Image: Rachel Reeves wants to reform pensions. Pic: PA
Almost 90 local government pension pots will be grouped together, with defined contribution schemes merged and assets pooled together.
This is part of the government’s plan to increase economic growth through investing in infrastructure.
Pension schemes get greater returns when they reach around £20bn to £50bn as they are “better placed to invest in a wider range of assets”, according to the government.
This is backed up by evidence from Canada and Australia, the government argues – with Canada’s schemes investing four times more in infrastructure, and Australia three times more compared to the UK’s defined contribution schemes.
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Ms Reeves said it marks “the biggest set of reforms to the pensions market in decades”.
The chancellor added the changes would “unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off”.
However, Tom Selby, the director of public policy at financial company AJ Bell, said: “There needs to be some caution in this push to use other people’s money to drive economic growth. It needs to be made very clear to members what is happening with their money.”
The government says the funds will be regulated by the Financial Conduct Authority and will need to “meet rigorous standards to ensure they deliver for savers”.
The Local Government Pension Scheme in England and Wales will manage assets worth around £500bn by 2030. These assets are currently split across 86 different administering authorities, with local government officials and councillors managing each fund.
Under the government plans, the management of local government pensions and what they invest in will be moved from councillors and local officials to “professional fund managers”.
This will allow them to invest more in assets such as infrastructure, supporting economic growth and local investment on behalf of the 6.7 million public servants, the government said.
Defined contribution pension schemes are set to manage £800bn worth of assets by the end of the decade.
There are around 60 different multi-employer schemes, each investing savers’ money into one or more funds. The government will consult on setting a minimum size requirement for these funds.
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Businesses cautious – but pensions sector backs plans
Businesses will need to be reassured that the government’s plans are watertight following the fallout from the budget, according to the trade group the Confederation of British Industry (CBI).
The CBI’s chief economist Louise Hellem said: “While the chancellor is right to concentrate on mobilising investment, putting pension reform to work for the government’s growth mission, unlocking investment also needs competitive and profitable businesses.
“With the budget piling additional costs on firms and squeezing their headroom to invest, the government needs to work hard to regain the confidence in the UK as a place businesses and communities can succeed.
“Pension schemes will want to operate within a UK economy that is prospering.”
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But key parts of the pensions sector gave their backing to the government’s plans, including Standard Life, Royal London, Local Pensions Partnership Investments and the Pensions and Lifetime Savings Association.
Deputy Prime Minister Angela Rayner said: “This is about harnessing the untapped potential of the pensions belonging to millions of people, and using it as a force for good in boosting our economy.”
Britain has “lost control” of its borders over the last five years, the defence secretary told Sky News after the highest number of migrants this year crossed the Channel.
John Healey told Sunday Morning With Trevor Phillips the previous Conservative government left the UK’s asylum system “in chaos” and the country with “record levels of immigration”, which his government is having to deal with.
On Saturday, 1,194 migrants arrived in the UK on 18 small boats, government figures showed – the highest number of arrivals in a day so far this year (the previous record was 825 on a day in May).
It brings the provisional total for 2025 so far to 14,811 – the highest ever recorded for the first five months in a year and the highest total for the first six months of the year, which was previously 13,489 on 30 June last year.
2025’s total so far is 42% higher than the same point last year (10,448), and 95% up from the same point in 2023 (7,610).
The highest daily total since data began in 2018 remains at 1,305 on 3 September 2022.
Image: Migrants were seen scrambling to get on small boats in the shallows of a beach at Gravelines, France, on Saturday. Pic: PA
On Saturday, French police watched on while people, including children, boarded small boats in the shallows of a beach in Gravelines, between Calais and Dunkirk.
Authorities were then pictured escorting the boats as they sailed off towards the UK.
Mr Healey said: “Pretty shocking, those scenes yesterday.
“Truth is, Britain’s lost control of its borders over the last five years, and the last government last year left an asylum system in chaos and record levels of immigration.”
He said it is a “really big problem” that French police are unable to intervene to intercept boats in shallow waters.
Image: Migrants waited for the boats to come to the beach before wading in to the shallows to board. Pic: PA
“We saw the smugglers launching elsewhere and coming around like a taxi to pick them up,” Mr Healey added.
He said the UK is pressing for the French to put new rules into operation so they can intervene.
“They’re not doing it, but for the first time for years, for the first time, we’ve got the level of cooperation needed,” Mr Healey said.
“We’ve got the agreement that they will change the way they work, and our concentration now is to push them to get that into operation so they can intercept these smugglers and stop these people in the boats, not just on the shore.”
Image: Migrants waited on the beach at Gravelines before boarding boats to the UK. Pic: PA
Image: People waded through the shallows to get on small boats. Pic: PA
On Saturday, Conservative shadow home secretary Chris Philp accused Labour of having “completely lost control of our borders”.
The Home Office released figures on Thursday that revealed France is intercepting fewer Channel migrants than ever before, despite signing a £480m deal with the UK to stop the crossings.
Image: French police watched on as migrants boarded the boats in the water at Gravelines. Pic: PA
Image: French authorities escorted the boats after they left the beach. Pic: PA
This year, French police have prevented just over 38% (8,347) of asylum seekers from reaching the UK in small boats, with 13,167 having made the journey successfully.
They stopped an estimated 45% last year and 47% in 2023.
New weapons factories will be built “very soon” to show Vladimir Putin the UK is “stepping up our deterrents”, the defence secretary has told Sky News.
Last night, the government announced at least six new arms plants as part of a £6bn push to rearm at a time of growing threats.
No details on timings or where the factories would be were provided ahead of the publication of the government’s strategic defence review, which the £6bn investment will be part of, on Monday.
“And we’ve already got strong munitions factories in every part of England, Scotland, Wales and Northern Ireland.
“The investment we’re making will boost the jobs in those areas as well.”
Image: Mr Healey said Vladimir Putin should know the UK is stepping up its deterrents. Pic: Sputnik/AP
Asked whether Russian President Vladimir Putin should be “frightened now” or in the future, Mr Healey said: “The message to Putin is we take our defence seriously, we’re stepping up our deterrents.”
The government also announced it would buy up to 7,000 long-range missiles, rockets and drones as part of the £6bn rearmament strategy.
New Sky News podcast launches on 10 June – The Wargame simulates an attack by Russia to test UK defences
He defended not trying to get to that in this parliament – by 2029 – and said: “It’s how much [is spent on defence], but also how you spend it.”
The defence secretary said his government is showing a sense of urgency by investing £1bn into cyber warfare capabilities, £1.5bn to improve forces’ housing over the next five years and a £6bn commitment to “rearm” over the next five years.
John Healey says the “transformation” of Britain’s armed forces and the industrial base needed to keep them supplied with weapons to be set out in tomorrow’s strategic defence review will be affordable within the government’s existing defence spending plans.
That’s a timetable which will see 2.3% of GDP increase to 2.5% by 2027, with an “ambition” to ratchet up to 3% in the next parliament, if economic circumstances allow.
Mr Healey’s repeated assertion this weekend that he has “no doubt” the UK will be spending 3% within the next parliament clearly puts pressure on the Treasury to stump up the cash.
Today, he was at pains to clarify that this optimism is based on his confidence in the chancellor and growth returning to the UK economy.
But even translating this ambition into a concrete commitment would only see 3% by 2034 – in nine years. There’s an obvious tension between this leisurely timescale and the sabre-rattling urgency of the government’s messaging.
Writing in the Sun on Sunday, the prime minister promised to “restore Britain’s war fighting readiness”, warning “we are being directly threatened by states with advanced military forces”.
Mr Healey told Sir Trevor Phillips the idea is to send a message to Vladimir Putin that “we take our defence seriously”.
But he also couldn’t give an exact date when the six new munitions factories would be up and running.
The Conservatives and Liberal Democrats are both calling for 3% to be reached within this parliament. But in a landscape of planned spending cuts – and with so many competing demands for money – finding any extra cash any time soon looks highly unlikely.
Image: Robert Jenrick said he could not be sure the chancellor will allow 3% of GDP to be spent on defence
Senior Conservative Robert Jenrick told Trevor Phillips he welcomed “any extra investment in defence” and the fact Labour had reaffirmed the UK’s commitment to spending 2.5% of GDP on defence.
However, he said: “We want to see the UK reach 3% within this parliament, we think that 2034 is a long time to wait, given the gravity of the situation.”
He called Mr Healey “a good man” who is “doing what needs to be done in the national interest”.
But he added: “I am sceptical as to whether Rachel Reeves, the chancellor, is going to make good on these promises.
“Since the general election, all I can see are broken promises from Rachel Reeves.”
The UK will buy up to 7,000 long-range missiles, rockets and drones and build at least six weapons factories in a £1.5bn push to rearm at a time of growing threats.
The plan, announced by the government over the weekend, will form part of Sir Keir Starmer’s long-awaited Strategic Defence Review, which will be published on Monday.
However, it lacks key details, including when the first arms plant will be built, when the first missile will be made, or even what kind of missiles, drones and rockets will be purchased.
The government is yet to appoint a new senior leader to take on the job of “national armaments director”, who will oversee the whole effort.
Andy Start, the incumbent head of Defence Equipment and Support – the branch of defence charged with buying kit – is still doing the beefed-up role of national armaments director as a sluggish process to recruit someone externally rumbles on.
Image: Sir Keir Starmer and Volodymyr Zelenskyy at a presentation of Ukrainian military drones. Pic: Reuters
Revealing some of its content ahead of time, the Ministry of Defence said the defence review will recommend an “always on” production capacity for munitions, drawing on lessons learned from Ukraine, which has demonstrated the vital importance of large production lines.
It will also call for an increase in stockpiles of munitions – something that is vitally needed for the army, Royal Navy and Royal Air Force to be able to keep fighting beyond a few days.
“The hard-fought lessons from [Vladimir] Putin’s illegal invasion of Ukraine show a military is only as strong as the industry that stands behind them,” John Healey, the defence secretary, said in a statement released on Saturday night.
“We are strengthening the UK’s industrial base to better deter our adversaries and make the UK secure at home and strong abroad.”
Image: Army Commandos load a 105mm Howitzer in Norway. Pic: Ministry of Defence/PA
The UK used to have a far more resilient defence industry during the Cold War, with the capacity to manufacture missiles and other weapons and ammunition at speed and at scale.
However, much of that depth, which costs money to sustain, was lost following the collapse of the Soviet Union in 1991, when successive governments switched funding priorities away from defence and into areas such as health, welfare and economic growth.
Even after Russia’s full-scale invasion of Ukraine in 2022 and a huge increase in demand from Kyiv for munitions from its allies, production lines at UK factories were slow to expand.
Image: A reaper drone in the Middle East. Pic: Ministry of Defence
Sky News visited a plant run by the defence company Thales in Belfast last year that makes N-LAW anti-tank missiles used in Ukraine. Its staff at the time only worked weekday shifts between 7am and 4pm.
Under this new initiative, the government said the UK will build at least six new “munitions and energetics” factories.
Energetic materials include explosives, propellants and pyrotechnics, which are required in the manufacturing of weapons.
There were no details, however, on whether these will be national factories or built in partnership with defence companies, or a timeline for this to happen.
There was also no information on where they would be located or what kind of weapons they would make.
Image: King Charles visits HMS Prince of Wales. Pic: PO Phot Rory Arnold/Ministry of Defence/PA
In addition, it was announced that the UK will buy “up to 7,000 UK-built long-range weapons for the UK Armed Forces”, though again without specifying what.
It is understood these weapons will include a mix of missiles, rockets and drones.
Sources within the defence industry criticised the lack of detail, which is so often the case with announcements by the Ministry of Defence.
The sources said small and medium-sized companies in particular are struggling to survive as they await clarity from the Ministry of Defence over a range of different contracts.
One source described a sense of “paralysis”.
The prime minister launched the defence review last July, almost a year ago. But there had been a sense of drift within the Ministry of Defence beforehand, in the run-up to last year’s general election.
The source said: “While the government’s intentions are laudable, the lack of detail in this announcement is indicative of how we treat defence in this country.
“Headline figures, unmatched by clear intent and delivery timelines which ultimately leave industry no closer to knowing what, or when, the MOD want their bombs and bullets.
“After nearly 18 months of decision and spending paralysis, what we need now is a clear demand signal from the Ministry of Defence that allows industry to start scaling production, not grand gestures with nothing to back it up.”
As well as rearming the nation, the government said the £1.5bn investment in new factories and weapons would create around 1,800 jobs across the UK.