Despite this, the government has been telling workers across the country to take a real pay cut. The Treasury also confirmed on Tuesday that the “triple lock” on pensions will be reinstated after its cancellation in the pandemic.
The move, which ensures that each year the state pension rises to the higher of inflation, wage growth or 2.5 percent, will see retirees’ annual pay exceed £10,000 for the first time.
The triple lock was introduced by the coalition government in 2010 in its first budget to ensure retirees and future retirees retain purchasing power when there is high inflation or wage growth.
It was postponed during the pandemic after a one-off surge in earnings made it difficult to stick with the deal.
The Chief Secretary to the Treasury told the House of Commons: “Next year, the triple lock for the state pension will apply.
“Subject to review by the Secretary of State, pensions and other benefits will be increased based on the September consumer price index which, based on current forecasts, is likely to be significantly higher than the projected rate of inflation for 2023/24.”
Along with the return of the triple lockdown, some six million Britons receiving state benefits will see an increase to bring them in line with inflation.
Both decisions will reportedly cost taxpayers up to £20bn.
It is estimated that approximately 12 million people receive a state pension.
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Universal Credit goes to six million people and will increase by the rate of inflation in September, which the Bank of England has projected at 10 percent.
Despite these announcements, the Prime Minister and the Chancellor of the Exchequer have urged the people and the Government to adopt “fiscal discipline” and insist that workers must accept wage increases below inflation.
An official read a statement from Downing Street in Cabinet on Tuesday which read: “The Prime Minister, the Chancellor and the Chief Secretary to the Treasury led a discussion on the importance of fiscal discipline.
“The prime minister said the public would expect the government to stay within its means at a time of global cost-of-living pressures.”
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The statement added: “The Chancellor emphasized that the Government had a responsibility not to take any action that could fuel inflationary pressures or reduce the Government’s ability to reduce taxes in the future.”
The rate of inflation is steadily rising and is expected to hit 11 percent this year, so it’s hard to see why a pay rise in line with inflation would be a negative when benefits and pensions will rise accordingly.
The government’s announcement of below-inflation wage increases was made amid the RMT rail strikes.
The industrial action, which began on Tuesday and will continue this week and potentially beyond the summer, saw staff pull out over pay disputes.