Jeremy Hunt ready to review pensions triple lock as Treasury scrambles for cash

Chancellor Jeremy Hunt is expected to link state pension increases to a measure of wage growth that excludes bonuses. Photo: Paul Grover

Jeremy Hunt is set to review the way the triple lock on pensions is calculated, which is expected to save the Treasury £900 million a year.

In his autumn statement next month, the Chancellor is expected to will announce that retiree benefits will rise in line with regular wages of 7.8%, rather than the 8.5% increase in overall wages that includes bonuses.

The Triple Lock increases pensions each year by the maximum amount of the average wage increase (2.5 percent) or by inflation. Official data released on Wednesday showed consumer price inflation remained stable at 6.7% in September, below the 8.5% rise in average wages in the three months to August.

The rise facilitated by public sector transactions. employees, including one-time bonuses, as a result of which wages for public sector employees increased by 12.5% ​​compared to last year.

The Chancellor and Mel Stride, the work and pensions secretary, are expected to choose regular pay, which rose by 7.8%, instead of total pay to calculate the triple lock, excluding the effect of these bonuses.

This means the basic pension next year will rise by around £837, rather than the £902 that would be expected under the full 8.5% increase.

During the pandemic, triple lockdown was suspended as a furlough scheme. distorted pay data.

Baroness Ros Altmann, a former pensions minister, said: “Pensioners deserve better than this constant hockey. What is needed is a proper cross-party review of all aspects of government support for pensioners going forward.»

September's inflation rate of 6.7% is higher than economists' forecasts of 6.5% and underscores the problem as policymakers struggle to contain rising prices.

Government borrowing costs rose on Wednesday as bond traders fear persistent inflation will put pressure on the Bank of England, forcing it to keep interest rates at 5.25% for longer.

Meanwhile, the latest inflation figures show shops, pubs and restaurants in England will face a quadrupling of their tax bills next year, by almost £2 billion.

Estimates compiled by advisory group Altus showed that from April next year, retailers will be billed business rates of £15,300 for the average property.

This compares to £3,600 this year as temporary relief expires and inflation causes the multiplier that is applied to the chargeable value of the property to calculate the tax due to increase.

p>Benefits are also usually provided. linked to inflation, although most welfare payments were frozen for four years from 2015.

Mr Hunt suggested benefit payments would increase next year.

Speaking at an IMF meeting in Marrakech last year, he said: “You will have to wait for our decision in the Autumn Statement, but I think what we have seen in the last year is that in very difficult times we are committed to ensuring that our commitments to the people with the lowest incomes are met.” income.

The Prime Minister's spokesman refused to confirm benefits would rise by 6.7% because Mr Stride «is due to undertake an annual review of benefits and state pensions» and Number 10 will not «get ahead of it».

A Department for Work and Pensions spokesman said: “The Government is committed to the triple lock. As usual, the Secretary of State will carry out the statutory annual review of benefits and state pensions using the latest available data.»