MSPs call for council staff pensions to be used to build affordable homes

Kevin Stewart MSP
Kevin Stewart MSP

Council pension funds should invest more capital in local projects such as affordable housing despite the “risks” involved, according to a committee of MSPs.

A report issued yesterday by the Scottish Parliament’s local government and regeneration committee found there is untapped potential for Local Government Pension Funds to support communities and generate income.

About £26 billion is currently sitting in 11 different pensions funds which cover all of Scotland’s councils to be paid out when workers retire. About half of this is invested in overseas shares of multinational corporations and about a quarter in shares in UK firms.

A Falkirk Council scheme to invest £30 million of its Local Government Pension Scheme Fund in social and affordable housing was hailed as a ‘trailblazer’ by social justice secretary Alex Neil.

However the report said that a lack of expertise in infrastructure investment means too few Pension Funds are grasping the opportunity to invest to achieve local social or economic impact.

Committee convener, Kevin Stewart MSP, said: “It has been proven time and again that investment in infrastructure is needed to grow a successful economy. All communities across Scotland must have the chance to benefit from this success and the opportunity to grow.

“Whilst there are some risks associated with investing in infrastructure, these can be reconciled given the long-term nature of these investments together with their positive social and economic impact. By working collaboratively Pension Funds could maximise their returns, share expertise and reduce investment costs. The returns should also be measured in terms of growth to communities.”

The committee also urged local authorities to maximise the opportunities presented by City Deals to improve local infrastructure.

The convener added: “On our visit to Manchester the drive, vision and enthusiasm that is vital for City Deals to succeed was apparent. City Deals offer unique opportunities to invest in strategic infrastructure projects and we look forward to seeing measurable benefits emerge for communities and the wider surrounding areas. However there needs to be careful governance to ensure plans flourish and other areas benefit from good practice.”

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