Minister who oversaw creation of triple lock issues bombshell verdict

A minister who served in the Government that brought in the triple lock has warned the policy is "not sustainable". Liberal Democrat Vince Cable told the Treasury Committee in a recent discussion that the policy was a "wonderful idea" when it was brought in, but it will need to be changed soon.

The triple lock ensures state pension payments go up each April in line with whichever is highest: 2.5 percent, the rise in average earnings or inflation. Mr Cable was Business Secretary during the Conservative-Liberal Democrat Coalition Government that introduced the policy, which came into effect from the 2011/2012 financial year.

He told the committee: "In dealing with demographic change, a future Government-I am sure that this is not going to happen in three weeks' time-will have to look at things like the triple lock. It was a wonderful idea when we did it: it was very progressive, lifted a lot of pensioners out of poverty and was very commendable all round.

"But it is not sustainable, and it makes no sense in the long run." The triple lock has delivered some sizeable increases to payments in recent years, including a record 10.1 percent pay hike in April 2023, due to high levels of inflation.

Payments rose 4.1 percent this past April thanks to the policy, raising the full new state pension to £203.25 a week, or £11,973 a year. But this means the costs of the policy for the Government continue to jump up.

If the Government confirms at the Autumn Budget (November 26) that the triple lock will apply again next April, pensioners are likely to get a 4.8 percent next year. Mr Cable spoke about what could replace the triple lock: "You will have to move to a double lock or something.

"This Government or the next will have to grasp the nettle, which Andy Burnham and Theresa May both failed to grapple with - I think we tried to do so in the Government - of trying to get people to pay for care other than through the council tax system. These are the kinds of big, meaty reform issues from which Governments keep backing away because they are too difficult, but precisely because of demographic change, they will have to be faced."

One concern is that as the population ages, there will be a growing number of claimants whose state pension needs to be paid, by a proportionally smaller working age population. Also speaking to the committee was George Osborne, who served as Chancellor during the Coalition Government that brought in the triple lock.

'We are in a better position'

He spoke about the thinking behind the policy - and why there is a case for changing it soon. He said: "This policy did not come out of the blue. It was designed to address a serious problem, which was pensioner poverty.

"I am not saying pensioner poverty does not exist today, but we are in a markedly better position. Unless you are prepared to go back to an earnings link, at the moment it is the inflation that is triggering the triple lock."

Mr Cable also put forward an idea for how the state pension increase policy could be made more sustainable. He said: " If we moved from a triple lock to a double lock and simply removed the mandatory 2.5 percent, which is way in excess of current or expected economic growth, that would provide pensioners with protection, but it would also put it on a more sustainable basis."