• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • Inflation ‘biggest concern for LGPS professionals’

    May 20, 2022

  • LGA calls for government support as regulators face staffing issues

    May 19, 2022

  • WMCA signs £4bn investment agreement with L&G

    May 18, 2022

  • Bill will give UK Infrastructure Bank power to lend directly to councils

    May 18, 2022

  • £400bn pension group collaborates on climate transition initiative

    May 17, 2022

  • CIPFA rejects proposal for vote on publication of fraud hub report

    May 17, 2022

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews
  • Briefs

DCLG declares union ‘scaremongering’ with LGPS claims

0
  • by Colin Marrs
  • in LGPS
  • — 7 Apr, 2016
Photo: Nick Efford, Flickr

Photo: Nick Efford, Flickr

The government has dismissed as “scaremongering” claims made in a UNISON-backed petition that the government’s encouragement for local government pension fund pools to invest in infrastructure projects breaches EU regulations.

Chancellor George Osborne’s rationale for the ongoing process to create a small group of LGPS pools is predicated both on saving costs and inducing more infrastructure investment.

A petition on Parliament’s website launched two weeks ago claims that the government is breaching a European Union directive banning member states from requiring institutions to invest in particular categories of assets.

Colin Meech, UNISON’s national officer for capital stewardship, told Room151: “We believe the government is in breach of the law.

“Once you invest in infrastructure then you are in it for a long time. Many LGPS funds are cash flow negative. The whole emphasis to moving to long-term fixed capital investing threatens the financial viability of the funds.”

At the time of writing, the petition had attracted more than 20,000 signatures. If it reaches 100,000, the issue would be considered for debate in Parliament.

However, a spokesman for the Department of Communities and Local Government said that the government had not breached EU directives.

He said that a power to intervene would only be used in exceptional circumstances where there was clear evidence that a pool was not acting reasonably and lawfully.

He said: “This is unnecessary scaremongering. We are not saying that councils must invest in infrastructure.

“We are simply saying that where appropriate, infrastructure should be considered as an investment option given the potential economic gains.”

In last month’s Budget, Osborne announced that a new national infrastructure platform for Local Government Pension Scheme funds will be created alongside the geographical pools.

Separately this week, accounting firm KPMG estimated that this year’s LGPS revaluation would likely lead to a large increase in the scheme’s deficit.

KPMG actuary David Spreckley told Room151: “In 2013 the LGPS valuation deficit was around £45bn and on a consistent measure we think that is likely to rise to around £65bn.

“This is primarily because long-term interest rates have fallen, meaning the liabilities have increased more than the assets.

“Councils may be able to spread that for longer than other organisations in the scheme, but we think that overall, an extra gap of £1bn a year will be added.”

William Bourne, director at pension scheme adviser City Noble, said: “My understanding is that quite a few authorities are going to be moving to valuations that use CPI inflation plus rates – which is commonplace for unfunded public funds.

“In these cases, the picture probably won’t be as bad as if you had continued to use a gilt based rate.”

But Spreckley said: “The actuaries could adopt a different valuation method that says liabilities are lower – but is that just a change in prudence or a real change in the situation?”

Photo (cropped): Nick Efford, Flickr.

Get the Room151 Newsletter

Share

You may also like...

  • Impact Awards: Shortlist revealed 2nd Jun, 2021
  • LGPS weighs up alternatives 26th Oct, 2021
  • LGPS funds seeking to divest from Russia 3rd Mar, 2022
  • Going beyond the standard metrics for climate change 2nd Mar, 2021

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    2022 LGPS valuations: difficult discussions in uncertain times: Michelle Doman looks at the impact of inflationary pressures, the war in Ukraine, climate risk and Covid-19 on employer contributions. At the start of 2022, for Local Government Pension… dlvr.it/SQlvy9 pic.twitter.com/Dd0lrHjWNb

    Room151 2 days ago

    Investing today: nowhere to hide: Partner Content: Alex Stanley from Ardea Investment Management suggests that investors have few places to hide amid a synchronised sell-off in both bonds and equities. However, there are catalysts that[...] dlvr.it/SQlNVC pic.twitter.com/KkGGnduzPL

    Room151 3 days ago

    Treasury to restrict PWLB loans to councils at risk of non-repayment: The Treasury has released new guidance that restricts local authorities’ access to Public Works Loan Board (PWLB) advances if there is a “more than negligible risk” of a council’s… dlvr.it/SQhLTV pic.twitter.com/vBsS7xMJdb

    Room151 3 days ago

    Mixed reaction to proposed government intervention powers: There has been a mixed reaction to the government’s legislative plans to strengthen its intervention powers over local authority finances. The Levelling Up and Regeneration Bill has proposed… dlvr.it/SQhLMB pic.twitter.com/50foWxpPGs

    Room151 3 days ago

    Post-Brexit struggles for national and local government regulators. @LGAcomms @NAOorguk Click the link below to read 🔻🔻 room151.co.uk/brief/lga-call… #Brexit #government pic.twitter.com/s3c8ySGy5G

    Room151 3 days ago

    CIPFA: a question of transparency: Roman Haluszczak’s campaign for publication of the independent report into the collapse of CIPFA’s London Counter Fraud Hub has been rejected again by the institute. He is now calling for[...] dlvr.it/SQgC5V pic.twitter.com/08fWsHFF4g

    Room151 4 days ago

    Back to the future for the PWLB: The Public Works Loan Board is tightening its lending criteria to ensure that loans will be repaid by local government borrowers. But, asks Peter Findlay, shouldn’t they have been doing[...] dlvr.it/SQcmmm pic.twitter.com/bVv4fe0Xlv

    Room151 4 days ago

    Great piece from Peter Findlay on the PWLB’s tightening of its lending criteria. He raises some pointed questions for the Treasury and explains why the ‘casino council’ characterisation was simplistic and inaccurate. #PWLB #localgov room151.co.uk/treasury/back-…

    Room151 4 days ago

    The Queen's speech highlighted the need for accelerating UK infrastructure investment into levelling up projects and cutting emissions. @UKInfraBank #QueensSpeech #ClimateAction #emissions Click the link below to read 🔻🔻 room151.co.uk/brief/bill-wil… pic.twitter.com/hFmF2veVIa

    Room151 4 days ago

    Huge funding heading to the @WestMids_CA from @landg. @andy4wm #LevellingUp #netzero #regeneration Click the link below to read 🔻🔻 room151.co.uk/brief/wmca-sig… pic.twitter.com/ajhZhia6mx

    Room151 4 days ago

    LGPS governance, Cagney and Lacey style: What regulatory response can be expected following the publication of the Good Governance project’s Phase 3 report and the closure of the Single Code of Practice consultation? Susan Black offers[...] dlvr.it/SQbfXf pic.twitter.com/xwqHOEu2AP

    Room151 5 days ago

    More evidence of the importance of emerging markets in the journey to net-zero. @BordertoCoast @BrunelPP @northernlgps @EAPensionFund @WYPF_LGPS Click the link below to read 🔻🔻 #LGPS #NetZero #NetZeroCarbon #EmergingMarkets room151.co.uk/brief/400bn-pe… pic.twitter.com/qCm0EGxzLn

  • Categories

    • 151 News
    • Agent 151
    • Audit
    • Blogs
    • Business rates
    • Chris Buss
    • Cllr John Clancy
    • Council tax
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Education
    • Forum
    • Funding
    • Governance
    • Graham Liddell
    • Housing
    • Ian O'Donnell
    • Infrastructure
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • Levelling up
    • LGPS
    • Mark Finnegan
    • Net Zero
    • Private markets
    • Recent Posts
    • Regulation
    • Resources
    • Responsible investing
    • Richard Harbord
    • Risk management
    • Social care
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Transport
    • Treasury
    • Uncategorized
    • William Bourne
  • Archives

    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Collaboration ‘important’ to future of treasury management
  • Next story Camden housing development needs private sector to reduce risk

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares