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Liberal Democrats on Kent County CouncilThe Official Opposition on Kent County Council |
Question to Kent County Council [with answer], 17 May 2012: Investment in Tobacco
May 14, 2012 2:01 PM
Question by Mrs Dean To The Cabinet Member for Finance & Procurement
In view of the transfer to KCC employment of former Health Service employees whose pension schemes would not include investments in tobacco; will the Cabinet Member for Finance & Procurement reconsider KCC's previous stance on the withdrawal of Superannuation Fund investment in tobacco firms?
Answer
I reply to Mrs Dean as a lifetime non-smoker. As she will know as a Council we give full support to encouraging, particularly the young, not to smoke, or if they do, to stop doing so. In this way we support the Government's health objectives.
To the best of my knowledge the NHS Pension Scheme, like all the public sector pension schemes except the Local Government Pension Scheme, is not a funded scheme, it has no investments and the Government funds the pension liabilities out of general tax revenue. This same Tax revenue is highly dependent upon the quite rightly penal rates of tax imposed by the Government on cigarette sales. Does that position make Government any less opposed to smoking than we are, no it doesn't, it just reflects that large organisations in times of enormous financial restraints have to deal with economic reality.
And it is this economic reality which is at the core of the position of the Superannuation Fund Committee, whose sole concern is the well being of the pensioners for whom it is responsible. Unfortunately the reality is that the Tobacco sector in the UK has been by far the best performing sector in the FTSE over the last 20 years, not by a small amount but by a huge amount. The higher returns generated by these tobacco companies are paying for the cost of pensions and to sell them would lead directly to higher employer contribution rates, which means for all of the 300 employing bodies in the scheme that either cuts in services would have to be made to make good the loss, or an increase in council tax.
It is interesting to note, that the areas of investment which have produced the best returns since 1986, in order are tobacco, mining, oil and gas and beverages. In all these sectors there are lobbyists for their control, either for health or environmental reasons. Once you start the process of elimination of investment opportunities, where do you stop?
Nevertheless, we will continue to remain aware of the sensitivities of this issue, and the conflicting responsibilities we have.
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