Labour urged to ‘call time’ on the triple lock to cut welfare spending – UK Times

Labour has been urged to bring the triple lock state pension policy to an end to save millions in government spending, which could be used to tackle Britain’s youth unemployment crisis.

New research from the influential Resolution Foundation think tank found the state pension is already the single largest driver of higher welfare spending this parliament, set to cost £13.8 billion more by 2029/30 in real terms.

The triple lock guarantee ensures that the state pension increases every year to keep up with rising costs and other financial pressures. The rate increases year-on-year by the highest of inflation, average earnings, or at least 2.5 per cent.

This could be replaced with a “smoothed” earnings link, the Resolution Foundation paper proposes, which would change how the state pension is uprated.

Under the measure, it would increase with earnings growth during most years, or with price inflation if it is higher than this. However, the policy would not then see the payment automatically increased by earnings the following year, but instead stick to inflation until its value returned to the same proportion of average earnings as before.

Such a policy could save £650 million a year by the end of the parliament, the research found, enough to triple the funding of Labour’s “youth guarantee” employment drive.

A recent report by former health secretary Alan Milburn found that Britain’s youth unemployment crisis is costing the country £125bn a year, with the number of young people not in work or education reaching more than 1 million for the first time since 2013.

Ruth Curtice, chief executive of the Resolution Foundation, said: “The pensions triple lock is a terribly designed policy that has proven to be far more expensive than originally planned, far less effective at reducing poverty than many hoped, and risks causing further economic harm if it continues for much longer.

“We cannot afford to keep this policy for another parliament. The government should call time on the triple lock as soon as possible and put the savings from doing so to far better use.”

The triple lock has also failed to reduce poverty despite its “exorbitant” cost, researchers add. Their report points out that pensioner poverty rates fell by 15.8 percentage points in the 15 years before its introduction, but have actually increased by 2.3 points in the 12 years since.

The report comes after a controversial intervention by former Labour prime minister Tony Blair last month, where he included an end to the “unsustainable” triple lock in a wide-ranging list of political recommendations.

A DWP spokesperson said: “Supporting pensioners is a priority and we have committed to the triple lock for the rest of this parliament.

“The Pensions Commission is examining how we can ensure secure retirements for tomorrow’s pensioners, while our newly passed Pension Schemes Act will bring about major reform to the UK pensions system, benefiting millions of workers to the tune of up to £29,000 by the time they retire.”