A huge increase in the state pension next year could be scrapped because voters will not consider it to be “fair”, the Chancellor has suggested.
The “triple lock” guarantee is set to push up pensions by around 8 per cent – costing taxpayers between £3bn and £4bn – because wages have bounced back sharply from the Covid recession.
Rishi Sunak twice refused to guarantee that the increase would go ahead on that scale next April, when it was pointed out that Universal Credit payments to low-earners are about to be cut.
And he said: “I do recognise people’s concerns on this. I think they are completely legitimate and fair concerns to raise.”
The triple lock – introduced by the coalition government in 2010 – ensures pensions rise by whichever is the highest of earnings growth, inflation or 2.5 per cent.
It has long been criticised for shielding the elderly from any of the post-Crash pain felt by younger generations, pushing up their incomes by 27 per cent in the 15 years to 2019.
That impact is poised to be far greater as earnings grow sharply this year – although workers are no better off in reality, because wages dropped when the pandemic struck.
Downing Street has previously insisted the triple lock will remain in place, but Mr Sunak said the decision, to be taken in the autumn, was “speculation”.
“It’s wrong to make policy based on speculation, we should wait for the actual numbers to be finalised,” the Chancellor told BBC News.
Asked if it was “fair” that pensions could leap by 8 per cent as Universal Credit is cut, Mr Sunak said: “I do recognise people’s concerns on this. I think they are completely legitimate and fair concerns to raise,
“And, when we look at this properly at the appropriate time, your word is the right word – fairness. That will be absolutely driving what we do.
“And we want to make sure that the decisions we make, and the systems we have, are fair both for pensioners and for taxpayers.”
In interviews marking the “success” of his Covid jobs plan, Mr Sunak also suggested strict isolation rules for people alerted by the NHS app will be relaxed after strong criticism.
Hospitality and business leaders have reacted with horror to predictions that millions of contacts of Covid cases will be told to stay at home for 10 days in the weeks to come – as infection rates soar.
The Chancellor said he recognised that “most people’s concerns rest with how the app is working” – rather than being contacted by the test and trace system.
“The health secretary is aware that that accounts for the majority of people who need to isolate, I understand, on the numbers,” Mr Sunak said.
“He’s looking at what the most appropriate, balanced and proportionate approach to isolation is in these circumstances.”
