Pensions and benefits ‘to rise with inflation’
Pensions and benefits are likely to rise in line with inflation as Rishi Sunak and Jeremy Hunt seek to ensure the Autumn Statement is seen to offer some comfort at a time of deep spending cuts.
The Prime Minister and Chancellor are understood to have agreed the double pledge as they put the final touches to next week’s crucial budget which is expected to include some tough spending decisions.
Protecting the rise in pensions and benefits will enable Downing Street to appear in tune with those most vulnerable to cutbacks across all departments as the government looks to plug a £50bn hold in the public finances.
The plans, which will be announced on 17 November, are expected to see changes to inheritance tax and possible tax relief on pensions, but retaining the triple lock on pensions was a 2019 election pledge that Mr Sunak will be reluctant to break. His predecessor Liz Truss said she intended to stick by it.
The triple lock increases state pensions in line with the rate of inflation, wage growth, or by 2.5%, depending on which is the highest. Inflation rose to 10.1% in September which is used as the measure to fix pensions.
Breaking the Tories’ pledge on increasing benefits in line with inflation would also prompt a significant revolt from MPs.
The government is expected to freeze the “nil rate band” of inheritance tax — the rate at which people start paying the levy — for another two years until 2028, according to the Financial Times.
It is also likely that income tax thresholds will be frozen until 2027-28, thereby dragging more workers into the higher rate of 40p as salaries rise.
Another windfall tax on energy companies is also now being priced in by the markets.