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‘Income tax hikes and end to pension triple lock’ could fund coronavirus deficit

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13/05/2020
The government could introduce income tax rises, end the controversial pension triple lock and freeze public sector pay to plug a £300bn coronavirus deficit, confidential papers reveal.

Treasury documents produced for chancellor Rishi Sunak reveal coronavirus will cost the exchequer £337bn this year, The Telegraph reports.

The Treasury declined to comment on the report.

Ending the pension triple lock would mean breaking the Conservative’s manifesto pledge.

The triple lock mechanism allows the state pension to increase each year by the highest of average earnings, inflation or 2.5%.

The state pension rose by 3% in 2018/19, 2.6% in 2019/20 and 3.9% for 2020/21.

Andrew Tully, technical director at Canada Life, said the triple lock makes a big difference in periods of relatively low earnings growth and low inflation which the UK has experienced over the last few years.

He said: “Recent above inflation increases to state pensions have been a very welcome boost for the many retirees who are looking to balance household budgets.”

However, there has been much debate over recent years about the long-term sustainability of the triple lock.

“There is no doubt the commitment comes with a huge cost attached, and this is only going to increase as the number of over 65s in the UK increases,” Tully said.

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