Comment

The Chancellor is right that pensioners need protection

As he observed, many in receipt of the state pension are the poorest and most vulnerable people in society

😧😲🧐 The latest inflation figures confirmed that prices are rising at their fastest rate in 40 years and will soon head into double figures. The Bank of England has predicted a peak of 11 per cent later this year but since it did not see the current acceleration coming this may turn out to be an under-estimate. The consequences in terms of labour relations are clear, with the rail strike partly motivated by a collapse in real wages.

But one group loses out more than most and that is people on fixed incomes, notably pensioners. The so-called “triple lock” guarantees that the old age pension will rise by either 2.5 per cent, or the average annual wage rise or the consumer price index inflation rate, whichever is greatest. The earnings element was suspended this year after wages rose faster than expected during the pandemic. Now it is prices that provide the outlier, with Rishi Sunak, the Chancellor, under pressure once again to limit the increase.

Mr Sunak indicated yesterday that he would revive the triple lock for next year which would mean a 10 per cent rise in the state pension based on September’s expected consumer price index figure. As he rightly observed, many in receipt of the state pension are the poorest and most vulnerable people in society. But with employees being limited to 2 or 3 per cent pay rises, this will be a hard political line to maintain.

Welfare benefits are also set to rise by 10 per cent but there are arguments for treating these differently from the state pension since recipients are in a better position to get jobs. It is astonishing that more than 5 million people are on out-of-work benefits when there are more vacancies than ever and a national shortage of workers in key sectors.