Local Authorities: Fossil Fuel Holdings

Baroness Miller of Chilthorne Domer Excerpts

Wednesday 24th February 2016 Lords Chamber

Asked by

[Baroness Miller of Chilthorne Domer]

To ask Her Majesty’s Government why on 17 February they changed the guidance to local authorities regarding procurement of, and investment in, fossil fuel holdings.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, on 17 February the Government published new procurement guidance for public authorities reminding them of the existing policy that has been in place for many years under successive Governments. The guidance makes it clear that boycotts in public procurement are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government. It does not mention procurement of, or investment in, fossil fuels or any other specific type of holding. Guidance on local government pension investments is a separate matter. The Government will be issuing guidance in due course on social, environmental and ethical considerations in council pension investment decisions.

[Baroness Miller of Chilthorne Domer (LD)]

I thank the Minister for making that plain, but the diktat—or should I say the reminder?—from the Cabinet Office on 17 February has made local authorities very nervous about the new regulations coming into force. Will she champion the role of local democracy in investment and confirm that—subject to the administrating authorities publishing their social, environmental and corporate governance policies, and subject to a decent return on investment for the people whose pensions they are responsible for—they will be free to divest or invest as they see fit?

[Baroness Williams of Trafford]

My Lords, there may have been some confusion in the press over the difference between the pension investment guidance and the procurement guidance. There will shortly be guidance on pension investment, but I think what has made local authorities slightly uneasy is the slight confusion in the press. On divestment from pension funds, it is the first duty of a pension fund to provide the best returns for investors, as I said yesterday at the Dispatch Box.