Pensioners have gained £900 from the State Pension triple lock while benefits for families with children have lost £1,400 in real terms, it is claimed. The figures have reignited the row over whether Britain can still afford the controversial guarantee.
Triple lock impact on pensioners and families
The triple lock was introduced in 2010 and guarantees the State Pension increases each year by whichever is the highest of inflation, average earnings growth or 2.5%. As a result, the former Conservative pensions minister Lord David Willetts said pensioners have benefited by around £900 above inflation over the past 15 years.
By comparison, he said that benefits for families with children have fallen by around £1,400 below inflation. Lord Willetts, now president of the Resolution Foundation, said it is now time to scrap the triple lock and rebalance the system to support the young.
Debate over the future of the guarantee
He was speaking during a BBC Radio 4 Today Debate on the future of the triple lock hosted by Nick Robinson. It was held against the background of increasing calls from across the political spectrum for the triple lock to be scrapped.
Just this week, the British Chambers of Commerce joined the calls for reform, arguing that money could instead be used to tackle problems facing younger workers. The Government faces an enormous and growing State Pension bill.
Lord Willetts, who was pensions minister when the policy was introduced, argued that the figures showed how welfare spending had increasingly favoured pensioners.
“Of course, there are still poor pensioners. However, if you look at the poorest 10% of families, they are on lower incomes than the poorest 10% of pensioners,” he said.
He said the country had changed dramatically from the days when pensioners were the group most likely to be poor. “In the old days, it was absolutely the case. Old people were poor, and poor people were old,” he said.
But he warned that Britain now faced significant levels of child and family poverty. He said: “What we've been doing for the past 15 years is focusing an inevitably limited benefit budget on pensioners, and the losers, unfortunately, have been families with children.” His conclusion was blunt: “We need to rebalance.”
Defence of the triple lock
But Lord Willetts faced a powerful challenge from another former coalition pensions minister, Sir Steve Webb, who was a Lib-Dem MP and is now a partner at pensions consultancy LCP. During the BBC debate, he fiercely defended the triple lock.
He rejected the argument that Britain simply could not afford decent pensions. “Governments are capable, unlike men, of doing two things at once,” he said.
Sir Steve said Britain spends a smaller proportion of national income on pensions and pensioner benefits than other developed countries, adding: “That's a choice.” He added: “We can afford a decent state pension. We have chosen to prioritise other things.”
He also warned that private pensions were failing to provide enough security for many workers. “One leg is falling over. The private pension bit is falling over at the moment. That's why we need a firm leg,” he said.
The clash is particularly striking because the two men were on the same side of government when the triple lock was introduced. Fifteen years later, they now represent sharply different views of what Britain's pension system should achieve.
Growing State Pension bill
The argument comes as the Government faces an enormous and growing State Pension bill. The State Pension alone is expected to cost around £146billion in 2026/27, while total spending on pensioner benefits is around £169billion.
The bill is expected to keep rising as Britain's population ages and millions more people become eligible for the State Pension. And pensioners are already in line for another increase.
The latest figures suggest earnings growth is likely to determine next April's increase, with the State Pension currently expected to rise by around 4.1% if the relevant earnings figure remains unchanged. That would add roughly £500 a year to the full new State Pension.
Another contributor to the debate, the finance content creator Abi Foster, said young people are seriously struggling with housing costs and student loans. She said people buying homes in the 1990s might have faced prices of around three times their salary, whereas younger buyers today could be looking at homes costing ten times their earnings. She also questioned why younger workers should be expected to pay more tax to support pensioners when they may never enjoy the same benefits.
Former TUC president Gail Cartmail warned against turning the issue into a straightforward battle between generations. She pointed out that many pensioners provide unpaid childcare and care for elderly relatives. She said: “We have a whole army of pensioners who are unpaid carers, and I don't think that's factored as an economic contribution.”
