Tristram Hunt
Main Page: Tristram Hunt (Labour - Stoke-on-Trent Central)(7 years, 10 months ago)
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Absolutely. The hon. Gentleman makes an important point that should be seen in the wider context of information that should be given to plan holders, including those in the state pension scheme. All potential pensioners should be given an A4 sheet detailing their entitlements, backed up by transparency about the charges for all the schemes invested in. There is more work to be done.
I ask a simple question: is it really the Government’s intention to be in a position in which they can be challenged regarding seeking to direct local authority pension schemes? The Pensions and Lifetime Savings Association states that the Government ought to pause and reflect on their obligations and on the importance of local democracy and accountability. In their consultation document, the Government state:
“However, given the very large sums of public money at stake, we believe that it is entirely appropriate for the Secretary of State to be able to intervene where concerns have raised, having taken account of all available evidence.”
That is illuminating. As a number of us have said, we are talking about plan holders’ money. Yes, there must be regulation and oversight, but the Government are hardly a neutral participant in the process and they must think again and learn from best practice elsewhere.
Earlier this year, new legislation came into force in Quebec, which has been framed as a measure that potentially ensures that costly defined-benefit plans are sustainable in the long run. We should consider having that here. Under the legislation, the province no longer requires defined-benefit plans to fund themselves based on short-term assumptions about their own finances and market volatility. Instead, they need to fund themselves based only on long-term, less conservative assumptions. The law, which aims to reduce contribution volatility for employers and thus make defined-benefit plans more sustainable, is the first of its kind in Canada. The changes will be particularly supportive when it comes to longer-term infrastructure investment. That is the kind of debate that we ought to have in this country.
The e-petition motion, and the changes to the governance of pension schemes, relate solely to England and Wales, but it is worth reflecting on the fact that there is active engagement on the topic of local authority investment in infrastructure in Scotland, where responsibility is devolved to the Scottish Parliament. The SNP-led Scottish Government are committed to changing pension scheme regulations to ensure that they are not a barrier to local government pension schemes investing in infrastructure, and they are working with the scheme advisory board to achieve that. We in Scotland realise that there needs to be more of a balance between encouraging that approach and paying due regard to the responsibility of scheme managers to invest pension fund moneys in accordance with the scheme managers’ fiduciary duty. The Scottish Government are committed to achieving that delicate balance.
The discussion of pension scheme investment takes place in a wider context, which includes activities centred on the cities and a major programme of infrastructure investment. Cities and their regions are key drivers of our economy and the Scottish Government are committed to working with all our cities to unlock investment, whether individually, collectively through a city deal, through one of the Scottish Government’s devolved initiatives to stimulate growth and deliver infrastructure investment, or through a combination of all those measures.
It seems to me that it is not only about the democratic right of local authorities to pursue their choices, but also, exactly as the hon. Gentleman is saying, about giving them the kind of fiscal skills that can only help in the furtherance of their city deals. For the Government to try to quash both those objectives seems wholly perverse.
I again find myself wholly in agreement with a Member. I am not trying to lecture the Chamber on the things we are getting right in Scotland, but the Government in London could benefit from the kind of collaborative thinking we have developed, which is very much in line with what the hon. Gentleman said.
The fiduciary duty placed on local government pension schemes to act in the interests of the beneficiaries of the funds has to be the underlying principle of investment strategies and has to govern investment decisions. The responsible investment of pension funds must always be prioritised over unstable and risky investment. It is up to local authorities to ensure that they invest the funds to achieve the best outcomes for employees, trustees and sustainable growth. I stress that it is for the local authorities to determine that, and not for central Government to determine for them.
There have been some excellent examples in Scotland of sustainable investment in local housing projects delivering much needed long-term infrastructure that benefits ordinary people. For example, the Falkirk local government pension scheme fund awarded fund manager Hearthstone Investments £30 million to invest in social and affordable housing in Scotland. More than 300 affordable homes are expected to be delivered, with the Scottish Government providing an initial investment of more than £6 million towards 126 social homes in Falkirk and Clackmannanshire. That is the kind of collaborative work that we need across the United Kingdom.
Rather than droning on, I will wind up at this point. On the basis of the consultation that the Government have seen and on the basis of what I expect the Minister will hear this afternoon, I ask that they go back and think again. They need to try to get back to a position of consensus and collaboration with local authority pension schemes in England and Wales.