Is Sunak going to give state pensioners an 8% increase?
This morning’s Daily Express raises what is almost certainly going to be the biggest, and potentially most politically damaging, decision that Sunak has to make – should state pensions rise in line with the triple lock formula which because of COVID could give them (and me for that matter) an 8% rise.
We have looked at this before because the formula, part of the CON GE2010 manifesto, has state pensions going up in line with prices, average wages or 2.5% whichever is the greatest.
What nobody envisaged at that time was that a totally artificial drop year on year in average earnings such as that created by COVID would point to, perhaps, an 8% increase in average earnings which according to this formula should be used to fix the next increase. In recent interviews Sunak has been careful not to state that this will be applied.
This is not just a one-off issue. If the 8% uplift came in for the next annual increase then it would stay in the system indefinitely because the enhanced rate would be the baseline for the following year’s calculation.
I am sure the Chancellor is only too aware of the impact this would have on the public finances which have already been stretched to the limit by measures like the furlough scheme.
The financially responsible thing surely would be for him to set out the dilemma and make a special COVID exception. Pensioners, of course, are a key voting group for his party.
Will Johnson allow that?