The government has suffered a defeat in the House of Lords over its plans to restrict increases in the state pension next year by temporarily suspending the triple lock.
Yesterday afternoon (November 2), the Lords voted by 220 to 178 to back an amendment to the Social Security (Up-rating of Benefits) Bill that would see the earnings link in the triple lock kept in place next year.
The government had temporarily suspended the wages element of the pensions triple lock for 2022/23 to avoid a disproportionate rise of the state pension following the pandemic.
Under triple lock rules the state pension is increased by the highest of earnings growth, price inflation or 2.5 per cent a year, and there were concerns this meant it would rise by more than 8 per cent next year due to a distortion caused by the pandemic.
The amendment, which was brought by Baroness Ros Altmann, intended to maintain the link between pension uprating and earnings.
However, it noted the secretary of state should set another earnings figure rather than the 8 per cent, which Altmann said the government had the power to do.
The amendment received support from peers of all parties.
However, it is expected to be overturned in the House of Commons where the bill has now been sent for further debate and where the government has a larger majority.
In the debate yesterday, Altmann said: “The state pension will always be a call on younger taxpayers and, with an ageing population, it will always be a tempting target to raid.
“But the state pension is the basis of the majority of pensioners’ income in retirement, and it is part of the social contract in our welfare state, on which our society is based. It underpins the national insurance system.
“If we break that contract, even supposedly for just one year, I believe it will be setting a seriously dangerous precedent. Pensioners are not a cash machine for chancellors to take money from when wanting to fund other projects or tax cuts elsewhere, especially not in the eye of a cost-of-living storm.”
Commenting on the outcome of the debate, Steve Webb, partner at LCP and former pensions minister, said: “Even though no government likes being defeated in the House of Lords, sometimes they will consider a concession in order to get their legislation through. But on an issue like this, there seems no prospect of a government concession when MPs are asked to consider the issue again.
“An alternative measure of earnings growth could lead to a multi-billion pound bill which could cause the chancellor to re-write his Budget.
"By convention, the House of Commons has supremacy when it comes to financial matters and the Lords will come under great pressure to back down if the Commons simply vote down today’s amendment."
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