Last week, Reform delivered a historic victory. They now control 10 councils with over 800 elected councillors. Their success should be understood as a rejection of the declinist orthodoxies that have defined this century.
Chief amongst these is Net-Zero. Energy bills have skyrocketed, industries have fled and living standards have fallen. Rather than driving decarbonisation, Net-Zero policies have offshored our emissions. Whilst we boast of closing down our coal fired power stations, India celebrates their one billionth tonne of coal produced.
There is much work for Reform to do, the rot is deep, as these new councillors will soon discover. The measure of their success will be how much of it they can remove. They have committed to using “every lever” to halt renewable energy schemes.
The greatest lever is perhaps the money behind such schemes. Much of this is now controlled by Reform councils via their pension funds. This may prove to be a great weapon in a common-sense crusade against Net Zero by local councils. These councils can lead by example and encourage others to follow suit.
Local government pensions manage the retirement savings of all council employees. Elected councillors have significant control of these pools of capital, with each pension fund board consisting primarily of local councillors. They have a fiduciary and legal duty to act in the best interests of their pension scheme members, a duty many have neglected.
Reform councillors now control £55 billion of capital. For context, the recently announced investment to create a new theme park in Bedford is expected to cost around £7 billion.
Our country’s problem is not just a lack of capital investment. It is that the capital we do have is not invested to maximise returns and wealth, but rather to achieve political outcomes. If we are to return to growth and prosperity, this must change.
Currently, this £55 billion is being used to pursue Net-Zero objectives. Councils allow external Local Government Pension Pools to act as their Asset Managers who have for years knowingly and willingly prioritised green ideology over and above investor returns.
Take the Local Pensions Partnership (LPP), which manages the entirety of Lancashire County Council’s £11.7 billion pension fund, which is now controlled by Reform. The LPP describes its pledge to Net Zero by 2050 or sooner as a “priority commitment.” This is antithetical to the fiduciary duty and to the welfare of their members.
To achieve this, the LPP is committed to weaponizing shareholder votes to force companies to embrace net zero. They exclude investment in “extractive fossil fuel,” companies whilst shovelling money into green projects. They founded and fund GLIL Infrastructure which funds billions of pounds worth of solar and wind farms. For example, the Clyde Wind farm, which blights the once beautiful Scottish landscape south of Glasgow, was funded by Lancashire’s pension members.
Reform should audit their pension fund’s strategies and remove policies not explicitly in favour of growth
GLIL’s investment returns are not publicly available. However, broader market trends suggest that green investments are not the route to prosperity for Lancashire’s pensioners. Over the last 5 years, the FTSE 350 Oil, Coal and Gas has delivered cumulative returns just shy of 100 per cent. Compare this to the returns of Greencoat UK Wind, a leading renewable energy investment fund, it returned less than 20 per cent.
The LPP purports to speak on behalf of Lancashire’s 30,000 members. They have used this voice, for instance, to lobby the government to completely ban sales of petrol and diesel cars by 2030. They even encouraged the government to ensure that combustion vehicles aren’t replaced with electric vehicles but rather that “car sharing and other alternatives,” be incentivised.
The CEO of the Border to Coast Partnership and of the LGPS Central pool also joined that effort. They both now manage significant amounts of money on behalf of Reform controlled funds. This is one example: there are many more such cases of attempted social engineering. It is not enough to blame the pooled investment managers alone. Each council pension fund has its own homegrown “green” agenda that must be overturned. Each has adopted a Responsible Investment Policy. It is appropriate that the acronym is RIP, given that they consign their funds to ruin.
To take a few, Lancashire’s RIP commits it to pressuring private companies into aligning with “a low carbon economy.” Lincolnshire’s pension takes no interest in the 16 trillion cubic feet of natural gas discovered locally, with its potential to offset 202 million tonnes of Co2 linked to LNG imports, whilst delivering British energy independence. Rather, its RIP commits it to seeking sustainable investments that contribute to “the global transition to lower carbon products, services and infrastructure including renewable energy generation.” Kent’s RIP goes so far as to commit to “invest 15 per cent of portfolio in sustainable assets.”
Kent’s pension has £8 billion under management. Its scheme members have elected a party opposed to Net Zero yet are unknowingly funding the defacing of the countryside with solar panels and wind turbines, to the tune of around £1.2 billion.
Newly elected councils should audit their pension fund’s strategies and remove any policy which is contrary to the aim of maximising financial returns. This will involve removing or rewriting Responsible Investment policies and scrapping Net Zero targets.
The fact that councils’ pension money is being deployed for purposes expressly contrary to the democratic wishes of the scheme members is shocking. This is compounded by the fact it is also making them poorer and is storing up higher taxes for the public.
Local government pensions are Defined Benefit schemes. This means that members are guaranteed a certain income in retirement, usually based on an average of lifetime earnings. If the pension fund can’t make these payments, it will ultimately be subsidised by the taxpayer.
Currently, most funds just about meet required funding levels. Given the amount they have invested in green assets which would be worthless without government subsidy, the long-term economic and financial risks to these schemes is significant.
In the coming weeks, Reform councils will appoint trustees to these pension schemes, and they will have the ultimate say on the £55 billion under management. These trustees have a fiduciary duty to the scheme members. They must act quickly, to return their schemes to growth and to expose the anti-human ESG policies that have governed unchallenged until now.
