Claims over welfare spending questioned: Social security figures spark heated debate

GOVERNMENT claims that spending on welfare benefits could outstrip the country's ability to pay by 2000 are 'questionable' and unduly pessimistic, according to economists from an independent think tank.

Conflicting interpretations emerged after Peter Lilley, Secretary of State for Social Security, yesterday published a report on projected spending on social security to the end of the century, to 'stimulate and inform public debate'.

The figures estimated that spending would rise by between pounds 10bn and pounds 19bn a year above the pounds 74bn this year, depending on whether unemployment fell by half or stayed at 3 million.

Labour accused the Government of misusing the estimates to justify cuts in benefits to the disabled, single parents, pensioners and other vulnerable groups. But right-wing Conservatives seized on the new figures to call for drastic cuts, including raising the state pension age to 67 for men and women.

In heated Commons exchanges, John Smith, the Labour leader, accused the Government of threatening pensions payments. Tony Newton, the Leader of the Commons, said pensioners had an absolute guarantee that their pensions would be uprated in line with prices. However, Alan Duncan, a Tory member of the Select Committee on Social Security, said the Governnment should consider equalisation of the retirement age - to 67. Mr Duncan added: 'We need to plan ahead and take difficult decisions now. We should plan now to equalise and even raise the state pension age to 67 into the next century. If we do it now, we can do it in a way which does not affect those who are already approaching retirement. Anyone who is over 45 should not suffer any abrupt change to their fortunes.'

In a press statement, Mr Lilley said: 'Expenditure as a proportion of GDP (the gross domestic product) has nearly trebled. In 1948-49 it was 4.7 per cent, in 1992-93 it stood at 12.3 per cent. It has outpaced growth in the economy as a whole and is set to continue to do so.'

After studying the figures Andrew Dilnot, of the Institute of Fiscal Studies, said the claim was 'questionable'. He said as long as the Government managed to reduce unemployment social security spending will would not outstrip the economy.