Let’s be brave and admit we can't go on like this – the triple lock must go
Work and Pensions Secretary Pat McFadden (PA Images / Alamy)
3 min read
There are times in politics when thinking the unthinkable becomes not only possible but necessary. When absolute axioms that have not been challenged for years become simply wrong. Politics is not maths: the facts can change. I believe we have reached that point with the triple lock on the state pension.
This political totem, which has gone unchallenged for the past decade, needs to be toppled if we are to avoid the national bankruptcy that is uncomfortably close. At present the pension cost is around £150bn, or 5.9 per cent of national income. By 2050, on current policies, this will increase to around eight per cent, adding around £45bn to the pensions bill.
Adding this to all the other pressures on public spending, and starting where we are with a working age population groaning under the increasing burden of taxation, we cannot go on like this.
But this would be political suicide for any party brave enough to speak the truth, surely? There are two answers to that salient point. The first general point is that the longer the political class takes to express an uncomfortable truth to the electorate, the more cataclysmic the disaster when the facts must be faced.
The current state of French politics is my Exhibit A in this case. There, you have parties of left and right promising to reduce the pension age to 60 with populist irresponsibility which could reignite the old Eurozone crisis very quickly.
Older people are better looked after than ever before
My second point is a domestic one, which is that one of the causes of the chronic unhappiness with politics here is the perceived unfairness between the generations. Older people are better looked after than ever before, but younger workers feel that, however responsible and hard-working they are, it is too difficult to buy a home, start a family, or just enjoy the traditional fruits of doing the right thing. Much of this imbalance has come about because successive governments do not have the financial firepower to deal with these issues due to rising pressures on existing commitments.
So, the resolution to this conundrum is to find a way to preserve the underlying promise of a dignified old age while not continuing with a policy that hangs ever heavier on the chancellor of the Exchequer. A massive reduction in pensioner poverty was the original purpose of the triple lock – a good and noble purpose. We cannot go back to the old days.
Instead, we need a way of ensuring pensioners are not left behind without the state pension taking up an ever-higher percentage of national income. I think the fairest way of doing this is to tie the state pension increase to the growth of average earnings. This would mean that in the years where the economy did well, jobs were readily available and therefore wages were likely to rise, pensioners would share in the increasing prosperity. In tougher times they would share in the belt-tightening too, but over time this would even out.
This would avoid any slide back towards widespread pensioner poverty (and remember that the Office for National Statistics reckons around two thirds of all pensioners have a private pension as well). Of course it would hold political risks, but these could be ameliorated by it being part of a wider package which could help older people.
Specifically, if a government had a credible policy to fund and operate social care in a way that was sustainable and left people with certainty about the potential costs to them, this would be a huge weight off the minds of many older people and their children.
So, let’s be brave for once. The triple lock has served its purpose and has had its day. We need a new settlement that is fair to all generations.
Damian Green is chair of the Social Care Foundation and a former minister, who served as Work and Pensions Secretary from 2016-2017
