Universal Credit boost urged as think tank calls for end to pension triple lock

Families struggling with rising living costs should get more support through Universal Credit and pensioners could lose their triple lock state pension guarantee, a leading think tank has said.

The Resolution Foundation, which has close links to Labour’s front bench, argue that scrapping the ‘triple lock’ on state pensions should be part of a wider programme that would free up money to end the controversial two-child cap on benefits.

Its chief executive, Ruth Curtice – a former senior Treasury official – said the Government must “think the unthinkable” in Rachel Reeves’ Autumn budget.

That includes ditching Labour’s manifesto pledge not to raise key taxes, accepting broad-based tax rises, and overhauling how families with children are supported.

She said: “Lifting the two-child cap is a rare example in public policy of an extremely well-targeted measure.

"On our projections, child poverty reaches record highs by the end of this parliament. Children in large families – half of them will be in poverty.

"Our job is to produce remarkable statistics, but that one still slightly takes my breath away.”

The two-child rule – introduced by the Conservatives in 2017 – prevents families from claiming child tax credit or Universal Credit for a third or subsequent child, saving the Treasury around £3.5billion a year.

Campaigners say it has driven up child poverty to “almost Dickensian levels”. Ms Curtice, whose father is the elections expert Sir John Curtice, warned that abolishing the policy would be the most effective way to help struggling households.

By contrast, she said pensioners had done comparatively well thanks to the triple lock – which guarantees annual increases in line with inflation, earnings or 2.5%. Over the past 20 years, living standards for pensioners have risen 21%, compared with just 7% for the rest of the population.

“Resolution has long said it would be better to peg pensions to average earnings rather than having this ratchet,” she said.

The think tank, which celebrates its 20th anniversary this week, also dismissed calls for a new wealth tax. Instead, Ms Curtice suggested reforming capital gains tax so that unearned income is not treated more generously than wages.

The recommendations come as Chancellor Reeves faces a tightening fiscal outlook ahead of November’s budget, with a likely downgrade from the Office for Budget Responsibility leaving her little room to keep her promises without further tax rises.