Scrap triple lock, senior Labour figures demand in growing revolt

Andy Burnham has been urged by senior Labour members of the House of Lords to “make brave decisions” and scrap the state pension triple lock. The intervention piles more pressure on the Prime Minister over the state of the public finances in the run up to the Budget next month – and casts further doubt on the long term future of the triple lock. It follows reports in The i Paper on Monday that Labour MPs are also privately urging Burnham to ditch the mechanism. Shorts The lock sees pensions rise by the higher of 2.5 per cent, wage growth or inflation each year. But high inflation and wage growth has seen its cost soar. The state pension bill at £146.1bn – nearly half the total welfare bill of £333.7bn. Labour has committed to keep the lock for the duration of this Parliament, which could last until 2029. But the growing criticism from economists and politicians means it could be left out of the next Labour manifesto. The latest round of criticism came during a Lord’s debate in which several members, including Lord John Reid a former Labour Cabinet minister, criticised the lock. Lord Reid , the former Home, Defence and Health Secretary, said the policy must be challenged as part of the government’s response to Britain’s ageing population and that he was “disappointed” that a Lords’ report on Britain’s ageing population had not “more forthrightly considered and challenged” the triple lock. He also backed the argument of economist Lord Jim O’Neill, a key economic advisor to the Prime Minsiter, who has warned that the triple lock is increasingly difficult to justify as the population ages. O’Neill claims that the policy protects pensioners from falls in living standards while placing a growing burden on younger generations through higher taxes and housing costs, and has called for it to be scaled back or replaced. Lord Reid told peers: “I agree entirely with him.” The mounting criticism leaves the Prime Minister facing an increasingly difficult political choice: maintain a manifesto commitment to pensioners or find savings at a time when his government is under pressure to fund defence, tackle youth unemployment and restore confidence in the public finances. Lord Richard Walker, the Iceland Foods executive chairman and the government’s former Cost of Living Champion, also called for change, telling peers that “now is the time to make brave decisions on welfare and, dare I say it, the triple lock”. And Lord Philip Hunt, a health minister under Tony Blair, acknowledged the political pressure building around the policy, saying: “We all know we have to face up to this.” Lord Bryn Davies a pensions specialist, said that simply retaining the triple lock was not enough to create a stable financial system. “What is going to follow the triple lock?” he asked. “Just saying ‘keep the triple lock’ does not satisfy the need to get a stable financial system.” The policy also came under attack from former senior Treasury officials sitting as crossbenchers. Former Cabinet Secretary Lord Andrew Turnbull called it “frankly, idiotic”, while former Treasury permanent secretary Lord Nick Macpherson said “the triple lock will have to go”. Lord Burns, another former Treasury permanent secretary, said the mechanism produced arbitrary and random increases in pension values. The argument has also exposed divisions on the Conservative benches. Lord Christopher Tugendhat called for the triple lock to be scrapped, saying it had been necessary when introduced but had “long since served its purpose”, while former pensions minister Baroness Therese Coffey said she would prefer “some kind of double lock”. But Lord John Redwood defended the existing system, saying abolishing it would be “a great pity” and arguing that the state pension should be treated as an earned entitlement rather than a benefit. The issue has already come under pressure beyond the Lords. The British Chambers of Commerce has called for the pension guarantee to be replaced with inflation-only increases. Burnham has told the i Paper in June that he would keep the triple lock if he became Prime Minister, saying Labour had to honour its manifesto commitment.