Mr. Paul Johnson:

I mean in different areas, indexation is set aside very frequently. There are default rules about income tax thresholds and benefits. I have not been looking at adding this up but my guess is that certainly for tax thresholds, what happens is more frequently not in line with the default than it is in line with the default. The basic rate threshold was raised more quickly in one period of time than inflation while in others, it did not really rise with inflation at all. The higher threshold was bumped up and down, although broadly speaking, it was down relative to earnings over time. There were bits of the tax system, in particular the threshold for the very highest rates, which are not indexed at all.

Allowances relating to pension taxation are a rather important aspect. For example, allowances for how much you can put into a pension have been changed quite dramatically over time. Again, that is not something that most people notice most of the time but one of the biggest tax changes in the past decade has been the very big cuts in those allowances. Essentially, there is plenty of scope for British Governments and British Chancellors to do whatever they want whenever they want in terms of these indexations.

For the state pension, the legislation only allows for earnings indexation. It is policy that is set each year that decides on the triple lock. Most years, working-age welfare benefits do rise in line with prices. Between 2015 and 2019 when as part of the Conservatives carrying out their manifesto commitment to bring about a significant reduction in welfare spending, the easiest part of that politically for them was a four-year freeze on the level of welfare benefits. It is certainly a very big cut, which got very little negative publicity.