UK politics

State pension triple lock could be axed – how to replace it

Andy Burnham is facing growing pressure to scrap the triple lock on state pensions to help repair the nations’ finances.

Here’s how the Government could navigate any journey away from the policy – and what could replace it.

The British Chamber of Commerce (BCC) has, for the first time, called on Chancellor John Healey to abandon the policy, under which the state pension rises by whichever is highest of inflation, wage growth or 2.5 per cent each year.

The BCC argued that replacing it with an inflation-matched raise (a single lock) could save £3.3bn in two years. Currently, the triple lock costs £146bn a year.

Smoothed earnings link

Mostly following wage growth but rising with inflation if there’s a temporary price shock.

Double lock

Removing the 2.5 per cent guarantee, rising with the higher of inflation or wages.

People build up credits through work and activities, and retirement age is determined by individual health.

Why is it controversial?

The Labour Party committed to keeping the triple lock in its 2024 manifesto. Going back on this would likely alienate older voters, who are generally more likely to go to the polls in an election than younger generations.

‘The triple lock has got to go’

There is no longer a financial or moral justification for keeping the triple lock, but scrapping it represents a political risk that no prime minister has felt like taking.

It was only introduced to rebuild the value of the state pension after decades in which it had fallen relative to earnings – not necessarily as a permanent settlement.

The inescapable fact is that most of us are living longer and collecting pensions for longer. Someone has to pay for that, and the bill goes to people of working age.

Frequently consuming drinks at very high temperatures increases the risk of oesophageal cancer – cancer of the food pipe or gullet – UK research suggests.

A three times higher chance

The study, from Oxford Population Health at the University of Oxford, included nearly a million people and found those who drank “very hot” drinks had about a three times higher risk of oesophageal .

Hot liquid may damage the cell lining of the food pipe as it travels down to the stomach, which could increase the risk of cancer developing, though the overall risk is low.

How hot is too hot?

The research, published in the , did not record the temperature of drinks. But the International Agency for Research on Cancer has classified drinking beverages above 65°C as “probably carcinogenic”.

Drinking six or more hot beverages a day also increases the risk, data from 977,282 middle-aged men and women in this latest study shows.

What to do

• Letting drinks cool down before drinking or adding cold milk can negate the risk, experts agreed.
• Researchers said the temperature at which coffee and tea is drunk in Western populations is estimated to be .
• “More research is needed to identify the exact drink temperatures linked to increased risk,” the researchers added.

The researchers said that one or two in every 10 oesophageal cancers could be avoided if people stopped consuming hot drinks.

The cancer is rare, though, with only around 1 per cent of the UK population at risk of being diagnosed with this type of cancer.

• Other factors, such as smoking, pose a comparatively bigger risk for developing oesophageal cancer.

Don’t make these money moves before next month’s Budget

With next month’s Budget fast approaching, speculation over what the Chancellor might announce is rife.

But history suggests making moves before the red box is opened can leave people worse off. Here is what to avoid.

Taking tax-free cash early

• One of the most obvious reactions to is to take the 25 per cent tax-free lump sum before the rules potentially change.
• The Institute for Fiscal Studies proposed cutting the lump sum to £100,000 in 2024 but the change has still not been implemented.
• Ian Cook, chartered financial planner at Quilter Cheviot, warned that taking the lump sum could undermine long-term retirement plans, and means the money loses the opportunity to remain invested.

Another rumoured Budget policy change is that the capital gains tax (CGT) rate could increase, which can tempt investors to sell assets now and pay today’s tax rate.

• However, this can mean paying more tax than needed if assets are sold in bulk, as there are multiple tax-free allowances before CGT is owed.

Giving away too much

With speculation that inheritance tax (IHT) could be raised, people often use gifting to avoid it, as gifts given more than seven years before death are exempt from IHT.

However, experts warn that rushing into this can lead to people giving away more than they can afford.

Making a hasty property move

There have been suggestions that the recently introduced mansion tax could be charged on homes worth £1.5m or more, rather than the current £2m.

Eamonn Prendergast, chartered financial planner at Palantir Financial Planning, said people should not panic and instead “ignore speculation when making a property purchase or sale decision, and act as if there was no speculation” rather than making a move they don’t really want.

But experts warn that the biggest trap is becoming so worried about the Budget that you stop making sensible financial decisions altogether.

Jason Hollands from wealth management firm Evelyn Partners says: “For investors and savers, the sensible approach is to focus on decisions that make sense under current rules rather than trying to second-guess the contents of a future Budget.

Hundreds of thousands of unemployed young people may see their benefits replaced with employment support under Government welfare reforms.

Here’s what we know.

Alan Milburn, the Government’s youth unemployment tsar, suggested many young people who are not in education, employment or training (Neets) – including those diagnosed with conditions like ADHD and anxiety – should see a shift in the state support they receive. “Work beats welfare every single time,” he said.

Why The Netherlands is a blueprint

• Milburn was visiting The Netherlands as part of a “fact-finding mission” as he prepares to publish his final recommendations in a landmark report about young people and work.
• This year, the UK topped for the first time since 2013.
• According to research from the independent think-tank The Resolution Foundation, if Britain’s Neet rate mirrored the Dutch rate, 600,000 more young adults would be in work.
• In The Netherlands, , whereas in Britain, support is generally for unemployment and centralised via the universal credit benefits system.

High anxiety levels

Figures from the Organisation for Economic Co-operation and Development (OECD) rank the UK at the top of the charts for anxiety levels among younger people, but The Netherlands comes in second.

Milburn highlighted how this doesn’t lead to low participation levels, adding: “Just because you’ve got a condition, or even because you’ve got the diagnosis, shouldn’t mean that you aren’t able to work.”

Nearly a quarter – around 250,000 – of young people who are classed as Neets are estimated to have mental health conditions such as depression and anxiety, according to Department for Work and Pensions data.

The number of young people claiming Personal Independence Payments (PIP) for mental health conditions such as anxiety and neurodevelopmental conditions such as ADHD has also increased.