Mr Sunak said last month he remained fully committed to the triple lock. Photo: TOBY MELVILLE/REUTERS
Rishi Sunak has been urged to do so by ditching the triple lock on pensions and spending more on childcare to boost the UK economy.
The Organization for Economic Co-operation and Development (OECD) has suggested lift the triple lock to ease pressure on public finances and prevent an ever-increasing tax burden.
He made the recommendation as part of a report on how countries can boost economic growth, in which he also called on the Prime Minister to make carer payments for new fathers more generous.
< p>The recommendation comes amid rising political tensions over the cost of the triple lock, which provides an annual increase in the state pension by the maximum amount of either wage growth, inflation or a benchmark of 2.5 per cent.
The OECD said: “Fiscal space will be under pressure in the long term as age-related costs rise. The current increase in pensions (triple lock) will be costly in the future.”
State pensions are set to rise by 8.5% from next April, well ahead of falling inflation, after wages rose at a record pace for three years. months until July. The Institute for Fiscal Studies has warned that the triple lock could add £45 billion a year to the public pension account by 2050.
Former Tory leader William Hague said last month the triple lock was «unsustainable and unfair» and speculation is growing that the government is considering how to reform policy to control costs.
Mr Sunak said last month he remained fully committed to the triple lock. However, there are suggestions that the Prime Minister may adjust the mechanism this year. Pensions minister Mel Stride said pensioners may not see a full increase in the pension age in 2024.
The OECD has called for state pensions to be raised on average through inflation and wage growth rather than through the triple lock . The government could then “provide direct payments to poor pensioners to reduce the risks of poverty.”
The Paris-based organization first called on the government to rethink the triple lock in 2017. The International Monetary Fund (IMF) also called on Mr Sunak to scrap the policy, which has been in place since 2010.
As well as ending the triple lock, the OECD said Mr Sunak should put more money into policies to support workers parents. He called on the Treasury to raise the cap on paternity benefits and link it to fathers' earnings.
It said paternity leave in the UK is too short and childcare costs too high. As a result, women tend to leave work when they have a child, rather than sharing caregiving responsibilities or relying on support.
OECD has called on the government to implement plans to expand the provision of free childcare hours to parents with children under three years of age. This could help increase the number of hours mothers can work.
The report states: «Women are highly educated, but a third of women work part-time, about three times more than men.»
The OECD also advised Mr Sunak to keep policies more consistent and transparent. It says: “Ensure long-term policy transparency and continuity of government programs to reduce uncertainty for business.”
The recommendation comes after days of speculation that the Prime Minister was preparing to scrap the northern part of HS2. .
The OECD is a group of predominantly rich countries. His proposals to boost economic growth come amid intense debate over how to improve Britain's sluggish economy and boost stagnant living standards.
Former Prime Minister Liz Truss made a call for growth on Monday at a Conservative fringe event parties. Manchester conference
She stepped up calls for tax cuts and warned the state had become too big. She also called on the government to resume fracking to reduce energy bills.
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