Pensioners on modest incomes to get new aid

Alistair Darling, Secretary of State for Social Security, yesterday signalled Labour's determination to woo pensioners when he unveiled a raft of measures to help the elderly.

He confirmed an Independent report that the basic state pension will rise by £2 a week next year for single pensioners and £3 a week for couples. The extra money follows complaints by Labour MPs that the 75p rise introduced this month had hit the party's support. Mr Darling also announced plans aimed at helping those who are not well off but are penalised for not being poor enough to qualify for extra state aid. The moves come as Labour steps up its campaign, not just in next week's local elections but also the general election, to hold on to the "grey vote" it won in 1997.

Gordon Brown, the Chancellor, and Mr Darling will stress over the next few weeks that the extra £6.5bn spending on pensioners will be at risk if the Tories return to office.

In a rebuttal of criticism of the 75p rise, which was prompted by unusually low inflation when the pension was set in September, Mr Darling said all pensioners were already £3 a week better off. "Labour is delivering pounds, not pence, for Britain's pensioners. And from next April ... we expect the rise in the basic state pension to be more than £2 for single pensioners and over £3 for couples," he said.

Mr Darling stressed that as well as helping the poorest in society, the measures were designed to offer aid to those who had more money but were still on modest incomes. Many of these people are traditional Labour supporters, skilled manual workers who have saved all their lives but are penalised by current rules.

From April next year capital limits for the minimum income guarantee will be doubled to help pensioners on modest incomes. Current limits, introduced by the Tories 12 years ago, cut access to benefit if savings exceed £3,000 and remove entitlement altogether if they exceed £8,000.

Under Mr Darling's plans, anyone over 60 will have the lower limit for savings increased to £6,000 and the upper to £12,000. More than half a million people will gain by an average of £5 a week, according to the Department of Social Security. A "pensioners' credit" will be introduced in the next Parliament further to help pensioners who have saved all their lives but whose savings levels disqualify them from income support.

Mr Darling said the Government had already achieved a great deal for pensioners by introducing the £150-a-year winter fuel payment, cutting VAT on domestic fuel, free eye tests and giving television licences to over-75s. Labour has calculated that as a result of the policies, all pensioners, rich and poor, are at least £3 a year better off and those over 75 at least £5 a week better off. The poorest pensioners over 60 are at least £14 a week better off and those over 75 at least £16 a week better off.

Mr Darling said the Tories were committed by their tax guarantee to cutting social security spending and would axe the winter fuel payment and minimum income guarantee.

Jacqui Lait, Tory spokeswoman on pensions, said the measures would not make up for the abolition of the married couple's allowance or £5bn taxes on pension funds. "Pensioners are not going to be fooled by this latest announcement, because the Government has already hit them in so many ways," she said.