UK Government is trying to stop divestment in England and Wales

The Chancellor, George Osborne, is leading local government pension reforms. Image by HM Treasury, Creative Commons.

You may have heard in the news that the UK Government is trying to clamp down on campaigns to divest local councils from fossil fuels and other dubious investments.

The UK Government intends to stop local councils from passing policy which could harm the UK’s trade interests.  This would be effected by issuing new guidance to local authorities which prohibits them passing boycotts and changing the regulations for local government pensions.

This looks a lot like a calculated effort to block action on the arms trade, fossil fuels, Palestine and other causes, as well as an attack on local democracy.

Whatever new guidance is issued to councils it will not apply in Scotland. This because Local Government is not reserved to Westminster and the local government pension scheme (LGPS) is regulated separately in Scotland.  So the UK Government cannot stop Scottish councils divesting in this way.

Currently pension divestment is legal if it can be shown to be supported by fund members and to have no “significant” impact on the financial health of funds. The changes the UK Government is proposing would make passing divestment policies on ethical grounds in England & Wales much more difficult. Recent successes, like divestment decisions in Haringey and South Yorkshire could be drawn into question.

This is of course very troubling, and Friends of the Earth Scotland is closely supporting our colleagues in the rest of the UK to help oppose these changes.

Until 19 February 2016 you can sign a petition again the changes here.

We want the Scottish Government to move in the opposite direction by ensuring more power over investments is given to pension fund members.  To support our campaign why not write to your MSP asking them to support divestment?

Find out more about this issue by reading Fossil Free UK’s online guide.

About Ric Lander

Ric Lander is Finance Campaigner at Friends of the Earth Scotland supporting their work to divest from fossil fuels and invest sustainably.
This entry was posted in Divest / Reinvest. Bookmark the permalink.

1 Response to UK Government is trying to stop divestment in England and Wales

  1. Ric Lander, FoE Scotland says:

    Some industry groups are now coming out against these changes:

    Government ‘may have gone too far’ in pension regulation changes

    Proposed pensions regulations in the public sector have been broadly welcomed by the body responsible for public sector pensions’ schemes, but the Pensions and Lifetime Savings Association (PLSA) has expressed concern that the government is going too far in terms of deregulation.

    In a letter to the DCLG, written as the consultation on proposals to revoke and replace the Local Government Pension Scheme (Management and Investment of Funds) Regulations 2009 with new regulations closed on Friday, Helen Forrest Hall, defined benefit policy lead at PLSA, said the association welcomes the new regulations, but is concerned that they include no actual reference to the fiduciary duty of investments to pay members benefits.

    She also says that the regulations could give too much power to the government to direct how funds invest without regard for the cost to employers and members, and that the six month timescale the regulations allow for funds to publish an Investment Strategy Statement could be challenging.

    The letter also says that the new guidance that funds’ policies on environmental, social and government factors should reflect UK government foreign policy, which critics say could limit the power of pensions’ funds to divest from investment areas viewed as unethical, seems “unhelpful, unnecessary… and undemocratic”.

Leave a Reply

Your email address will not be published. Required fields are marked *