Webb blames overreaction for 'triple lock' speculation

Steve Webb has quashed speculation the Treasury could stop up rating pensions with price inflation and replace it with a lower figure next year to save money.

The pensions minister, speaking at the annual TUC Trustee Conference on Tuesday, said he would be "astonished" if the Treasury decided to ditch the "triple lock" guarantee and use a lower figure than Consumer Prices Index inflation of 5.2% for uprating pensions in April 2012.

It follows comments made by the Prime Minister's spokesman last month that September's figures are "usually" used to up rate pensions but Chancellor George Osborne's autumn Statement on 29 November may use a lower figure than price inflation.

The government's ‘triple lock' guarantee means pensions are normally up rated with the highest figure out of price inflation, earnings or 2.5% - but September's high inflation figure could force Treasury to scrap the guarantee.

Webb said: "There was a lot of overreaction to that press conference. What always happens is that the September inflation figures are published in October and there's a range of rules for updating.

"The Chancellor was asked last week and he said the triple lock was something he was proud of. I can't predict what he's going to say in two weeks' time but I would be astonished if the triple lock wasn't kept."

Pension increases for April are due to be based on September's CPI figure of 5.2%, one the highest CPI figure since records began.

September's spike in CPI inflation poses a headache for Treasury as it previously sought to reduce the cost of pensions by moving from the higher level of Retail Prices Index inflation.

However, the difference between the two figures in September was just 40 basis points, offsetting cost savings from the move.