The Bank of England is set to raise interest rates on Thursday as inflation in the UK continues to bite. City economists widely expect the central bank to increase its key rate from 0.25 percent to 0.5 percent in response to inflation hitting levels not seen for almost 30 years. It comes after the official inflation rate reached 5.4 percent in December, the highest level since March 1992, driven by soaring gas and electricity prices and the higher cost of food, clothes and footwear. The Bank has warned that inflation could peak at close to six percent by April, three times the two percent target rate set by the government.
The anxiety around the cost of living is being felt especially by those who are reliant on their state pension.
The Government announced last year that the triple lock will be suspended for a year, meaning the state pension payments would not increase in line with average earnings (an 8.3 percent rise).
Instead, the payments are set to increase in line with September’s inflation figure of 3.1 percent.
However, given that living costs have continued to increase, experts are urging Prime Minister Boris Johnson and Chancellor Rishi Sunak to bring the state pension in line with the latest inflation figures.
Baroness Altmann of Tottenham, a former pensions minister, told the Telegraph last month: “We had a manifesto promise to protect pensioners who are now on the cusp of a cost of living crisis.
“It is so awful to think that we have so many pensioners now living in poverty. What are they meant to live on?”
She called on ministers to increase one-off payments to pensioners, including the warm homes discount for those on lower incomes, to prevent hardship and a rise in excess deaths over the winter.
Another former pensions minister, Steve Webb, added: “This is a one-off situation that justifies using forecasts because we knew that this year’s figures would be volatile and erratic.
“It’s no good saying to a pensioner who is sitting at home with the heating on that they will get an increase next year… and it’s not just the poorest pensioners that this affects.”
Caroline Abrahams, the charity director at Age UK, suggested that bringing back the triple lock policy was one of a number of measures that should be considered by the Government.
She said: “There’s no doubt that the rapid rise in the cost of living is hitting many older people hard, with worse likely to come in the spring due to soaring energy costs, according to the experts.
“It is certainly open to the Government to change its mind about pausing the triple lock this year, to help pensioners to cope at this inflationary time, but there are many other options available to ministers too.
“What really matters is that they bring forward one or more really effective measures that protect older people on low and modest incomes from financial distress and all the anxiety that goes along with it, and do so quickly.
“Token gestures will not be enough. There’s a need to direct substantially more money to the poorest pensioners to enable them to keep their heads above water this winter.”
A Government spokesperson responded: “We recognise people are facing pressures with the cost of living and we want to ensure pensioners receive all of the support they are entitled to.
“Our winter fuel payments are supporting over 11 million pensioners with their energy bills and we are continuing to encourage those eligible for Pension Credit, and the wide range of other benefits it can provide, to make a claim.”
In recent months, some on the state pension have suffered delays in receiving their payments, while the Government has also broken its promise to save the free TV licence for over-75s.
Over-75s now have to pay just like everyone else, although the licence fee has been frozen for two years.
Sally West, policy manager at Age UK, said on the organisation’s website in August: “It’s asking a lot for older people to believe that any scaling back of the triple lock would only be temporary, rather than permanent.
“This is especially true when we know that some of the prominent voices arguing for a suspension of the triple lock in response to the pandemic, are the same people who have called for its abolition in the past.
“Moreover, the fact this Government declined to step in and save the free TV licence for over-75s (another manifesto commitment), hardly helps to build trust.”