Prime Minister Andy Burnham is reportedly planning to end the state pension triple lock, with changes potentially introduced after the next election, according to reports on the future of the annual pension boosts.
The triple lock automatically increases state pension payments each April by whichever is highest of inflation, wage growth or 2.5%. Defence Secretary Wes Streeting has confirmed that the triple lock will remain in place for the remainder of this parliamentary term, but its future beyond the next election is uncertain.
Funding social care
The next election will not be held until at least 2029, as the Prime Minister has ruled out snap elections, taking the government to its full five-year term. According to ITV's Robert Peston, the new PM is looking to fund free social care for the elderly by reforming the triple lock guarantee.
Following an interview with Mr Burnham, he set out that the plans would not be put in place until the next election manifesto, in a bid to avoid breaking former PM Sir Keir Starmer's manifesto pledges.
Potential 'double lock'
The hint appears to be that the triple lock will drop to a 'double lock', a system proposed by the Office for Budget Responsibility, removing the wage growth element so that pensions cannot increase by more than inflation.
Mr Peston posted on X: "He said everyone would contribute to the funding of social care, but that the funding mechanism would be different from that of the NHS. In other words he would not use general taxation to pay for his new national care service. And to state the obvious, if the rate of increase in the state pension becomes less generous - up-rating by inflation perhaps rather than the higher of inflation or earnings, with a floor of 2.5% - this would have an impact both on current pensioners and future ones. All of us would contribute, either now or in the future."
Fiscal resolve
Mr Peston added that the new PM's belief appears to be that watering down the triple lock and handing out free social care to the elderly could be enough of a sweetener. He said the clincher for senior members of the government is that a new free-at-the-point-of-use care service would disproportionately benefit older people, making it reasonable to pay for it by adjusting another part of the state's universal support for them.
Mr Peston also noted that Mr Burnham said he and the Chancellor would show the nation's creditors that they are prepared to take unpopular though rational decisions to slow the growth of the national debt and the public sector's interest bill, with reforming the triple lock being the most symbolically powerful manifestation of that fiscal resolve.
The Institute for Fiscal Studies says that the triple lock makes planning the government's finances difficult because the combination of its three components is difficult to forecast, as is the exact number of recipients with a full National Insurance record claiming the full state pension. Its current estimates for spending on the triple lock by 2050 range from £5 billion to £45 billion per year due to that uncertainty. Sir Steve Webb, the former Pensions Minister who oversaw the introduction of the triple lock, suggested that the policy could be removed once the State Pension reaches a "reasonable" share of average earnings, a system he called the 'double lock'.
