Burnham commits to triple lock despite backlash over
Andy Burnham has committed to keeping the triple lock pension and allowing pensioners to escape paying income taxes despite the policy being opposed by swathes of economists and MPs.
Burnham said he would keep the triple lock pension, the mechanism that ensures the taxpayer-funded state pension rises by whichever is highest out of wage growth, inflation or 2.5 per cent.
Economists have widely labelled the triple lock pension as “unsustainable” given it means, over a long period of time, that the state pension outpaces workers’ earnings and loads more pressure on public finances.
Burnham’s official commitment brings him into line with the Labour government, the Conservatives and Reform UK, all of which have committed to keeping the policy that is popular among elderly voters.
In an interview with the i Paper, the Manchester mayor, who is hoping to win the Makerfield by-election this week ahead of a leadership bid, said the government needs to help pensioners who were being drawn into paying income tax thresholds which have been frozen
He said it would be “very damaging” to break from Labour’s manifesto commitment, adding that an initial decision to scrap winter fuel payments “still comes up on doorsteps a lot here in Makerfield”.
Several economists and think tanks have lobbied for the government to ditch the triple lock pension. The Office for Budget Responsibility said the policy cost three times more than initially estimated since its introduction by George Osborne, claiming it was “unsustainable” for public sector debt.
The sitting Manchester mayor also said he backed Rachel Reeves’ policy to allow pensioners to escape paying income tax as the state benefit rises above the personal allowance threshold. The state pension will rise above £12,570 from next year.
His bid to return to parliament has worried bond traders amid fears that his ascendancy to Downing Street could lead to fiscal rules being loosened to fund tax cuts for pubs, higher defence spending and possible nationalisation of key utility firms such as Thames Water.
Sarah Coles, head of personal finance at AJ Bell, warned he had “mastered the art of the non-specific, positive answer”, meaning it was difficult to predict how he would approach government were he to become Prime Minister.
Pantheon Macroeconomics analysts said that none of Burnham’s policies “lead to lower government spending or deregulation”.
“We think risks are skewed to more borrowing than expected, as tax hikes on increasingly narrow bases could raise less money than hoped, though the news on borrowing would likely emerge slowly,” a report by the economics consultancy said.