Jeremy Hunt: Pension triple lock is an ‘anchor drag’ on economic growth
Former chancellor Jeremy Hunt has warned that the triple lock on the state pension is acting as “an anchor drag on economic growth.”
In an interview with Morning Wire, Hunt said that above-inflation rises to the state pension are being funded “by more debt” on future generations and called for every major party to pledge to remove the triple lock after the next election.
The triple lock was introduced by David Cameron’s coalition government and ensures that the state pension is hiked each year by either the rate of inflation, average wage growth or 2.5 per cent – whichever is higher.
Labour has ruled out scrapping the triple lock, but former Prime Minister Sir Tony Blair heaped pressure on the government to drop the policy in his landmark intervention last month.
Triple lock ‘isn’t fair on future generations’
Hunt, who served as Chancellor between 2022 and 2024, said he has accepted that the triple lock will not be dropped in this parliament but urged all major parties not to put it in their manifestos “going forwards”.
He said that “the cost of above-inflation rises in the state pension, as opposed to just inflation rises, is partly being funded by debt,” adding that the arrangement is “very bad for economic growth because we have to pay for that debt through [the] £110bn a year that the Exchequer pays for that interest.”
The veteran Tory MP said: “That’s more than we spend on the police, more than we spend on schools, more than we spend on the entire defense budget.”
He said he thinks the government should offer a “rock-solid guarantee” that pensions will rise in line with inflation, but drew attention to the costs of above-inflation hikes.
Hunt said it is becoming harder to justify the triple lock to the electorate, which was introduced when pensioners were “living in very, very tough conditions”.
He said: “How many people would think that it was fair for them to have an above-inflation increase in their pension if that was being paid for by more debt on their children and grandchildren?
“I think most people would recognize that actually isn’t fair on future generations.”
He added: “If we want to look after pensioners, that’s not just a generous state pension. It’s also [about] having [a] good NHS, good social care system – that needs economic growth.”
Hunt: Massive cost from ‘ducking welfare reform’
The former Tory leadership contender also criticised the Labour government’s efforts to reform welfare.
“The government has no plans to reform welfare. We’re hearing virtually nothing in terms of concrete actions,” he said.
Last year, Prime Minister Sir Keir Starmer suffered a crushing defeat at the hand of his backbench MPs when he was forced to abandon modest cuts to the welfare bill.
Hunt claimed that the government could save £56bn per year if it brought the welfare bill back down to the same level as in 2019.
“The opportunity cost […] from ducking welfare reform is higher taxes on business and that’s why it’s so bad.
“This is not just about parking people on welfare and damaging their life chances, it’s also about the consequence of that which is higher taxes on business, lower growth.”
Hunt told Morning Wire that successive governments have made “a profound mistake” in the way poverty is measured.
By recording the number of people below two thirds of median income, Hunt claimed, “you’re able to produce a figure saying these [any welfare] reforms will push 200,000 more people into poverty”.
“And of course, that makes it impossible for Labour MPs to vote for,” he said.