UNISON Notice Board - Preston City Hall

I do like a good trade union notice board. Today I went on a visit to Preston to meet the Labour Council Leader Matthew Brown regarding Community Wealth Building (The Preston Model). I will write more about this visit later. Congratulations to the local branch for a prominent and up-to-date UNISON  Notice board. 

Community Wealth Building Seminar for Labour Councillors 21 July 2018

This well attended seminar sponsored by APSE (Association for Public Sector Excellence) of was excellent. Held in the UNISON centre (HQ) in Euston Road, London.

Speakers Paul O’Brien and Mo Baines, APSE; Neil McInroy CLES, Cllr Matthew Brown, Leader of Preston City Council and Cllr Asima Shaikh, Executive Member for Economic and Community Development, Islington Council.

Chair was Mo Baines who works for APSE but is also a UNISON branch President and member nominated representative on the Greater Manchester Local Government Pension Fund.

Paul O'Brien warned us that the "Barnet Map of Doom" could still happen - social care budgets will rise and rise and soak up all Council budgets! London local authorities depends at the moment on Council Tax for 40% of its income. In 2020 that will be 51%! (a huge problem for Councils who have failed to increase Council tax in the past even by inflation and therefore decimated their tax base)

While Neil McInroy reminded that we live a world were 5 super rich men control 50% of its wealth while workers suffer wage contraction, how we must build wealth locally and stop global capitalism from extracting wealth for the super rich.

Cllr Matthew Brown described the "Preston Model" and long, hard, slog to bring about changes following the destruction of traditional local industries and the failure of private led regeneration schemes to develop the city centre.

Cllr Asima Shaikh explained how Islington Council had won court battles over private developers who had overpaid for land and therefore claimed that they could not provide 50% social housing.

A really positive event. At the end I had a number of very constructive conversations with London Councillors about the possible role of local government pensions funds investing in social housing. Watch this space.

(Hat tip pictures Cllr Sakina Sheikh)

The role of pensions in building Community Wealth

Professional Pensions: John Gray says we should think about investing more locally, but there are a number of serious practical investment problems to overcome

As austerity bites and local authorities up and down the country struggle to provide services following cuts in central government expenditure and grants, communities are looking for alternative sources of investment.

The £250bn Local Government Pension Scheme (LGPS) is being eyed as one possible source. In the recent past it was the Conservative chancellor, George Osborne, who wanted to turn the LGPS into a "British sovereign wealth fund" and direct it to invest in local infrastructure projects. That big idea fell away due to opposition from councils, which dislike being told what to do and also demanded that the government guarantee the money if it all goes horribly wrong.

This time, the interest in the LGPS (and other pension funds) is from the Left. The community wealth movement championed in the UK by Preston City Council wants the LGPS and banks to provide local financing for investment. The idea that workers should invest their savings to not only secure their retirement but also to improve their local economy is on the face of things attractive. Who wouldn't want to help provide jobs for their children and better local infrastructure?

On a wider point, finance activist Joel Benjamin has noted that 30 years ago 60% of the LGPS was invested in the UK while now it is only 30%. He argues that this makes pension funds vulnerable to currency speculation and political risk.

However, there is the inevitable 'but'. The primary purpose of all pension funds is to pay pensions and by law a pension fund must be run solely in the interests of its beneficiaries. The LGPS is a statutory scheme but there is no Crown Promise and no Pension Protection Fund. While on one level it is unthinkable that pensions would not be paid, we now have a number of large councils showing signs of financial stress, and in February Northamptonshire County Council declared effective bankruptcy. The history of direct council investment in local projects has not been great, with too much money wasted on ill-thought-out 'vanity' projects.

The Carillion and Capita private finance initiative disasters also remind us that it is far cheaper and safer in the long run for government to borrow money and invest, but all this doesn't mean  there is no role for pension funds to invest locally.

On the positive side, the LGPS is being effectively merged and scaled up in size into large £25bn plus 'pools'. This should mean  they can widen their asset allocation, spread risk and acquire greater investment expertise.

There is also a possible window of opportunity with the growth of the campaign to divest in fossil fuels and reinvest in new 'low carbon' green industries. There is currently around £14bn in the LGPS invested in fossil fuels. Some councils have already decided to disinvest within five years.

So we should be thinking about investing more 'locally' as long as we deal with a number of serious practical investment problems to overcome such as the lack of accountability to beneficiaries (hardly any of the pools have employee representation) costs, risk, volatility, conflicts etc.

Meanwhile, there is nothing stopping pension funds actively engaging with the companies they own and getting them to support other community wealth building measures, such as making sure  they are responsible lenders or pay all their workers (including agency) the real national living wage, decent sickness and pension benefits; insource services; use local suppliers (especially mutual and other co-operatives); train and upskill their workers. In a landmark report by the Law Commission last year, it said: "There are no legal or regulatory barriers to pension schemes making social investments." Hopefully the time has come for pensions to play its part in community wealth building. 

John Gray is a member of the London Borough of Tower Hamlets Pension Board, and is speaking in a personal capacity

Conference on Community Wealth Building. 8 February 2018. Preston

I am due to speak at this seminar about work done in promoting more creative and sustainable use of local government pension funds in the session "Leveraging Local Finance"

"Shadow Secretary of State for Communities and Local Government, Andrew Gwynne MP, and Shadow Chancellor, John McDonnell MP, will host this conference for activists, academics and Labour councillors.

In a series of sessions, we will explore how to use levers such as procurement, insourcing, setting up local banks, and energy generation to revitalise local economies and strengthen economic democracy. It will be a great opportunity to learn from each other about how we can boost our local economies to overcome austerity and transform the lives of those who are suffering every day because of the policies of the current Conservative Government. 

Speakers include: Ted Howard - Social entrepreneur, author and Executive Director of The Democracy Collaborative. Hilary Wainwright - Editor of Red Pepper magazine, Aditya Chakraborrty - Senior economics commentator for the Guardian. 

Cllr Matthew Brown - Preston City Council, Cabinet Member for Social Justice, Inclusion and Policy Initiatives. 

Location – Harris Museum and Art Gallery, Market Square, Preston, PR1 2PP"