To receive any questions from members of the public which have been submitted in advance of the meeting in accordance with the cabinet procedure rules. The deadline for the receipt of public questions is midnight Wednesday 15 March 2017.
Minutes:
Public Question from Mr Adam McGibbon
As a Southwark resident, I welcome the ground-breaking commitment from Southwark Council to divest the council’s funds from fossil fuels. I know that I and many others are grateful. Will the council tell us when it intends to bring forward a timetable to make this happen?
Response from Cabinet Member for Finance, Modernisation and Performance
Southwark presented a draft Investment Strategy Statement (ISS) for the Pension Fund to the Pensions Advisory Panel, of which I am the chair, on 7 March 2017. The ISS set out our firm commitment, to which you refer, regarding the approach to Fund investments in fossil fuels. Following this Pensions Advisory Panel meeting and positive discussions between Southwark and Client Earth; a final version of the ISS has been published on our website.
This is available at: http://www.2.southwark.gov.uk/info/200175/pensions/1503/pension_fund
A key paragraph on our approach to responsible investment from the ISS is shown below.
“The Fund recognises the growing financial risks associated with investment in traditional energy sources and is fully committed to the continued reduction in exposure to fossil fuel. The Fund commits to transferring over time any current investments in these traditional energy sources in a way that is both structured and affordable and also meets the Fund’s fiduciary duties.”
The Fund, in conjunction with our investment advisors, is in the early stages of a thorough review of the current investment management strategy; the initial results of this review will be taken to the Pensions Advisory Panel in June 2017. This report will set out a timetable for reducing the carbon exposure of the fund. The investment review is being undertaken on the basis that changes to the strategy must meet our environmental social and governance policy, outlined in the ISS, and the commitment to ultimately eliminate investment in fossil fuels.
The transition away from fossil fuel investments must be realised through a structured and evidenced based strategy that also complies with the clear fiduciary duties of the Fund. There is a wide variety of differing investment options available to meet our commitment and we must consider all such possibilities. In doing so we must also ensure that the overall investment management strategy of the Fund is best placed to meet the key objectives and risks associated in the management of a defined benefit pension fund with investment assets and pension liabilities of c£1.5bn. As with any investment decision, Southwark will produce a full and proper business case to determine the most appropriate course of action that ensures value for money for our members and residents.
We also recognise the important of being open and transparent with our stakeholders as to our progress made and will ensure that information taken to the Pensions Advisory Panel for our ongoing investment review will be made available on our website:
http://www.2.southwark.gov.uk/info/200175/pensions/1503/pension_fund
As a part of this review process we have already met with our two existing passive equity fund managers to outline our new ISS, to hear about their existing investment funds (such as the LGIM Future World Fund) and to hear their ideas about the kinds of investment options that could be developed.
Whilst we are progressing with the investment strategy review, the Fund has continued to play a key role within the Local Authority Pension Fund Forum (LAPFF) in order to utilise the engagement potential of 71 other Local Authority partners to pressure companies to adopt best practice in governance and responsible business practices.
Southwark is a shareholder in the London Collective Investment Vehicle (CIV) which was created to pool investment assets of the London based Local Government Pension Funds. I attended a CIV workshop specifically on ethical investment and stewardship and was pleased that a number of Funds are planning to adopt a similar approach to our own. We have in recent weeks sought to collaborate with other local authority partners in the pursuit of responsible investment strategies and opportunities.
We are proud to be at the forefront of this important and necessary change in investment philosophy both in London and nationally, and will seek to lead investment debate in this direction. We recognise that such a change is not possible overnight but we will continue unwavering in our ambition to reduce and ultimately eliminate Southwark’s exposure to fossil fuel investments, and look forward to sharing our success with our residents and Fund membership.
Supplemental question
Adam McGibbon asked if the initial results report of the review of the current investment management, due to be considered by the Pensions Advisory Panel in June 2017, would also be seen by the Local Pensions Board.
Councillor Fiona Colley indicated that as the chair of the Local Pensions Board would be invited to the meeting of the Pensions Advisory Panel in June, and that due to the fact that part of the role of the Local Pensions Board was to scrutinise the work of the Panel, they would be able to examine the report further should they so wish.
Public Question from Judi Bos
The judge at the judicial review (JR) hearing (January) stated the council should ameliorate leaseholders’ situations. Why then has the non-binding arbitration (agreed at cabinet 20 September 2016) been delayed pending the JR (May) and why has demolition started, prejudicing the outcome of the further inquiry the council seeks through the JR?
Response from Cabinet Member for Regeneration and Homes
At the permission hearing on 18 January 2017, the council was granted leave to pursue an application for judicial review of the Secretary of State’s decision not to confirm the council’s Compulsory Purchase Order for the Aylesbury Phases 1b/1c. A key issue with regard leaseholders is reaching fair valuation in line with the CPO compensation code, and supporting resident leaseholders to stay in the area through a range of re-housing options depending on individuals’ circumstances. In granting the council leave to pursue its application, Mr Justice Collins also recommended further discussions between the council and the Secretary of State regarding what the council can do to ameliorate the situation for resident leaseholders in the absence of further specific guidance on this. The hearing into the council’s challenge has been set for 9 May. The council is continuing to negotiate with remaining leaseholders to acquire the outstanding properties by agreement. There are now just 4 resident and 3 non-resident leasehold interests remaining within Phase 1b/1c.
Non-binding arbitration is one of a number of alternative dispute resolution mechanisms available to Aylesbury leaseholders, who agree in principle to sell back their property to the council but are in dispute with the council over the value of their property, having reached an impasse following extensive negotiations. The principle of non-binding arbitration was agreed at Cabinet for leaseholders in Phase 2 onwards on 7 June 2016, and was later extended by cabinet on 20 September 2016 to leaseholders in Phase 1b/1c. It is, therefore, currently available to all Aylesbury leaseholders, where the individuals’ cases permit (for example, leaseholders would need to be in full, undisputed ownership of their property, or have the express agreement of all parties with an interest in the property).
On 20 September 2016, Cabinet approved a range of priority work streams to maintain momentum on the regeneration of the estate. These included the commencement of partial site demolition of the First Development Site, comprising demolition of four existing vacant blocks at 69 - 76, 77 - 105 and 106 - 119 Chartridge and 42 - 256 Bradenham, with provisions for this to be extended to include further blocks within the FDS, as and when these become vacant. The council’s position is that refurbishment of the estate was not a viable option, which was also supported by both the Planning Inspector and the Secretary of State. Confirmation of the CPO is not required for the council to undertake demolition of these blocks, and Cabinet took this decision in the knowledge that a process to judicially review the Secretary of State’s decision would proceed in parallel to these works. The demolition contract was entered into in November 2016, and the works are now well underway on site with 69-76 Chartridge already demolished to slab level.
Supplemental question
Judi Bos asked for further information regarding the non-binding arbitration, and expressed concerns that demolition of ramps had already started in some places, and that disabled residents would still require access, and as such, temporary ramps would need to be put in place, incurring a further cost that could have been avoided.
Councillor Mark Williams responded that he would need to look into the issues that had been raised in further detail and supply a written response outside of the meeting, and made assurances that the council would continue to work with residents on a number of issues as well as those relating to the non-binding arbitration.