Tory Government could break part of its 'unsustainable' triple lock state pension promise

By Vicky Shaw & Lottie Gibbons & Mike Kelly

Huge changes to state pensions could be made by the Department for Work and Pensions, according to reports.

Mel Stride, chairman of the Treasury Committee, said the state pension trip lock is unsustainable in its current form.

He suggested that the wages measure used to calculate the triple lock should be temporarily suspended - meaning it would be replaced with a double lock.

Read more: Go here for the latest regional affairs and North East politics news

A decision to temporarily introduce a double lock could be announced imminently, reports the Liverpool Echo.

At present, the pensions promise guarantees that the state pension will increase in line with inflation, earnings or 2.5%, whichever is higher.

However, distortions to wages during the coronavirus crisis could mean pensioners receive a rise of as much as 8% - an extra £3bn - while many workers have been dealing with job losses, salary cuts and pay freezes in the tough economy.

Mr Stride said: "Over the last decade, the pensions triple lock has successfully protected the incomes of older people, who often have limited opportunities to increase their earnings.

"However, the triple lock is unsustainable in its current form. A potential almost double-digit percentage rise is unrealistic and unfair, with knock-on effects for the public finances.

"Given that average wage levels have been skewed by the unprecedented events of the past 18 months, the Chancellor should temporarily suspend the wages element of the lock.

"This is a sensible approach which will aid our recovery from the pandemic."

Final decisions on the uprating policy for pensions and welfare benefits are taken by the Work and Pensions Secretary, supported by the Treasury, through an annual uprating review.

Chancellor Rishi Sunak (Stefan Rousseau/PA Wire)

In a letter to the Committee, Chancellor Rishi Sunak said: "I am committed to ensuring that older people are able to live with the dignity and respect they deserve.

"The state pension is the foundation of state support for older people and, as a result of this Government's policies, the full basic state pension in 2021/22 is over £2,050 a year higher in cash terms than in 2010.

"This is against a backdrop of wider state support for pensioners, including winter fuel payments, free eye tests and NHS prescriptions, and free bus passes."

The letter continued: "The Government recognises that there are legitimate concerns about potentially artificially inflated earnings numbers feeding into the uprating of the state pension in '22/23.

"However, the trajectory of average earnings remains uncertain, and it is not yet clear whether there will be a 'spike' as forecasted.

"We will continue to examine the data as it becomes clearer, and we will be guided by the principle that decisions on pensions must be fair to both pensioners and taxpayers."

For a North East politics and regional affairs digest direct to your inbox, go here to sign up to the free Northern Agenda newsletter

What is inkl?

Important stories

See news based on value, not advertising potential. Get the latest news from around the world.

Trusted newsrooms

We bring you reliable news from the world’s most experienced journalists in the most trusted newsrooms.

Ad-free reading

Read without interruptions, distractions or intrusions of privacy.