Latest news with #InstituteforFiscalStudies
Daily Record
2 days ago
- Business
- Daily Record
Scots could face £3bn tax rise and government spending cuts
David Phillips, Head of Devolved and Local Government Finance at the Institute for Fiscal Studies (IFS) warned taxpayers could face higher taxes. Scotland could be facing up to £3billion of tax rises and spending cuts, the Sunday Mail can reveal. It comes after it emerged last week Chancellor Rachel Reeves is facing a £41 billion budget black hole. The economic problems stem from the government's numerous u-turns on policies like winter fuel payments and welfare reform as well as low economic growth and higher borrowing. Experts have warned whatever Reeves decides to do to balance the Treasury's books, there will be a direct impact on Scotland - either through tax rises or spending cuts. David Phillips, Head of Devolved and Local Government Finance at the Institute for Fiscal Studies (IFS) said Scotland's could be impacted by up to £3billion. He warned that Scottish taxpayers could face higher taxes if Reeves chooses to raise reserved levies such as VAT, corporation tax or capital gains taxes. Equally if Scotland's block grant is cut First Minister John Swinney will need to decide whether to plug the hole with increases to taxes controlled by Holyrood, or by slashing public services. Philips said: 'If Rachel Reeves cuts spending, the impact on the Scottish government's funding will depend on what is cut. 'Cuts to reserved spending wouldn't affect government's funding but would affect Scots directly. 'Cuts to services that are devolved in Scotland would mean cuts to the Scottish Government budget via the Barnett Formula, or the block grant adjustments for devolved benefits if she revisits cuts to disability benefits, for example.' If the Chancellor raises taxes rather than cutting services, the impact would be directly on Scots rather than through a reduction in the Scottish government's funding as the majority of taxes are reserved to Westminster. Phillips said if Reeves chose to raise taxes that are devolved to Holyrood, like income tax, it would lead to a cut to the block grant, leaving ministers to decide whether to iplement their own tax rises or bring in spending cuts. He said: 'If those in the rest of the UK are paying more tax to support things that benefit Scotland too, either Scots need to pay more tax or need to forgo those benefits. 'That's what this system of block grant adjustments achieves.' Influential think tank the National Institute of Economic and Social Research (NIESR) last week predicted Reeves would need to raise taxes to meet her own strict fiscal rules. It recommended a 'moderate but sustained increase in taxes ' to ensure Reeves meets Labour's 'stability rule' - to get the current budget into surplus by 2028/29 by bringing in more money than it spends on public services and welfare. NIESR predicted the government would miss this target by £41.2 billion and said tax rises were not just a possibility but were now inevitable. Join the Daily Record WhatsApp community! Get the latest news sent straight to your messages by joining our WhatsApp community today. You'll receive daily updates on breaking news as well as the top headlines across Scotland. No one will be able to see who is signed up and no one can send messages except the Daily Record team. All you have to do is click here if you're on mobile, select 'Join Community' and you're in! If you're on a desktop, simply scan the QR code above with your phone and click 'Join Community'. We also treat our community members to special offers, promotions, and adverts from us and our partners. If you don't like our community, you can check out any time you like. To leave our community click on the name at the top of your screen and choose 'exit group'.
Daily Mail
29-07-2025
- Business
- Daily Mail
Millions of workers could lose £18,000 in state pension if they have to wait until 68
Millions of people in their early 50s could miss out on up to £18,000 if the state pension age is hiked to 68 faster than expected, new research reveals. A new Government review of the state pension qualifying age has triggered speculation it might have to rise substantially to contain rapidly rising costs. The state pension is currently worth £230.25 a week or nearly £12,000 a year if you have paid enough National Insurance years to receive the full amount, and it starts at age 66. The qualifying age is already set to rise to 67 between 2026 and 2028, and then the next increase is technically not scheduled until the mid 2040s, which will affect those born from 6 April 1977. The Government is expected to give at least 10 years' notice of a change in the timetable, but it could act straight after the current official review concludes in 2029, according to wealth manager Rathbones. This could mean the rise to 68 is accelerated to 2039-41, which would affect workers now aged 51, 52 and 53, it says. Rathbones has crunched the numbers for future rises under the state pension triple lock, and reckons the annual amount could hit £17,774 in the year someone who is 51 now turns 68. When a 52-year-old is 68 - in 15 years' time - they could miss out on a year of state pension worth £17,340. And someone who is 53 now could lose out on £16,918. That is based on the state pension rising by at least 2.5 per cent a year, which is the minimum increase required under the triple lock pledge - so could easily be higher, unless politically difficult steps are taken to soften the popular guarantee. The triple lock means the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent. The Government has promised to stick to the triple lock for the whole of this parliament. Although questions have been raised about affordability the Government has effectively, if not in so many words, told the experts working on the next two state pension age reports to operate under the assumption the triple lock pledge will remain in place indefinitely. How much does a comfortable retirement cost? What YOU will need The Government is required by law to review the state pension age every six years, so it has ordered two reports which will look at when to hike to 68. It will examine this in light of life expectancy, public spending and population trends. But a recent report by independent think tank, the Institute for Fiscal Studies, warned that without reform of the state pension triple lock, the retirement age would have to rise to 74 by 2069. Meanwhile, the Government has launched a new Pensions Commission to try to stop future retirees ending up poorer than older people today. It says nearly half of working age adults are saving nothing at all into a pension - despite the success of auto enrolment into work schemes - and nearly 15million people are under-saving for retirement. Rebecca Williams, a financial planning boss at Rathbones, says: 'With longevity increasing and population pressures mounting, future generations appear set to face a less generous state pension regime than that enjoyed by many of today's retirees. 'The situation appears particularly precarious for those in their early 50s who face a real prospect of missing out.' She says people in their late 40s and early 50s have come to her firm asking for help getting their retirement finances on track, given the shifting goalposts when it comes to pensions. 'The state pension alone is not enough for a comfortable retirement,' cautions Williams. 'Individuals need a broad foundation built on workplace pensions, private savings, and the ongoing support of pension tax relief. 'Cracks are beginning to show in the system,' she warns.
Scottish Sun
21-07-2025
- Business
- Scottish Sun
State pension age could rise AGAIN as government launches review amid soaring costs
The review, required by law every six years, is being launched earlier than expected POT LUCK State pension age could rise AGAIN as government launches review amid soaring costs Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) MILLIONS of Brits may face delays to their state pension as the government launches a review of the pension age. Currently set at 66, the pension age is already scheduled to increase to 67 between 2026 and 2028, and to 68 between 2044 and 2046. Sign up for Scottish Sun newsletter Sign up 1 Work and Pensions Secretary Liz Kendall giving a speech at the Coin Street Neighbourhood Centre in London, introducing the next phase of the Pensions Review Credit: PA However, experts have warned these timetables may need to be accelerated to keep the system sustainable. Work and Pensions Secretary Liz Kendall has today announced a fresh review into the state pension age, currently set at 66, with plans to assess whether it remains appropriate given factors such as life expectancy. The review, required by law every six years, is being launched earlier than expected, following warnings about the financial strain of supporting an ageing population. The triple lock, which guarantees state pension increases in line with inflation, wages or 2.5%, has become increasingly expensive, with costs expected to hit £15.5 billion by 2030. Experts warn this could make promises to maintain the policy unsustainable without raising the pension age. The Institute for Fiscal Studies (IFS) has previously suggested the pension age may need to rise to 74 to fund the triple lock in the long term. The announcement also follows warnings from the Office for Budget Responsibility that the UK's finances are on an "unsustainable" path. It predicts that rising healthcare and pension costs could drive national debt to 270% of GDP by the early 2070s. Meanwhile, workers aren't saving enough into private pensions. Speaking in west London, Ms Kendall revealed that future pensioners are on track to be poorer than those retiring today, driven by skyrocketing living costs and insufficient pension savings. She said that nearly half of working-age adults are not saving anything for retirement, adding: "Put simply, unless we act, tomorrow's pensioners will be poorer than today's." Young people, in particular, are struggling to save due to housing costs, with many "killed by rent" and unable to get onto the property ladder, Ms Kendall said. Ms Kendall also announced the revival of the Pension Commission to address concerns over declining retirement incomes. The commission will provide recommendations by 2027 to boost savings and tackle pensioner poverty.
Glasgow Times
21-07-2025
- Politics
- Glasgow Times
UK Government to cut support for special educational needs
The latest concern is the UK Government's plans to cut support for special educational needs and disabilities (SEND) in English schools. In Scotland, SEND is akin to our funding for additional support needs (ASN) for children and young people in education. For every £1billion of cuts in England, the impact on the Scottish budget would be approximately £93million. READ MORE: 'Prime Glasgow gem' hits the market in 'rare opportunity' for buyers For example, when the Chancellor sought to remove the winter fuel payment (WFP) from most pensioners to save £1.5bn, this resulted in a consequential loss of £140m for Scotland. That policy was largely U-turned. English local authorities have accumulated a £3.3bn deficit in their 'high needs' education budgets, according to a report by the Institute for Fiscal Studies last December. Under English law, persons in education up to the age of 25 can seek education, health and care plans (EHCP) to identify the additional support required to meet their SEND at school. The number of EHCPs has increased annually since they were introduced, rising by 71% from 253,679 in 2018 to 434,354 last year, according to the Department for Education. The equivalent to EHCPs in Scotland is the coordinated support plan (CSP). Generally, children and young people with complex or multiple ASN will require a CSP. Last year, 248,448 pupils were recorded as having ASN in Scotland, including autism, dyslexia or a mental health problem, in contrast with 140,542 a decade ago. READ MORE: Cat found in minibus engine revealed as 'master escape artist' after this incident And yet, counter-intuitively, the number of pupils with a CSP dropped by nearly two-thirds. In 2014, there were 3128 pupils with a CSP, but this fell by 61% to 1215 last year. That's a reduction from 2.2% to 0.4% of those with additional support needs. If anything, these statistics strongly suggest there is a need for more funding and investment in ASN in Scotland. The possibility of Barnett formula cuts from the UK Government would make no sense at all. The House of Commons rises today for the summer recess. The White Paper on SEND reform in England was due to be published earlier this year, but has been delayed. We'll need to wait until the autumn to discover if these disability support cuts go ahead. Some of the possibilities mooted include restricting SEND support to those aged 18 or less. There might be a replacement of EHCPs altogether with something completely different. Wales has phased in a new additional learning needs (ALN) system. This is a single statutory scheme known as an individual development plan (IDP), designed to encourage collaboration with children and parents in the planning process. Only schools or local authorities can apply for IDPs, and not young people or their parents. READ MORE: Poundland bosses confirm Scottish store will close next month Scotland's ASN system is right to place children, young people and parents at its heart. Having a legal right to request a CSP enables the rights to additional support to become a reality in practice. It's unlikely Scotland would follow suit with the UK Government's policies here, but the potential for funding cuts must be a worry. That said, we've seen major U-turns on the WFP and the welfare reform bill in the last couple of months. Could Sir Kier Starmer's proposed SEND bill be the next big U-turn?
Wales Online
09-07-2025
- Business
- Wales Online
Millions of Brits 'face working until 74' in new state pension warning
Millions of Brits 'face working until 74' in new state pension warning The state pension age is already set to rise to 68 in the coming decades, but it would need to reach 74 by 2069 to keep funding the triple lock promise, according to a new report State pension age is gradually rising (Image: GETTY ) According to a recent report by the Institute for Fiscal Studies (IFS), the UK state pension age would need to increase to 74 by 2069 in order to sustain the triple lock promise. The IFS warning comes amid concerns that an ageing population will render the government policy unaffordable. The state pension age, which is the earliest age at which individuals can claim their state pension, currently stands at 66 for both men and women, but is gradually rising to 68. The triple lock guarantees that the state pension will rise every April by the highest of inflation, wages, or 2.5%. However, without adjustments to the state pension age, the IFS has cautioned that the triple lock will cost taxpayers up to £40 billion annually. As an alternative, the IFS has suggested a double lock, which would tie state pension increases to wages or inflation. Chancellor Rachel Reeves has committed to maintaining the triple lock until 2029. The IFS report states: "Increases in the state pension age required to keep spending on the state pension below a certain level of national income would have to be substantial.", reports the Mirror. "[Official] modelling shows that to keep public spending on the state pension below 6pc of national income while retaining the triple lock, the state pension age would have to rise to 69 by 2049 and 74 by 2069." Mike Ambery, Retirement Savings Director at Standard Life, commented: "The report correctly identifies widespread under-saving and gaps in pension provision. "We are supportive of their conclusion that there is not a one size fits all solution to these problems but there is a need to be more inclusive, particularly for the self-employed, as well as for younger workers who are not yet included. Article continues below "The risk of over saving for those on low incomes is significant but so too is the need for most of those on average or higher earnings to save more. "Striking the right balance will be a key challenge of the adequacy review, and any change would need to be carefully considered and in consultation, especially with employers." The state pension age is already on track to rise to 67 between 2026 and 2028, with plans for it to climb further to 68 in the years between 2044 and 2046. Calls have been made in the past to accelerate the increase to age 68. The state pension is distinct from any private or workplace pensions you might hold. One can verify their state pension age online and this also provides a state pension forecast, indicating how much you will receive upon reaching the state pension age. There are two separate versions of the state pension, and eligibility depends on your date of birth. You're entitled to the new state pension if you're a male born on or after April 6, 1951, or a female born on or after April 6, 1953, which stands at a full rate of £230.25 per week. Article continues below You're eligible for the basic state pension if you're a man born before April 6, 1951, or a woman born before April 6, 1953, with the full rate being £176.45 per week. The sum you receive as state pension is contingent on your National Insurance record. To qualify for the full new state pension, you need 35 qualifying years on your National Insurance record, and typically ten years to receive any amount at all.
