Local Government Pension Scheme

Debate between Edward Leigh and Ian Blackford

Monday 24th October 2016 Westminster Hall

[Sir Edward Leigh (in the Chair)]

Order. We are having a lot of interventions. This is a three-hour debate, so if people want to make long interventions, I would love to hear them give a speech instead. There is no need for long interventions, Sir Alan.

[Ian Blackford]

Thank you, Sir Edward. Again, I find myself in agreement with the hon. Member for Mansfield (Sir Alan Meale), because, as I mentioned, the funds belong to the scheme-owners—those who are working in local authorities that are engaged in that way. It rather ill behoves the Government to seek to interfere in the governance of the funds if they are acting in the best interests of their members—that is the test. That is why it is important for the Government listen to the debate, reflect and perhaps come back with some new thinking.

The whole infrastructure issue is important. I think we all recognise that we have to build capacity in our economies. We have all heard the debate about being left behind. It is absolutely necessary that local authority pension funds in the north of England, the midlands and my own country of Scotland play their part. Each local authority area must make its own determination as to what is right and invest in local schemes—social housing, perhaps—for the benefit of the community. At the same time, they should invest for the benefit of the pension schemes. It is about democratic accountability and investment opportunities. It should not be too complicated.

I urge the Government carefully to consider what has been done in Ontario and Quebec. They have been able to build consensus because they have not had the same compulsion and the Government in Canada cannot use the big stick against local authorities.

I commend the Library on a first-class briefing. On the legal framework, it states:

“Although the rules are set nationally by the Secretary of State,”

the scheme

“is administered at local level by ‘administering authorities’, which broadly correspond to county councils and London Boroughs. These administering authorities are responsible for managing scheme investments, within the statutory framework. The Local Government Association (LGA) explains that this means decisions are ‘taken by democratically elected local councillors working within the restraints of local authority budgets.’”

That local democratic accountability, which many right hon. and hon. Members have mentioned, is the nub of the matter.

The briefing continues:

“When making decisions on investment, the primary responsibilities of administering authorities are to deliver the returns needed to pay scheme members’ pensions, and to protect local taxpayers and employers from high pension costs. In this context, there have been questions about the extent to which investments can be made with other objectives in mind – for example, a desire to invest in infrastructure or avoid certain investments on ethical grounds. Legal advice published by the LGA in April 2014 said that the power of investment must be exercised for investment purposes and not for wider purposes. However, as long as this remained true, the precise choice of investment could be influenced by wider considerations.”

The briefing also states that the Department for Communities and Local Government has been considering how to “achieve economies of scale” and, as has been mentioned, pooling can lead to reduced costs and enhanced returns. The principle is fine and is to be lauded. However, it has become clear that the Government are going to use the stick approach as well as that of the carrot. If subtle inducement does not work, the Government could intervene by directing local authorities to invest in a certain way or by the Secretary of State exercising control. If we are to support local democracy throughout the United Kingdom, that cannot be right, and I can understand why local authorities might be alarmed.

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[Sir Edward Leigh (in the Chair)]

Order. This is a very interesting debate on local government pensions and I know that Mr Blackford, who is a consummate parliamentary performer, will want to get straight back to the point, and away from Mr Maxwell, won’t he?

[Ian Blackford]

I am grateful for that advice, Sir Edward, and will move on. I was trying to put across the point that, regarding the Government interfering in local government pension schemes, their track record on pensions is not something I would see as commendable.

Unison has argued that investment decisions should be made by their funds and their members. I agree. Let us remember that the pension funds we are talking about are members’ funds. The Local Government Association has also said that there is even the risk of the regulations and the Secretary of State infringing European law on Government intervention in pension fund investment—a point that was made earlier. I find myself, not for the first time, on the side of European law and against the Government.

The Local Government Association has welcomed some of the changes, stating:

“Under the previous LGPS investment regulations there were express limits and thresholds on the assets that LGPS funds could invest in. The new framework moves the LPGS to a ‘prudent person’ approach as exists in the private sector. Under this approach outright limits and thresholds are replaced with a system that gives LGPS administrating authorities more flexibility and requires them to have their own policies on asset allocation, risk and diversification.”

I do not think anyone here would object to that but, having given local authorities that clear mandate, we need to see them investing under the conditions set for them and in the best interests of the members, without interference from Government.

On the Government reforms, the Pensions and Lifetime Savings Association states:

“We agree with the Governments proposals for pooling and the need to ensure that fund are committed to delivering these pools. However, there is a risk that such broad powers, combined with the lack of an explicit fiduciary duty, could ultimately be used by a future government to direct what funds invest in, with limited regard on the impact to the payment of members benefits and the costs to employers and members.”

Standing Orders (Public Business)

Debate between Edward Leigh and Ian Blackford

Thursday 22nd October 2015 Commons Chamber

[Sir Edward Leigh (Gainsborough) (Con)]

I apologise for arriving late to the debate but I was attending the Trade Union Bill.

I sat on the Procedure Committee and have gone through this issue in great detail. English votes for English laws is a manifesto commitment that must be carried out, and I have argued consistently that the complete exclusion of Scottish MPs would be a disaster. The Leader of the House has listened to our views carefully, and Scottish MPs are not being completely excluded—there is a double veto.

This issue is fearfully complicated—our new Standing Orders take up 700 lines—and we need a careful piloting stage. It is a cliché to say that this is like the Schleswig-Holstein question—only three people understand it and one is mad and one is dead—but only two Clerks understand it, and neither is mad or dead. The Leader of the House of Commons says that it is okay because we can all vote on estimates, but I wrote a report for the Chancellor on that issue, and under our procedures, on estimates days the only thing Members cannot talk about is estimates. In that sense, this is a serious matter.

The most serious matter for me, my right hon. Friend and our colleagues to consider is that we love the Union beyond everything else. Nothing we do in this House should add to a sense of grievance in Scotland, and that most important consideration should be in the forefront of our minds.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Will the hon. Gentleman give way?

[Sir Edward Leigh]

I cannot. The point about Barnett consequentials that the hon. Member for Perth and North Perthshire (Pete Wishart) mentioned is of supreme importance. It is essential that it cannot be argued in Scotland that Scottish MPs were prevented from taking part in all stages of a Bill that ostensibly affected England, when because of the Barnett formula that decision also affected spending in Scotland. The Leader of the House says that that will not happen, but we must have a careful piloting stage. We on the Government Benches love the Union above all else, and we cannot do anything that will add to a sense of grievance in Scotland. There would be a genuine sense of grievance if Scottish MPs were excluded from some stages of a Bill, when that Bill—through non-estimates procedure and debate—affected spending in their own country.

Finally, we must do nothing to politicise the office of Speaker, because this is different to the certification of money Bills. When we pilot this measure, we must ensure that the Speaker is not dragged into politics—that is one of the most important principles to abide by. The Leader of the House understands those points and is listening. We are fulfilling a manifesto commitment, and I wish him well in the parliamentary process.

Scotland Bill

Debate between Edward Leigh and Ian Blackford

Monday 15th June 2015 Commons Chamber

[Sir Edward Leigh]

It can be referred to as a deficit. We have listened to the Institute for Fiscal Studies and the Office for Budget Responsibility, so now let us have an informed debate.

I want to make it clear, by the way, that I am not in favour of cutting Scotland loose. I am in favour of United Kingdom solidarity, and I am in favour of a new grant mechanism, if the need for one is proven. My aim is not to trap the SNP, call its bluff or reveal its timidity. I genuinely want to give the Scots what they want: the freedom to run their own affairs and not to blame others if things go wrong, but all within the buttresses and safety of the United Kingdom. I am a fervent Unionist.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Will the hon. Gentleman concede that Scotland has contributed more than the rest of the UK in tax per head of population in each of the last 34 years, and that Scotland with full economic powers would be able to deliver prosperity and social justice for the people of Scotland?

[Sir Edward Leigh]

The hon. Gentleman can vote for my new clause, if that is what he believes. That scenario is on offer tonight, and he can vote for it. As a No. 10 spokesman said helpfully over the weekend—it is not often that No. 10 spokesmen have supported my new clauses, but I am grateful to him—the new clause

“is the acid test for the SNP over whether they will back their own policy”.

A Labour party spokesman helpfully said over the weekend, “They can have full fiscal autonomy by 10 o’clock tonight if they want to vote for it.”

--- Later in debate ---

[Sir Edward Leigh]

I am absolutely not. I do not want to overplay the analogy. As a fervent, almost romantic Unionist, I believe that Scotland has benefited enormously from being in the Union, which has been a Union based on trust and shared responsibility. I would not in any way suggest that the Scottish people have suffered in the same way that the Irish people suffered in the 18th century. If I gave that impression, I apologise, because that was not my aim at all. The only point I was trying to make was that we have to realise, in these debates, when there is a certain inevitability. If we know that full fiscal autonomy is going to come, it is better to have a serious discussion now on how to achieve it.

[Ian Blackford]

Will the hon. Gentleman give way?

[Sir Edward Leigh]

I must finish soon, because I am going to weary the Committee, but I do give way.

[Ian Blackford]

An important point has been made about opportunity. It is a real sadness that Scotland has lost a net 2 million people through migration over the past 100 years. One reason why we want powers over our economy is so that we can grow Scotland and ensure that we do not see tens of thousands of our young people being educated in Scotland and then emigrating and contributing to countries abroad. We need to grow the Scottish economy. That is why we need the powers over our economy.

[Sir Edward Leigh]

Most of them seem to come down here and run us, but there we go. They have done very well and we have benefited.