Tobacco...the right debate in the wrong context.

I am not a great enthusiast for tobacco; although having never smoked I am conscious that I have little idea of how difficult it is to give up the habit.  With our relatively new responsibility for Public Health at the County Council, it is our duty to persuade our residents not to smoke and, although there is an element of the ‘nanny state’ about it all, there is no doubt, firstly, that smoking is a proved killer that ruins lives; and secondly that smoking related disease costs the taxpayer a good deal of money.

I think that a debate about how we persuade people to stop smoking is one worth having. I was disappointed however when the Labour Group at the County, aided and abetted by a good number of our own persuasion, decided to move a motion at last week’s Council Meeting aiming to prevent the Suffolk Pension Fund from investing in Tobacco shares.   I felt that this was the right debate in the wrong context.

The Suffolk Pension Fund is managed by the Pension Fund Committee. The Committee operates independently of the council and in fact cannot be legally bound to take instructions from it. Moreover, to my mind its only aim should be to get the best possible return for our pensioners.  I know from my City experience that picking the best balance of investments is a complex and difficult business without taking into account political, or indeed moral, encouragement from the sidelines.  If what a company does is legal, and selling cigarettes is not a crime as yet, then it should be regarded as a valid investment.

There are many arguments for maintaining this position. 

The most obvious one is the ‘where do you draw the line?’ question.  If you prohibit investment in tobacco, what about alcohol: (Green King and Adnams!), sugar (British Sugar!), and the list goes on.  During the council debate it was quite fun to see proponents of the motion struggling to justify local company Adnams as an investment in the light of their sale of alcopops to the detriment of the night time economy in our market towns.  

Secondly there are good technical reasons that make it risky to limit the choice of investments available to the Trustees.  Furthermore it is unlikely that Suffolk’s refusal to purchase the shares of tobacco companies will in any way alter their financial strength, or indeed the progress of their share prices, which are far more likely to be affected by a class action taken by bereaved relatives of deceased smokers.  These are increasingly likely and will, I am sure, eventually bring about the industry’s demise.

I was one of the ‘brave’ few who voted against the motion.  I suppose that for most people appearing to side with the tobacco companies and their evil empire was a step too far.  To me however the attempt to link the pension fund’s activities with what is essentially a moral issue was unnecessary and misplaced. 

 

It should be remembered that, because the scheme is a defined benefit scheme, our pensioners are legally entitled to their pension in any event.   The person who picks up the tab for fund underperformance is the employer and indirectly this means all the residents of Suffolk. 

Suffolk County Council already pays some £12m per annum out of its revenue budget to make up for a shortfall in the pension fund.  This is around 45% of the entire annual Public Health Budget, and would pay for quite a few stop smoking campaigns!