Pensions to rise with inflation

The announcement followed the release of inflation for September

The basic state pension is to increase in line with inflation next year, Chancellor Alistair Darling has said.

Payments for single people will increase by £3.40 to £90.70 a week, while payments to couples go up by the same rate, by £5.45 to £145.05 a week.

But the Conservatives said many pensioners would continue to feel they were receiving "a raw deal".

And the rise "would do nothing to help the millions of pensioners struggling to survive", the Lib Dems claimed.

Mr Darling made the announcement in the Commons.

'Harsh reality'

Mike O'Brien, the pensions reform minister, said later that the government had increased spending on the elderly by £11 billion since it came to power in 1997.

More than two million pensioners had been lifted from "absolute" poverty while another million were no longer enduring "relative" poverty, he added.

Some 2.2 million - or 21% - of pensioners were ranked as living in "relative" poverty in government figures covering 2005-6. This was counted as being at least 60% below the national median income.

Many pensioners face cost of living increases way above the cost of inflation Chris Grayling, Shadow work and pensions secretary

Of these, 1.3 million pensioners earned so little that they were considered to be in "absolute" poverty.

"For the first time, a pensioner is no more likely to be poor than any other person in society," Mr O'Brien said.

But shadow work and pensions secretary Chris Grayling disagreed, arguing: "The harsh reality is that many pensioners face cost of living increases way above the cost of inflation."

He said the government's "latest round of stealth tax rises" added to "the burden" they faced.

"They haven't even been given a definite date for the restoration of the earnings link. It's no wonder pensioners feel they are dealt such a raw deal."

For the Lib Dems, work and pensions spokesman Danny Alexander branded the state pension "derisory" and said it was still £30 a week below the poverty line.

"Rather than relying on the incredibly complicated Pension Credit, which over 1.5 million eligible pensioners do not claim, the government should immediately restore the link with earnings as a first step towards a decent state pension," he said.