Fact check: Pensioner poverty dropped under the last Labour government

Prime Minister Rishi Sunak claimed that under a Labour government pensions rose by just 75p one year, juxtaposing that with what he said was a £900 increase from the Conservatives this year.

In a post on X, formerly Twitter, the Prime Minister wrote: “Thanks to our Triple Lock, pensions have risen by £900 this year & now we’ll cut taxes by £100.

“Under Labour pensions rose by just 75p one year and pensioner poverty was through the roof.”

Evaluation

The Prime Minister compared a weekly rise of 75p with an annual rise of £900. His comparison was also between two different pension systems.

A more accurate comparison would be to contrast the 75p per week increase recorded in 2000 with the extra £13.30 per week for pensioners in 2024.

This was down to a vast difference between the economic measures used to calculate pension increases. In 2000 the increase was based on inflation hitting 1.1%, while in 2024 the rise was based on an 8.5% increase in earnings.

In 2000, UK inflation was at its lowest for nearly 40 years, whereas in 2024, the country is still recovering from inflation that peaked at 11.1% in October 2022 and was matched with high wage rises.

The number of married pensioners living in poverty fell from 22% in 2005, when Labour last won a general election, to 14% in 2010, its final year in government.

The facts

Pension rises

At the turn of the century, annual pension increases each April were tied to the Retail Prices Index (RPI) monthly measure of inflation recorded in the previous September. In 2012, the use of RPI was switched to the Consumer Prices Index (CPI) measure.

In September 1999, RPI was measured at 1.1% – the lowest level since July 1963. It was this 1.1% that decided the increase in the weekly basic state pension payments for the following year.

For a single person the state pension rose from £66.75 per week to £67.50 per week in April 2000. That was a yearly increase of £39 in total, bringing the annual pension to £3,510.

However, in April 2024, the state pension increase was not linked to inflation  levels. Instead it was calculated on the annual growth in average total pay, which was 8.5% the previous September.

This meant a single person’s basic state pension rose by £13.30 per week from £156.20 to £169.50 – giving an annual increase of £691.60.

Meanwhile, the new state pension – introduced for people who retired after April 6 2016 – rose by £17.35 a week from £203.85 to £221.20. That is an annual rise of £902.20, and appears to be the figure Mr Sunak is referring to. However, not all pensioners are entitled to this full amount because there may be gaps in their national insurance payment histories.

Unlike in 2000, state pensions are now protected under a government system known as the triple lock, where annual payments are guaranteed to increase by the highest level of either CPI, 2.5%, or the increase in average weekly earnings.

In September 2023, the official figure for annual growth in average total pay, including bonuses, was 8.5%. As that was higher than September’s CPI reading of 6.7%, the state pension increased in April 2024 by 8.5%, generating the extra £902.20 on average.

Pensioner poverty

It is unclear what data the Prime Minister was referring to when he claimed that “under Labour… pensioner poverty was through the roof”.

Data from the Joseph Rowntree Foundation shows that in the 1996/97 fiscal year, the last year before Labour formed the government, 22% of married couples who received the state pension were classed as being in poverty. By 2009/10, the year before Labour left office, that figure was 14%.

In the same period, the poverty rate among single retired men fell from 31% to 14%, and for single retired women from 41% to 18%.

A 2013 report from the Institute for Fiscal Studies (IFS) into child and pensioner poverty under New Labour said: “The substantial falls in pensioner and child poverty were largely driven by very significant additional spending on benefits and tax credits.

“Reforms since 1997/98 resulted in an £18 billion annual increase in spending on benefits for families with children and an £11 billion annual increase on benefits for pensioners by 2010/11.”

One of the measures the Labour government introduced to help pensioner finances was the winter fuel payment, which started in 1997 to help pay for increased home heating costs. It was introduced at an annual rate of £20 but increased to £100 in 1999/2000 and to £200 the year after, which was the same year as the 75p weekly pension increase.

Links

Rishi Sunak post on X (archived)

Unison – State Pension Increased (archived)

ONS – RPI All Items: Percentage change over 12 months (archived)

Royal London – Basic State Pension (archived)

Royal London – New State Pension (archived)

ONS – Average weekly earnings in Great Britain: September 2023 (archived)

ONS – CPI Annual Rate (archived)

JRF – Pensioner poverty archived link

IFS – Labour’s record on poverty and inequality (archived)

House of Commons Library – Winter Fuel Payment update (archived)