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Government floats £45bn pension-backed housing fund

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The government has proposed doubling the amount of money local authority pension funds can invest in housing and infrastructure

Communities Secretary Eric Pickles has announced plans to allow council pension funds to invest up to 30 per cent of their assets in vital infrastructure such as housing.

Currently the limit is 15 per cent which is equivalent to £22.5 billion.

Pickles said: ‘Unlocking Town Hall pension pots so they can be used to invest in vital infrastructure projects is a common sense decision that will help this country complete on a global scale and get Britain building.

‘By lifting the restrictions controlling local pension investments councils could pump a further £22 billion directly into job creating infrastructure projects that will boost our economy.

‘This is potentially a huge development and investment opportunity we simply cannot afford to ignore that also allows us to maintain long-term value for money for the taxpayer.’

The policy announcement comes shortly after a major RIBA report claimed 300,000 homes could be completed each year without spending a penny of government money.

The RIBA report had advocated a more modest, £10 billion local housing development fund created by pooling 15 per cent of the largest local authorities’ pension fund assets.

RIBA chief executive Harry Rich said: ‘This kind of investment of local government pension fund assets in local housing was a key recommendations of the recent report by the  Future Homes Commission that the RIBA set up.  I am therefore delighted that the Government is following-through on this innovative idea.’

He added: ‘There is a huge opportunity for local authorities to become the drivers behind the next generation of new homes across the country by pooling parts of the largest pension funds into one superfund.  As the Future Homes Commission identified in their recent report,  this approach can only work if the homes that are built are well designed and in communities where people want to live and if the fund trustees can be sure of making a proper return on their investment.’

 

A consultation on the proposed policy will close on 18 December.

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