At conference this weekend, there was a rare – and welcome – moment of controversy in the hall.
During Ed Davey’s Q&A, journalist Carolyn Quinn asked for a show of hands. Should the Liberal Democrats continue supporting the triple lock pension?
It was close. The triple lock survived the straw poll, but only narrowly.
For a party which proudly introduced the triple lock, that tells us something. There is an appetite among Liberal Democrats for a serious conversation about intergenerational fairness.
We should have it.
The triple lock was the right policy for its time. When Liberal Democrats entered government in 2010, too many pensioners had seen the value of the state pension eroded over decades. Linking annual increases to whichever was highest – earnings, inflation or 2.5% – was rooted in a liberal instinct. Giving people dignity and security in retirement.
It worked.
The question is whether a mechanism designed for Britain in 2010 should continue indefinitely, irrespective of how Britain changes.
Today the state spends around £154 billion a year on the state pension. The Institute for Fiscal Studies estimates that this is now £16 billion higher annually than it would have been without the triple lock. Looking towards 2050, it estimates the additional annual cost of maintaining the lock could plausibly be as high as £40 billion.
That is not an argument for impoverishing pensioners. Nor should we succumb to lazy generational warfare which portrays pensioners as universally wealthy. It is an argument for asking where state support can best deliver fairness in Britain today. I believe the answer is children and families.
The triple lock has achieved something important. It has deliberately increased the state pension faster than earnings over time. But no equivalent promise exists to families bringing up the generation which will ultimately finance tomorrow’s pensions, NHS and social care system. That needs to change.
Liberal Democrats should propose replacing the triple lock with a more sustainable guarantee. Maintaining the state pension’s value against earnings over the long term, while protecting pensioners against periods of high inflation. Pensioners would retain the security of knowing their living standards would not be allowed to collapse. What would disappear is the ratchet under which the pension can repeatedly rise faster than both prices and wages. And we should make an equally clear promise about where the savings go.
First, universal free school meals for every primary school child.
We introduced universal infant free school meals in government and our 2024 manifesto set an ambition of extending free meals to every primary-age child when the public finances allowed. Well, let us create the fiscal room to allow it.
Universal provision is liberalism at its practical best. It gives every child a decent meal, removes stigma, saves working families money and gives children a better chance of arriving in the classroom ready to learn.
Second, we should create an Early Year’s Premium through Child Benefit.
For example, an additional £10 per child per week for children under five would put £520 a year directly into family budgets during some of the most expensive years of raising a child.
There is a wider economic purpose here too. Britain should be a country in which people who want children feel financially able to have them. Housing, childcare and everyday living costs increasingly make starting a family feel like an economic penalty. Government cannot — and certainly should not — tell people how many children to have. But it can stop making starting a family unnecessarily difficult.
Alongside our existing commitments to deliver better childcare and improved parental leave, an Early Year’s Premium could form part of a recognisable Liberal Democrat offer: Britain should be the best country in which to start and raise a family.
None of this means abandoning pensioners. Indeed, reforming the triple lock now may be the best way of creating a state pension settlement which younger workers can genuinely believe will still exist when they retire. The triple lock was introduced to correct an intergenerational injustice. We should be proud that Liberal Democrats did that. But liberalism cannot mean permanently preserving yesterday’s solution after the problem has changed.
Government is about choices. In 2010, one of the great social challenges facing Britain was pensioner insecurity. Today we face another. A generation struggling with the costs of housing, childcare and raising children, while child poverty continues to scar life chances from birth.
The liberal instinct should remain exactly the same. Protect people who need security. Give every child the best possible start in life. And spend public money where it creates the greatest freedom and opportunity.
The triple lock did its job. Now it is time to offer the same security to the next generation.
* Shaun Ennis is the Leader of Trafford Liberal Democrats and a councillor in Timperley Central
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12 Comments
The ‘next generation’ most concerned about this, I suspect, are women in their 50s who have already seen the state pension age pushed back eight years, and are worried what, if anything, will be left by the time they reach it.
And they are also likely to be presently struggling with the cost of living and lack enough time/spare income to much improve their private provision. Let alone any guarantee their present job will last until 68, and very little chance of securing new work if it doesn’t.
“ First, universal free school meals for every primary school child”
So, cut future pension increases that will harm the poorest pensioners most (as their state pension is the bulk of their income) so that the money can be used to save millionaires from having to pay for their children’s meals while they are school.
Really?
Why not start from the basic democratic and liberal premise of fairness?
AI Overview states that some experts estimate that tax revenue could be increased by some 4% to 5%/£50 to £60 billion a year if our tax system were made consistently proressively fair and ceased to favour the wealthy
The UK’s state pension is just over €14 000 a year (approximately £12 000 – not a lot to live on if that’s all you’ve got.) The average for our closest “big” neighbours, Germany , France, Spain and Italy, is between €17 000 and and €19 000 – not a fortune, but better.
Our politicians tend to bang on about our being World Leading: I’d be content if we reached the average and with regard to pensions in my view the triple lock should stay in place until then.
Peter Wrigley is right. How many of those calling for the end of the triple lock are living on £13,00 pa or less? Our state pension is one of the lowest in Europe. (only Greece is worse). The triple lock has dragged the old age pension (which I remind you pensioners have paid for all their working lives) up from totally dreadful to just dreadful.
Is our party seriously going to allow pensioners to fall way behind again?
It would be far more honest to say that pension contributions (or NI) will have to rise 1 or 2% so that we can pay pensioners a half decent pension. There would be savings too because there would be less need to play out supplementary pension to pensioners who haven’t even got the lowly amount of £!3,000, which amounts to £250 a week, whilst the average full time salary is £794 per week after tax.
It would also be possible to ask working people to keep on paying NI until they retire rather than stopping at 60. If people thought they would get a fair pension as a result, I suspect they would be willing to pay this.
Trying to balance the books on the back of poor pensioners is really not on.
There are two relevant measures:
a pensioner specific inflation rate based on a basket of goods that the average pensioner with no other income buys.
average income.
The former would maintain absolute standard of living. The latter would maintain relative standard of living.
You might of course decide that the current level is too low and we need to do better than maintaining it.
While an eventual removal of the triple lock should be considered, there are reasons why that should be delayed in the short term, so w should continue to guarantee its retention for some years ahead. For a variety of valid reasons outside of their own control, some people reaching pensionable age do not have a company or commercial pension on which to fall back, e.g. those who have been disabled and unable to work throughout all or most of their working age lifetime, or those who have been full-time carers for a disabled family member. For such people, the state pension (even augmented by Pension Credit) is usually their only source of income. As mentioned above, for historical reasons this level of income lags significantly below the European (EU) average, and UK state pension rates should continue to be raised under the triple lock until that disparity disappears. There are of course two different levels of state pension – the Old State Pension (pre-April 2016) which people retiring before that date continue to receive, and the New State Pension which has replaced it with a significantly higher payout. Our aim should be to raise all those on the Old State Pension to the levels of the New State Pension as soon as possible. Meanwhile the level of personal allowances under the tax system should be raised in line with the state pension level.
Pensions lag behind other European countries, yes indeed but so does our spending on Defence and protecting this country from annihilation. Without a full and appropriate Defence there would be none of us left to get a pension. Spending on weapons must come first. Why is the party not raising its policy of Defence Bonds to a much higher level?
It’s worth remembering that a pensioner in Germany is paying between 12% and 15% of their pension for health insurance. A UK pensioner on the other hand is exempt from NI contributions regardless of their income.
Because of this, among other factors, a UK pensioner receiving about £12,000 p/a is likely to have more disposable income at the end of the month than a German pensioner on considerably more.
It is notoriously difficult to simply compare a single benefit between countries without taking a large number of other factors into account.
Adam is right. These international comparisons need treating with great care. This is exemplified by the debate regarding the standards of living in North Ireland and the Republic. Academic research based on income suggests the those in the south are better off, but based on spending suggests it’s those in the north.
Moreover so much depends on individual circumstances. Those who bought a home when property prices were affordable in the RoI and SE England do not face the same pressures on their income as younger generations. Moreover they now sit on a comfortable capital gain that in a worse case scenario will pay for health and social care, whereas later generations are faced with spiralling rents and little prospect of building up assets for the future.
It is true that crude international comparisons need to be subject to various adjustments, but all the cavitates in the world will not turn the basic UK pension alone into sufficient to maintain a dignified lifestyle. I still maintain that the triple lock should remain in place until we reach at least the European average for countries of a similar size.
I am 61 so just coming up to retirement and can honestly say that I would be happy to give up one part of the triple lock if it means me getting free care at home if i need it.
My mum had help come in for 1 hour a day for around 6 weeks before she died . For that she had to pay 75 a week . I dont want that for my family if im in that situation. Id rather lose a small part of the triple lock.