Boris Johnson has failed to deny that the government is considering dropping the pensions triple-lock to help pay for the recovery from Covid.
The prime minister was speaking after reports that chancellor Rishi Sunak is considering suspending the measure – under which state pensions rise in line with the highest of prices, average wages or 2.5 per cent – for a year in order to avoid a bumper hike as pay soars in the wake of the pandemic.
And reports today suggested the Treasury are considering cutting the pensions lifetime allowance or tax reliefs or introducing new taxation on employer contributions to bring down the ever-mounting bill.
Asked today whether he was planning to ditch the triple lock, Mr Johnson said: “I read all sorts of stuff at the moment which I don’t recognise at all about the government’s plan.”
Speaking during a visit to a science facility in Hertfordshire, the prime minister added: “What we’re doing as the single most important thing for the economy, and indeed paying for the recovery, is to ensure that we continue cautiously but irreversibly to unlock and get our economy moving again.
“That is the priority of the government.”
The Treasury is understood to be be concerned that distortions to wage data as workers leave furlough could trigger a rise of as much as 8 per cent in pensions under the triple-lock rules, costing as much as £4bn.
Anomalies in wages data pushed the headline growth rate of average UK earnings up to 5.6 per cent in April, with economists forecasting that the rate will rise to about 8 per cent by July, which is the month when the pensions rise is calculated against.
Mr Johnson’s official spokesperson said there had been no change in the system, telling reporters: “We are committed to the triple lock. We made a commitment at the general election and we plan to stick to that commitment.”
But the spokesperson added: “It is important to say that the final figures are still unclear and the uprating takes place in the annual review which takes pace later this year.
“There is some uncertainty about the trajectory of average earnings and whether there will be the spike that’s been forecast.
“Our focus is on ensuring fairness to both pensioners and taxpayers.”
