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The Triple Lock – Safe For Now, But Still Work To Do

Many NFOP members will have breathed a sigh of relief at last week’s confirmation that the government will maintain the triple lock on the state pension in 2021-22. If rumours are to be believed, this was the result of intervention by the Prime Minister, with the Chancellor, Rishi Sunak, reportedly keen to suspend or amend the Triple Lock for a period of years in a bid to ease budgetary pressures and address the high level of public borrowing necessitated by Covid 19. Inevitably, talk of a difference between numbers 10 and 11 Downing Street was downplayed, with a Downing Street source disclosing that “there isn’t a lot of difference between the Prime Minister and the Chancellor on this”. What is indisputable however is that over the past few months, the merits and viability of the triple lock have been the subject of debate.

Whilst we celebrate the fact that the triple lock is secure for another year at least, we must not relax our guard, because this is a race that is not yet fully run. We can expect opponents of the triple lock to redouble their efforts in arguing for it’s removal on grounds that it has become too expensive to operate, that it is a source of intergenerational unfairness and as a vehicle which was developed to close the gap between average earnings and the state pension, it has served its purpose. It is likely that this debate will continue and indeed gather momentum in the months ahead. Public finances will be under even greater pressure as we enter the winter months, particularly in the area of health and social care. As early as July, Councils announced that without a £6bn additional funding injection, they could be forced to make cuts in their social care provision as we enter Autumn and a period when health and social care is traditionally under severe pressure. Add to this, expected largescale redundancies in the wake of the withdrawal of the furlough scheme at the end of October and we could be facing a ‘perfect storm’ of public debt and borrowing, with a Government under enormous pressure to find savings from somewhere. It has been estimated that scrapping or amending the triple lock would save the Government around £8bn per year. This is relatively ‘small change’ in the big picture but nevertheless it will feature prominently as part of the argument for change or reform of the triple lock.

It is important not to present this as a simplistic case of protecting what older people have at all costs. There is much more at stake here. Younger people today are the pensioners of tomorrow. The vast majority will not have DB / Final Salary pension schemes to support them in retirement. Many may well find themselves heavily reliant on the state pension. Despite the impact of the triple lock over the last 9 years, the UK state pension remains one of the least generous in all of Europe.

The pledge to maintain the triple lock was a key part of the Conservative Party’s manifesto pledge and it is unlikely that the Government will want to break that pledge lightly. We are in unprecedented times however and we have already witnessed how events can change quickly. Organisations like NFOP must remain alert and continue to present coherent and robust argument for the continuance of the triple lock, whilst at the same time being cognisant of the exceptionally challenging economic circumstances the country finds itself in.

Eamonn Donaghy
CEO - NFOP