Barley a week ago, fresh from his first audience with the King at Buckingham Palace, Rishi Sunak stood in Downing Street and forewarned the nation that there were “difficult decisions to come”. The policies of his predecessor, he told us, were “Not borne of ill will or bad intentions” but were “mistakes nonetheless”. The new prime minister said he would bring “compassion to the challenges we face today” and that action by his government, as during the pandemic, would “protect people and businesses”. Whether he can live up to that test remains to be seen.
There are mutterings around Westminster that the Chancellor Jeremy Hunt (yes, he is still the Chancellor) is pondering whether to scrap the pensions triple lock, a move that would deliver real term pay cuts for millions of pensioners but would in turn save the Treasury coffers billions. Notwithstanding the fact the triple lock commitment was a Conservative policy introduced under the Coalition, the maintaining of it was solidified in the 2019 election manifesto. It would be wrong to scrap the commitment.
The triple lock ensures pensions rise by 2.5 per cent, the rate of average wage growth, or by the rate of consumer inflation – whichever is higher. The policy ensures dignity for pensioners in retirement. Folk who’ve worked their entire lives, paid their taxes and played their part deserve to be reassured in the knowledge that their most basic income will be protected.
Estimates suggest maintaining the triple lock would cost an additional £5 billion next year, as double-digit inflation continues to soar. It is understandable therefore why the chancellor would be considering withdrawing the commitment, given the headache he has in trying to plug a £50 billion hole in the public finances.
However, it must be borne in mind that pensions in the United Kingdom are among some of the least generous in Europe as it stands. The average weekly pension in Britain for a single person is £182.60. This is dwarfed by the Irish average of £210, The Netherlands at £237 and Denmark which affords its retirees an impressive £360. Maintaining our triple lock uplift surely must be the least we can do.
If one is to be cynical then increasing pensions may also prove better politically for the prime minister and his chancellor. According to YouGov, 67 per cent of those aged 70 and over voted Conservative at the last general election, compared with 14 per cent who sided with Labour. Cutting pensions in real terms is a sure enough simple way to push your biggest group of supporters to vote for your opponents. After all, Labour has pledged to maintain the triple lock.
Withdrawing this safety net would not only be foolish and insensitive but wholly unnecessary. Liz Truss moved too far and too fast in her ambition for a low tax, high growth economy. In doing so she spooked the markets and crashed the pound. Rishi Sunak seems willing to move too far in the other direction, with tax rises and spending cuts that the Bank of England predict will result in a two-year recession and double the unemployment of today. The chancellor was successful in stabilising the markets and reversing Kwarteng’s tax cuts, and finding efficiencies within government will no doubt offer additional relief. But it seems foolhardy to withdraw vital support from pensioners and further perpetuate the recession as well.
When he became prime minister, Rishi Sunak spoke of his mandate, claiming “the heart of that mandate is our manifesto”. Our ambition must not be limited to Britain being the best place to work and live in the world, but we must become the greatest place to retire in the world. Honouring the 2019 manifesto and preserving the triple lock would be the best place to start.
