Revealed: the council that spends more on pensions than it collects in tax
Cash-strapped local authorities are spending more than half of their council tax revenue on staff pensions, a Telegraph investigation has found.
The Shetland Islands council puts the equivalent of 111pc of its council tax haul into staff pensions, while councils in Hackney, South Oxfordshire, Newcastle-under-Lyme and the Orkney Islands all shell out more than half.
Another 19 fork out the equivalent of at least a third of what they take in.
Together, the 24 councils have stuffed almost £3bn into staff pensions over the past five years – but still hiked their tax rates by an average of over 7pc for 2025-26.
As rates soar to record levels and second home owners are hit with double premiums, Telegraph Money can reveal:
12 Scottish, nine English and three Welsh local authorities now shell out more than a third of their council tax on staff pension contributions – with the total bill exceeding £730m a year.
60 councils spend at least 20pc of what they collect.
The Local Government Pension Scheme already pays 2.3 million retirees and another five million current and former workers are building up generous, inflation-linked pensions.
It comes after nine in 10 areas across England endured the maximum 4.99pc council tax rise last month, with parts of Scotland and Wales slapped with even higher increases.
Local authority funding comes from multiple sources, including government grants, but tax receipts represented more than half of English councils' core spending power last year, according to the Institute for Fiscal Studies.
The Local Government Pension Scheme for England and Wales is one of the world's largest funded schemes, with 6.7 million members and £390bn in assets. Scotland's scheme has another 639,000 and assets of £60bn.
Together, they pay retirees £15bn a year in inflation-linked, guaranteed pensions for life. Employers pay an average contribution of 19.8pc of salaries for staff pension in England and Wales and 17.5pc in Scotland.
Now, following a series of Freedom of Information requests, The Telegraph can reveal the true cost of the generous schemes – and how much of your council tax is used to fund them.
Nigel Farage, Reform leader, said: 'For all the talk of debt, for all the talk of interest rates, for all the talk of local, county and national budgets, the real elephant in the room is public sector pensions.
'What is happening is a microcosm of an even bigger national problem. These will present big challenges for Reform in the councils we're in control of.'
The Shetland Islands council reported the highest percentage of contributions paid compared to council tax collected with 111pc. Its pension costs of £74.9m over the past five years dwarfed the £67.7m it collected from ratepayers.
In March, council officials said the council's major spending commitments and millions in borrowing repayments would lead to cuts to everyday services.
Orkney Islands council was also near the top of the list after spending the equivalent of 58pc of council tax.
The highest in England was Hackney council, which collected £415.2m in council tax between 2020 and 2024 and paid £243.3m, or 59pc, into staff pensions. It has yet to release its 2024-25 figures, but confirmed in November it would need to make savings of £67m by 2028.
South Oxfordshire district council received £43.8m over the past five years, but spent £25.2m, or 58pc.
Blaenau Gwent county borough council, at 39pc, was the highest in Wales after taking in £176.9m and spending £68.5m.
A total of 60 local authorities have spent more than a fifth of the council tax they collected on pension contributions since 2020-21.
Among the 24 that spent over a third, the average council tax increase for 2025-26 was 7.5pc. It ranged from 1.99pc in Newcastle-under-Lyme to 15pc on the Orkney Islands.
Birmingham council, which effectively filed for bankruptcy and announced £300m in cuts over two years, spent more than £100m a year, equivalent to 29pc of its council tax.
The figures come as homeowners and renters battle soaring council tax rates across the country.
Almost half of properties in England now face bills of at least £2,000, while the number of households on the hook for a £5,000 bill has quadrupled.
Six councils were also granted permission for exceptional increases by Angela Rayner, with Labour-run councils in Bradford and Newham hiking rates by 9.99pc and 8.99pc respectively. Increases in Scotland and Wales were even higher.
Second home owners have also been hit after more than 200 local authorities brought in a 100pc council tax premium from April 1, enabled by rules introduced under the Conservatives.
Telegraph analysis found that 2,000 second home owners in popular holiday hotspots could face bills of £10,000 or more across both their residences. The average second home owner will now see their tax bill rise 77pc to £3,672 in 2025-26.
John O'Connell, of the TaxPayers' Alliance, said: 'Local taxpayers are fed up with seeing more and more of their cash being used to prop up gold-plated pensions that most could only dream of.
'Households across the country are still reeling from the latest round of council tax rises and authorities are cutting back key services. All the while, those working in local councils are sitting pretty on defined benefit nest eggs that are all but non-existent in the private sector.'
Despite the amounts paid in by councils, the Local Government Pension Scheme remained almost £6bn in deficit at its last valuation. Of 87 individual schemes, 26 still didn't have enough money to pay their retirees.
There were hopes that councils would be able to cut their contributions following the next round of valuations, due later this year. However, experts fear this is now less likely after Donald Trump's announcement of global tariffs hit investment markets.
Andy King, of wealth manager Evelyn Partners, said the 'huge divide' between public and private sector pensions raised questions over affordability and fairness for taxpayers.
He said: 'A lot of council tax payers will be surprised at just how much of their continually rising bills go towards funding pensions, rather than into local services. The scheme is hugely more generous than private sector pensions, and local government staff may not know how good it actually is.'
A Local Government Association spokesman said: 'The Local Government Pension Scheme [LGPS] can help encourage people to develop a career in local government. With pay often lower in local government than comparable private sector roles, the LGPS can mitigate that while occupational pensions, like the LGPS, can help public sector workers avoid needing welfare benefits in retirement.
'The LGPS is the most robust public sector pension scheme. Compared with other major public sector pension schemes, the employer contribution rates in the LGPS are also generally much lower.'
A Hackney council spokesman said: 'Council tax income is just one of many funding sources that form our £1.9bn budget this year and help us deliver over 800 services that our residents rely on.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Mail
20 minutes ago
- Daily Mail
EXCLUSIVE 'London is finished - it's bleeding us dry !' Locals in Havering reveal why they want their borough to be kicked out of the 'disgusting' capital
Havering is the easternmost point of London and has been considered a part of the capital for more than 60 years. But after decades of declining growth and accumulated debt, Romford MP Andrew Rosindell is campaigning for the borough to become a part of Essex instead. 'I've been an MP 24 years I barely see any benefits to being under Greater London, all it is, is taking money out of boroughs and funneling money into the inner London areas,' Mr Rosindell told MailOnline. 'Greater London was established in the 60s and prior to that Havering was under the Essex County Council. 'This is an ongoing campaign across the country, lots of areas want to be aligned with their historic counties rather than their metropolitan artificial regions that were created in the 60s and 70s. 'It means we take control of our own budget, we don't pay the Mayor of London, literally hundreds of millions of pounds. 'We get complete control of our local policies again, so things like ULEZ wouldn't be imposed on us.' At the moment, planning permission and public spending in the area falls under the jurisdiction of the Mayor of London. And residents of Havering have had enough of 'London tax'. Bradley Smith, 45, a high vantage cable joiner thinks London is 'a joke' and is more than happy for Havering to become a part of Essex instead. He told MailOnline: 'I think London is finished I work there every day and everything they're trying to do is disgusting. 'It's mental it's like they're trying to bleed us dry. 'The ULEZ is a joke and now we have the Silvertown tunnel. My company has 6000 vans and London's our main area, they had to spend £17milliom to pay for new vans. 'It's done it's not London I grew up there and I moved to Upminster for better schools and a better quality of life for my kids. 'A lot of people will say we're Essex anyway.' Mr Rosindell's campaign follows on from Angela Rayner's plans to increase devolution across local authorities and streamline local services. The government are currenting seeking to create a Mayoral Combined County Authority for Greater Essex by May 2026. It would enable the county councils under its jurisdiction to make their own policies and it would have its own elected Mayor. Mr Rosindell said: 'Havering, we're Essex, we're not London, because we're under Greater London we're not being considered for this new Essex devolution. 'It means when they do London we will probably be merged, which means the end of Havering as an independent borough. 'We'd be swallowed up by Labour boroughs to the east so our character and identity will likely be swallowed up by east London. 'This is a serious debate. It's the very survival of our borough whether the character of our borough stays or whether it goes. 'Boroughs that orbit London, I accept we orbit but we're not in London, we need a different type of governance than those in the actual capital. It needs complete reform and I'm arguing for this.' Havering is considered an East London borough but includes areas that consider themselves to be geographically Essex, such as, Romford, Upminster and Hornchurch. Catherine Terry, 57, who grew up in Upminster, thinks becoming part of London has destroyed the area. She told MailOnline: 'We're being dragged into the East End and I don't think it's for the best. 'It used to be regarded as a posh area we used to have some lovely shops, local shops to get your shopping, and now we're being swallowed up by charity shops. 'I was horrified to see the litter it was horrendous. 'All these things coming in from London it's changed it massively since I was a child. Every time I come back it gets worse it hasn't improved. 'I still think of Upminster as Essex and a lot of people will still term it as Essex. Margaret Townley, 70, who has lived in the borough for 33 years agreed that becoming part of Greater London tainted the borough. She told MailOnline: 'All the money seems to go to London and we have to pay all the extra and get nothing out of it. 'I don't go to London there's not a lot up there even the shopping isn't good. 'Nothing is getting done here and we don't get funding where we're paying extra money we could spend it.' But others disagree saying being part of London has its perks. Michelle Taplin, who has owned Optimum Fine Art on Hornchurch High Street for 31 years, worries leaving London will destroy her business. She told MailOnline: 'I don't know why he wants to do that; we are London. 'There are parts of Essex that have a bad reputation, it's worlds apart. 'I don't think my customers would be the same. 'House prices would go down and businesses may suffer.' However, most residents believe it would be better to officially rejoin Essex now to curb anti-social behavior that has been pouring in from the capital. Claire Moran, 50, said: 'I've always lived round here, and my address has always been Essex. 'Traditionally I always thought I was Essex. 'I would like to leave London because I don't like paying council tax to the mayor and I don't agree with his policies like ULEZ. 'It's sprawling out more the inner city stuff is spreading here and we're getting consumed into London. 'We always had green areas and my nervousness is that London will take over and develop it.' Cliff Barker, retired, 69, who has lived in Havering 30 years agreed. He said: 'I would rather this be Essex I don't consider this to be London. 'I think London is overpopulated it's too busy most of the place is dirty.
Daily Mail
an hour ago
- Daily Mail
Wes Streeting warns there is no money in the NHS for assisted dying and helping people to end their lives will mean cuts to treatment for the living
The Health Secretary has warned that legalising assisted dying could take NHS money away from medical treatment for the living. Wes Streeting, who opposed the suicide law change passed by MPs last week, said getting the system up and running would take 'time and money' away from other parts of the health service. He said that said better end-of-life care was needed to prevent terminally ill people feeling they had no alternative but to end their own life. MPs on Friday voted by a majority of just 23 to allow medical professionals to help people die, under a system expected to start operating by the end of the decade. But having been passed by the Commons the legislation faces a tricky passage through the Lords, which calls for them to either make major changes or block it altogether. Mr Streeting, writing on his Facebook page, said he could not ignore the concerns 'about the risks that come with this Bill' raised by the Royal College of Psychiatrists, the Royal College of Physicians, the Association for Palliative Medicine and charities representing under-privileged groups. He cited a warning from ex-PM Gordon Brown that 'there is no effective freedom to choose' if there is no high quality palliative care available, or if people 'feel under pressure to relieve their relatives of the burden of caring for them'. 'He is right. The truth is that creating those conditions will take time and money,' Mr Streeting wrote. 'Even with the savings that might come from assisted dying if people take up the service – and it feels uncomfortable talking about savings in this context to be honest – setting up this service will also take time and money that is in short supply. 'There isn't a budget for this. Politics is about prioritising. It is a daily series of choices and trade-offs. I fear we've made the wrong one.' The Government is neutral on the Terminally Ill Adults (End of Life) Bill which cleared the Commons with a majority of 23 votes on Friday. Mr Streeting said his Department of Health and Social Care 'will continue to work constructively with Parliament to assist on technical aspects of the Bill' as it goes through the House of Lords. Last week assisted dying campaigner Dame Esther Rantzen urged peers not to block the landmark legislation. Dame Esther told BBC Radio 4's Today programme: 'I don't need to teach the House of Lords how to do their job. 'They know it very well, and they know that laws are produced by the elected chamber. 'Their job is to scrutinise, to ask questions, but not to oppose. 'So yes, people who are adamantly opposed to this Bill, and they have a perfect right to oppose it, will try and stop it going through the Lords, but the Lords themselves, their duty is to make sure that law is actually created by the elected chamber, which is the House of Commons who have voted this through.' Dame Esther, who turns 85 on Sunday and has terminal cancer, acknowledged the legislation would probably not become law in time for her to use it and she would have to 'buzz off to Zurich' to use the Dignitas clinic. Paralympian and crossbench peer Baroness Tanni Grey-Thompson told BBC Breakfast: 'We're getting ready for it to come to the Lords and from my personal point of view, about amending it to make it stronger. 'We've been told it's the strongest Bill in the world, but to be honest, it's not a very high bar for other legislation. 'So I do think there are a lot more safeguards that could be put in.' Conservative peer and disability rights campaigner Lord Shinkwin said the narrow Commons majority underlined the need for peers to take a close look at the legislation. He told Today 'I think the House of Lords has a duty to expose and to subject this Bill to forensic scrutiny' but 'I don't think it's a question of blocking it so much as performing our duty as a revising chamber'. Lord Shinkwin added: 'The margin yesterday was so close that many MPs would appreciate the opportunity to look at this again in respect of safeguards as they relate to those who feel vulnerable, whether that's disabled people or older people.' Labour MP Kim Leadbeater, who steered the Bill through the Commons, said she hoped peers would not seek to derail the legislation, which could run out of parliamentary time if it is held up in the Lords. She said: 'I would be upset to think that anybody was playing games with such an important and such an emotional issue.'
Telegraph
an hour ago
- Telegraph
Telegraph readers' favourite history books
All intelligent people need to understand our past – and Telegraph readers agree. Simon Heffer, our expert historian and columnist, picked a shelf's work of history books everybody ought to read, from the stink of medieval England to the savagery of Nazi Germany. Readers commented in their hundreds and highlighted the books that should have been included. Here are their top recommendations, plus some from colleagues around the newsroom. Uncrowned Queen (2019) By Nicola Tallis 'Her biography of Margaret Beaufort, the mother of Henry VII, is brilliant.' Tudor Lady Buy the book America and the Imperialism of Ignorance (2012) By Andrew Alexander 'I recommend this book by a former parliamentary sketch writer for The Telegraph and Daily Mail. His thesis is that the Cold War was based on US ignorance and corruption of the truth.' Leo Thomas Buy the book Irish Freedom. The History of Nationalism in Ireland (2007) By Richard English 'It's a recent book on Irish nationalism: This book debunks, with sound evidence, many beliefs about Irish history. For example. The Irish are not Celts.' Vincent Cooper Buy the book History of the Peloponnesian War (431 BC) By Thucydides 'A classic and still relevant today on the unpredictability of war.' Me We Buy the book The Last Days of Hitler (1947) By Hugh Trevor-Roper 'A real account showing his madness and how he hated Germany as much as the allies near the end. It breaks any notion he was a genius of any kind.' Me We Buy the book A Monarchy Transformed: Britain 1603-1714 (1966) By Mark Kishlansky 'I love history, have a degree in it and read histories. This book is a good broad sweep of the Stuarts, far more digestible than a multi-volume epic in my humble opinion.' Katy Cletheroe Buy the book Napoleon the Great (2014) By Andrew Robert 'Covers the period sufficiently and, being a biography, is definitely not dry as dust. The conversational literary style does not suit books on history.' Dermod Hill Buy the book The Mediterranean (1949) By Fernand Braudel 'Marc Bloch was a remarkable historian. Shot for being a member of the French Resistance. With Fernand Braudel he founded the French 'annales' school of history which produced some remarkably detailed historical works which sought to recreate the 'texture' of life in the past rather than just being an account of kings and statesmen. An amazing generation of engaged historians. Braudel wrote his masterpiece, The Mediterranean, whilst a prisoner of war.' David Eden Buy the book Reformation Europe (1963) By GR Elton 'The best and most readable account of the upheavals, intellectual and political, caused by the European Reformation.' David Eden Buy the book The Guns of August (1962) By Barbara Tuchman 'A better book than The Sleepwalkers, in my opinion.' Iain Allan Buy the book Smoke and Ashes (2023) By Amitav Ghosh 'Just the one volume but it will help explain why China and India will not be doing the UK any favours in the next century.' Marion Grindrod Buy the book Wonderful Adventures of Mary Seacole in Many Lands (1857) By Mary Seacole 'Often, it is biographies that illuminate an era.' James Anderson Buy the book Europe: A History (1996) By Norman Davies 'A thought-provoking introduction and some very interesting and pertinent perspectives on Eastern Europe.' Can Dide Buy the book The Flashman Papers (1969) By George MacDonald Fraser 'All you need to know about the Victorian period; and quite a lot you should not.' Pete Nossined Buy the book The March of Folly (1984) By Barbara Tuchman 'This should be compulsory reading for every world leader. It covers the utter futility of war from Troy to Vietnam. Sadly, she died before Iraq/Afghanistan/Ukraine/Gaza etc., etc. I sometimes wonder what she would have made of it all.' Judith Roberts Buy the book The King's War (1958) By C. V. Wedgwood 'Readable enough to have a 15-year-old science student engrossed.' Martin Moss Byzantium: The Early Centuries (1988) By John Julius Norwich 'He manages to bring a bit of character into some of the players, which can't be easy to do, given the paucity of material to work with. And you get genuinely frustrated reading it shrink as it had yet another pointless civil war, and the Turks, Bulgarians and Venetians slowly ate it into nothing, whilst they were putting each other's eyes out and slitting their noses.' Ryan Brighton The Most Dangerous Enemy (2000) By Stephen Bungay 'Best overall single volume I've ever read. A really brilliant look at the Battle of Britain, with stunning conclusions. Gives great credit due to Dowding and Park (and Churchill, and seven other visionaries). Well worth a read.' Simon Davey Buy the book All the Shah's Men (2003) By Stephen Kinzer 'Tells the story of how the CIA and the British secret service overthrew the elected Iranian prime minister Mohammad Mosaddegh in 1953. Without a doubt things would be very different today had they not done so.' Ian Brown Buy the book A New World Begins (2019) By Jeremy Popkin 'An outstanding history of the French Revolution. I'd suggest pairing it with Roberts's excellent Napoleon biography.' Matthew Andrews Buy the book The Spanish Civil War (1961) By Hugh Thomas 'A case study in how a country turns on itself. Coming to a town near you soon…' Richard Freer Buy the book Female author recommendations ' Mary Beard: A renowned classicist and historian, known for her expertise in ancient Rome and her engaging writing style. Gerda Lerner: A pioneering historian of women and a leading figure in the development of women's history as an academic field.' Emma Pearson
