Robert Maxwell, former Labour MP and rapacious capitalist famously robbed the pension funds of his employees at the Daily Mirror and elsewhere to bail out the problems of his business. We looked on in horror as this bloated socialist exploiter ripped off ordinary workers.
It seems that the Liberal Democrats - in search of a gimmick - have decided to learn from Bob and rip off members of pension funds. In this case to build housing that the normal (private sector) funders won't provide finance for:
Funded by public sector pension funds, the 300,000 properties a year target would more than double the current rate of housebuilding.
Building this many homes (just building - we would need to buy the land too) will cost about £30,000,000,000 each year (let's call this £30 billion). The income of local authority pension funds in 2010/11 was £10.6 billion made up from employee and employer contributions plus investment returns.
Even if the existing development funding system generated 150,000 houses (for 2011 the figure was a tad short of 120,000) that would still require £15 billion each year. This could only be achieved by redirecting funds from other investments. If the Liberal Democrats want this to continue for the five-year lifetime of a parliament that would require £75 billion - 50% of all the funds under investment by local authority pension funds.
So we have a scheme that redirects funds from profitable investment intended to secure a decent pension for the funds' members. And places that money into property schemes that the private sector will not finance - presumably for lack of confidence in the anticipated return.
This would be morally bankrupt and criminally stupid.
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2 comments:
I think your article rests on the faulty premise that The Guardian is correct. Never a good assumption.
I've looked at the *proposed* policy itself and, while it does include the overly ambitious 300,000 target, it doesn't say anything about using pension funds, let alone using them for all 300,000.
But if it is true in part, I don't think the idea of local authorities investing in socially and economically useful investment rather than in hedge funds is so bad, especially if those loans are backed by central government.
See http://www.libdems.org.uk/siteFiles/resources/docs/conference/2012-Autumn/Aut12%20Agenda%20book.pdf
" I don't think the idea of local authorities investing in socially and economically useful investment rather than in hedge funds is so bad, especially if those loans are backed by central government."
My reading of that is that you are saying it's alright for local authorities to gamble with their pension funds, since central government can bail them out with taxpayers money if (when?) it invariably goes wrong.
That said, I may be misreading your intentions.
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