Boris Johnson today broke another Tory manifesto promise by suspending the state pension ‘triple lock’.
Work and Pensions Secretary Therese Coffey confirmed that the pledge – supposed to mean payments rise by the highest out of average earnings, inflation or 2.5 per cent – is being temporarily dropped.
She said the furlough scheme and layoffs last spring had created a ‘statistical anomaly’ in figures for wage rises – putting pensioners ‘unfairly’ on track for an 8 per cent hike from next April.
Instead ministers are switching to a new double lock system – which would cut out the wages element. As a result pensions are likely to rise by around 2.5 per cent depending on the trajectory of inflation.
In a statement to the Commons, Ms Coffey stressed that the suspension was for a single year and the arrangements will be reinstated.
Boris Johnson (left) and Rishi Sunak (right) have agreed to break another manifesto commitment to avoid giving pensioners an 8 per cent rise
Wages have been surging ahead, with total pay up 8.8 per cent in April-June, largely due to the warping effect of the pandemic on figures
Work and Pensions Secretary Therese Coffey confirmed that the pledge – supposed to mean payments rise by the highest out of average earnings, inflation or 2.5 per cent – is being temporarily dropped
The Institute for Fiscal Studies has said pensioners would receive £4 a week more with an 8 per cent increase, compared with a rise in line with underlying earnings growth of 5 per cent.
The think-tank said that giving pensioners a 5 per cent rise would increase public spending by £500million, relative to the March forecast.
But it would cost the Treasury £2.5billion a year less than if it went ahead with an 8 per cent increase.
The Chancellor previously hinted that he would not go ahead with the large rise, saying his decision would be guided by ‘fairness both to pensioners and for taxpayers’.
The ONS has estimated that accounting for the impact of the pandemic, ‘underlying’ earnings growth is far lower at between 3.5 per cent and 4.9 per cent.
The announcement is being pushed out alongside social care reforms, with No10 hoping it will help avoid accusations that young people are unfairly shouldering the burden of extra spending.
But Labour has insisted that the triple lock should stay in place.
