Ditch pension triple lock and consider scrapping some VAT exemptions, says OECD

The OECD urged the UK to move away from the “state pension triple lock” and consider scrapping some VAT exemptions to increase room for government spending, arguing reforms are needed to support living standards and economic performance. In a report, the Paris-based organization described the triple lock as “unusually generous,” guaranteeing the state pension rises each year by whichever is highest among inflation, wage growth, or 2.5%. It said the indexation increases public expenditure pressure and creates fiscal risks by exposing budgets to supply shocks, calling for timely change despite political-economy constraints and the existing commitment through the current Parliament. The OECD estimated the measure adds about £15.5 billion per year to state pension spending by 2029–30, up from an earlier £5.2 billion estimate. Ministers, including pensions minister Torsten Bell, reiterated that the triple lock remains for the current parliament but added focus on private pension reform, while the OECD warned against further increases to national insurance contributions.