London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

State pension to rise £4.40 a week next year in smallest possible increase

State pension to rise £4.40 a week next year in smallest possible increase

The state pension is set to rise by £4.40 a week next year, which is the smallest increase possible.

The rise means pensioners on the ‘new’ plan will see a change from £175.20 to £179.60 a week, which is an increase of £228.80 a year. Those on the ‘old’ state pension plan will receive £3.40 more a week.

It comes after the inflation rate rose to 0.5% in September from 0.2% in August, following the end of the popular Eat Out to Help Out scheme.

Jonathan Athow, deputy national statistician at the ONS, said: ‘The official end to the Eat Out to Help Out scheme meant prices for dining out rose during September, partially offsetting the sharp fall in inflation for August.

‘Air fares would normally fall substantially at this time due to the end of the school holidays but with prices subdued this year, as fewer people have been travelling abroad, the price drop has been less significant.

‘Meanwhile, as some consumers look for alternatives to using public transport, there was an increased demand for used cars, which saw their prices rise.’

September’s inflation rate is used to calculate the increase for state pensions the following year.

The current ‘triple-lock rule’ means the rise is based on whichever is higher: earnings growth of the year to July, or 2.5%.


The end of the popular Eat Out to Help Out scheme meant prices for dining out rose during September


Because earnings have been hit hard by the coronavirus pandemic this year and prices creeping up by just 0.5%, this 2.5% figure will be used to set the pension increase in 2021.

This has not yet been confirmed by the Government but an official announcement is expected later.

This is the smallest increase possible under legislation and is the fourth time the 2.5% underpin has kicked in since the triple-lock policy was introduced in 2011. It aims to prevent a state pension freeze.

Tom Selby, senior analyst at AJ Bell, said: ‘With Covid-19 hammering wages and pushing inflation to almost 0%, the value of the state pension triple-lock has never been clearer.

‘If it were not for the policy, pensioners would likely see their state pension frozen next year.

‘As it is, retirees are set to benefit from a 2.5% state pension boost in 2021/22, adding £3.40 a week to the value of the “old” basic-rate state pension and £4.40 a week to the “new” state pension.’

It comes as the UK’s national debt hit a record £2.06 trillion at the end of September, according to new data from the Office for National Statistics.


The rise means pensioners will see the change from £175.20 to £179.60 a week


It pushed borrowing up to 103.5% of gross domestic product after the public sector borrowed around £36.1 billion in September – which is £28.4 billion more than the same month a year ago and the third-highest month of borrowing since records began in 1993.

At the end of September there was £1.741 trillion of central government bonds, or gilts, in circulation to prop up the falling tax take and cover the huge expenditure made on the health crisis.

Central government tax receipts were £37.7 billion in September – which is £6 billion less than in September 2019, with large falls in VAT business rates and corporation tax receipts.

The Treasury has also announced it will scrap a planned multi-year spending review due later this year, and replace it with a one-year review to focus on the impact on the public accounts from the pandemic.

The review will take place by the end of November and focus on supporting jobs, setting department resources and capital budgets and block grants for devolved administrations.

Chancellor of the Exchequer Rishi Sunak said: ‘In the current environment it’s essential that we provide certainty.

‘So we’ll be doing that for departments and all of the nations of the United Kingdom by setting budgets for next year, with a total focus on tackling Covid and delivering our Plan for Jobs.’

Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×