According to Rupert Harrison, George Osborne’s former special adviser, the triple lock on pensions was a Liberal Democrat demand for the Coalition agreement in 2010, which was accepted by the Conservatives on the basis that it would just cost £50m. The triple lock has meant that the state pension has been increased by the highest of earnings, inflation or 2.5% since 2010. Analysis by the Centre for Policy Studies shows that this decision has been one of the most costly and long-lasting decisions taken by the Coalition Government. The report further highlights that the policy has been one of the main causes of growing inter-generational inequality.
Key conclusions include: since 2010, welfare spending on pensioners is up by 10% in real terms but down by 5% for workers and children. On a per household basis, welfare spending is up by 4% per pensioner household and down by 10% for children and those of working age. Had the state pension been uprated in line with CPI inflation instead of the triple lock – which would have maintained its purchasing power – the Treasury would now be around £8.6bn a year better off. The opportunity cost has been large. This sum could have paid for a cut of 2 percentage points in the basic rate of income tax or increased spending in areas of greater need.Read Full Report