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President National Pensioners Convention, Jack Jones
"Pensioners have lost over many years now"
 real 28k

Sunday, 5 November, 2000, 12:59 GMT
Pensions set for inflation-busting rise

The government, attacked for short-changing the elderly of 1bn, is to increase pensions payments by twice the rate of inflation, newspapers report on Sunday.

UK Chancellor Gordon Brown is on Wednesday to reveal an increase in the state pension next year of 5 per week for single claimants and 8 a week for couples, the Sunday Telegraph says.

If pegged to inflation, payments to a single pensioner would rise by 2.25 a week.

The rise, to be outlined in a statement outlining the government's plans for the 2001 Budget, follows bitter criticism of the 75p-a-week rise awarded this year.

And figures set to be revealed to the House of Commons next week show that pensions payouts have fallen 0.1% as a proportion of the UK's economic wealth.

The drop is equivalent to 1bn in payments, the Sunday Mirror claims.

Pensioners to get more

While the Treasury has declined to comment on pensions reforms ahead of Wednesday's statement, Mr Brown says in an article in the Sunday Mirror that the government "will spend more on pensioners, and spend it more fairly".

Frank Dobson
Frank Dobson: cash "can't be spent twice"

And Alistair Darling, Social Security Secretary, said two weeks ago that the government would introduce "transitional measures to help all pensioners" ahead of the introduction of a scheme aimed at helping elderly people with few or no savings.

Frank Dobson, the former health secretary, on Sunday restated a government line linking a rise in pensions payments to a refusal to bow to demands by farmers and hauliers for a drop in fuel taxes.

Treasury funds "can't be spent twice", Mr Dobson told GMTV's The Sunday Programme.

"If people want very substantial improvements in living standards for pensioners, they can't improve the living standards of some of these millionaire people who run some of these lorries."

Last minute talks

Mr Brown is on Tuesday to hold talks with campaigners for the elderly to discuss pensioners' incomes, which has become an increasingly important political issue.

More than two thirds of Britons over the age of 54 - accounting for one fifth of the population - are dissatisfied with the government's performance, a Mori poll in September showed.

Other reforms set to be included in Wednesday's pre-Budget report include measures to help smaller companies with VAT payments, the Sunday Times says.

Small and medium sized firms will be able to pay VAT at a flat rate, instead of on an item-by-item basis.

More companies will also be able to pay VAT annually rather than quarterly, so easing cash flow restraints.

Capital gains tax reviewed

Mr Brown last month revealed that reforms to capital gains and small business taxes would be include in the pre-Budget report.

He has also hinted at measures to encourage firms to invest in "the potential of our people", including skills training.

And the report is set to cover his views on the minimum funding requirement which, while designed to guarantee payments for recipients of company-backed pensions, has been attacked for being too restrictive.

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See also:

20 Oct 00 | Business
Brown tries to bridge the gap
10 Oct 00 | Business
Inflation rise set to boost pensions
10 Oct 00 | UK Politics
Brown warned over pension rise
18 Jul 00 | CSR
Strong economy aids spending
03 Aug 00 | UK Politics
Labour 'spending less than Tories'
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