Andy Burnham’s advisers may be lobbying for him to scrap the triple lock on state pensions – but this does not mean he will, at least for now.
The new MP for Makerfield, who is expected to succeed Keir Starmer as prime minister, has been consulting with economists who believe the generous state pensions policy should be axed, according to The Times.
They include Lord Jim O’Neill, the former Goldman Sachs economist, who said he was “trying to convince” Burnham that scrapping the lock could be positive for the bond markets and boost national finances.
The policy – which ensures the state pension rises automatically each year in line with whichever is highest of inflation, wage increases or 2.5 per cent – was introduced in 2010 to reduce pensioner poverty.
But high interest rates and wage growth over recent years have seen a series of bumper boosts, meaning the triple lock has cost around three times more than initial expectations, according to the Office for Budget Responsibility (OBR).
Expected to cost £15.5bn a year by 2030 and with pensions already accounting for nearly half of the £333bn welfare bill, the lock is considered to be unaffordable in the long term, especially with pressure to reduce the benefits bill.
Despite this, Burnham has committed to honouring Labour’s manifesto pledge to keep the policy during this Parliament – effectively until 2029.
The policy faces mounting criticism for being unpredictable and unaffordable – including by the current pensions minister, Torsen Bell, in his former role as CEO of the Resolution Foundation think tank.
But scrapping it is a politically toxic move that could lose a powerful cohort of older voters, which is why almost all other parties have also committed to it.
Labour’s manifesto vowed to keep the triple lock
Labour won the 2024 general election with a manifesto that included a commitment to keeping the triple lock.
Before even becoming PM, Burnham has faced accusations that he does not have a mandate to lead and that he must call a general election.
Reform UK leader Nigel Farage has repeatedly demanded a general election and Starmer loyalist Labour MP Sean Woodcock said questions will be raised over “what mandate we have going forward”.
Meanwhile, a YouGov poll conducted on Tuesday found that almost half of voters believe whoever becomes PM should call an election.
In order to ward off these criticisms, Burnham is likely to stand by the election manifesto that won Labour its landslide victory.
He has already committed to keeping the triple lock
The outgoing mayor of Greater Manchester has already promised to keep the lock untouched, insisting Labour must honour its manifesto promise to millions of pensioners.
Previously speaking to The i Paper, he claimed that tearing up the manifesto commitment would be “very damaging” – defying a growing chorus of voices calling for it to be ditched.
“The manifesto commitment holds” on the triple lock, he said, warning that to “tear up the manifesto commitments on the triple lock” would be “a very damaging thing to do.”
However, Burnham has not commented on what he would do with the state pension beyond 2029, meaning he has not committed to its long-term future.
Scrapping it would alienate older voters
While there have long been murmurings from within Labour, and other parties, that the triple lock is unsustainable, many politicians believe scrapping it would be too politically toxic among older voters – who are those most likely to vote.
Former pensions minister Steve Webb said that although ministers would “love to” ditch it to free up extra money, it is politically risky.
“There are perfectly good fairness arguments, and we should do more for young people,” he said. “But from a crude electoral perspective, there aren’t many votes in taking money away from pensions and spending on young people.”
Many pensioners claim that the state pension is their only source of income, with more than three-quarters of workers now unable to look forward to a “moderate retirement”, according to a new report by Pensions UK.
However, Burnham has suggested other tax breaks for pensions, hinting that the next government should “look at” the growing number of older people being drawn into paying income tax through frozen tax thresholds.
Labour MPs could oppose scrapping it
Burnham has positioned himself as a figure to bring the Labour Party together, recently telling The Guardian he is “about unifying people”.
Infighting between different factions of the Labour Party was detrimental to Starmer’s premiership as more than 100 MPs and ministers turned against him.
Scrapping the triple lock would be controversial and divisive within the Labour Party, which Burnham may want to avoid.
Growing numbers of Labour MPs have called for the policy to be scrapped, including former Cabinet minister Liam Byrne, who said it should be scrapped to lessen the financial burden on young people.
However, many MPs also believe that ditching the annual state pension increase guarantee is too politically toxic for the Labour Government to attempt.
All other political parties (but the Greens) are committed to it
All the major political parties, bar the Greens, are currently committed to keeping the triple lock.
Kemi Badenoch recently defended the Conservatives’ commitment to the triple lock policy in an interview with The i Paper, arguing the basic state pension of £12,500 a year is “very little money” to live on.
Reform has pledged to slash the benefits bill by billions of pounds to offset the cost of keeping the triple lock.
Last year, the party had been considering scrapping the lock after Farage shared concerns about “pensions being unaffordable on a national level”.
The Greens’ manifesto promised to ensure pensions are uprated in line with inflation and keep pace with wage rises, but it did not explicitly pledge to keep the triple lock.
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