Warning council faces ‘BHS-style’ pensions crisis
Tories slam city leader for blocking £65m payment to fund relied upon by 300,000 public sector staff
THE Labour leader of Birmingham City Council shows a “worrying lack of understanding” after refusing to sign-off a top-up payment to the region’s public sector pension fund, the Conserva- tive opposition has warned. The criticism of Councillor John Clancy by city Tory leader Robert Alden followed accusations of a looming ‘BHS-style’ pensions deficit scandal for 300,000 public sector workers past and present across the region.
The council is at loggerheads over a £65 million payment to the West Midlands Pension Fund (WMPF), which has assets of £11.6 billion. Mr Clancy revealed last month that he would not hand over the money next year, claiming the fund’s deficit was not as serious as reported and that too much money had been wasted on investment fees.
BIRMINGHAM City Council is risking a BHS-sized pension scandal if it refuses to help plug a deficit in the fund relied upon by almost 300,000 former and current council workers.
That was the stark warning from the Conservative leader of the opposition on the authority, Robert Alden.
It comes after the Labour leader announced he would not hand over £65 million to the West Midlands Pension Fund (WMPF) next year, claiming the deficit was not as serious as reported, that money was wasted on City-based investment managers, and that the cash would be better spent on services.
The fund has assets of £11.6 billion but is asking the seven West Midland councils to plough in more than £100 million extra next year.
Nearly 300,000 current and former council staff from Birmingham, Coventry, Solihull, Walsall, Dudley, Wolverhampton and Sandwell are members of the scheme.
Council leader John Clancy believes council pension funds should be used to invest in local housing and development to help fill budget black holes due to austerity measures.
BHS collapsed this summer with a £571 million pension deficit and disgraced former owner Sir Philip Green is now being pursued for the missing money.
But Cllr Clancy believes he can make significant savings by cutting the council pension fund contributions as well as a renegotiation of the authority’s expensive Service Birmingham IT contact with Capita.
That provoked harsh criticism from the Pension Fund which claimed he did not speak for the wider political leadership of the West Midlands.
In a letter sent to all 120 Birmingham councillors, fund chairman and Wolverhampton councillor Ian Brookfield and chief executive Keith Ireland said they wanted to correct several “inaccuracies”.
They state: “Whilst we note the comments made by your leader, his views don’t represent the wider political leadership of the West Midlands. No other authority is refusing to pay employer contributions to this statutory scheme.”
It suggests that councils have been asked for top-ups because they have failed to meet their pension obligations in the past and that the £65 million contribution due from Birmingham in 2017 had been known about for several years.
“If a council failed to plan for known commitments, then it’s hard to see how the WMPF can be blamed,” the letter said.
They also challenged the claim that the management fees were too high, saying the fund’s charges were 20 per cent lower than average and stated that the 5.6 per cent return on investment was also above average.
Opposition Conservative group leader Robert Alden said Cllr Clancy showed a “worrying lack of understanding” of the pension and that the council had ignored warnings over the past three years about the deficit.
He said: “The council’s failure to prepare is systematic of the mistakes being made under Cllr Clancy’s leadership. To suggest pension fund returns should be the same as a single cherry-picked fund shows a worrying lack of understanding about how pensions work and would worry any accountant.
“In refusing to pay contributions staff pensions are owed, no wonder some are comparing Cllr Clancy’s dealings to BHS. Our staff and taxpayers deserve better.”
But a defiant Cllr Clancy stood by his original comments.
He said: “I have made my views about the performance of the West Midlands Pension Fund very clear in the past and will continue to do so on every possible occasion.
“Hard-pressed citizens and tax payers in Birmingham are being asked to find £65 million a year to close a projected deficit in the fund, but at the same time the fund is prepared to pay extraordinary sums to City-based investment managers.
“Last year the fund rewarded investment managers with a payment of £86.5 million. And the same managers were even handed a £29 million bonus.
“Council tax payers have every right to know why such large sums of money are being poured into the hands of investment managers rather than being used to deliver vital public services.”
To suggest pension fund returns should be the same as a single cherry-picked fund shows a worrying lack of understanding Conservative group leader Robert Alden
BIRMINGHAM’S German Christmas Market will be smaller this year. Despite this being the 50th anniversary of Birmingham’s twinning partnership with Frankfurt, where most of the stallholders come from, the market will be much smaller than usual.
Earlier indications from the market’s director Kurt Stroscher were that the market would be the same size as in recent years, with 180 stalls. But it has now been confirmed that there will be just 140 stalls this year – because of the Paradise Circus building work in the city centre.
Christmas Craft Market stallholders in Centenary Square previously complained they had been cut off from the rest of the market, so the council set up a route through Fletchers Walk to connect the two and supervise the flow of visitors between both parts of the festive attraction. That will continue this year.
The German Market will, however, be extending in one other sense. For the first time, it will stay open in the city over Christmas, running from November 17 to December 29, only being closed on Christmas Day itself.