The Office for Budget Responsibility (OBR) has issued a stark warning that the UK's state pension triple lock is contributing to an 'unsustainable path' for public finances, with government debt projected to grow explosively without intervention. In its Fiscal Risks and Sustainability report released on Tuesday, the OBR highlighted that the triple lock is a major factor behind a projected 9% of GDP increase in primary spending over the next 50 years.
Triple Lock Mechanism Under Scrutiny
Introduced by the Conservative-Lib Dem coalition in 2011, the triple lock guarantees that state pensions rise each year by the highest of wage growth, inflation, or 2.5%. This year, pensioners received a 4.8% increase, adding £575 annually to the full new state pension. However, the OBR warns that if unchanged, state pension spending will climb from 5% to 9% of GDP by 2075-76, with the triple lock accounting for about a third of that rise.
The report states: "State pension spending... is projected to rise from 5 per cent to 9 per cent of GDP over the projection period. This is driven by population ageing and the cost of the triple lock. The triple lock is estimated to account for around a third of this rise by the end of the projection period."
Projected Spending Increases
Under the baseline scenario, total primary spending is forecast to increase from 40% of GDP in 2030-31 to 49% by 2075-76. Health spending is also projected to rise by 8% of GDP. The OBR notes that the triple lock alone drives 1.2% of GDP out of the 3.6% long-term increase in state pension spending. If earnings growth and inflation were more volatile, state pension spending could be 1.5% of GDP higher than the baseline.
Replacing the triple lock with an average earnings uprating would reduce spending by 1.8% of GDP by the end of the projection period, while switching to CPI inflation would cut it by 5.4% of GDP, according to the OBR.
Challenging Fiscal Position
The OBR described the UK's public finances as "in a challenging position relative to history and to other similar countries," noting that government debt has increased by one of the largest shares of GDP among advanced economies over the past two decades. The report warns: "It is not plausible that the UK... could remain on any of the unsustainable paths set out in these scenarios, because they imply that debt will ultimately grow explosively."
The OBR stressed that early action to address these pressures is less costly than late intervention, and that future governments would almost certainly need to adjust tax or spending policies to maintain fiscal sustainability.
Government Commitment to Triple Lock
Despite the warnings, the Labour government has committed to keeping the triple lock for the remainder of the current parliamentary term. Andy Burnham MP, widely expected to become Prime Minister later this month, has also pledged to maintain the policy. In an online Q&A, Burnham responded to a question about abolishing the triple lock by saying: "I appreciate there’s a lot of debate about this but it is important that the commitment in the manifesto stands."
