Former Pensions Minister BARONESS ALLAMANN says that cutting state pensions would be a betrayal for Britain’s best.

Jeff Prestridge (The Mail on Sunday Personal Finance editor) pointed out seven days back that MPs can restore confidence in themselves this week. 

Tomorrow Conservative MPs have an opportunity to vote for their party’s Triple-lock Promise to Pensioners. Also, they can accept House of Lords suggestions that state pensions would increase according to earnings next year. 

Many pensioners will struggle to make ends meet due to the government’s proposal to eliminate earnings protection. For many years, state pensions have been supported by pension credit and state pensions. Make no mistake, the proposed 3.1 per cent increase represents a cut in real terms in the state pension – which is already the lowest in the developed world. 

Hard going: Removing the triple-lock earnings protection will undoubtedly increase hardship

Hard going: Removing the triple-lock earnings protection will undoubtedly increase hardship

Is it possible for one of the richest nations in the world to justify cutting pensions when inflation increases? 

Undoubtedly, hardship will rise if the triple lock earnings protection is removed. Pensioner poverty was rising even before the pandemic struck, with two million living below the poverty line and one million – predominantly women – in fuel poverty. Pensioners often feel that they need to make a choice between eating and heating, though fuel costs have rocketed and some may be unable to afford both. 

According to the Government, the suspension of earnings links is only for one year. Well, that is of scant comfort to millions relying principally – or entirely – on state payments to support their retirement spending. 

This is a wonderful year. The majority of elderly people don’t have enough money to last them the day. It is important not to undervalue pensioners.

A change in political mind is possible. Triple-lock promises to raise pensions, at minimum in line with earnings, was part of the 2019 Conservative manifesto. 

These commitments shouldn’t be broken easily, but the Commons approved the move within a few hours and with very little discussion. The House of Lords is asking MPs to reconsider their decision and take on board new information which they did not have when agreeing to scrap the earnings link. 

What is the new information? As that is the standard official earnings measure, the Government stated it needed to keep the triple-lock earnings coverage. 

This figure was inflated by year-on-year distortions from pandemic measures such as furlough, and using it would cost £5billion – unaffordable when public finances are under exceptional strain.

The House of Lords however pointed out that 8.3% could be adjusted for pandemic effects. 

According to the Government, it can’t produce accurate adjusted numbers so earnings protection must be abandoned and 3.1 percent used. This is based upon September’s inflation rate. Well, the Government’s claim does not stand up to scrutiny. They have all the statistical professionals at their disposal to produce an accurate figure. 

In any event, both the Office for National Statistics (ONS) and the Office for Budget Responsibility (OBR) have published estimations for the underlying earnings at below 8.3 percent but much higher than 3.1 percent. 

In fact, September’s consumer price inflation figure was biased downwards by exceptional factors such as the ending of the ‘eat out to help out’ scheme in 2020. The Budget last month confirmed that inflation would rise to a high of 3.1% next year. It could even reach 5% or 7.5 percent. 

Budget’s announcement of huge spending increases, as well as a variety of tax cuts also undermined Government’s affordability argument in breaking triple lock. 

Abandoning the triple lock was the Chancellor’s largest cost-cutting measure, but what would it say about our society’s values if Parliament reduces pensioners’ incomes during a cost of living crisis to help pay for lower bank and alcohol taxes? 

Our National Insurance welfare system includes state pensions. It is the deal that today’s seniors are paid by younger generations. 

While costs will rise with an aging population, that is part of the societal agreement. Senior citizens have already paid their share. 

Too many Chancellors see pensions as an acceptable target for raids when money is scarce. Pensioners deserve better. The Lords amendments will allow MPs the opportunity to honor their promises. Opting to go ahead with the 3.1% hike could cause a political backlash, as pensioners become increasingly angry and struggle to make ends meet. 

An honest society shouldn’t abandon its older citizens in this way. To force more seniors into poverty or hardship is betrayal for our best. 

Voting to ensure pensioners’ safety would be an excellent place for MPs to begin restoring public trust.

Baroness Altmann, who is also a Conservative Life peer and an expert on pensions and a well-known campaigner, is known as Altmann.