For millions of people – pensioners and those eligible for state benefits – last month’s double-digit inflation figure is the one that really matters.
Each year, the government uses the September increase in the cost of living as measured by the consumer prices index to calculate by how much pensions and benefits will rise the following April.
Under the triple lock, pensions are uprated by one of three measures: the annual inflation rate, average earnings growth or 2.5%. This year, inflation is markedly the highest at 10.1%, with average earnings lagging at 5.5%.
So it was big news when word got out this week that Jeremy Hunt’s austerity drive could involve abandoning the triple lock and saving the Treasury £5.6Bbn by linking next year’s pension increase to earnings rather than prices.
The rumour proved short-lived. Liz Truss popped up at prime minister’s questions to say she was “completely committed” to the triple lock. That means someone eligible for a full state pension will get an increase of close to £1,000 a year from April.
It is not hard to see why Truss considered ditching the triple lock a U-turn too far. Pensioners voted overwhelmingly for Boris Johnson at the 2019 general election and are the Conservative party’s core constituency.
Tellingly, however, the government has failed to give a similar cast-iron pledge to uprating working-age benefits – such as universal credit – in line with prices, and, as things stand, most of them look likely to be raised in April by average earnings. According to the Resolution Foundation thinktank, that would save Hunt £2.4bn but make life even tougher for households already struggling to cope with the rising cost of energy and fuel.
