Both the FT and the Guardian report this morning that Rachel Reeves is considering a new way of looking at capital expenditure by Government, not as debt- but as investment.

Listeners to Pension PlayPen podcasts and coffee mornings had prior warning. Con Keating told us last week that it was obvious that things had to change ; he has since added.

The scaremongers saying the gilt market will take fright (or have) are smoking dope – gilts are being driven by US rates

Here is the Guardian on what  Reeves is pondering

One option for Reeves is to change the debt measurement to account for the value of the assets the government holds, such as roads, schools and hospitals. Measuring the net worth or the net financial liabilities held by the government could give the chancellor room to borrow as much as £50bn more than currently planned, although some officials worry it would spark a bond market sell-off, with the Treasury left to pick up the bill.

It is what pension schemes including USS are calling for, here is the FT

The group of pension investors including Australia’s IFM and the UK’s Universities Superannuation Scheme called on Reeves to redefine the key debt measure in her Budget rules.

They said the UK’s “public sector net debt” measure should be changed to recognise the financial value of assets created by government spending on infrastructure and green energy projects.

This may be a rare occasion where the needs of Government and pension funds are fully aligned. Pension Funds want the long term income flows that come from owning infrastructure and Government wants the investment of pension funds to rebuild Britain’s sorry road, rail and healthcare (to name but three areas of infrastructure we all worry about)

It makes a lot of sense to co-invest. The Government identifies the need and issues an RFP to pension funds, pension funds co-invest, knowing that neither they nor the Government are going away.

I’m pleased to see Gregg McClymont at the front and centre of this. His old buddy is now in the DWP working with Emma Reynolds and we could see some joined up thinking as a result.

I’m pleased to see USS on the front foot and I hope that they will join forces with the CIOs of the USS pools and those of the large multi employer DB and DC schemes that include not just the master trusts but schemes such as Church of England and RailPen.  The multi-employer CDC initiative could be primed with access to these kind of investments if CDC and DB can be hitched under a common investment agreement.

These are the kind of initiatives we need from the private sector and from a progressive Treasury looking to unlock doors to the benefit and not the detriment of pensioners.

There is nothing good about austerity, there is much to say for Government investing in the economy. The accounting method must change from glass half-empty to half-full and we must see the topping up of the glass as investment and not debt.

Frank Carson used to say it was the way you sell them. Government needs to change the narrative from fiscal lockdown to growth and pensions can help them to do that.

I warmly welcome news from both sides and hope it will result in a budget at the end of the month that sets hearts racing , rather than just “wallets emptying”.