Andy Burnham, the current Mayor of Greater Manchester, has publicly affirmed his commitment to the state pension triple lock and a policy that would exempt pensioners from paying income tax. This declaration comes despite significant opposition from numerous economists and Members of Parliament, who argue the triple lock mechanism is fiscally unsustainable in the long term for the UK.
The triple lock guarantees that the taxpayer-funded state pension increases each year by the highest of three measures: average wage growth, the Consumer Prices Index (CPI) inflation rate, or 2.5 per cent. Economists have consistently warned that this mechanism, over an extended period, leads to the state pension rising faster than average earnings, thereby placing increased pressure on the nation's public finances. The Office for Budget Responsibility (OBR) has previously highlighted that the policy has cost three times more than originally forecast since its introduction, labelling it 'unsustainable' for public sector debt.
Mr Burnham's pledge brings his position into alignment with the Labour government, the Conservative Party, and Reform UK, all of whom have committed to retaining the popular policy among older voters. In an interview with the i Paper, Mr Burnham, who is campaigning in the Makerfield by-election with aspirations for a future leadership bid, emphasised the need to support pensioners being drawn into income tax due to frozen thresholds. He also stated that deviating from Labour's manifesto commitment would be 'very damaging', referencing past negative reactions to proposed changes like scrapping winter fuel payments.
Furthermore, Mr Burnham has expressed support for Chancellor Rachel Reeves' proposal to allow pensioners to avoid income tax payments as the state pension rises above the personal allowance threshold. The state pension is projected to exceed the current personal allowance of £12,570 from next year. This move is intended to alleviate the tax burden on pensioners whose primary income is the state pension.
Mr Burnham's potential return to Parliament has reportedly caused unease among bond traders. Concerns have been raised that his ascendancy to a senior government role could lead to a loosening of existing fiscal rules. Such a shift might facilitate funding for initiatives like tax cuts for pubs, increased defence spending, and potential nationalisation of key utility companies, such as Thames Water. Analysts at Pantheon Macroeconomics have suggested that Mr Burnham's policy proposals do not indicate a reduction in government spending or deregulation, implying a potential for increased borrowing if tax hikes on narrower bases yield less revenue than anticipated.