Sunak introduces the ‘Triple Lock Plus’

Another day, another big policy pledge from the Tories – and this time it’s a pitch for the grey vote. Rishi Sunak is pledging to cut tax for pensioners. A Conservative government would increase the personal allowance for pensioners in line with the Triple Lock by introducing a new age-related allowance. It is being billed as the ‘Triple Lock Plus’ whereby both the state pension and their tax-free allowance rise in line with the highest of earnings, wages or 2.5 per cent.

As things stand, tax thresholds are being frozen for three years – which would not only drag five million more into higher tax bands but mean the basic state pension would, for the first time, be subject to income tax as that threshold stays at £12,570. This so-called fiscal drag has been softened for workers via National Insurance cuts but not for pensioners: that would now change. This being an election campaign, the absence of a tax rise is being billed as a tax cut worth £95 for eight million pensioners next year and £275 a year by 2029/30 (see chart below).

Laura Trott, Chief Secretary to the Treasury, explains in the Daily Telegraph that…

…without change, next year pensioners would start paying income tax on their state pension alone.  That isn’t right. That is why, from April next year, we will increase the personal allowance for pensioners, a tax cut worth around £100 for eight million pensioners. Better still, to make sure the state pension never crosses the income tax threshold, we will ensure personal tax allowance for pensioners rises by the triple lock in each year of the next Parliament. A new triple lock plus.

The announcement comes as Labour is making inroads with the pensioner vote. This weekend, Labour took out a page two advert in the Mail on Sunday titled ‘an open letter to the pensioners of Britain from the Labour party’. In the letter, shadow work and pensions secretary Liz Kendall attacked Sunak over his ambition to abolish national insurance contributions ‘which help fund the state pension’. Starmer’s team see talking about the Tories and NI as a way to signal to pensioners as they grew up with the view that NI was all about funding their pensions and the NHS.

Yet this policy will raise questions of affordability. Labour is already attacking it as ‘another desperate move from a chaotic Tory party torching any remaining facade of its claims to economic credibility’. But even Tory politicians have raised questions over whether the Triple Lock is sustainable or fair – let alone the ‘Triple Lock Plus’. As the Work and Pensions Secretary Mel Stride said of the Triple Lock last year: ‘In the very, very, long-term, if you have an arrangement like the Triple Lock that keeps ratcheting up pensions by the highest of three different metrics – it seems to me that it does become unsustainable in the long-term.’

There have been Tory nerves over a potential pensioner backlash since the Budget which focussed on those in work (by cutting National Insurance). When Sunak appeared on Loose Women recently one of the panellists asked him: 'why do you hate pensioners?' This policy is aimed at addressing such criticisms – and trying to get the one age voter group that still leans Tory (a recent YouGov poll found the Tories still led at 33 points to 28) to keep doing so.

For now though, this policy coming soon after Sunak's call for mandatory national service for 18-year-olds appears to suggest the Tories are adopting a core vote strategy – trying to shore up the vote among the older ages so as to limit losses.