Just when you thought the gulf between the private and public sectors couldn’t get any wider, Labour turned it into a chasm.
The tax raid on salary sacrifice pensions announced in last month’s disastrous Labour Budget hit employees of private companies harder than their counterparts on the taxpayer-funded payroll.
From April 2029, assuming the Chancellor is still in place by then and any successor doesn’t change her proposals, salary-sacrificed pension contributions will only be free from National Insurance for the first £2,000 a year.
Any amount above that cap will be treated as ordinary employee pension contributions in the tax system, meaning both you and your employer will pay National Insurance on them.
Rachel Reeves has sent the clearest of signals that her government is no friend of prudent savers.
Instead, ever-larger sums are being channelled into handouts by Labour’s economic illiterates – and we will all end up paying a heavy price.
The apartheid between the private and public realms has been a feature of the landscape for decades, but there aren’t many politicians who want to acknowledge it.
Underlying its existence is the assumption that those who have devoted their life to public service deserve more generous pensions.
Deputy Chief Constable Jane Connors alongside Chief Constable Jo Farrell at Police Scotland HQ in Fife
Rachel Reeves’s used last month’s disastrous Budget to announce that salary sacrificed pension contributions would be subject to a new tax raid
No one grudges just reward, but equally it seems no one wants to grapple with the gross inequities baked into the system.
If you’re expecting it to feature in the campaign ahead of next May’s Holyrood election, don’t hold your breath – there are very few in statist Scotland with a desire to rock the boat, with more than a fifth of Scots in the public sector.
That’s around 600,000 people and many of them are directly involved in shaping policy either as ministers or as civil servants, quangocrats, spin doctors and special advisers. Reform UK leader Nigel Farage is one of the few to warn that generous public pensions represent the ‘biggest ticking time bomb’ in government finances.
But for MSPs, upsetting the apple cart on this sensitive issue wouldn’t be in their own best interests. Their priority is preserving their nest-eggs, and enhancing them.
And it isn’t only on pensions where injustices are to be found, particularly in policing – where costly perks which ought to belong to a bygone era are still available.
As the Mail revealed on Saturday, Deputy Chief Constable Jane Connors, formerly of the Metropolitan Police in London, was handed more than £112,000 to help her move house when she joined Police Scotland. She has just been suspended over a series of bullying allegations.
Her boss, Chief Constable Jo Farrell, received £134,000 to help her buy a second home in Scotland – she has another south of the Border.
Yet between them these two fat cats are paid nearly £500,000, so why can’t they stump up for their own house moves?
Nigel Farage has warned that generous public pensions represent the ‘biggest ticking time bomb’ in government finances
Ms Connors’s pension pot was valued at more than £3.1million last year – something to ponder as you calculate the likely impact on your private pensions of Ms Reeves’s tax-grab.
Police regulations are cited in their defence, but the problem isn’t that they broke the rules – it’s that the rules exist in the first place, and no one has got round to changing them (or they have no appetite to do so).
Yet the depleted rank-and-file are based in crumbling police stations, sometimes reduced to using ink and paper for fingerprinting.
Commenting on the use of taxpayers’ cash for top cops’ house moves, one former senior officer told me: ‘This has been going on for some time – it’s not good.’ The ‘optics’ are dire at a time when top brass regularly issue grave warnings about under-funding, to the extent that some ‘minor’ crime is no longer fully investigated.
It emerged in 2018 that the Scottish Police Authority had granted payments totalling £67,000 to help the then Deputy Chief Constable Rose Fitzpatrick move house – and paid her £53,000 tax bill (she was given the £67,000 by bank transfer).
We’re encouraged not to dwell on these practices, and you won’t hear much about it from the SNP – given that it set up the single force in 2013.
The Scottish Police Authority accounts also disclose, almost in passing, that the liability for police pensions is around £12.4billion, with the bill picked up by the Scottish Government.
The vast majority of public sector workers in the UK still pay into taxpayer-funded ‘gold-plated’ pensions which have nearly vanished in the private sector.
Some 81.9 per cent of workers employed by the state enjoy lucrative defined benefit schemes – often inflation-linked for the rest of their life.
By contrast, just 7 per cent of private sector employees receive this benefit, according to the Office for National Statistics.
This is despite the public sector pensions bill now standing at more than £2.6trillion – larger than the size of the UK economy.
Defined benefit schemes are close to extinction in the private sector as they have become too expensive for employers to maintain.
Instead, most private sector workers and employers pay pension contributions each month into defined contribution schemes, with the size of retirement pots dependent on how well investments perform in the stock market.
Elsewhere in the public sector, councillors in Scotland who are voted out of office are set to be handed ‘golden goodbyes’ for the first time in a controversial move that could cost taxpayers up to £10million every time local elections are held.
As The Scottish Mail on Sunday revealed, Cosla, the body which represents the country’s local authorities, is planning to introduce severance payments for councillors who either lose their seat at an election or else stand down.
Under the move – due to be implemented in time for the 2027 polls – hundreds of outgoing town hall representatives will be in line for payouts of up to £26,000 each.
Naturally, Cosla believes the move is vital to encourage participation in local democracy and ensure more Scots, especially from under-represented groups, feel able to stand for election.
To the rest of us, it looks like snouts being lowered into the trough at our expense, and not for the first time.
It’s really about greed, and of course it’s bankrolled partly by rising council tax rates which increased by up to 15 per cent in the past year.
Meanwhile, there’s a daft and ruinously expensive proposal from the SNP for teachers to work a four-day week in the classroom so they can catch up on continuous professional development and marking homework, which Cosla warns would cost £310million.
Teachers have just been handed a 7.5 per cent pay rise over two years (for a 35-hour week) – and doubtless many deserved it.
If you netted a similar wage increase this year in the private sector, you’re doing well – but you’re probably in the minority.
More likely, you’re feeling lucky just to have a job which allows you to keep a roof over your head – for now at least.
This is a tale of two Scotlands, but the injustice is here to stay for as long as those who benefit most from the largesse of the state continue to rake in sky-high pay hikes and lucrative pensions.
