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Rachel Reeves will this week announce plans to unlock tens of billions of pounds from corporate pension schemes as part of government plans to kickstart economic growth.

Sky News has learnt that the chancellor will use a crucial speech on Wednesday to disclose that she wants to use so-called surplus release to boost investment in the economy.

Government sources said it could unlock more than £60bn of pension surpluses held in defined benefit (DB) schemes, while other estimates suggested the figure could be in the region of £100bn.

The surplus release plan could be included in a pension schemes bill expected to be published in the coming months.

City sources said that a meeting had taken place earlier this month which was attended by Treasury officials, members of the Number 10 Policy Unit and representatives of the 100 Group of FTSE-100 company finance chiefs.

The meeting, which was hosted by Varun Chandra, Sir Keir Starmer’s top business adviser, discussed the surplus release plan in detail, according to one finance director briefed on the talks.

Ms Reeves’s move will form part of a wider set of pensions reforms initiated under the last government and now being accelerated by Labour.

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These include forcing the merger of local government pension schemes, which collectively hold about £400bn of assets.

In her maiden Mansion House speech in November, the chancellor said she would preside over “the biggest set of reforms to the pensions market in decades to 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”.

An overhaul of defined contribution (DC) schemes, which in aggregate manage £500bn in assets, is also on the cards, with consolidation there also anticipated in the coming years.

The Treasury has cited Australia and Canada as examples of the model Britain’s pensions system should seek to emulate, with both countries utilising pension scheme capital to invest more heavily in domestic infrastructure.

The surplus release plan has the potential to be a major catalyst for economic investment, although it was unclear this weekend how the deployment of this capital into UK growth initiatives would be guaranteed.

It was also unclear the extent to which pension trustees would play a role in any surplus release plans.

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The pensions industry has been pushing for surplus release to be adopted in Britain for years, with the Pensions and Lifetime Savings Association having endorsed such a move before last year’s election.

Edi Truell, the prominent financier and pensions entrepreneur, said on Sunday: “It is time to split DB pension funds from their employers.

“The employers should be focussing on their core business; and the pension funds be backed by capital from specialist pension superfund managers.”

“The Pensions Regulator needs to replace its misguided views of “risk” and recognise that investment in productive assets in the long term provides better pension outcomes.”

Ms Reeves’s speech on Wednesday will come at a critical time for her, with doubts having been raised about her grip on her job for the first time in recent weeks amid financial market volatility in the aftermath of her October Budget.

Speaking at the World Economic Forum in Davos last week, Ms Reeves indicated that she would row back from a number of Budget measures, including relating to the treatment of non-doms.

Having been repeatedly accused of talking down the economy in the wake of Labour’s landslide general election victory, she said this weekend that she wanted Britain to be less “polite” about championing its economic virtues.

The chancellor has also formed a pivotal part of the government’s move to shake up economic regulation, with the removal last week of the chairman of the Competition and Markets Authority.

Sky News revealed several weeks ago that Sir Keir had written to watchdogs to urge them to remove barriers to growth, with meetings between the chancellor and regulators set to continue in the coming weeks.

The chancellor’s speech this week is expected to confirm government support for major infrastructure projects, including – controversially – a third runway at London Heathrow Airport.

The Treasury declined to comment on Sunday on the contents of the chancellor’s growth speech.

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Woman and three teenagers arrested over M&S, Co-op and Harrods cyber attacks

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Woman and three teenagers arrested over M&S, Co-op and Harrods cyber attacks

Four people have been arrested by police investigating cyber attacks targeting M&S, Co-op and Harrods.

A 20-year-old woman and two males, both aged 19, and a male aged 17, were detained in London and the West Midlands this morning as part of a National Crime Agency (NCA) operation.

They were arrested at their homes on suspicion of Computer Misuse Act offences, blackmail, money laundering and participating in the activities of an organised crime group.

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Electronic devices were seized from the suspects and are currently being analysed by forensic experts.

M&S halted online orders, and shelves were empty in shops after the cyber attack on the retailer earlier this year.

The initial hack into the retailer’s systems took place in April through “sophisticated impersonation” involving a third party.

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Disruption is expected to continue at the retailer until the end of this month.

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Mickey Carroll in May answered why M&S cyber attack was so bad.

The Co-op and Harrods were also subsequently targeted by hackers.

Paul Foster, head of the NCA’s National cybercrime unit described the arrests as a “significant step” in their investigation, which remains “one of the Agency’s highest priorities”.

He added: “…our work continues, alongside partners in the UK and overseas, to ensure those responsible are identified and brought to justice.”

The National Crime Agency is keen to “signal” to “future victims” the “importance of seeking support and engaging with law enforcement”, stating that “the NCA and policing are here to help”.

The NCA has also thanked M&S, Co-op and Harrods for their support in their investigations.

The arrests, which took place early on Thursday morning, were supported by officers from the West Midlands Regional Organised Crime Unit and the East Midlands Special Operations Unit.

Earlier this week, the chairman of M&S told MPs that the hack had been “traumatic” and like an “out-of-body experience”.

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Archie Norman, however, refused to be drawn on whether the retailer had paid any ransom.

“We are not discussing any of the details of our interaction with the threat actor, including this subject, but that subject is fully shared with the NCA,” he said.

It is estimated that the cyber attack will cost M&S up to £300m this year.

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Days after M&S was attacked, the Co-op was targeted and forced to shut down some internal systems.

Harrods was then hacked, and also had to shut some systems despite its website and shops continuing to operate.

Of those arrested, a 17-year-old British male and a 19-year-old Latvian male were from the West Midlands.

A 19-year-old man was from London and a 20-year-old woman from Staffordshire.

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US-listed Ulta Beauty swoops on high street chain Space NK

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US-listed Ulta Beauty swoops on high street chain Space NK

A New York-listed company with a valuation of more than $21bn is to snap up Space NK, the British high street beauty chain.

Sky News has learnt that Ulta Beauty, which operates close to 1,500 stores, is on the verge of a deal to buy Space NK from existing owner Manzanita Capital.

Ulta Beauty is understood to have registered an acquisition vehicle at Companies House in recent weeks.

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The exact price being paid by Ulta was unclear on Thursday morning, although one source said it was likely to be well in excess of £300m.

Manzanita Capital, a private investment firm, engaged bankers at Raymond James to oversee an auction in April 2024.

The firm has owned Space NK for more than 20 years.

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Manzanita has also owned the French perfume house Diptyque and Susanne Kaufmann, an Austrian luxury skincare brand.

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Founded in 1993 by Nicky Kinnaird, Space NK – which is named after her initials – trades from dozens of stores and employs more than 1,000 people.

It specialises in high-end skincare and cosmetics products.

Manzanita previously explored a sale of Space NK in 2018, hiring Goldman Sachs to handle a strategic review, but opted not to proceed with a deal.

None of Ulta, Manzanita, Space NK and Raymond James could be reached for comment.

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Royal Mail to scrap second-class post on Saturdays and some weekdays

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Royal Mail to scrap second-class post on Saturdays and some weekdays

Royal Mail is to be allowed to scrap Saturday second-class stamp deliveries, under a series of reforms proposed by the communications regulator.

From 28 July, Royal Mail will also be allowed to deliver second-class letters on alternate weekdays, Ofcom said.

The post will still be delivered within three working days of collection from Monday to Friday.

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The proposals had already been raised by Ofcom after a consultation was announced in 2024, and the scale back was proposed early this year.

Royal Mail had repeatedly failed to meet the so-called universal service obligation to deliver post within set periods of time.

Those delivery targets are now being revised downwards.

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Rather than having to have 93% of first-class mail delivered the next day, 90% will be legally allowed.

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The sale of Royal Mail was approved in December

The target for second-class mail deliveries will be lowered from 98.5% to arrive within three working days to 95%.

A review of stamp prices has also been announced by Ofcom amid concerns over affordability, with a consultation set to be launched next year.

It’s good news for Royal Mail and its new owner, the Czech billionaire Daniel Kretinsky. Ofcom estimates the changes will bring savings of between £250m and £425m.

A welcome change?

Unsurprisingly, the company welcomed the announcement.

“It is good news for customers across the UK as it supports the delivery of a reliable, efficient and financially sustainable universal service,” said Martin Seidenberg, the group chief executive of Royal Mail’s parent company, International Distribution Services.

“It follows extensive consultation with thousands of people and businesses to ensure that the postal service better reflects their needs and the realities of how customers send and receive mail today.”

Citizens Advice, however, doubted whether services would improve as a result of the changes.

“Today, Ofcom missed a major opportunity to bring about meaningful change,” said Tom MacInnes, the director of policy at Citizens Advice.

“Pushing ahead with plans to slash services and relax delivery targets in the name of savings won’t automatically make letter deliveries more reliable or improve standards.”

Acknowledging long delays “where letters have taken weeks to arrive”, Ofcom said it set Royal Mail new enforceable targets so 99% of mail has to be delivered no more than two days late.

Changing habits

Less than a third of letters are sent now than 20 years ago, and it is forecast to fall to about a fifth of the letters previously sent.

According to Ofcom research, people want reliability and affordability more than speedy delivery.

Royal Mail has been loss-making in recent years as revenues fell.

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In response to Ofcom’s changes, a government spokesperson said: “The public expects a well-run postal service, with letters arriving on time across the country without it costing the earth. With the way people use postal services having changed, it’s right the regulator has looked at this.

“We now need Royal Mail to work with unions and posties to deliver a service that people expect, and this includes maintaining the principle of one price to send a letter anywhere in the UK”.

Ofcom said it has told Royal Mail to hold regular meetings with consumer bodies and industry groups to hear their experiences implementing the changes.

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