BCC Calls for Scrapping Triple Lock State Pension to Cut Youth Unemployment Costs

The British Chambers of Commerce (BCC) is pressing the chancellor to scrap the triple lock state pension and replace it with annual CPI uprating, arguing the £3.3 billion saved over two years should instead fund relief on employer National Insurance contributions (NICs) for younger workers. The proposal, submitted ahead of the Autumn Budget, would extend the existing zero rate of employer NICs to cover workers aged 21 to 24, targeting what the government has acknowledged is a growing NEET crisis.

The triple lock state pension: what it costs and who pays

The triple lock has guaranteed the state pension rises each year by the highest of CPI inflation, average earnings growth, or 2.5%. Introduced for the 2011/12 financial year, it was suspended only once, in 2022/23, and has been pledged by successive governments. Age UK notes the current commitment runs through to 2030 and applies to both the basic and new State Pension, though not to private or workplace pensions.

The cost trajectory is steep. The Office for Budget Responsibility’s (OBR) July 2026 Fiscal Risks and Sustainability report projects state pension spending rising from 5% to 9% of GDP in the 50 years to 2075-76 in its baseline scenario. The OBR calculates that switching to earnings uprating rather than the triple lock could reduce the projected rise in primary spending by a fifth over that period.

The OBR’s July 2025 report, which models a different central projection endpoint of 7.7% of GDP by the early 2070s, found that the triple lock will have added £15.5 billion (0.5% of GDP) to annual state pension spending by 2029-30, roughly three times the £5.2 billion the OBR had initially estimated. Relative to pure CPI uprating, the triple lock is expected to have added £22.9 billion to annual state pension spending by the same point. The two OBR reports use different scenario assumptions; the July 2026 baseline of 9% by 2075-76 is the most recent central figure.

The Intergenerational Foundation puts current state pension spending at around £138 billion a year, or roughly 5% of GDP. Under a high-macroeconomic-volatility scenario, that share could reach 9.1% of GDP by the early 2070s; under a low-volatility scenario, 6.3%, a swing of 2.8 percentage points.

BCC’s case for redirecting the savings

The BCC, which represents more than 50,000 businesses across the UK, argues that scrapping the triple lock would generate £3.3 billion over two years, money it wants channelled into cutting employer NICs for entry-level hiring. The existing zero-rate band currently covers workers up to the age of 20; extending it through to age 24 would reduce the payroll cost of taking on younger staff at a time when over one million young people are classified as NEET.

Shevaun Haviland, director general of the BCC, was direct in her submission: ‘Pro-growth choices have never been more important. The chancellor must use his first budget to cut the cost of doing business, allowing everyone to reap the economic benefits. Piling more taxes on firms, would be a road to ruin. The quickest way to destroy business confidence.’

The BCC also urged the government to halt the expected 3.9% increase in business rates and to lower energy costs for firms, alongside additional export support.

When the issue was put to John Healey in his first speech as chancellor, he acknowledged youth unemployment as a problem but declined to address the triple lock directly, saying only: ‘We will outline our plans based on the outcomes and recommendations made by Alan Milburn.’

Reform already in motion, but the savings are long-dated

The political context has shifted since the BCC’s submission was framed. Andy Burnham announced that from April 2030 the triple lock arrangement will change: the state pension will rise at least in line with inflation or 2.5%, with a further uplift only where needed to maintain its value relative to earnings. The Institute for Fiscal Studies called the proposed change a ‘great improvement’, with deputy director Jonathan Cribb saying Burnham had ‘neutered the worst element of the triple lock.’ Cribb added a warning, however: ‘we should not expect this reform to save enough that it could fund universal social care in the next parliament.’

The government’s own state pension uprating analysis estimates the adjusted policy will generate in-year AME savings of £11 billion by 2039-40 and £30 billion by 2049-50, relative to the current triple lock (both figures in 2025-26 real terms). Those are meaningful numbers, but they accrue over decades, not over the two-year horizon the BCC had in mind.

For the record, the full new State Pension for 2026/27 stands at £184.90 a week (£9,615 a year), up from £176.45 in 2025/26. Recipients generally need at least 30 years of National Insurance contributions to claim the full amount. A snapshot poll of MoneyWeek readers found 74% considered the triple lock vital for pensioners, with 22% calling it unfair and expensive.

The House of Commons Library notes that before the triple lock, pensions had been uprated at least in line with prices since 1980, when the earnings link was severed. The question now is whether the Burnham reform, phased in from 2030, moves quickly enough to satisfy business groups or whether the BCC’s call for a faster, sharper cut will find fresh momentum at the next spending review.