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Social Security Benefits: Cost of Living

Volume 479: debated on Monday 29 September 2008

To ask the Secretary of State for Work and Pensions what recent assessment his Department has made of the effect of increases in the cost of living on people on benefits. (223236)

[holding answer 10 September 2008]: There is a statutory requirement to review all social security benefits each year and to increase certain benefits from April each year. The increase applied to most contributory and non-contributory benefits is calculated using the increase in the Retail Prices Index for the 12 months ending in the preceding September. This ensures that benefits keep their value in broad terms.

The inflation figures are based on a year-on-year comparison of prices. Therefore any recent fluctuations in inflation will be taken into account in the benefit increases that will take effect from the following April.

In addition to the annual uprating, the Chancellor also announced in his Budget 2008 speech that for winter 2008-09 an additional payment will be made alongside the winter fuel payment. Households with someone aged 60 to 79 will receive an additional £50 and households with someone aged 80 or over will receive an additional £100.

On 11 September 2008, the Government also announced a new £1 billion package of measures to help people cut their energy bills. Measures on offer deliver significant energy savings—e.g. cavity wall and loft insulation—and 11 million lower income and pensioner households are eligible for these free of charge. Also for winter 2008-09 cold weather payments will increase in value from £8.50 to £25.00. Cold weather payments are made to vulnerable people in receipt of qualifying benefits, including pension credit, if there is a period of very cold weather in their area.