Triple lock reform ‘right answer to difficult question’, says Pat McFadden

He also said the Pensions Commission, a Government-backed body set up to look at retirement outcomes, had been tasked with exploring ways of “further supporting lower-income pensioners”.

Proposed changes to the triple lock were unveiled when Prime Minister Andy Burnham spoke at the Labour Party’s conference in Liverpool last month.

The state pension is currently guaranteed to rise by either average wage growth, consumer price index inflation (CPI) or 2.5%, whichever is highest.

“This year, the full new state pension is rising by £575,” Mr McFadden said.

“It is set to be over £2,000 a year more by the end of this Parliament compared to when we took office in 2024.

“That will take the new state pension to over 30% of average earnings by the end of the Parliament (in 2029) – this is forecast to be a record high.”

Under the proposed, changed model, pensions would rise by the highest of either inflation, 2.5% “or what is required to maintain its record high level against average earning”, the minister added.

The state pension would “continue to rise but not permanently grow as a share of average earnings”, he said.

By making the changes, ministers expect to save £15 billion a year by the end of the next decade, rising to around £50 billion a year by 2050.

These savings would help support a new national care service, which Mr Burnham has said would be “a person-centred, high-quality care service that starts in the home”, with “no care charges paid out of your basic state pension”.

Mr McFadden told MPs: “The cost of inaction, the cost of turning away from this, is more pressure on the NHS, more ambulance call-outs, more A&E admissions, more corridor care and more people stuck in hospital when they don’t have to be – and that is why change is needed.

“Now, the triple lock has, of course, been subject to much debate.

“Economists and commentators have proposed a range of options – as has the party opposite (the Conservatives) over the years – from removing the earnings link to scrapping the triple lock altogether.

“Some have called for the state pension to be means tested but we have rejected these proposals.

“We believe our plan is the right answer to a difficult question that has been ignored for far too long.”

Mr McFadden also said the changes would “end what is known as the ratchet effect, that makes the triple lock consume a greater and greater share of national wealth over time – and which means that reform at some stage was inevitable”.

He said: “We are committed to protecting the poorest pensioners and under our plans, pensioner poverty is set to fall.

“In addition, we’ve asked the Pensions Commission to include suggestions for further supporting lower-income pensioners in their final report to be delivered next year.”

The minister labelled the proposal “a new settlement for pensioners”.

Responding, shadow work and pensions secretary Helen Whately accused the Prime Minister of being “desperate for cash to pay for his new national care service”, adding: “That’s why he’s ditching the triple lock.”

The Conservative frontbencher added: “The savings he’s hoping for will hardly touch the sides. Come the mid 2030s, a national care service is forecast to cost over £18 billion versus potentially £4 billion a year in savings from the triple lock – and that’s extremely uncertain.

“The care service could well cost more.

“Demand does tend to grow for something that’s free but scrapping the triple lock could save less. At the very least, Labour’s policy creates a £15 billion black hole in the public finances.”

Mr McFadden replied: “I have a file as thick as my morning porridge, full of quotes from the Tories saying that the triple lock is unsustainable and will have to be changed.

“They say it in private, they say it before they join the front bench and they say it after they leave it.”