Backlash forces Truss to keep pensions lock
LIZ Truss abandoned plans to axe the pension ‘triple lock’ yesterday after the idea was branded political suicide.
In yet another dramatic U-turn, the Prime Minister confirmed that the state pension will rise in line with inflation, less than 24 hours after Downing Street and new Chancellor Jeremy Hunt warned it could be squeezed.
She told MPs: ‘We’ve been clear in our manifesto that we will maintain the triple lock and I’m completely committed to it – so is the Chancellor.’
But she declined to give the same guarantee for benefit payments, which could now be squeezed.
The move means that the new state pension will rise by 10.1 per cent, or £972.40 a year. The decision followed a ferocious backlash from Tory MPs and charities.
Downing Street said the PM held emer
‘Undermines the basis of the welfare state’
gency talks with Mr Hunt yesterday morning to agree that the pension triple lock would be protected in the Budget this month, when the Chancellor is expected to unveil £40billion in spending cuts and tax rises.
The move was the second U-turn on spending in two days. On Monday, the PM moved to guarantee her pledge to raise defence spending to 3 per cent of GDP by 2030 after Armed Forces minister James Heappey threatened to resign if it was broken.
Earlier, the former Tory pensions minister Ros Altmann warned that falling to raise pensions in line with inflation would damage ‘mental wellbeing, causing huge anguish, and undermines the whole basis of our welfare state social contract, where people have paid national insurance for decades to provide their pensions in later life’.
The peer added: ‘Pensioners cannot be abandoned because we have a short-term problem. Either we have a welfare state or we don’t.’ Sir Steve Webb, who oversaw the introduction of the triple lock during the Coalition government, warned that ditching it would be ‘political suicide’.
A string of Tory MPs also warned they would vote against the change. Nigel Mills said the idea of not keeping to the triple lock was ‘ridiculous’ and warned it could cost the party at the next General Election given that many older people vote Tory. Former minister Maria Caulfield said: ‘Pensioners should not be paying the price for the cost of living crisis whether caused by the war in Ukraine or mini-budgets.’
The triple lock, introduced in 2010, guarantees that the state pension will rise in line with either inflation, earnings or 2.5 per cent, whichever is the highest.
It was suspended this year in the wake of the pandemic and was due to return next year. During the Tory leadership contest, Miss Truss confirmed she would restore the policy, saying: ‘I’m fully committed to the triple lock.’
But Mr Hunt had considered axing it as he scrambled to fill a £40billion black hole in the public finances ahead of the Budget statement on Halloween.
Treasury officials were looking at raising the state pension in line with earnings, which would have seen it increase by 5.5 per cent rather than 10.1 per cent.
The institute for Fiscal Studies estimated it would have saved the taxpayer £4.5billion a year. But it would have cost pensioners £442 a year at a time of soaring prices.
Mr Hunt is considering raising taxes by a further £20billion, on top of the £32billion of changes that were unveiled on Monday.