A Centre for Policy Studies report claims former deputy primer minister Nick Clegg’s insistence on the state pension triple lock policy was a driver in increasing intergenerational unfairness.
The report says that, since 2010, welfare spending on pensioners has increased by 10 per cent in real terms but is down by 5 per cent for workers and children. It says that on a per-household basis welfare spending is up by 4 per cent per pensioner household and down by 10 per cent for children and people of working age.
The triple lock, introduced by the Conservative and Liberal Democrat coalition government, means guarantees that the basic state pension will rise by a minimum of either 2.5 per cent, the rate of inflation or average earnings growth, whichever is largest.
Following the snap election in June the Conservatives and DUP agreed to maintain the triple lock.
The CPS report says that if the state pension had been uprated in line with consumer price index inflation instead of the triple lock the Treasury would now be around £8.6bn a year better off.
CPS economic research head Daniel Mahoney says: “Nick Clegg’s insistence on the triple lock policy during the coalition negotiations has increased intergenerational unfairness and caused huge fiscal problems for the Government.”
Mahoney says: “Had the state pension’s purchasing power stayed the same since 2010, the Government could have implemented a series of growth-promoting tax cuts for all demographic and income groups, as well as giving additional funds to areas that require more resources – all the while being in a similar, if not better, fiscal position.”
He adds that the guarantee in the triple lock should be dropped to 1.5 per cent.
Mahoney says: “This would still be a triple lock but would guard the Treasury from additional fiscal burdens arising from a situation where inflation and earnings growth hover at around 2 per cent.”