Rishi Sunak, UK chancellor, is facing calls to revisit his decision last year to suspend the “triple lock” on annual state pension increases, adding to pressure on the government over big cost of living increases.
Two former pensions ministers have urged the government to offer help to the most vulnerable, as they struggle to cope with rising energy bills and with inflation expected to rise above 6 per cent.
Senior Conservatives admit the issue is of increasing concern to Tory MPs. “It’s just begun,” said one. “Some people want the triple lock reinstated.” Ministers say they are braced for parliamentary trouble.
Tory MPs are already urging Sunak to take a range of measures to alleviate cost of living pressures, including cutting VAT on energy bills, suspending “green levies” on fuel bills or scrapping planned tax rises in April.
Since 2011, people have received protection for their state pensions under the triple lock, which guaranteed an annual rise based on inflation, average earnings growth, or 2.5 per cent, whichever is the highest. The Conservatives pledged to maintain it in the party’s 2019 general election manifesto.
Under the triple lock, the state pension would have risen in April by more than 8 per cent, thanks to a Covid-related anomaly in average wage growth, surpassing Goldman Sachs’s expectation of 6.8 per cent annual inflation in that month.
But Sunak, under pressure to find savings, has suspended the wage element of the triple lock for one year; instead the state pension will rise by 3.1 per cent in April, based on inflation in September 2021.
Sir Steve Webb, Liberal Democrat pension minister from 2010-2015, said the government should revisit suspension of the triple lock, which benefits 12m state pensioners — many of them Tory voters.
“The government needs to accept that a 3.1 per cent increase doesn’t even deliver its own stated objective of protecting pensioners against increased living costs and think again about the April increase,” said Webb, now a partner with LCP, a firm of actuarial consultants.
“Energy costs in particular form a larger part of the budgets of older people and they will find it extremely difficult to absorb these costs without cutting back on heating or other vital expenditure.”
Baroness Ros Altmann, Conservative pension minister in 2015-2016, this week called on the government to take emergency action to ease inflation pressures on the poorest pensioners, warning that without help the numbers of elderly suffering or dying this winter are likely to rise sharply.
“The government response must include urgent plans to increase Pension Credit take-up and enable pensioners to afford to heat their homes with reduced prices or increased benefits,” she said.
The government said: “We recognise people are facing pressures with the cost of living and we want to ensure pensioners receive all of the support to which they are entitled. We are continuing to encourage those eligible for Pension Credit, and the wide range of other benefits it can provide, to make a claim.”
A spokesperson said the energy price cap, winter fuel payments and a £500m household support fund would help low income households through the winter.