LGPS announcement & reaction, London a “fiscal infant”, Housing borrowing cap, TfL rating

DCLG to look at merging pension funds, changing investment caps
Local government minister Brandon Lewis has announced a review of LGPS investment regulations. A review will examine the caps set on the amounts funds can invest in certain assets. Speaking at the National Association of Pension Funds local authority conference Lewis also said that there would be a call for evidence to examine whether schemes should be merged. Said Lewis: “The clear message from me this morning is that I am not wedded to the existing number of 89 funds in England and Wales. If it takes a smaller number of funds to improve the efficiency and cost-effectiveness of the scheme, I shall not shy away from pursuing that goal.” See Lewis’ speech in full here.

Pension industry responds to Lewis annoucement
Pension industry members at the National Association of Pension Funds conference argued that tinkering with pensions could destabilise the LGPS structure. Nicola Mark, head of Norfolk Pension Fund asked why the Government was in such a hurry to make changes. “We must not be rushed by politics into a position that is bad for the LGPS,” she said. “I am very alarmed at the timeframe; the minister wants a plan by April 2014. This is the investment of £150bn of public and stakeholder money and we need a lot of time to think it through.” Bob Summers of the Chartered Institute of Public Finance Accountants said that mergers were “one end of a spectrum of measures” and that the LGPS could be destabilised at a crucial point in its lifetime.

Johnson: London has less fiscal autonomy than Manchester
London Mayor Boris Johnson has bemoaned the fiscal status of the capital, speaking at the launch of a London Finance Commission report. “London is a political and economic giant but a fiscal infant … We have less fiscal autonomy than Manchester,” he said. Proposals to give London controls over council tax business rates and stamp duty are necessary, Johnson added, for London to be able to fund infrastructure to cope with its growing population. Some Finance Commission recommendations had, however, been accepted by Whitehall, Johnson said, as the Local Government Finance Act has split locally raised business levies between councils and the Exchequer.

LGA argues on housing borrowing cap
The Local Government Association is calling for the government to remove the cap on local authority housing borrowing. Councils could build up to 60,000 homes in the next five years if allowed to invest in housing under normal borrowing guidelines. “The figures show that as a country we are still falling way short of the number of new homes we need to be building,” Councillor Mike Jones, Chairman of the LGA’s environment and housing board, said. Councils have excellent credit ratings and want to use our assets to help kick-start the housing recovery but our hands are being tied.”

Transport for London rating affirmed
Standard & Poors has affirmed Transport for London’s AA+ long term and A-1 short-term issuer credit ratings. The agency said that TfL operated in a predictable and supportive institutional framework as a UK local authority, had a good liquidity position and demand for services.