Tories said state pensions would rise “crazy” as workers were urged to accept pay cuts

Lord Jim O’Neill, a former Treasury Secretary, called the protection of pensioners “ridiculous” in the face of increasing hardship for working families.

The Tories have been told it is “crazy” to increase state pensions in line with inflation while refusing to meet demands for pay rises for millions of public sector workers.

Economist Lord Jim O’Neill, a former Treasury Secretary under George Osborne, called the protection of pensioners “ridiculous” given the increasing hardship facing working families.

The Consumer Price Index (CPI), a measure of inflation, rose to 9.1% in the 12 months to May – the highest level in 40 years – as pressure on the cost of living for Britons mounts.

Ministers are locked in a battle with unions over demands for decent pay rises for public sector workers, with further strikes at the railways planned for Thursday and Saturday.

Workers were told not to expect inflation-dampening wage increases, but to see staff face real wage cuts.

As more than 40,000 RMT union members took part in the first of several strikes on Tuesday, ministers confirmed the triple lockdown on pensions – which increases payout by no more than 2.5%, average wages or inflation – will return in April.

Lord O’Neill told the Today programme: “It strikes me as pensioners – given the pressures on fiscal policy and these inequality issues now for the last decade and beyond – the continued protection of pensioners is itself ridiculous and particularly insane in these circumstances be .

“I speak as someone who is making a little progress.”

The Crossbench peer warned the country was in a “very fragile position”, adding: “Rather than jumping from one issue to another and seemingly trying to cater to every whim, the government needs to formulate an articulated and clear economic policy framework in my view.” , which we have none of.”

Deputy Prime Minister Dominic Raab defended the decision to provide inflation-based pay rises for pensioners and pledged to stand firm against union demands for a decent pay rise for workers.

Mr Raab said today: “They (pensioners) are particularly vulnerable and disproportionately affected by the rise in energy costs that we know everyone is facing.”

He said ministers had pledged £37billion to help people deal with rising costs, but added: “At the same time we need to stop making the problem worse by fueling wage demands that will only fuel inflation stays higher longer, and that only hurts the poorest the worst”.

In one round of interviews, Mr Raab insisted that the government should maintain wage moderation for public sector staff.

“I am afraid we cannot allow the unions to win this dispute in the very militant way they have been operating because it will only harm the poorest in our society,” he said.

Downing Street has repeatedly said wage increases for workers would make it harder to stem inflation, which is expected to rise to 11% in the autumn.

The justice minister said the strikes were “deeply regrettable” and that reforms to the railways were needed.

He added: “I think Network Rail is taking the right approach. We know the cost of living challenge is there, we know it affects workers across the board.

“But the only thing that will keep inflation high and wage packages undercut longer is if we have public sector wage increases that are beyond the responsible. And that’s what this is about.

“Especially to protect the wages of those on the lowest incomes, we need to hold the line.”