The Resolution Foundation, a think tank with close ties to the Labour Party, has called for the scrapping of the triple lock on state pensions, arguing that the guarantee has become unaffordable. The triple lock ensures that the state pension rises each year by the highest of inflation, wage growth, or 2.5%. The foundation proposes replacing it with a less generous earnings-based formula, a move that has also been echoed by former Conservative chancellor Jeremy Hunt.
Fiscal Crisis and the Triple Lock
The Resolution Foundation warns that Britain faces a £330 billion-a-year fiscal crisis, driven by weak economic growth, an ageing population, and rising ill-health. According to its report, maintaining the triple lock will cost an extra £12.6 billion in 2026-27 compared with increasing pensions in line with average earnings. The foundation argues that a "smoothed earnings link" would protect pensioners while avoiding the ratchet effect that pushes pension spending higher.
Simon Pittaway, senior economist at the Resolution Foundation, said: "Britain has been hit by a triple whammy of weak growth, rising ill-health and an ageing population over the past 20 years. Collectively these three hits are costing £330 billion a year and are being paid for by more borrowing, the highest tax burden in 75 years, and huge cuts to public services."
Political Sensitivity and Labour's Position
The report comes at a politically sensitive time, with Labour repeatedly insisting it remains committed to the triple lock despite growing concern over long-term costs. The Resolution Foundation has long been influential within Labour circles; former chief executive Torsten Bell left to become a Labour MP and now serves as a Treasury minister. The foundation's work has frequently shaped economic policy debate.
Broader Fiscal Challenges
The report paints a bleak picture of Britain's finances, noting that weaker economic growth since 2007 has reduced annual tax revenues by around £240 billion, while an ageing population and worsening health have added another £90 billion. Governments have filled the gap through higher taxes, cuts to public services, and rising borrowing. The tax burden is at its highest level in 75 years, adding around £90 billion in extra annual tax receipts since 2007-08, while day-to-day spending on public services is almost £140 billion below pre-crisis trends. Public sector net debt has almost trebled.
Additional Pressures: Electric Vehicles and Energy Prices
The foundation also warns that the rapid growth of electric vehicles will shrink fuel duty revenues, which raised £24 billion last year. The government will need to go further than reforms already announced to replace this lost income. Additionally, higher energy prices linked to conflict in the Middle East may have reduced the Chancellor's fiscal headroom from £23.6 billion at the Spring Forecast to around £6 billion, leaving little capacity for extra spending without tax rises or cuts elsewhere.
Need for Sustainable Public Finances
The report argues for greater investment in public services to improve productivity, warning that under-investment is storing up bigger problems. Pittaway added: "An incoming PM and Chancellor offer the perfect opportunity to start afresh. But they will need to level with the public that popular policies like the triple lock ratchet are simply unaffordable. Sounder public finances will also require honesty about the limits of what the state can do, and that everyone needs to pay their part through a more efficient, broad-based tax system."
