Shadow Chancellor Rachel Reeves aims to revamp the country’s pension system. Her proposal involves redirecting retirement savings towards supporting the expansion of UK businesses, potentially increasing the average pension pot by up to £37,000, as reported by The Guardian.
Reeves criticises the current government’s 25 tax increases over the past decade as evidence of their economic failure. She asserts that these tax hikes are a result of their inability to foster economic growth. Labour leader Sir Keir Starmer clarified during a recent debate in the Commons that the party has no intentions of further increasing taxes beyond already announced measures, such as tightening non-dom status rules, ending tax breaks for private schools, and imposing higher taxes on private equity executives.
What’s more, economists estimate that these changes could generate up to £7 billion annually. Reeves expresses her desire to reduce taxes for workers but emphasises the need for a clear funding source, rejecting unfunded tax cuts akin to Liz Truss’s approach.
Despite current opinion polls indicating Labour’s lead in the upcoming election, Reeves acknowledges the significant challenges ahead, including slow economic growth and strained public services. Labour’s growth plan involves streamlining the planning system, implementing an industrial strategy with statutory backing, and reforming the pension system.
Regarding pensions, Reeves favours a French-style scheme where institutional investors and defined contribution funds collaborate to invest in promising UK companies. She also proposes giving the Pensions Regulator more authority to consolidate the number of UK defined contribution funds.
There is speculation that Chancellor Jeremy Hunt might announce an extension of 100% tax breaks for business investments in the upcoming autumn statement. Reeves indicates that Labour would support such an extension if the funds permit it, with a commitment to further extension if feasible.