Pensioners need £90 a week to live, MPs tell Government

Pensioners need £90 a week to live on, a Labour-dominated Commons committee said yesterday, piling pressure on the Government to provide more cash.

Pensioners need £90 a week to live on, a Labour-dominated Commons committee said yesterday, piling pressure on the Government to provide more cash.

The Social Security Select Committee called for an immediate rise in the £67.50-a-week basic pension and warned the Government might eventually need to uprate it in line with earnings instead of prices.

Last night ministers privately admitted the committee's call would fuel the row over the 75p-a-week rise in the basic pension in April. "It was a mistake by the Treasury and we need to put it right," one source said.

The Chancellor, Gordon Brown, will try to stem the tide of criticism in November by unveiling a new credit, which would give all pensioners an income of about £80 a week, even if they have savings or an occupational pension. But the scheme would not take effect until after the general election and would stop short of yesterday's demands from the influential select committee.

The MPs endorsed Age Concern's findings that pensioners need £90 a week to provide their basic living requirements and urged the Government to make this figure its goal.

Ministers have strongly resisted the long-running campaign, led by Baroness Castle of Blackburn, to restore the link between the basic pension and earnings, which rise faster than prices. But the MPs warned that, if the proposed credit does not work, the earnings link would have to be restored "to provide a firm financial platform for retirement on which people can build for the future".

The Government says this would cost £4.5bn and the committee admitted the move would involve higher taxes and national insurance contributions. The MPs also said the basic state pension for everyone over 80 should be raised to £78.45 a week, the level of the Government's minimum income guarantee (MIG), which is means-tested.

They warned the Government's policy of raising the MIG in line with earnings while restricting the increase in the basic pension to prices was "unlikely to be sustainable in the long run".

The MPs added: "If it is right for the MIG to be linked to earnings, so too must both components of the state pension, if we wish pensioners to share equally in the rising prosperity of the nation."

Jeff Rooker, the Pensions Minister, who told the committee he could not afford to live on £78.45 a week, said yesterday the average pensioner income was £132 a week, but he admitted: "We have to do more. We have repeatedly said we want to do more."

Archy Kirkwood, the Liberal Democrat MP who chairs the committee, said: "We are nailing our colours to the mast. We are saying to the Government, if they don't think £90 is modest, they should work out what the figure should be.

Mr Kirkwood, member for Roxburgh and Berwickshire, added: "That should be the target and it should be achieved in the minimum time possible."

Andrew Dismore, the Labour MP for Hendon, said: "Ninety pounds is what pensioners need to live on. We say we think there is a case for uprating the basic pension as part of that."