Tag: Treasury

The press release issued by HM Treasury on 20 July 2024.

• Chancellor launches landmark review to boost investment, increase pension pots and tackle waste in the pensions system.
• New Pensions Bill confirmed in King’s Speech could boost pension pots by over £11,000, with further consolidation and broader investment strategies to potentially deliver higher returns for pensions.
• An investment shift in defined contribution schemes could deliver £8 billion of new productive investment into the UK economy.
• Action will be taken to unleash the full investment might of the £360 billion Local Government Pension Scheme to make it an engine for UK growth.

The Chancellor Rachel Reeves has announced a landmark pensions review as part of the new Government’s mission to ‘boost growth and make every part of Britain better off’.

Under plans unveiled by the new Chancellor, billions of pounds of investment could be unlocked in the UK economy from defined contribution schemes alone and pension pots for savers in defined contribution schemes could be boosted by over £11,000.

The Review will also, working closely with the Minister of State at MHCLG Jim McMahon, look at how to unlock the investment potential of the £360 billion Local Government Pensions Scheme, which manages the savings of those working to deliver our vital local services, as well as how to tackle the £2 billion that is being spent on fees.

The announcement comes ahead of the first Growth Mission Board on Tuesday. This will be chaired by the Chancellor and drive the Government’s work to achieve the highest sustained growth in the G7. New measures have already been announced to fix the planning system, the creation of a new National Wealth Fund and the overhaul of the listings regime to boost UK stock exchanges.

The work announced today – focusing on investment – is the first phase in reviewing the pensions landscape and will be led by the first ever joint Treasury and Department for Work and Pensions Minister, Emma Reynolds (Minister for Pensions). The next phase of the review starting later this year will consider further steps to improve pension outcomes and increase investment in UK markets, including assessing retirement adequacy.

The Chancellor and the Pensions Minister will chair a roundtable with the pensions industry on Monday to start intensive industry engagement for the Review.

Chancellor of the Exchequer Rachel Reeves said:

Despite a very challenging inheritance, this new Government is getting on with the job of delivering our mandate to get the economy growing so we can make every part of our country better off.

The review we are announcing is the latest in a big bang of reforms to unlock growth, boost investment and deliver savings for pensioners. There is no time to waste. That is why I am determined to fix the foundations of our economy so we can rebuild Britain and improve people’s lives.

Deputy Prime Minister Angela Rayner said:

After putting in years of hard graft serving their communities, the very least our frontline workers deserve – millions of whom are low paid, millions of whom are women – is dignity and security in retirement.

That’s why we want to make sure their hard-earned money works harder for them so we ensure they receive the pensions they have earned, whilst unlocking growth across our economy.

Pensions Minister Emma Reynolds said:

As the first ever joint Treasury and DWP Minister I am uniquely placed to tackle the twin challenges of productive investment and retirement outcomes.

Over the next few months the review will focus on identifying any further actions to drive investment that could be taken forward in the Pension Schemes Bill before then exploring long-term challenges to ensure our pensions system is fit for the future.

There is so much untapped potential in our pensions markets, with an industry worth around £2 trillion. The measures we have already set out in our Pension Schemes Bill will help drive higher investment and a better deal for our future pensioners.

Legal & General Group Chief Executive António Simões said:

As the UK’s largest manager of money for pension clients, we welcome the ambition set out by the government today. Driving pensions capital into areas such as science, technology and infrastructure can help support better returns for millions of retirement savers, as well as stimulate much needed long-term growth for the economy. Having recently launched our own fund offering Defined Contribution savers access to high growth private market sectors, we look forward to continuing to work closely with government on the next stages of reform to help unlock further funding routes to power UK businesses, communities and society. We also strongly welcome the Government’s intention to consider the adequacy of overall pension provision in the next stage of the review.

BVCA Chief Executive Michael Moore said:

We are very encouraged that the Government has brought forward their Pensions Review so quickly. The Chancellor has a real opportunity to deliver economic growth by facilitating increased investment in UK businesses to the benefit of returns to pension savers as well as the wider economy.

Legislative and policy changes, including further consolidation of pension schemes to increase pension schemes’ ability to deploy capital into UK private capital funds are vital, as is greater industry partnership.

The BVCA’s Investment Compact has already brought together over 100 growth equity and venture capital firms committed to working with pensions schemes to consider effective structures that attract investment.

If the Government is ambitious and considers a wide range of options in this review we are optimistic that this will deliver the clear roadmap we have called for, building on the work of the BVCA’s Pensions and Private Capital Expert Panel.

Aviva Director of Workplace Savings and Retirement Emma Douglas said:

We welcome the government’s determination to undertake a pensions review as an early priority. We fully support government’s ambition to get pension funds invested in a way that both supports UK growth and improves outcomes for savers. We see this as an important next step and look forward to working with government and industry on the Review.

Phoenix Group CEO Andy Briggs said:

The announcement of a pensions review by the government is much needed and is welcome news. Phoenix Group has committed to allocate 5% of assets in our default funds to unlisted equities by 2030 which will allow UK savers to invest in a more diversified portfolio. Our key priority is to deliver good outcomes for our customers and we are confident that Phoenix Group could invest up to £40 billion to support the economic growth agenda whilst keeping policyholder protection at its core.

With only one in seven people in the UK saving enough for a decent standard of living in retirement, we are happy to see that this review will expand to look at pension adequacy. This is vitally important for people across the UK and we hope this will include a commitment to increasing auto-enrolment contributions.

Defined contribution schemes will be managing around £800 billion in assets by the end of the decade and the Review will explore ways to increase their investment into productive assets. Even a 1 percentage point shift of assets into productive investments could mean £8 billion of new productive investment to grow the economy and build vital infrastructure by the end of the decade.

This would also help savers using these schemes build up better retirement pots as productive assets are more likely to provide higher returns. Immediate action has already been taken to boost retirement savings through the Pensions Bill, which introduces a Value for Money Framework to promote better governance and achieve higher returns – boosting the pension pot of an average earner who saves over their lifetime in a defined contribution scheme by over £11,000.

The first stage of the review will examine actions to support greater productive investment and better retirement outcomes, including through further consolidation and encouraging at-scale schemes to increase returns through broader investment strategies.

The Local Government Pension Scheme (LGPS) in England and Wales is the seventh largest pension fund in the world, managing £360 billion worth of assets. Its value comes from the hard work and dedication of 6.6 million people in our public sector, mostly low-paid women, working to deliver our vital local services. Pooling this money would enable the funds to invest in a wider range of UK assets and the government will consider legislating to mandate pooling if insufficient progress is made by March 2025.

To cut down on fragmentation and waste in the LGPS, which spends around £2 billion each year on fees and costs and is split across 87 funds – an increase in fees of 70% since 2017, the Review will also consider the benefits of further consolidation.

The first stage of the review will report in the next few months and consider further measures to support the Pensions Bill. It will take account of the need to prioritise gilt market stability, liquidity and diversity. It will then broaden out to consider the wider pensions landscape to strengthen security in retirement. In the meantime, immediate action has been taken through new laws announced to Parliament in The King’s Speech.

Barclays CEO C. S. Venkatakrishnan said:

We welcome the Government’s timely review of the pensions sector. Pensions reforms are critical to unlocking institutional investment in growth equity, and alongside a streamlining of listing requirements, will give a significant boost to UK capital markets and growth. Building institutional demand is also an important signal in encouraging private share ownership.

Association of British Insurers Director General Hannah Gurga said:

This review is an important opportunity to provide much needed long-term strategy for the significant role the UK pensions sector plays in investment and economic growth. We welcome the holistic approach with the interests of savers going hand in hand with further boosting investment in the UK. Good outcomes for savers and providing stability must ultimately be at the heart of the reforms and we look forward to working with the government to achieve this.

M&G plc CEO Andrea Rossi said:

A Pensions Review is long overdue and to be welcomed. M&G has a rich heritage of investing in the UK and there are significant opportunities ahead to give the real economy a boost over the next decade and beyond. We know from experience, through our PruFund offer, that a large pooled fund gives savers access to a wider range of productive assets that aims to maximise benefits over the long-term. Consolidation, combined with the role of advice, has huge potential to align the interests of savers with the UK’s growth ambition. We look forward to supporting the Government on this landmark review.

Border to Coast CEO Rachel Elwell said:

Our focus is on delivering a strong and sustainable LGPS to enable it to pay the pensions of the 6.6 million local government workers in an affordable and sustainable manner.  Through the commitment and support of our Partner Funds, Border to Coast has developed innovative and cost-effective investments, while cutting Private Market fees by almost 30%.   We welcome the opportunity to work with the Government on a co-ordinated review to consider how the LGPS can continue to deliver for hard-working members, generate even greater value to local taxpayers, and deliver productive investment in the UK.

Nest CEO Ian Cornelius said:

Nest members represent a third of the UK workforce. Why wouldn’t we want to help invest in their jobs, their communities, and the infrastructure they use? Nest already invests more than £8.5bn into the UK.  As one of the world’s biggest economies, there are further great investment opportunities available to pension schemes like Nest and we welcome the opportunities being announced to explore increasing investment in the UK.

Pension Protection Fund CEO Michelle Ostermann said:

Pension consolidation, and a fresh approach, can unlock billions in new UK growth-supporting investments and support the UK gilt market whilst securing the retirement incomes of many more pension members.  We welcome the launch of the government’s review, marking the start of an important process, and look forward to playing our part.

Pensions and Lifetime Savings Association Director of Policy and Advocacy Nigel Peaple said:

It is positive the Government has acted quickly to initiate its promised review of our pensions savings system. Pension schemes already invest one trillion pounds in the UK economy, with this amount expected to grow as our defined contribution system matures. With the right regulatory framework and Government action to ensure a healthy pipeline of investible opportunities, we look forward to working with Ministers to create a pension system that works for the country and for savers.

Pensions & Private Capital Expert Panel Chair and co-founder of IQ Capital Kerry Baldwin said:

An early and ambitious review of the pensions landscape is an extremely important step in prioritising returns for UK savers and driving economic growth. The Chancellor’s Pensions Review will add further impetus to the work of the Investment Compact for Venture Capital and Growth Equity, which has brought together the private capital and pensions industries to support pension savers and to encourage investment from pension funds into unlisted equities.

There has been significant progress through this collaboration.  We are already developing a greater understanding of the ways we can work together to deliver new options for UK pension savers at the same time as supporting high growth, innovative UK companies with new sources of capital. The Review offers us the opportunity to develop this shared agenda further and deliver better outcomes for all the stakeholders.

TheCityUK CEO Miles Celic said:

Creating the right investment environment is critical both for improving people’s retirement incomes and for boosting growth across the UK. The government’s new Pensions Review will be an important mechanism to help deliver this. We look forward to working closely with government and regulators to ensure that an effective long-term strategy that supports financial resilience is developed.

Royal London Group Chief Executive Barry O’Dwyer said:

Pensions already play an important role in supporting UK economic growth, and the review announced by the Chancellor is a welcome opportunity to consider reforms that could strengthen this further. We are particularly pleased the review will focus on delivering better retirement outcomes for people, as this must always be the main priority of the pensions system. We are also encouraged that the next phase of the review will examine retirement adequacy, as creating a long-term plan for increasing contributions will have a major impact on improving retirement outcomes and helping to finance growth.

Citi UK CEO Tiina Lee said:

We welcome the Government announcing a pensions review to boost investment in the UK economy.

The UK is home to the second-largest pool of long-term capital in the world. Based on Citi’s experience with global investors, increasing pension fund investment will reinvigorate funding in British companies and infrastructure projects and bring real benefits to our economy and society.

The press release issued by HM Treasury on 18 July 2024.

New law bringing economic stability introduced to the House of Commons following the King’s Speech.

A new law to bring economic stability and help protect family finances introduced to the House of Commons following the King’s Speech.

The new law will mean the Office for Budget Responsibility – the independent watchdog for public finances – will be given the power to make an independent assessment of any single major tax and spending announcement, or series of announcements over the course of a single financial year, which make permanent tax or spending commitments worth more than 1.0% of the UK’s GDP, or around £30 billion.

The Budget Responsibility Bill will ensure that any major future fiscal announcement will be subject to an independent assessment, as a form of ‘fiscal lock’.

The Growth plan set out in 2022, which announced £46bn worth of unfunded tax cuts, led to an unprecedented increase in borrowing costs.

Rachel Reeves, Chancellor of the Exchequer, said:

This Government’s defining mission is to deliver economic growth. However, growth can only come through economic stability and a commitment to sound public money so never again can a government play fast and loose with the public finances.

This new law is part of our plan to fix the foundation of our economy so we can rebuild Britain and make every part of the country better off.

Emergency, temporary measures lasting fewer than two years will not require an OBR assessment, such as the response to the Covid-19 pandemic.

If the government wanted to announce fiscally significant measures but did not ask for an OBR forecast, the fiscal lock would be triggered.

The legislation gives the OBR a new power to independently decide to produce a full fiscal forecast or assessment, at the OBR’s discretion, if they judge the lock has been triggered.

The OBR would alert the Treasury Committee in the event of a breach and notify them of their intent to publish an assessment or updated forecast. Any fiscal event accompanied by an OBR forecast in the usual way will not be subject to the lock.

Louise Hellem, Chief Economist, CBI said:

Market stability is a key foundation to enabling economic growth and business investment. Ensuring large changes in tax and spending policy are always subject to an independent assessment by the Office for Budget Responsibility will give businesses and investors additional confidence in the stability of the public finances.

Growth is the urgent business of the day and fixing our economic foundations at home as well as strengthening the UK’s pitch to the world can rapidly shift UK growth and productivity.

The press release issued by HM Treasury on 21 May 2024.

Fair deal delivers on commitment made within the Northern Ireland Executive’s restoration financial package.

• UK Government delivers on plan to support sustainable public finances and services in Northern Ireland with boost to capital borrowing powers and long-term security of needs-based funding to come into effect this year.
• Interim framework provides further clarity on delivery of funding within the unprecedented £3.3 billion spending settlement confirmed by the UK Government in February.

The UK Government and Northern Ireland Executive have today, 21 May, reached agreement on an interim Fiscal Framework.

Chief Secretary to the Treasury Laura Trott met with Northern Ireland’s Finance Minister Caoimhe Archibald this afternoon to sign the deal, which represents an early and significant step in realising the commitment towards new funding arrangements for the Northern Ireland Executive and investment in its future – as committed in the UK Government’s Northern Ireland Executive restoration financial package and Safeguarding the Union Command Paper.

The deal gives the Executive greater security in funding public services while enabling investment in infrastructure to grow the economy, driving jobs and opportunity across Northern Ireland.

It is headlined by a new needs-based funding formula which will also mean that Northern Ireland will get a 24% uplift in the Barnett formula if its funding falls short of its relative need per head. It also contains an immediate £20 million boost to the Executive’s annual capital borrowing powers, which will rise in line with inflation from 2025-26 onwards.

Chief Secretary to the Treasury Laura Trott said:

This significant deal will provide the Executive with further certainty and resources to deliver for the people of Northern Ireland.

We’ve moved at speed to deliver our plan to address the most pressing issues facing Northern Ireland’s funding and will continue to work with the Executive to secure a fair and final Fiscal Framework made possible by the strength of our Union.

The text agreed between the two governments today also provides further clarity on the new approach to support stability, prosperity, and sustainable public services in Northern Ireland.

The interim Fiscal Framework sets out progress with other elements of the Executive’s restoration financial package. As part of a commitment for the UK Government to write off £559 million in debts incurred while there was a governance gap, the Northern Ireland Executive agreed to publish a plan to deliver sustainable public finances by August 2024. The scope of this plan has now been agreed with HM Treasury ahead of publication in August.

The Executive is also required to publish a comprehensive and costed long-term Strategic Infrastructure Plan by Autumn 2024. The Framework sets out that the Plan will cover the priority areas for action on infrastructure and how it will support prosperity and growth.

A new Public Service Transformation Board, comprising officials from the Northern Ireland Civil Service and UK Government supported by independent experts will provide approval on £235 million ringfenced funding for the purpose of public sector transformation.

Secretary of State for Northern Ireland, Chris Heaton-Harris, said:

Our priority has always been to support the stability and fiscal sustainability of Northern Ireland through a restored Executive.

Today is a significant moment for Northern Ireland and honours this Government’s commitment to a new fiscal framework. It is an example of the better outcomes that are achieved when the UK Government and the Executive work together.

There’s much work to still be done and we stand ready to support the Executive to deliver on the priorities in both this interim framework, and the financial settlement as swiftly and strategically as possible to ensure the full benefits can be realised.

The UK Government and Northern Ireland Executive have committed to agreeing a final Fiscal Framework. Today’s meeting marked the inaugural Joint Exchequer Committee between the two governments. As was committed to within the Safeguarding the Union Command Paper, this will be the forum for discussions on further tax devolution going forward.

Further information

• All documents connected with the interim agreement on the Northern Ireland Executive’s Fiscal Framework and today’s inaugural Joint Exchequer Committee are available online here.

The press release issued by HM Treasury on 10 May 2024.

Major investments have been made in the past week alone.

• Over £2 billion invested by world leading tech companies in the UK this week
• AI firm CoreWeave are investing £1 billion in the UK
• Comes as the Chancellor visits the Siemens Healthineers site, marked for a new factory supporting more than 1,300 skilled jobs

The Chancellor has welcomed the “safe bet” world leading tech and AI companies are making in Britain, as over £2 billion of investment in the UK has been secured in a single week.

Supporting more than 1,300 skilled jobs, Siemens Healthineers have today announced that they are investing £250 million to design and manufacture superconducting magnets for MRI scanners at a new Siemens Healthineers facility in North Oxfordshire.

This comes as world leading AI firm CoreWeave are also investing £1 billion in the UK, as well as confirming their new European Headquarters will be based in the capital.

These two UK data centres will be opened in 2024, with a further expansion planned in 2025, helping secure the necessary processing power for machine learning and AI, graphics and rendering, life sciences and real-time streaming.

This £2 billion investment also follows Scale AI, the data infrastructure company for AI, selecting London as the location for its first European headquarters.

Earlier this week, Wayve announced they had secured over $1.05 billion to develop the next generation of AI-powered self-driving vehicles in the UK.  Founded in the UK in 2017, Wayve is a home-grown British success story and a testament to the UK’s global leadership in creating the economic and regulatory conditions for start-ups in the AI and self-driving vehicle industries to grow and thrive.

Chancellor of the Exchequer Jeremy Hunt said:

Businesses are making a safe bet in Britain. We have attracted the third highest amount of greenfield foreign direct investment since 2010 and the UK accounts for around half of all AI private capital investment in Europe. We really are turning a corner, and the businesses of the future agree.

The UK accounts for around half of all AI private capital investment in Europe and hundreds more AI companies are starting up in the UK every year, growing our economy and creating highly-skilled, well-paid jobs. The AI sector employs more than 50,000 people in the UK and contributes more than £3.7 billion to our economy every year. By 2035, our AI market is forecast to grow to over $1 trillion.

Taken together, these investments cement the UK’s position as a world leader in the AI and tech industry and builds on our strong record of attracting the best and biggest investments from world leading AI companies.

Bernd Montag, Chief Executive of Siemens Healthineers said:

MRI technology plays a vital role in diagnosing disease, helping patients to get healthy and stay healthy. As a world leader in medical imaging, we are very proud to open the next chapter of our history here in Oxford.

This factory will be the global centre for our innovative low-helium magnet technology, meaning we consume far less of a scarce natural resource and enable access to MRIs for many more patients.

Mike Intrator, Cofounder and Chief Executive Officer, CoreWeave said:

We are seeing unprecedented demand for AI infrastructure and London is an important AI hub that we are investing in. Expanding our physical footprint in the UK is an important milestone in the next phase of CoreWeave’s growth.

CoreWeave’s infrastructure will fill a void in the cloud market by providing AI enterprises with localized high-performance compute solutions that will help build and deploy the next generation of AI applications.

Secretary of State for Science, Innovation, and Technology Michelle Donelan said:

I have always said that the proof will be in the pudding when it comes to cementing the UK’s place as a technology superpower – and there is no better proof than the fact that our tech sector has received £2billion of private investment in a single week! Time and again, world leading tech companies are choosing the UK to invest in – bringing new jobs and opportunities for people to gain valuable skills.

Siemens, Wayve, CoreWeave, ScaleAI – these are major players that countries all across Europe and the world are keen to attract. Yet it is our unique, agile and highly-ambitious tech ecosystem that I have proudly helped to build that is winning the race for the UK.

Some of the world’s biggest AI companies including Open AI and Anthropic have also chosen London as the base for their first international offices in a huge vote of confidence in our approach to AI. Microsoft recently announced a new AI hub in London, and one of the leaders in the field, Google DeepMind was also founded here over a decade ago and remains in the UK to this day.

We also have a world-leading AI and tech industry in the UK which is continuing to grow. The UK is only the 3rd country (behind the US and China) in the world to have a tech sector valued at over $1 trillion in total. The UK is also home to 3rd highest number of AI companies and private capital investment in AI in the world.

The single biggest way we’re backing businesses is by creating the economic conditions for them to thrive, which is why we have worked with the Bank of England to reduce inflation from over 11.5 to 3.2%, this means that wages have been rising faster than inflation for nine months in a row.

Because the economy has turned a corner we can cuts taxes, including our cuts to National Insurance worth £900 for the average worker, and full expensing which effectively cuts corporation tax by more than £50 billion to help firms invest for less – the biggest business tax cut in modern British history.

Further information

• CoreWeave is a specialized GPU cloud provider, designed to power the most complex workloads with customized solutions at scale. The company’s portfolio of cutting-edge technology delivers a broad range of capabilities for machine learning and AI, graphics and rendering, life sciences, real-time streaming, and more. Its world-class teams, talent, and engineering prowess bring unmatched speed-to-market for advanced compute. CoreWeave operates a growing footprint of data centres covering every region of the US. It was founded in 2017 and is based in New Jersey.
• Siemens Healthineers pioneers breakthroughs in healthcare. For everyone. Everywhere. Sustainably. The company is a global provider of healthcare equipment, solutions and services, with activities in more than 180 countries and direct representation in more than 70. As a leading medical technology company, Siemens Healthineers is committed to improving access to healthcare for underserved communities worldwide and is striving to overcome the most threatening diseases. The company is principally active in the areas of imaging, diagnostics, cancer care and minimally invasive therapies, augmented by digital technology and artificial intelligence. In fiscal 2023, which ended on September 30, 2023, Siemens Healthineers had approximately 71,000 employees worldwide and generated revenue of around €21.7 billion.
• Further information on the Wayve investment.
• Further information on the Scale AI European headquarters.

The press release issued by HM Treasury on 23 April 2024.

Investing in defence companies contributes to our national security, defends the civil liberties we all enjoy, while delivering long-term returns for pensions funds and retail investors.

That is why the UK’s world leading investment management industry supports our defence sector, with the Investment Association’s members having invested £35 billion in UK defence companies.

Investing in good, high-quality, well-run defence companies is compatible with ESG considerations as long-term sustainable investment is about helping all sectors and all companies in the economy succeed.

The press release issued by HM Treasury on 19 April 2024.

UK Chancellor Jeremy Hunt chaired a meeting of the “Five Finance Ministers” of Australia, Canada, New Zealand, the United Kingdom and the United States.

The meeting was hosted by Secretary Janet L. Yellen at the U.S. Department of the Treasury yesterday alongside the IMF and World Bank Spring Meetings.

Finance Ministers exchanged views on shared economic security priorities and the common economic risks and vulnerabilities faced by partners and the global economy from overconcentrated supply chains.

They discussed the importance of resilience building measures in mitigating the economic risks resulting from these challenges and underscored the role of Finance Ministers in increasing resilience, promoting stable global supply chains, and supporting global growth.

They also reaffirmed their commitment to continued cooperation to respond to joint economic challenges and looked forward to future meetings of the group deepening collaboration on these shared priorities.

Speaking after the meeting, Chancellor Jeremy Hunt said:

We must not be complacent. In light of the legacy of the pandemic and the instability from the current conflicts, the value of working together to tackle the economic risks we face and build our collective resilience cannot be ignored.

The press release issued by HM Treasury on 18 April 2024.

Consultation on VAT relief on everyday charitable donations will be launched before 23 July 2024.

• New VAT relief to encourage businesses to donate everyday items to charity will be consulted on
• Currently firms do not pay VAT if goods are sold on, however, if distributed free of charge VAT must be accounted for
• 12 week consultation to be launched before 23 July 2024

A new VAT relief to encourage businesses to donate everyday items to charity will be consulted on, the Treasury’s tax minister Nigel Huddleston has announced today (18 April 2024).

Currently firms do not pay VAT on any goods they donate which are then sold on, such as clothes, hygiene supplies and cleaning products. However, if these goods are not sold but are instead distributed free of charge to those in need VAT must be paid for.

The Treasury has today announced it will consult on a new VAT relief for donations of low value household goods to help encourage donations.

Nigel Huddleston, Financial Secretary to the Treasury said:

We want the tax system to support donations to charity, not work against it.

We are consulting on how a VAT relief might boost donations so we can get more items we all rely on everyday to those in need and help to alleviate poverty.

Donations that could be in scope of the proposed new VAT relief could include anything that may be of use to a household, such as:

• hygiene items (soap, toothpaste, toothbrushes, shower gel, toilet rolls)
• second hand items from hotels (such as sheets, kettles)
• cleaning supplies – including laundry detergent

Helen Dickinson OBE, Chief Executive of the British Retail Council, said:

Following our representations to government, we welcome the consultation into the unequal tax treatment of goods for onward sale compared to those being donated directly to those in need. We hope that the consultation will result in a meaningful change that will boost the charitable work of business in this country.

Andy Scott, Principal Tax Adviser, Confederation of British Industry said:

We welcome the government’s announcement to consult on a new VAT relief for charitable donations of everyday items. This progressive step aligns with our calls for a smart tax system that incentivises corporate social responsibility and cuts red tape for businesses wanting to contribute their unsold stock to good causes.

By removing the VAT penalty on donated goods, businesses will be more encouraged to support the growth of the civil society sector and the circular economy.

The proposed VAT relief will lower the cost of generosity, allowing firms to extend their social impact without the deterrent of an additional tax expense or the administrative burden of valuing donated goods. We look forward to working with the government to shape a relief mechanism that maximises the potential for positive change in our communities and simplifies the tax system.

A barrier to businesses donating goods to charities for distribution to people in need has grown over recent years as firms have had to account for VAT on donations which are not for onward sale.

The Treasury announced today that it will launch a 12-week consultation before 23 July 2024. It will consult on introducing a UK-wide VAT relief for a range of low value household goods which businesses donate to charities to give away free of charge to people in need. The conclusion to the consultation will be announced at a future fiscal event.

Further information

• The new VAT relief will not include goods which are donated to charities for them to use, such as new IT equipment. This is to prevent VAT avoidance. For example the commercial arm of an organisation buying equipment then donating them to a charitable wing to avoid VAT. The consultation will seek views on this.
• VAT is the UK’s third largest tax, forecast to raise £171 billion in 2023/24. Taxation is a vital source of revenue which helps to fund the UK’s schools, hospitals, and other essential services that we all rely on. VAT has been designed as a broad-based tax on consumption, and any relief requests must be carefully considered and balanced against the need to manage the public finances in a disciplined and responsible way by targeting support where it is most needed.
• Today’s announced forms part of today’s Tax Administration and Maintenance Day. Further details can be found in the full Written Ministerial Statement.

The press release issued by HM Treasury on 12 April 2024.

Today’s action brings the world’s two largest metal exchanges into the scope of existing bans.

• Russian metal producers blocked from profits from the London Metal Exchange and the Chicago Mercantile Exchange, reducing a crucial source of revenue for the Kremlin.
• Joint UK and U.S. action builds on ban of metal imports, targeting $40 billion of Russian exports of aluminium, copper and nickel.

The UK and the U.S. have together announced joint action to clamp down harder on prohibited Russian metal exports, by today bringing the world’s two largest metal exchanges into the scope of the existing bans.

The London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME) will no longer trade new aluminium, copper and nickel produced by Russia. Metals are Russia’s largest export commodity after energy, though their value has been decreasing since Russia’s invasion of Ukraine. In 2022 they were $25 billion, dropping to $15 billion in 2023 due to the efforts of the G7 and allies to curtail the market. Today’s action will go further to constrain Russia’s ability to make money from its shrinking metals exports, dealing another blow to President Vladimir Putin’s funding for his illegal war in Ukraine.

Jeremy Hunt, Chancellor of the Exchequer, said:

Disabling Putin’s capacity to wage his illegal war in Ukraine is better achieved when we act alongside our allies. Thanks to Britain’s leadership in this area, our decisive action with the U.S. to jointly ban Russian metals from the two largest exchanges will prevent the Kremlin funnelling more cash into its war machine.

Janet L. Yellen, U.S. Secretary of the Treasury, said:

Our new prohibitions on key metals, in coordination with our partners in the United Kingdom, will continue to target the revenue Russia can earn to continue its brutal war against Ukraine.

By taking this action in a targeted and responsible manner, we will reduce Russia’s earnings while protecting our partners and allies from unwanted spillover effects.

The Prime Minister first announced the intention to act on banning Russian metals in May 2023. UK legislation to directly ban imports of Russian metals, including aluminium, copper and nickel was introduced in December. Separately, the U.S. put in place tariffs on various Russian metal imports.

Together, the UK and the U.S. have today gone one step further and brought both metal exchanges into the scope of these measures – reinforcing a shared commitment to constrain Russia and support Ukraine. This follows a dialogue between the two countries to maximise the impact of the policy, which is a technically complex measure requiring time to work through the details to ensure its effectiveness and minimise the risk of market disruption.

Metal exchanges provide a central role in facilitating the trading of industrial metals around the globe. The London Metal Exchange and Chicago Mercantile Exchange both have warehouses all over the world. Together, they are the world’s two largest metal exchanges and set global benchmark prices for the trade of base metals.

Both the UK and U.S. measures will exempt the existing stock of Russian metal on these global exchanges so they can still be traded and withdrawn. This is to minimise the risk to market stability.

Today’s announcement to strengthen the UK’s existing ban on Russian metals builds on ongoing work to support Ukraine. Since Putin’s full-scale invasion of Ukraine, the UK has introduced the largest and most severe package of sanctions ever imposed on any major economy. Over 2,000 individuals and entities have now been sanctioned, and it is estimated that without sanctions, Russia would have over $400 billion more to fund its war – which could be enough to do so for an additional four years. The UK has also provided almost £12 billion in military, humanitarian and economic support to Ukraine and has often been the first mover on vital lethal aid.

Sanctions Minister Anne-Marie Trevelyan said:

Today’s action ratches up economic pressure on Putin, further depriving him of the key resources and revenue streams he needs to fund his illegal war in Ukraine.

We have now imposed extensive trade sanctions on Russian-origin oil, gas, gold, diamonds, iron, steel, and base metals, dealing a heavy blow to Putin’s war economy. But we must continue to work with our allies to further tighten the screws on the Kremlin.

Minister for Trade Policy Greg Hands said:

The UK has already imposed the most severe package of bans that we’ve ever seen on a major economy, including on Russian metals which is Russia’s largest export commodity after oil and gas.

Now, we’re going even further. By strengthening our sanctions on Russian metals, alongside the U.S., we will reduce Russian revenue which it uses to fund Putin’s war machine.

Further information

• There are no restrictions on acquiring existing stockpiles of Russian metals already on exchange, in order to prevent disruption to markets.
• This action does not cover titanium or platinum group metals, such as platinum and palladium, which were not included in the UK’s prohibition in December due to supply chain sensitivities.

The press release issued by HM Treasury on 6 March 2024.

‘Budget for Long Term Growth’ sticks to the plan by delivering lower taxes, better public services and more investment, while increasing size of economy by 0.2% in 2028-29 and meeting fiscal rules – taking the long-term decisions needed to build a brighter future.

• Economy turning a corner, with inflation expected to fall to target next quarter, wages consistently rising faster than prices and better growth than European neighbours.
• Chancellor capitalises on progress with ‘Budget for Long Term Growth’, sticking to the plan by putting over £900 a year back into the average worker’s pocket thanks to changes at Autumn Statement and a second Employee National Insurance tax cut from 10% to 8% in April for 27 million working people.
• 2 million self-employed also get a second tax cut through a further 2p reduction in the NICs main rate from 8% to 6% – saving the average self-employed worker £650 when combined with cuts at Autumn Statement.
• Personal tax cuts since Autumn are worth £20 billion, slashes the effective personal tax rate for an average earner to its lowest level since 1975, and will lead to equivalent of 200,000 more full time workers joining the labour market.
• High Income Child Benefit Charge to be assessed on a household-basis by April 2026, and immediate support for working families by increasing the threshold to £60,000 and halving the rate at which Child Benefit is repaid – representing a £1,260 boost on average for around half a million working families.
• The NHS in England will receive a £2.5 billion day-to-day funding boost for 2024/25 and £3.4 billion in capital investment over the forecast period to help unlock £35 billion in productivity savings over the next Parliament by harnessing new technology like AI and cutting admin workloads – part of landmark Public Sector Productivity Plan to deliver better public services.
• The average car driver will save £50 this year as the 5p cut and freeze to fuel duty is maintained until March 2025, while pubs, breweries and distilleries will benefit from a further freeze to alcohol duty until February 2025 – which will also save consumers money on their favourite tipple.
• New tax reliefs and investments will help establish the UK as a world leader in high-growth industries such as the creative sector, advanced manufacturing and life sciences, while 28,000 SMEs will be taken out of VAT registration altogether – encouraging them to invest and grow.
• ‘Budget for Long Term Growth’ sticks to the plan by delivering lower taxes, better public services and more investment, while increasing size of economy by 0.2% in 2028-29 and meeting fiscal rules – taking the long-term decisions needed to build a brighter future.

More tax cuts for working people, more investment and a plan for better public services headlined Chancellor Jeremy Hunt’s ‘Budget for Long Term Growth’ today, Wednesday 6 March.

With the independent Office for Budget Responsibility (OBR) confirming inflation is set to fall to target a year earlier than previously expected, wages rising consistently and the economy outperforming European neighbours, the Chancellor said he would stick to the plan to improve living standards by rewarding work and growing the economy.

Building on the 2 percentage point cut to Employee National Insurance at Autumn Statement, Mr Hunt announced a second 2p cut from 10% to 8% from April. Taken together with the cut to Employee National Insurance at Autumn Statement, this slashes the main rate of Employee NICs by a third and means the average worker earning £35,400 a year will be over £900 better off this year.

The Chancellor also went further with tax cuts for the self-employed, having reduced Class 4 NICs from 9% to 8% and abolished the requirement to pay Class 2 NICs at Autumn Statement. Today he announced a further 2p cut to Class 4 NICs for the self-employed to 6%, meaning the average worker earning £28,000 will be £650 better off compared with last year.

Combined with changes at Autumn Statement, today’s announcements deliver personal tax cuts worth £20 billion and reduce the effective personal tax rate for a median earner to its lowest level since 1975. The OBR says these reductions will lead to the equivalent of around 200,000 extra full-time workers by 2028/29, as people increase their working hours and move into work. This boost is why the Chancellor has prioritised NICs cuts in his ‘Budget for Long Term Growth’ and why he will continue to do so when fiscally responsible. He set out that his long-term ambition is to end the unfairness of double taxation of work.

Mr Hunt also announced that the High Income Child Benefit Charge will be assessed on a household basis by April 2026, with a consultation to come on achieving this.

To ensure working families benefit from increasing their earnings before this change is made, the threshold to start paying back Child Benefit will increase in April from £50,000 to £60,000 – a 20% increase which will take 170,000 families out of paying the charge this year – while Child Benefit will no longer need to be repaid in full until earnings exceed £80,000. This represents a £1,260 boost on average for around half a million working families, rising to nearly £5,000 for some families when combined with tax cuts since Autumn Statement. This will put an end to the current unfairness, where two parents earning £49,000 a year receive the full Child Benefit while a household with a single earner on over £50,000 does not. The OBR says the immediate changes to the HICBC will lead to an increase in hours worked equivalent to around 10,000 more people entering the workforce on a full-time basis.

The Chancellor also announced a landmark Public Sector Productivity Plan which marks the first step towards returning public sector productivity back to pre-pandemic levels and will ensure taxpayers’ money is spent as efficiently as possible. OBR analysis suggests that raising public sector productivity by just 5% would deliver up to £20 billion of benefits a year.

Backed by £4.2 billion in funding, the plan will allow public services to invest in new technologies like AI, replace outdated IT systems, free up frontline workers from time-consuming admin tasks and take action to reduce costs down the line. The NHS will receive £3.4 billion as part of this over the forecast period – doubling investment in digital transformation, significantly reducing the 13 million hours lost by doctors every year because of old IT and delivering test results faster for 130,000 patients a year thanks to AI-fitted MRI scanners that help doctors read results more quickly and accurately. This investment, which comes alongside an extra £2.5 billion cash injection for 2024/25 to support the NHS improve performance and reduce waiting times, means the NHS can commit to delivering £35 billion in productivity savings over the next Parliament, while the £800 million to boost productivity across other public services will deliver an extra £1.8 billion in productivity benefits by 2029.

New tax breaks and investments will help to establish the UK as a world-leader in high-growth industries. The UK’s creative industries will be backed by over £1 billion, including higher tax reliefs to lower the cost of producing visual effects in high-end TV and film, a 40% relief on gross business rates until 2034 will be introduced for eligible film studios, and a new tax credit for independent British films with a budget of less than £15 million. Orchestras, museums, galleries and theatres will also benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions, while £26 million will fund maintenance and repairs at the National Theatre.

A £360 million package will support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors – with a further £45 million funding to accelerate medical research into common diseases like cancer, dementia and epilepsy – while the Green Industries Growth Accelerator will be allocated an extra £120 million to build supply chains for offshore wind and carbon capture and storage.

Opportunity will be spread across the country with hundreds of millions in funding to extend the Long Term Plans for Towns to 20 new places and a swathe of cultural projects, while local leaders will also be empowered to improve their communities through more devolved powers and a new North-East trailblazer devolution deal which comes with a funding package potentially worth over £100 million to support the region’s growth ambitions.

The Chancellor also took steps to make the tax system simpler and fairer. The ‘non-dom’ tax regime will be abolished and replaced with a fairer system from April 2025 where new arrivals to the UK pay the same tax as everyone else after four years – raising £2.7 billion a year by 2028/29. As the oil and gas sector’s windfall profits from higher prices are expected to last longer, the sunset clause on the Energy Profits Levy will be extended by a year to March 2029, raising £1.5 billion while encouraging investment in the UK’s energy security by promising to legislate for its abolition should market prices fall to their historic norm sooner than expected.

Accompanying forecasts by the OBR confirm that the combined impact of decisions taken at Spring Budget and the preceding two fiscal events will increase the size of the economy by 0.7% and increase total hours worked by the equivalent of 300,000 full-time workers by 2028-29  – with the combined impact of government policy since Autumn Statement 2022 reducing the tax burden in the final year of the forecast by 0.6%. Today’s announcements will reduce inflation in 2024/25, bring the equivalent of over 100,000 people into the workforce by 2028-29 and permanently grow the economy by 0.2% – with borrowing falling in every year of the forecast.

Lower taxes 

With the economy turning a corner and debt on track to fall as a share of GDP, the Chancellor delivered further tax cuts for working people – rewarding work, boosting growth and helping families with the cost of living.

• Following a 2 percentage point cut in the Autumn Statement, the main rate of Employee National Insurance will be cut again by a further 2 percentage points from 10% to 8% in April – a one third reduction in the main rate of National Insurance which means the average worker on £35,400 will receive a tax cut of over £900 compared to last year.
• Following a 1 percentage point cut in the Autumn Statement, the main rate of Class 4 NICs for the self-employed will be cut by a further 2 percentage points from 8% to 6% from April – saving the average self-employed person on £28,000 over £650 compared to last year when combined with scrapping the requirement to pay Class 2 NICs announced at Autumn Statement.
• Personal tax cuts worth £20 billion delivered since Autumn, which reduces the effective personal tax rate for a median earner to its lowest level since 1975.
• High Income Child Benefit Charge (HICBC) will be administered on a household rather than an individual basis by April 2026, with a consultation in due course, while around half a million working families will benefit from an increase in the threshold from £50,000 to £60,000 and raising the level at which Child Benefit is fully repaid to £80,000 – worth £1260 per family on average.
• OBR says combined changes to NICs will lead to the equivalent of around 200,000 new full-time workers joining the labour market by 2028-29 as people increase working hours and move into work, while confirmed changes to the HICBC will bring in the equivalent of an additional 10,000 full-time workers.
• The main rates of fuel duty will be frozen again until March 2025 with the temporary 5p cut also extended, saving car drivers around £50 this year and £250 since the 5p cut was introduced – a £5 billion tax cut.
• The six-month alcohol duty freeze announced at Autumn Statement will be extended until 1 February 2025, saving consumers 2p on a pint of beer, 1p on a pint of cider, 10p on a bottle of wine and 33p on a bottle of spirit compared to if the planned rise had gone ahead. This will benefit 38,000 pubs across the UK, while reducing inflation this year.
• The higher rate of Capital Gains Tax (CGT) on property will be cut from 28% to 24% from April 2024 – firing up the residential property market and supporting thousands of jobs that rely on it.
• Building on the single biggest investment in childcare in English history, nurseries and preschools will be protected from rising costs through a guarantee that future funding will rise with a combination of inflation, earnings and the National Living Wage – certainty the sector needs to expand and deliver the rollout, which will save some parents using the full 30 hours up to £6,500 a year.
• The most vulnerable families will receive targeted support through a £500 million extension to the Household Support Fund for an extra 6 months to September 2024, helping local authorities to support people with the cost of essentials, as well as abolishing the £90 fee for Debt Relief Orders so households struggling with problem debts can get the help they need, and extending the maximum period for Universal Credit budgeting advances from 12 to 24 months.

Better public services 

While growth is key to delivering high-quality public services, the Chancellor backed the NHS with more funding and outlined the first steps towards getting public sector productivity back to pre-pandemic levels.

• Day-to-day public spending will increase by 1% higher than inflation on average over the next parliament, as Chancellor confirms spending levels will not be cut.
• The Public Sector Productivity Plan announced today with a £4.2 billion investment will improve public service delivery and get better value for taxpayers’ money through better tech, freeing frontline workers from time-consuming admin and making earlier interventions to reduce costs later down the line.
• The NHS will receive an additional £3.4 billion as part of this to invest in new tech and digital transformation, including making the NHS app a single front door for patients, piloting new AI to halve form-filling times for doctors, rolling out universal electronic patient records, and over one hundred upgraded AI-fitted scanners so doctors can read MRI scans more accurately and quickly. This improves patient care and helps unlock £35 billion in productivity savings by 2030.
• This means the NHS can commit to raising productivity in the NHS to 2% on average by 2028-29, at the upper end of the 1.5-2% ambition in the Long Term Workforce Plan – delivering a health service fit for the future. The NHS also gets a £2.5 billion funding boost for 2024/25.
• £800 million will be invested to boost productivity across other public services, including £230 million for drones and new technology like facial recognition which will free up police officers’ time for more frontline work and £75 million to roll out the highly successful Violence Reduction Unit model across England and Wales.
• This investment in non-NHS public services will help deliver up to £1.8 billion of benefits by 2029, with further measures including digitising jury bundles to free up 55,000 working hours spent on admin, creating 200 new children’s social care place to tackle overspends, and expanding the use of AI across government to make it easier to spot and catch those who try to defraud the public purse.
• Defence spending is expected to hit 2.3% of GDP next year after £11 billion investment announced at Spring Budget 2023.

More investment 

Building on recent investments in the UK by Google, Nissan and Microsoft, Mr Hunt announced exciting new investments in key growth sectors and set out plans to support businesses of all sizes to grow.

• Significant package of support to establish the UK as a world leader in fast-growing industries over the next five years, including over £1 billion in new tax reliefs for creative industries, £270 million in automotive and aerospace R&D projects focusing, and a £120 million top up for the Green Industries Growth Accelerator to help build supply chains for offshore wind and carbon capture and storage.
• £45 million will fund medical research to develop new medicines for diseases like cancer, dementia and epilepsy, and the UK’s ability to manufacture them will be boosted by plans for a £650 million AstraZeneca investment to build a new vaccine manufacturing hub in Liverpool and expand their footprint in Cambridge – thanks to government support for the life sciences sector.
• Opportunity will be spread across the country with hundreds of millions in funding to extend the Long Term Plans for Towns to 20 new places, over £240 million to build nearly 8,000 homes in Barking Riverside and Canary Wharf alongside a new life sciences hub, and a new £160 million deal to acquire two site to develop nuclear for our energy security.
• Local leaders will be empowered, with a new North-East trailblazer devolution deal which comes with a funding package potentially worth over £100 million in support for the region, and powers devolved to Buckinghamshire, Warwickshire and Surrey.
• Draft legislation will be published within weeks to extend full expensing – a £10 billion tax cut for business every year to help them invest for less – to leased assets when affordable to do so, strengthening one of the most attractive capital allowance regimes of any major country.
• SMEs will be supported to invest and grow through a £200 million extension of the Growth Guarantee Fund, helping 11,000 small businesses to access the finance they need, and an increase in the VAT registration threshold from £85,000 to £90,000 which will take around 28,000 small businesses out of paying VAT altogether.
• Pensions and savings reforms, including the introduction of a new UK ISA allowing an additional £5,000 annual investment in UK equities tax-free and new British Savings Bonds offering savers a guaranteed rate for 3 years, will deliver better returns for savers.

Sustainable public finances 

The ‘Budget for Long Term Growth’ delivers lower taxes, better public services and more investment in a responsible way, the OBR confirming the Chancellor’s fiscal rules are on track to be met.

• Underlying debt will fall as a share of the economy to 92.9% in 2028/29 – meeting the debt rule with £8.9 billion headroom. Headline debt will fall as a percentage of GDP every year from 2024/25.
• Public sector borrowing falls in every year of the forecast. The deficit will be 2.7% of GDP in 2025-26 – meeting the second fiscal rule to get borrowing below 3% of GDP three years early – and by 2028-29 it falls to 1.2% of GDP, which is the lowest level since 2001-02.
• Measures to tackle the tax gap will bring in an additional £4.5 billion a year by 2028/29, saving nearly £10 billion for the public purse when combined with policies announced at Autumn Statement.
• The ‘non-dom’ regime will be replaced by a simpler system where arrivals have access to a more generous scheme for their first four years of tax residency before paying tax in the same way as everyone else, raising £2.7 billion a year by 2028/29 without deterring investment.
• The Energy Profits Levy sunset clause will be extended from March 2028 to March 2029 to raise £1.5 billion a year, but legislation in the Finance Bill will abolish the Levy if market prices fall to their historic norm sooner than expected – maintaining investment in our energy security.
• A duty on vapes will be introduced from October 2026 to protect young people and children from the harm of vaping, alongside a one-off increase in tobacco duty to recognise the role vapes play in helping people to quit smoking. This will raise a combined £1.3 billion by 2028/29.
• Multiple Dwellings Relief will be abolished from June after showing no evidence of promoting investment in the private rented sector – raising £385 million a year – and the Furnished Holiday Lettings tax regime will be abolished from April 2025, raising £245 million a year while making it easier for local people to find a home in their community.

The press release issued by HM Treasury on 4 March 2024.

Australia’s biggest pension fund to invest more than £18 billion in UK by 2030.

• Set to unleash billions in productive finance for innovative businesses in the high-growth sectors of the future like clean energy and digital infrastructure.
• Chancellor hails investment as part of vision to make the UK the global capital for capital.

A fresh £8 billion investment from Australia’s biggest pension fund, AustralianSuper, will take its total investment in the UK to over £18 billion by the end of the decade.

It comes after Chancellor Jeremy Hunt met with CEO Paul Schroder, alongside some of the Board, this afternoon and rounds off a day of significant investment announcements, including the government announcing over £360 million of funding for advanced manufacturing.

The Prime Minister attended the ground-breaking of a development site in Swindon today owned by Panattoni, Europe’s largest developer of new build industrial and logistics facilities, which has the potential to create 7,000 jobs for local people and add £1.2 billion to the economy, and the Chancellor visited Siemens Mobility, which revealed a £100 million investment for a manufacturing and research and development centre in Chippenham.

Growing the economy is one of the Prime Minister’s priorities, and is part of the plan to improve economic security and opportunity for everyone. The UK has secured investment from major corporations over the past year, and according to PWC, around 4,000 CEOs see the UK as a top-three priority country for investment, alongside the US and China.

It also follows the announcement of a series of pension fund reforms to back British business and increase returns and transparency for savers, including a new Value for Money (VFM) framework aimed at improving the performance of defined contribution pensions – a market growing rapidly, fuelled by the success of Automatic Enrolment in increasing pension savings by over £26 billion between 2012 and 2022.

Prime Minister Rishi Sunak said:

The raft of investment announcements we have seen today show that the UK remains one of the most attractive places to invest in the world.

But because of the difficult, long term decisions the government has taken the economy is now turning a corner, and we must stick to the plan – driving investment and growth to deliver long-term change and a brighter future everyone.

Chancellor Jeremy Hunt said:

This major investment from AustralianSuper will promote growth and strengthen the UK’s position as a leading financial centre, creating wealth and helping to fund public services.

Britain continues to be Europe’s leading hub for investment, and it is through commitments like this that we will funnel billions into our brightest, burgeoning businesses to scale up and grow.

The Australian pension fund industry is the fastest growing in the developed world with assets under management doubling every five years, and the Chancellor has previously referred to the success of the pensions model in Australia, which has pioneered a similar set of reforms to VFM.

AustralianSuper has had a presence in the UK since 2016, with approximately £8 billion currently invested in the UK and holding over £2.5 billion in UK listed equities. It is on track to deploy more than £8 billion of new capital by 2030 into large-scale, long-term investment opportunities in some of the fastest growing sectors in which Britain excels in comparison to its European peers, such as the energy transition and digital infrastructure.

Mr Schroder has praised the UK’s investment opportunities for enabling high-quality, long-term returns for members. In future the company stated it expects £7 of every new £10 invested to be deployed outside Australia, as it pursues the best global investment opportunities and long-term returns for members.

The United Kingdom has the largest pension market in Europe, worth over £2.5 trillion. Last year the Chancellor set out his ‘Mansion House Reforms’ to capitalise upon this, with the possibility to unlock an additional £75 billion for high growth businesses – supporting the Prime Minister’s priority of growing the economy and delivering tangible benefits to pensions savers. These include the ‘Mansion House compact’ which encourages pension funds to invest at least 5% of their assets in unlisted equity, which is in line with the Australian model.

Minister for Investment Lord Johnston said:

Foreign investment is not just about numbers on a spreadsheet. It creates jobs, nurtures skills and unleashes our nation’s innovative spirit. That’s why the UK’s recent trade deal with Australia prioritised boosting investment flows.

AustralianSuper’s ongoing commitment shows the strong relationship we have built as they create a global centre of excellence in London. We are a top choice for major investments like this, and the government is committed to promoting the opportunities available to global investors so they choose the UK.

The UK-Australia free trade agreement, which came into force on 31 May 2023, includes comprehensive provisions on investment, which has made the UK a more attractive place to do business.

Notes to Editors  

More information on the Value for Money framework and other pension fund reforms announced by the Chancellor this past weekend.