State pension may not be protected from cuts after 2020, Philip Hammond hints in Autumn Statement

Chancellor says state pension will continue to rise until 2020 - at which point it will be reviewed

Benjamin Kentish
Wednesday 23 November 2016 15:56 GMT
Philip Hammond said the Government would "review public spending priorities" before the next election
Philip Hammond said the Government would "review public spending priorities" before the next election

Chancellor Philip Hammond has hinted the state pension will no longer be ring-fenced from spending cuts after 2020 – raising for the first time the prospect of pensioners' benefits being cut as part of the Government’s austerity measures.

Until now, benefits for the elderly have been exempt from reductions and the Chancellor confirmed during his Autumn Statement today that the state pension would continue to rise until at least 2020.

However, he suggested that after that, changes may be needed in order to “tackle the challenge of rising longevity” - the growing financial costs of people living longer.

Mr Hammond said: “Despite the fiscal pressure, we will…meet our pledge to our country’s pensioners through the triple lock [on the state pension].

“But as we look ahead to the next Parliament, we will need to ensure that we tackle the challenges of rising longevity and fiscal sustainability, and so the Government will review public spending priorities and other commitments for the next parliament in light of the evolving fiscal position at the next Spending Review.”

The "triple lock" on the state pension is a guarantee to anually increase the amount paid to pensioners by 2.5 per cent, or in line with inflation or wage growth – whichever is highest.

Mr Hammond’s statement is the first suggestion that benefits for the elderly may no longer be exempt from spending cuts aimed at cutting the UK’s deficit.

The 2015 Conservative manifesto promised the party would “continue to increase the state pension through our triple lock" and vowed to “protect pensioner benefits including the free bus pass, TV licenses and Winter Fuel Payment”.

Former Prime Minister David Cameron had attacked those suggesting older people should be asked to contribute to cuts in welfare spending.

He said: "If you’ve worked hard during your life, saved, paid your taxes, done the right thing, you deserve dignity when you retire.

“These people have fought wars, seen us through recessions – made this the great country it is today. They brought us into the world and cared for us, and now it’s our turn – our fundamental duty – to care for them.”

Pensioner benefits would be protected "for as long as I am Prime Minister”, he promised.

The prospect of new spending cuts comes after the Office for Budget Responsibility downgraded the UK’s growth forecast in the wake of Britain’s decision to leave the EU.

A 2.4 per cent reduction in predicted growth in 2020 means Britain is likely to be faced with a £30 billion budget deficit rather than the £10 billion surplus promised by Mr Hammond's predecessor, George Osborne.

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