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This article was originally published on 24th February 2014 in The Ecologist

Special Investigation Planners’ pension funds set to win from fracking permissions
Jan Goodey, Will Cottrell & Ed Jones

Two Councils at the front line of fracking protests – Greater Manchester and West Sussex – have pension funds investing in the major fracking operators – while decisions on planning applications to frack are pending.

The findings – which have emerged from a special investigation for The Ecologist – reveal a serious conflict of interest as the value of planners’ pensions could be affected by the decisions they are making.

West Sussex County Council Pension Fund (WSCCPF) invests in IGas, Celtique Energie – and Cuadrilla, which made the news headlines in the summer at Balcombe.

Greater Manchester Pension Fund (GMPF) has the same interests in the big three with IGas currently facing protesters at Barton Moss near Salford.

The spreading tentacles

Lawrence Carter, energy campaigner at Greenpeace UK said: “After the business rate bribes promised by the government, it now turns out that councils have their pension pots riding on the outcome of fracking applications. These councils appear to have a worryingly large stake in the success of the UK’s fracking industry.

“Fracking is a highly controversial issue and council authorities owe it to their citizens to ensure that they are far beyond even the slightest suspicion of a conflict of interest. Local councils are institutions trusted by the vast majority of the population – they need to do all they can to retain that trust.”

In Balcombe, Cuadrilla is waiting on planning permission from West Sussex County Council to continue its controversial work from last summer with a series of flow tests to assess the viability of fracking.

WSCCPF invests in the US firm to the tune of £3.8m through its UK partner, Centrica. It has also invested in IGas, which has a licence block covering the West Sussex town of Storrington.

This investment is via IGas shareholder Ballie Gifford, a fund manager for WSCCPF. The firm is the recipient of the largest WSCCPF investment – £187m – an undisclosed proportion of which is invested in IGas.

Celtique Energie is looking to frack in nearby Fernhurst, Billingshurst and Wisborough Green. It too is a potential money-spinner for the Council, although to a lesser extent: WSCCPF has fracking investments through two portfolio funds, Partners Group and Pantheon Global Secondary Fund (under £5,000 in each).

‘No conflict of interest’, insists West Sussex

A West Sussex County Council spokesman told The Ecologist: “There is not a conflict of interest. Bailie Gifford has a discretionary mandate and make investments to fulfil the obligations on the pension fund. Whether or not we hold any stocks in our pension fund will not alter any planning decision that we do or do not take.”

The West Sussex Pension Fund, worth some £2.45 billion, is one of the larger local authority pension funds in England and Wales.

As well as the County Council it takes in the University of Chichester, Chichester College, Central Sussex College, several district councils in the area and more than a dozen town and parish councils – plus local housing associations and public and voluntary sector organisations.

The fund invests in a number of other controversial companies in arms and tobacco. It holds shares worth £8.5m in British American Tobacco and £4.5m in BAE Systems.

Manchester Councils – heavily committed

Further north, Salford and Trafford Councils, which have granted permission for IGas to drill at Barton Moss and Davyhulme, have investments through the GMPF, with £108m in the Henderson Group which through a subsidiary, is a major shareholder in IGas.

GMPF also has holdings totalling £73m in Cuadrilla via partner, Centrica and £10m in Pantheon Global Security Fund IV and £1.9m in Partners Group, both portfolio funds which invest in Celtique Energie.

While the permit IGas holds in Barton Moss is for coal bed methane exploration, the company has stated that it is also considering shale gas extraction by fracking in the future.

No conflict of interest that we’re aware of …

A Salford Council spokesperson told The Ecologist: “Planning permission for coal-bed methane exploration drilling was given in 2010, when the city’s Planning Panel considered all the issues carefully, heard a great deal of evidence, and granted permission for the exploration to take place.

“Councillors who took the decision to grant planning permission to I Gas in 2010 for coal-bed methane exploration were not made aware of GMPF’s investments in Henderson Global Investors. There is no conflict of interest that we’re aware of.

“The members of Planning Panel have no role in deciding where GMPF invests its funds and had no role in deciding that GMPF should invest its funds in Henderson Global Investors.

“Should the company or anyone else wish in the future to engage in anything further than they have been given permission for, they would have to seek separate planning permission from the Council. They would also require permits from both the Health and Safety Executive and the Environment Agency, which are the regulatory authorities for these issues.”

Conflicted responsibilities?

The Ecologist has looked into the possible conflict of interest should councillors work both in planning and pension fund management. On its website WSCC Pensions Panel states that it

“wishes to be an active shareholder and exercise its voting rights to promote and support good corporate governance principles, which in turn will feed through into good performance.

“The Pensions Panel has directed the fund managers, in acting in the best financial interests of the scheme, to consider, amongst other factors, the effects of social, environmental and ethical issues of the performance of a company when considering the acquisition, retention or realisation of investments for the scheme.”

While there is no direct crossover between planning and pensions, in West Sussex, Conservative Councillor Steve Waight is on both the Pensions Panel, and the Performance and Finance Select Committee.

Two others – Conservative Cllr Liz Kitchen and Lib Dem Robin Rogers – sit on the same Finance Committee as well as on the Planning Committee.

Trafford Council’s Conservative Cllr Alan Mitchell is on the GMPF Pension Panel and at the same time is on the Executive Committee in charge of Highways and Environment. The Executive is responsible for all key decisions and the strategic management of services.

In nearby Salford, Labour Cllr Bernard Pennington is also on the GMPF Pension Panel and at the same a member of the Finance and Budget Scrutiny Committee.

Local MPs: ‘no comment’

Barbara Keeley, MP for Worsley and Eccles South (which covers Barton Moss), said she could not comment on the WSCCPF as it was not in her remit. When questioned about the wisdom of investment in extreme extraction over and above renewables she made no comment.

The Ecologist also approached Andrew Tyrie MP for Chichester in West Sussex who also did not comment.

This investigation follows a broader picture of local council investment in tobacco and arms companies at a time when NHS resources are stretched and Middle Eastern military repression continues apace.

‘We will not be bought off!’

Meanwhile closer to home other local councillors have rejected government plans to allow councils to keep 100% of business rates from fracking operations, rather than 50% as before.

In Hampshire, the Conservative leader of the county council, Roy Perry told the Portsmouth News that “the Council will not be ‘bought off’ by David Cameron’s offer of extra revenue if it approves applications for fracking.”

On a broader scale some pension funds are already pulling money out of fossil fuels, fearful of owning ‘stranded carbon’ assets. Nearly $2bn has been pulled out of fossil fuel shares with 17 of the world’s largest funds saying that they would reinvest their money in clean energy.

The Green Light Campaign has been set up specifically to encourage pension funds to pull out of the fossil fuel business altogether.

Lancashire – investing in renewables

This comes in the light of a number of leading scientists including Sir David King, the Foreign Office Special Representative on Climate Change, warning that fracking would have “enormous environmental consequences”.

In a positive example of what can be done, just down the road from Barton Moss, Lancashire County Pension fund has recently invested £12m in the world’s largest community-owned solar power station, Westmill Solar Cooperative in Oxfordshire.

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The article below was originally published in Red Pepper in February 2014

Brighton & Hove’s council tax referendum: the pros and cons
Ed Jones looks at the rights and wrongs of a referendum on whether to raise council tax by 4.75 per cent in order to protect services

brighton-pierPhoto: dawarwickphotography/Flickr

Almost all government policies have pros and cons, winners and losers – and the proposed Brighton & Hove referendum to raise council tax by 4.75 per cent is no exception. This article looks at who would gain and who would lose from the plan.

Firstly we need to put the referendum in context. It is being held because of the austerity measures imposed by the Conservative-Liberal Democrat coalition government, which have meant that Brighton & Hove’s council budget has to be cut by around £100 million over four years. The referendum on a 4.75 per cent council tax rise has come about because of a cap on council tax increases above 2 per cent imposed by central government. The only way to get a rise above that approved – to help protect the services which vulnerable people depend on – is a referendum.

Already, many poor, sick and disabled people are suffering as a result of austerity measures while taxes are being cut for the rich and corporations. There has been a soaring rise in homelessness, food bank usage and people choosing between heating their homes or feeding themselves. Further cuts would most likely continue this trend.

Council tax in Brighton

It is important to know that Brighton & Hove administrations of all political hues have previously raised council tax at higher levels than 4.75 per cent, and sometimes much higher, before the law changed on council tax rises. Here is a year-by-year breakdown of council tax rises in recent years. Red indicates Labour administrations, blue Conservative, and green Green.

tax-increaseFigures provided by the Green Group of councillors

The Greens are a minority administration, which means that Labour and the Tories have been able to team up and prevent previous council tax rises – this is why the 2012-13 rise was 0 per cent. This, taken alongside inflation, has made the funding shortfall for services even more serious.

So, what are the pros and cons of the plan?

Cons

1) The price of the referendum

Opponents of the referendum have argued it is an additional expense that the council can ill afford. There are a range of estimates of how much the referendum will cost. The Green group of councillors says the cost of holding the referendum at the same time as the European elections in May ‘is currently estimated at about £230,000, though this doesn’t include other costs such as dealing with an increased volume of residents’ enquiries about council tax’.

According to council figures, there are currently around 275,000 people living in Brighton & Hove, with around 120,000 eligible households which pay council tax, before taking into account discounts such as those available to those on low incomes and single person households. That means, if the above figures are correct, the referendum would cost around £1 per person in Brighton & Hove, or £2 per eligible household.

2) Residents can’t afford to pay more council tax

There is a cost of living crisis as the prices of housing, food, energy, water, transport and more skyrocket while wages continue to stagnate. In this climate, will people want – or be able – to pay more council tax, even if it is to protect services for some of the most vulnerable people?

Here are the projected figures for what a 4.75 per cent rise would mean across the council tax bands:

band-increases*entitled to disabled relief
Figures provided by the Green Group of councillors

Will the citizens of Brighton & Hove bear these extra costs? Informal polling by the local newspaper, the Argus, says that most people are currently against the idea, but so far there have been no scientifically conducted polls that have asked the citizens of Brighton & Hove the question. Only a referendum could tell us for certain. One of the biggest problems with council tax is that its bands are based on 1 April 1991 levels of value, not what property is worth today, however council tax rises would still be progressive with those at the top paying more.

One alternative idea that some members of the Green Party have previously suggested is the ‘progressive council tax’. This would lower council tax for 80 per cent of the population while raising it for the top 20 per cent – which would probably be more popular! It is currently being looked at by a Green Party working group to see if it is even feasible.

3) The referendum might fail

A council tax rise would be a difficult vote to win at the best of times. In Brighton, however, people might also vote No in the referendum to spite the Greens because there is bitterness about some of their previous decisions. The bin strike, in particular, was a disaster for Jason Kitcat’s administration.

However, they have done many positive things in the city, such as erecting shelters for homeless people, building council houses, and expanding the living wage as well as bringing down the ratio between highest earners and lowest earners in the council to 10:1. For me, on balance, the Greens have been a force for good in the city, especially given the constraints they have to work with. The referendum, though, risks being seen as a referendum not just on the council tax rise but on the Green administration itself.

Pros

1) It would fund services for poor and vulnerable people

Most of us will become old, sick and/or vulnerable during our lives and may need to access similar services. If they are not there any more, not only the current people using them will suffer but many of us in the future will not be able to access them.

According to the Greens, a 4.75 per cent rise in council tax would raise £2.75 million in additional funds. This would go towards key adult social care services, including home care, residential community care, day services and supported employment for disabled people, as well as grants to the third sector.

Further details will be revealed on 13 February, and the devil may be in the detail. However, some unions that traditionally support Labour, such as the GMB and Unison, have already come out in support of the referendum. Mark Turner, the city’s GMB branch secretary, has said: ‘This new budget would protect frontline services in adult social care and a disabled workshop where we have members. Cuts would have absolutely terrible consequences on people’s lives. It is only right that the public have a chance to vote on this proposal.’

2) Referendums promote local debate and democracy

Referendums educate people, getting them to talk about current politics and think about policy. Already councillors have addressed a GMB branch meeting about the council budget, three public debates have been organised about the referendum (on 6 Feb, another on 6 Feb, and 10 Feb), a multitude of articles have been written about it and people across the city are discussing it. Actively engaging people in politics makes them more empowered, less apathetic and more able to appreciate the complexities of political decision making. And all this, as we’ve seen above, for only £1-2 a person!

The Scottish will have a chance to discuss and vote in a referendum on their independence on 18 September. Referendums are regularly held in Switzerland, where they recently decided to curb executive pay (although decided against introducing a cap of top salaries at 12 times that of a company’s lowest-paid worker). The Swiss will be voting in 2014 on the country’s procurement of Saab Gripen E fighter aircraft, amongst other things, and at some point are even set to debate and vote on a national basic or citizen’s income.

If the Scottish and Swiss can have referendums over such wide-ranging and important decisions, I am sure the citizens of Brighton & Hove could vote on a council tax rise.

3) It would send a message

A Yes vote would be a clear signal to the Tory-Liberal coalition that the citizens of Brighton & Hove do not agree with their policies.

The media coverage would be immense and could help shift the frame of debate around austerity economics and politics. It would have ripple effects around the country, and would likely encourage other councils to think about more daring strategies to oppose the cuts.

Final thoughts

Overall, I hope that the referendum goes ahead. It will give citizens a chance to debate and decide on the future direction of the city (for good or for bad). I am disappointed that the local Labour Party has till now opposed the referendum and not tried to find significant alternatives to austerity.

If the residents of Brighton & Hove do get to have a referendum, the way the question is phrased will really matter. People would vote very differently if they saw the following two questions:

a) Do you agree to the council tax rise of 4.5 per cent? OR

b) Do you agree to the council tax rise of 4.5 per cent to protect services for some of the most vulnerable in the city, which are facing cuts as a result of austerity imposed by the Conservative-Liberal Democrat coalition?

Also, the way this issue is reported in the media will make a big difference. The local newspaper, the Argus, is owned by Newsquest, which is in turn owned by Gannett Corporation – a giant multinational media corporation. There are many good journalists at the Argus, however they are under-staffed and under-funded and constrained by the structures which they work within. Not so long ago, workers at the Argus went on strike due to job losses.

These contraints drastically affect what issues are covered and how they are covered, and will affect how the proposed referendum is presented to the public. That is why, if nothing else, it is important we make ourselves aware of the facts.

The timeline

13 February: Budget policy & resources committee meeting. Final draft of budget proposals are published and agreed on at committee. It would require one or both of the opposition parties to support the referendum proposals, or abstain, for the decision to go to the budget meeting on 27 February.

27 February: Budget. Council budget for 2014-15 is set. Final decision on whether to freeze or increase council tax will be taken here by all councillors. If an increase above the referendum trigger threshold is set, a referendum would then be held in May.

22 May: Possible Referendum Date. If agreed at the budget meeting in February, this would be the date for a referendum on council tax – the same day as the European elections.

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