Mick McAteer of the Financial Inclusion Centre and Romi Savova of Pension Bee
I have a high regard for Mick McAteer, someone who’s passion is compassion. Mick fiercely believes in the primacy of the public sector in delivering pensions in the UK and he argues against private initiatives that he sees diluting the impact of state sponsored projects.
His Financial Inclusion Centre mobilizes publicly held money to be put to work for social good.
Financial Inclusion Centre calling on government to issue Social Housing Bonds to raise funds at historically low cost for social housing.
Similarly, let's use NS&I to issue Social Housing Bonds to raise funds – just like post war housebuilding programme https://t.co/TNEL9RyZNI
— Mick McAteer (@MickMcAteer) July 1, 2020
Mick’s view, as the views of others such as Jeannie Drake and Gregg McClymont inform and temper our thinking. Without the interventions of the state, we would follow the dystopian world of unchallenged capitalism which has led to consumers seeing value destroyed.
This position means that even on issues of sustainability, state sponsored initiatives are promoted and private work denigrated
Using more costly private finance (pension funds etc) has a huge cost for society.
– citizens pay more for services
– a transfer of wealth from younger/ poorer to older/ better off
– big fees for big finance
This undermines, not supports, economic and social justice#CIF20 #CIFUK
— Mick McAteer (@MickMcAteer) July 1, 2020
I don’t share this view and though I am not an economist, I see evidence , even in this time of pandemic of the private sector delivering answers to the nation’s problems.
So let’s look at three areas where the private sector is serving the public interest
Macquarie Infrastructure Debt Investment Solutions (MIDIS) has raised £2.7 billion in commitments from predominantly UK corporate pension schemes, local authority pension schemes and insurance companies in the latest round of fundraising for its UK infrastructure debt strategy.
MIDIS raised more than £220 million via its second UK focused pooled fund targeting investments in inflation-linked debt in essential UK infrastructure businesses. A further £2.5 billion of commitments was raised to invest alongside the fund through separately managed accounts.
Many maturing defined benefit pension schemes and insurance companies have increased their exposure to inflation-linked infrastructure debt seeking to better match their inflation-linked liabilities. Investors have also been attracted to the prospect of higher returns than those offered by other assets with inflation protection and the lower risk profile of the asset class when compared to corporate debt
In the middle of June, Legal & General released a report called the power of pensions in which it suggested that the massive flows of defined benefit pension schemes to bulk buy out could release money that can plug the £200bn gap in funding for further infrastructure projects.
There is a third area where the public and private sectors can work together and it is in the gathering and distribution of data sharing.
Increasingly our financial affairs are simplified by ready access to data. The open banking initiative, the general data protection requirement and the development of the Government Gateway have meant that we can gather data about our savings and out tax affairs online and do everything from paying tax-bills to consolidating pensions from our phones.
For this to happen, Government has worked with the private sector to establish protocols and police behavior to ensure that the public can do what they need to do in real time without fear.
But I fear that progress towards a goal of consumer empowerment, where people can look into their pensions and make informed decisions on where they want their money invested and how they want their retirement wages paid to them is under threat.
It is under threat from the well-intentioned but ultimately regressive views of those who want to take the private sector out of the dashboard project. Consumers have already seen promises of pension finding, data aggregation and dashboard delivery slip back year after year.
A long history of state and private sector collaboration
There is a long history of successful projects where state and private sectors have worked together to deliver good. That history continues to this day as is evidenced by the banking activities of McQuairie and the Insurance activities of Legal & General.
It is up to those on the skeptical left, Mick and Jeannie and others, to accept that the aims and aspirations of the private sector. People like Nigel Wilson, L&G’s CEO, of Macquairie’s Alistair Yates (who shared the MIDIS fund with me) and with the data sharers such as Romi Savova of Pension Bee are not financial hooligans but business people who organise wealth to meet the needs of society. Whether this be through private sector investment or the generation of taxable wealth, the business of finance is to mobilise capital.
Those who work in public service must trust these people just as we must respect those who work to protect the public within Government. That is the way it is, has been and will be.