Sunak’s attempt to make a distinction between increases in pensions and wages fuels a sense of political favouritism
The government has got itself into a fine muddle on the triple lock pension guarantee, David Cameron’s gift-cum-bribe to older voters in 2010 that has ricocheted down the years. On the one hand, Boris Johnson and Rishi Sunak argue that awarding inflation-matching pay rises to public sector workers would risk an “inflationary spiral” and so should be avoided. On the other, the chancellor maintains that lifting the state pension by 10% – the figure likely to be produced by the triple lock formula – wouldn’t create inflationary pressures.
The position makes no sense. Income increases, whether delivered via pension payments or pay packets, all contribute to aggregate demand and spending capacity. Sunak’s attempt to make a distinction – “pensions are not an input cost into the cost of producing goods and services we all consume so they don’t add to inflation in the same way,” he said – only fuelled the sense of naked political favouritism. Teachers, to alight on the next bargaining battleground, aren’t manufacturing soap suds either.
