Lilley to honour pensions pledge

THE BASIC STATE pension and child benefit will remain safe under the public spending review announced on Monday, Peter Lilley, Secretary of State for Social Security, assured MPs last night.

Speaking in a Commons debate on measures uprating all benefits by 3.6 per cent from April, Mr Lilley said the Government had no intention of reneging on manifesto pledges to uprate pensions and child benefit in line with inflation. 'We believe the basic pension must remain the foundation for retirement,' he said.

'We will protect its value against price rises. We have no plans to means test.

'Likewise we are committed to child benefit. It will continue to be paid to all families, normally to the mother, and uprated in line with prices.'

Mr Lilley's remarks follow intense speculation that the two benefits were under threat after Michael Portillo, Chief Secretary to the Treasury, announced a long-term review of spending in four key departments.

Mr Lilley turned such fears against Labour last night, attacking its Commission on Social Justice and claiming the party's policies would compel it to means test pensions.

The 3.6 per cent uprating, based on the inflation rate in the year to last September, was in turn attacked as a 'standstill' by Donald Dewar, Labour's social security spokesman. 'It represents no progress,' he said.

Mr Lilley said Labour's predictions about the spending review would prove 'reckless and unfounded scaremongering'.

The aim of the review was not just to control expenditure. 'It is to ensure spending is geared to the needs of the Nineties and the 21st century, not to the patterns of the past. We intend to improve as well as save.'

But Mr Dewar said he thought the Government might encourage people to opt out of the state pension. 'In effect those people, a vast and important part of the population would be encouraged to see the welfare state as something for other people.'

Earlier, Mr Dewar told a conference on benefits in Weston-super-Mare that the Government's review had been forced by its huge borrowing. Calling for an open review, he said Labour recognised the inadequacy of the present pounds 80bn social security system.