Rachel

Keir Starmer

If Government were simply to raise Gilts and borrow money from the market , it would endanger one of its promises to the nation, not to get Britain into more debt. So it needs help and needs vehicles that can channel capital from outside the Treasury to invest in the projects that the Government wants started or grown.

Reeves in the first two years of this Government made two tweaks to the fiscal rules that make it possible for Healey and Burnham to use PuFins to relate Britain.

We were huffin’, now we’re PuFin

PuFins are a set of state-owned, taxpayer-funded institutions that use public money to provide loans, equity investments and guarantees to the private sector.

The key ones are the NWF — a supporter of projects such as ports, wind farms and reservoirs — and the British Business Bank, which lends to smaller companies. Others include the National Housing Bank and UK Export Finance, which supports companies selling abroad.

On this blog, I have carried several contributions from economists and financiers who see the 2 trillion pounds in pensions as a source of capital that can do what the Government has limited space to do.

Healey told Treasury officials last week that a central goal would be to make

“the fullest possible use of public investment within our fiscal framework”

and to

“take the fullest advantage of private and international investment”,

while meeting the UK’s budget rules with a buffer against uncertainty.

It is not surprising that pensions have been so cautious about investing in our home economy, it’s CEO and CFO – Starmer and  have not been taking risks but setting up conditions where others could. It now looks as if another CEO – Andy Burnham and CFO (John Healey) – will make the investment, capture growth and prosper.

His remarks point to a desire to make greater use of a group of government-owned public financial institutions — or PuFins — and to prompt them to work more flexibly with mayors.

The popular groan of trustees and CIOs of our large pension schemes has been that there has not been opportunity to invest in the home economy (other than through our stock markets).

But with the apparatus in place, with the fiscal rules tweaked so that a partnership can work, it would be good to see the large DB and now DC schemes investing without hesitancy. The investment advantage of CDC will be that for them progress will be quick, they should be a reorganisation of DC money without the constrains of having to de-risk.

There has been a lot of huffin’ from pension schemes, now there are PuFins to help do the work.