Brown signals pension increase above inflation

Gordon Brown promised a cash boost for Britain's 10.5 million pensioners last night in an attempt to head off a damaging defeat at next week's Labour Party conference.

Gordon Brown promised a cash boost for Britain's 10.5 million pensioners last night in an attempt to head off a damaging defeat at next week's Labour Party conference.

The Chancellor bowed to pressure from cabinet colleagues, trade unions, Labour MPs and activists by approving a party policy statement saying that all pensioners should share in the nation's rising prosperity.

The statement was the clearest signal yet that the £67.50 a week basic state pension would be raised by more than inflation next year to compensate for the tiny 75p-a-week rise introduced in April.

However, Mr Brown's attempt to avoid rebellion appeared to have failed last night. The GMB general union, which has tabled a motion calling for pensions to be raised in line with earnings rather than prices, dismissed the statement as "too vague".

The unions will press Mr Brown to move further before he addresses the conference on Monday. If he gives ground, they will not press their demands to a vote when delegates debate pensions on Wednesday.

The Chancellor's concessions, made at a meeting of the party's economic policy commission, came after Tony Blair, John Prescott, the Deputy Prime Minister, and Alistair Darling, Secretary of State for Social Security, urged him to compromise. Their intervention mirrored the Cabinet's battle over petrol prices.

Mr Brown announced after the meeting that pensioner couples with an income of less than £150 a week would benefit from a new "pensioner credit" to help those on modest incomes who do not qualify for state benefits. "We may be able to go further than that in future years," he said. However, the Chancellor insisted the Government "cannot go back" to linking the basic pension with earnings.

The policy statement declared that no pensioner should live in poverty and that all old people should benefit from Britain's rising living standards. It added that people who have saved all their lives should not be penalised for their thrift.

The statement committed Labour to a "substantial rise" in the incomes of the poorest pensioners by raising the minimum-income guarantee, which tops up the state pension to £78.45 a week for those with no other source of money. This is likely to be raised to £90 in the next few years and to £100 by the end of the next Parliament.

The Government's problems on the issue are highlighted by an opinion poll published today showing a dramatic slump in Labour's ratings amongst pensioners. The survey by Mori for the charity Help the Aged showed that older voters were turning against the party in even greater numbers than the rest of the population.

The poll put the Tories 10 points ahead of Labour among voters aged 55 and over, compared with a two-point lead among the population in general, and overturning a four-point Labour advantage a month ago.

The poll was seized upon by the Tories. "These figures show a catastrophic loss of confidence in this Government amongst those aged over 54," said David Willetts, the party's social security spokesman.