Localis responds to ‘Pensions Investment Review: Final Report’
Localis lead researcher, Sandy Forsyth, said: “The requirement for Administering Authorities (AAs) and pools to work with local authorities, regional mayors, strategic authorities and Welsh Authorities on local growth plans is welcome, as is the news that the National Wealth Fund (NWF) will work in partnership with the LGPS in support of strategic objectives for growth and clean energy.
In Localis’s recent study “New Stable: expanding and reforming the role of the LPGS in driving affordable housing”, we went further and noted that the National Wealth Fund should have its mandate extended to include the provision of social housing as significant national infrastructure, so it would be good to see the partnership between the NWF and the LGPS encompassing this wider mandate.
The requirement for pools to report on the impact of local investments rather than AAs does clarify where they fit in terms of locally driven investment, although some additional clarity may be required in terms of what “local” means to pools. That said, the focus on building a collaborative approach between AAs, pools, and strategic authorities should be a boon in ensuring that the LGPS is working in lock-step with the needs of place.
This latter point aligns with recommendations we have made in ‘New Stable’ that local growth plans and spatial development strategies should synchronise an infrastructure pipeline and align with LGPS local investment strategies.
This support for place-based LGPS investment will hold significant firepower, coming as it does ahead of the looming spending review which is set to promise an extra £113bn in capital spending. We should note that the Review estimates the LGPS will reach £550bn by 2030 – making some £27.5bn available for local investment were 5% of this total invested, with each 1% increase resulting in a potential £5.5bn of investment uplift.
Additionally, the Review’s emphasis on boosting the pipeline of investment opportunities is good to see, as the question is not necessarily one of whether schemes want to invest in the UK, but whether the environment in the UK supports them in doing so.
Again, the use of the NWF and also the British Business Bank to mobilise private investment is a promising sign.
The long-term approach to infrastructure and housing highlighted in the report is also pointing in the right direction. In New Stable, we set out a number of recommendations about how the government can take action to achieve a much better environment for potential investors in housing, especially institutional investors such as the LGPS, which may prove to align with what the government have in mind for affordable and social housing in the forthcoming Spending Review.
For instance, the reclassifying of social housing as national infrastructure; a role for Homes England in overseeing the creation of a national affordable housing development pipeline for investment; and policy to facilitate the creation of partnerships between local authorities, housing associations, LGPS pools, and others to develop housing projects.”