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Good morning. The UK faces a series of “daunting” risks to the public finances, the Office for Budget Responsibility has warned. There are a lot of them to worry about. For now I want to talk about just one: the pensions triple lock, which ensures the state pension increases every year by consumer price rises, average earnings growth or 2.5 per cent, whichever is highest. More on that below.
Inside Politics is edited by Georgina Quach. Follow Stephen on Bluesky and X, and Georgina on Bluesky. Read the previous edition of the newsletter here. Please send gossip, thoughts and feedback to insidepolitics@ft.com
Expense of a neat fix
The triple lock pension is an elegant solution to a real problem: what to do about the fact the UK’s state pension is less generous than our peers. Introduced by the Conservative-Liberal Democrat coalition, the solution was simple: to increase the state pension gradually via the triple lock, rather than via a one-off rise.
It’s a great idea — if and only if you can at some point get off the carousel once the triple lock has done its job and the UK state pension has “caught up” with peer countries.
The problem is: what if you can’t, in fact, get off the carousel? What if the political cost of doing so is always too high for a democratic government to spare and you end up, well, where the British state is now, with ever higher taxes for worse public services, because more and more of government spending is going on the state pension, even when pensioners are the wealthiest cohort in the UK? Here’s the spending pressure that creates, courtesy of the OBR. According to the fiscal watchdog, state pension expenditure is projected to rise from about 5 per cent of GDP in 2024-25 (£138bn) to 7.7 per cent of GDP by the early 2070s.
A good demonstration of the political problem can be found in this striking chart from the latest More in Common public opinion research, which explores who does the public want the British state to spend money on, and who does the public think the state spends money on? (My thanks to Georgina for spotting this one.)
There’s a lot one could say about this and I suspect this will be one of those charts that readers get tired of me banging on about. But for now, I just want to focus on pensioners specifically.
By any reasonable definition the Labour government, like the previous Conservative government, spends an awful lot of money on pensioners. Not just through the state pension and the triple lock, but through the NHS, too.
I think this political challenge is rooted in a policy problem in the UK labour market: age discrimination. Ageism has proved to be an incredibly “sticky” prejudice: we’ve done a lot to try and stop it, but it still goes on. One reason why there is age discrimination in the workplace is that the electorate’s prevailing image of pensioners as a vulnerable, impoverished group of people shapes how older workers are treated. It contributes to why so many people struggle to find employment if they lose their jobs in their mid-50s or later.
I’m not saying this is an easy problem to solve, but one comfort for successive British governments is that combating ageism is an easier sell than directly confronting misconceptions about how much largesse British pensioners already receive and need — and that tackling ageism may make it easier for future governments to get off the triple lock carousel when the time is right.
Let me know what you think by voting in our poll.
Now try this
The constant adverts for The Salt Path film (twee, uplifting true story of human resilience) really have been a blight on my cinema-going. Until, that is, this Observer exposé about the book it is based on, which has added a note of pleasing farce to it.
