Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Brown's pension raid hits competitiveness

News

CONSULTANTS THIS week said that Chancellor Gordon Brown's tax raid on pension dividends had slowed growth and risked making UK firms less competitive around the world.

Millions of pounds that could have been invested in developing businesses or in research and development have instead gone into making up the shortfall created when Brown scrapped tax relief on dividends paid into pension funds in 1997.

'I am very angry with Gordon Brown. He has contributed enormously to a situation which threatens UK consultancies' competitiveness around the world, ' said the head of a major consultancy.

'Gordon Brown has damaged us. He took money from the pension schemes and we have had to put more in. That's money that could have been used elsewhere, ' said another senior consultant.

'The tax has certainly affected growth, ' he added.

The tax has contributed to an estimated £800M pension decit among UK consultancies, along with new accounting rules that require companies to recalculate likely pension payouts based on people living longer.

Consultants running final salary schemes have been forced to increase their investment in the plans by 20% a year over the past 10 years and many have axed them in favour of dened contribution schemes.

Pension de cits of the UK's 200 largest companies across all industries are £26bn. Just last month Atkins closed its final salary scheme in an attempt to reduce its £187M debt (NCE 22 March).

Consultants warned that decits now sitting as debt on company balance sheets are starting to affect credit ratings, making borrowing more expensive.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.