State pension triple lock future in doubt as Labour MPs ‘plot axe’ | Personal Finance | Finance
Labour MPs have called for the triple lock to be replaced by an alternative scheme (Image: Getty)
Labour MPs are reportedly considering axing the triple lock in a bid to move away from “unaffordable long-term” rate increases. Under the triple lock, the state pension increases every April in line with whichever is the highest of total earnings growth from May to July of the previous year, Consumer Prices Index (CPI) inflation or 2.5%.
But a growing number of MPs are calling for the guarantee to be scrapped after warnings that high inflation could make the state pension unaffordable in the near future, according to reports. The Office for Budget Responsibility (OBR) warned last year that the triple lock is now projected to be three times more expensive by the end of the decade than initially forecast, with costs set to reach £15.5billion a year by 2030.
Among the parliamentarians who have been vocal about their opposition is former cabinet minister Liam Byrne, who called for “a gradual move from the triple lock’s ratchet effect toward a more stable uprating mechanism” in an essay for the centre-right think-tank Bright Blue. Former Prime Minister Tony Blair has also warned that the guarantee is “unaffordable long term” and a raft of backbenchers have been engaged in “private discussions about how to phase it out”, according to the i Paper.
Critics have described the annual state pension increase as ‘unaffordable in the long term’ (Image: Getty)
Graeme Downie, MP for Dunfermline and Dollar, said: “The triple lock costs tens of billions of pounds more than it was expected to cost, yet we still have pensioners living in poverty, which tells you that the current system isn’t working, and it’s costing too much money.
“Why not come up with a way that both supports pensioners in poverty, but also uses that money more efficiently to shift to things like defence spending, and also to support the next generation as well?”
Labour pledged to keep the triple lock in place in its General Election manifesto, but senior party figures were critical in opposition, including pensions minister Torsten Bell, who once described it as “silly”.
A report by the Tony Blair Institute (TBI) said earlier this month that the state pension is “outdated, increasingly unaffordable, and too rigid for the way people live and work”.
It argued that a new “lifespan fund” should be established instead, providing a flexible model that builds entitlement through activities including work, caring and studying.
Former deputy Labour leader Harriet Harman also suggested the guarantee be means-tested in April in a bid to boost defence funding.
But Caroline Abrahams, charity director at Age UK, argued for the triple lock to remain in place at least into the next parliament, warning that the extra money it delivers “makes a meaningful difference to many lives”.
“In new polling, three in 10 pensioners say they are struggling financially – even before the worrying rise in energy prices,” she said. “Going forward, we need a national debate to determine the purpose and appropriate value of the state pension as, at present, it is set too low to provide those reliant on it with a decent standard of living throughout their later lives.”
A spokesperson for the Department for Work and Pensions (DWP) said: “Supporting pensioners is a priority and our commitment to the Triple Lock for the rest of this Parliament means millions of pensioners will see their yearly State Pension rise by up to £2,100.”
