Winning in 2015, the Beveridge Report and Xmas Nosh

"Jon Trickett MP: The Labour Party vote 1997-2010 and what this means for winning in 2015 - Tuesday 27th November from 19:30 at 349 Cambridge Heath Road, E2 9RA

The great British novelist Aldous Huxley once said, "that men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach." Help prove him wrong:

Join us to hear from Jon Trickett MP, Shadow Minister for the Cabinet Office, on how Labour can win the next General Election by learning lessons from the electorate of the past.

Liam Byrne, Shadow Secretary of State for Work and Pensions on the Beveridge Report, 1 December on 11am -12pm.
Toynbee Hall is hosting a series of free policy lectures to mark the 70th anniversary of the Beverige Report, and to contribute to the critical debate about the future of the welfare state.

On December 1 1942 the Beveridge Report set out the makings of the welfare state - and since then Britain has changed dramatically. Exactly 70 years on, Labour's Liam Byrne will give a keynote speech in conjunction with historic Toynbee hall and the Fabian Society as he sets out how we can build a system of social security fit for the challenges of the 21st century.

Tower Hamlets Labour Party Fundraising Dinner - 18th December 2012
Join us for a fundraising dinner as we end a very successful year for Tower Hamlets Labour and look forward and build towards the future. The event will take place on Tuesday 18th December at Mumbai
Square, Middlesex St, E1 7AA from 7pm.

Tickets cost £25 and £18 for concessions. More details to be announced soon including special guests. Please e-mail James King jrvking1990@gmail.com for more details or sign up at
http://thlp-fundraiser.eventbrite.co.uk"

Hat tip Tower Hamlets Labour Party newsletter edited by Chris Weavers.

The Root of all Evil in the Local Government Pension Scheme

The Pensions Institute last week issued a very provocative report which does raise some important points about process and scale but misunderstands the real nature of the governance deficit in the LGPS (in London and elsewhere).

Which is Councillors have a clear fiduciary duty to Council tax payers, but pension funds should (must by European law) be run in the interests of beneficiaries not employers. This dichotomy does mean that some LGPS schemes have indeed made poor decisions based on Council tax considerations. However, this is not just a “London thing” and some of the larger schemes have faced similar accusations.

Unlike the private sector Defined Benefit schemes where you have at least 1/3 beneficiary representation there is no similar legal right in the LGPS. Some schemes have consistently refused to have any beneficiary representation not even as observers.

Member nominated trustees and representatives (MNR) have a real interest and “ownership” of their schemes. The trustee model has its faults but on the whole has worked well over the years in trying make sure that pensions schemes are well governed and principles are not ripped off by agents. We need to do much, much better, but if you have no effective beneficiary representation on schemes and also a fundamental conflict in fiduciary duty then no wonder some of them go astray.

The answer is to mirror the best practise in private sector DB schemes and have statutory beneficiary representation in the LGPS as well as employers. The fiduciary duty of all representatives must be to the beneficiaries.

It is disappointing that this Pension Institute report has not had any input at all from existing LGPS beneficiary representatives nor does it make any reference to the changes already agreed to the scheme such as theire will be an employer contribution “cap and collar”. This is probably the most significant development in LGPS governance in decades.

I must admit that the “evidence” in the report for the serious “wrong doing” suggested is pretty weak and antidotel. It may or may not be true (and I strongly suspect some of it is) but I wonder if this aggressive approach is the best way forward to win hearts and minds for change?

As s LGPS activist for a number of years, I would also disagree that elected Councillors are “dominant” on London schemes. In fact I will say the opposite and it is professional advisors and Council Officers who are dominant (and in that order). That makes for more potential fiduciary conflicts.

It is illogical to complain of Councillors dominating schemes when at the same time arguing that their 4 year election time span is too short? This is also obviously not just a problem in London and is another argument for MNR to play a positive role like they do in the private sector schemes. MNRs are also more likely to provide continuity. Since I have been a MNR in my scheme in 1996 all the original Councillors, Officers, professional advisers, actuaries and fund managers I first worked with have long gone.

Scale is a crucial issue but it is also one for the private sector. Having 101 pension funds sharing £150 billion is inefficient but what about the hundreds of thousands of tiny private DB/DC schemes? What about the billions invested in contract schemes which have no independent oversight or beneficiary governance?

No recognition either that the way pension liabilities are calculated in the public and private sector schemes is  a complete nonsense due to low gilt yields. Yet they are driving repayment plans and long term asset allocations.

I also wonder about the tabloid references to “gold plated pensions” and “DB in the private sector is dead” (in press release)? The average pension for a women retiring from the Council in 2011 was £2780 per year? Hardly “gold plated”, also there are still 3 million workers in the private sector accruing DB pension benefit. As well as 25% of the LGPS who now work for private organisations?

Just because in the private sector it is now the fashion for many employers to turn their backs on their workers and are seemingly quite happy for them to retire and then die in poverty, doesn’t mean that it is a good thing for teacher assistants, cleaners, clerks and road sweepers to have the same fate?

The taxpayer of course has to subsidise these bad employers and pick up the bill for their poverty pension provision. This will have to change and the reintroduction of DB into the private sector is the only way it is going to happen.

I am also surprised to the reference about the discredited Channel 4 programme and the supposed link with LGPS and Council tax? I think I am right that 80-90% of Council income comes does not come from council tax e.g. Government grants, business rates, charges, fees etc. How is it therefore relevant to link LGPS contributions only to Council tax?

In short I am glad that this report has meant that long standing concerns about LGPS governance being fit for purpose are at long last out in the open. Yet it has ruffled feathers amongst those who are broadly supportive of change and has failed to take on board the argument that it is the democratic deficit that is the root source of most if not all evil in the LGPS.

London Councils Summit 2012

On Saturday I went to the London Councils Summit at the medieval Guildhall in the City of London. I had my ward surgery at 10am so I missed the morning session and opening keynote speech by London Mayor, Boris Johnson. I gather it was as silly and superficial as usual.

I stopped off at a lunchtime London Councils "micro-surgery" on "Social Media" and came away convinced that I should try a "Tweet up" Councillor Surgery. Tell everyone I will be available on twitter on such and such date and time for 1 hour for West Ham ward matters. Watch this space.

After lunch I went to the breakout session "Mind the funding gap" with  Cllr Richard Cornelius, leader of LB Barnet, Cllr Catherine West leader of LB Islington, Chair John O'Brien and LSE director, Tony Travers.

We all live in our own political comfort zones and bubbles. So it is rewarding to come out and meet the enemy, and find they are as convinced and comfortable with their own political prejudices as you are with yours. Catherine and Richard are chalk and cheese. Yet they were both polite and humorous in their attempts to convince us of the merits of their very different approaches to the dire and desperate financial situation we are in.

In the Q&A Richard was not impressed with my comment about the report last week by PWC that London Councils pension funds could have been £1.6 billion better off if they had merged. Nor that the outsourcing of all Barnet Council back office services will result in his pension scheme going belly up and this will completely wreak their finances.

You can check out my twitter account of the debate here 17 November 2012.

The final session "taking the temperature - London's Political Landscape" by Robert Gordon Clark and Tony Travers was so interesting that I stopped tweeting in case I missed anything. You can check out what people did tweet about at #lcSummit. 

Equality: how radical can the next Labour Government be?

Newham Compass & Fabians are holding their next event on how radical the next Labour Government will be with regard to achieving greater income equality.

This will be held on 7.30pm Tuesday 4 December 2012 at West Ham Supporters club in Green Street.

The guest speaker will be Sean Baine from the Equality Trust. The trust is "an independent, evidence based campaign working to reduce income inequality in order to improve the quality of life in the UK". It was set up by the authors of the Report "The Spirit Level".

Sean spoke at my UNISON Housing Association branch AGM early this year on the same subject. I met him again last month at the launch of Class. He is very good speaker and it should be an interesting debate.

I have a Council meeting clash that evening so might not make it. My take on this is that is the most important political issue and is central to nearly all my beliefs. Radically reducing levels of income inequality should be a key manifesto pledge.

Yet we cannot just sit back and pontificate about this but we need to get out and convince the Great British Public that this is necessary and will benefit everyone in our society. 

Tories: One rule for them, another for us plebs...

Council pensions, mergers and the infrastructure cacophony

(this is an article I wrote for Professional Pensions which was published yesterday on behalf of the AMNT. An earlier John's Labour Blog version is here).

"Recently Sir Merrick Cockell, Chair of the Local Government Association announced that he personally supported the merger of the 101 different Local Government Pension Schemes (LGPS) into 5 “super schemes” each worth around £30 billion each.

He was being interviewed about a report from The Future Homes Commission on the need for investment in residential property. He argued that to invest in such infrastructure you need massive scale. There are claims that this merger and investment could result in 300,000 more homes being built every year with 15% of pension assets being invested

His comments are likely to be more than a little controversial in the sedate world of Council pension funds.  Merger is controversial. Some funds have consistently argued for merger in the past not only to enable infrastructure investment but to increase returns and slash costs. Others say "rubbish", bigger doesn't mean better and small is often beautiful (and more democratic and responsive).  The fragmentation of pension funds in the private sector is also far worse.

Yet, the governance concern about these proposals is even more significant than a spat over size.

As a LGPS member nominated representative I have been in favour of looking into the merits of merging Council pensions schemes for many years. Also investing in rented residential properties as an asset class with the prospect of long term inflation linked returns has always seemed attractive.

But remember pension funds must be run in the interests of the scheme beneficiaries and not make up for an inadequate state housing policy or the need to stimulate demand in the wider economy.

Have Councils in favour or opposed to merger actually consulted beforehand on this issue with their beneficiaries? Why is the government being let off the hock and not asked for guarantees?

The local government trade unions have quite rightly objected to this plan which was made without any consultation with them.  There is a planned cap on employer contributions to the LGPS so if this infrastructure investment goes belly up then active beneficiaries will be left to pick up the pieces.

15% is a very significant amount of assets to invest in any one class. Nothing in life is risk free. There is an obvious risk of property price crashes or even that future housing benefit cuts could derail plans.  Hundreds of organisations are cited as contributing to the Future Homes report but there is no input from those whose money it is being proposed should be put at risk?

For this still worthy proposal to have any legs there needs to be firstly proper consultation with the representatives of scheme beneficiaries on why this is good for them and then the drawing up of a business plan as water tight as possible".

Update: The Government are now consulting on plans to allow Council Pensions to invest up to 30% of its assets in infrastructure? Up from the existing limit of 15%. Hello, 30%! What is going on here?

Newham History Society: "Up the Hammers" and East London Floods

On Tuesday evening I went to my first meeting of Newham History Society. It took place at the Didsbury Centre in East Ham and the speaker was  Mark Watson from the Vallence House Museum in Barking.

Before he spoke, members of the society gave a short "plug" on historical books for our area.  "Up the Hammers" which is about the West Ham Pals battalion in the First World War & "Borough over the Boarder" a history of West Ham.

Mark spoke very well about the history of flooding in Newham, Barking and Dagenham marshland from the Iron age to present.  I did tweet during his talk which you can see here on my twitter account for 13 November.

I was not aware that it was possible in Tudor times for King Henry VIII to sail his fleet right into the centre of Barking.

That during Victorian times "busting up" was a favourite children's game during the summer, when they would look for the dead and decomposing bodies of dogs and pigs floating in the marsh and throw pointed stones at them to try and "blow 'em up".

Nor that Welsh drovers use to herd thousands of cattle to the marshlands to fatten them up for sale and that Dagenham use to be regarded as a healthy place to live and visit since it was so windy! It was also an area where rich families use to have rural summer cottage retreats. Just like nowadays!

The meeting was well attended with about 30 residents present. There was tea, coffee and a raffle.  The  Society normally holds its meetings on the 2nd Tuesday of the month. Well worth a visit. 

STOP POLICE PRIVATISATION (& vote Labour in Corby, Manchester Central & Cardiff By-elections)

Police and Crime Commissioner Elections

MAKE A DIFFERENCE: VOTE FOR PUBLIC SERVICES ON 15 NOVEMBER

On 15 November, the elections for Police and Crime Commissioners will be held for the first time in England, excluding London, and in Wales.

Worried about government cuts to your police force? Concerned that policing could be privatised? Then make your voice heard by voting on 15 November for your Police and Crime Commissioners.

Government cuts will mean:

• 16,000 fewer police officers
• 18,000 fewer police staff (police community support officers, 999 call takers, forensic experts etc)

The government also wants to privatise policing to allow private companies to make a profit from keeping your community safe.

If you object to these attacks on your police force, vote for a Police and Crime Commissioner who will campaign against cuts and privatisation. Vote for public services on 15 November.

Here's how you can make a difference:

• Register for a postal vote today at: aboutmyvote.co.uk
• Talk to friends, family and work colleagues to make them aware of just how important it is to vote on 15 November
• Visit unison.org.uk/stoppoliceprivatisation to find out more.

Find out more about your local PCC candidates: Choose my PCC

(hat tip UNISON website)

Some good news on housing workers pensions! But...

This is a rather rare title for a post on pensions! However, well done to Housing Association Plymouth Community Homes who have decided to keep their 60th Defined Benefit scheme with the Social Housing Pension Scheme (SHPS) open and absorb the extra costs imposed by the SHPS.

There are still some changes which UNISON members are unhappy about such as move from RPI to CPI and the charging of pension contributions while on maternity leave.  But PCH obviously care about their workforce and take their duties as a responsible employer seriously.

They do not want their employees to retire and die in poverty. Unlike some it would seem who not only want to close their Defined benefit (DB) scheme but replace it with a pittance of a Defined Contribution (DC) scheme. In a recent report by a leading Actuary, in a DC scheme you would need to invest 22.9% of your pay to get 53% of final salary pension (twice as much as a DB scheme!).

Yet some employers are proposing to pay only the new national legal minimum of 3%. This will mean as mentioned above that their staff will not only die in relative poverty in their old age but the taxpayer will also have to subsidise their pensions to keep them out of absolute poverty.

SHPS and its parent organisation, the Pension Trust, tries to justify increases in contributions by pointing to a supposed rise in "liabilities" (the future expected costs of giving members pensions) yet even the Pension Minster, Steve Webb MP, recognises that the way we calculate pension costs is practically meaningless and is destroying perfectly good pensions schemes.  He has committed to change.

Employers need to get a grip and challenge the assumptions being made and the contributions they or their employees are being expected to make. I am not at all convinced that this contribution rate increase requirement by the SHPS is at all necessary and I hope they seriously take this up with them.

I am dismayed that SHPS are not engaging with UNISON's proposals about practical alternatives to contribution rises. The Local Government Pension Scheme is very similar to many SHPF schemes but has been able to avoid increases in contributions for most of its members by working in a partnership with the trade unions and employers. This has brought about radical but thoughtful and intelligent change.

There was no consultation with the trade unions whatsoever by the SHPS before they decided what they wanted to do and no interest shown in any real partnership working.

One of the irony of ironies is that a major reason why some SHPS employers want to close their scheme to existing members is because they have closed it to new members joining. Quite rightly pensions contributions have to be increased if a fund is closed. SHPS have to charge more (I think 3%) since in any closed scheme the investment returns will be lower and the costs higher. This is just madness. Why condemn your staff to a miserable old age for nothing? Cut costs and re-open those schemes to new blood.

Closing your DB scheme does not make it any better, it does not get rid of any deficit (real or otherwise) it just makes it worse. Increase contributions on your staff by too much and they will just walk away from it, the scheme will then fail and the employer will be left to carry the can.

UNISON has recently published an excellent guide on the proposed changes to SHPS and later this week we are holding a national training event in London on it. 

Perhaps there is a God?

Mind you I think that David Cameron would also enjoy this picture of his least favourite ring wing Tory MP, Nadine Dorries, from last nights "tucker trial" on the very silly but entertaining TV show "I'm a Celebrity...Get me out of here!".