Andy Burnham proposes changing pension triple lock from 2030 to help fund care service

Prime Minister Andy Burnham announced at Labour’s conference in Liverpool on 29 September that he plans to change the UK state pension triple lock from April 2030, directing savings toward a proposed National Care Service. Pensioners would still receive annual increases of at least inflation or 2.5%, but the yearly link to earnings growth would change. The plan would affect future pension increases and the funding of a care service Burnham wants to introduce after the next election.

How Burnham’s pension formula would work

The existing triple lock raises the basic and new state pensions each year by whichever is highest: average earnings growth, consumer price inflation or 2.5%. Burnham said that promise would remain in place throughout this parliament. Under his proposed formula, the annual increase would be at least inflation or 2.5%, while the pension would retain its value relative to average earnings over time.

The Institute for Fiscal Studies says the proposed system still has a third element: an increase when needed to keep the pension aligned with cumulative earnings growth since the new policy began. That differs from applying each year’s earnings growth as an automatic annual benchmark. The distinction matters when inflation or the 2.5% floor has already lifted pensions faster than wages.

Under the current arrangement, such years can permanently raise the pension’s value relative to earnings, the IFS says. Its analysis describes the proposed change as removing that permanent ratchet while preserving the annual minimum increase. The pension could therefore grow more slowly than under the existing rule in some years without falling below the inflation or 2.5% floor.

What the change could save

The institute also calculated that the proposed rule would still have increased the state pension by 6% in real terms between 2010 and 2026 in that hypothetical exercise. Actual increases after 2030 will depend on future inflation and earnings. The IFS describes its illustration as an example, not a forecast of pension rates for individual years.

BBC economics editor Faisal Islam reported that government sources expect the change to save around £15bn a year by 2040. That is a long-term government estimate. The IFS expects savings in the next parliament to be small and says they would not be enough to fund universal social care. The size and timing of any eventual saving therefore remain central to the funding debate.

Burnham’s proposed National Care Service

Burnham said the pension change would help build a National Care Service that starts with support at home and is free at the point of use. He promised that older people living on the state pension or little more would no longer face care charges under his plan. Those are commitments for a proposed service, rather than benefits people can claim now.

He said the government would begin preparatory work now, seek advice from Louise Casey’s review and introduce the service in the next parliament. Burnham also said it would be fully funded without borrowing. The Associated Press reported that the service is contingent on Labour winning the next general election and would be paid for through taxation. Its detailed design and eligibility rules remain to be settled.

Political support and opposition

Angela Rayner called Burnham brave for opening a discussion about the triple lock. She said people might consider a change if they could see a concrete benefit, such as social care, instead of savings being used to fill a budget shortfall. Her response underlines why Burnham has tied the pension proposal to a specific service.

Unite general secretary Sharon Graham opposed using pension changes to pay for care. She said Burnham had not raised the issue when they met that week and argued that placing the cost on people living on around £12,500 a year would be morally wrong. She has argued that a universal care service should be funded by contributions from everyone who benefits from it.

Burnham acknowledged the political risk. The Associated Press quoted him saying he might pay a political price and that someone had to go through the pain barrier. For pensioners, the immediate position is that the existing triple lock continues during this parliament. Any later effect will depend on the final policy, future economic conditions and whether the proposed change is enacted.