Islington Council left red faced after an investment of £85,000 in payday loan companies emerges – days after declaring war on them
- Credit: Archant
Finance chiefs were left red faced last week after it emerged that the town hall has invested almost £85,000 in the same “legal loan sharks” they had declared war on just days before.
Islington Council has poured £84,785 - some of which may be taxpayers’ cash - into Wonga, Zestcash, Kestrel Holdings and Brighthouse – all of which offer controversial payday loans – in a bid to generate cash for its pension pot.
The council publicly opposes short-term loan companies and last week unleashed a new policy banning them from advertising on council-owned billboards and even blocked their websites from town hall computers.
The investments were uncovered by a written question from Cllr John Gilbert, the opposition Lib Dem group’s finance spokesman – although the ruling Labour group said it had already asked council officers verbally.
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Cllr Terry Stacy, leader of the Lib Dems, said: “This is total hypocrisy on behalf of a Labour council. They started the fairness commission and have put hundreds of thousands of pounds in credit unions, while at the same time investing money in payday loan companies like Wonga.
“If they knew this was going on then it’s sneaky, and if they didn’t, then its incompetent.”
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But Richard Watts, Islington Council’s executive members for finance, said the investments had been made by fund managers and the council had no idea where the money had been placed.
The situation recalls that of the Church of England, which was found to have invested in payloan companies a few days after the Archbishop of Canterbury, Justin Welby, spoke out against them.
Cllr Watts said: “We asked the question, in light of what happened to the Archbishop of Canterbury, whether we had any money invested in these companies and it turns out we did. It’s a small amount in the scale of our pension fund and it was invested by an independent fund manager, so we didn’t know it had happened.
“We’re not try to duck responsibility. It probably shouldn’t have happened and we hold our hands up. But the important thing is we are doing something about it and we have asked the fund managers to get the investments out.”
It’s the second time in little more than 12 months that the council has got itself into hot water over its pension investments.
Last July it emerged that it had sunk £11million into tobacco firms while it was denouncing the evils of smoking.
Cllr Watts said: “Its a balance, because we have a responsibility to do the right thing morally, but we also need to do the right thing by our pensioners and the taxpayer, who would have to bail out a pension black hole.
“But we do need to check every so often and things like this are a timely reminder of why.”
The council’s pension fund contains a total of £918 million.