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Telegraph
6 days ago
- Business
- Telegraph
Labour accused of unleashing ‘stealth tax' on pensions
Labour is preparing to unleash a 'stealth tax' on pensions, critics have warned. The new Pension Schemes Bill will give the Government the power to force pension funds to invest in British assets to help spark growth. Yet critics of the reform argue the change, laid out in the Treasury's Pensions Investment Review published Thursday, risks lower returns for savers. Pension industry experts also called into question government claims that the package of reforms could leave retirement savers £6,000 better off. Tory MP Neil O'Brien called the plans 'a massive stealth tax' and said pension savers will 'get lower returns' so the Government can reduce its borrowing costs. Shadow chancellor Mel Stride said the move was an extraordinary overreach. He said: 'Labour is crossing the Rubicon into directing the public's savings. Pension pots are there to secure retirements, not to bankroll a government.' Last month major pension providers said they would voluntarily commit to investing 5pc of their total funds into UK assets by 2030. However, the new reserve power would go further and mandate how much of savers' money needs to go into UK plc. Experts within the industry have also thrown scorn on the plans. Tom Selby, director of public policy at AJ Bell, said the move 'puts a gun to schemes' heads and will create those mandatory targets in all-but-name'. Laura Myers, partner and head of DC pensions at consultancy LCP, said the threat of the Government telling trustees how they should invest was 'a step too far' that 'risks losing sight of the primacy of member interests'. James Carter, of investment firm Fidelity International, labelled the power to direct pension scheme investments in the future 'a concern'. pension contributions made via salary sacrifice work schemes. If implemented the changes would cost the average earner more than £500 a year in extra income tax and National Insurance – and whittle away their pension pot and their retirement potential. The Government has said that the changes within the new review will result in an additional £6,000 on average being added to an individual's pension pot over a lifetime of saving, as revealed by the Telegraph. However, Sir Steve Webb, a former pensions minister and now a partner at LCP, has said he would not 'put any weight' on the figure. He said that while lower cost pensions due to reforms could see savers add to their pots, the increase will only be marginal and there is a risk that costs actually rise, adding: 'Even the assertion that there will be overall cost savings is far from obvious.' Mr Selby added: '£6,000 isn't exactly a big potential 'gain' over the course of a retirement in return for the extra risk that is likely to be taken on. Entirely possible the gains will be higher but they could also be lower.'
Telegraph
24-05-2025
- Politics
- Telegraph
Whitehall refuses to cut diversity roles
Whitehall is defying orders to cut diversity jobs, figures suggest. Headcounts released by ministers reveal that at least 200 officials are still working in the roles despite a supposed clampdown. Some Government departments and quangos even appear to have increased the number of diversity officers on their payroll in the past year despite instructions to the contrary. It comes as Downing Street prepares to enforce wider cuts to the Civil Service which aim to save £2.2 billion in back office costs including HR roles. A Government source said the Tories had failed to crack down on waste while in power. Neil O'Brien, a Tory MP, wrote to Whitehall departments asking them to reveal how many staff they employ with diversity and inclusion in their job title. Of those contacted 10 provided full or partial responses, revealing they have a combined total of at least 190 such officials on their payrolls. The biggest number is at the Department of Health, almost entirely accounted for by 47 diversity officials at the quango NHS England which is being abolished. However, the department has cut such roles by seven since last year after Wes Streeting vowed to put a stop to 'misguided' diversity practices. The next highest number of diversity staff is at Work and Pensions, which has 29, followed by Science and Technology which employs 24. Transport had the biggest increase in diversity officers of any ministry, with its number leaping from eight last year to 19 at the present. The spike was largely fuelled by an expansion at HS2, the beleaguered high speed rail firm, whose number more than doubled from four to 10. In reality, the number of diversity staff across Whitehall will be significantly higher as some departments failed to provide answers to the questions. They include the Ministry of Defence, which is believed to have one of the highest headcounts, as well as Defra and the Home Office. The MoD revealed in a Freedom of Information response last year that it had 50 such officials in 2023 but has refused to disclose the number since. Mr O'Brien said: 'Not only are these unnecessary roles costing taxpayers directly but they tend to increase costs more generally as they create work and programmes and bureaucracy for the rest of the public service they work in. 'Some departments like MOD have so many EDI staff that they are trying to cover up the figures, which is even more alarming. 'These staff are often pushing divisive and unfair policies; for example, in research you end up with funding being driven by people's skin colour rather than the value of their research.' This week the MoD admitted it has axed a 'root and branch review' of diversity policies ordered by Grant Shapps, the former Tory defence secretary. In response to Tory MP Richard Holden, veterans minister Al Carns said the review 'did not align with the new Government's priorities for the Department'. A Cabinet Office source said: 'The Tories spent their time in government spouting off, while failing to actually get things done. 'We are tackling waste across the board and reducing administration spend by 15 per cent so we can target resources at the frontline – rebuilding the NHS, getting more teachers in classrooms and putting police back on the beat.'
Telegraph
19-05-2025
- Business
- Telegraph
Labour triggers biggest private school exodus in more than a decade
Private schools lost a record 13,000 pupils in the run up to Labour's VAT raid, figures show. The Independent Schools Council (ISC), which represents four in five private schools in England and Wales, said the number of pupils fell from 551,578 to 538,215 in the year to January ahead of Labour's planned 20pc tax. It marked the biggest drop in pupil numbers since the trade body first surveyed schools in 2012, but teachers warned that the figures 'do not reflect the full damage inflicted by the imposition of VAT'. Private school fees rose by an average of 22.6pc to £22,000 a year in January, the ISC said. It comes as Neil O'Brien, a shadow education minister, accused Labour of underestimating the impact of the tax raid and piling more pressure on the struggling state sector. Mr O'Brien last week told The Telegraph that every child 'priced out' of private education would mean fewer places in good schools for others, and children with special needs would be particularly hard hit. Labour predicted that only 3,000 children would leave the private sector in 2024-2025 as a result of the tax raid. But the ISC said this did not include the thousands of children believed not to have started at private schools in September because of rapidly rising fees. Aatif Hassan, of Dukes Education, which runs 27 private schools, told The Sunday Times: 'These figures do not reflect the full damage inflicted by the imposition of VAT. 'We are just beginning to see the impact on families, and the flow-through of that will become more apparent in September.' The ISC said private schools faced a 'triple whammy' of financial blows this year, chiefly the 20pc VAT imposed in January. Costs have been driven up further by the recent increase in employer National Insurance contributions. And schools with charitable status were also stripped of 80pc business rates relief last month. The Treasury has rejected claims that the VAT raid is to blame for steep rises in fees, arguing that it followed large increases over the past few decades. A number of private schools have closed this year, with more than a dozen directly blaming the VAT raid. A High Court legal challenge last month argued the Government's policy of adding VAT to private school fees would 'interfere with the fundamental right to education'. Documents seen by The Telegraph revealed that Rachel Reeves was warned about the risk of more schools shutting. The High Court is due to rule this month on whether the policy breaches the human rights of children. A Treasury spokesman said: 'This data misrepresents reality – the increases in fees are not only down to VAT. Average fees have risen by 75pc in real terms in the past 25 years, and pupil numbers have remained steady. 'Ending tax breaks for private schools will raise £1.8bn a year by 2029/30 to help deliver 6,500 new teachers and raise school standards, supporting the 94pc of children in state schools to achieve and thrive.'
