Pension fund cash could hold the solution to the sectors funding crisis, but will it help deliver on the Big Society? Or might more locally available and accountable pensions cash deliver both?
Two debates have been bubbling under across the sector over recent months and caught the headlines in the industry press this last week.
At the NHF conference, Mr Blond (Phillip) espoused the virtues and benefits of mutual provision, outlining how mutual and co-operative housing models could utterly reshape the lives of residents and staff alike and be the perfect vehicle for delivering the civic and social impact envisaged as part of the big society agenda – citing examples such as Poplar Harca and Rochdale Borough wide Housing , who hope to be the first tenant and employee co-owned mutual social landlord in the UK.
The mutual approach has many fans across the sector – drawing upon the known success and benefits for staff and customers alike in existing models within the sector, and John Lewis Partnership in the private sector – but as critics have rightly pointed out, there are more pressing issues at hand to resolve. Regulatory and economic changes aren’t just impacting on landlord’s capacity to develop more homes, but on day to day I&E and their ability to deliver and invest in such civic and social impact activities.
That’s where ‘Mr Grey’ comes in. As Derwent Living announced a £45m deal with Aviva’s pensions fund, news also emerged that large pension funds are being asked to give evidence to MPs on the communities and local government select committee about what is stopping them investing in social housing on a large scale. Meanwhile investment manager M&G is raising money for what it hopes to be a £1 billion social housing fund, with two unnamed pension funds reportedly mulling investments totalling £100 million.
Such investment from Mr Grey is great news when there is £60bn of existing debt awaiting refinancing and more investment needed; banks want to re-price their debt and won’t lend long term, and many organisations (including council’s) are resorting to issuing their own bonds. However, aside from increasing the immediate availability of finance, isn’t it merely swapping the institutional source? Instead of faceless bank shareholders, organisations will be accountable to faceless pension fund managers, representing the interests of third or even fourth party pensions funds, which may or may not be UK based?
There is an alternative untapped source worth exploring which could result in a partnership to meet Mr
Blond’s mutualism/localism aspirations and Mr Grey’s return on investment.
The Local Government Pension Scheme is collectively the biggest pension fund in the country and fourth largest in the world making it a major shareholder in business and the UK economy. Together the 101 individual and locally managed LGPS funds hold more than £120 billion in investments and assets, and have 4.6m members.
Imagine the potential benefits to be had of locally accountable and funded investment in housing organisations through pension funds such as the LGPS.
Locally based and raised funds could be pumped back into the local economy– creating jobs through investment in new housing; meeting local housing needs; providing the finance and impetus for 'big society' projects, and giving a shared stake in the local economy, society and housing market for the pension funds and employees who contribute to it, many of whom may already work for housing organisations in the area.
Contributors would have a vested interest to ensure housing organisations perform well and contribute to local society, could exert their influence to ensure investments are targeted at the best local housing providers, and (for those already working in housing organisations) would be incentivised to help their organisation succeed as part of their long term future rather than just their salary. It could be a virtuous circle which leads to increased funding/investment and delivery on key tenets of the localism bill.
Unfortunately for Mr Blond, pursuing mutuality through changing the constitution or governance arrangements of the vast majority of housing associations, ALMO’s or councils isn’t going to happen overnight, and certainly not in the current climate.
Investment in housing organisations through Mr Grey’s pension funds such as the LGPS may be the next best thing in the current economic circumstances - if investment regulations permit. Food for thought (and for Mr Betts as Chair of the CLG Select Committee?)
At the NHF conference, Mr Blond (Phillip) espoused the virtues and benefits of mutual provision, outlining how mutual and co-operative housing models could utterly reshape the lives of residents and staff alike and be the perfect vehicle for delivering the civic and social impact envisaged as part of the big society agenda – citing examples such as Poplar Harca and Rochdale Borough wide Housing , who hope to be the first tenant and employee co-owned mutual social landlord in the UK.
The mutual approach has many fans across the sector – drawing upon the known success and benefits for staff and customers alike in existing models within the sector, and John Lewis Partnership in the private sector – but as critics have rightly pointed out, there are more pressing issues at hand to resolve. Regulatory and economic changes aren’t just impacting on landlord’s capacity to develop more homes, but on day to day I&E and their ability to deliver and invest in such civic and social impact activities.
That’s where ‘Mr Grey’ comes in. As Derwent Living announced a £45m deal with Aviva’s pensions fund, news also emerged that large pension funds are being asked to give evidence to MPs on the communities and local government select committee about what is stopping them investing in social housing on a large scale. Meanwhile investment manager M&G is raising money for what it hopes to be a £1 billion social housing fund, with two unnamed pension funds reportedly mulling investments totalling £100 million.
Such investment from Mr Grey is great news when there is £60bn of existing debt awaiting refinancing and more investment needed; banks want to re-price their debt and won’t lend long term, and many organisations (including council’s) are resorting to issuing their own bonds. However, aside from increasing the immediate availability of finance, isn’t it merely swapping the institutional source? Instead of faceless bank shareholders, organisations will be accountable to faceless pension fund managers, representing the interests of third or even fourth party pensions funds, which may or may not be UK based?
There is an alternative untapped source worth exploring which could result in a partnership to meet Mr
Blond’s mutualism/localism aspirations and Mr Grey’s return on investment.
The Local Government Pension Scheme is collectively the biggest pension fund in the country and fourth largest in the world making it a major shareholder in business and the UK economy. Together the 101 individual and locally managed LGPS funds hold more than £120 billion in investments and assets, and have 4.6m members.
Imagine the potential benefits to be had of locally accountable and funded investment in housing organisations through pension funds such as the LGPS.
Locally based and raised funds could be pumped back into the local economy– creating jobs through investment in new housing; meeting local housing needs; providing the finance and impetus for 'big society' projects, and giving a shared stake in the local economy, society and housing market for the pension funds and employees who contribute to it, many of whom may already work for housing organisations in the area.
Contributors would have a vested interest to ensure housing organisations perform well and contribute to local society, could exert their influence to ensure investments are targeted at the best local housing providers, and (for those already working in housing organisations) would be incentivised to help their organisation succeed as part of their long term future rather than just their salary. It could be a virtuous circle which leads to increased funding/investment and delivery on key tenets of the localism bill.
Unfortunately for Mr Blond, pursuing mutuality through changing the constitution or governance arrangements of the vast majority of housing associations, ALMO’s or councils isn’t going to happen overnight, and certainly not in the current climate.
Investment in housing organisations through Mr Grey’s pension funds such as the LGPS may be the next best thing in the current economic circumstances - if investment regulations permit. Food for thought (and for Mr Betts as Chair of the CLG Select Committee?)
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