The state pension is due to go up by 4.7 per cent in April, adding over £6bn worth of costs to the public finances

A bumper 4.7 per cent increase to the state pension next April will cost £6.3bn, according to calculations by Quilter for The i Paper.

The triple lock ensures the state pension increases each year in light with the highest of average earnings, inflation or 2.5 per cent.

Figures published by the Office for National Statistics this week showed that total pay, including bonuses, grew by 4.7 per cent between May and July and so this figure will likely be used to dictate next year’s rise.

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This would see the full new state pension go up from £230.25 to £241.05 a week, equivalent to an annual increase of £561.60. Calculations by Quilter suggest this will add £6.3bn to the state pension bill.

Yet should the lock be changed and rise by inflation – which currently stands at 3.8 per cent – it would cost around £5.14bn, which is just over £1bn less.

Adam Cole, retirement specialist at Quilter, said: “While the triple lock has undoubtedly helped protect pensioner incomes, it has become a blunt and costly tool.

“Labour is now undertaking the second stage of its pension review and the upcoming Budget will see the Chancellor looking for multiple ways to fill the fiscal black hole. Tackling the long-term sustainability of the state pension should be on the agenda, however unpopular that conversation may be.

“If not, we risk the thorny issue of the triple lock simply being kicked between governments, despite the fact it is becoming too expensive to ignore.”

The Chancellor is expected to have to raise taxes in November’s Budget, in order to fill a black hole in the public finances that experts predict could be tens of billions of pounds.

Though the increase in the state pension is largely already baked into the Government finances – with its fiscal watchdog forecasting last year that the state pension would have to rise by 4.6 per cent in 2026 – how much could be saved in tax increases if it instead went up by inflation, saving £1bn?

The i Paper spoke to experts to find out.

What tax rises could cover the triple lock cost?

Th rise in the state pension next year “is akin to an almost 1p rise in the basic rate of income tax,” according to Robert Salter, a partner at accountancy firm Blick Rothenberg.

He says a 1p rise in the basic rate is estimated at increasing tax revenues by around £7.5bn or so per year.

But freezing the state pension entirely is unlikely to be something that politicians could countenance.

So what about the £1bn that would be saved if the state pension were to go up by inflation instead of average earnings?

Salter suggests that this £1bn gap may be the difference between a rise in fuel duty, and no rise.

“Ending the ‘temporary’ 5p per litre relief on fuel duty – which is due to end next year – and then increasing the fuel duty rate by say a further 2.5p per litre could raise another £1bn or so,” he says.

“A 1p in the higher (40 per cent) rate of income tax could cover this extra £1bn,” he says.

“Other options could include increasing some ‘hidden taxes’ such as insurance premium tax. For example, an increase in insurance premium tax worth 1 per cent could raise say £600m.”

Figures from HMRC also indicate that a 1 per cent increase to the personal allowance – the amount someone can earn without having to pay tax, £12,570 – is also worth around £1bn to the exchequer.