Government breaks manifesto commitment to pensioners

The Government has abandoned a manifesto commitment on increases to the state pension because of concerns over the potential cost.

The triple-lock guarantees that pensions grow in line with whichever is highest out of earnings, inflation or 2.5%.

But the policy has been temporarily shelved because the impact of the coronavirus crisis on wages could have led to an unaffordable rise.

Work and Pensions Secretary Therese Coffey
Work and Pensions Secretary Therese Coffey (Yui Mok/PA)

Work and Pensions Secretary Therese Coffey told MPs next year’s increase will be based on either 2.5% or inflation.

Distortions to wages during the coronavirus crisis could have meant pensioners receive a rise of as much as 8% – an extra £3 billion – while many workers have been dealing with job losses, salary cuts and pay freezes in the tough economy.

Ms Coffey told MPs there had been an “irregular statistical spike in earnings” over the period during which the pension rate is set.

She said the decision to remove the earnings benchmark “will also ensure that as we are having to make difficult decisions elsewhere across public spending, including freezing public sector pay, pensioners are not unfairly benefiting from a statistical anomaly”.

She told MPs: “At a time when we have made tough decisions to restore the public finances which have impacted working people, such as freezing income tax personal thresholds at current levels, this would not be fair.

“Setting aside the earnings element is temporary and only for one year.

“This means we can and will apply the triple lock as usual from next year for the remainder of this Parliament in line with our manifesto commitment.”

The decision to temporarily break the triple lock came just hours after Prime Minister Boris Johnson breached another manifesto commitment by increasing National Insurance to fund health and social care.