Kate Hollern
Main Page: Kate Hollern (Labour - Blackburn)(7 years, 10 months ago)
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It is an honour to serve under your chairmanship, Sir Edward. I thank the hon. Member for Ross, Skye and Lochaber (Ian Blackford) for securing this debate, and I thank hon. Members who have articulated their opinions clearly on this issue.
We have heard about a variety of interesting options for and aspects of the upcoming changes, but the nub of the matter is that 5 million people rely on the local government pension scheme. Like other people who have pensions, they rely on their pension trustees—the pension boards—to invest their funds in their best interests. To me, that is a simple principle—I am sure everybody can understand it—so why has it taken more than 100,000 people to sign a petition on something so obvious? It is obvious to everyone that local government means local. Pension schemes belong to those people; they have paid in, so they should have the right to say how that money is invested—no more and no less.
Despite that, 98% of respondents to the Government’s consultation rejected the proposals. The Government have ridden roughshod over those views. They tabled in Parliament a statutory instrument that will become law on 1 November. It comprises a new set of local government investment regulations under which the Government can instruct local government pension scheme administrators on how to invest their money. With no debate in the House to help to influence the measure and warn of any potential pitfalls, the pensions of 5 million scheme members, worth £178 billion—it is the fourth-largest pot in the world—will be dictated to by the Government.
As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) made clear, this is about people’s pensions and people’s lives. This is about school janitors and cleaners.
It is also about deferred pay for precisely the reason the shadow Minister outlined. Local government employees pay in, unlike other public sector pension fund members. A local government worker’s pension is deferred pay.
I agree entirely. This is an appalling misuse of power, and contrary to the best interests of scheme members, who want to ensure that their pensions are invested in the way they want, not the way the Government wants. It also flies in the face of European law. Article 18 of the directive on institutions for occupational retirement provision—hon. Members have already covered this point—clearly states that pension funds must invest
“in the best interests of members”,
and that
“Member States shall not require institutions to invest in particular categories of assets.”
We are in the mid-chaos of Brexit, but article 50 has yet to be triggered and we are still working under European Union directives, so we are breaking that law.
As usual, the Government are using a sledgehammer to crack a nut, and we have spoken about the back-door policy of avoiding councils that have, for ethical reasons, concerns about investment in some areas. The guidance attached to the regulations states that
“using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate, other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government.”
In summary, therefore, administering authorities should not pursue policies that are contrary to UK foreign or defence policy. There is, however, little or no evidence that the local government pension scheme has ever undertaken investment decisions in that way, and the Government should not be imposing their foreign and defence policies to the detriment of LGPS pensioners.
The Government need to listen for a change. They need to listen to the 105,000 people who signed the e-petition, to the Local Government Association, to the public sector unions representing their members and to the Law Commission, which commented on the LGPS investment regulations for England and Wales:
“We think two aspects of the LGPS Regulations could usefully be reviewed. First, in practice administering authorities consider themselves to be quasi-trustees, acting in the best interests of their members. We think that the same rules which apply to pension fund trustees in taking account of wider or non-financial factors will also be taken to apply to LGPS administering authorities. There is an argument that the IORP Directive requires this. However, we think that uncertainty on this point is undesirable and that the matter should be put beyond doubt. It would be helpful if the LGPS Investment Regulations made it clear that administering authorities must act in the best interests of pension scheme members.”
We cannot stress strongly enough that the authorities must act in the interests of members.
Why are the Government ignoring those voices? Why have the Government refused to listen? Why did they even bother to carry out a consultation, if they then ignore 98% of the results? Why are the Government not looking at everything again carefully? I fully support pooling arrangements; they are great if they get the best for the scheme members. The regulations should not be a way for the Government to borrow on the back of pensioners, or to dictate where and where not the pension fund may be invested.
Why have the Government failed to take the arrangements through the House of Commons? Because they know they are wrong. My hon. Friend the Member for Birmingham, Erdington spoke about localism. He was absolutely right: this is the reverse of localism; it is dictatorship. The Government have no right to interfere in people’s pensions. The consultation went out and the Government, I am quite sure, felt that their proposal was a good idea, but the people who own the fund have said no. I beg the Government to listen and to put a hold on their scheme.