The National Institute of Economic and Social Research (NIESR) has called on Prime Minister Andy Burnham to abandon the costly triple lock pledge for state pensioners born after 1953, warning there is "clearly no scope" in the Treasury to fund his social care plan. The proposed cut would reduce the weekly state pension increase by £6, from £241 to £247, affecting those eligible for the new state pension—men born after 1951 and women after 1953.
Triple Lock Under Fire
During a Reddit AMA before succeeding Sir Keir Starmer, Burnham vowed to maintain the triple lock, which guarantees the state pension rises by at least 2.5% each year. However, NIESR argues that this commitment is unsustainable given the current fiscal landscape. The Institute for Fiscal Studies estimates the triple lock costs between £12 billion and £12.6 billion annually, straining public finances already weakened by economic shocks.
NIESR's report stresses that the government's £24 billion of fiscal headroom has been largely eroded by the energy crisis triggered by the war in Ukraine. The think tank recommends that Burnham's pledges on defence and cost-of-living support should be funded through higher taxation or spending cuts, not borrowing. “There is clearly no scope for the Treasury to fund the prime minister’s policy blitz,” a NIESR spokesperson said.
Economic Forecasts Paint Grim Picture
The NIESR outlook also includes revised economic projections. Inflation is forecast to average 3.1% in 2026, up from 2.6% in June, and is expected to peak at 3.8% in February 2027—down from an earlier forecast of 4.1%. It is not predicted to return to the 2% target until 2029, a year later than previously anticipated.
The Bank of England is expected to hold interest rates steady this year and in 2027, but NIESR sees a case for raising the benchmark rate from 3.75% to 4% if energy prices rise further. GDP growth in the second quarter of 2026 is projected at 0.4%, following 0.6% growth in the first quarter. Meanwhile, the unemployment rate is forecast to peak at 5.3% in early 2027, slightly below the 5.5% predicted in April.
Funding the Social Care Plan
Burnham's social care plan, which aims to reform the sector, requires significant funding. The NIESR report suggests that without cuts to pension spending or other areas, the government would need to raise taxes or reduce expenditure elsewhere. The £6 weekly reduction would save billions over time but faces political backlash from pensioner groups. The triple lock has been a cornerstone of Labour's pension policy, and any changes could alienate older voters.
Critics argue that targeting those born after 1953 is arbitrary and unfair, as they have contributed to the system for decades. Supporters of the cut say it is necessary to ensure intergenerational fairness and to fund essential services like social care. The debate is expected to intensify as the government prepares its next budget.
