£30m of council pension fund in tobacco shares
Tobacco barons have been handed more than £30million in public money by town hall chiefs across Tyne and Wear – despite high-profile efforts to combat smoking in the region.
The Tyne and Wear Pension Fund – which is managed by South Tyneside Council – has £31.133million invested in British American Tobacco (BAT).
This is despite the efforts of council chiefs all over the region to cut the number of smokers – and their cost to health services and local authorities.
The pension fund covers retirement schemes for employees of Sunderland City Council, South Tyneside Council, Gateshead Council, Newcastle City Council and North Tyneside Council, as well as other organisations, and – as of March 31 – was worth £8.24billion.
The choice of investments was originally revealed by a series of freedom of information requests submitted by The Guardian, which claimed local authorities throughout the country had invested more than £1.7billion with various tobacco firms through their pension funds.
South Tyneside is legally responsible for the fund and also nominates eight out of the 18 members of the committee which runs it.
A spokesperson for the Tyne and Wear Local Government Pension Fund said ‘social, environmental and ethical’ issues were considered when taking decisions.
But Sunderland City Council’s Conservative opposition leader Coun Robert Oliver called the investment inappropriate in light of efforts to curb smoking in the North East, and said that councils should ‘lead by example’.
He said: “I think that the pension fund should sell the shares in BAT, which they are now able to do.
“They’re able to do that for ethical reasons, so long as the fund doesn’t lose out. It is totally wrong that anything is done to profit from this in the public sector.”
Sunderland City Council leader Graeme Miller said: “These decisions are taken in light of the fund’s approved Investment Strategy Statement so Sunderland cannot influence specific investment decisions.
“The council, via its appointed representatives to the Pension Fund, will input into future changes to the Investment Strategy Statement when it is next due for review.”
South Tyneside Council leader, Coun Iain Malcolm said: “The Pension Fund is a long-term investor charged with looking after the interests of over 150 employers, council tax payers and beneficiaries of the Pension Fund, over many decades into the future.
“The Pension Fund is under a duty to secure the best investment returns as possible, consistent with an acceptable level of risk.
“The Pension Fund does, of course, value social issues and has set out its approach to so-called ‘Social, Economic and Corporate Governance’ considerations in its Investment Strategy Statement.
“However, the legal position means that financial considerations must be prioritised over non-financial considerations.”