The basic state pension is expected to increase by 3.9% next year, equating to an additional £375 for pensioners who retired before 2016, according to provisional figures published today by the Office for National Statistics.
The rise is determined by the ‘triple lock’, a mechanism ensuring that state pensions increase each year by the highest of three measures: 2.5%, inflation, or average wage growth. Recent data show that average weekly wages grew by 3.9% between May and July, making this the relevant figure for the upcoming increase.
Currently, the basic state pension stands at £9,615 annually, and the proposed 3.9% uplift would take this to nearly £9,990. This rise is almost certain to exceed inflation, which is calculated using the Consumer Price Index averaged over the year to September, with results released on 21 October.
Andy Burnham, Labour Party leader and Prime Minister-designate, has reiterated his commitment to maintaining the triple lock on state pensions as he prepares to take office. During a recent Reddit ‘Ask Me Anything’ session, Mr Burnham emphasised the importance of honouring the manifesto pledge, describing the measure as crucial and highlighting Labour’s assurance to uphold it throughout the parliamentary term following the 2024 general election.
Responding to questions about the triple lock, Mr Burnham said, “I appreciate there’s a lot of debate about this, but it is important the commitment in the manifesto stands.”
He also expressed frustration at critics of his economic policies, referencing his strong record in Manchester. While affirming adherence to Labour’s 2024 manifesto and Chancellor Rachel Reeves' strict fiscal rules, he acknowledged some flexibility regarding tax policy.
Mr Burnham proposed adjusting business rates, suggesting higher rates for warehouses and large developments on city outskirts to enable reductions for pubs-proposing a 20% cut-and potentially lifting some high street businesses out of business rates altogether. These measures form part of his broader economic strategy aimed at supporting local businesses and promoting fairer taxation.