Anonymous 'sources' have told the BBC Newsnight programme that the government is considering ending the automatic annual increase in benefits in line with inflation.
According to the report, senior government figures are proposing a two-step change to the payment of benefits. At first there would be a freeze to a wide range of working-age benefits to last for two years. After that a new link would be introduced between benefit payments and increases in wages. The change would not be implemented quickly, but could be in place by 2014 – in time for the next General Election. Potential savings are 'simply mind-boggling' – as much as £7 billion a year.
But one benefit not being targeted is the state pension. Pensions are currently protected by a 'triple lock', rising each year by either inflation, earnings, or 2.5 per cent – whichever is highest.