The Department for Work and Pensions (DWP) is under mounting pressure to reconsider the Triple Lock policy, described by some experts as “terrible” and unsustainable for state pensioners. For years, this popular guarantee has ensured the state pension rises annually by the highest of inflation, average earnings growth, or 2.5%.
This year, the state pension is set to increase by 4.8%, driven by last year’s earnings growth figures. However, the escalating cost of maintaining the Triple Lock has prompted voices from across the political spectrum to call for reform. Former Chancellor Sir Jeremy Hunt and Labour’s Baroness Harman have both hinted that the policy’s long-term viability is in question.
Labour MP Graeme Downie noted a growing willingness among political parties to revisit the policy, emphasizing that “there are no sacred cows” if welfare budgets must be adjusted to fund defense priorities. Sir Charles Bean, former deputy governor of the Bank of England, described the policy as “terrible” and “unsustainable.” Similarly, ex-NATO chief Lord Robertson warned of the difficulties in balancing defense needs with an expanding welfare budget.
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Despite these warnings, a recent poll conducted by Lord Ashcroft indicates six in ten voters currently support the Triple Lock. Sir Charles Bean acknowledged this, saying voters “always like having money spent on them if there’s no price tag attached.” Meanwhile, Reform UK Treasury spokesman Robert Jenrick has pledged the party’s commitment to retaining the policy.
Historically, between 2011/12 and 2023/24, the state pension has increased by inflation six times, by 2.5% four times, and by average earnings three times. By 2023/24, the pension was already approximately 10.9% higher than if it had only followed the Consumer Price Index (CPI) and 10.6% higher than average earnings growth alone.
The extra cost of the Triple Lock policy adds roughly £15 billion annually to public expenditure compared to if it had never been implemented, raising significant questions about its sustainability in the face of competing budgetary demands.