Councillor Oldham's letter was published in Postbag in the Manchester Evening News on Wednesday 12th May 2004. This responded to an article in the MEN on Thursday May 6th 2004 entitled Anti-war councils investing in weapons, which focused on leading anti-war protestor and Manchester Council employee Richard Searle. He complained that Greater Manchester Pension Fund (GMPF) was making profits from the Iraq war by having investments in arms companies. Richard Searle said:
"We don't want blood on our pensions. Many people will be unhappy their pensions are making profit out of slaughter."
Peter Morris, Head of Pensions for GMPF was quoted in the article and said:
"We have a policy of not interfering with the decisions of our investment managers. The pension fund does endeavour to be a socially responsible investor."
The following is Councillor Oldham's letter and gives his opinion on ethical investment:
"Tameside council manages the Greater Manchester Pension Fund (GMPF) and, thanks to its quality staff and management, it is the best local government fund in the country.
As chair of the GMPF, I suggest the MEN had the wrong headline on its front page (Anti-war councils investing in weapons< May 6). It should have told how well the fund is performing in this period of pension downturns, and how it is 18% ahead of the stock market. It is the largest pension fund in local government, standing at £6.6bn.
The article criticised us for investing in companies such as British Aerospace. It failed to mention that these major companies directly provide employment for hundreds of people, and also supply work to hundreds of engineering and other companies across Greater Manchester.
Thousands of other workers in other trades supply materials and services to these small firms.
Indeed, councils supply services to these companies but we are an overhead on such firms. The local council tax and business rates paid by these firms and their employees support councils and, thus, their workers pensions.
Greater Manchester also benefits from millions of pounds of investment from the fund, through its property venture fund, which invests in regeneration projects and attracts new jobs to the area whilst maintaining the fund's increasing income.
If some members of the fund have a moral problem then that would involve more than a few companies, and who knows where that could wind up? Take the Co-op Bank, for instance, who, according to your paper, turned away £6.6m of business because of its ethical stance (Ethical stance pays dividends, Business Section, Manchester Evening News, 6th May 2004).
The Co-op is the council's bank. Yet the Co-op finds itself able to deal with the council's business, probably in part because of the complexity of investment issues and the knowledge that the council and the fund, like the bank, try their best in a sensible manner to have ethical investments but have no intention of damaging local jobs in that pursuit.
The fund exists, and has a legal duty, to provide secure pensions, and in so doing it invests in local companies so that those outside have jobs in order to pay for local government.
Those who don't like how the fund runs can attempt to find a better one. I doubt if they ever will. If they have a moral problem, they can give part of their pension to charity. I doubt they ever will.
I am content that the majority of fund members understand the situation and value the fact that they, unlike so many others, are assured of a final-salary based pension from a well-managed and financially sound fund."
Mike Kavanagh, Campaign Against Arms Trade's Manchester Contact, had his reply to Councillor Oldham's letter published in the Manchester Evening News In Postbag on 20th May 2004. His reply was edited but the full text is as follows:
"Councillor Oldham, Executive Leader, Tameside Council and Chair, Greater Manchester Pension Fund (Postbag May 12) is probably right in that he does control the best local government fund for financial performance in the country. But in 2001 a Friends of the Earth survey of the top 100 UK pension funds placed it in the poorest category of performance with regard to taking social, ethical and environmental issues into its investments decisions. For example, the survey said the fund had and still has the same "poor statement" on socially responsible investment (SRI) as part of its legally required Statement of Investment Principles.
In line with this disregard for socially responsible investment, Councillor Oldham defends the fund's investments in British Aerospace, a company that re-named itself BAE Systems some years ago. It is now a leading, majority foreign owned, global arms company and not merely British. Its main customer and key target for sales is the Pentagon. The fund also invests in other arms companies, including in 2002 in US arms companies United Technologies and General Electric. It not only profits from the Iraq war but also from arms exports by these companies to repressive regimes such as Indonesia, to countries in tension or conflict such as India and Pakistan and to countries such as South Africa where unions and churches have argued that money for arms would be better spent on housing, the reduction of poverty and the fight against HIV/Aids.
His fear of job losses and a reduction in council coffers are not sound economic reasons for continued investments in arms companies. The main and continuing contribution to employment for some years by arms companies has been redundancies. For example, BAE Systems in 1990 had over 127,000 UK employees but in 2000 it had only 50,500 and there have been further job losses. A recent Ministry of Defence/University of York report stated that if government subsidies to arms exports were cut by 50%, 49,000 job losses would be offset by 67,000 jobs created in the civil sector thereby resulting in more jobs and greater income for local councils.
As a fund member and member of the Campaign Against Arms Trade, I am appalled that Councillor Oldham believes he speaks for "the majority of fund members". His inability to see the increasing public desire for socially responsible investment is shown by his criticism of the Co-op for its turning away of £6.6m's worth of "unethical" business including that of arms companies. He does not note that 30% of the Co-op's pre-tax profits, up from 24% last year, stems from its ethical stance, which "has a very positive impact on our (the Co-op's) overall profits". The Co-op ignores Councillor Oldham's apparent view that any business can be good business for the fund and benefits from its ethical stance. (Also note the Co-op does not support those local companies supplying the arms trade as the Co-op does not invest in the arms trade. Furthermore the Co-op by refusing £6.6m worth of business thereby means a loss of jobs locally due to its ethical stance. I hear no complaints but rather plaudits from its growing customer base.)
Councillor Oldham portrays, in his letter, a one-sided picture and his fund is oblivious to ethical, social and environmental issues when making decisions. Similar problems led Britain to war in Iraq. He proclaims that the fund is 18 percent ahead of the stock market. Profits from the arms trade are based on death and destruction, repression and underdevelopment. Members of the fund who are public service workers would be happy, I believe, to accept a slightly less advantageous financial position by ending investments in arms companies that form roughly 1.11% of the FSTE index or 0.4% for BAE Systems. Councillor Oldham could then proclaim it as an investment for world peace but I fear this to be an investment that he does not understand or appreciate."