Council stubs out tobacco investments to fund housing

Croydon Council this week moved to cancel all its investments in tobacco, pay-day loan firms and the arms industry, as Labour’s new administration at the Town Hall seeks to ensure a more ethical approach to the way the borough’s affairs are managed.

stubbed out cigaretteIn a 2014 version of “turning swords into ploughshares”, the decision of the pensions committee this week could see a large chunk of Croydon’s £700 million pension fund being re-directed into an innovative local housing fund, with the potential of helping to resolve some of London’s housing shortage while also delivering even better returns on investment than shares in Big Tobacco that has always been so beloved of the Conservatives.

“I am pleased to report that Croydon’s new Labour council has taken the decision to end investment in tobacco shares and to move that part of the fund into an ethical fund which excludes tobacco, thus fulfilling our manifesto pledge,” John Wentworth, councillor for Upper Norwood and chairman of the pensions committee, told Inside Croydon.

“The reasons behind the decision are sound in terms of our commitment to public health and our duty to produce the best returns for our pensioners and fund members.

 John Wentworth: ethically sound investments, with good returns

John Wentworth: ethically sound investments, with good returns

“The ethical fund has produced returns which are equivalent or slightly better than that containing tobacco shares, so we judge there to be no risk to the pension fund. Tobacco shares as a long-term investment are increasingly risky. There is much potential litigation, a declining market and the threat of increasing legislation, such as plain packaging and display restrictions,” Wentworth said.

“Overall, the decision is good for Croydon, setting a clear ethical stance and also good for our pension fund.”

Labour say that the move is part of what they promised would be “a radical approach to overhauling and managing the council’s finances”.

In their election manifesto, Labour suggested that buying or building property in Croydon would be a real alternative, “…in order to keep our much-needed funds within the borough… which could provide a return to the pension fund from a proportion of the sale of private housing while also delivering additional affordable housing”.

With the price of an average home in London reportedly spiralling by £4,000 per month so far this year, putting council funds into property appears to be an example of enlightened self-interest.

Neighbouring Sutton Council, still under LibDem control, this week announced it is to establish a house-building company and, for the first time in 25 years, actually embark on building council houses to address the homes crisis.

“We want to build new council housing and new private housing with a social purpose at its heart,” Jayne McCoy, the chairman of Sutton’s housing committee, said. “It will give people more choice and a greater chance of getting on or moving up the housing ladder.

“By being involved in the development of new homes, we can stipulate that they are only for Sutton residents and make sure there is a focus on the housing we want such as family homes, rather than expensive studio flats.”


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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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4 Responses to Council stubs out tobacco investments to fund housing

  1. I’d love to know Tory Councillor Dudley Mead’s views on this change.

    When this issue last came up, he told the press “I don’t have any problems investing in tobacco. It’s a matter of choice. You don’t have to smoke.” He then elaborated “If we go on being too ethical, you won’t have investments in armaments, you won’t have tobacco, you won’t have anything. “But I think payday loans is going just that little bit too far. I think they are exploiting people in difficulty.”

    So, it’s alright to invest in killing people, but ripping them off is a bit much.

  2. KristianCyc says:

    Really pleased to hear this. Also read today that the world council of churches will pull its investments from fossil fuels. Fossil fuels are an increasingly risky asset, as the value in fossil fuels is based on the large quantities still unmined, for which there is scientific consensus that we cannot burn ~3/4 those resources if we are to avoid catastrophic climate change. So Labour might next look at how it can divest fossil fuels before the market adjusts to price that in.

  3. sed30 says:

    Reblogged this on sed30's Blog and commented:
    Glad to hear it

  4. Pingback: Steps to Divest- London Councils – Fossil Free Newham

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