Chancellor Jon Healey urged to scrap triple lock as Budget looms
Key Points
- Chancellor Jon Healey has been urged to scrap the state pension triple lock ahead of the Budget in October.
- The BCC has for the first time called for the triple lock to be replaced by a single uprating mechanism tethered to CPI inflation.
- This change could be used to cut Employer NI for under-25s, lowering the cost of hiring and getting more young people into work.
- The BCC also advised that the government support businesses with their energy bills and give business rate relief.
The British Chambers of Commerce (BCC) has for the first time called for the government to scrap the triple lock to cut welfare costs.
The prominent business organisation has welcomed indications from Andy Burnham’s government that he will back businesses and pursue growth, but said bold changes are required to deliver this goal.
Newly appointed Chancellor John Healey will present his first Budget on Wednesday 28 October, which is expected to bring significant changes to tax and administration, including a devolution-led agenda that will give local authorities more power and freedom.
Ahead of the Budget, the BCC has submitted its suggestions for the changes Healey should introduce to boost growth within the British economy.
One of the key recommendations of the BCC is that Healey cut Employer National Insurance for under-25s to lower the cost of hiring and get more young people in the UK into work. This measure would have a gross outlay of £5.1 billion.
How does the BCC propose this change should be funded? In part, by scrapping the triple lock and replacing it with an inflation-linked alternative.
The BCC suggests that Healey should replace the state pension triple lock with CPI uprating, which is estimated to cut welfare costs £3.3 billion over two years.
The triple lock mechanism means that every year, state pension increases by whichever is highest between CPI inflation, average earnings growth, and 2.5%.
Under the system suggestion by the BCC, state pension would be linked only to inflation, which would result in more measured increases that more closely reflect the current state of the economy.
In addition to cutting Employer National Insurance for under-25s, the BCC also suggests that the government should reduce energy and business-rates pressures and restore consistent, locally delivered export support to support global trade.
“These are practical, fiscally responsible steps that would give firms breathing space to invest, recruit and expand,” said BCC Director General Shevaun Haviland.
“They should sit alongside medium and longer-term reform on skills, infrastructure and business taxation.”
