A Labour MP has called for the VAT rise to be deferred, claiming that older people on lower incomes will be left £8 billion worse off once the state pension is linked to earnings next year.

Chancellor George Osborne announced the 2.5% VAT rise in his first Budget, a move that Labour MP John Robertson claims will laden older people with billions of debt until 2015.

Pensions Minister Steve Webb was urged by Mr Robertson at Commons question time to persuade the Chancellor to defer the VAT rise that will be introduced in January 2011.

Mr Robertson, MP for Glasgow North West, said: "That earnings link will not help older people as of January when they start to pay their VAT. It amounts to nearly £8 billion over the life of the Parliament."

He asked Mr Webb: "When are you going to stick by your promise with your party during the general election that you would fight any VAT rise?

"What are you going to do to protect those who through no fault of their own are left with these enormous debts thanks to your Government?"

Mr Webb said: "I am not sure whether you are aware that the Office for Budget Responsibility estimated that since the election the size of the country's structural deficit is £12 billion larger than was thought at the time of the election.

"I don't know where you would have found that £12 billion from.

"In terms of pensions, not only will we restore the earnings link but in April 2011 the full value of the cash increase in the state pension will go through to the poorest pensioners on pension credits."

Find out more about pension credits and Pension Advice from Age UK.

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