In my view, the provisions in the instruments are compatible with the European convention on human rights. The draft Social Security Benefits Up-rating Order will increase relevant state pension rates by 4.8%, in line with the growth in average earnings in the year to May to July 2025. It will increase most other benefit rates by 3.8%, in line with the rise in the consumer prices index in the year to September 2025, so the regular formula has been used.
The order commits the Government to increased expenditure of £9 billion in 2026-27, of which £6 billion will be from state pensions and pensioner benefits, £2 billion from disability and carers benefits, and £1 billion from other working-age benefits. A further £2 billion of expenditure on working-age benefits will be incurred in 2026 as a result of uprating decisions made under separate legal powers in the Universal Credit Act 2025, which will set new rates for universal credit and income-related employment and support allowance.
Let me say a little more about each of the benefits being uprated in turn. First, on pensions, the Government’s commitment to the triple lock means that the basic and full rate of the new state pension will be uprated by the highest of the growth in earnings or prices or 2.5%. That means that the uprating will be by 4.8% for 2026-27. As a result, from April the basic state pension will increase from £176.45 per week to £184.90, and the full rate of the new state pension will increase from £230.25 at the moment to £241.30 per week.
I suppose I ought to declare an interest, Madam Deputy Speaker. [Laughter.]
The right hon. Gentleman will understand that we welcome the adherence to the triple lock that my party introduced. He will also know that there are tens of thousands of expatriate United Kingdom citizens whose pensions have been, and remain, frozen at the point at which they left the United Kingdom, in spite of the fact that they have paid their full taxes and national insurance contributions throughout their working lives in the UK. The last Government, to our shame, failed to address this issue. Do this Government have any plans to do so?
I am grateful to the right hon. Gentleman for raising this point. It might be of some comfort to him to know that it was not only the last Government who failed to do anything about this, and that previous Governments also failed. Indeed, in my previous tenures of the office of Pensions Minister, this issue was raised with me. However, it was the case that when those people left the UK, the rules were then as they are today. They were quite clear when people left. Of course, it depends on which country they went to, but in the countries where uprating has not been applied, it has always been the case that uprating has not been applied there, so it should not have come as a surprise to those who left that their pensions were not uprated. We are not looking at any proposals to change the situation at the moment, but I know that the right hon. Gentleman has campaigned on this matter consistently over a long period and I pay tribute to him for that.
We very much welcome the triple lock and the extra moneys coming to our pensioners, but an issue has come to my attention recently. I had an 84-year-old pensioner in my office just last week who said, “Jim, I’ve got a demand from the HMRC for hundreds of pounds, but I’ve never been in debt in all my life.” When it comes to those pensioners who now find themselves being taxed when they were never taxed before, is it not possible to have a different system where the money could be taxed at source, rather than asking pensioners who are financially, mentally and emotionally under pressure to fill in an online form, which they just cannot do? There must be a simpler way of doing it.
The question of how the tax system operates is a matter for His Majesty’s Treasury rather than for me. However, the hon. Gentleman might take some comfort from the reassurance provided by the Chancellor that those whose only income is the basic or new state pension, without any increments, will not have to pay any income tax in the course of this Parliament. Of course, those who have additional income beyond the state pension often do have a tax liability. The mechanism for how that is applied is a matter for my hon. Friends in His Majesty’s Treasury rather than for me, but I can certainly ensure that his point is passed on to them.
Other components of state pension awards, such as those previously built up under earnings-related state pension schemes, including the additional state pension, will increase by 3.8%, in line with prices. The Government are committed to supporting pensioners on the lowest incomes, so the safety net provided by the pension credit standard minimum guarantee will increase by 4.8%. That means that it will increase from £227.10 to £238 per week for single pensioners, and from £346.60 to £363.25 per week for couples. The maximum amount of pension credit savings credit will increase by 3.8%, in line with prices.
One of the first acts of this Government was to remove the winter fuel payment, before their subsequent partial U-turn. The Prime Minister himself promised assistance for WASPI women, which is manifestly not happening. Both things affect pensioners significantly. When it comes to uprating, the gap between new and old pensions is widening all the time, because although they are going up by the same percentage, they start from different baselines. What are the Government doing to equalise pension levels to prevent that situation from worsening?
We are not proposing any change in those arrangements. As the hon. Gentleman will know, those arrangements were introduced by the previous Government. In fact, the coalition Government put in place the current arrangements for the new state pension, which were introduced with commitments to future uprating. We are committed to delivering the triple lock, but we are not planning to change the relativities between those two arrangements.
Most working-age benefits and other benefits for people below state pension age will also increase by 3.8%. They includes statutory payments such as statutory sick pay, statutory maternity pay, the personal allowances of income support, housing benefit, jobseeker’s allowance, and contributory employment and support allowance. The order will also increase by 3.8% the child amounts, the carer amounts, transitional severe disability premiums in universal credit, and pensioner and carer premiums in income-related employment and support allowance.
As I mentioned earlier, the Universal Credit Act 2025 included important changes to rebalance universal credit. For 2026-27, the standard allowance in universal credit will be uprated by September’s consumer prices index plus an additional 2.3%. That represents the first ever permanent above-inflation rise to the universal credit standard allowance, and I believe that it is the first permanent real-terms increase in the headline benefit rate since the 1970s.[Official Report, 23 February 2026; Vol. 781, c. 4WC.] (Correction) That is not part of the order that we are debating, but all these increases will apply across Great Britain.
I very much appreciate the action that the Government have taken to uprate UC—for the first time in its history, as the Minister says—but does he accept that it still will not cover the cost of basic essentials such as food, heating and rent for many of our most put-upon constituents?
I think perhaps the point that the hon. Gentleman is making is that it does not fulfil the aspirations of the essentials guarantee campaign, with which he and I are familiar, and that is true. However, April’s above-inflation uprating will be the first of four such upratings, so there will be a similar over-inflation uprating in each of the following three Aprils. It will not end up at the level on which the essentials guarantee campaign has focused, but let us see what happens beyond the period for which we have made these announcements. As he said, it is an historic change of direction for public policy.
Benefits for people in England and Wales who have additional costs as a result of disability or ill health will also increase by 3.8%. These include disability living allowance, attendance allowance and personal independence payment. The increase will also apply to carer’s allowance.
The draft Guaranteed Minimum Pensions Increase Order 2026 sets out the yearly amount by which the guaranteed minimum pension part of an individual’s contracted-out occupational pension, earned between 1988 and April 1997, must be increased when it is being paid. The increase is paid by occupational pension schemes, and helps to provide a measure of inflation protection for people in receipt of contracted-out occupational pensions earned between 1988 and 1997. The law requires that GMPs earned between those two dates must be increased by the percentage increase in the general level of prices measured the previous September, capped at 3%. The September 2025 inflation figure— or CPI—was 3.8%, so the increase for the financial year 2026-27 will be 3%.
The 3% cap provides pension schemes with more certainty, allowing them to forecast their future liabilities more reliably. That is important when they are considering their funding commitments. The measure strikes a balance between, on one hand, protecting members against the effects of inflation, and on the other, not increasing scheme costs beyond what schemes and sponsoring employers can reasonably afford.
I wish to reassure the Minister about something that I said in last week’s debate on the two-child benefit cap. I shared something of my story, and said that we had lost child benefit as a result of the Labour Government coming into office in 1997. I was convinced I had said “family credit”, which was what I was supposed to say. When I read back over Hansard, I realised that, in my haste to get my point across, I had said the wrong thing, which explains why I caught sight of the Minister’s perplexed face from across the Dispatch Box. I have also corrected the record through Hansard.
I can confirm that the Opposition support the usual increase in the guaranteed minimum pension, and the uprating of social security benefits. However, given that this debate is largely a formality and there will be no vote on the motions, it is a good opportunity to take a step back and reflect on the pensions and benefits system more broadly—in the context of the motions before us, of course.
First, let me highlight what I call the “benefits barbell”. At one end is the working-age welfare bill, which keeps getting heavier; at the other is the eye-watering cost of public sector defined-benefit pensions. In the middle of those two heavy weights is the hard-working taxpayer, straining under the load. Welfare and pensions both matter—they are pillars of a decent society—but it is Britain’s taxpayers who do the heavy lifting. They are the ones who get up before dawn, commute in all weathers and keep the economy moving. Without their efforts or even more Government borrowing, there would be no welfare state at all, and we cannot pile more weight on to their shoulders indefinitely.
The Secretary of State for Work and Pensions has already admitted that the long-awaited Timms review will not involve making welfare savings and is not likely to be published before 2027. It seems that this Government are shunning any attempts at reform over the coming year, and yet again, it is taxpayers who bear the cost of this delay. Right now, the UK is on the verge of becoming a welfare state with an economy attached. Over 40,000 people were signed off work every day by GPs over the last year, according to the Centre for Social Justice. Over 5 million people are claiming benefits with no work requirements, which is equivalent to over half of London’s population.
I am pleased to follow the shadow Minister. I would like to challenge several things she said, but I will pick up on just a couple.
First, one of the hon. Lady’s opening statements was that hard-working people who get up at dawn and go out to work do not approve of this increase in support. I gently point out to the hon. Lady that most people in receipt of social security support are working, but they are in the low-paid jobs that were presided over by previous Conservative Administrations.
Secondly, the hon. Lady spoke of her concerns about young people. Yes, absolutely, nearly 1 million young people are not in education, employment or training and that concerns us all, but we must all look at the evidence and at the underlying causes of that. She might not have heard me say last week—I have said it a few times—that evidence from the UK Millenium cohort study suggests that half of that population have experienced childhood poverty and adversity in their young years, under the former Conservative Government, and that is the driver. People are five times more likely not to be in education, employment or training if they have experienced that long childhood of poverty and adversity—I do not think the shadow Minister would claim that that has not happened.
It is also a pleasure to follow my right hon. Friend the Minister. I give the pensions and social security uprating orders my wholehearted support. The uprating is absolutely the right thing to do, and I will expand on exactly why. This year’s uprating, confirmed last November by the Secretary of State, will see inflation-linked benefits and tax credits rise by 3.8% this April, which is the level of inflation as measured by the consumer prices index in September 2025. As a result of the Universal Credit Act 2025—some people did not support that, but I did once we got rid of the bits I had concerns about—we increased the universal credit standard allowance. That is important, as it means an additional 2.3% for the standard allowance, which equates to an increase in the standard allowance for a single claimant over 25 from £400.14 to £424.90 per calendar month.
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The draft Social Security Benefits Uprating Order 2026 will, if Parliament approves it, commit the Government to increased expenditure of £9 billion in the next financial year. Changes will mainly come into effect from 6 April this year and apply for the tax year 2026-27. The order maintains the triple lock—which benefits pensioners in receipt of both the basic and new state pensions—raises the level of the safety net in pension credit beyond the increase in prices, increases the rates of benefit for those in the labour market, and increases the rates of carers benefits and benefits to help with additional costs arising from disability or health impairment.
The draft Guaranteed Minimum Pensions Increase Order requires formally contracted-out occupational pension schemes to pay an increase of 3% on GMPs in pensions earned between April 1988 and April 1997, giving a measure of protection against inflation, paid for by the scheme. I commend the orders to the House.
Concerningly, that number includes more than 300,000 people aged 16 to 24—young people with promising lives ahead of them whose ambitions are being stifled by a benefits system that would rather write them off. Labour is presiding over a youth unemployment crisis and seems unable to offer long-term solutions. There are already nearly 1 million young people in the UK who are not in education, employment or training. Over 700,000 university graduates are out of work and on benefits. One and a half years after taking office, this Government are still failing to tame the runaway benefits bill and rising unemployment rates. By contrast, the Conservative plan to get Britain working again will tackle youth unemployment by offering young people a first jobs bonus, which they can use to save for their first home.
Living within our means is one of those sensible, mundane things that gives the Conservative party its reputation as a safe pair of hands for the economy. Of course, making welfare savings is far less likely to grab headlines—scrapping the two-child benefit cap or rolling out more free school meals is a far easier win—but getting the deficit under control is crucial to a healthy economy. When the Conservatives took office in 2010, the Government were running a deficit of 9%. By the time covid struck, we had brought it down to under 1%. That, in turn, enabled us to provide generous support to individuals and businesses during lockdowns.
As I said in the debate on the two-child benefit cap last week, keeping the limit would have saved the taxpayer £2.4 billion in 2026-27, rising to £3.2 billion in 2030-31, yet our current Prime Minister would rather throw some red meat to his Back Benchers than exercise fiscal discipline. He has caved in to their demands, even though scrapping the two-child benefit limit was previously ruled out by the Chancellor and was conspicuously absent from Labour’s manifesto.
Conservatives believe in fairness for the working parents who make difficult choices about whether they can afford another child. Many working families do not have incomes much higher than the threshold for universal credit but are paying for others through their taxes. Why should we make those parents bear the double burden of supporting their own children and subsidising other people’s? A fair system should not simply exempt families on benefits from making tough choices.
Speaking of fairness, the issue of passported benefits desperately needs investigating. Last week, I highlighted the shocking statistic that one in four full-time UK workers would be better off on benefits than in work, but something that often gets overlooked is that people on universal credit also gain access to a raft of discounts and additional benefits such as free prescriptions, discounted broadband, healthy food cards and special savings accounts. There are over 20 of these schemes sprinkled across multiple Government Departments. Taken together, passported benefits give some families who are already on universal credit over £10,000 a year in extra support, costing the taxpayer over £10 billion, according to a new report from the think-tank Onward. These benefits need rationalising and streamlining within universal credit. Otherwise, we will continue to face three serious problems.
First, passported benefits disincentivise people from entering employment. Any sensible person would think twice about starting a job if they faced a cliff-edge denial of additional benefits worth thousands of pounds once their universal credit tapers away. Secondly, we have a two-tier system. As a result of these linked benefits, individuals just outside the universal credit threshold often face greater financial hardship than benefit claimants. Thirdly, for those who really do need these extra schemes, there is a labyrinth of bureaucracy that slows down the process of getting help. These piecemeal entitlements distort the system. From a quantitative perspective, it is harder to see which poverty interventions are actually having a positive effect. It is also incredibly difficult for everyone to see whether this Government are succeeding at reducing poverty.
I welcome the Government’s new emphasis on deep material poverty as a headline poverty metric, which is a far more holistic measure that captures how poverty impacts people’s daily lives and whether they can afford necessities. Last week, we heard endlessly that the Government’s child poverty strategy and the scrapping of the two-child benefit cap will bring half a million children out of poverty, but it is worth noting that we are talking about relative poverty. That can never be eradicated, because it refers to a household income below 60% of the median household income. The only way to reduce relative poverty is to raise the incomes of the poorest faster than the middle or compress the income distribution. An overemphasis on relative poverty has underpinned a misleading left-wing argument that exaggerates the need for income redistribution. I worry that we will end up paying people to be so-called middle-class if we continue as we are.
At the heart of Conservative philosophy is a belief in personal responsibility—taking control of our future through hard work and aspiration. If we are serious about tackling child poverty in the long term, it is vital to deal with the effects of intergenerational worklessness and not just rely on social security. Children in long-term workless households are four times more likely to be materially deprived and 10% more likely to end up workless themselves. For every parent who does not go out to work, there is a child who misses seeing a positive example of work modelled to them—the early alarm clock, the daily routine, the reward for an honest day’s work and the ability to save up to buy important things. That is not to say that there are not those in dire circumstances for a vast number of reasons, but ultimately, when we are looking at people in general, that is the reality we need to deal with. Under our watch, the number of children in workless households fell consistently. Under Labour, the number has reached a nine-year high, with 1.2 million children now living in homes where no parent has worked for over a year.
Turning to the topic of personal independence payments, I would like to ask the Minister about a disabled constituent I caught up with at the weekend. She is a veteran who served in the Royal Navy for 19 years and is now an unpaid carer for her elderly father. She works full time, mainly from home, and commutes to London a few times a month. She had a Motability scooter, which enabled her to get to the office and around London when required, but after her last PIP review, which took place over the phone, she lost her higher rate of PIP and thus her scooter. She then received a puzzling letter from the Department for Work and Pensions, which wrongly claimed that full-time work indicated she had reasonable mobility, despite the fact that her entire home is adapted for her accessibility requirements.
My constituent is a highly capable woman who is skilled at advocating for herself as well as her father and, indeed, her fellow veterans, but she admitted that she felt too stressed to open the letter for a few weeks, meaning that the reconsideration window had timed out by the time she fully processed the DWP’s decision. For context, she has also been diagnosed with complex post-traumatic stress disorder following a traumatic experience in the military and is currently on a long waiting list for treatment. Statistically, she is unusual; fewer than one in six PIP claimants are in employment.
It seems bizarre that the DWP assessors are happy to downgrade someone in this situation, who is in work and genuinely needs the higher rate of PIP to help her carry out that work, yet the Department seems reluctant to stem the tide of benefits claims from people with less severe mental health issues. That is why a Conservative Government will end sickness benefits for low-level mental health problems, to ensure that support is targeted at people who need it most. I welcome the Government’s commitment to increase the number of face-to-face PIP assessments to 30%, up from the very low rate of 5% in 2024, but I urge them to be even more ambitious with their target, to ensure that constituents like mine are accurately assessed and receive the help they need.
In conclusion, as I return to the image I began with, the barbell is getting heavier by the year, with welfare on one side and pensions on the other, and still the hard-working taxpayer stands in the middle doing all the heavy lifting. The Government are doing far too little to ease that pressure. Working families are paying the price for a system that grows ever more expensive, while true reform moves at a crawl. It is time for a welfare system that is fair to those who need support and fair to those who pay for it.