Pensioners will lose a £16-a-month boost if ministers press ahead with plans to suspend the state pension triple lock, experts said last night.
Chancellor Rishi Sunak is widely expected to break the manifesto commitment to avoid giving pensioners an 8 per cent rise – with an announcement possible this week.
The triple lock guarantees that the state pension will increase in line with inflation, earnings or 2.5 per cent, whichever is higher.
However, due to the coronavirus crisis, a distortion to wages would have seen pensioners’ payments rise by as much as 8 per cent from next April.
To head off this anomaly, the Chancellor is expected to announce a new double lock system – which would cut out the wages element.
Chancellor Rishi Sunak is widely expected to break the manifesto commitment to avoid giving pensioners an 8 per cent rise – with an announcement possible this week
The Institute for Fiscal Studies 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 has 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’.
Labour said it supported increasing taxes for the wealthy to pay for NHS and social care. Shadow Foreign Secretary Lisa Nandy (pictured) echoed calls from TUC general secretary Frances O’Grady, saying it was ‘absolutely right’ that ‘those with the broadest shoulders should take some of the burden’
Reports have suggested he could make an announcement this week – potentially along with social care reforms to avoid accusations that young people are unfairly shouldering the burden of extra spending.
It comes as Labour said it supported increasing taxes for the wealthy to pay for NHS and social care.
Shadow Foreign Secretary Lisa Nandy echoed calls from TUC general secretary Frances O’Grady, saying it was ‘absolutely right’ that ‘those with the broadest shoulders should take some of the burden’.
She added that the Prime Minister’s plan would ‘load the entirety of the cost of social care on to supermarket workers [and] delivery drivers who are already suffering with high childcare costs, high housing costs and who kept us going through the pandemic’.
Speaking to Sky’s Trevor Phillips on Sunday, she added: ‘I think that’s a really difficult ask of a group of people who haven’t done well under this Conservative Government over the last 11 years.’
Age UK’s Caroline Abrahams said temporarily removing the triple lock was a ‘price worth paying’ if it helped ministers reach a deal on social care.
She added: ‘If suspending the triple lock for a single year helps get a Government deal on social care over the line then I believe it’s a price worth paying but only if it really is just a one-off measure and not a sneaky way for ministers to ditch the triple lock altogether.
‘With more than two million pensioners and rising living in poverty there’s a strong case for keeping the triple lock as it is at the moment.
‘But I think older people would understand if they only get a relatively modest state pension increase this year, provided the Government simultaneously announces a bold and effective plan for reforming and refinancing social care.’
A government spokesman said: ‘We will continue to support retired people while ensuring future decisions are fair for both pensioners and taxpayers.’
