Millions may lose 10% pension hike to match inflation as Liz Truss refuses to confirm triple-lock


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Sound Health and Lasting Wealth

Millions of British pensioners face losing money after Liz Truss refused to stand by a pledge to increase the state payout in line with inflation. 

Downing Street today refused to confirm the under-pressure PM will keep the ‘triple-lock’ designed to guarantee the elderly do not miss out if prices spike.

Retaining the lock, which increases the state pension in line with whichever is highest out of inflation, wages, or 2.5 per cent, was a manifesto pledge at the 2019 election.

That could have meant a huge increase next April, as it is based on the September inflation rate published tomorrow – expected to be around 10 per cent. 

But new Chancellor Jeremy Hunt has warned that no departments will be exempt from an ‘eye-watering’ £40billion squeeze expected in his Halloween Budget.

Mr Hunt announced yesterday that he was reversing £32billion of Ms Truss‘s tax cuts, in a bid to quell market panic.

But the huge tightening is less than half of the estimated £72billion black hole in the public finances. 

One step could take would be to increase the pension in line with wage rises, which are lower than the current CIP inflation rate of 9.9 per cent.

But that would case uproar and leave him and Ms Truss facing a massive battle to get the change through the Commons in a vote. 

Such a move would effectively be a cut in income for those receiving the age-related benefit. 

The PM’s spokesman pointedly insisted today that the government is ‘not making any commitments’ when asked about the key policy.

Downing Street today refused to confirm the under-pressure PM will keep the 'triple-lock' designed to guarantee the elderly do not miss out if prices spike.

Downing Street today refused to confirm the under-pressure PM will keep the 'triple-lock' designed to guarantee the elderly do not miss out if prices spike.

Downing Street today refused to confirm the under-pressure PM will keep the ‘triple-lock’ designed to guarantee the elderly do not miss out if prices spike.

Chancellor Jeremy Hunt announced he was reversing £32billion of Liz Truss’s tax cuts yesterday, as the government scrambles to quell market panic

The IFS pointed out that even without the looming cuts many departments' budgets are below 2010 levels in real terms

The IFS pointed out that even without the looming cuts many departments' budgets are below 2010 levels in real terms

The IFS pointed out that even without the looming cuts many departments’ budgets are below 2010 levels in real terms

Now tax cuts have been jettisoned, the burden as a proportion of GDP is set to surge to a level not seen since 1950

Now tax cuts have been jettisoned, the burden as a proportion of GDP is set to surge to a level not seen since 1950

Now tax cuts have been jettisoned, the burden as a proportion of GDP is set to surge to a level not seen since 1950

Treasury sources stressed not even health and defence will be exempt from the savings drive, with No10 refusing to repeat Ms Truss’s commitment to spending reaching 2.5 per cent of GDP by 2026.

However, the spokesman made clear that the vow to be spending 3 per cent of GDP on the military by 2030 will be kept.

Earlier, armed forces minister James Heappey threatened to resign if the idea was dropped. His boss Ben Wallace – seen as a leadership contender – has been making similar noises.

Cabinet had a 90-minute discussion on the fiscal situation this morning, as ministers face making their submissions to the Chancellor. 

Downing Street repeatedly refused to say whether the PM remained committed to the pensions triple lock.

The official spokesman said: ‘We are very aware of how many vulnerable pensioners there are.

‘Our priority ahead of this fiscal plan will be to ensure we continue to protect the most vulnerable in society.

‘The Chancellor has been clear – the Prime Minister and the Chancellor are not making any commitments on individual policy areas at this point.

‘But, as I say, the decisions will be seen through the prism of what matters most to the most vulnerable and we will be coming forward with further detail at the end of the month.’

Pressed on why Ms Truss was apparently ditching a commitment she made during this summer’s Tory leadership campaign, the spokesman added: ‘The Prime Minister is aware of the commitments made in this area and, indeed, to how many vulnerable pensioners there are.

‘The decision she has taken is to prioritise economic stability.

‘Her view and the Chancellor’s view is, at this point, it is not right to start pre-empting a collective piece of work that needs to be carried out across Government on all spending.’

Downing Street appeared to back away from Liz Truss’s pledge to lift defence spending to 2.5 per cent of GDP by 2026, although No10 insisted the PM remained committed to raising defence spending to three per cent of GDP by 2030.

The Prime Minister’s official spokesman said: ‘You’ve heard from the Chancellor on this.

‘We are obviously committed to maintaining the UK’s position at the forefront of Nato, that’s why the PM committed to raise defence spending to three per cent of GDP by 2030.

‘The shape of that increase will be set out at future spending reviews in the normal way and the Chancellor has obviously broeugh forward the fiscal plan to 31st October.’

Pressed on what he meant by the ‘shape’ of the increase to defence spending, the spokesman added: ‘The structure of how we get to that three per cent increase over a number of years will be determined in conjunction with the Ministry of Defence and the Treasury.’

Asked if No10 was backing down on the 2.5 per cent target by 2026, the spokesman replied: ‘The PM remains commited to increasing defence spending to three per cent by 2030.’

Meanwhile, the grim situation faced by Britons has been underlined with warnings that average energy bills could hit £5,000 a year, after Mr Hunt U-turned on the ‘guarantee’ to cap them at £2,500 until late 2024. 

Now tax cuts have been jettisoned, the burden is also set to surge to a level not seen since 1950. 

The Resolution Foundation think tank warned spending cuts could be as deep as those after the 2009 financial crisis, and that middle-income families may be unable to pay energy bills next year.

Chief executive Torsten Bell told BBC Radio 4’s Today programme there was a fiscal black hole of around £30billion even after the Government scrapped nearly all of its mini-budget.

‘These are big numbers. If we are talking of spending cuts between £30-40billion then they’re not that far off the scale of the cuts announced by George Osborne back in 2010,’ he said.

On the scaling down of energy support, Mr Bell said: ‘It’s a big deal, if he (Chancellor Jeremy Hunt) did scrap all of that he’s saving up to £40 billion, but it’s a big deal for households too because our bills are due to hit £4,000 in April.

Read more – Sound Health and Lasting Wealth

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