Downing Street has suggested that reports claiming the Government’s triple-lock pensions pledge could be ditched or suspended are wide of the mark.
The prime minister’s official spokesman said ministers remained “fully committed” to the state pension increasing in line with inflation, earnings or 2.5 per cent – whichever is higher.
Strong recent growth in earnings and inflation have prompted concerns that sticking to the guarantee will be problematic.
With average earnings data showing a rise of 5.6 per cent, and the Consumer Prices Index (CPI) measure of inflation hitting 2.1 per cent, the process of setting a new state pension for April 2022 is likely to be expensive, with reports the Treasury is facing an added £4 billion pension bill.
The earnings data is artificially high because a year ago wages were depressed with many people being furloughed, and reports have surfaced suggesting the Government is toying with the idea of suspending the triple lock for a year or taking a two-year average to help cut back the spike.
The Sunday Times reported that Treasury officials are said to be examining plans to put any pensions rise on hold for a year to save money.
A former minister has already suggested that the system could be “fudged” by applying the formula over a longer period or by accounting for the effect of the Covid pandemic and the government’s furlough scheme.
Also, Mirror reporter Dan Bloom tweeted: “Very interesting line from a House of Commons Library briefing. Suggests the triple lock on pensions could be kept in name – but ministers change the mathematical measure used to work it out.”
Very interesting line from a House of Commons Library briefing.— Dan Bloom (@danbloom1) June 21, 2021
Suggests the triple lock on pensions could be kept in name – but ministers change the mathematical measure used to work it out.
Therese Coffey at DWP spoke about this last year… https://t.co/rEPgIk0s3r pic.twitter.com/J3NTA3jbTL
Boris Johnson was asked about the triple-lock reports during a visit to a laboratory in Hertfordshire on Monday.
But when asked about the possibility of a one-year suspension of the manifesto pledge, the prime minister’s spokesman said: “We are fully committed to the pensions triple lock.”
Johnson told broadcasters: “I’m reading all sorts of stuff at the moment which I don’t recognise at all about the Government’s plans.”
Business secretary Kwasi Kwarteng told LBC radio that the matter would be for chancellor Rishi Sunak to consider but added: “I don’t think there is any chance he will change it.”
No 10 said a review later this year would determine the “final figures” used for any pensions uprating.
Asked whether the review could give the Treasury “wiggle room”, Mr Johnson’s spokesman added: “We’re just simply making the point that there is significant uncertainty around the trajectory of average earnings and whether there will be the spike that has been forecasted.”
The official denied that hikes in income tax could alternatively be used to pay for the UK’s Covid recovery, following heavy borrowing by the Government during the pandemic.
“On income tax, we’ve been clear that there was a promise made at the election that we would not raise the rate of income tax and we stand by that,” said the Prime Minister’s spokesman.