The Conservatives should be the first party to admit that triple lock pensions are becoming unsustainable, a senior MP has said.
The MP said dropping the ‘sacred cow’ pledge, which adds billions to annual pension spending, would show the Tories are the party of fiscal sustainability.
Under the radical proposals, pensioners could be assured that their income would not fall – but that their income would not rise equally every year due to the ‘dangerous’ state of public finances.
Instead of the current system, which guarantees that the AOW pension increases by the highest value inflationWith a wage increase of 2.5 percent, a ‘flexible triple lock’ could be introduced that is equivalent to the average of the three measures.
Another option would be a ‘double lock’, where pensions are increased by the best inflation or earnings.
Abandoning the triple lock, a key Tory promise for more than a decade, should be accompanied by other measures and messages for older voters who may find it unfair.
The senior Tory MP told a meeting in Westminster: ‘It is a simple mathematical calculation that the triple lock is unsustainable in the medium term.’
And they added that the Conservative party needs to ‘slaughter some sacred cows’.
The triple lock currently guarantees that state pensions rise every year in line with the highest rate of inflation, average wage growth or 2.5 percent
“The budget situation is becoming increasingly dangerous because of what this government has done and it could mean more emergency operations than anyone would like,” the MP said.
The Tories are currently focusing on reducing the amount spent on in-work benefits, with £23 billion in savings already identified if they win the next election, including limiting benefits to British citizens.
But the MP admitted that ‘more may be needed’, including major changes to the triple lock to put it on a ‘more sustainable trajectory’.
They said the party must “consider long-term sustainability” while being fair to people who have been paying taxes for decades.
It is hoped that this move will not only reduce government spending but also help reduce government borrowing costs by reassuring bond investors.
It comes just days after a prominent business group called for the demolition of the triple lock.
The British Chambers of Commerce said raising pensions in line with inflation would save the Treasury £3.3 billion over two years.
And the Institute for Fiscal Studies said that spending on the state pension, which now stands at £154 billion, is £16 billion a year higher than it would have been without the introduction of the triple lock in 2011.
Although a growing number of prominent Tories are questioning this pledge, it remains party policy.
Former Work and Pensions Secretary Baroness Coffey told the House of Lords last week: ‘To some extent I would probably prefer some kind of double lock.’
Ex-chancellor Sir Jeremy Hunt said in April that pensioners ‘might reconsider whether they think it is such a good policy’ if they knew it would increase the national debt.
Sir Mel Stride admitted it was ‘unsustainable’ when he was Work and Pensions Secretary, but insisted this was only the case in the long term.
Kemi Badenoch emphasized a year ago: ‘The Conservatives created the triple lock; we have always protected it and stand behind it.”
But when asked last November whether the Tories would never reform policy, the party leader replied: “That time is not now.”
