Steve Webb writes… Lib Dems will write the pensions ‘triple lock’ guarantee into law

webb 01For decades, successive Labour and Conservative governments allowed the state pension to decline after Margaret Thatcher broke the ‘earnings link’ in 1980. The nadir of this was in the Labour years, when Gordon Brown increased the state pension by just 75p a week.

I was determined that the Liberal Democrats would do something about this appalling situation. In our manifesto in 2010 we campaigned on a ‘triple lock’ guarantee. This was a commitment that the pension would rise by whichever rating was highest in each year – by earnings, prices or 2.5%.

I am proud that we have used the triple lock in every year of this parliament. This means the state pension is £440 higher per year in 2014-15 than if it had been uprated just by earnings since we were in government.

We are announcing this week that we are serious about having a decent state pension, so we will write the triple lock into law, giving pensioners more certainty that their pension will continue to rise in future. This policy has been agreed by the Lib Dems’ Federal Policy Committee and, while they and conference have the final say, I am keen that we can get out on the doorsteps in the weeks and months ahead and sell our record in this parliament and our promise for the next.

There are good reasons to keep the state pension going up each year. Most people in retirement have a mix of state and private pensions. Private pensions are increasingly not being linked to inflation so it is more important than ever than the state pension is index linked. This will make sure the new state pension remains above the means test, to encourage people to save for their retirement. It is also affordable, alongside the changes we have made on the state pension, including the state pension age. Even with the triple lock, we have still made the system more affordable than the one we inherited.

So when people ask you that inevitable question – what have the Lib Dems done in government? – you can proudly answer them. We have restored a fair increase in the state pension and we are now saying that we would write that commitment into law.

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24 Comments

  • But why a triple lock rather than just an earnings link? Especially when other universal pensioner benefits don’t even rise with inflation (and we want to means-test them too) and when even an earnings link for working age benefits is just a distant dream.

  • Steve Webb has been a ray of sunlight in an ugly DWP era of storms and natural disasters. But he should realise that the disasters Adam succinctly recognises in his comment need to be addressed. To create a society our party can be justly proud of, we need less inequality across age and class divides, as well as buttressing the elderly, who vote!

  • That’s the sort of social policy Lib Dems were voted in for not the Tory nonsense you have supported until now Too Little To Late guys

  • Simon McGrath 29th Jun '14 - 10:13am

    Excellent stuff. But it will make the funding problems even more difficult – has it been costed ?

  • Oh what irony — one of the few decent things to come out of the coalition comes from the man Nick Clegg hates.

    Clegg on Steve Webb:
    “Webb must go,” he said. “He’s a problem. I can’t stand the man. We need a new spokesman. We have to move him. We need someone with good ideas. At the moment, they just don’t add up.”

    https://www.libdemvoice.org/shadow-cabinet-reshuffle-leaked-by-nick-clegg-6514.html

  • For all the Labour-bashing in this article, the fact is that this year’s “triple-locked” state pension increase is LESS than it would have been under the Labour system that the coalition inherited in 2010.

    Under Labour’s rules, pensions would have gone up by 3.2% this year.

    Under Steve Webb’s triple lock, which replaces Labour’s RPI-linked increase with a much less generous CPI-linked increase, pensions have gone up only 2.7%.

    The triple lock is a classic con – give pensioners a smaller increase, but kid them in to thinking they’re getting a bigger increase.

  • Paul in Wokingham 29th Jun '14 - 11:15am

    @Simon McGrath – re. funding. Straws in the wind, but next month Cristobal Montoro will announce details of a bank deposit levy (tax on savings) in Spain. Once the precedent is set (following on from the recent introduction of NIRP on overnight deposits at the ECB and comparable to Dijsselbloem’s failed attempt to include small depositors in the Cyprus “bail-in”) it is easy to see it become the norm.

  • Stephen Donnelly 29th Jun '14 - 11:39am

    I would prefer to see a coherent set of policies rather than individual initiatives. We are left hoping that the Liberal programme has been costed and is coherent.

  • Toby Fenwick 29th Jun '14 - 7:08pm

    The triple lock ensures that a non-means tested benefit increases by 2.5% irrespective of inflation or earnings performance. This, at the time we are capping and cutting working-age benefits, means-testing child benefit, at a time of an ageing population and more cuts to come in the next Parliament in order to eliminate the deficit.

    This is simply bad policy, and we should reject it, and replace it with a double (earnings or inflation) lock, and target the scarce resources on poverty, whether pensioner or non-pensioner.

  • Ian Hurdley 30th Jun '14 - 9:13am

    Toby Fenwick
    The solution is not to drop the triple lock on pensions, but to see it as a first step towards providing adequate financial support to all benefit recipients, and to challenge the popular belief that those who are not in work have chosen not to work.
    I r.ecognise that this immediately raises the question of how this would be paid for. A contribution could come from a simple switch of responsibility for the support of those unemployed as a result of redundancy; let the ex-employer foot the bill for these people, rather than the state. Why should Naff Garments Ltd be able to decide to move production to Asia for cheaper labour, and simply walk away from their UK workforce at no cost? Let the company pay the benefit until the employee finds a new job, or for three years, whichever comes sooner. It might also help to keep more jobs in the UK.

  • It would be nice to see at least one major party craft policy that isn’t inspired a mortal fear of offending the ‘grey vote’.

  • @Ian Hurdley 30th Jun ’14 – 9:13am
    Tony Fenwick is right, the third lock – the guaranteed increase of 2.5% pa regardless of inflation or earnings is the killer, unless you are only guaranteeing the fixed increase for a short period until such time as pensions reach parity with the living wage.

    As for your idea of getting the employer to pay, please explain how this would work with employer’s who cease trading; a relatively common event.

  • Kevin White 30th Jun '14 - 3:41pm

    I still haven’t forgiven him for eulogising about the wonders of the Bedroom Tax but fair dos at least he seems to respect the Party’s policy making process.

  • David Allen 30th Jun '14 - 7:46pm

    If all else fails, bribe the electorate with its own money – oh, and stuff the young, they don’t vote.

  • George Morley 30th Jun '14 - 8:00pm

    We want to really believe in what the Pensions Minister Steve Webb says when he says : “There are good reasons to keep the state pension going up each year. Most people in retirement have a mix of state and private pensions. Private pensions are increasingly not being linked to inflation so it is more important than ever than the state pension is index linked”
    If this is his true belief then why does he freeze the ex-par pensioners who qualify for the indexed pension in the very same way as everyone who get the indexation ?.
    This is a serious question and an answer by the moderator or better still Steve Webb himself would be appropriate.
    Either he is just saying this ( it is more important than ever than the state pension is index linked ) and not meaning it or he believes it and is not willing to do it which really makes it a lie.
    Moderator – please clarify what the Minister really means. Thank you.

  • @Toby Fenwick

    Your argument would hold water except most bodies do accept that inflation is not a real figure for low paid, even 2.5% lock is still less than cost of living

    I don’t disagree working age benefits need protection but the key word is working, age pensioners are past working age and up rate of pension is how they fund living costs

    Allan

  • Stuart says “For all the Labour-bashing in this article,” I don’t quite think so.

    It is not Labour bashing to merely point out, entirely accurately, their past record.

    I expect you might also think pointing out that the Labour Government from 1997 to 2010 (with the exception of just April 2010) had a top tax margianal income tax rate of 40 per cent (compared to the present 45 per cent) is also some offensive form of Labour bashing.

    Facts matter and pointing them out is exactly what Lib Dem Voice should be doing.

  • Jane Davies 1st Jul '14 - 2:17am

    To George Morley regarding the frozen pensions, here is Webbs opinion on this subject…..

    Steve Webb. 18 March 2004. Pension bill debate. Hansard,

    “The moral claim rests on the fact that we have a contributory pension system. We ask people to make contributions all their life to accrue an entitlement. Why should that accrued entitlement vary according to where they choose to live? That does not sit well with the idea of a contributory system.”

    On becoming pensions minister Webb has done nothing about the plight of the 4% who are victims of this blatant discrimination who are denied their rightful cost of living increases just because of where they live in retirement (retire to the USA and you get the annual increases, retire to Canada, a Commonwealth country, no less, and you get nothing, EVER) and to show what a hypocrite he is he has included Clause 20, which freezes the state pensions of less than half expats, in the new pensions bill! Credibility rating? Nil.

  • George Morley 1st Jul '14 - 4:24am

    On 4th July 2013 during the Public Bill Committee debating clause 20 that Jane Davies kindly mentioned, Steve Webb said : ” Yes, I believe that an organisation called Oxford Economics was paid by the International Consortium of British Pensioners and, interestingly enough, came up with a report that the ICBP felt supported its case. I read the report in full, and it makes some pretty heroic assumptions about future behaviour—there is some polling and so on—and to call it highly speculative would be charitable”.
    This offhand remark was in response to a submission by the ICBP mentioned and you can detect the manner of Mr Webb when he says ” Yes, I believe that an organisation called Oxford Economics” and then says “. I read the report in full, ” So he knew very well that O E had made the report.
    He even mentioned someone scratching his head during what should have been a serious debate.
    With that kind of treatment it is a wonder that anything is dealt with in a proper, fair and just way.
    So we come up with a less than complimentary opinion of the Pensions Minister and you can understand why pensioners take a dim view of this negativity when their very life is threatened because of the theft of their rightful pension indexation which is done without any justification.
    Justify it if you can and publish the reason. The pensioners affected will be very interested to read it.
    If you would like more ammunition then please let me know.
    Thank you.

  • Jane Davies 1st Jul '14 - 4:49am

    The Oxford Economics report said that each expat pensioner saves the UK economy around £3,700 a year, multiply that by 1.1 million, that’s how many expat pensioners there are ,and that adds up to a few million. I have heard that pensioners who live abroad save the UK 2 Billion a year but I’m no good at math but I’m sure Webb can work it out. But he just dismisses these figures with a wave of his hand. Another reason this man has no credibility.

  • Ian Hurdley 1st Jul '14 - 7:53am

    Roland
    Clearly where redundancy occurs because the company failed the state would have to continue to foot the bill for JSA and the like. However, many redundancies are the consequence of a company choosing to re,Duce costs by shedding labour which, apart from statutory redundancy pay, they can do at no cost. I am suggesting that in this situation there should be a cost to the company, the cost of maintaining the ex-employee at the JSA rate for a reasonable period of time. I would envisage this as a means of encouraging companies not simply to plump for the cheap option, but to consider all cost-saving avenues, whilst at the same time diverting some of the costs of supporting unemployed people away from the taxpayer.
    As to the 2.5% guarantee! I am perfectly happy to see that lapse when pensions are restored to the level they would have been had the link to earnings not been severed. I would simply like to see us looking at ways in which the lock (double or triple) could be applied to all benefits. let’s level up, not down.

  • Andy Robertson-Fox 1st Jul '14 - 8:14am

    George Morley and Jane Davies have clearly outlined Steve Webb’s continued attack on some members of the most vulnerable of our scociety – the frozen pensioner. It is a policy that Webb himself has described as illogical and irrational and as far back as 1993, in its policy paper, the Lib Dems stated “This discrimination is inexcusable. Lib Dems would ensure that non resident pensioners get the same up rating as resident pensioners”.

    Webb and the Lib Dems were presented wıth the golden opportunity to stand by their word when he was appointed the Pensions Minister and, four and a half years later, he has not only reneged on both his and the party’s commıtment he has actually condoned the discrimination in the iniquitous Clause 20 of the new Pensions (Reform) Act .

    George Morley has drawn attention to the naive dismissal that Webb made of the well researched and surveyed report by Oxford Economics which incidently, if I may quote, ” Is the world leader in global forecasting and qualitive analysis for business and government and the most trusted resource for decision makers seeking independent thinking and evidence based on research ”

    Steve Webb admitted that his department had conducted no similar research or surveys and, in point of fact had produced no evıdence on the issue, whatsoever. In truth it was actually his own unsubstantiated opinions that “made heroic assumptions about future behaviour…. and to call it speculatıve would be highly charitable”
    Add to this the scrappıng of the wıdowed spouse’s pensıon based on her late partner’s NI contrıbutıons whıch, for many both at home and oversea, has torpedoed theır retırement plans and budgettıng plans .

    Perhaps then, when asked what have the Lib Dems done in government ? – you can proudly answer them. We have broken our promise to abolish pension freezing and continue with our policy of discriminating against pensioners.

  • @simon
    I don’t have a problem with Lib Dems Labour-bashing. What I do have a problem with is an article which keeps claiming the Lib Dems have introduced a more generous system than existed under Labour, when in fact the pension increase this year is LESS than it would have been under Labour’s system.

    I agree with you that facts matter – which is why I’m pointing out the above fact.

  • @Stuart

    Have you considered labour made a fantastic 25p increase one year 2.5% sounds very good

    Generally I do wish that part of the contract in pensions would be that all from birth to death made contribution for the NHS how I would like to see NIS merged with income tax and the heating allowance and bus passes paid in with state pension instead of lump sums.

    I have no idea how ex pats may feel about the freeze on increase as I do not know if that was in place when they moved from the UK however when you get a pension abroad is it not the case you pay no VAT or fuel taxes and the like. The money a pensioner spends here means lots goes back to the exchequer why should the expat be exempt is it not a little like having your money in off shore accounts

    As far as I am concerned steve made one error calling it single tier

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