Proposed tobacco investment ban declared illegal in Suffolk
- Credit: PA
Suffolk County Council is set to maintain its £33.5million pension fund investment in tobacco firms, despite widespread criticism.
The authority has come under pressure to scrap the investment since it took responsibility for promoting public health in 2012.
Politicians backed plans last year to remove the funds from tobacco shares because of the conflict of interest - but a top lawyer has now said it would be illegal.
The legal advice comes just weeks after the county council launched a major initiative to reduce the number of smokers in Suffolk.
The leaders of both major groups on the council are disappointed by the advice. Health Minister and local MP Dr Dan Poulter urged the county to seek a second opinion.
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Dr Poulter said: “(To me) It is wrong that the county council, which has a duty to promote public health, is still investing pension money in tobacco companies.
“So far as this decision is concerned, (I think) it should seek a second opinion to see how such a policy could be legally framed.”
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Dr Poulter will be writing to the committee asking it to reconsider the officers’ recommendation.
The Suffolk Pension Fund – which handles the pensions of employees of other councils and public bodies as well as the county council itself – is set to reject an overwhelming call by county councillors to sell its shares in tobacco companies.
At present the fund holds £33.5m of shares in tobacco companies, about 1.6% of its total value.
Last July the county council voted by 49 votes to 10 ask the pension fund to find alternative investments to its tobacco holdings. It consulted with the government before drawing up the motion to ensure it was appropriate.
The pension fund committee agreed to take advice about the proposal, and asked Nigel Giffin QC for advice about whether it would be possible to disinvest from tobacco companies while fulfilling its legal duty to secure the best possible return on the money it invests.
Mr Giffin said the balance of the fund’s investment was crucial in maximising its earnings, and that to disinvest in tobacco would be illegal because the fund would be failing in its “fiduciary duty.”
The county’s pension fund group is to meet next week and is being asked to recommend no change to investment strategy to exclude tobacco companies from its portfolio.
The divestment motion was proposed by Labour group leader Sandy Martin, who said he was frustrated by the legal advice.
Council leader Mark Bee was also disappointed – he spoke in favour of disinvestment at last July’s meeting – but felt the issue was now something that needed to be addressed by the government.
He said that officials had done all they could, but added: “We have to maximise the investment for the pension fund and that over-rules everything, according to this advice.
“I am not happy about that, but we now have to take this up with the government and see what changes can be made so we can go ahead with what the overwhelming majority of councillors want.”