Pension chief speaks out against Labour plan for Government-backed pot

Pension chief speaks out against Labour plan that could see pension funds obligated to spend billions in Government-backed pot

• The Labour plan would see the launch of a £50 billion fund to invest in the UK
• Schroders CEO Peter Harrison said fund managers should not be ‘inhibited’ 

The boss of investment giant Schroders has warned against meddling following a Labour-backed proposal that could lead to pension funds being told how they must spend billions of pounds.

Chief executive Peter Harrison said fund managers should not be ‘inhibited’ in how they select investments on behalf of retirement fund savers.

The comments come amid signs of a backlash among some in the City over plans – supported by Shadow chancellor Rachel Reeves – for a £50billion Future Growth Fund. It could see defined contribution pension schemes divert 5 per cent of their assets into it.

Ms Reeves has said she is open to the idea but believes fundraising goals could be met on a voluntary basis. One industry figure has described it as a ‘slippery slope’.

And Yvonne Braun, director of long-term savings policy at industry body the Association of British Insurers, said that while it welcomed the focus on unlocking the power of savings to boost growth, savers’ interests should be ‘at the heart of investment decisions’. 

The Labour-backed plans could see defined benefit pension schemes divert 5 per cent of their assets into a government-backed fund (File photo: Labour party leader Sir Keir Starmer)

STARMER’S SINISTER LAND GRAB

Groups representing landowners yesterday criticised plans announced by Labour to force the sale of plots at lower prices to local authorities for housebuilding.

The proposal by Sir Keir Starmer, pictured, would enable councils to compulsory purchase land without adding ‘hope value’, the premium for potential planning permissions.

Sarah Lee of the Countryside Alliance campaign group, said: ‘There’s no doubt we need more housing, but there is something incredibly sinister about forcing people to sell off land below market value.’ 

Mark Tufnell of the Country Land and Business Association, said developers would continue to cash in, even if ‘hard-pressed farmers were forced to sell land for a fraction of its potential value’.

Labour sources insisted the proposal would not involve paying below market value. Last year the Government also began a consultation into capping or abolishing ‘hope value’.

A key concern is that fund managers should act in line with their fiduciary duty – for the benefit of those who entrust their money with them – rather than be influenced by other reasons to invest.

Mr Harrison, writing in the Daily Telegraph, said that ‘we need a change in our whole investment culture’ to spare Britain from falling behind globally.

He did not comment directly on Labour’s plans. 

But he said of pension savers: ‘We need to ensure their pension managers are not inhibited in selecting these investments on their behalf.’ 

Schroders, the company Mr Harrison leads, is responsible for managing around £750billion of assets. 

He is also part of a City taskforce aiming to increase the proportion of Britain’s £3.4trillion pensions savings that is ploughed into boosting growth.

The idea is to help Britain’s promising start-ups grow bigger without having to rely so heavily on foreign money or move abroad. 

At the same time, it is argued, UK investors would benefit by being able to be more exposed to such growth opportunities.

But the Future Growth Fund plan from Nicholas Lyons, lord mayor of the City of London, has drawn mixed responses.

Aviva chief executive Amanda Blanc said: ‘We’re big supporters of investing in the UK… However, we are not supportive of a mandated participation.

‘We do not feel that creating a complex and bureaucratic fund… is the right way forward at all.’

Sir Keir ‘in pocket of rail union militants’ 

By David Churchill Chief Political Correspondent 

Transport SecretaryMark Harper (pictured) accused Sir Keir Starmer of being ‘in the pocket’ of the rail unions

The Transport Secretary last night accused Sir Keir Starmer of being ‘in the pocket’ of the rail union barons behind this week’s crippling strikes.

Mark Harper hit out at the Labour leader for accepting thousands from train drivers’ union Aslef despite its misery-inducing strike campaign.

Labour has banked more than £25,000 from Aslef since it launched industrial action last year, and more than £268,000 since 2018.

Aslef members will strike today and on Saturday – hitting the Epsom Derby and the FA Cup final – as the pay dispute drags on. The RMT union is striking on Friday.

Both unions have refused to put recent offers to a vote.

Mr Harper said last night: ‘Labour’s repeated failures to condemn these strikes are no surprise given they continue to be in the pockets of those very union bosses who are hell-bent on causing disruption on our rail network.’

Labour transport spokesman Louise Haigh said ministers have ‘failed to lift a finger for months’ on negotiations.

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