Downing Street defends pledging sharp hike in pensions while urging workers to accept real terms pay cuts

·2-min read

Downing Street has defended plans to deliver a possible double-digit rise in the state pension next year even as workers are being urged to accept real terms pay cuts.

Simon Clarke, Chief Secretary to the Treasury, confirmed this week that the government was sticking to a pledge by Chancellor Rishi Sunak to reinstate the "triple lock" on state pensions.

The triple lock protects older people's incomes by guaranteeing that the state pension will rise each spring by either inflation, average wage growth, or 2.5% - whichever is higher.

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With inflation heading towards 11% this autumn - and September's inflation the benchmark figure used for the triple lock calculation - it could mean a double-digit percentage increase in the benefit.

Yet workers - including striking rail staff - are being urged to accept the "sacrifice" of pay settlements that fall well short of the increase in the cost of living, in order to avoid creating a spiral in which big wage hikes result in further upward pressure on prices.

The prime minister's official spokesman was asked about why public sector workers could not be given the same treatment on pay as those receiving pensions or other benefits - also in line for the increase.

He told reporters: "It's always about striking the right balance when it comes to making sure that we reward our public sector workers fairly whilst also not doing anything that is irresponsible with the public finances more broadly.

"The Chancellor needs to consider this all in the round and I think the view is that we can meet that commitment without stoking inflationary pressures, but you know, we did take difficult decisions with regards to the triple lock with a temporary one year suspension."

The triple lock was suspended this year because a surge in wage growth data in 2021, skewed by the impact of the pandemic, could have translated into a much bigger than usual pension hike.

But the Chancellor confirmed last month, while announcing a new £15bn package of cost of living help that will see money knocked off every household's energy bill, that the triple lock would return next spring.

Mr Clarke confirmed the policy in a written answer to Labour MP Janet Daby about help available to pensioners facing inflationary pressures.

It will mean an increase in pensions that will be much higher than inflation at the time, which is by then expected to have subsided from its current four-decade highs.

But the message for workers has been different.

Mr Clarke told Sky News on Monday: "If we are going to forestall the evil of inflation... then we are going to have to show collective, society-wide responsibility.

"I recognise there is sacrifice involved in this situation."