Economic Activity of Public Bodies (Overseas Matters) Bill

Second Reading

That the Bill be now read a second time.

My Lords, at a time of increasing global division, the effective communication of the United Kingdom’s foreign policy is vital. In order to achieve our objectives, the nation must speak clearly with one voice. It is for His Majesty’s Government alone to decide the UK’s foreign policy.

I acknowledge that the Bill is being debated at a troubling time. Although some noble Lords may disagree with the Government on certain aspects of this legislation, I hope that everyone in this House will be sensitive to the broader issues with which the Bill deals. It will give effect to an important manifesto commitment. It is vital that public bodies are not allowed to pursue policies, through their investment and procurement decisions, in order to try to legitimise a UK foreign policy that differs from that of HMG.

Some public bodies have tried to declare boycotts and divestment policies that are inconsistent with the foreign policy set by the Government. Local councils have passed motions in support of boycotts. Local government pension schemes are frequently under pressure to divest certain securities. Universities, too, have been pressurised by groups that want to impose their own views about foreign policy.

The campaign that has placed the most pressure on our public bodies is the BDS movement. It deliberately asks public bodies to treat Israel differently from any other country, and its founders have been clear in their opposition to the existence of Israel as a Jewish state. Not only is that at odds with the policy of this Government, which is to promote a two-state solution, but we have seen an increase in anti-Semitic events following on from the activities of the BDS movement. These concerns pre-date the 7 October attacks, but since then the Community Security Trust has recorded the highest-ever number of anti-Semitic incidents, alongside increasing pressure for public bodies to engage in BDS activity.

The provisions in this landmark Bill prohibit public bodies from imposing their own boycotts or divestment campaigns against foreign countries or territories. It is clearly wrong that individuals who have roles of authority in a subordinate public body can act in such ways. It is also wrong that those public bodies can act in a way that, at home, jeopardises community cohesion while sowing confusion among our international allies about UK government policy.

It is particularly noticeable that boycotts and divestment campaigns disproportionately target Israel, especially in recent months in the wake of Hamas’s despicable terror attack and the resulting conflict. These boycotts contribute to the depressing rise of anti-Semitism across the UK, as reported last week by the Community Security Trust, which recorded its highest-ever annual total of anti-Jewish hate across the UK.

This Bill was unamended in the other place. That reflects the care taken in the drafting of this legislation to ensure that it adequately prohibits BDS campaigns in public bodies, applies to the correct public bodies within its scope and provides appropriate enforcement powers. Noble Lords may wish to table amendments in Committee that can improve the Bill, and of course I am open to considering those.

My Lords, I think the best way to approach a Bill such as this is for me to be completely straightforward with the House. We on these Benches oppose this Bill. We do not support boycott, divestment and sanctions campaigns towards Israel—they wrongly single out one nation and are counterproductive to peace—but the Bill is deeply flawed. It contains draconian powers and fails in its central purpose, which surely ought to be to prevent anti-Semitism.

The Bill prohibits public bodies from making procurement and investment decisions based on their “political or moral disapproval” of a foreign state’s conduct. The Government say that this is an attempt to ensure that all UK public bodies speak, as the Minister said, “with one voice” on international issues. However, the Government seem to think that there are councils, universities, NHS trusts and nursery schools with their own foreign policies, and that this is somehow confusing to our international allies. In fact, the impact assessment points to just three local government pension funds in Scotland that have disinvested from an Israeli bank since 2018. None of them say that this was a political decision or should be taken to represent any kind of political or moral disapproval, so can the Minister explain how the Bill would have impacted on those decisions? Would trustees be interviewed by enforcement authorities, for example?

The naivety of the Bill is to believe that trustees of pension schemes have, until now, been making investment decisions—which have a profound impact on their funds—in response to local boycott, divestment and sanctions campaigns. There is just no evidence for this. The risk is that the Bill will serve only to heighten tensions. I am afraid it plays into the hands of those who spout incomprehensible conspiracy theories and will have unintended consequences. I repeat that Labour has consistently opposed boycott, divestment and sanctions against the State of Israel. We know, and accept, that some campaigners have used the cover of BDS to whip up hate towards Jewish people, to hold Israel to different standards, to question its right to exist and to equate the actions of the Israeli Government with the Jewish people. We know that this happens and it is utterly wrong, but do we really think that the Bill will eradicate anti-Semitism? My fear is that it will make things worse, and it could not be happening at a more sensitive time.

My Lords, when I read through the Commons debates on this Bill, a number of things struck me: the frequency with which MPs of all parties described it as badly drafted, the large number of Conservative MPs who called for substantial changes, and the stubborn resistance of the Secretary of State to any changes. This Bill is ambiguous, confused and contradictory. It is about a specific campaign to boycott Israeli firms and companies based in the Occupied Territories, but it also applies to all foreign countries. It is aimed primarily at local authorities and universities, but it also extends far more widely, across a large and unknown number of public authorities.

Hard cases make bad law. All of us who support the long-term security of the State of Israel are opposed to campaigns to discredit and undermine it. Those of us who believe that a secure future for Israel within the Middle East depends upon permitting a Palestinian state as its neighbour have more doubts about goods produced in illegal settlements, but remain clear that Israel, within its 1967 boundaries, is and remains a trusted trading partner.

The current conflict means that there are passionate views within our society about what has happened on both sides. Michael Gove, nevertheless, has argued that the Bill is needed to maintain “community cohesion”, but the conflict has shown how diverse and divided the British public are on the Israel-Palestine conflict, at the moment. The recent short debate on Gaza, in this House, showed that we are similarly divided.

The Bill is not just about Israel and the Occupied Territories. I will focus on its wider implications. This is not the first time that people in Britain have campaigned against behaviour in territories overseas. In the late 18th century, anti-slavery campaigners promoted the boycott of West Indies sugar. My generation of students boycotted South African oranges and sherry, with student unions raising money to support scholarships for ANC members—at a time when the older generation regarded Nelson Mandela as a terrorist and a communist. Few would now disagree that the younger generation then were right.

My Lords, I welcome the Bill for the reasons explained by the Minister. My focus today is on one particular issue: the international law exception to Section 1 in paragraph 6 of the Schedule. Consistently with the policy objectives of the Bill, that exception must be qualified to ensure consistency between the view of the public body decision-maker and that of central government about the meaning and effect of the obligations under international law relied upon by the decision-maker. I am grateful to the Minister for seeing me to allow me to explain my concerns.

The policy objectives of the Bill are described in paragraphs 5 and 6 of the Explanatory Notes. In summary, the Bill is intended to give effect to the Government’s view that it is not appropriate for public bodies to accede to campaigns to persuade them not to buy goods or services associated with particular foreign countries for political or moral reasons,

“except where to do so is positively consistent with the UK’s foreign policy as determined by the Government”.

The international law exception in the Schedule does not reflect that policy background as it leaves entirely to the public body decision-maker the right to reach its own conclusion about whether the decision, or anything done further to it, would place the United Kingdom in breach of its obligations under international law. There are, as Members of the House are aware, many sources of international law. They include treaties, custom deriving from state practice—that is, customary international law—general principles of law, international conventions, advisory opinions of the International Court of Justice and resolutions of the United Nations General Assembly, to mention but some. International humanitarian law—the law of war and armed conflict—is part of international law. Many aspects of international law derived from those sources can be highly contentious. One has only to think of the disagreements expressed in this House over the past few years on the proper meaning and effect of the refugee convention 1951 and the European Convention on Human Rights.

Under the international law exception, it is sufficient for the public body decision-maker to form a reasonable view of the meaning and effect of the applicable international law, even if that view is different from the Government’s. That is entirely at odds with the policy stated in paragraph 6 of the Explanatory Notes that decisions of public bodies about procurement and investment based on political or moral disapproval of a foreign state are permitted only if the decision

“is positively consistent with the UK’s foreign policy as determined by the Government”.

My Lords, this is another pernicious piece of legislation attacking the freedom to protest against injustice and oppression except when the Government approve. It is therefore a Bill of which Vladimir Putin would be proud as it prevents public authorities, such as local councils, local government pension funds or universities, making their own ethical choices about their spending or investment. I am sorry that this Conservative Party is on the wrong side of history, as indeed it was over the fight against the most institutionalised system of racism the world has ever seen, namely apartheid.

It is also abolishing the right of British citizens to make their own choices. Tory Ministers support boycotts against Putin’s Russia over his barbaric attacks on Ukraine but want to ban even those advocating boycotts of Israeli products from settlers in the West Bank who have stolen Palestinian land in flagrant breach of international law. Ministers have said that Russia and Belarus would be exempt, but what about public bodies wishing to take boycott action over China’s oppressive treatment of Uighur Muslims or the Myanmar junta’s genocidal banishment of Rohingya Muslims?

The Bill violates UN Security Council Resolution 2334, which the UK voted for and which declares Israeli settlements in the Palestinian territory occupied since 1967, including east Jerusalem, as legally invalid and a clear violation of international law. The Bill explicitly designates Israel for special protection and seems to encompass the illegally occupied territories within its definition of Israel. Surely local authorities should have the discretion to make ethical decisions in line with the preferences of their constituents and the freedom to align with international law and exercise due diligence in procurement.

The Conservatives, I am afraid, have previous form on authoritarian repression of such ethical boycotts. In 1988 Prime Minister Margaret Thatcher, having denounced him as a terrorist, imposed restrictions on political action by local councils in support of Nelson Mandela, by then into his 25th year in prison.

My Lords, in her opening speech, the Minister rightly reminded us of the very difficult circumstances, particularly in Israel and Gaza, that are the background to the Bill, while we have just heard in that powerful intervention a reminder of the lively public debate about the case for and against boycotts, divestment and sanctions. However, whatever we may think of those issues, surely across the House people are shocked by clauses of a Bill with titles such as:

“Disapproval of foreign state conduct prohibited”

and

“Related prohibition on statements”.

It is indeed to be an offence for someone to indicate that they would intend to act in such a way were it lawful to do so. These are shocking provisions to bring before this House.

Many of us debate these issues in a host of environments, including this Chamber, and many of us have had responsibilities in public bodies and public authorities. It is very hard to draw the distinction that the Minister has attempted to draw between somehow acting in a leadership role in a public body and expressing a personal opinion. That is a distinction that I do not believe will bear the weight that she hopes to put on it.

There was a manifesto commitment, of course, which was clearly put:

“We will ban public bodies from imposing their own direct or indirect boycotts, disinvestment or sanctions campaigns against foreign countries”.

There is nothing there about expressions of view or statements of opinion. It is focused entirely on banning BDS campaigns. The Government can claim a manifesto right for that proposal but nothing that goes beyond it.

The Minister has said in her letter to us about this legislation—and this is an argument that we have heard elsewhere—that one argument for it is that such campaigns will damage community cohesion. That is a legitimate concern and of course it needs to be taken into account, but I have to say that if there had been an attempt to amend the Higher Education (Freedom of Speech) Bill so that freedom of speech was not permitted where it would damage community cohesion, the Government rightly would have had nothing to do with such an argument as a constraint on activity and freedom of speech. It would be a suitable irony, if the Bill goes forward as currently proposed with new powers for the Office for Students, if the newly appointed free speech tsar should be given authority as well for trying to implement the provisions that the Government are now putting forward.

My Lords, I declare my interests as chair of the Labour Climate and Environment Forum and of the Royal Veterinary College.

This law is indeed pernicious, as has been aptly shown by the noble Lords, Lord Wallace and Lord Hain. It is a Bill aimed specifically at the BDS movement. The main targets are ostensibly official boycotts and official divestment, but the memorandum document acknowledges that it would be difficult to define the precise limits of boycotts or divestments so, to prevent that, the Bill is cast in broader terms of “procurement and investment decisions”. That, from my point of view, was mistake No. 1. The result is that the Bill would have serious impacts on a wide range of organisations. I honestly cannot believe that the Government intend such collateral damage to happen.

The Bill would constrain this wide range of public bodies from taking procurement and investment decisions that incentivise ethical business, environmental responsibility and climate change action. Public procurement and the Local Government Pension Scheme’s investments are important levers for change—in environmental improvement, climate change and social welfare. It is vital that we continue to drive ESG considerations through investment and purchasing decisions.

The Bill creates a really unhelpful confusion over what is and is not acceptable when factoring in risk on environmental, social and governance issues as legitimate investment risks that need to be taken into account. The Bill could be interpreted as preventing action on taking these legitimate risks into account, which would be directly at odds with the fiduciary duty of pension scheme trustees. It is almost impossible to take account of human, environmental and governance issues in particular circumstances of contracts or investments without also taking account of abuses in a territorial element. For example, if a decision was made, either by a pension scheme or public procurer, that they would not have anything to do with palm oil grown in an unsustainable fashion, that could be seen as being against the palm oil countries because it is their policies that are allowing unsustainable production to take place.

I wish to speak on only one issue, one that the noble Baroness who preceded me has just dealt with: the way the Bill works with devolution. It is important to understand the context. The Bill is so widely drawn that it deals with decisions or views that express disapproval of foreign state conduct. It is all justified on the basis of foreign policy, but it is very important to distinguish between the wide terms of the Bill and the much narrower interests of British foreign policy. That is important for two reasons, to which I shall come.

It seems clear from the Bill and the various devolution statutes that the Bill affects powers that have been devolved to the national Parliaments and Governments. I thought this was not in dispute to a large extent, because pages 13 and 14 of the Explanatory Notes, first, tick boxes that say that legislative consent would be sought and, secondly, seem to accept that, at least as regards the executive powers of Ministers, devolution powers are engaged. I very much hope that the Government have not changed their position on that and that they will not proceed with this legislation without obtaining legislative consent. There have been far too many instances where this Government have overridden the devolution settlements, and it is not in the interests of the unity of the United Kingdom that this is continued.

As I understand it, it is claimed that much of the Bill does not involve devolved competences because the general reservations in most of the devolution settlements expressly reserve international relations, the regulation of international trade, and international development assistance and co-operation, although there are qualifications to that. In a Second Reading debate, I do not want to go into the finer and more detailed and difficult legal points in relation to the devolved settlements, and I am sure that the Minister, in replying at a late hour this evening, will not want to deal with that.