Government could axe pension triple lock to fill budget black hole

Work and Pensions Minister Laura Trott refused to apologise for the upset the latest threat to 10.1 percent increase is causing.

It comes as experts said the government has limited options for filling the £50 billion black hole in the public finances in the November 17 autumn statement.

The Resolution Foundation said one of the “unpalatable” options would be saving £9 billion by axing the triple lock and keeping down benefits.

More than 25,000 people have now signed the petition organised by the Daily Express and Silver Voices calling for Prime Minister Rishi Sunak to keep the lock in place.

Labour demanded the government showed it was “truly committed” to the funding formula and apologise for “stress and uncertainty” caused by repeated u-turns over its future.

Ms Trott said the state pension was “approximately double” what it was in 2010, when Labour lost power.

“I do understand the uncertainty but we do have to wait for the 17th,” she added.

The Resolution Foundation warns the Office for Budget Responsibility could predict a recession next year and unemployment could also rise by around half a million.

It says there are four options, cutting investment, reducing departmental spending, increasing taxes and keeping down pensions and benefits.

The think tank says that “reneging” on pledges to raise working-age benefits and the State Pension in line with prices next year would save £9 billion but the impact on living standards would be “huge”.

It estimates a low-income working family with two children would lose around £750, and a pensioner £342.

James Smith, research director at the Resolution Foundation, said: “The Government has a little over two weeks to finalise its plans to repair its economic credibility and the sustainability of the public finances.

“While the recent focus has been on conditions improving post-Trussonomics, the central picture remains one of weaker growth, higher borrowing costs and expensive tax cuts that have left a fiscal hole of at least £40 billion to fill.”

The Resolution Foundation report warned the Government faces a struggle to reduce debt proportionally unless “significant further policy action is taken”.

Mr Sunak and Chancellor Jeremy Hunt could “go full circle” on the mini-budget by reinstating the 1.25 percent hike in national insurance, which would raise £15 billion by 2026-27.

Around £2 billion could also be raised by extending the “stealth” freezes in income tax thresholds by a further year to 2026-27.

Mr Smith said that the lesson from history is that public investment projects are likely to face cuts.

“History tells us that this will involve cuts to public investment, which are easy to announce but reduce growth in the longer term.

“Further austerity for public services is also likely, but there are limits to how big these can credibly be, as public services are already facing cuts of £22 billion thanks to high inflation. This reality means that the Autumn Statement is likely to involve tax rises, not just spending cut.”

Dennis Reed, director of Silver Voices, warned holding down pensions would cause the country more economic woes.

He said: “Several think tanks have been nudging the Chancellor towards ending the triple loc but it would be a foolhardy move.

“The more older people are left penniless, the less they have to spend in the economy, which would further drive the country into recession.”

Baroness Altmann, former pensions minister, said ministers should stop the uncertainty over the triple lock immediately.

She said: “The Government must stop messing around with older people’s lives. This is a matter of basic values. The Government must not keep pensioners waiting any longer, no more obfuscation, no more broken promises, no waiting till 17 November. Just a cast-iron commitment to do the right thing, right now.”

Cllr James Jamieson, chairman of the Local Government Association, warned more cuts would leave councils struggling to look at the most vulnerable.

“In the past decade, councils have done more than their fair share of the heavy lifting when it came to putting public finances on a more sustainable footing, having faced a £15 billion real terms reduction to core government funding between 2010 and 2020.

“The Government needs to ensure councils have the funding to meet ongoing pressures and protect the services that will be vital to achieve its ambitions for growth and to produce a more balanced economy, level up communities and help residents through this cost-of-living crisis.

“Without certainty of adequate funding for next year and beyond, and given the funding gaps they face, councils will have no choice but to implement significant cuts to services including to those for the most vulnerable in our societies.”

Sign the petition at: https://www.change.org/triple-lock-crusade