Scrapping triple lock may be ‘irresistible’ for Chancellor

THE triple lock on the state pension is likely to be scrapped if the UK sees a period of negative inflation, a former pensions minister has warned.

Rishi Sunak will find reviewing the costly pledge “irresistible”, said Sir Steve Webb, the former pensions minister in the coalition government that introduced it.

The triple lock guarantees that the pension will rise annually by a minimum of either 2.5 per cent, the rate of inflation or average earnings growth, whichever is largest. The Conservative Party manifesto included a pledge not to scrap it.

If the UK goes through a period of deflation – when inflation turns negative and overall prices fall – the Government is likely to review the pledge, said Sir Steve, who is now a partner at LCP, the pension consultants.

Modelling by LCP forecasts that inflation may turn negative in September unless the economy goes through a “strong recovery” before then.

Last month, a leaked Treasury document, seen by The Daily Telegraph, showed officials had told the Chancellor “reforming” the pledge could produce savings of about £8billion a year.

Sir Steve said options could include freezing pensions or introducing a “modified” triple lock, perhaps with a lower floor of 1 per cent or 1.5 per cent.

Inflation was 0.8 per cent in April, down from 1.5 per cent in March, according to the Consumer Prices Index.

Sir Steve said: “The Chancellor is likely to be looking for the best time politically to make sure that the pensioner population contributes to restoring the public finances … he may find the temptation to tackle the triple lock to be irresistible.”

Meanwhile, Mr Sunak said there was “no point” cutting VAT rates before the economy had a chance to reopen, after Alistair Darling, the former Labour chancellor, had called for a temporary cut to stimulate the economy.