A finance trade body has criticised Michael Gove’s plan to use £16bn in public sector pension funds for levelling up.
The Chartered Institute of Public Finance and Accountancy (CIPFA) said the government should drop its instruction to the Local Government Pension Scheme (LGPS) to invest more assets in “projects which support local areas”, as laid out in its Levelling Up white paper.
The long-awaited policy paper said the LGPS has assets of £330bn, but “only a tiny fraction of these funds are currently allocated to local projects”.
It added that if all LGPS funds allocated 5% to local projects such as housing and infrastructure, this would unlock £16bn in new investment.
Rob Whiteman, chief executive of CIPFA, said: “The key workers who pay into the LGPS should not have their pensions used to pay for government priorities.
“It is important that proper funding is made available for levelling up schemes that doesn’t risk pressures to the pension scheme that would fall on the council tax payer.”
CIPFA has previously fought for restrictions to local authority borrowing for commercial property purchases and updates to the Prudential Code to address risky debt-for-yield investments.
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