To understand what the pensions double lock is, it’s worth understanding with what the pensions triple lock is first! The triple lock was introduced in 2011 to guarantee that the basic state pension will rise by whichever is the greater of the following:
- the rate of inflation
- average earnings growth
So, whichever is the greater amount out of those three, that’s how much the basic state pensions rises by each year. In recent years this has meant pensions have risen by 2.5%, because inflation and average earnings have been lower. Good news for pensioners, but not so much for a government trying to save money. As an example, the cost to the taxpayer by including the 2.5% lock has been calculated as an extra £4-6 billion between 2011 and 2016. This is where the double lock comes in. The double lock does not include the 2.5% rate, and will therefore reduce the cost to the taxpayer if the other two measures (inflation and earnings) stay low.
But wait! Here’s where it gets interesting. You may remember that the Conservative Party entered into an agreement with the Democratic Unionist Party (DUP) just after the election in June 2017. This was in order to make their combined number of MPs more than half of the total in Parliament, and therefore give them a ‘majority’ government. Well, in making that agreement there were a few concessions made – one of which was that there would be “no change to the Pensions Triple Lock…”. In other words, the earliest the triple lock could be scrapped is now 2022, not 2020 as promised (unless there is an election sooner).
So in light of the agreement with the DUP after the election, the new double lock will not be introduced in 2020 after all. Therefore this manifesto promise is considered to be ‘broken’.
- Conservatives agree pact with DUP to support May government – BBC
- Agreement between the Conservative and Unionist Party and the Democratic Unionist Party on support for the government in parliament – Gov.uk
- Would you rather? Further increases in the state pension age v abandoning the triple lock – Institute for Fiscal Studies