Author Archives: James Hill

In his conference speech this week, Andy Burnham made a brave political decision to reform the triple lock on the state pension.  The reformed triple lock will increase the state pension by either inflation or 2.5% every year. If there is sustained growth in average wages over several years – enough to outpace the inflation and 2.5% locks – then the pension will rise to match that wage growth.

This ensures that every year the state pension will be protected, or increase, in real terms, and it retains its value relative to wages. This is a sensible reform; similar proposals have been put forward by the resolution foundation, and our own peer Tim Leunig, and there is widespread agreement from economists that the unreformed triple lock is financially unsustainable. Under the current triple lock, the state pension can grow faster than both wages and inflation, due to a ratcheting effect where correlated higher inflation and larger wage increases lag each other and lead to compounded state pension increases. And remember, every time the state pension bill increases, this money must come be found from increased taxes, spending cuts or (currently dismal) growth. The triple lock reform removes this ratchet by tracking average wage growth over many years, instead of an annual wage growth lock, saving an estimated £15 billion/year by 2039/40 (though this is hard to predict). This is a large sum of money in the medium and long term and will significantly ease the huge spending pressure the country is facing.

So it was disappointing to see an immediate condemnation of this policy from the party leadership – seemingly without considering the details or merits of what has been proposed. They seem to have jumped into opposition because of a (misguided) belief that the most politically popular option is to oppose any change to the triple lock, now and forever more. The polling around this announcement shows how wrong this assessment is (Lib Dem voters are the most supportive of the reform)!

Our deputy leader Daisy did an interview with Sky News setting out the party’s 3 main problems with the plan, 24 hours after the PM’s speech:

1) The reform doesn’t raise any money in the short term for urgent social care needs

2) It seems like cross party talks have been torpedoed

3) Triple lock “hasn’t done its job yet” in tackling pensioner poverty