York Conservative Councillor Paul Doughty criticised a Lib Dem motion at tonight's Full Council which would have put artificial restraints on how council and other employees pension funds are invested. The proposed motion, which would simplistically define all energy companies as ‘good’ or ‘bad’ on fossil fuels and all infrastructure as being green or not green would limit the ability of the North Yorkshire and York Pension Fund to allocate funds to the most value enhancing assets.
Cllr Doughty's speech at Full Council:
This motion is written for one reason and one alone, to be on a Lib Dem leaflet. It will achieve nothing at all with just one supposed action point and the motion and amendment misunderstand the way financial markets work and house the North Yorkshire and York Pension fund operates.
Firstly the motion lives in a lovely simplistic binary world where all investments are either fossil fuels or not. in reality this is not the case and although there are some companies and funds which avoid fossil fuels it is not many and in reality most companies are energy rather than for example oil and are changing. Of course so called green investors pulling the plug on such companies would likely mean they see less point in moving from fossil fuels, rather than if they have concerned investors wanting to go on that journey.
Although we support the Climate Emergency and action on it the move away from fossil fuels is nothing like on the scale Cllr Vassie seems to believe. The Pension Fund has long based its decisions on investment merit rather than any preferences. This remains the right view and if it is to change surely consistent with our Public Health messages world we could also not invest in tobacco stocks, companies that are not Living Wage would presumably soon be banned and we would no doubt soon go to a protectionist type world of only investing in local companies.
Encouraged by the government, the Pension Fund has for a number of years been planning to boost infrastructure assets. This is the right thing as with certain cashflows and generally low risk they are an ideal asset class for pension funds. Some will worry about the premiums to Net Asset Value that listed infrastructure funds are on but our fund has more scope and with large amounts can be choosier.
Would we like to see more infrastructure investment? Yes. Would we like to see more of it locally? Yes. However what does this then look like? I am surely Cllr Vassie hasn’t even thought of the definition of ‘the region’ and the exactly £40 million of investment it will get. However even if he has what an absurd binding position it would be as the fund for example says to a wind turbine factory it could invest in Selby, sorry we’ve done our £40 million in the region, do you have a similar factory across the Pennines? Nevermind the array on analysts that could be saying the future and value is overseas but under Cllr Vassie the fund is again capped at the magical £40 million. This is all of course assuming all infrastructure fits neatly in the binary green or non green infrastructure categories.
The Pension fund, with able advisers, has long set the best financial framework for investment; that should remain the case.