Time to axe ‘unfair’ pensions triple lock, says UK’s cost of living tsar

Iceland chair Lord Richard Walker, appointed by Starmer in February, calls system ‘mathematically unsustainable’

Lord Richard Walker, the cost of living tsar, has urged the UK government to reconsider its commitment to the pensions triple lock, calling the system “mathematically unsustainable” and “profoundly unfair”.

The call to re-examine the triple lock from a senior adviser to Sir Keir Starmer is awkward for the prime minister given Labour’s manifesto pledge to stick with the safeguard for elderly people despite concerns over its ballooning cost.

The commitment, introduced in 2010 by the Conservative-led coalition government, means the state pension increases every April by the highest of three potential measures: average earnings, inflation or 2.5 per cent.

But political parties have been loath to reverse the policy because pensioners are more likely to vote than any other demographic in Britain. 

The government spends about 5 per cent of GDP on state pension benefits, up from 3.5 per cent at the turn of the century.

Nigel Farage, leader of Reform UK, who previously hinted he would consider abolishing the triple lock, said earlier this year that he would keep it if he became prime minister.

Speaking in the House of Lords on Thursday, Walker, the Iceland chair who was appointed by Starmer in February, said the triple lock was “mathematically unsustainable, politically untouchable and profoundly unfair. We all know it.”

Walker urged his colleagues to rethink “who it is that constitutes the biggest drain on our benefits system” and implied that the triple lock posed a greater burden on the state.

He waded into the debate as he delivered an interim report of his recommendations for how to help cash-strapped households, which is being shared across Whitehall. This includes a winter energy affordability plan and a write-off of consumer energy debt.

Walker used his speech to express disappointment over “how hard it is to actually get things done” within government and to call for the welfare system to be “urgently reformed . . . so the safety net catches those who truly need it, not those who choose it as a lifestyle”. 

The Labour peer also said that the crisis of youth unemployment was a tragedy that would be “made worse by the challenges of AI and . . . by the reality that the incentives to work are diminishing”.

Other leading figures in retail, such as M&S chief executive Stuart Machin, have written to the government this week urging it to bring down the cost of employing young people.

Walker’s call for more support for households on energy bills comes ahead of an anticipated increase due to the conflict in the Middle East. 

Earlier this week, chancellor Rachel Reeves said the government’s steps in February to reduce household bills by an average £150 had kept the lid on inflation, but this was before the US-Israel strikes in Iran.

However, household electricity and gas bills are expected to rise by nearly 13 per cent, or £209, to £1,900 starting this summer, according to the latest forecasts by Cornwall Insight. 

Reeves has said that the government is working on contingency plans but insisted support for households would be “targeted and temporary”.

Meanwhile, there is a growing concern about the £4.4bn debt owed by households to energy suppliers as of June year, which is 71 per cent higher than it was in 2023.

Walker’s report recommends that providers recover this by increasing bills for middle-class households, rather than government subsidies or writing off the debt. 

Energy regulator Ofgem has said one way to tackle growing energy debts could be to make it harder for households to avoid paying their bills.

Walker has proposed reforms to debt collection for households that fall behind on bills, including recommending that repayment plans are offered as a first step for all local authority bills. 

The Labour peer has also suggested that ministers tackle the growing burden of costly subscriptions on consumers by forcing companies to have a simple cancellation button and by ending mid-contract price increases.