Other tax changes also slated to fund the cost of the pandemic
The state pension triple lock could be scrapped as the government tries to recover the £337 billion cost of fighting the coronavirus pandemic.
Chancellor Rishi Sunak has been advised to reform the guarantee by Treasury officials, according to a document seen by The Telegraph.
Treasury insiders told the Chancellor: "Stopping the rising cost of the pension triple lock would produce savings of c.£8 billion p.a. when compared to the base case."
The triple lock was implemented by the coalition government in 2011 to protect the state pension against inflation.
It guarantees that the state pension rises annually by whichever is the highest of price inflation, average earnings growth or 2.5%.
Should the pension triple lock be scrapped?
Experts have debated the triple lock guarantee since it was first announced a decade ago.
Some experts have criticised it for creating intergenerational inequality between working-age households, who have seen little wage growth over the last decade, and those who are retired.
The Social Market Foundation think tank last month called for the triple lock to be scrapped to pay for coronavirus.
Replacing the triple lock with a 'double lock' that removed the 2.5% element could save £20 billion over the next five years, according to the think tank.
But charities warn that scrapping the triple lock could make hundreds of thousands of pensioners worse off.
Age UK estimates that 700,000 more pensioners could fall into poverty by 2050 if the government waters down the triple lock.
Tax increases across the board
The Treasury is considering a wide range of other tax rises affecting workers and homeowners, as well as pensioners.
Rises to income tax, VAT, national insurance and corporation tax are under consideration to refill government coffers.
Officials think a one percentage point increase in the basic rate of income tax, from 20% to 21%, would raise about £5 billion a year, according to the Treasury document.
VAT receipts plunged to £2.3 billion in March this year after the economy stalled during the lockdown. That is a £5 billion drop compared to the the same month last year.
Most goods have a VAT charge of 20%, up from 17.5% in 2011. Another increase in the rate of tax is being discussed by the Treasury to "raise fiscally significant amounts."
Other ways to cover coronavirus costs
Freezing public sector pay is also being considered by the government. Plans presented to the Chancellor estimate that a two-year freeze on public sector pay could save £6.5 billion in 2023-2024.
Treasury officials have also suggested introducing a “surcharge” to pay for the NHS and social care.
Introducing “green taxes” are also under consideration to help repay the coronavirus bill.
The Treasury did not respond to a request for comment by the time of publication.
Why bother looking for another excuse
Don't know why they keep looking for an excuse to remove the triple lock, they were always going to do it anyway. An austerity measure where only elderly retirees will be directly affected so who cares.
Paying for Covid-19
How about cutting back the perks that the House of Lords get. We have the largest Second House in the world, it costs us millions every year, and so few Lords actually vote. The perks are disgusting, they can just get out of a taxi, sign in and drive off again. This needs sorting before any other cuts are made elsewhere.
reducing the triple lock.
These people in think tank committees ,have no ideal of the real world, the triple lock basic increase doesn't cover the council's increase every yr,so the pensioners really are not having a rise but a decrease.we should have increases to RPI. Funny how companies & Government depts, increase their prices on RPI.
Cutting state pension triple lock to pay coronavirus bill
As an OAP I am fully in favour of this option being considered to pay for the cost of the coronavirus outbreak. And since we are "All in this together" I look forward to MPs flagging up some suggestions of their "lead by example" ideas for cutting the £500+ billion annual cost of Westminster, their own extremely generous pensions, HS2 and several other "national/political vanity" projects.