The Lords will go no further on the triple lock

Posted on November 17, 2021 by henry tapper

We should be grateful to Sir Steve and Baroness Altmann for persisting. The triple lock should not have been broken as it has been and the solution they reached which would have seen this year’s increase at just over 5% was just and affordable.

Some will say that Rishi Sunak has repealed a law in breaking the triple lock But the strict letter of the law does not require an 8% increase in state pensions. The law requires the DWP Secretary of State (Therese Coffey)  to use an estimate for the earnings indexation she sees fit.

This is deliberate – and contrasts with legislation where price indexation is used where the index is clearly specified.

So the legislation would use an increase adjusted for all the anomalies. I fear there is a lot of confusion on this. To me what is essential is for the legislation to retain the wording linking state pension to earnings – or we risk a return to the Thatcher era of price indexation.

The nonsense of the triple lock underpin and ratcheting is a different issue, it is clear it is an albatross around the Chancellor’s and the nation’s neck.

The State Pension is an essential social insurance

The full rate of the new State Pension is currently £179.60 a week – that’s just over £9,350 a year. The PLSA estimate that the minimum a single person needs to live on in retirement is only £12 a week more at £10,900. The triple lock was closing in on parity though I suspect the cost of living will exceed for pensioners will exceed 3.1%

and – assuming the PLSA revalue their retirement living standards, the gap will widen

Since dependency on the single state pension is confined to those who have no other source of income or capital, a real decrease in the state pension is a tax on the poorest – a return to austerity where those with least lost most in terms of lifestyle. This is why Altmann and Webb made their stand.

Ros Altmann has written a powerful blog on this.

I’d urge you to read the blog from the link, but here are the highlights

  • MPs missed an opportunity to restore trust and instead voted to push more pensioners into poverty.   
  • Government reasons to drop earnings protection for State Pensions and Pension Credit do not stand up to scrutiny.   
  • State Pensions would be higher next year if the triple lock had not been applied and only earnings had been used, but pensioners are told they have been protected! 

The DWP , we are told, failed to come up with any better formulation than the Treasury’s. This I find hard to believe. All independent analysis I have read focused on 5% or thereabouts and Therese Coffey is not short of resource.

Falling back , as the Treasury has, on arguments of “intergenerational unfairness” is a cheap and nasty tactic. It is clear that we have a higher dependency ratio that at any time. Britain’s have never lived so long and procreated so little. It is clear that the demands of those over 60 are going to increase, not just for retirement income but for healthcare.

These problems haven’t just been detected, they have been known for a generation. Like other issues of sustainability , they are independent of the pandemic and we should not use the short-term increase in debt on the Government’s balance sheet to claim that the operation of the triple lock is temporarily unaffordable.

So shame on the Government and power to Altmann and Webb and Prem Sikka, who stood against this miserly increase to the state pension.

&

;

Steve Webb
Ros Altmann

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , . Bookmark the permalink.

Leave a Reply