Published by Alexander Hitchcock on 24 November 2015
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Researcher Will Mosseri-Marlio wrote an article for Prospect ahead of the Spending Review announcement, arguing that the government should implement a new uprating system for working-age benefits and reform the triple lock pension policy to make the Prime Minister’s mantra that we “are all in this together” more credible:
“As Reform argued in its recent report, Updating Uprating, the government should work with the ONS and UK Statistics Authority to design a new index that specifically aims to reflect the price changes experienced by benefit recipients. We estimate the difference between this measure and CPI would be somewhere in the region of 0.3 per cent each year. This “wedge” might not sound like much, but over time the gains for beneficiaries are pronounced: by the end of a ten year period, the difference between a CPI-linked Jobseeker’s Allowance and Reform’s approach would be £155 a year. For families on low incomes, this could have a material impact on their wellbeing.
“Pegging the State Pension to a proportion of wages in the medium term, as is the case in Australia, would give the Chancellor space for additional generosity when inflation outstrips wage growth. In contrast to the triple lock, this would then be clawed back when earnings rebound. Returning the State Pension to the proportion of wages seen in 2010 would save the Government £20.9bn over the next five years.”
“If implemented, Reform’s recommended package of reforms could alleviate concerns about intergenerational unfairness and save almost £8bn.”
Click here to read the entire article.