Hand back your £1,000 pension boost if you don’t need it, urges minister

·4-min read
Thérèse Coffey, the Work and Pensions Secretary, said it is 'very straightforward' to return the money to the Government - Aaron Chown
Thérèse Coffey, the Work and Pensions Secretary, said it is 'very straightforward' to return the money to the Government - Aaron Chown

Rich pensioners should consider paying back the £1,000 extra coming from an inflation-linked rise in the state pension, the Cabinet minister overseeing the policy has said.

Thérèse Coffey, the Work and Pensions Secretary, on Wednesday said it was “very straightforward” to return the money to the Government as she rejected criticism of the increase.

The remark came after Lord Clarke, the former Tory chancellor, said the Government’s focus should be on the poor rather than well-off pensioners such as himself.

Downing Street and the Treasury faced fresh scrutiny over their decision to increase the state pension and benefits by inflation but refusing to do likewise for public sector pay – a stance that has in part led to the rail strikes this week.

Rishi Sunak, the Chancellor, defended the position, saying increases in wages were more likely to push up inflation than pension rises. He argued firms paying higher wages may in turn raise their own prices, known as a "wage price spiral".

The Prime Minister’s spokesman also doubled down on the stance, saying it would be “reckless” to give public sector pay increases in line with inflation, arguing those same people would suffer if that locked in steep price rises.

Inflation forecast to hit 11 per cent

On Wednesday it was announced that inflation in May was 9.1 per cent, according to the Office of National Statistics, up from nine per cent in April. It is forecast to hit 11 per cent this year.

The spokesman declined to say whether the increase in state pension next April - which could amount to an extra £10 billion of Treasury spending - would fuel inflation.

Lord Clarke criticised the inflation-linked state pension rise on BBC Radio Four’s World at One, saying ministers should “protect the poor - stop giving me money to pay my power bills”.

Ms Coffey responded on the same program: “When politicians make decisions, we think about the individuals that are there.

"We think about the people who are worrying about whether or not they’re going to have enough money to heat their homes. Those are the sorts of issues we are tackling right now.

“Of course there’ll be some people like Lord Clarke who’ve got substantial amounts of money, I’m conscious of that.

"But nevertheless, in order to deliver this payment effectively, it is a comprehensive payment, and frankly I’ll ask Ken Clarke to send a cheque back to HMRC if he feels that strongly against it. This is about helping people in a really challenging situation right now.”

Asked to clarify whether other people should give back the state pension increase, she said: “I am always encouraging people who seem to think that they don't need money given from the Government to [return it].

"There’s a very straightforward way they can return that, and of course other people often give it to other charitable donations as well.”

From next April the state pension, which is received by around 12 million people, will rise by the inflation figure in September. Early forecasts suggest it could be around 10 per cent.

A rise of 10 per cent would add £18.50 per week to state pensions, or £962 annually, and increase the pensions bill by around £10 billion.

People are able to pay back money given to them from the Treasury via the government website, with bank transfer being one option.

Lord O'Neill, the former Treasury minister, said the Government's decision to raise pensions by double digits while workers face a real terms wage cut is "ludicrous" and "crazy".

Constant protection of pensioners ‘ludicrous’

Asked why pensioners are getting such a big increase, the crossbench peer told the BBC: “I have no idea… it seems to me pensioners, given the pressure on fiscal policies and these inequality issues now for the past decade and beyond, the constant protection of pensioners seems ludicrous in itself and in these circumstances particularly crazy.

“I am talking as somebody who is getting on a bit of course.”

Mr Sunak was asked to explain why the state pension increase was not inflationary during an interview on Wednesday morning.

He said: “Well, it is right that we reward our hard working public sector workers with a pay rise.

“But that needs to be proportionate and balanced with the need not to make the inflationary pressures worse and also to see what is affordable for the taxpayer.

“The slight difference with pensions is pensions are not an input cost into the cost of producing goods and services we all consume so they don’t add to inflation in the same way.”

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