UK Government’s cost-of-living champion urges Labour to cut pensions triple lock

Harry Taylor – PA Political Staff

The UK Government’s cost-of-living champion has called for Labour to cut the triple lock on pensions.

Lord Walker of Broxton, who is executive chairman of Iceland supermarket, told a debate on youth unemployment that the state pension policy was unaffordable and decried inaction by successive governments on the issue.

The Labour peer, who hinted he disagreed with the Government’s approach on business, was appointed to his position in February, after joining the Lords a month earlier. He is a former member of the Conservative Party.

Meanwhile, his party colleague Lord Liddle, who was influential within the party when Labour were in opposition, said the Chancellor Rachel Reeves was wrong to increase national insurance costs for employers.

Both said the issue had impacted on youth unemployment, as peers discussed the subject following a report by former health secretary Alan Milburn a fortnight ago.

The report found that 1.25 million young people could be categorised as not in education, employment or training (Neet) by 2031. In the Lords on Thursday, former education secretary Lord Baker of Dorking said the situation was “deplorable”.

Education minister Baroness Smith of Malvern said the Government was “determined” to fix the issue. She denied national insurance increases had contributed to the problem.

‘Drain’

As Lord Walker urged wider reform to welfare to cut down on worklessness, he said: “Let’s jettison the worn-out stereotype of who it is that constitutes the biggest drain on our benefits system.

“We should have the courage to challenge the pensions triple lock – mathematically unsustainable, politically untouchable, and profoundly unfair. We all know it.”

The pensions triple lock was introduced by the coalition government in 2010 after long-held fears about pensioner poverty.

Since then, the state pension has increased by either earnings, inflation or 2.5%, depending on which figure is higher.

But it has come under recent criticism over costs to the public. The Government had projected it would spend £146.1 billion on it in 2025 and 2026.

Lord Liddle said: “I totally agree with my noble friend Lord Walker that that has to examine the challenge of the aging society and whether we can continue to support the pension triple lock and all the costs of NHS and social care, which if we’re not careful, are producing great generational inequality in Britain, and something has to be done to address that.”

Rise

Conservative peer Lord Willetts, who is president of the Resolution Foundation and was a policy advisor to former prime ministers Margaret Thatcher and John Major, later agreed and said the money saved could be put into the youth guarantee.

He said pensions should instead be moved to rise in line with earnings. It would save £650 million, Lord Willets added.

“What better use of that saving than instead, shifting it towards young people, who could gain from the guarantee,” he said.

The Government’s economic policy also came under fire from both sides of the Lords.

Lord Walker said his own Government had been “slower than (he) imagined” to achieve growth.

He said: “It is only business that creates wealth, jobs and pays tax. I repeat, it is only business that can grow the economy.”

Tory shadow minister Baroness Steadman-Scott said Lord Walker had been “brave” with his speech.

She urged Baroness Smith to “rethink the additional costs you’ve added to business”.

Conservative former employment minister Lord Grayling said he hoped Lord Walker would use his position to “put pressure on the Government”.

Lord Liddle agreed with Lord Walker, and said he agreed with former prime minister Tony Blair’s recent essay that criticised the hike in national insurance.

He said: “The Government made a mistake in putting up national insurance in the way that it did as a way of raising taxes.

“We should have done something else, and particularly the way it was done in terms of lowering the threshold at which the national insurance can be paid of course hit low-paid staff jobs particularly hard.”

Conservative former education and employment secretary Baroness Shephard of Northwold said: “The Government needs all possible co-operation from business and employers. But it is not what they have provided.

“Higher national insurance costs, increased national minimum wage and business rates, new workers’ rights legislation and more regulation – these are disincentives for business stability and expansion.

“Employers are reluctant, unable even, to take on more staff, to provide those vital first job openings for any staff that they may not be able to retain.”

Replying to the debate, Lady Smith said the Government was “determined to meet” the challenge of youth unemployment.

She denied national insurance increases were responsible for the youth unemployment issue.

She said: “I am sure noble lords will recognise… it is not actually the national insurance contribution increases or the national minimum wage, if we look at the way in which both those impact on the labour market, but also the reliefs that are available to employers.

“This is not at the heart of the cause of youth unemployment.”