Economic Activity of Public Bodies (Overseas Matters) Bill

(Limited Text - Ministerial Extracts only)

Committee stage
Tuesday 7th May 2024 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I say to the noble Baroness, Lady Noakes, that I wish the Bill was specific and addressed the manifesto commitment of the Conservative Party. The Labour Party has made it absolutely clear that we are opposed to boycotts, disinvestment and singling out Israel. The problem with the Bill is that it is wide. It covers all kinds of issues that will place public bodies in a very difficult position. In the debate on this group of amendments, we have senior legal people all saying basically the same thing: this will end up in court. When that fear of ending up in court occurs—when people read a law and say, “This is so complicated that we don’t know what it means; it will end up with us in court”—what happens then? It is the chilling effect. There will be decisions made not in the interest of the public body but on the basis of it not being sure that it is capable of making this decision. That is the important thing.

I support my noble friend’s amendment on extending the exceptions. The Schedule lays out other obligations on public bodies, not least very positive legislation that this Government have implemented on modern slavery, on other international law issues, on labour-related misconduct and so on. They are naturally there because these public bodies have already been told that these obligations are on them. There will be a lot of confusion. I agree with my noble friend’s point about taking into account potential breaches of international law by the UK but not those by other countries in the supply chain. Most of our experience of labour issues is that those supply chains can be incredibly convoluted. You do not know the origin of certain products. We have had debates in this Chamber about the use of cotton grown in Xinjiang by slave labour and being sold in British shops. Companies have decided to find out where that goes.

My noble friend also raised the Rana Plaza disaster of 2013. I remember it well, and I am sure that the Minister does, too, because many of our retail companies were selling products made in factories that were incredibly unsafe and used child labour. That disaster will stay in my mind. The government response at the time was, “There are potential breaches of international law. We will give the ILO extra money to go and investigate Bangladesh so that it commits to its proper responsibilities”. We did that.

The Government in this legislation are saying, “There are all sorts of factors that we can’t take into account—and even if we can, there are exceptions, the Secretary of State has to be involved, and we know it’s going to end up in court.” That is the problem with this legislation. It is not straightforward dealing with BDS. I wish it were. We will come on to that in the other group.

I have been trying to work out at what point I should read out the guidance on the Occupied Territories in Palestine that the Government have issued to companies. I say to the noble Baroness, Lady Noakes, please read it. The noble Baroness is nodding; she has read it. Great. I shall read it into the record, although it may take longer than the 10 minutes I am allowed.

“The UK has a clear position on Israeli settlements: The West Bank, including East Jerusalem, Gaza and the Golan Heights have been occupied by Israel since 1967. Settlements are illegal under international law, constitute an obstacle to peace and threaten a two-state solution to the Israeli-Palestinian conflict. We will not recognise any changes to the pre-1967 borders, including with regard to Jerusalem, other than those agreed by the parties … There are therefore clear risks related to economic and financial activities in the settlements, and we do not encourage or offer support to such activity. Financial transactions, investments, purchases, procurements as well as other economic activities (including in services like tourism) in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognised as a legitimate part of Israel’s territory. This may result in disputed titles to the land, water, mineral or other natural resources which might be the subject of purchase or investment … UK citizens and businesses should be aware of the potential reputational implications of getting involved in economic and financial activities in settlements, as well as possible abuses of the rights of individuals. Those contemplating any economic or financial involvement in settlements should seek appropriate legal advice”.


That is the Government’s advice, recently issued. As the noble Lord, Lord Deben, said, we are saying that there is one policy for the private sector and another for the public sector. That is absolutely crazy. There are so many contradictions in this legislation that it beggars belief. I hope that the Minister will think hard about the complex nature of the Bill, and perhaps give it due consideration. I shall not repeat my comments on the next group, but we have often said, “Let’s sit down together and come to a solution that meets the requirements that were set out in the manifesto”. This legislation does not; that is why it is so wrong.

[The Minister of State, Cabinet Office (Baroness Neville- Rolfe) (Con)]

My Lords, I will address the various amendments tabled in relation to international law. If the Committee is content, I will start by addressing Amendment 31, tabled by the noble Lord, Lord Hendy. It is a wide-ranging amendment, as some have said, which would allow public authorities to choose not to procure a good, service or works if their manufacture, provision or supply may have involved a breach of international law. Where a judgment has been made that a party has breached international law, it is for the Government and not a public authority to determine the appropriate response. This amendment would give public authorities too much discretion to engage in boycotts and divestment campaigns and would undermine the legislation.

--- Later in debate ---

[Lord Deben (Con)]

My noble friend is saying that, if a regime controls by force and in the most terrible way the whole economics of a nation, I can advise a private company not to deal with it and remove itself from it, but a public body could not say, “I will not trade with or buy from Myanmar”, unless the Government decide that they will not deal with Myanmar in that sense. I find that morally extremely difficult to take. We are asking private people to do things—I am sure the Government would support that—but we are going to exclude those who are democratically elected or who are looking after, for example, a university. I find that very difficult to take.

[Baroness Neville-Rolfe (Con)]

We are of course dealing with investment and procurement and the public bodies themselves.

Perhaps I should respond to the noble Lord, Lord Collins, who mentioned the Occupied Territories, which we will be coming back to on later amendments. Although the Government recognise the risks associated with—

[Baroness Blackstone (Lab)]

My Lords, I am sorry to interrupt the Minister, but I am perplexed by her view that foreign policy is simply a matter for central Governments. Foreign policy affects the population of the UK; it affects thousands of institutions in one way or another. We live, after all, in a global world. We do not live in a completely isolated country with no contact with the rest of the world. Foreign policy is not just something that can be determined and administered entirely by central government without the engagement, involvement and acceptance of those policies by a very large number of public and private institutions and individual members of this country.

[Baroness Neville-Rolfe (Con)]

I note what the noble Baroness says, but the Bill does not change UK foreign policy. That is for FCDO and the UK Government to decide. This applies only to public authorities and to investment and procurement, which I have continued to emphasise, because I think some of the discussion is needlessly wide-ranging—and, if I may, I will now make progress.

The Government, as I was saying, in relation to the Palestinian Occupied Territories, recognise the risk associated with economic and financial activities in the Israeli settlements, but we do not support boycotts of the Occupied Palestinian Territories. They are inherently divisive and may lead to inadvertent negative effects on Palestinians, as well as undermining the aim of the Bill, which is to ensure that we speak with one voice internationally. None of this changes existing government guidance.

[Lord Collins of Highbury (Lab)]

This is a fundamental point. I have made clear the Labour Party’s position on boycotts. We are talking about investment in factories in illegal settlements in the Occupied Territories. What is the noble Baroness saying to a public body that realises that an investment it had has suddenly transferred from Jordan to a factory in the Occupied Territories? Is she saying that that public body cannot say that the investment is in breach? It causes reputational risk and could fundamentally affect the value of the investment, because it is illegal. What is the noble Baroness saying: that we are going to put it in this Bill, come what may, because that is the foreign policy? It makes no sense to me at all. The Government are talking with two voices. The FCDO is saying one thing and this Minister is saying something completely different.

[Baroness Neville-Rolfe (Con)]

I do not think there is a difference between us and the FCDO. If I may, I will move on to the other amendments, because I am trying, as I always do, to answer the questions noble Lords have asked. There are a number of different amendments in this group, and I think we should look at them in the round. I will turn to Amendments 18, 28 and 29.

I will start with Amendment 28, which is a probing amendment tabled by my noble friend Lady Noakes, which would remove paragraph 6 of the schedule. She said that was a direct approach. I thank her, more generally, for her support for this legislation and for providing this opportunity to explain why this provision was included in the Bill. Paragraph 6 of the schedule makes an exception to the ban for considerations that a decision-maker in a public authority reasonably considers to be relevant to compliance with the UK’s obligations under international law.

Amendments 29 and 18, as the noble Lord, Lord Verdirame, has explained, would remove the existing exception and replace it with a narrower exception that would only allow public authorities to consider international law in a way that is influenced by moral or political disapproval of foreign state conduct, in line with regulations made by the Secretary of State. I would like to thank him, and my noble friend Lady Noakes, and the noble and learned Lord, Lord Etherton, for raising this matter. I acknowledge the noble Lord’s and my noble friend’s valuable expertise in this area— of course, they have the support of the noble Lord, Lord Pannick, who is not in his place, my noble friends Lady Altmann and Lord Wolfson.

There are very limited examples of when this clause might be relevant to public authorities, such as when abiding by sanctions under international law. It is therefore intended as a safeguard. I appreciate the noble Lord’s concern that public authorities could make their own subjective interpretations of foreign policy that are not aligned with the foreign policy of the UK Government. This exception can only be exercised by public authorities in a way that is “reasonable”. It would be up to the enforcement authority, or the courts, to determine whether the exception was exercised reasonably.

However, I appreciate noble Lords’ various concerns on this matter, including the impact on the courts, and the Government will consider these. We will no doubt return to the international law issue on Report. I thank noble Lords for their insightful contributions—

[Lord Purvis of Tweed (LD)]

Can I press the Minister on that? My understanding is that, under the Bill, in the absence of a Minister or the Government coming to a determination that international law has been breached, a decision-maker in a public authority can make the decision that there is the potential of a breach. Therefore, a decision-making body at the moment, for example—because Ministers are warning the Israeli Government that their actions in the West Bank and Occupied Territories are potentially in breach of international law—would be permitted under Schedule 6 to make a decision not to invest.

[Baroness Neville-Rolfe (Con)]

I am not sure that I entirely understand the noble Lord’s question, but I will reflect on it. We will come relatively shortly to a group that will look at these issues more broadly. If I am able to do so, I will come back to him at that point.

As I have already said, various concerns have been raised, which we will consider. I thank all noble Lords for their contributions. I say to the noble Lord, Lord Deben, that we value this House’s expertise, as I said at Question Time only last week. The Government will continue to think carefully about the important points that have been made. I hope the noble Lord will feel able to withdraw his amendment.

[Lord Verdirame (Non-Afl)]

My Lords, I thank all noble Lords who have taken part in this debate. The key driver behind our amendments was a concern about clarity, as the noble Lord, Lord Deben, pointed out. International law is not just a law but an entire legal system, so to say that you cannot breach international law is like saying that you cannot breach Chinese law. The legislative instruction has to be more specific than that. That is the essence of our concern.

I do not think the power we are proposing in my amendments, supported by the noble and learned Lord, Lord Etherton, would be excessive, as suggested by the noble Lord, Lord Oates. We have other examples of that in the legislation. As for the Minister’s comment on sanctions, we already have powers in legislation to deal with sanctions, so there would not need to be an international law exception on such a broad and unlimited basis to cover that situation; we already deal with that in our existing legislation.

I thank those who supported our amendments and analysis, in particular the noble Baronesses, Lady Altmann and Lady Noakes, and the noble Lord, Lord Wolfson of Tredegar. I look forward to the proposals that the Minister said she would consider bringing forward on Report. With that, I beg leave to withdraw.