Housebuilding programme ‘would be open to legal challenge’

Published by 24publishing for 24dash.com in Housing and also in Central Government, Communities, Legal, Local Government

Unison has warned the Government that any plans to use council staff pensions to fund a major housing programme would be open to legal challenge.

The plans were floated by a commission – set up by the Royal Institute of British Architects (RIBA) – which concluded that six million new homes could be built across Britain in the next 20 years by using the pension savings of more than four million council staff.

The commission wants the Local Government Association (LGA) to “demonstrate leadership” in getting local authority pension funds to invest in housing and associated infrastructure.

It wants the 15 largest funds and other relevant bodies to work together to commission research into the case for setting up an independently managed £10bn local housing development fund. This, it said, would be used to finance local developments of mixed-tenure housing, looking at the potential returns, risks to be managed, structure and governance arrangements.

However, Unison has warned the Government that funds must be invested in the best interest of scheme members and there are at least two pieces of legislation – the Occupational Pension Scheme Investment Regulations and the EU Directive Institutions for Occupational Retirement Provision – that could hamper any plans to implement the scheme.

Under these pieces of legislation, warns the union, where conflicts of interest exist, any decision on investment must be scrutinised in the interests of scheme members; and any conflicts of interest against them in the decision or the investment process must be resolved in scheme members’ favour.
 
The union’s assistant general secretary Karen Jennings said: “This report must not be seen as a green light for the Government to use local government pension pots as a slush fund to pay for massive building schemes – and they would do well to remember the legal protection that covers these funds.
 
“Any attempt to use these funds – particularly where a conflict of interest, such as massive profits for investment intermediaries and their shareholders – outside of the best interests of the scheme members should expect to be met with a legal challenge.
 
“The legislation exists to protect scheme members, and will be used to protect their savings.

“Our members working in local government have paid into their pensions in good faith, and will be alarmed to see reports such as this one advocating their hard-earned savings being ploughed into building schemes that will ultimately benefit rich property companies.”