Abolishing the triple lock avoids the issue of setting the level for pensions

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The pensions triple lock was originally introduced (by a Tory-led government) in 2010 to repair some of the damage done (by another Tory government led by Thatcher) in 1979. Prior to 1979, state pension increases were linked to wage increases, meaning that the basic pension more or less kept pace with increases in earnings. Pensioners’ financial position didn’t improve particularly, but then neither did it worsen. At that point (as this article highlights), pensions were equivalent to around 26% of average earnings. By the time the triple lock was introduced, the state pension had fallen to around 16% of average earnings. Amazingly, Thatcher’s deliberate assault on pensioner living standards didn’t stop pensioners from voting, in large numbers, for her party.

If the moral case for restoring some sort of link was clear to Cameron, it was over-ridden by financial considerations, and rather than immediately addressing the disparity, he put in place a gradual process which would eventually restore the value of pensions. It has worked, to the extent that the basic state pension today is worth more like 30%. In simplistic terms, it looks like job done. There are caveats, though. The pensions system has changed; whilst that 30% ratio might hold for those who reached state pension age after April 2016, those who reached retirement age prior to that date have been left behind on a lower pension which will permanently lag behind the new rate. Only some unfairnesses are worthy of action, apparently. There are also a number of assumptions and calculations in the figures for average earnings, which complicate the situation.

Let us assume, though, that the figure of 30% is broadly correct. Under Burnhams two-and-a-half times lock, that relationship will be maintained by adding an additional (so far unexplained) mechanism to be applied in the event that wages growth powers ahead of both price increases and the 2.5% uplift. Without saying so much in transparent terms, it is clear that Burnham has decided that the ‘right’ level at which to set the state pension is 30% of average earnings. He has produced no explanation as to how he’s reached that figure; he simply expects us all to be happy with a number which exceeds that which applied before Thatcher’s attack on pensioners. It’s easy enough to see why he’d want to avoid a debate on that – much more straightforward to justify having exceeded the pre-Thatcher level than to justify setting a pension level which remains significantly below the annual government-set minimum living wage for a full-time employee.

There is a sense in which it can legitimately be argued that the triple lock has done its intended job (for those on the new state pension at least). What is still lacking, though, is any meaningful debate about the ‘right’ way of setting pension levels. It’s an issue which Burnham, like all his predecessors, seems determined to avoid.