Latest news with #UKTreasury
ITV News
3 days ago
- Business
- ITV News
Wales' public services face £36m shortfall after National Insurance hikes
The Welsh Government says it won't get enough money from the UK Government to offset all of the impact of higher National Insurance costs for public services. Ministers say there'll be a £36m shortfall even after they've raided reserves. The UK Government says it's 'boosted' the Welsh Government's spending power by lifting limits on use of reserves on top of 'a record £21bn' budget. Employers have been paying more National Insurance Contributions (NICs) since April after the Chancellor announced the increase in her budget last October. The UK Government had said it would ensure funding for the Welsh Government to cover the cost of the increase for public sector organisations such as hospitals, local authorities and schools. Welsh Ministers have been concerned about the method the UK Treasury is using to calculate that amount. It relies on the Barnett Formula - a method used to work out how much funding Wales should get based on spending in England. But because the public sector is bigger here in Wales than across the border, Welsh ministers argued that using the formula in this instance would leave Wales shortchanged. Now the Welsh Government says it's had final confirmation of the figures. It says that the increase in NICS will cost the public sector here in Wales an extra £257m. The UK Government is providing £185m, leaving a shortfall of £72m. The Welsh Government says it will find half of that amount, £36m, from its own reserves. But it says that still leaves a gap of £36m. Finance Secretary, Mark Drakeford, said: "We're protecting our vital public services by using £36m from our reserves to help address the National Insurance shortfall left by UK Government. "The UK Government did provide funding, but this falls short of the actual costs faced by Welsh public services, creating a multi-million-pound gap every year. "We have stepped in to help as much as we can, but the Welsh Government cannot afford to cover the entire shortfall. "The UK Government should treat the public sector the same across the UK and make good on its pledge to fully fund these extra costs." A UK Government source said: "The Welsh Government's spending power has been boosted by the UK Government's decision to waive their reserve draw down limits for 2025-26. "This increased spending power came on top of more than £180m extra to compensate for public sector national insurance contributions, and a record £21bn financial settlement at the Autumn Budget, the largest in the history of devolution. "UK Government did this to help the Welsh Government invest in public services and drive down NHS waiting lists. Together, we are delivering our Plan for Change in Wales by fixing our NHS, creating thousands of well paid jobs, boosting the minimum wage, and investing billions in our high streets and public services." It's another source of tension between the Labour Welsh Government and the Labour UK Government. Earlier this week the First Minister called for the two-child benefit cap to be scrapped. Eluned Morgan told ITV Wales: ''We are really concerned about levels of child poverty in Wales and we have called on the UK Government to lift the two tier child benefit cap. "We think this should be considered in future budgets and we have made that case to the Prime Minister as I did last week in London." Ahead of that meeting, Eluned Morgan told ITV Wales that Keir Starmer should 'start coughing up' to make up for areas where Wales has been shortchanged. She added: "I'll obviously be taking that opportunity to really push the case for those things that I outlined in my Red Welsh Way speech, making sure that we get a fairer deal on things like the railways and coal tips and other issues that are absolutely top of my agenda, where we think we've been hard done by in the past and we want them to make up for it." Is a cash boost for railways coming down the tracks? There have been reports today that there will be significant extra funding for at least one of those demands: railways. The Chancellor Rachel Reeves will set out long-term spending plans in her Spending Review on June 11th. The Politico website says it's been told that the plans will include capital funding for Wales which is aimed at improving rail infrastructure. UK Government sources have dismissed the report as 'speculation' but say that rail spending in Wales is a top priority for the UK Government as has been repeatedly highlighted by the Welsh Secretary Jo Stevens.
Yahoo
3 days ago
- Business
- Yahoo
Government 'megafund' pension plans could give £6k boost to savers
Plans to double the number of UK pension "megafunds" by 2030 could see workers get a £6,000 boost to their retirement pot, the government has said. The UK Treasury confirmed plans on Thursday to expand the number of UK pension megafunds in the next five years. Under reforms set to be introduced through the Pension Schemes Bill, the government said that multi-employer defined contribution and local government schemes will pool to operate at megafund level, managing at least £25bn in assets by 2030. The Treasury said that evidence from Australia and Canada showed that this size enabled pension funds to invest in large infrastructure businesses and private businesses, both boosting the economy and potentially driving higher returns for savers. The government said that this would help drive more than £50bn in investment for UK infrastructure, new homes and fast-growing businesses. This comes on the back of the government's recent announcement of a new agreement, known as the Mansion House Accord, in which Britain's biggest pension funds committed to invest 5% of assets in the UK. On Thursday, the government also published the final report from its Pensions Investment Review, setting out its final policy decisions following on from feedback provided to its consultation. It said that figures from the report showed that these reforms would drive higher returns for savers, "in part by cutting waste in the system". Read more: Trending tickers: Nvidia, Salesforce, HP, Tesla and M&S According to the Treasury, these schemes could be saving £1bn a year by 2030 through economies of scale and improved investment strategies. As a result, the government said average earner who saves over their career could see a £6,000 boost to their defined contribution pension pot. That's based on its estimate that this megafund consolidation could deliver at least a six-basis-point reduction in fees, as well as an increase in allocations to "productive" assets such infrastructure projects. "We're making pensions work for Britain," said chancellor Rachel Reeves. "These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses — the Plan for Change in action." Meanwhile, deputy prime minister Angela Rayner said that the "untapped potential of the £392bn Local Government Pension Scheme is enormous. Through these reforms we will make sure it drives growth and opportunities in communities across the country for years to come" In Thursday's announcement, the Treasury also said that a "backstop power [is] set to be taken in the Pension Schemes Bill to protect the interests of LGPS [local government pension scheme] members and local taxpayers where necessary by directing an administering authority to participate in a specific investment pool." According to a Financial Times report, officials confirmed that this could include specific targets to UK assets. A spokesperson for the Treasury had not responded to Yahoo Finance UK's request for comment at the time of writing. Matt Tickle, chief investment officer at Barnett Waddingham, said: "The main concern for schemes following the government's wide ranging pension announcements is the looming threat of 'mandation'. "While the chancellor's 'backstop' power – which could compel funds to back British assets – appears to have deterred that threat for now, any move towards mandated investment is a blunt tool, leaving members and society as a whole at risk of poorer outcomes." "That said, the fact that there is time gives some of the government's better policies, around planning reform, value for money and retirement pathways more space to succeed," he added. "If they do, they could generate opportunities that pension schemes will willingly invest in. Efforts to improve the flow of investable opportunities are certainly positive, however there is still an urgent need to focus on reforms rather than enforcing mandates." Helen Morrissey, Yahoo Finance UK columnist and head of retirement analysis at Hargreaves Lansdown, said: "While scale is important in delivering better outcomes for savers, it must not come at the cost of reducing competition, member choice and much needed innovation. This has the ability to really drive up member engagement with their pensions, improve decision making and boost outcomes." "It's important to pick through the detail of the report and later regulation to see how this is supported," she said. "For instance, detail needs to be fleshed out on how the transition pathway for providers looking to reach scale by 2035 will work. "If the market is to thrive, then there needs to be space for smaller, innovative providers. It's a lesson learned in the retail banking market where competition from smaller challenger banks has put pressure on larger incumbents to improve user experience and product offerings." Read more: Odds of more Bank of England interest rate cuts fall as food inflation rises UK 'bargain' stocks that have outperformed the market long-term Trump tariffs to hit UK economy next year, says IMF
Yahoo
4 days ago
- Business
- Yahoo
Government 'megafund' pension plans could give £6k boost to savers
Plans to double the number of UK pension "megafunds" by 2030 could see workers get a £6,000 boost to their retirement pot, the government has said. The UK Treasury confirmed plans on Thursday to expand the number of UK pension megafunds in the next five years. Under reforms set to be introduced through the Pension Schemes Bill, the government said that multi-employer defined contribution and local government schemes will pool to operate at megafund level, managing at least £25bn in assets by 2030. The Treasury said that evidence from Australia and Canada showed that this size enabled pension funds to invest in large infrastructure businesses and private businesses, both boosting the economy and potentially driving higher returns for savers. The government said that this would help drive more than £50bn in investment for UK infrastructure, new homes and fast-growing businesses. This comes on the back of the government's recent announcement of a new agreement, known as the Mansion House Accord, in which Britain's biggest pension funds committed to invest 5% of assets in the UK. On Thursday, the government also published the final report from its Pensions Investment Review, setting out its final policy decisions following on from feedback provided to its consultation. It said that figures from the report showed that these reforms would drive higher returns for savers, "in part by cutting waste in the system". Read more: Trending tickers: Nvidia, Salesforce, HP, Tesla and M&S According to the Treasury, these schemes could be saving £1bn a year by 2030 through economies of scale and improved investment strategies. As a result, the government said average earner who saves over their career could see a £6,000 boost to their defined contribution pension pot. That's based on its estimate that this megafund consolidation could deliver at least a six-basis-point reduction in fees, as well as an increase in allocations to "productive" assets such infrastructure projects. "We're making pensions work for Britain," said chancellor Rachel Reeves. "These reforms mean better returns for workers and billions more invested in clean energy and high-growth businesses — the Plan for Change in action." Meanwhile, deputy prime minister Angela Rayner said that the "untapped potential of the £392bn Local Government Pension Scheme is enormous. Through these reforms we will make sure it drives growth and opportunities in communities across the country for years to come" In Thursday's announcement, the Treasury also said that a "backstop power [is] set to be taken in the Pension Schemes Bill to protect the interests of LGPS [local government pension scheme] members and local taxpayers where necessary by directing an administering authority to participate in a specific investment pool." According to a Financial Times report, officials confirmed that this could include specific targets to UK assets. A spokesperson for the Treasury had not responded to Yahoo Finance UK's request for comment at the time of writing. Matt Tickle, chief investment officer at Barnett Waddingham, said: "The main concern for schemes following the government's wide ranging pension announcements is the looming threat of 'mandation'. "While the chancellor's 'backstop' power – which could compel funds to back British assets – appears to have deterred that threat for now, any move towards mandated investment is a blunt tool, leaving members and society as a whole at risk of poorer outcomes." "That said, the fact that there is time gives some of the government's better policies, around planning reform, value for money and retirement pathways more space to succeed," he added. "If they do, they could generate opportunities that pension schemes will willingly invest in. Efforts to improve the flow of investable opportunities are certainly positive, however there is still an urgent need to focus on reforms rather than enforcing mandates." Helen Morrissey, Yahoo Finance UK columnist and head of retirement analysis at Hargreaves Lansdown, said: "While scale is important in delivering better outcomes for savers, it must not come at the cost of reducing competition, member choice and much needed innovation. This has the ability to really drive up member engagement with their pensions, improve decision making and boost outcomes." "It's important to pick through the detail of the report and later regulation to see how this is supported," she said. "For instance, detail needs to be fleshed out on how the transition pathway for providers looking to reach scale by 2035 will work. "If the market is to thrive, then there needs to be space for smaller, innovative providers. It's a lesson learned in the retail banking market where competition from smaller challenger banks has put pressure on larger incumbents to improve user experience and product offerings." Read more: Odds of more Bank of England interest rate cuts fall as food inflation rises UK 'bargain' stocks that have outperformed the market long-term Trump tariffs to hit UK economy next year, says IMF
Bloomberg
21-05-2025
- Business
- Bloomberg
UK, EU Extend Debt Auction Deadlines Due to Technical Issues
The UK and European Union extended the bidding window for debt auctions on Wednesday in response to Bloomberg LP technical issues. The Debt Management Office, which manages bond sales on behalf of the UK Treasury, said it expects to close the auction bidding window at 11:30 a.m. in London. Usually the bidding finishes at 10 a.m. The EU said in a separate statement it was delaying the deadline for its bills sale by one hour to 1 p.m. in Brussels
Cambrian News
08-05-2025
- Business
- Cambrian News
Powys could use reserves to offset National Insurance hikes
Under the Barnett formula which allocates funding from the UK Treasury to the Welsh Government, Wales is not expected to receive the full actual cost of the NI hike but a share of the English costs.
