Economic Activity of Public Bodies (Overseas Matters) Bill

Debate between Baroness Janke and Baroness Altmann

Committee stage
Tuesday 14th May 2024 Lords Chamber

[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.

[Baroness Janke (LD)]

My Lords, I support the amendments in this group and will speak to Amendment 45, which I have signed. This amendment would remove “management” from the definition of a fund investment decision, allowing investors to carry out stewardship activities, including engagement and voting, without falling foul of the prohibition and enabling vexatious legal challenges.

Clause 12, on application of prohibitions, applies Clause 1 prohibitions to the LGPS. It includes acquisition, retention, management or disposal of assets in its definition of fund investment decision. However, advice from the LGPS identifies “management” as pension scheme stewardship—engagement with or seeking to influence the companies and sometimes Governments in which it invests and voting at annual general meetings. Without this amendment, local authorities would be open to legal challenge for statements made during engagement with the companies in which they invest or to votes against them at AGMs, should interested parties wish to argue that these were influenced by political or moral disapproval of a foreign state.

I hear the arguments put forward by the noble Baroness, Lady Altmann, but the breadth of the Bill means that there is an opportunity for interested parties to use the moral and political disapproval of a foreign state as a way of challenging decisions that they do not agree with. The concern is that many will choose to take that view—and the Bill allows them so to do—on risks, for example, connected with a company’s purchases from a certain market, such as the use of forced labour in China, or investment in fossil fuels, which are becoming more financially risky. These could all be interpreted as disapproval of a foreign state or moral or political disapproval and thereby attract interested parties to challenge via judicial review and the quasi-judicial review process introduced in Clause 5.

Furthermore, foreign Governments have large stakes in listed companies, so concerns about any aspects of those companies could be litigated on the basis that they were influenced by disapproval of a significant fellow investor. With such a threat of litigation, it is easy to see how advice and full and frank discussion of decisions could be severely restricted. Having been a member of a local government pension scheme, I understand the need for advisers to be able to give frank advice without fearing that their words may be used later in legal action.

Social Security (Up-rating of Benefits) Bill

Debate between Baroness Janke and Baroness Altmann

Committee stage & Committee: 1st sitting (Hansard) & Committee: 1st sitting (Hansard): House of Lords
Tuesday 27th October 2020 Lords Chamber

[Baroness Altmann (Con)]

My Lords, I thank the noble Lord, Lord Addington, for his explanation of the amendment and echo his request for some clarity from my noble friend the Minister. Is she able to give us an idea of the Government’s thinking on the future uprating of pensions?

Clause 1, before proposed subsection (2A), relates to the basic pension and the standard minimum guarantee. At the moment, the triple lock does not apply to the standard minimum guarantee and pension credit. Were the amendment to be inserted, it would ensure that the poorest pensioners, who are normally those we might wish to protect the most, would get the benefit of the full triple lock. The overall issue on which I should like clarification from my noble friend is whether she can give us an idea of the Government’s thinking on the 2.5% element of the triple lock. Is that likely to continue in the light of what is happening in the rest of the economy? If so, is there any thinking within the department on ensuring that the pension credit is also uprated by the full 2.5%?

I congratulate my noble friend on pointing out what I was going to mention about the relevant 2021-22 tax year. The thrust of this probing amendment is of interest to the Committee and I look forward to her response.

[Baroness Janke (LD) [V]]

My Lords, I too welcome the amendment of my noble friend Lord Addington. We are all interested to hear the Government’s thinking, particularly on the future of the triple lock. I am sure that we all welcome their commitment to the undertakings in their manifesto and are pleased to see the Bill. However, in recent months, a lot of doubt have been shared regarding the triple lock’s future. Some people have said to me that there seems to be an almost systematic picking at the seams of the triple lock. With the Chancellor under pressure due to the economic implications of the pandemic, we would like some reassurance from the Minister that the Government are committed to ensuring that the pension keeps its value.

The state pension is particularly important to give the poorest pensioners confidence. Everyone is suffering under the pandemic but there is no doubt that the poorest are suffering worst. We would like to know the Government’s thinking for the future. Will there be a commitment in the Bill to keep the 2.5%, as well as transparency and clarity to reassure those pensioners who are particularly dependent on the state pension? I look forward to the Minister’s reply.