PM renews triple-lock pension promise
BORIS Johnson remains committed to guaranteed annual pension hikes despite a fresh warning of soaring costs, Downing Street has said.
The Office for Budget Responsibility (OBR) yesterday forecast the PM’s “triple lock” state pensions promise could cost the Government £3billion a year more than estimated.
The expected rise was based on analysis showing the pension could rocket by up to eight per cent next year if links with wage growth continue during predicted pay inflation. Included in the last Tory election manifesto, the triple lock guarantees the state pension rises in line with inflation, earnings or 2.5 per cent – whichever is higher.
Wage growth has already risen by 5.6 per cent in the three months to April, official data show.
The figure is significantly higher than the 4.6 per cent forecast in March by the OBR.
The watchdog’s report said earnings growth was “almost certain to rise further” before the next state pension increase is calculated, with many experts predicting wage increases will hit 8 per cent.
The OBR said: “If earnings growth in the three months to July period that determines triple-lock uprating for next April was eight per cent, as some expect, that would add around £3billion a year to spending.”
Asked if the Government was reviewing the triple-lock pledge yesterday, the Prime Minister’s spokesman said: “Our commitment to that still stands.
“More broadly on the OBR report, the risks discussed underlined the importance of returning public finances to a more sustainable path over the medium term, which is why we made the difficult choices at the last Budget.”
Separate figures in the OBR report said Chancellor Rishi Sunak could face a £10billion shortfall due to huge pandemic costs. It said the extra health funding pressures could total around £7billion a year.
Other spending needs include £1.25billion a year more for pupils to catch up on education lost during lockdowns and around £2billion extra a year to fill the fares gap left by reduced public transport use.