Sunak should ‘step away’ from pension triple lock says Gauke
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Will it rise by eight percent, amended, or thrown on the scrapheap altogether?
With workers continuing to be tapered away from furlough support as its ultimate deadline at the end of September looms, wage growth has exceeded eight percent in recent months. In normal times this would be a staggering achievement.
But these are not normal times.
The triple lock has been government policy since 2011, since when it has guaranteed state pension growth in line with the highest of inflation, wage growth or 2.5 percent.
This has seen the value of the state pension grow in terms of spending power over the last decade and meant it has been sheltered from the vicissitudes of the global pandemic.
The wage growth that has been observed has been labelled artificial by experts as it reflects wages simply returning to pre-furlough levels rather than actual wage growth.
Rishi Sunak appears stuck between politics and economics (Image: Getty)
However, circumstances such as these were not factored into the calculations of the triple lock, and if it is not suspended or scrapped, the Chancellor faces spending upwards of £8billion extra.
For someone hoping to reduce the UK’s eye-watering deficit of over £300billion, this is an unenviable dilemma.
Margaret Snowdon OBE, chair of the Pension Scams Industry Group, told Express.co.uk exclusively: “We clearly have a problem with perceived fairness. The triple lock was and is a policy to help ensure pensions keep pace with the cost of living.
“It is over-generous when looking at other economic policies and I am sure the Government regrets introducing it.”
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There is a maelstrom of political battles and perceived injustices to be reckoned with by Rishi Sunak and although the current state pension settlement seems cosy for pensioners, recent research has shown that the UK’s is the meanest state pension in the developed world.
Not only does the new full state pension only cover around 22 percent of pre-retirement income, there are hundreds of thousands of people who receive under £100 a week from their state pension.
Many of these are people who lost years of National Insurance contributions due to raising a family which kept them out of the workforce.
Ms Snowdon cautioned the Government: “Care needs to be taken with changes because what seems overly generous today can quickly become the opposite when circumstances change.”
If that were to be the crux of the matter then Rishi Sunak would face enough of a battle as it were, but the decision is ultimately a political one and so subject to political factors.
The triple lock was an integral part of the manifesto Boris Johnson ran on in 2019, winning a historic victory.
The Government needs to care about manifesto promises that got them elected, Ms Snowdon said.
“Trust is easily lost when promises are broken, regardless of the motivation. Lots of money has been spent frivolously on other things delivering poor value and we must not forget that many pensioners are actually poor.”
For Rishi Sunak to continue the triple lock as it stands would be to steer the UK increasingly towards fiscal ruin, but not to do so would risk severing the link between his party and their most loyal core of support; pensioners.
According to YouGov, the Conservatives won 67 percent of the vote among over-70s, a figure which peeled away as the age group in question gets younger until we reach the 18-24 age bracket, only 21 percent of whom voted Conservative.
What is the state pension? (Image: Express.co.uk)
Alienating this demographic of voters is not something that a Conservative Party leader would normally countenance.
Whatever choice the Chancellor makes, it could have broad repercussions on the next election, set to take place in 2024.
It may well be that a way is found to save on the monstrous costs that have been forecast while simultaneously placating pensioners, although that path will be far from an easy one to tread.
One suggestion that has been put forward is to amend the way the triple lock is calculated and do so on a three-year rolling basis, which would take the anomaly of a once-in-a-century pandemic out of the equation.
Alternatively, the Chancellor could simply suspend the triple lock for a year, although such a choice would likely provoke anger and worry that if it can be suspended once, it can be again.