Extra £5 a week pledged for pensioners

The Liberal Democrat leadership avoided an embarrassing defeat over its flagship pensions policy yesterday when delegates rejected calls to upgrade pensions in line with earnings.

The Liberal Democrat leadership avoided an embarrassing defeat over its flagship pensions policy yesterday when delegates rejected calls to upgrade pensions in line with earnings.

After a lively debate on the issue, the conference voted to approve new proposals to pay an extra £5 a week to all pensioners, £10 to over-75s and £15 to over-80s.

Instead of restoring the wages link, an independent pension authority would be created to report annually to the Government on an uprating of the state pension, taking into account poverty, earnings and national income.

Several senior figures in the party said it could outflank Labour on the issue by proposing a restoration of the link with average earnings that was abolished by the Tories.

Although Charles Kennedy claimed he was relaxed about the vote, it was clear that the leadership was relieved that such a move was overwhelmingly defeated in a card vote.

Paul Burstow MP, the party's spokesman on older people, said restoring the link to earnings would ensure that the party had a "stronger, tougher" policy. "How can we criticise the National Institute of Clinical Excellence for rationing in the NHS when we plan to do the same for pensions?" he said.

In an impassioned speech, Archie Kirkwood MP, chairman of the Commons Social Security Committee, pointed out that Gordon Brown was likely to offer means-tested increases for pensioners at next week's Labour Party conference.

By voting for a link with earnings, the Liberal Democrats would avoid being trumped by the Chancellor on a key general election issue, he said.

Mr Kirkwood, whose committee estimated earlier this year that pensioners needed a minimum of £90 a week to keep above the breadline, said the extra cost could be paid out of rising national wealth.

"The issue is less about money. It is more about the importance of giving dignity back to a generation. Without restoring the link, we duck the issue," he said.

However, Susan Kramer, the party's former candidate for London mayor, was scathing about calls for such open-ended, uncosted proposals. "Generations were betrayed because they believed promise made to them and because it was unsustainable. Let us not betray them again with a false offer, however attractive it seems to be. Please don't promise rainbows."

David Laws, former head of policy, warned that offering to restore the link would have ruined the party's economic credibility and would cost taxpayers £100bn by 2050.