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Cripes! Boris signs up to Clancynomics

Cripes! Boris signs up to Clancynomics

🕔06.Oct 2014

Boris Johnson, the Tory mayor of London, has hijacked a radical pensions reform policy that was first developed by Labour Birmingham city councillor John Clancy.

Earlier this year Clancy set out in his book The Secret Wealth Garden ways in which £220 billion of assets sitting in over 100 local government pension funds could be placed into a huge sovereign wealth fund and used to build thousands of new homes and other infrastructure projects.

The book showed how council pension funds are wasting £500 million on highly-paid investment advisers and explained how costs could be slashed by consolidating the 100-plus funds into eight super-funds based on English and Welsh regions.

In the book, Clancy concluded: “It’s time to end this scandal and use the £220 billion sitting festering in local council pension funds to kick-start regeneration and create much needed jobs.”

Clancy hoped his pension reform plan would form part of Labour’s manifesto for the 2015 General Election. A copy of the book was sent to Ed Miliband and his advisers.

It now appears more likely that the Tories will embrace what came to be known as ‘Clancynomics’.

Boris Johnson has taken the basics of Cllr Clancy’s plan and enlarged the proposition to include every public sector pension fund in Britain – 39,000 funds in total worth hundreds of billions of pounds.

Writing in The Daily Telegraph, Mr Johnson said: “There are more than 39,000 public sector pension funds in this country – each with its own trustees, each with its own managers and advisers and accountants.

“The waste is extraordinary. Think of all those advisers and investment managers taking their fees – their little jaws wrapped blissfully around the giant polymammous udder of the state. Think of the duplication.

“But it is worse than that – because this country is missing a huge opportunity, and one that is being exploited by more sensible governments around the world.

“Other countries have realised that it is mad to keep their pension funds divided into tens of thousands of relatively tiny jam jars of cash. They have smashed the jam jars, pooled the pension funds – and created gigantic sovereign wealth funds which they are using to invest in high-yield assets.

“If we amalgamated our local authority pension funds, we would have a war chest of £180 billion, and if we added in all the public-sector pension funds we would be talking hundreds of billions – and suddenly we would be able to direct those vast UK assets to the support of projects that are both socially useful and vital for the economy.”

He went on to highlight how foreign pension funds are investing in housing and infrastructure projects in London and other parts of the UK. Under British law, UK public sector pension funds are prevented from investing in this way.

Arguing for a “citizens’ wealth fund” to be created from the pension funds, Mr Johnson said he accepted there would be a certain amount of hostility to the idea: “The little pension funds will fight for their independence; they will make all sorts of spurious arguments about the need for localism in managing this dosh, when of course the advice is all subcontracted to the same legion of investment managers, and when what they really care about is their fees and their tickets to Wimbledon from the investment managers and their golf-club bragging rights.

“The vested interests must be ruthlessly overridden. It is time for Britain to have its own Citizens’ Wealth Fund, deploying our assets in a useful way, helping us to bolster the pensioners and cut pointless public expenditure at the same time.”

Cllr Clancy welcomed Mr Johnson’s conversion to Clancynomics.

“It’s great to see someone else joining the cause for rewiring pension funds into the real economy and setting up wider public sector regional wealth funds.

“But you’ve got to say he has gone and pinched my policies lock, stock and Boris Barrel. Plagiarism is the sincerest form of flattery.

“The 32 local government pension funds in London totalled £33.5Billion last year.  So it’s no wonder he’d like to get hold of them.”

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