Pooling pension funds makes perfect sense

Far from the hysteria about "Granny tax II", London's pension investment plan can't come soon enough

Pension funds and infrastructure investment have enjoyed a recent revival in policy discourse. Last month Prime Minister David Cameron used a major speech on the economy to discuss infrastructure, ‘the magic ingredient in so much of modern life.’ In Budget 2012 Chancellor George Osborne announced a new Pension Infrastructure Platform. Yesterday they were the talk of the town in London.

The proposal to pool the pension funds of London boroughs and to invest these assets through a new infrastructure vehicle is good news both for the public purse and good news for the essential upgrades – to transport, utilities and communications – that the capital requires. However, a new debt vehicle will only go so far. To drive economic growth London councils should consider more fundamental reforms to the pooling of both finance and risk.

Pension funds have long time horizons. This means that they are well placed to invest in the infrastructure that is crucial to economic growth but will not realise immediate returns, such as new transport connections. In fact, there is a near perfect match between pension funds' appetite for long term assets and the need for long term financing of infrastructure.

Although underdeveloped in the UK the investment model has been pursued abroad; Canadian public pension funds are amongst the most active backers of infrastructure in the world. London councils are reportedly modelling their new approach on the Ontario Municipal Employees’ Retirement System (OMERS).

The scale of the OMERS model encourages collaborative working. This has provided the stability required for Ontario investment managers to build up management expertise. In the UK, councils that collaborate on investment decisions – through arrangements like those in place in Greater Manchester or under discussion in the Leeds city region – can raise far more money than those that work alone. In the absence of a clear national strategy for growth such local prioritisation and investment certainty is crucial.

OMERS holds CAD $55 bn in assets which makes it slightly smaller than the proposed £30 bn London fund. As of December 2010 OMERS had committed 15.5 per cent of its total portfolio to infrastructure. Its target allocation of 21.5 per cent dwarfs the investment planned by London council’s: 7.5 per cent of pension fund assets or £2.25 bn.

OMERS invests through its Borealis infrastructure vehicle. Borealis was established in 1999 and has built up sufficient expertise to run a varied infrastructure portfolio. London councils should consider establishing a similar independent vehicle so that decisions are based on the best business case for investment and the fiduciary duty of trustees, rather than political short-termism.

The relatively small scale of the Canadian infrastructure market means that OMERS has invested in international markets in order to meet its portfolio target. London boroughs may prefer to invest solely in projects in and around the capital, such as Crossrail or the proposed extension of the Northern Line to Battersea. However, prioritising local investments will undermine portfolio diversity. The boroughs will have to take a more holistic view of infrastructure for local economic growth.

London council’s may want to consider channelling local investments through a revolving investment fund (RIF). This would provide a vehicle through which councils could co-operate on the use of existing capital spending allocations and prudential borrowing. Greater Manchester has recently established a £1.2 billion RIF and agreed a city deal with the government that gives councils the opportunity to "earn back" up to £30m a year of tax for the growth it creates through infrastructure investments. This could include both corporate and income tax and demonstrates that Government is willing to consider potential funding opportunities that go way beyond the current plans for local business rate retention.

London boroughs could look to negotiate a similar deal, assessing infrastructure investment not only on stand-alone returns but on how they will underpin the development of London’s businesses.  If they succeed in this they could well have found a "magic ingredient" for economic growth. They may even have a few ideas to offer the Canadians.

London boroughs are planning to pool their pension liabilities. Credit: Getty

Joe is a senior researcher at the New Local Government Network

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MP Michelle Thomson's full speech on rape at 14: "I am a survivor"

The MP was attacked as a teenager. 

On Thursday, the independent MP for Edinburgh West Michelle Thomson used a debate marking the UN’s International Day for the Elimination of Violence against Women to describe her own experience of rape. Thomson, 51, said she wanted to break the taboo among her generation about speaking about the subject.

MPs listening were visibly moved by the speech, and afterwards Thomson tweeted she was "overwhelmed" by the response. 

Here is her speech in full:

I am going to relay an event that happened to me many years ago. I want to give a very personal perspective to help people, both in this place and outside, understand one element of sexual violence against women.

When I was 14, I was raped. As is common, it was by somebody who was known to me. He had offered to walk me home from a youth event. In those days, everybody walked everywhere - it was quite common. It was early evening. It was not dark. I was wearing— I am imagining and guessing—jeans and a sweatshirt. I knew my way around where I lived - I was very comfortable - and we went a slightly differently way, but I did not think anything of it. He told me that he wanted to show me something in a wooded area. At that point, I must admit that I was alarmed. I did have a warning bell, but I overrode that warning bell because I knew him and, therefore, there was a level of trust in place. To be honest, looking back at that point, I do not think I knew what rape was. It was not something that was talked about. My mother never talked to me about it, and I did not hear other girls or women talking about it.

It was mercifully quick and I remember first of all feeling surprise, then fear, then horror as I realised that I quite simply could not escape, because obviously he was stronger than me. There was no sense, even initially, of any sexual desire from him, which, looking back again, I suppose I find odd. My senses were absolutely numbed, and thinking about it now, 37 years later, I cannot remember hearing anything when I replay it in my mind. As a former professional musician who is very auditory, I find that quite telling. I now understand that your subconscious brain—not your conscious brain—decides on your behalf how you should respond: whether you take flight, whether you fight or whether you freeze. And I froze, I must be honest.

Afterwards I walked home alone. I was crying, I was cold and I was shivering. I now realise, of course, that that was the shock response. I did not tell my mother. I did not tell my father. I did not tell my friends. And I did not tell the police. I bottled it all up inside me. I hoped briefly—and appallingly—that I might be pregnant so that that would force a situation to help me control it. Of course, without support, the capacity and resources that I had within me to process it were very limited.

I was very ashamed. I was ashamed that I had “allowed this to happen to me”. I had a whole range of internal conversations: “I should have known. Why did I go that way? Why did I walk home with him? Why didn’t I understand the danger? I deserved it because I was too this, too that.” I felt that I was spoiled and impure, and I really felt revulsion towards myself.

Of course, I detached from the child that I had been up until then. Although in reality, at the age of 14, that was probably the start of my sexual awakening, at that time, remembering back, sex was “something that men did to women”, and perhaps this incident reinforced that early belief.​
I briefly sought favour elsewhere and I now understand that even a brief period of hypersexuality is about trying to make sense of an incident and reframing the most intimate of acts. My oldest friends, with whom I am still friends, must have sensed a change in me, but because I never told them they did not know of the cause. I allowed myself to drift away from them for quite a few years. Indeed, I found myself taking time off school and staying at home on my own, listening to music and reading and so on.

I did have a boyfriend in the later years of school and he was very supportive when I told him about it, but I could not make sense of my response - and it is my response that gives weight to the event. I carried that guilt, anger, fear, sadness and bitterness for years.

When I got married 12 years later, I felt that I had a duty tell my husband. I wanted him to understand why there was this swaddled kernel of extreme emotion at the very heart of me, which I knew he could sense. But for many years I simply could not say the words without crying—I could not say the words. It was only in my mid-40s that I took some steps to go and get help.

It had a huge effect on me and it fundamentally - and fatally - undermined my self-esteem, my confidence and my sense of self-worth. Despite this, I am blessed in my life: I have been happily married for 25 years. But if this was the effect of one small, albeit significant, event in my life stage, how must it be for those women who are carrying it on a day-by-day basis?

I thought carefully about whether I should speak about this today, and it was people’s intake of breath and the comment, “What? You’re going to talk about this?”, that motivated me to do it, because there is still a taboo about sharing this kind of information. Certainly for people of my generation, it is truly shocking to talk in public about this sort of thing.

As has been said, rape does not just affect the woman; it affects the family as well. Before my mother died early of cancer, I really wanted to tell her, but I could not bring myself to do it. I have a daughter and if something happened to her and she could not share it with me, I would be appalled. It was possibly cowardly, but it was an act of love that meant that I protected my mother.

As an adult, of course I now know that rape is not about sex at all - it is all about power and control, and it is a crime of violence. I still pick up on when the myths of rape are perpetuated form a male perspective: “Surely you could have fought him off. Did you scream loudly enough?” And the suggestion by some men that a woman is giving subtle hints or is making it up is outrageous. Those assumptions put the woman at the heart of cause, when she should be at the heart of effect. A rape happens when a man makes a decision to hurt someone he feels he can control. Rapes happen because of the rapist, not because of the victim.

We women in our society have to stand up for each other. We have to be courageous. We have to call things out and say where things are wrong. We have to support and nurture our sisters as we do with our sons. Like many women of my age, I have on occasion encountered other aggressive actions towards me, both in business and in politics. But one thing that I realise now is that I am not scared and he was. I am not scared. I am not a victim. I am a survivor.

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.