Tory peer Lord John Redwood has argued that scrapping the state pension triple lock saves too little money at too big a political cost, as he questioned why so many claim abolishing it will yield big savings.
Writing in the Daily Express, Lord Redwood said the move will not solve the debt crisis or pay for free social care for all. He noted that those calling for the change are never asked how much it will save, and rarely say what they will replace the triple lock with.
Few savings in the next few years
Lord Redwood said tampering with the triple lock will yield few savings in the next few years and still leave the government struggling to manage its stretched finances. He assumed none of the pension cutters want to end an annual uprating of some sort, as with high inflation a low pension would soon become hopelessly too small.
He suggested they may wish to remove the provision that in a down year with low inflation the pension should not go up by 2.5%, or they may just want to update the pension in line with wages or prices. He said any of these solutions will still leave most of the increases pensioners currently enjoy in place, greatly limiting the savings.
Limited savings from the change
Lord Redwood cited the Government Actuary, who has said that if the triple lock were stopped the savings might reach £2bn by 2030-31. He said if the 2.5% promise were removed and wage, price and inflation stay as now or went up, there would be no savings at all.
He asked why those who want savings ignore the much larger sums to be had by less unpopular policies. He said if the government stopped recruiting new civil servants and started to get back the public sector productivity lost since 2019, they could tackle a £50bn black hole in the accounts.
Other ways to cut the build of debt
Lord Redwood said if the government asked the Bank of England to rein in its forecast average losses of £20bn a year, they could save more. He said if they adopted the Conservative proposals for benefits reform they could reduce costs by £23bn, and if they delayed or deferred carbon capture and storage schemes they could save billions.
He noted that some of these wannabe reformers seem unaware that the state pension is based on people's contributions paid over a lifetime of work, with everyone's National Insurance Contributions paid into the National Insurance Fund, which in turn pays the pensions.
The good news, he said, is the Fund has a large surplus at its 2026 Valuation, and is forecast to have a rising surplus for the next five years whilst paying out the pension with triple lock increases. The government would need to change the law to get the surplus out to spend on other priorities, and those on state pensions see it as an entitlement based on what they have put in.
Lord Redwood said there are many better ways of cutting the excessive build of debt, and cheese paring the triple lock saves too little money at too big a political cost. That is why both Conservatives and Labour promised to keep it in the last election.
