Welcome relief for pension savers as Rachel Reeves pledges 'we'll turn our attention to the pension system'

Rachel Reeves

The Chancellor said the Government will make “tough” choices to fix the UK’s economy

Temi Laleye

By Temi Laleye

Published: 08/07/2024

- 14:58

The Chancellor said the Government will make 'tough' choices to fix the UK’s economy

Rachel Reeves pledged that urgent attention will be given to the UK's pension system in order to boost the economy.

In a speech at the Treasury today, she vowed that the new Labour Government will make those "tough choices" that are needed to drive growth in the UK.

Whilst outlining her plan in the upcoming months, she drew specific attention to the pension system, stating she will use this area to boost growth.

The first ever female Chancellor said: "This Labour Government was elected to get things done and get Britain building again. We will make those tough decisions.

"We will get Britain's economy growing again - there's no time to waste.

"We will reform our skill system. We will tackle economic activity to get people back to work.

Rachel Reeves

Rachel Reeves pledged that urgent attention will be given to the UK's pension system


"We will turn our attention to the pension system to drive investment in home grown British business and to deliver greater returns for pension savers."

The Labour party has committed to the retention of the state pension triple lock. This guarantees the state pension rises each year in line with inflation, earnings or by 2.5 per cent – whichever is higher.

Some commentators have suggested that, while the triple lock provides a vital safety net for pensioner incomes, retaining it will be a challenge, given the ageing population and questions around intergenerational fairness.

Labour has also promised to “undertake a review of the pensions landscape to consider what further steps are needed to improve pension outcomes and increase investment in UK markets”.

Patrick Heath-Lay, chief executive of People’s Partnership, which provides the People’s Pension, said: “I hope that Labour’s pensions review will help revitalise the consensus that drove forward the success of automatic enrolment and create a roadmap for the future.”

He added: “There are also ‘day one’ challenges for the new ministerial team. Confederation of British Industry chief Rain Newton-Smith said: “Businesses will be encouraged to hear the Chancellor speak clearly and passionately about making growth the defining priority of Government and to committing to the three pillars of stability, investment and delivery needed to achieve it.

“With improvements to public services and living standards dependent on a step change from the sluggish levels of growth we’re currently seeing, it’s clear that the Government needs to hit the ground running.

“Firms will welcome the Chancellor wasting no time in committing to tackle the burdensome and time-consuming planning processes that are holding back critical investments in infrastructure and housebuilding.”

Mike Childs, head of science, policy and research at Friends of the Earth, said that although much of the designated green belt bordering towns and cities “isn’t exactly a haven for wildlife”, it does serve a vital purpose in preventing urban sprawl and that building on it should be a “last resort”.

Reeves ordered Treasury officials to produce an assessment of the financial “mess” left by the Conservatives as she promised a new focus on generating economic growth.

The Chancellor said the Government is ripping up planning rules to build more homes and critical infrastructure, saying she is prepared for “short-term political pain to fix Britain’s foundations”.

She said: “We face the legacy of 14 years of chaos and economic irresponsibility.

“That is why, over the weekend, I instructed Treasury officials to provide an assessment of our spending inheritance so that I can understand the full scale of the challenge, and I will present this to Parliament before the summer recess.”

She has already commissioned analysis which showed that if the economy had grown at the average rate of the OECD group of developed nations during the last 14 years, the UK’s economy today would be £140 billion bigger, with £58 billion more in tax revenues for public services.

“That is why growth is so crucial, not just for driving up living standards but also for having the money for public services,” she said.

The mission to kick-start economic growth is central to Labour’s hopes of funding public services without resorting to tax rises or being forced to slash spending in other areas.


Rachel Reeves

Chancellor Rachel Reeves gave a speech at the Treasury


The Chancellor continued: “Economic growth is about more than lines on a graph.

"This is about whether working people feel better off, whether our high streets and town centres are revived, whether there are good jobs paying decent wages in more parts of the country.

“Success for me will be whether working-class kids from ordinary backgrounds have more opportunities than they do today, and I think those opportunities have gone backwards in the last few years.”

But she acknowledged being in Government will mean “difficult decisions” because of “the mess left by our predecessors”.

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