Most National Insurance-based benefits will rise by 5% and income-related benefits by 6.3%, Employment Minister Tony McNulty told MPs today.

Announcing the annual benefits uprating, Mr McNulty said the Government was committed to providing "real support" in the economic downturn.

Tory spokesman Nigel Waterson welcomed the increases but asked why ministers would not restore the earnings link for pensions.

Chancellor Alistair Darling announced the increases to pensions in last month's Pre-Budget Report.

Mr McNulty told MPs the changes would mean from April 2009 the basic state pension will increase by £4.55 a week to £95.25, or £152.30 for couples.

Mr McNulty said: "We recognise that for those who are receiving benefits, we need to uprate the value of this safety net to reflect changes in the cost of living."

Most working age income-related benefits will rise by 6.3%, taking the personal allowance for a single person aged over 25 from £60.50 to £64.30. The amount for a couple will increase from £94.95 to £100.95.

Maternity pay and maternity allowance will increase in line with prices by 5% from £117.18 to £123.06, Mr McNulty said.

Mr McNulty continued: "In April 2009, Incapacity Benefit will be uprated by the same index as the Employment and Support Allowance - the Rossi index instead of the Retail Price Index - in order to prevent rate differences widening over time.

"No Incapacity Benefits customers with age additions will, as we proposed in the Welfare Reform Green Paper, have their rates frozen.

"Instead the cash increase in their overall benefit will be at least half of Rossi, until they are transferred to Employment and Support Allowance.

"The additions will therefore be phased out more gradually than previously planned."

Mr McNulty said no Incapacity Benefits claimants with an age addition would receive less than £95.15 a week.

Turning to pensions, Mr McNulty said the 5% increase came against a "backdrop of falling inflation" and represented a 7% real terms rise since 1997.

He added: "For pensioners on the lowest incomes, from April 2009 we will see the biggest increase in the pension credit guarantee since its introduction in 2003."

This means that "no single pensioner need live on less than £130 a week and no couple on less than £198.45".

Tax and benefit changes meant the poorest third of pensioners were an average of £2,100 a year better off than under the 1997 system, Mr McNulty said.

Mr McNulty said: "All of these measures demonstrate this Government's commitment to supporting pensioners just as we are also committed to increasing the support on offer for those of working age.

"Our new proposals for lone parents and disabled people, for partners and for those facing multiple barriers to work build on the steps we have taken over the last 10 years to bring the advantages of an active, responsive welfare state to all those who can benefit.

"Today's uprating continues our progress towards a fair and inclusive society that offers opportunity and independence for all.

"It reinforces our commitments to tackle poverty and exclusion and ensure security in retirement."

Shadow work and pensions minister Nigel Waterson welcomed the uprating saying: "We support the uprating of benefits.

"Anything that can help hard pressed families and individuals at this difficult time is welcome - especially as this Government's own policies have contributed so much to the economic downturn and to its likely duration and severity."

He asked when the Government intended to restore the link between pensions and earnings and urged ministers to improve take-up of pensioner benefits.

Many pensioners, Mr Waterson warned, were facing "real hardship" due to falling interest rates for savings.

"The Prime Minister may think he is saving the world. It's high time he got around to repairing our broken society."

Mr McNulty dismissed the remarks about Gordon Brown as "absolute nonsense".

He said the link with earnings was broken by the previous Conservative Government and insisted the pension increases announced today were "significantly better than simply establishing the link".

For the Liberal Democrats Paul Rowen also welcomed the uprating but said he was disappointed that the pension link to earnings had not yet been re-established.

"It is the right time now to restore that link," he told the House.

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