Is the pension triple lock SAFE?

A senior minister suggested the elderly will be spared a real-terms pension cut as a rare improvement in the UK’s financial situation raised hopes swingeing spending cuts and tax rises may not be as tough as previously feared.

Nadhim Zahawi hinted today that Rishi Sunak and Jeremy Hunt could retain the ‘triple lock’, which was a Tory manifesto pledge, after the PM declined to rule out scrapping it yesterday.

The lock ties increases in the state payout to the rate of inflation, but with the Consumer Price Index at 10.1 per cent last month it could add billions to state spending next year.

However Mr Zahawi, the new Tory chairman, told Times Radio that while he could not pre-empt the autumn statement on November 17, Mr Sunak, when he was chancellor, ‘always protected the most vulnerable’.

He went on: ‘I am stating the obvious here, but uniquely pensioners cannot add to their income by taking on more work and therefore we have to be clear in how we make sure we help the most vulnerable in our society including those pensioners.’

It comes amid some potential good news on the economy. The PM and Chancellor are said to be considering using falling gas prices and a ‘dullness dividend’ reaped from financial markets after the change in government to rein in their drastic plans.

A new report today by the Resolution Foundation suggests a £40billion black hole in the nation’s finances could have shrunk by up to £15billion by the time they present their delayed autumn statement on November 17. This means cuts to public spending could be eased, and tax rises reduced or scrapped altogether.

The forecast has led to growing confidence in Downing Street that only minor changes will be required to public finances, the Telegraph reported.

Gas prices have fallen in recent days thanks to unseasonally warm autumn weather, while the yield on gilts – government bonds – has fallen back following the removal of Liz Truss as PM, meaning borrowing costs for the Government have dropped. 

However, it is not all good news. Ministers have yet to rule out changes to benefit payment rates that would mean recipients face a real-terms cut. The PM has so far refused to confirm that Universal Credit will also increase in line with prices.

Reports today suggest that income tax thresholds could also be frozen. With inflation at 10.1 per cent this means thousands could be dragged into higher brackets, generating up to £4billion for the Treasury, according to the Times.

It came as oil giant Shell added nearly 10 billion dollars in extra profit to its balance sheet today as gas prices remained high.

The business said its adjusted earnings more than doubled to 9.5 billion dollars (£8.2 billion) in the three months to the end of September when compared with the year before.

But profits are down compared with the company’s second quarter, when it made 11.5 billion dollars (£9.9 billion), as the price of oil slowly began to fall after months of multi-year highs due to the war in Ukraine.

On Thursday it announced plans to return another four billion dollars (£3.5 billion) to shareholders by buying back shares over the next three months, and said it would also hike the dividend by 15 per cent.

It brings the total payout to Shell shareholders to 26 billion dollars (£22.4 billion) so far this year.

But it will raise pressure for a fresh windfall tax. 

Liberal Democrat Leader Ed Davey said: ‘The Conservative government’s refusal to properly tax these eye-watering profits is an insult to families struggling to pay their energy bills.

‘Even the CEO of Shell has admitted that oil and gas companies should be taxed more to help protect vulnerable households.

‘It’s time Rishi Sunak introduced a proper windfall tax and used the extra money to support people facing heart-breaking choices this winter.’

The Chancellor yesterday announced that the medium term fiscal announcement would be delayed from Halloween to November 17 to allow time to rework the economic plan amid a £40billion black hole in the nation’s finances.

But analysis has today shown that the two-week delay cut the figure by up to £15bn with the interest rate on government gilts and international gas prices both falling swiftly.

The fortnight delay will also allow the Office of Budget Responsibility to base its forecasts for UK finances on more recent economic conditions.

Meanwhile, gas prices have halved, crashing from £190 per megawatt hour last month to around £90 in international markets.

A spokesperson for the OBR said: ‘Had our forecast been published on October 31, it would have been based on market determinants, including for gas prices and gilt yields, from the early to middle part of October.

‘Postponing the date to November 17 means that we will take a later window for these market prices.’

It comes after Mr Sunak talked tough on the economy n as he made a fiery Prime Minister’s Questions debut against Labour’s Sir Keir Starmer.

Minutes after he revealed he and Mr Hunt had delayed the fiscal statement by three weeks, the new Prime Minister warned the opposition that he would not shy away from ‘difficult decisions’.

He also goaded Sir Keir over the profligate spending plans of previous Labour leaders, congratulating him on realising that ‘spending has to be paid for’.

But later his press secretary would not commit to keeping the triple lock – which ties rises in the state payments to the largest of inflation, earnings or 2.5 per cent.

The Prime Minister’s press secretary yesterday said: ‘That is something that is going to be wrapped up into the fiscal statement, we wouldn’t comment ahead of any fiscal statements or budgets.

‘But what I can say is he has shown through his record as Chancellor is that he will do what’s right and compassionate for the most vulnerable.’

Shadow work and pensions secretary Jonathan Ashworth said: ‘Rishi Sunak stood on a manifesto in 2019 on a pledge to keep the triple lock. Now he’s threatening that promise to Britain’s retirees. 

‘With pensioners struggling under the Conservatives cost of living crisis, it’s clear that Rishi Sunak is not on their side.’

The markets have been calmed by the replacement of Mr Kwarteng and Liz Truss in the top jobs, potentially giving the new team more time to play with. 

But they are facing a serious task of how to find savings to fill in a black hole in the public coffers. 

Mr Hunt told broadcasters yesterday: ‘I want to confirm that it will demonstrate debt falling over the medium term which is really important for people to understand.

‘But it’s also extremely important that that statement is based on the most accurate possible economic forecasts and forecasts of public finances.

‘And for that reason the Prime Minister and I have decided it is prudent to make that statement on November 17 when it will be upgraded to a full autumn statement.’

The head of the International Monetary Fund backed Mr Sunak to steer Britain towards fiscal sustainability.

Kristalina Georgieva said  he was right to warn the public of difficult decisions ahead and welcomed what she said was Sunak’s clarity and constructive attitude that she knew from his time as finance minister.

She expects to speak to Mr Hunt in coming days.

Rishi Sunak puts his hope in a team of loyal backers (and a few surprises)… so who’s who in the new Prime Minister’s Cabinet?

DOMINIC RAAB 

Justice Secretary and Deputy Prime Minister

Mr Raab’s stint on the backbenches following Liz Truss‘s reshuffle was a brief one, having been rewarded for his loyalty to Rishi Sunak with a return to Government.

The karate blackbelt and former Foreign Office lawyer will be given an opportunity to pick up where he left off under Boris Johnson, as Deputy Prime Minister and Justice Secretary.

JEREMY HUNT 

Chancellor of the Exchequer

A vastly experienced minister across the many departments, Mr Hunt replaced Kwasi Kwarteng as Chancellor this month.

He put in a measured performance from the Commons despatch box as he tore up Miss Truss’s tax-cutting plans, calming the markets.

Mr Hunt, the longest-serving health secretary in British political history, keeps his job and remains in No 11 Downing Street.

SUELLA BRAVERMAN 

Home Secretary

Mrs Braverman is a leading figure on the Right of the party, and came out in support of Rishi Sunak during the latest leadership contest.

She returns as Home Secretary, a week after she was forced out of Government for breaking the ministerial code after emailing a sensitive document from a personal account.

Often outspoken, she recently blamed eco-protests across the country on ‘the Guardian-reading, tofu-eating wokerati’.

JAMES CLEVERLY

Foreign Secretary

Mr Cleverly retains his job as Foreign Secretary – one of the Great Offices of State – despite being an old ally of Boris Johnson. In fact, Mr Cleverly publicly endorsed Mr Johnson for PM in the latest leadership race and had previously been a staunch backer of Liz Truss.

BEN WALLACE 

Defence Secretary

Retaining former soldier Mr Wallace as Defence Secretary is likely to be an attempt to soothe the military community amid growing unease over defence spending. The Sandhurst graduate has been in post for more than three years, making him one of the longest-serving ministers to hold the same position.

STEVE BARCLAY

Health Secretary

Mr Barclay returns to his job in Government having previously been sacked as Health Secretary as part of Liz Truss’s reshuffle. He previously held the role for two months and was memorably interrupted by a heckler while giving an interview outside a hospital. Mr Barclay worked with Rishi Sunak at the Treasury during the pandemic. He will be expected to get a grip on NHS spending.

NADHIM ZAHAWI

Minister Without Portfolio

Mr Zahawi earned a reputation during the pandemic as a safe pair of hands and skilled media performer. But the former vaccine minister’s magic touch well and truly deserted him during the two recent Tory leadership races after a series of loyalty flip-flops.

OLIVER DOWDEN

Chancellor of the Duchy of Lancaster

Mr Dowden now holds the most senior Cabinet position after the PM. The ex-Culture Secretary has been rewarded for his unwavering support during the leadership races. He quit as party chairman after taking responsibility for the Tories’ disastrous by-election defeats in two seats in the summer.

GRANT SHAPPS

Business Secretary

Mr Shapps is another to have served across multiple government departments, most recently as Home Secretary less than a week ago following the departure of Suella Braverman. He was a prominent figure during the pandemic as transport secretary.

GILLIAN KEEGAN

Education Secretary

Mrs Keegan is the fifth person this year to hold the position of Education Secretary. She spent a year as health minister before moving to the Foreign Office as part of MissTruss’s doomed premiership.

She was forced to apologise earlier this year for an ‘error of judgment’ after continuing a meeting with grieving fathers despite testing positive for Covid part-way through.

PENNY MORDAUNT

Commons Leader

In a major humiliation, there was no big promotion for Miss Mordaunt, the former magician’s assistant who holds on to her position as Leader of the House of Commons.

She stood against Mr Sunak for the leadership this weekend, but pulled out at the last moment when it became clear she did not have the backing of enough MPs.

She appears to have paid the price for her failure to strike a deal with her rival.

MEL STRIDE

Work and Pensions Secretary

Mr Stride is well known to Rishi Sunak, having managed his campaign to replace Boris Johnson as prime minister. He publicly criticised Liz Truss’s ill-fated mini-Budget, saying it had put the Conservative Party’s reputation for managing the economy in jeopardy. The chairman of the Treasury Select Committee is a former president of the Oxford Union.

THERESE COFFEY 

Environment Secretary

A big demotion on the face of it for ex-health secretary Miss Coffey, though the fact she remains in Government despite her support of Liz Truss suggests the PM was keen to appease his predecessor’s followers. 

The self-confessed karaoke fan admitted she was ‘not the role model’ when it came to her own health after being questioned about her lifestyle. 

She left Downing Street yesterday by announcing she was ‘going home to Defra’ – a department which she served in for three years from 2016.

SIMON HART

Chief Whip

The former Welsh Secretary is not exactly a household name. But he takes on one of the most significant roles in Government, responsible for ensuring discipline within the Conservative Parliamentary Party.

SIR GAVIN WILLIAMSON 

Minister Without Portfolio

The former education secretary and master of the parliamentary arts and will attend Cabinet, a clear reward for his staunch backing of Mr Sunak’s campaign.

Other appointments yesterday: Michelle Donelan, Culture Secretary, Kemi Badenoch, International Trade Secretary, Mark Harper, Transport Secretary, Chris Heaton-Harris, Northern Ireland Secretary, Alister Jack, Secretary of State for Scotland, David TC Davies, Secretary of State for Wales, Lord True, Lord Privy Seal and Leader of the House of Lords, Victoria Prentis, Attorney General, Jeremy Quin, Paymaster General and Minister for the Cabinet Office, John Glen, Chief Secretary to the Treasury, Johnny Mercer, Minister for Veterans’ Affairs, Tom Tugendhat, Security Minister, Robert Jenrick, Immigration Minister, Andrew Mitchell, Minister for Development