Former Conservative Leader Calls for Ditching Triple Lock on Pensions
The former Conservative leader William Hague has said it is time to ditch the triple lock on pensions – as figures showed the policy meant the state pension was likely to rise by 8.5% in April.
The Triple Lock Policy
The triple lock policy means that increases in the state pension should be in line with whichever is highest of the average earnings increase, inflation or 2.5%.
Concerns for Tories and Labour
The scale of the likely increase presents questions for both the Tories and Labour. The policy was introduced under the coalition government but has long been an article of Conservative faith when it comes to shoring up an older support base. Hague described it as a “runaway train” that was creating a dangerous social and political situation by denying younger generations a fair stake in the economy.
Challenges for the Treasury
The new figures also potentially present challenges for the Treasury as it considers how to find wriggle room for options such as pre-election tax cuts. There have been reports that figures in the government are mulling over making changes to the lock.
Hague cited a report by the Institute for Fiscal Studies that found that maintaining the triple lock on state pensions could add as much as £45bn a year to the welfare bill by 2050, putting “insurmountable pressure” on the government to increase the minimum retirement age. He wrote in an article for the Times, “A runaway train is a fair analogy because we don’t know where it will end up, or at what speed; it’s nearly going too fast already for the train drivers to slow it down, but if they don’t it will end in disaster.”
Cabinet minister Michelle Donelan later mounted a defense of the lock, stating that it was right to keep the lock because “vulnerable” elderly people were unable to increase their incomes in any other way.
Labour’s deputy leader, Angela Rayner, repeatedly refused during an interview on BBC One to commit to keeping the triple lock on if her party won power. She said that she did not want to make “unfunded spending commitments” without knowing the state the public finances would be in when the election came.
Possible Tax Implications
While pensioners could be set for a bumper state pension increase next April, many more could be dragged into paying tax, experts have said. The earnings figures released by the Office for National Statistics (ONS) indicated that the state pension could leap by 8.5% next April.
The Department for Work and Pensions (DWP) said the government was committed to the lock and, as usual, a statutory annual review of benefits and state pensions would take place in the autumn.