Andy Burnham’s first speech to the Labour Party conference was received with great enthusiasm by party members. He said that he planned to grasp some of the big, difficult policy issues which governments have been avoiding for decades. And he announced radical proposals for the future of social care and the controversial state pension triple lock. This is a politically risky strategy, so what exactly is he proposing, and how are the public at large reacting?
1. What is the triple lock?
The ‘triple lock’ on state pensions is a rule which guarantees that the state pension will rise every year by the highest of 2.5%, inflation and average wages. It was introduced by the coalition government in 2010 to reduce pensioner poverty. As a result, the state pension is now £1,500 a year higher than it would have been if it had simply kept pace with average earnings since then. This is because of a ‘ratchet effect’: when prices rise most, pensions follow, and in the following year, when wages catch up, pensions rise again.
2. Andy Burnham is not ‘abolishing’ it
In 2024, the Labour election manifesto promised to keep the triple lock, and Andy Burnham has been clear that he will honour that promise for the current parliament. So, in 2030, the state pension will be at an all-time high.
However, he is proposing a new deal for pensioners from 2030, assuming a new Labour government is elected in 2029. Pensions will continue to rise, but with a different formula.
3. In the long term, the triple lock is unaffordable
Although people like to think that their pensions are paid out of ‘savings’, there is, in fact, no ‘fund’: today’s pensions are paid out of today’s taxes. So, any rise in the pension is paid for by today’s workers, and it is obvious that the state pension cannot continue to rise faster than working-age incomes forever.
And overall levels of taxation are already extremely high. One reason is the growing cost of ‘welfare’. But in government accounts, the state pension is included that figure. Together with other benefits like Housing Benefit, more than half the ‘welfare’ bill is spent on pensioners.
In an ageing society, that cannot continue indefinitely.
4. Social care is struggling
Most people have no experience of social care and never think about it. When they find out, they are horrified. It is a lottery. Nobody can predict what they may need at the end of their lives. Some of us will die in our own homes and never need any social care. But most of us will need some support, and some will need residential care for decades. None of us can tell which we are, but with residential care costing well over £1,000 a week, many people see their life savings swallowed and their houses sold to pay the bill.
And local authorities have to pay when your savings are gone. In 2010 social care (most of it for old people) accounted for 53% of council budgets; it is now 70% and rising. Councils are closing libraries and swimming pools to pay for social care. Meanwhile, the companies they fund to provide care struggle to find staff willing to take on the skilled and challenging work for little more than the national minimum wage.
5. British pensioners are not poorer than their European counterparts
It is often claimed that British pensioners are poorer than pensioners in other European countries. But the picture is complicated, because pension systems are organised in quite different ways in different countries.
Britain is unusual. Although many British pensioners depend entirely on the state pension and welfare benefits, most have some form of private pension, often linked to their previous job, and some savings. So, on average, in Britain, 50% of pensioners’ incomes comes from the state pension, while in half of all OECD countries the figure is above 90%. But, because living costs also vary, the average British pensioner’s income, adjusted for different prices, is around the average for Europe as a whole, though lower than most of northern Europe.
But averages are misleading. Because the state pension is low, those dependent on the state pension and other benefits alone, are significantly worse off..
6. This is the new deal
Burnham’s proposal is to guarantee that two of the three elements of the triple lock (2.5% and inflation) will continue to apply every year, and that the state pension will keep pace with average earnings over the longer term (removing the ratchet effect). Pensions will continue to rise, but over time the change will create significant savings, which will help to pay for social care.
The plan is that much more care will be provided in people’s homes, which is what most people want. But if they need residential care, they will pay the costs of food and accommodation, subject to a means test.
7. This is popular
On the day after Burnham announced his plan, the pollster Survation conducted a poll. They found that the speech had received an unusually high level of attention. Half the public had heard about the speech, and three quarters thought the proposals on pensions and care were the most important part.
Survation then explained the proposals and showed respondents two clips from Burnham’s speech, on the triple lock and on social care. Sixty-nine percent of respondents responded positively, including a third who responded ‘very positively’, with only 13% responding negatively. On the specific proposal to use the savings on the triple lock to fund social care, the balance was 64% in favour and 16% opposed.
Burnham’s gamble
Burnham, who talked in his speech about his personal experience of the system – losing his own father to dementia this month – will be pleased with the reaction. People have been asking for radical change, and this is one response.
His aspiration is that pensioners will see their incomes continue to rise, but be relieved of the fear of losing their homes and savings to social care costs. He has called for cross- party cooperation on planning this, and the opposition’s response, that he is ‘abolishing the triple lock’ doesn’t seem to be cutting through.
Perhaps, at last, we are going to see real reform.
