Millions of workers could see £6,000 boost to pension pots
The Government plans to double the number of UK pension megafunds by 2030.
This could result in an investment of £50 billion in infrastructure projects, which the Treasury hopes will boost the economy and drive up higher returns for savers.
Since taking office we've delivered pay rises for over 3 million workers by increasing the National Minimum and Living Wage, and secured trade deals with key international partners.
Today I spoke to the unions about our ongoing commitment to working people. pic.twitter.com/aXjJomWMfA — Rachel Reeves (@RachelReevesMP) May 28, 2025
Chancellor Rachel Reeves said: 'We're making pensions work for Britain. These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses – the plan for change in action.'
The Treasury said the schemes are expected to save £1 billion a year through economies of scale and improved investment strategies.
Under the reforms, the local government pension scheme will be consolidated, reducing the current 86 administering authorities into six pools.
Deputy Prime Minister Angela Rayner said: 'The untapped potential of the £392 billion local government pension scheme is enormous.
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'Through these reforms, we will make sure it drives growth and opportunities in communities across the country for years to come – delivering on our plan for change.'
Sir Steve Webb, a former Liberal Democrat pensions minister who is now a partner at consultants LCP (Lane Clark & Peacock), described it as a 'truly a red letter day for pension schemes, their members and the companies who stand behind them'.
He said: 'The Government has clearly been bold in this area and this opens up the potential for this surplus money to be used more productively to benefit scheme members, firms and the wider economy.'
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Telegraph
4 minutes ago
- Telegraph
Inflation risks are taking Britain towards the debt-crisis cliff edge
The UK's consumer price index was 3.6pc higher in June than the same month last year – significantly above the Bank of England's 2pc inflation target. The broader retail price index rose even more, by 4.4pc. Unemployment is also up, hitting 4.7pc during the three months to May, a four-year high. And last week's double dose of downbeat data came against a backdrop of broader economic weakness, with GDP having shrunk in both April and May. It's now screamingly obvious that Labour's crude Keynesianism – 'pump priming' the economy by upping state borrowing and spending – isn't working. Worse than that, this Government's actions are pushing Britain towards a budgetary crisis every bit as serious as that in 1976, when the UK was forced to go 'cap in hand' to the International Monetary Fund for a bail-out. Chancellor Rachel Reeves's higher tax rates have been hammering economic activity, causing tax revenues to fall. Yet Labour's leadership, driven by ideological fervour and fearing the party's increasingly strident far left, keeps pushing spending up regardless. The sharp rise in the rate of employer National Insurance contributions (NIC) has caused hiring to plunge since it was announced in last October's Budget, undermining NIC revenues overall. Labour's higher capital gains tax (CGT) rates mean investors aren't selling assets, causing CGT revenues to plunge. A far more punitive non-domicile tax regime and much higher inheritance tax on businesses has sparked an exodus of wealthy individuals, with countless UK entrepreneurs moving abroad. The top 1pc of earners generate 30pc of all income tax receipts, with the top 5pc paying almost half. But when you push the seriously rich overseas with a student-politics tax regime, they often stop investing and close their UK-based businesses. So the revenue loss goes way beyond income tax, spreading across the gamut of employment and corporate taxes too. As a former asset manager, I talk to many senior people at the global pension funds, insurance companies and other institutional investors that lend governments serious money. They ask me about UK politics and public policy and I ask them what they are doing and why. So when I say financiers are not only deeply unimpressed but seriously alarmed at this Government's actions, that's directly from the horse's mouth. Anyone remotely financially literate can see investors are demanding ever higher returns to bankroll this increasingly spendthrift Government. The interest rates our Government pays to borrow are now at their highest level since the late 1990s, but on a far greater volume of debt. The UK's benchmark 30-year gilt yield last week breached 5.5pc – and has been way above 5pc for the whole of this year. Borrowing costs, then, are consistently much higher than the 4.85pc peak they momentarily touched during Liz Truss's 'mini-budget' crisis in October 2022. Yet the broadcast media's reaction, hysterical back then, is now ridiculously complacent. Draw your own conclusions as to why. Last August, just after Labour took office, the 30-year yield was below 4.5pc. Since then, increasingly sceptical investors have pushed it a full percentage point higher. During this same period, the Bank of England has cut its benchmark borrowing cost from 5.25pc to 4.25pc, a percentage point in the opposite direction. 'Market rates' and 'policy rates' moving against each other are a clear sign of brewing systemic danger. The warning signals are flashing red, yet almost no one in a political and media class addicted to government spending wants to acknowledge what's going on. In April 2024, the Office for Budget Responsibility (OBR) forecast the Government would borrow £87bn over the subsequent 12 months. When that financial year ended in April 2025, the figure was £148bn, an astonishing 70pc more. Endless discussions about whether 'fiscal headroom' in 2029/30 is £5bn or £10bn is utter displacement activity. We can't even get within £60bn of our borrowing estimate within the current financial year. The reality in front of us is that Britain borrowed £148bn last year and £110bn or three quarters of that increase in our national debt went on interest payments on debt previously incurred. Our public finances resemble a Ponzi scheme. Reeves and Keir Starmer cite crowd-pleasing nonsense about 'school breakfast clubs' and 'world-class public services'. As if it's fine to drive the UK into bankruptcy, provoking a full-on bail-out and all the resulting financial and economic chaos because the money is being spent under virtue-signalling headings. 'Borrowing costs are going up around the world', bleat fresh-faced government spin doctors. Yes, but UK gilt yields and total debt service payments are now easily the highest in the G7. Plus, much of the private money invested in UK gilts is 'levered' – or also borrowed. And when the backers of the Government's backers get worried, as they now are, they will eventually 'margin call' creditors, igniting a sudden and self-reinforcing sell-off that sends yields and economy-wide borrowing costs into orbit. On top of all that, Britain is a stark outlier when it comes to the share of 'index-linked' state debt – with regular interest payments rising in line with RPI inflation. Around 30pc of UK gilts are 'linkers', compared to just 12pc in Italy (the G7's next highest) and 5pc in Germany and the US – reflecting long-standing market concerns about vast UK government off-balance-sheet liabilities, not least the trillion-pound-plus bill for still insanely generous pensions for state employees. Britain's sky-high share of index-linked state debt, a long-standing ruse to keep headline yields as low as possible, is coming home to roost. As inflation rises, debt service costs ratchet upward, resulting in ever more borrowing to pay those costs as our tax-strapped economy struggles. That's why, when last week's higher-than-expected inflation number emerged, yields rose sharply. The UK is close to the debt-crisis cliff-edge – and ministers can't say they weren't warned.
The Herald Scotland
an hour ago
- The Herald Scotland
What has Scotland gained from having voted in 37 Labour MPs?
It's also the case that, by rejecting out of hand the Octopus Energy proposal of seven or eight "zones" for electricity, the Labour Government is ensuring that Scotland's economy will be more depressed than needs to be the case. Had zonal pricing gone ahead, there would have been a boost in economic activity for Scotland, with energy-hungry business operations looking to relocate, or to expand, their business in Scotland to benefit from the lower price of electricity. Our NHS and public services, hospitality sectors, and every other business would have benefited instantly. Across Dumfries and Galloway we previously sent Tory MPs to London to do their bit for Scotland in government but, instead, we got Brexit. And that despite Scotland voting 62% Remain in the EU. And now we have Labour in Westminster failing to as much as rejoin the European Economic Area with a single market) with the resultant loss of freedom of movement for people both ways; nor the customs union to facilitate the movement of trade and services. The question must surely now be: "What is the benefit to Scotland of being a part of this UK that is so much against what the people of Scotland want and need?" Ian Waugh, Dumfries & Galloway Indy Hub, Dumfries. SNP's wise policy on offshore wind Jill Stephenson (Letters, July 13) claims that the Scottish Government does not own any energy sources for wind generation and that these are actually the property of private companies. Is this the same Jill Stephenson who berated the Scottish Government three years ago for selling wind farm seabed licences at a much lower price as compared to Westminster? How do you auction off something you do not own? As regards the efficacy of that decision, it is perhaps worth noting a January 2022 article in the industry magazine WindEurope which commented as follows: 'The Crown Estate Scotland has announced the results of the 'ScotWind' seabed tender. They auctioned 8,600 km² of sea space which could host almost 25 GW of offshore wind. 17 projects won. With 15 GW most of the capacity that will now be developed to be floating offshore wind, the system the Scots have used for awarding seabed leases ensures the new offshore wind farms will be delivered at the lowest cost for taxpayers. "The option fees are much lower than in the UK's recent Offshore Wind Lease Round 4. Scotland chose a more sensible tender design with a maximum price ceiling of £100,000/km². This has avoided bidding at very high prices – which keeps the costs of offshore wind low for consumers. As seabed leasing costs are usually passed on to the electricity consumer, a price ceiling ensures that new offshore wind volumes are also delivered at the lowest cost for consumers." A business ceases to become commercially viable when its customers can no longer afford to buy its products. So keeping that price as low as possible becomes a pre-requisite for any energy policy. However Westminster has not only ignored that logic but has transferred the high prices it charged for its licences onto Scottish consumers. This has led to a number of businesses in Scotland closing as rising energy costs have made them uneconomic. How could any Scottish Government create a viable business in these circumstances? Robert Menzies, Falkirk. Read more letters We need a vote on Holyrood The cost of running Holyrood is spiralling out of control. With a total budget of over £41 billion it is questionable if Scotland really needs this expensive additional layer of government. 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The aforementioned academics argued that the calculation is immeasurable. But someone will measure it. They always do. With or without hankies. Archie Beaton, Inverness. Has the Scottish Government got it right on offshore wind? (Image: PA) Crack down on charities This Government is spending, or should that be wasting, money like water and taxes are increasing and increasing. Cuts must be made. What about starting with charities? There are 200,000 charities in the UK. For the tax year to April 2025 the tax relief for these charities and their donors totalled £6.7 billion. Yes, billion not million. That is £6.7bn less to spend on where it is more needed. The Government should be more critical in allowing new charities and challenging existing charities with a view to reducing the numbers to see where savings can be made and whether they are still in the public interest. Just think what could be done with a 10 per cent saving. Top of the hit list should be the 1,717 migrant charities (up from the 2020 level of 1,104) which play a dominant role in preventing the deportations of migrants who had no right to remain in the UK. Clark Cross, Linlithgow. UK is at war with Russia Of course the latest Russian drone attacks on Ukraine should be condemned ("Zelenskyy's plea as Ukraine is bombarded", July 13), but let's not forget that Russia proper is being attacked with UK-supplied Storm Shadow missiles, meaning the UK is effectively at war with Russia (that Brits aren't firing them is immaterial). Given the increasing importance of cyber warfare, Keir Starmer (who recently told us to prepare for war) is risking attacks on UK infrastructure. If the coming winter is marked by regular power cuts, with hospitals having to run on generators, we'll know who was stupid enough to up the ante. George Morton, Rosyth. Hypocrisy over Trump I see that the usual suspects are lining up to protest at the forthcoming visit of President Trump – left-wingers, the Greens and the SNP. Not that long ago, there was a visit from the Chinese leader, head of an odious government, with very few of the above turning out to protest. Why not? William Ballantine, Bo'ness.
The Herald Scotland
an hour ago
- The Herald Scotland
Why did ScotGov support award of Scots ferry contracts to firms abroad
MV Isle of Islay is expected to be taking passengers in Scotland nine months before MV Glen Rosa that is still being completed by state-owned shipyard firm Ferguson Marine. It has been confirmed successful sea trials mean that MV Isle of Islay - one of the first of the four ferries being built in Turkey in the wake of Scotland's ferry fiasco - is on target to be delivered by September. But there are now concerns that Scots companies have lost out in playing any part in making any contribution to the building of 11 new lifeline vessels to serve the nation's islands as part of a Scottish Government plan to help end the nation's ferry fiasco. Why did CMAL award ferry contracts to shipyards in Turkey and Poland? The Scottish Government-owned ferry and port owner CMAL awarded contracts to build ferries to Cemre Shipyard in Turkey and Remontowa Shipbuilding in Poland based on competitive procurement processes. These shipyards demonstrated the capability to deliver vessels that met technical specifications, timelines, and budgetary constraints. The Cemre yard and (inset) one of the vessels it is delivering for Scotland (Image: .) Remontowa was awarded a £147.5m contract to build seven all-electric ferries, having received the highest score during the bidding process. The Turkish shipyard Cemre Marin Endustri was contracted to construct four new roll-on/roll-off passenger and vehicle ferries for Scotland's west coast ferry network. These vessels are intended to enhance services on routes to the Isle of Islay and the Little Minch corridor, which includes Skye, Harris, and North Uist. The deals together were worth £206m. Why was Ferguson Marine, the Scots state-owned shipyard firm not awarded these contracts? The Inverclyde firm had faced several challenges that affected its competitiveness in the bidding process. Firstly a lack of experience. The shipyard had not completed any ferries in the past five years, failing to meet the tender's requirement to show recent experience in building at least three similar ferries. Read more: Public inquiry demand over 'scandal' of hundreds of Scots jobs lost in ferry fiasco 'Laughable': Turkey-built ferry to be delivered seven years faster than fiasco ship Cost to repair CalMac ferry now £2m more than to buy replacement 'Final nail in coffin'. Scots fiasco firm loses out on big ferry contract to Poland 'Material uncertainty' over Scots ferry operator future amidst £45m funding hike 'Mismanagement': Public cost of Scots ferry fiasco firm hits £750m amidst overspends It had financial and operational issues. Ferguson Marine's previous projects, such as the Glen Sannox and Glen Rosa, have been significantly delayed and over budget, raising concerns about the yard's financial stability and project management capabilities. CMAL's procurement process emphasised technical and financial suitability. Ferguson Marine is understood to have not scored as highly as other bidders in these areas. What were the issues with the Glen Sannox and Glen Rosa projects? The issues with Glen Sannox and Glen Rosa has become known as Scotland's ferry fiasco. Glen Rosa and Glen Sannox's arrival to serve islands was scheduled to be online in the first half of 2018. Glen Sannox finally went into service on January but islanders are still awaiting the arrival of Glen Rosa. Glen Sannox (Image: Andrew Milligan/PA) Both vessels were significantly behind schedule and over budget. Glen Rosa's delivery has been delayed until spring 2026, with costs soaring. Costs of the entire project are currently expected to have multiplied at least five-fold from the original £96m price. The delays were down to design and construction flaws. Problems included inadequate planning, quality issues, and a lack of detailed construction plans with CMAL and Ferguson Marine blaming each other for failings. The contract also lacked adequate financial safeguards, such as a builder's refund guarantee, which would have protected public funds in case of project failures. What are the implications of awarding contracts to overseas shipyards? Awarding contracts to overseas shipyards has both advantages and disadvantages. Overseas shipyards like Cemre and Remontowa, it is felt, have demonstrated the ability to deliver vessels on time and within budget. These shipyards have experience building similar vessels, ensuring adherence to technical specifications. But the disadvantages are the economic impact on Scotland. Excluding domestic shipyards like Ferguson Marine can have negative effects on local employment and the Scottish shipbuilding industry. Ferguson Marine has previously indicated that losing ferry contracts had an effect on its ability to continue as a going concern. Ferguson Marine (Image: Colin Mearns) The decisions on the contracts have sparked political criticism and debates over the government's commitment to supporting domestic industries. What lessons have been learned from these experiences? While the decision to award ferry contracts to overseas shipyards was based on factors like cost, efficiency, and technical capability, it has raised important questions about the future of domestic shipbuilding in Scotland and the need for improved procurement practices. The challenges faced in ferry procurement have highlighted the need for robust procurement processes and that contracts should include builder's refund guarantees to protect public funds. It has also shown the requirement to balance the need for cost-effective procurement with the importance of supporting local industries.
