Question to the Ministry of Housing, Communities and Local Government:

To ask His Majesty's Government what steps they are taking to ensure that investment proposals submitted under the Local Government Pension Scheme pooling reforms are subject to formal cost-benefit analysis, include the use of standardised benefit-cost ratio (BCR) calculations; whether projects with a BCR below 1.0 will be deemed poor value for money; and what safeguards they will put in place to ensure projects are prioritised on economic returns rather than political factors.

LGPS funds and strategic authorities will be required to co-operate with each other to identify and develop appropriate investment opportunities, but there is no plan to require local authorities or mayors to submit business cases. LGPS funds and strategic authorities should agree how best to work together within their region.

The decision to make local investments will be the responsibility of the pool who must implement the strategy set by partner funds. This delegation to the pools will help funds to manage potential conflicts of interest such as political pressures. While funds will be required to have regard to local growth plans and priorities, they have a legal fiduciary duty to pay benefits in the first instance. The pools will be FCA-regulated investment managers with the capacity to set their own assessment criteria for making local investments and will be required to conduct due diligence on local investments.

The Government will issue supporting guidance on these issues in due course.