Boris Johnson under pressure over ‘bonkers’ £1,000-a-year state pension increase

Boris Johnson was facing fresh questions today over his plan to increase the state pension in line with inflation while demanding working Britons cool demands for more pay.

Government insiders and Tory backbenchers attacked the ‘bonkers’ plan to give retirees a double-digit boost next year after the Treasury vowed to reinstate its ‘triple lock’ pledge.

The bumper rise could amount to nearly £1,000 a year extra at the same time that ministers are insisting that public sector workers like train staff, teachers and nurses temper their demands to cool rampant inflation.

The headline CPI rate increased from an annual rate of 9 per cent in April to 9.1 per cent in May – a 40-year high, new figures revealed this morning. 

It is expected to hit 11 per cent this year and it is this massive surge that is fuelling the pension increase thanks to the triple lock – which means they rise by the highest figure out of inflation, average pay growth or 2.5 per cent each year. 

A 10 per cent rise would add £18.50 increase to the single-person’s state pension, taking it from £141.85 to £160.35, or a £962 rise annually.

This morning former Treasury minister Lord O’Neill attacked ministers’ refusal to scrap the triple lock.

The ex-Goldman Sachs economist told BBC Radio 4’s Today programme:  ‘It seems to me pensioners, given the pressure on fiscal policies and these inequality issues now for the past decade and beyond, the constant protection of pensioners seems ludicrous in itself and, in these circumstances, particularly crazy.’

Government insiders and Tory backbenchers attacked the ‘bonkers’ plan to give retirees a double-digit boost next year after the Treasury vowed to reinstate its ‘triple lock’ pledge.

This morning former Treasury minister Lord O’Neill – now a crossbench peer – attacked ministers’ refusal to scrap the triple lock.

Deputy Prime Minister Dominic Raab defended restoring the pensions triple lock, which will see the benefit rise in line with inflation, at a time when the Government is arguing against wages keeping pace with rising prices.

Chancellor Rishi Sunak suspended the triple-lock commitment for this year because it would have been abnormally high due to the post-pandemic rise in earnings.

The Government will spend an extra £10billion on state pension payments if inflation hits 10 per cent by September, when the next increase is decided.

Deputy Prime Minister Dominic Raab defended restoring the pensions triple lock, which will see the benefit rise in line with inflation, at a time when the Government is arguing against wages keeping pace with rising prices.

He told Today ‘They (pensioners) are particularly vulnerable and they are disproportionately affected by the increase in energy costs which we know everyone is facing.’

But one insider last night told the Telegraph: I think this sounds bonkers. If you are going to stick to the line on inflation, you have to show restraint across the board.

‘People will start to see through the contradictions. If we confine ourselves to this gerontocracy, it obviously doesn’t have a very long lifespan.’

The Government had committed £37 billion to help people cope with rising costs, he said, but ‘at the same time we have got to stop making the problem worse by fuelling pay demands that will only see inflation stay higher for longer and that only hurts the poorest the worst’.

On Monday a new report revealed around one in seven 65-year-olds were in income poverty in late 2020 due to the state pension age rising from 65 to 66.

A key effect of the rise, between late 2018 and late 2020, was that 65-year-olds missed out on pension income of £142 per week on average, said the Institute for Fiscal Studies think-tank.

The rate of absolute income poverty – less than £260 per week for a couple without children – for those this age rose by 14 percentage points to 24 per cent by late 2020. Emily Andrews, of the Centre For Ageing Better which funded the research, said: ‘It is crucial the Government gets serious on improving access to work for people in their 60s.

The report said: ‘The reform caused absolute income poverty rates (after accounting for housing costs) among 65-year-olds to climb to 24 per cent, some 14 percentage points higher than – or more than double – the 10 per cent, that we estimate it would have been had the state pension age remained at 65.’