Anna Ridgway is National Coordinator for Students for Liberty UK.
Three months ago I wrote on this site that Britain needs to start thinking differently about the state pension. I was called selfish, ignorant, cruel, and (my favourite) a “lefty.” Seventy-three comments, many of them furious. One commenter told me I just need to get off social media and stop doing university courses that do not lead to a good income. Noted.
But here is what has changed since April. Keir Starmer is gone. Andy Burnham is almost certainly about to become Prime Minister. The fiscal case I made has not changed much. The OBR still projects £80 billion more in state pension spending by the 2070s, with over half driven by the triple lock. The IFS still shows the full new state pension running £30 a week higher than it would under simple earnings indexation. Annual spending is still £12 billion above what an earnings link would have cost. None of this is news.
What is new is that the consensus against the triple lock has hardened into something close to unanimity. As Sky News reported recently, think tanks from across the political spectrum now warn the policy is unsustainable. The original estimates when it was introduced in 2012 suggested it would cost around £5.2 billion a year by 2029–30 and push the state pension up by an average of 0.2 percentage points above earnings growth. It has blown past both figures.
Even the Resolution Foundation, a centre-left outfit once led by the current pensions minister Torsten Bell, has called time on it, publishing a report in June called What a Ratchet! which found that pensioner poverty fell by 15.8 percentage points in the fourteen years before the triple lock existed, driven mostly by Pension Credit, and that the policy has cost the Treasury three times more than originally expected while doing comparatively little for the poorest pensioners. When a think tank that close to Labour is saying this, it is worth paying attention. More importantly, they proposed a concrete replacement. More on that shortly.
Now, Burnham has publicly committed to keeping the triple lock. Of course he has. Every party leader does. But there are reasons to think he might actually be the one to ditch it, and reasons to think he should.
The first is that he has watched, up close, what happens when you reform pensioner benefits stupidly. The winter fuel allowance debacle was not the only thing that sank Starmer, but it became the one voters kept bringing up. Labour MPs called it “kryptonite” on the doorstep. The reason it stuck was not the policy itself but the execution: announced three weeks into government, with no groundwork, no explanation of what the savings would fund, and no compensating offer. It looked like taking from pensioners for nothing in return.
The lesson is not “never touch pensioner spending.” The lesson is “don’t do it badly.” Burnham can learn from this. He can do it differently.
His own advisers are already telling him to. Lord O’Neill, the former chairman of Goldman Sachs Asset Management and the man who coined “BRIC”, has called ending the triple lock a “no-brainer.” Andy Haldane, formerly chief economist at the Bank of England, has warned that Britain cannot afford its current spending commitments. Both sit at the centre of Burnham’s economic thinking, and both are pushing hard.
And Burnham has something Starmer never had – goodwill.
He is the most popular figure in the Labour Party by a country mile. He won Makerfield with a majority over 9,000, smashing expectations. He has framed his pitch around “economic renewal” and trust. If a prime minister is ever going to spend political capital on something difficult, the first six months are when you do it. Everyone knows this. Burnham knows this.
The Resolution Foundation has even handed him the replacement policy on a plate. A “smoothed earnings link” would keep the state pension tracking wages over the long run, while still protecting its real value in years when inflation outpaces earnings. What it would not do is keep ratcheting the pension above earnings every time the economy misbehaves. The difference in cash terms? About £1.30 a week by 2029–30. That is it. £1.30 a week less for pensioners, £650 million a year back to the Exchequer, growing over time.
£1.30 a week. That is what stands between the current policy and a fiscally sustainable alternative. Try telling me that is not a trade worth making.
There is also a looming absurdity that makes reform almost unavoidable. The full new state pension is now £12,548 a year. The personal allowance is frozen at £12,570. Next year, the state pension will breach that threshold, and pensioners receiving only the state pension will start paying income tax on it. Burnham has said he will exempt them. Fine. But that is yet another sticking plaster on top of a system that is generating its own contradictions faster than politicians can patch them.
Yes, this is politically risky. YouGov found in May that 66 per cent of the public support keeping the triple lock. Only 14 per cent oppose it. Landslide numbers. But dig into the detail and the picture shifts. When people are presented with specific alternatives, like a double lock or a smoothed earnings link, support and opposition split much more evenly. The British public might well accept change if anyone in politics actually tried to explain one.
So far, nobody has.
Westminster knows all this, by the way. As this site noted back in April, the triple lock is an open secret. Almost every economist, journalist, and politician privately accepts it is unsustainable. They keep it because older voters turn out, younger voters do not, and nobody wants to go first. That is not principle. It is cowardice dressed up as compassion.
Burnham could break the pattern. Not by cutting pensions or punishing pensioners, but by swapping a volatile and badly designed indexation formula for a stable one, and being straight about why. He could say: we are protecting the state pension, we are keeping it rising with wages, and we are using the savings to bring down the tax burden on young workers, build houses, and fund training for people locked out of the labour market. Call that an attack on pensioners if you like. I would call it governing.
Will he do it? The early signs are not encouraging. Burnham recently did a Reddit “Ask Me Anything” session, presumably to show he is the kind of leader who engages with difficult questions. One of the most upvoted questions asked whether it is time to abolish the triple lock. His answer: “I appreciate there’s a lot of debate about this but it is important that the commitment in the manifesto stands.” That is not a leader preparing the ground for reform. That is a politician reading from the same script as every other politician who has ever been asked this question.
His public statements are no bolder. Defenders will point out, as they always do, that the UK state pension remains low by international standards. That is true. But the triple lock is not a policy designed to reach a target and stop. It is a ratchet with no ceiling, and keeping it because the pension is still comparatively modest does not make the mechanism any less broken.
The economists around Burnham are serious. The fiscal arithmetic does not go away. And the political window is as open as it is likely to get. Plenty of people doubt he has it in him. They may be right. But if Burnham ducks this, the next prime minister will face the same problem under worse conditions. And the generation paying for it, my generation, will still be here, still paying, still waiting for someone in charge to be honest.
I said in April that symbolism does not pay the bills. Three months on, I see no reason to update that view.
Anna Ridgway is National Coordinator for Students for Liberty UK.
Three months ago I wrote on this site that Britain needs to start thinking differently about the state pension. I was called selfish, ignorant, cruel, and (my favourite) a “lefty.” Seventy-three comments, many of them furious. One commenter told me I just need to get off social media and stop doing university courses that do not lead to a good income. Noted.
But here is what has changed since April. Keir Starmer is gone. Andy Burnham is almost certainly about to become Prime Minister. The fiscal case I made has not changed much. The OBR still projects £80 billion more in state pension spending by the 2070s, with over half driven by the triple lock. The IFS still shows the full new state pension running £30 a week higher than it would under simple earnings indexation. Annual spending is still £12 billion above what an earnings link would have cost. None of this is news.
What is new is that the consensus against the triple lock has hardened into something close to unanimity. As Sky News reported recently, think tanks from across the political spectrum now warn the policy is unsustainable. The original estimates when it was introduced in 2012 suggested it would cost around £5.2 billion a year by 2029–30 and push the state pension up by an average of 0.2 percentage points above earnings growth. It has blown past both figures.
Even the Resolution Foundation, a centre-left outfit once led by the current pensions minister Torsten Bell, has called time on it, publishing a report in June called What a Ratchet! which found that pensioner poverty fell by 15.8 percentage points in the fourteen years before the triple lock existed, driven mostly by Pension Credit, and that the policy has cost the Treasury three times more than originally expected while doing comparatively little for the poorest pensioners. When a think tank that close to Labour is saying this, it is worth paying attention. More importantly, they proposed a concrete replacement. More on that shortly.
Now, Burnham has publicly committed to keeping the triple lock. Of course he has. Every party leader does. But there are reasons to think he might actually be the one to ditch it, and reasons to think he should.
The first is that he has watched, up close, what happens when you reform pensioner benefits stupidly. The winter fuel allowance debacle was not the only thing that sank Starmer, but it became the one voters kept bringing up. Labour MPs called it “kryptonite” on the doorstep. The reason it stuck was not the policy itself but the execution: announced three weeks into government, with no groundwork, no explanation of what the savings would fund, and no compensating offer. It looked like taking from pensioners for nothing in return.
The lesson is not “never touch pensioner spending.” The lesson is “don’t do it badly.” Burnham can learn from this. He can do it differently.
His own advisers are already telling him to. Lord O’Neill, the former chairman of Goldman Sachs Asset Management and the man who coined “BRIC”, has called ending the triple lock a “no-brainer.” Andy Haldane, formerly chief economist at the Bank of England, has warned that Britain cannot afford its current spending commitments. Both sit at the centre of Burnham’s economic thinking, and both are pushing hard.
And Burnham has something Starmer never had – goodwill.
He is the most popular figure in the Labour Party by a country mile. He won Makerfield with a majority over 9,000, smashing expectations. He has framed his pitch around “economic renewal” and trust. If a prime minister is ever going to spend political capital on something difficult, the first six months are when you do it. Everyone knows this. Burnham knows this.
The Resolution Foundation has even handed him the replacement policy on a plate. A “smoothed earnings link” would keep the state pension tracking wages over the long run, while still protecting its real value in years when inflation outpaces earnings. What it would not do is keep ratcheting the pension above earnings every time the economy misbehaves. The difference in cash terms? About £1.30 a week by 2029–30. That is it. £1.30 a week less for pensioners, £650 million a year back to the Exchequer, growing over time.
£1.30 a week. That is what stands between the current policy and a fiscally sustainable alternative. Try telling me that is not a trade worth making.
There is also a looming absurdity that makes reform almost unavoidable. The full new state pension is now £12,548 a year. The personal allowance is frozen at £12,570. Next year, the state pension will breach that threshold, and pensioners receiving only the state pension will start paying income tax on it. Burnham has said he will exempt them. Fine. But that is yet another sticking plaster on top of a system that is generating its own contradictions faster than politicians can patch them.
Yes, this is politically risky. YouGov found in May that 66 per cent of the public support keeping the triple lock. Only 14 per cent oppose it. Landslide numbers. But dig into the detail and the picture shifts. When people are presented with specific alternatives, like a double lock or a smoothed earnings link, support and opposition split much more evenly. The British public might well accept change if anyone in politics actually tried to explain one.
So far, nobody has.
Westminster knows all this, by the way. As this site noted back in April, the triple lock is an open secret. Almost every economist, journalist, and politician privately accepts it is unsustainable. They keep it because older voters turn out, younger voters do not, and nobody wants to go first. That is not principle. It is cowardice dressed up as compassion.
Burnham could break the pattern. Not by cutting pensions or punishing pensioners, but by swapping a volatile and badly designed indexation formula for a stable one, and being straight about why. He could say: we are protecting the state pension, we are keeping it rising with wages, and we are using the savings to bring down the tax burden on young workers, build houses, and fund training for people locked out of the labour market. Call that an attack on pensioners if you like. I would call it governing.
Will he do it? The early signs are not encouraging. Burnham recently did a Reddit “Ask Me Anything” session, presumably to show he is the kind of leader who engages with difficult questions. One of the most upvoted questions asked whether it is time to abolish the triple lock. His answer: “I appreciate there’s a lot of debate about this but it is important that the commitment in the manifesto stands.” That is not a leader preparing the ground for reform. That is a politician reading from the same script as every other politician who has ever been asked this question.
His public statements are no bolder. Defenders will point out, as they always do, that the UK state pension remains low by international standards. That is true. But the triple lock is not a policy designed to reach a target and stop. It is a ratchet with no ceiling, and keeping it because the pension is still comparatively modest does not make the mechanism any less broken.
The economists around Burnham are serious. The fiscal arithmetic does not go away. And the political window is as open as it is likely to get. Plenty of people doubt he has it in him. They may be right. But if Burnham ducks this, the next prime minister will face the same problem under worse conditions. And the generation paying for it, my generation, will still be here, still paying, still waiting for someone in charge to be honest.
I said in April that symbolism does not pay the bills. Three months on, I see no reason to update that view.