The British Chambers of Commerce is calling for a triple lock update
Pensioners could be facing a new challenge to the state pension “triple lock” after a leading business group urged the Government to rethink how annual rises are set. The British Chambers of Commerce (BCC) says switching to inflation-only uprating could help pay for a targeted cut to employer National Insurance for under-25s, arguing it would make it cheaper to take on younger staff and tackle stubborn levels of youth worklessness.
The proposal lands just as ministers look for ways to balance the public finances ahead of Chancellor John Healey’s first Budget, with businesses warning against loading more costs onto employers. The BCC says the package is aimed at reducing the expense of employing people and running a company, while trying to “unlock investment” and support growth – but critics are likely to question whether pensioners should help fund the change.
At the heart of the debate is the triple lock, which guarantees the state pension increases every year by the highest of inflation, average earnings growth or 2.5%. The BCC wants that replaced with rises linked only to inflation, meaning pension income would grow more slowly in years when wages outpace prices.
According to reports of the group’s plans, moving away from the triple lock could save the Treasury £3.3billion over two years. The BCC argues that, if the savings are redirected into cutting employer National Insurance for under-25s, it could also reduce welfare spending by almost £10billion in the longer term as more young people move into jobs.
The organisation says firms are already struggling with rising costs, claiming domestic policies have pushed the cost burden for a typical small or medium-sized business up by more than 70% over the past decade. It says around a quarter of that increase has come since the 2024 Budget, and points to weak confidence, with only 17% of SMEs planning to increase investment this quarter – the lowest level since the pandemic.
Shevaun Haviland, director general of the BCC, said the Government was boxed in by the state of the public finances, while insisting businesses should not be hit with higher taxes. “We know the government is in a fiscal bind and its choices are limited,” she said. “But support for business is not just money out the door, it generates vital economic returns.”
She warned: “Piling more taxes on firms, would be a road to ruin. The quickest way to destroy business confidence.”
Alongside the pensions change, the BCC is also pressing for help on day-to-day overheads, including energy bills and business rates. It wants the Government to fund 75% of the Renewables Obligation for businesses and reduce multipliers used to calculate business rates, as well as offering stronger backing for smaller companies looking to export.
The triple lock suggestion is expected to prove politically sensitive, with campaigners likely to push back at any move that could mean smaller pension rises. With pressure building on ministers to identify savings while trying to boost growth, the BCC has become the first major business group to openly argue for replacing the guarantee.
The organisation says its wider package would bring down business costs quickly and encourage investment. Ms Haviland said: “We need to see immediate action on helping young people into work, cutting business rates and energy costs, as well as helping to support more SMEs to export.”
She added: “Taken together, we believe these measures can help light the touch paper for stronger growth.”
The BCC also wants a longer-term plan on skills, productivity, public investment and tax reform. Ms Haviland said: “Pro-growth choices have never been more urgent.” The Chancellor is being urged to “back business, cut costs and deliver growth.”
