Faisal Islam: Triple lock move is significant, but it's a gamble

Prime Minister Andy Burnham has made a significant announcement regarding his plans for the triple lock, which will have far-reaching implications. The triple lock, a policy currently protecting state pensioners, is set to undergo changes that could save billions of pounds over the coming decades. Burnham's move, described as a gamble, is intended to reassure pensioners by linking the state pension to annual increases in price rises or 2.5%, whichever is higher.

This change, however, will phase out the link to yearly average earnings, which currently determines the rise in the state pension. The policy aims to maintain the state pension at a level that it will reach in 2030, as a percentage of earnings. This shift is more significant than a simple adjustment and requires the support of government ministers and MPs.

The Institute for Fiscal Studies estimates that had Burnham's changes been implemented since 2011, it would have reduced the annual cost of the triple lock by more than half, saving £9 billion each year. Government sources indicate that the decision to implement these changes now will save around £15 billion annually by 2040. Burnham's announcement was supported by the notion that bond markets would appreciate a UK government willing to make difficult decisions.

Former Chancellor Rachel Reeves may have anticipated a similar reward for her decision to eliminate the winter fuel allowance, which was later reversed. The triple lock is just one of several major policy debates the government must address, including energy and post-Brexit policy, which Burnham hopes will garner support from both the markets and the public.