Chancellor George Osborne has confirmed the Government will not include the state pension in its overall welfare spending cap.
The Coalition has already introduced a cap of £26,000 on the amount households can claim in benefit payments. The cap was opposed by Labour in Parliamentary votes.
Labour has, however, committed to introducing an overall welfare spending cap of its own. Shadow chancellor Ed Balls has previously suggested state pension spending would be included in Labour’s cap.
Giving his Spending Review speech to Parliament today, Osborne said pensioner benefits would be included in the Government’s welfare cap but the state pension would be excluded.
A small number of cyclical benefits that rise and fall with unemployment will be excluded alongside the state pension but housing benefit, disability benefit, tax credits and pensioner benefits will all be included.
Osborne said the welfare cap will be set each year at the Budget and will apply from 2015. The Office for Budget Responsibility will be able to issue public warnings to the Government if it is on course to breach the cap.
Osborne said: “I’ve had representations we should include the basic state pension in the welfare cap. It would mean keeping a rise in working age benefits by cutting the pensions for older people.
“That penalises those who have worked hard all their lives. Cutting pensions to protect working age benefits is a choice this Government won’t make. It’s unfair.”
Responding for Labour, shadow chancellor Ed Balls said he “fully supported” the state pension triple lock. The triple lock links rises in the state pension to the highest of earnings, prices or 2.5 per cent.
The Coalition agreement introduced the triple lock in 2010 but the Pensions Bill currently going through Parliament only states that the state pension must increase in line with average earnings.