The British Chambers of Commerce (BCC) is calling for the state pension triple lock to be replaced with inflation-only increases, with the money saved used to fund cuts to employer National Insurance for under-25s. The proposal could save the Treasury £3.3billion over two years, according to coverage of the BCC's plans, and is aimed at tackling Britain's youth employment crisis by making it cheaper for businesses to hire younger workers.
Triple lock under fire ahead of Budget
The intervention puts the controversial pension guarantee firmly in the firing line ahead of Chancellor John Healey's first Budget. The BCC says the change could help tackle Britain's youth employment crisis by making it cheaper for businesses to hire younger workers.
The triple lock currently guarantees that the state pension rises each year by whichever is highest of inflation, average earnings growth or 2.5 per cent. Scrapping it in favour of inflation-only increases would mean pensioners could receive smaller rises in years when wages increase faster than prices.
Business group's proposal
The BCC says its proposal is part of a package of measures designed to reduce the cost of employing people and doing business. The group believes the move could ultimately save almost £10billion in welfare spending as more young people move into work.
Shevaun Haviland, director general of the BCC, said the Government was in a difficult financial position but warned against increasing the tax burden on companies. "We know the government is in a fiscal bind and its choices are limited," she said. "But support for business is not just money out the door, it generates vital economic returns."
Cost pressures on firms
She warned: "Piling more taxes on firms, would be a road to ruin. The quickest way to destroy business confidence." The BCC says domestic policies have increased the cost burden facing a typical small and medium-sized business by more than 70 per cent over the past decade. Around a quarter of that increase has come since the 2024 Budget.
And just 17 per cent of SMEs plan to increase investment this quarter – the lowest level recorded since the pandemic. The business group is also calling for cuts to energy and business rates. It wants the Government to fund 75 per cent of the Renewables Obligation for businesses and lower all business rates multipliers. The BCC is also demanding better support for smaller firms seeking to export.
Pressure on public finances
The triple lock proposal comes as pressure grows on ministers to find savings to repair the public finances while trying to boost economic growth. The BCC is the first major business group to explicitly call for the pensions guarantee to be replaced. The intervention is likely to anger pension campaigners and will raise questions about the Government's commitment to maintaining the triple lock.
The BCC says its proposals would immediately reduce business costs, unlock investment and create stronger economic growth. Ms Haviland said: "We need to see immediate action on helping young people into work, cutting business rates and energy costs, as well as helping to support more SMEs to export." She added: "Taken together, we believe these measures can help light the touch paper for stronger growth."
The BCC is also calling for a longer-term roadmap covering skills, productivity, public investment and tax reform. Ms Haviland said: "Pro-growth choices have never been more urgent." The Chancellor is being urged to "back business, cut costs and deliver growth."
