Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Palmer of Childs Hill Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Lord Palmer of Childs Hill (LD)]

My Lords, I declare my interests in the Jewish community, as required in the register. It is sad to have to start by deploring the name of the Bill. “Economic Activity of Public Bodies (Overseas Matters)” does not trip easily off the tongue. It is in fact known as the “anti-BDS Bill”. But does it actually help in combating Boycott, Divestment, Sanctions—a campaign I deplore as, in practice, it targets one nation: Israel?

We have this poorly drafted and politically motivated Bill purely so that Mr Gove can show that he supports the UK Jewish community, beleaguered as it is—and it is—by anti-Semitism. He can try to dress it up with talk of other nations being discussed at local levels, but if one googles “BDS” one sees that the

“movement works to end international support for Israel’s oppression of Palestinians and pressure Israel to comply with international law”.

I stress that these are its words, not mine. The Bill implicitly recognises who it is meant to defend, as it specifically singles out as the only nation an exemption of powers cannot be applied to as

“Israel … the Occupied Palestinian Territories, or … the Occupied Golan Heights”.

I am against BDS, which is often perceived as being—and I believe often is—anti-Semitic, and often a part of Jew hatred. Others perceive BDS as simply supporting the rights of Palestinians. We are a democracy and if an individual, or groups of individuals, want to support BDS, that is their right. The Bill seeks to stop public bodies—and we have had much discussion of what is and is not a public body—imposing their approach to, or view on, international relations.

I am concerned that the Bill, as drafted, could have a negative effect. Would there be a strong backlash to the Bill as being a freedom of speech issue? It is a freedom of speech issue. Is there a fear that it could lead to a rise in anti-Semitism as being seen, incorrectly, as a result of Jewish pressure, when it is not?

The Bill gives government the power to exempt certain countries from boycott restrictions, but it specifically does not allow the exemption of Israel, the West Bank and the Golan. Why are these the only named territories? It is not as simplistic as suggested. I was on the Golan Heights the week after they were taken from Syria to stop Syria shelling the Israeli valley below. Yes, Israel has annexed the Golan, and if you stand on that spot you can see why. There is no way it could ever be returned to Assad’s Syria. As far as the West Bank is concerned, its final status and division between Israel and the Palestinians is a matter for them to agree on.

When the Minister replies, it would be helpful if she could clarify the scope of BDS. Does it include Israel? Does it include the major Jewish settlements in the West Bank and the Golan? These settlements are generally thought of as a land swap—settlements that would be in a reconstituted, rebounded Israel. Does it include them, or all the settlements of the West Bank?

We have this Bill because some public bodies have proposed BDS motions. The Minister mentioned three when she spoke; could she tell the House how many public bodies, local authorities or whatever have actually done so? The reality is that these motions will do little to affect Israel or any other nation. However, they create a very hostile environment for local Jewish communities and create community division.

There is an argument that this Bill limits free speech, but the BDS campaign itself calls for limits on freedom of speech, preventing speeches by Israeli academics and Israeli performers, as the noble Lord, Lord Mann, mentioned. That is not mentioned anywhere in the Bill, as he said.

This is a bad Bill, which attempts to right a misjustice but could well have unseen, harmful consequences. The Local Government Association, which obviously has an interest in this, says that it does not expect the Bill to have significant effects on local authority investment or procurement practices, but it has significant concerns about the effects it will have on the operation of local government pension schemes.

I imagine that the Bill will get to Committee and beyond. We are only at Second Reading. I believe that we will see amendments. It will be very interesting to see what the amendments will be and, if they are passed by your Lordships’ House, what the reaction will be in the other place. My own judgment will depend on the final version in your Lordships’ House, as I am in favour of free speech but against the BDS movement.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Wednesday 20th March 2024 Lords Chamber

[Lord Wallace of Saltaire (LD)]

My Lords, as we are starting Committee, I will say a few things about how we should handle the Bill from now on. After Second Reading and the Commons stages, during which there were a large number of sharp criticisms from Conservatives, as well as others, about the quality of the drafting and the coverage of the Bill, I would have expected the Government, between Second Reading and Committee, to have produced a number of government amendments to clarify some of the many imprecisions in the Bill and perhaps to have arranged to meet some of us who had spoken at Second Reading. I am sorry that that has not happened, and I very much hope that, between Committee and Report, the Government will respond to some of the criticisms by bringing forward clarifying amendments, and that the Minister and the Bill team will be willing to meet with us to discuss some of the arrangements.

The lack of engagement is troubling, and the absence of government amendments at this stage is extremely worrying. I recognise that this is very much a Michael Gove Bill and that he, as Secretary of State, probably wishes to get it through, if possible, without amendment. But here we are in the amending House, and the Minister also has a duty, as a Lords Minister, to listen to and engage with the reasoned criticisms made of the many highly imprecise elements in this Bill, and to respond.

I have two amendments in this group. One raises the question of what is meant by “political or moral disapproval”, and whether the word “influenced” in the phrase

“influenced by political and moral disapproval”

is sufficient. The second, Amendment 6, refers to

“any person seeking to persuade the decision-maker”,

as well as the decision-maker.

As the Minister will know, environmental, social and corporate governance has a long history. It goes back to the Sullivan principles from the United States, which I am sure she will remember. They were formulated by Mr Sullivan, a director of General Motors, in the context of apartheid South Africa and set out a number of principles that companies and others should follow when dealing with investments and procurement. Those principles have since expanded into the whole ESG dimension, which we see actively discussed in Britain, the United States and a number of other market economy countries. The right wing in the United States is busily attacking them in favour of what one has to describe as an amoral capitalism, in which profit is the only thing you are ever allowed to think about. I recall that the first person who started attacking the Sullivan principles was Professor Milton Friedman, who strongly believed that companies have no other duties than to pursue the greatest profit possible for their shareholders.

We need to know what is meant by

“influenced by moral or political disapproval”.

My Amendment 1 suggests that it has to be very considerable in order to be a primary cause of the decision, not simply something that comes in as, or can be argued under Clause 5 to have been—we will get to that later in terms of judicial review—part of the reasons why the decision was taken.

One of our many worries about the Bill is the extent to which it opens the door to litigation through a great many of its imprecise terms. The question, therefore, is whether or not any indication of political or moral disapproval begins to get captured under the Bill, or whether this has to be the major reason why such a decision is taken.

I was very struck as I went through the impact assessment and the Explanatory Memorandum by the sheer lack of evidence that much of this has happened. We find a reference to a council that in 2014 discussed whether or not to, and that another council in 2016 discussed whether or not to. Neither of them actually did it, but they discussed it. “That is wrong and we should stop them doing things like that” seems to be a pretty thin basis on which to mount a Bill that has the sorts of penalties which this Bill begins to set out. That is very much part of our concerns.

Amendment 6 raises the question of whether it is not only the decision-maker who is going to be liable but

“any person seeking to persuade the decision-maker”.

Does that mean that the Guardian journalist who writes an editorial suggesting that this should be done is going to be caught by it? Does it mean that the lobby group that sends things to the decision-maker is going to be caught by it? Does it have to be a more direct approach? How do we identify that “any person”? This is the sort of drafting that should not appear in a Bill before this House. It has to be clarified or we shall do our utmost to remove it. I beg to move.

[Lord Palmer of Childs Hill (LD)]

I speak to exactly the same issue as did my noble friend. Mine is a simpler amendment. I work on the basis that the Bill will pass in some form or another and if one does a modest, sensible tweak to a Bill, it has a chance of being incorporated into the final version. My Amendment 2 —purely adds one word: “materially”. This would raise the threshold that needs to be met before a decision is deemed to be in breach of this prohibition. If it is not “materially”, things could be prohibited for something very minor. Having “materially” improves the Bill and makes it more logical—we are looking at things of substance, not things that are minor.

[Lord Deben (Con)]

My Lords, I rise merely to ask my noble friend the Minister to be very careful about her responses to this. I have a huge problem in that I cannot think of a speech that I have made in this House in which there has not been some moral content, because that is the way I think. I cannot help that. I am very concerned about the clarity with which the Bill is written. My noble friend and I go back a very long way. I have to say to her that when she was a civil servant working with me, she would not have produced a Bill like this. She would have been very angry if I had suggested that it should be as loose as all this. I am sorry to remind her of that fact. All I am interested in is that we do not unhappily and by accident cause a whole lot of legal cases that are unnecessary and which we never meant to.

I have some fundamental problems, not least with the specifics of this. I may wish at some later point to discuss the speech that was made at Second Reading by my noble friend Lord Wolfson, but the first point I want to make has nothing to do with the nature of the Bill itself or what it seeks to do. It is about precision. This is an imprecise Bill and it needs to be precise if it is not to be extremely malignant. All I ask is for my noble friend to try to understand that we need precision here, even those of us who in general do not come here with an antagonistic view. We just want to know what it is about, and you do not understand that if you merely read the Bill. I do not want this constantly to be in the courts. It would be much better to get it right now.

--- Later in debate ---

Tabled by

[Lord Palmer of Childs Hill]

2: Clause 1, page 1, line 7, after “was” insert “materially”
Member's explanatory statement
The inclusion of the word “materially” would raise the threshold that would need to be met before a decision was deemed to be in breach of this prohibition.

[Lord Palmer of Childs Hill (LD)]

My amendment was of a probing nature. I am grateful to the Minister for giving more detail. As we go forward with the Bill, I shall be particularly interested to see how “materially”—the word that I tried to add—is looked at in terms of local authority pension funds. That worries me, because they make their investment decisions. There needs to be a material point, otherwise those investment decisions can be upset very easily by the Bill.

Amendment 2 not moved.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Tuesday 14th May 2024 Lords Chamber

[Lord Willetts (Con)]

My Lords, I rise briefly to support the points made by the noble Baroness, Lady Drake, and to explain why I have put my name to her amendment. She makes a powerful case, and what I hope sways the Minister is that her case rests very much on the policies enunciated by the DWP and the Chancellor, who are very keen to see pension funds take a broader view of their responsibilities and take account of impact and risk. Indeed, the noble Baroness has cited specific DWP regulations which make it clear that risk is something distinct that it wants pension fund trustees to take account of. What she is proposing here is consistent with the wider direction of government policy about how pension fund trustees, particularly local government pension trustees, should see their responsibilities.

My understanding of the Government’s position is that actually “financial value” already captures all that and that the noble Baroness’s amendment, which I support, is therefore unnecessary. However, I must say that I think it is unlikely, given that so much effort has taken place in the Treasury and the DWP to use some other expressions going beyond “financial value” to capture the responsibilities of trustees, that anyone would automatically accept that the formulation currently in the Bill covers this wider meaning. If the Minister is right that it is the Government’s intention and it should have this wider implication, I do not see any difficulty in making that absolutely clear by accepting this amendment. I very much hope that in the spirit of constructive review and revision of legislation, without in any way challenging the fundamental electoral mandate behind it, this amendment is a proposal that the Government can accept. It is, indeed, entirely consistent with the direction of the Government’s own policies.

[Lord Palmer of Childs Hill (LD)]

My Lords, I support Amendment 27. The Bill has effects that were not thought of in advance. Local government pension schemes and their administrators have one thought in mind, which is to protect the financial interests of the pensioners and of the funds, and this amendment just clarifies the financial aspects of that. The administrators should not be involved in any international political situation, but be there to look after the funds of the pensioners. Amendment 27 does exactly that in clarifying, which is all it is doing, what this aspect of the Bill does. Therefore, I support it from these Benches.

[Baroness Altmann (Con)]

My Lords, I rise briefly to congratulate the noble Baroness, Lady Drake, on her amendment and the others in the group. I understand where they are coming from, but it seems to me that the Government’s argument that this issue is already encompassed in “financial impact” holds some sway. There are concerns that I understand, but I am not sure they are necessary. Indeed, sight should not be lost of the fact that all local government pension schemes are ultimately underwritten by the Government and taxpayers. If the stewardship of these assets were swayed by issues which the Government themselves might not be comfortable with, there are powerful reasons why that stewardship should not be swayed by the kind of considerations that the Bill seeks to ensure does not happen.

Political or moral disapproval is not the same as environmental, social and governance issues. If a board of trustees decided to boycott an investment because of the country in which it is located, based on judgments of that country which do not accord with the views of the elected Government, the duties incumbent on the Government in accordance with this Bill would be at risk. That someone might take legal action against trustees who decide that they do not wish to make certain investments because they make a political or moral judgment that is not in accordance with that of the elected Government could equally be argued the other way. Trustees, certainly local government trustees, should not be taking these decisions.

I believe that was the manifesto commitment. Private pension schemes are not part of government and therefore that is a different decision, but local authority pension assets are ultimately underwritten by government so, should there be concerns about material financial risk and impact, they ultimately rest on the Government’s underpinning them anyway. Given that, as my noble friend said, “financial value” already encompasses these issues, I am relaxed about the current wording of the Bill. I hope that noble Lords across the Committee, especially those who have worked so hard on pension issues and with whom I normally fully agree, will not be too uncomfortable with the explanations that I am trying to put forward for not using pension assets as a disguised tool for political or moral judgments in the way that could happen and which this Bill seeks to deter.