July 28 2014 Latest news:
By Marijke Cox, Reporter
Thursday, May 17, 2012
Council invests millions in tobacco companies as part of its pension fund portfolio
Finance chiefs at Kent County Council will review the decision to invest £24 million in tobacco firms after coming under fire over its duty to protect the public’s health.
It follows calls from Lib Dem leader Cllr Trudy Dean for the council to withdraw the controversial superannuation fund investment, which is part of KCC’s pension fund portfolio.
The council invested £24m in firms including Philip Morris, Imperial Tobacco, Altria Group and Japan Tobacco, amounting to one per cent of all its investments.
KCC argues it brings in the highest return and to remove that would leave a huge funding gap resulting in the possibility of increased council tax or cuts to services.
But Cllr Dean argued that most people would not want their pension in something that kills people.
“I think KCC has a responsibility to invest responsibly. I think most people would react badly when told about this type of investment,” she said.
“We spend £360m a year in ‘clearing up’ the results of people smoking. About £250m is on lost days of work with people having to be off due to smoking related diseases.
“About £70m is NHS costs. Taxpayers are footing the bill every year for this while KCC is pumping in £24m in investment.
“It’s like a fire brigade pouring petrol on a fire while trying to put it out.”
Cllr Dean said a draft report by the Public Health Unit warned the investment could be “incompatible” with KCC’s duty to help protect the health of people in Kent.
She said that during Thursday’s council meeting leader of KCC Cllr Paul Carter had agreed to review the investment later this year.
“I’m not confident, but I’m determined to push for the money to instead be invested in ethical companies,” she said.
But finance member Cllr John Simmonds said tobacco had continued to deliver a high return and to remove that would leave a huge gap in the pension fund.
“This is a huge organisation and we have to deal with the economic reality. This investment generates £5m,” he said.
“I’m a non-smoker and I don’t like smoking, but the pension fund is independent from political control and looks for the best possible return on investments, and tobacco does get a stunningly good return and it’s legal.”
Cllr Simmonds said removing the investment would mean having to find a substitute, warning it could lead to cuts to services or an increase in council tax.
He admitted it was a difficult ethical balance, but stressed that the pension fund needed to be preserved.
“If we start a process of elimination, we would have to look to other investments too. The next ones with the highest return are oil and gas, minerals and booze,” he said.
“For the time being it is responsible to stay as we are.”