Sunak signals state pension could rise by almost 8% as he commits to triple lock
Rishi Sunak has signalled that state pensions could go up next year by almost 8% as he committed to maintaining the “triple lock”.
Under the triple lock, the state pension is uprated in April by inflation, wages or 2.5%, whichever is higher.
Wage growth is currently the highest of the three metrics, reaching 7.8% in June compared with the same period 12 months earlier.
The Prime Minister said the Government is “committed to its policy on the triple lock”.
Asked by ITV News during a visit to Leicester on Wednesday whether he was uncomfortable with potentially uprating the state pension by almost 8%, Mr Sunak said: “No, I think the most important thing is that we continue to bring inflation down more generally.
“But while inflation is higher than we would like, I also believe it is right to step in and help people with the pressures that it brings.”
Listing financial support given to the public, including assistance with energy bills and cost-of-living relief payments, the Conservative Party leader said it was “right” that the Government helped the “most vulnerable through a tough time” while tackling inflation.
Mr Sunak has made halving inflation by the end of the year one of his top five priorities ahead of a likely general election in 2024.
He committed to bringing down Consumer Prices Index inflation to around 5.3% by the end of the year.
On Wednesday, the Office for National Statistics (ONS) said CPI was 6.8% in July, down from 7.9% in June.
But rising wages could lead to a jump in inflation as a result of increased spending.
Inflation
While outside of the 2023 time frame set by the Prime Minister for his target, an increase in the state pension could also fuel inflation for similar reasons.
Mr Sunak said pay rises needed to become “sustainable” but said the Government would not “intervene” in private sector salary increases.
He said: “I want people to be paid more, but that means we have to have a growing economy where productivity is rising.
“That is how you have sustainable long-term increases in people’s pay packets.”
The ONS on Tuesday revealed that regular pay growth, which excludes bonuses, reached a record 7.8% compared with a year earlier for the quarter to June.
The base state pension rate is currently worth £203.85 per week.
An increase in line with 7.8% wage growth would lead to a £15.90 weekly rise.
The triple lock is based on average earnings growth measured from May to July each year, meaning it is likely to be figures published next month that could dictate the state pension rise in spring 2024, as long as it is higher than the inflation figure in September.
Steve Webb, a former pensions minister, said it was likely that Chancellor Jeremy Hunt would need to find £2 billion more for pensions than he had anticipated in March, with the spring Budget anticipating a 6.2% hike.
In April, the application of the triple lock saw retirees given a 10.1% increase to match inflation.
Work and Pensions Secretary Mel Stride in May said that the triple lock pension commitment would remain in place until the next election.
But the Cabinet minister said he was not sure whether it would feature in the next Conservative manifesto.
The triple lock was introduced by the Tory-led coalition government in 2010 as a way of ensuring pensioner income did not lose value in real terms by offering state pension increases at least in line with inflation.
It has become seen as an important offer to older voters.
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And UK state pension will still be one of the lowest state pensions in the developed world. 8% of very little is still very little. .
So you think ot should be more?
Oh dear. Having to bribe pensioners now which proves what I hoped would be the case. There will not be enough votes in the racist hate drive alone.
So you think it should be less.
It’s not a bribe. It’s embedded in the current rules. If you want those rules changed vote Tory cos you can rest assured they’ll change them when it suits their purposes. Also remember that when these indicies had a funny turn after Covid there was year where the actual “entitlement” was watered down. As Linda above says that State Pension remains a low level in comparison with other so-called advanced nations. Perhaps you would prefer that all pensions should be privatised at the same time as the NHS is thrown to the wolves. That will end in tears for sure.
Regarding yours and the previous reply. No I DO NOT think it should be less. Quite the opposite and yes, it IS a bribe of a relatively worthless level just to get votes and as for ‘rules’, there aren’t any under the goalpost moving party. That book went to landfill in 2019. My point was ‘Stop the boats’ won’t get them to the finish line so they have to blow smoke up backsides in the hope of fooling sufficient numbers to survive.
But the origin of the “triple lock” was very low inflation which left pensioners with a derisory increase of something like “£1-27. This was a Gordon Brown budget and so the Tory chancellor Osborne came up with a device to ensure the minimum increase would be worth having.
True enough it’s miserable compared with our nearer European countries but it had nothing to do with fairness.