Andy Burnham has announced plans to introduce legislation aimed at abolishing the triple lock on state pensions during the current parliamentary session. This decision comes despite the government’s commitment to maintain the existing guarantee until 2030.
The Prime Minister revealed this policy shift during his conference address, stating that the triple lock—which ensures that state pensions increase by the greater of 2.5%, inflation, or earnings growth—will undergo modifications. The earnings component will be recalibrated to prevent excessive pension hikes during periods of rapid wage increases.
In his address, Burnham reassured that the triple lock would remain effective until 2030, fulfilling Labour’s manifesto pledge to uphold this guarantee until after the next general election. However, accompanying guidance indicates that the government plans to move forward with legislation prior to that deadline, necessitating a vote from MPs on the proposed alterations.
This development means that political parties will need to clarify their positions in their manifestos for the upcoming election, outlining whether they will uphold Labour’s amendments or reverse them should they gain power.
The guidance further suggests that the proposed adjustment to the triple lock could lead to a reduction in state pension expenditure by £15 billion annually by the late 2030s, and potentially by £50 billion by 2050. Nonetheless, the Resolution Foundation think tank expressed skepticism regarding these savings estimates, noting that potential figures could vary significantly, ranging from zero to approximately £24 billion each year, depending on the decade used for modeling.
Ruth Curtice, the think tank’s CEO, commented on the complexities of the situation, stating that while the adjusted triple lock might yield significant savings in uncertain economic conditions, it would have produced negligible savings in the 1990s and 2000s, with the potential for up to £24 billion in the 2010s. She cautioned that if real earnings growth continues to disappoint, even the new protections could prove costly, highlighting the importance of addressing stagnant wages.
The proposed policy has faced backlash from various parties, including the Conservatives, Reform UK, and the Liberal Democrats. Some members within the Tory and Lib Dem ranks have expressed dissatisfaction with their leaders for supporting a policy they deem financially burdensome.
Sharon Graham, General Secretary of Unite, warned that eliminating the pension triple lock to finance social care reforms would be politically detrimental. However, recent polling by YouGov indicates that a majority of voters—48% to 28%—support Burnham’s initiative.
During his speech, Burnham reaffirmed his intention to abolish the pension triple lock, proposing that the resultant savings be directed towards establishing a national care service in England, which would be available without upfront costs. He assured that his reforms would still leave millions of pensioners in a more advantageous position and that they would benefit from the proposed care system, which aims to cover care expenses while excluding accommodation costs.
Additionally, Burnham pledged to exempt lower-income pensioners from income tax during this parliamentary term.
