Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, the Bill to which this House is being asked to give a Second Reading today is, in my view, both ill-timed and ill-conceived. It singles out Israel for special protection over any other country in the world in a remarkably discriminatory way—positive for Israel, negative for everywhere else—which, important though the preservation of Israel’s security and democracy undoubtedly is, can hardly be justified. Is it really that much more important to us than the countries of the Commonwealth?

The Bill is ill-timed in the sense that, while many will assert and defend Israel’s right to act militarily in self-defence in response to the onslaught unleashed against it by Hamas on 7 October, as does the present speaker, this is hardly the appropriate moment to bring forward a piece of legislation which appears to give Israel a blank cheque for whatever it does in Gaza and the other Occupied Territories.

It is ill-conceived because it would appear also to override some of the formal international positions taken by successive British Governments with respect to the West Bank and the settlements established there, to the Golan Heights and to east Jerusalem. Can the Minister confirm whether it remains the Government’s position, as set out in paragraph 5 of UN Security Council Resolution 2334, for which the UK voted, that the status of these territories can be determined only by international negotiations and agreement between the parties to the dispute between Israel and Palestine—and not, as is the view of the present Israeli Government, by the unilateral action of Israel—and that those settlements are illegal and that the assertion of Israeli sovereignty over the Golan Heights and east Jerusalem has no basis in international law? If so, and given that that view is shared by the vast majority of the members of the UN, why is that distinction not recognised in the present Bill? Why, indeed, is it not recognised as being an obligation on public bodies in this country, just as they are not permitted—rightly, in the view of the present speaker—to try to impose their own trade sanctions on Israel?

Let us reflect for a moment on where we would have stood in the early 1990s with respect to investments in apartheid South Africa, had a Bill of the sort proposed been on the statute book. I listened with great interest to the reference made by the noble Lord, Lord Hain, to that issue. Do we really wish to tie the hands of public bodies in matters of investment, should such breaches of customary international law occur in the future?

The objections I have referred to relate to the international dimensions of this Bill, which seem far-reaching and undeniable. How do they respect the Government’s championing of the rules-based international order, of which the provisions relating to the status of the territories concerned are surely an integral part?

Other considerations, referred to by other noble Lords, such as whether it makes any sense to deprive public bodies of powers they would appear to possess, are matters for others with more expertise than me on such aspects of the legislation. The negative implications for the autonomy and freedom of speech of universities has been referred to by noble Lords and must be a matter of real concern.

The noble Lord, Lord Willetts, did us a favour by reading out the relevant passage from his party’s 2019 manifesto. The Salisbury/Addison convention is highly relevant to the Bill. There is no mention in the manifesto of Israel, and no mention of universities, which are not public bodies. This will be relevant as we look, as I believe we should, to produce some fairly radical amendments to the Bill in order to avoid setting off in quite the wrong direction.

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[Baroness Neville-Rolfe (Con)]

We will move on. Obviously, I agree that the history of—

[Lord Hannay of Chiswick (CB)]

On that point, if can help the Minister, I represented this country at the United Nations at the time and what the noble Lord, Lord Boateng, says is totally accurate.

[Baroness Neville-Rolfe (Con)]

We will move on. I was just going to say that it was amazing that the change happened in South Africa. I remember visiting it in the 1990s, after the change.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Committee stage
Wednesday 20th March 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, it seems to me that there is a bit of confusion going on. Amendment 7, which takes out the words in Clause 1(7), relates only to who is carrying out the disapproval. It is just amplifying those people whose disapproval is taken into account, to see whether or not the clause is engaged. It is not trying to add different categories of decision-maker, because the reference to decision-maker is clear in Clause 2, which we will come on to in another group. It is that definition that then drives enforcement, et cetera.

I was interested in Amendment 55 of the noble Baroness, Lady Chapman—although I think it is actually the wrong amendment asking for regulations—because it highlights that decision-makers might be individuals under the Bill, which they can be. As I understand it, the definition of “decision-maker” in Clause 2 encompasses some individuals being the decision-maker from whom all these consequences might flow. That was a complete surprise to me because the Bill is titled the Economic Activity of Public Bodies (Overseas Matters) Bill—a manifesto commitment related to public bodies. I was completely amazed to find that individuals might be public authorities within the terms of Clause 2, and therefore decision-makers.

I was interested in the noble Baroness’s probing amendment, because I hoped that she would be using that to ask the Minister what kinds of individuals could be decision-makers under the definition that we are using—the Human Rights Act definition. The limited research I have done produced the example of a doctor. When a doctor is carrying out his NHS work, he could be a public authority for that purpose, but when carrying out his private work, he could not be. I did not find much more than that, and I am rather hoping that the Minister will be able to explain to us in rather more detail precisely which individuals are decision-makers within Clause 2.

[Lord Hannay of Chiswick (CB)]

My Lords, I, too, will speak to this amendment and do so, like the noble Lords, Lord Wallace and Lord Johnson, in relation to universities and higher education. I had some experience of that: I was on two university councils—those of Birmingham and Kent—and I chaired the Birmingham council for five or six years in the early part of this century.

I have to say to the Minister that, as a result of a lot of extremely desirable reforms, the decision-making at universities was concentrated quite heavily on the council. The council did not micromanage every decision, but it was responsible for every decision taken at the university. That responsibility was clearly focused on a much-reduced size of council, down from the 30s or 40s to the 20s, and it meant that a quite a lot of responsibility came on to its members, who were a combination of academics and lay persons—with a majority, on the whole, of lay persons. The lay persons on the council were volunteers and were not paid a penny. Now, if the vagueness in this bit of the legislation is retained, I would not like to be out there trying to recruit new members to university councils, if they thought they were going to be liable for any of the sorts of problems that could arise under this legislation.

I suspect that this is just one of many pieces of this legislation that reinforce the case for simply taking higher education and universities completely out of it. I think that is what we will come to when we get to Report. This is just the first illustration that it will have a remarkably chilling effect on the conduct of councils and the way in which people are prepared to serve—for nothing and as volunteers—on university councils, giving up many hundreds of hours of their lives to making sure that the university is properly administered and decisions properly taken.

[Baroness Randerson (LD)]

My Lords, I preface my remarks by declaring an interest as chancellor of Cardiff University. I apologise that my duties at Cardiff University prevented me attending the whole of Second Reading—so I could not speak, although I attended a significant part of it.

Before I was chancellor of Cardiff University, I was a member of the council of Cardiff Metropolitan University, so I have a background in both executive and non-executive roles at universities. What I have to say very much follows neatly from the noble Lord. My experience is that university councils—and other bodies doing the same job but sometimes with different names—are very highly regulated already. They involve a great deal of training and responsibility and absolutely no financial reward—but there is great satisfaction for those who participate.

In both universities I have mentioned, our problem is always trying to get the suitable range of highly skilled, highly experienced people to participate. If you add another unnecessary layer of responsibility on to those people, you will deter very worthwhile recruits and you will make life more difficult again for our higher education sector. So can the Minister give us examples of universities—and individuals within universities—that have made these inappropriate decisions, so that we can see why universities are included? Otherwise, if there are no examples at the Minister’s fingertips, could the Government give further thought to whether they should be included at all?

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Committee stage
Tuesday 7th May 2024 Lords Chamber

Clause 3(7) is deeply damaging, because it suggests to Israel that its conduct in the Occupied Palestinian Territories does not matter and that it is immune from any criticism from its friends, whatever it does and however it acts. That is not a demonstration of friendship; it is the encouragement of a dangerous delusion that will lead the region to ever greater disaster. We should cease encouraging that delusion. A good place to start would be to delete Clause 3(7) or, better still, to dispense with the Bill altogether.

[Lord Hannay of Chiswick (CB)]

My Lords, I support the amendment introduced by my noble friend Lord Warner. It is conceivable that the Government’s objective of exempting the State of Israel—I say that carefully, the State of Israel—from the imposition of BDS, which I do not support, could be achieved with different drafting. However, to have introduced it in the way that it is introduced in Clause 3(7) is a mistake, and the mistake is compounded by mixing up completely different things: the State of Israel and the Occupied Territories, which certainly include the West Bank, east Jerusalem and the Golan Heights. They should not be treated in the same way. They are not part of the State of Israel in the view of the British Government, though they are in the view of the present Israeli Government. I repeat, they are not in the view of the British Government part of the State of Israel. Within those Occupied Territories—Golan, east Jerusalem and the West Bank—there are internationally illegal settlements. Illegality is another category on which the British Government’s policy is quite clear—just read the Security Council resolution, which has been quoted. Mixing these things up together is, frankly, a solution of disaster. It will just doom this legislation by including it.

I am not trying to suggest that it would not be possible to do something, though I doubt very much whether specifically mentioning Israel is a wise thing in the first place. I agree with the Government that public bodies should not be making foreign policy, but I am not sure that specifying one country out of 194 where they particularly should not be making foreign policy is a very clever way of setting about that. If you took that away and tried to sort out these unhelpfully mixed-up elements, there might be a better chance of this Bill making progress. So long as they are all mixed up together, we will have a cat’s cradle of contradictions.

[Baroness Noakes (Con)]

My Lords, the noble Lord, Lord Warner, said that this Bill will increase anti-Semitism. That is one view. I prefer to observe what is actually happening. We only have to look at what is happening in universities at the moment; we will come on to universities in a later group.

If we look at what has been happening with the encampments that have been springing up in the UK following what has been happening in the US, they are vocally calling for boycott and divestment in relation to Israel—and, indeed, quite a lot worse. This is a very live issue. It is causing much harm on campuses for Jewish students, who are clear that there has been a significant increase in anti-Semitism since this has started. This is not theory; it is actually happening.

Israel is always the focal point for BDS campaigns. The BDS movement itself came into being to attack Israel. I am glad that we are aligned with the noble Lord, Lord Collins, on the need to protect Israel from those activities. From my perspective, if the Bill does nothing else, it should try to protect Israel from boycott and divestment activities. That is why we need Clause 3(7): it underlines the importance of Israel and the particular attacks on Israel.

I accept that the Occupied Territories raise much more difficult issues. In line with the international community, the UK recognises the settlements as illegal, but the practicalities are that this will not be settled conclusively until there is a two-state solution. This is something that cannot be imposed; it will have to be agreed, but that is unlikely to happen very soon. Anyone who has been to Israel or has been in touch with people in Israel will know that the attacks by Hamas on 7 October have left a traumatised Israeli people, for whom the possibility of discussing a two-state solution seems almost unthinkable at this point in time. That is not to deny that that is the right solution in the long term but simply to say that it does not appear to be an immediate, practical problem.

The reality on the ground is that, in the meantime, the unsatisfactory nature of the Occupied Territories is likely to continue. Even if we thought that boycotts and divestments in relation to the Occupied Territories would punish Israel, this ignores the simple fact that there is economic activity in those settlements. Anything that harms that will almost certainly harm Palestinians as much as it harms the people of Israel. We only have to look at what happened when SodaStream, an Israeli company, was forced to withdraw from its activities in the occupied West Bank. The people who really lost out were the Palestinians who lost good, well-paid jobs when that facility had to close.

On our last day in Committee, the noble Lord, Lord Collins, pointed me to the FCDO guidance, which I duly went and read; he has read much of it into the record today. The important thing about that guidance is that, although it highlights the risks involved, it does not prohibit anyone in the UK from investing or dealing with those who are active in the Occupied Territories. I believe that this Bill reflects that pragmatic position—that the Occupied Territories are a fact of life—and that, until there is a two-state solution, trying to eliminate it from the Bill does not reflect the practical politics we are facing.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hannay of Chiswick Excerpts

Committee stage
Tuesday 14th May 2024 Lords Chamber

It is also the case that many foreign Governments have big stakes in listed companies, so any express concerns about those companies could be litigated on the basis that they were influenced by the disapproval of a substantial fellow investor. If pension schemes became open to legal challenge in the way that I have described, it would have a chilling effect on the high standards of corporate governance and corporate responsibilities, which the Government claim to support. I hope the Minister will therefore accept this simple amendment to allow proper stewardship by local government pension funds without the threat of litigation hanging over them.

[Lord Hannay of Chiswick (CB)]

My Lords, I will speak in support of the noble Baroness who has just spoken on Amendment 45, as well as Amendment 27 in the name of the noble Baroness, Lady Drake. As the noble Baroness, Lady Noakes, has eloquently drawn to the attention of the Committee, this is another of the points at which this legislation’s handling of Israel arises. The issue is the elision that has been made by the Government between the State of Israel and the Occupied Territories—the West Bank, the Golan Heights and east Jerusalem. Within the Occupied Territories there is a mass of illegal settlements, which the international community and the British Government regard as illegal. A whole rash of outposts have now been established from those settlements, which are also illegal. The elision between the State of Israel and the settlements is causing infinite trouble to this Bill, and I hope that the Minister will find some way to sort this out, because it really needs to be sorted out.

There is no disagreement, between the Government and those of us who wish to see this sorted out, about the settlements in the West Bank, Golan and east Jerusalem. We all agree that they are illegal under international law. I think we therefore agree—the Minister was very clear about this at Second Reading and when it came up in earlier amendments—that for British companies, pension funds or whatever else to invest in those illegal settlements, even unwittingly, would be to create an illegality. Presumably, the Government do not want a British company or a British pension fund to do that—and I hope that we would not want it either.

These amendments would make it somewhat easier for the bodies covered by the Bill to make sure that they were not being drawn into illegality in any way and thus acting in a way that would be contrary to government policy. I hope that the Minister will give careful consideration to the issue, because I am afraid that the elision between the State of Israel and the Occupied Territories is really damaging to the Bill’s prospects.

[Lord Davies of Brixton (Lab)]

I have made no secret that this is a bad Bill that is badly drafted, and I spoke against it at Second Reading. In this debate, my suggestion that we should not agree Clause 12 is narrowly focused.

Local government pension schemes should be treated in exactly the same way as every other funded occupational pension scheme—the point made by my noble friend Lady Blackstone. I agree totally with the amendments tabled by my noble friends, and I certainly support their proposals, but my question is: do we need separate legislation to cover the local government pension schemes? My strong view is that we do not; the schemes should all be treated the same. They should come under the same rules as the fiduciary duties on trustees or committees —whoever is responsible for taking the decisions—and they should be the same across the board.

I tabled my clause stand part notice just to ask what the effect would be of not having this provision. Would it mean that I achieve my objective and that, should the provision be removed from the Bill, the local government pension schemes would be treated like other pension schemes? I suspect not. I suspect that I would need a more detailed amendment that would place local government pension schemes under the same responsibilities and law as occupational pension schemes more generally. That is my objective, and I hope that we can have this debate again on Report so that all pension schemes are treated the same.

I listened carefully to the remarks from the noble Baroness, Lady Altmann, but I think her argument fails. First, there are private employers whose employees are within the local government pension scheme. Equally, there are public bodies whose pension schemes are not covered by this legislation, most obviously the universities superannuation scheme. So the division between the sheep and the goats in this respect is arbitrary. There is no consistency about—

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[Lord Hannay of Chiswick (CB)]

I am slightly puzzled by the Minister’s statement that the Government wish to avoid any territorial connection, since the Government themselves have placed large chunks of territorial description in the Bill. Could the Minister enlighten us on that? After all, it is the Government who have put down a Bill that talks about Israel and elides Israel with the Occupied Territories, the Golan Heights, east Jerusalem and the West Bank. Although they have confirmed their view that the settlements in all those areas are illegal, and therefore that investment in those settlements would be illegal too, it is the Government who are specifying this matter territorially. By all means, take the whole lot out—that would be fine.

[Baroness Neville-Rolfe (Con)]

As I was trying to explain, the important point is that it depends on the motivation for the decision. The Bill would prohibit only investment and procurement decisions that would appear to a reasonable observer to be influenced by moral or political disapproval of foreign state conduct, and have a territorial element. It would not prevent public authorities making any other kind of territorial or practical business considerations. I have been trying to clarify this.

As I am conscious of time, perhaps we could turn finally to—