Gov to Merge 89 LA PF’s 10/15
City Wire by Ollie Smith 5th Oct 2015
The government is to pool 89 existing local authority pension funds into six wealth funds in a bid to get more money invested in British infrastructure.
As part of a four-point plan to ‘get Britain building’ chancellor George Osborne (pictured) announced that existing 89 local authority pension funds would be pooled into six wealth funds, each with assets of over £25 billion.
The plan aims to change the way infrastructure projects are planned and funded.
By pooling the schemes into six wealth funds the government hopes to save millions of pounds annually in management costs and fees.
The Conservatives said the move would change the way pension savings are invested. The funds will follow international norms for investment, meaning larger sums being invested in infrastructure, the party said.
Currently, small local pension funds ‘lack the expertise’ to invest in infrastructure, the government said. Overall, across £180 billion of assets, only 0.5% is invested in such projects, it claimed.
To see how the UK’s local authority schemes are currently invested, click here.
In countries with larger pooled public pension funds, up to 8% of assets are in infrastructure and 17% are in housing and infrastructure, the government said.
Business rate revolution
The Conservative party also announced it would local councils to be in full control of business rates by 2020.
On the matter of giving local authorities the power to set and keep their own business rates, Osborne said that it was important for the government to live within its means, but that devolution reform was necessary.
‘Right now we have the merry-go-round of clawing back local taxes into the Treasury, and handing them out again in the form of a grant. In my view, proud cities and counties should not be forced to come to national government with a begging bowl.
‘So I am announcing… we’re going to allow local governments to keep the rates they collect from business. That’s right: all £26 billion of business rates.
‘Right now we collect much more in business rates than we give back in the main grant, so we will phase out this local government grant altogether, but well also give councils the power and responsibilities for running their communities. The established transfers will be there on day one, but thereafter all the real growth in revenue will be yours to keep.’
The uniform business rate will be abolished and any local area will be able to cut business rates as much as they like.
Will this provide a greater focus on UK Housing and particularly Social housing provision, when housing falls under the infrastructure investment heading?
We certainly hope so…