How do you predict what Labour will do next? Time was when you’d read the earnest pamphlets of ambitious backbenchers, study speeches to think tanks from junior ministers and find out the reading lists of key aides to the Prime Minister. These days, the better predictor of where things are going is that the Government will end up having to do the one thing it has been insisting all along that it won’t.
Chancellor Rachel Reeves, this week, announced she was “protecting” the triple lock on pensions until 2029, promising that the state pension will continue to rise every year in line with inflation, wages or 2.5 per cent.
The triple lock has long been unsustainable and MPs on all sides have long privately acknowledged that. The Office for Budget Responsibility (OBR) estimates it will cost an additional £15.5bn per year than if the state pension had been linked to average earnings.
Ministers know it is unaffordable, but they are even more aware that they cannot afford politically to open yet another front with older voters after they made the winter fuel payment their first misstep in government.
Nevertheless, despite insisting that the triple lock should remain, Reeves has announced other policies that bring its demise closer. It is the equivalent of opining about the importance of staying dry while stabbing holes in your umbrella.
In her own Budget speech, the Chancellor made an argument about salary sacrifice for pensions which could be applied directly to the triple lock, saying: “Salary sacrifice for pensions, which was intended to be a small part of our pension system, is forecast to treble in costs from £2bn to £8bn by 2030.”
She added: ‘This is not sustainable for our public finances, putting pressure on the tax everyone else pays, and so I am introducing a £2,000 cap on salary sacrifice into a pension.”
The triple lock was always intended to be a much bigger part of the pensions system than salary sacrifice, but the sustainability argument remains the same.
A number of senior Tories have been calling for an end to the triple lock for a while, and repeated their arguments in the Commons this week, despite their own front bench remaining ambiguous on the matter. But Labour MPs have started to say in public that while it’s right that Reeves made the announcement she did, the policy remains unsustainable.
If that last sentence makes no sense to you, by the way, that’s because loyal MPs are regularly required to produce word salads when responding to nonsensical policies from their leaders. Of course, it doesn’t make sense to prolong something that you all agree should go – or at least, it doesn’t make sense without the political context.
The political context is not just that pensioners are more than mildly irritated by Labour’s prowess thus far, nor even that the triple lock is popular among voters. It is that Reeves and Sir Keir Starmer seem to be trying to shore up the welfare system more generally, so that they can scare voters with the prospect that a Reform government would put its generosity at risk.
The two-child benefit cap announcement was part of that strategy, copied wholesale from the way former prime minister Gordon Brown tried to make voters fear the Tories would come for their tax credits. Reform has forced Labour to be more generous on welfare, particularly when it comes to disability benefits. But on the triple lock, Nigel Farage’s party hasn’t yet decided its stance.
He has said that he will decide “between now and the next election” whether the triple lock is sustainable. So, maintaining support for it means Labour can suggest that Farage isn’t on the side of pensioners in the way that they are.
That strategy depends on Labour MPs maintaining the word salad, rather than openly disagreeing with their leadership. Key party ginger groups, including the Blue Labour caucus and the Labour Growth Group, have recently discussed the need to admit that it is impossible to maintain the triple lock for much longer, and they are becoming less and less worried about their senior colleagues – or indeed the public – finding out about those discussions.
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The party isn’t actively angry after this week’s Budget, but that doesn’t mean that Reeves has bought their silent compliance until the next election.
The Chancellor knows this as much as she is aware of the inevitable demise of the triple lock. Presumably, even as she punches the holes in her own umbrella, she is hoping that the politician who really suffers in the ensuing downpour is whoever comes next.
And that’s the other way of understanding Labour policymaking – or, indeed, policymaking in politics today more generally. Everyone hopes that someone else will have to face up to the things that their own decisions made glaringly inevitable.
Isabel Hardman is assistant editor of The Spectator magazine
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