Economic Activity of Public Bodies (Overseas Matters) Bill

Committee (1st Day)

Clause 1: Disapproval of foreign state conduct prohibited

Amendment 1

1: Clause 1, page 1, line 7, leave out from “the” to the end of line 8 and insert “political or moral disapproval of foreign state conduct was the primary or sole factor in the decision” Member’s explanatory statement This amendment would clarify that political and moral disapproval must be seen to be a central factor and not a supplementary consideration in any relevant decision.

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.

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.

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.

My Lords—

My Lords, Amendments 3 to 5 are in my name. All the amendments in this group have the same objective, which is to find some ways of mitigating the rather unusual and perhaps slightly sinister language of

“political or moral disapproval of foreign state conduct”—

the language that gives the provision its title. Amendments 1 and 2 seek to achieve that objective by retaining that concept but raising the bar for its application. I agree that this approach may be sensible, and it is one that I encourage the Government to consider very seriously.

My amendments go a little further. I tried to think of ways in which the main provision of the Bill—Clause 1 —could operate without the novel concept of a prohibition on

“being influenced by political or moral disapproval of foreign state conduct”.

I note that this is not an attempt to frustrate the Bill. As the Minister will recall, I spoke in support of the Bill at Second Reading and I support the Government’s intentions. I am suggesting this different way forward because I am not really persuaded that the policy objectives require us to introduce this concept in our legislation. I urge the Government to test more proportionate and more focused ways to achieve those objectives.

As I understand those objectives, the core purpose is to ensure that public bodies, when taking procurement or investment decisions, do not impose a de facto sanctions regime or a de facto ban or boycott on a foreign state on the basis of their own judgments about a territorial dispute, the status of a foreign territory or the presence of a foreign Government in a particular territory. It seems to me that that objective can be achieved equally effectively by focusing the duty in Clause 1 on not having regard to territorial considerations, rather than in the current formulation of a duty not to be influenced by political or moral disapproval of foreign state conduct. Subject to the exceptions, it would still be the case that if a public authority were to have regard to a territorial consideration, it would probably do so because of disapproval of a moral or political kind of the foreign state’s conduct in the territory. But it would be better if we can get to the result that the Government are pursuing without that language of political or moral disapproval of foreign state conduct.

My Lords, I apologise for my not being able to speak at Second Reading, although if I had, I would have agreed with my noble friend Lord Wolfson on much of what he had to say. I also apologise for slightly jumping the gun on the noble Lord, Lord Verdirame, particularly as what he said was so interesting and informative.

I just wanted to question Amendment 1. If one is seeking clarity and certainty, introducing the idea of having a

“primary or sole factor in the decision”

seems extremely difficult to prove, whereas showing that the decision was “influenced” is much easier and, as I understand it, a recognised legal term.

My Lords, I have problems with all the amendments in this group. Amendment 1 in the name of the noble Lord, Lord Wallace of Saltaire, would elevate “political or moral disapproval” to be the sole or main factor, and the noble Lord, Lord Palmer of Childs Hill, wants to introduce the concept of materiality into influence. Both these would just create huge loopholes, which would allow public bodies to conceal their boycott activities within other factors. Clever lawyers would find ways of writing papers which support decision-making in, say, local authorities or other bodies affected by the Bill, by reference to a whole load of other factors, to support the claim that they were not “materially” influenced by their disapproval of a foreign state, or that it was not the sole or main factor. I genuinely have a problem with the watering-down implied by Amendments 1 and 2.

I listened very carefully to what the noble Lord, Lord Verdirame, said about his amendments. I understand that he is trying to find a way through by removing the reference to “political or moral disapproval”, but I am not convinced that his amendments work either. In particular, I am not sure what the restriction to “that territory” in his Amendment 4 will do. Let us suppose that the territorial consideration is Ukraine, because it has to relate to a particular foreign territory by virtue of subsection (3). Does that mean that the decision-maker must have no regard to what is happening in Ukraine itself? It seems to me that “that territory” can be related only to the territorial consideration referenced in subsection (2). In that case, it would be Ukraine. If, say, Russia is the foreign state you have a problem with, it seems that you can take account of its activities only in Ukraine. You could not take account of activities that were not in Ukraine—for example, attacks from other places, such as the Black Sea, or whether it takes children from Ukraine back to Russia. If you thought that Russia was the territory—still restricting it to one territory—you have the problem the other way around; you could take activities only in Russia, but not in Ukraine, which is the fundamental problem. That creates an interpretive problem.

My Lords, because this is the first group, I again state that I think that a lot of these amendments are trying to establish what is intended by the Bill, in a probing way. In that sense, they are very helpful for clarification on the language used. It was clear from Second Reading that most of the people who have since tabled these amendments and are speaking now are not in any way defending BDS; it was clear to me anyway. These boycott schemes are censorious and illiberal, and very often, as was stated at the time, the seeding ground for anti-Semitism in public life. In that sense, I oppose them; I am just not clear how the Bill will actually tackle them.

As we speak, just to use an example, the Rio Cinema in London has just cancelled its Eurovision party on the basis that it will not hold it while Israel still has somebody in the Eurovision Song Contest. I do not know whether this is self-declared BDS; it is a charity, and I am not quite sure how the Bill would apply. The point I kept trying to make at Second Reading was that, so often, I feel that the Bill will miss where a lot of the anti-Semitic censorship is occurring, around the periphery, rather than just in terms of divestment and investment, and so on.

I say that because those of us who are interested in tackling those issues need to have as much free speech as possible. I particularly support Amendment 6 from the noble Lord, Lord Wallace of Saltaire—although both his amendments are interesting—which makes the point about

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

That is what politics is, is it not? Trying to persuade a decision-maker—lobbying and trying to have an influence on politics—is surely the job we are all in, even if we disapprove of, in this instance, what someone is trying to persuade about. I just get anxious about this being in a Bill; it sets a dangerous precedent.

My Lords, I also wish to speak in support of Amendments 1 and 6 in the name of my noble friend Lord Wallace. As a former councillor, I can imagine that former colleagues will be absolutely horrified at the scope of the Bill. We are talking about how moral and political disapproval cannot be used as the basis of a decision. Many councillors get into politics because they have moral and political views—they want to change the world and do something about things in their own area. I would welcome clarity, as others have asked for, on how it is to be established whether a decision-maker has been

“influenced by political or moral disapproval of foreign state conduct”.

What means might be used to actually determine this, in the event of needing to enforce action against it?

Councillors on a committee such as a pension committee receive expert professional advice from council officers and external advisers. Would these people be seen as people

“seeking to persuade the decision-maker”?