Israeli Settlements: Trade Ban

Andy McDonald Excerpts

Thursday 9th July 2026 Commons Chamber

[Andy McDonald (Middlesbrough and Thornaby East) (Lab)]

I congratulate my hon. Friend the Member for Sheffield Central (Abtisam Mohamed) on leading this debate today.

The Government rightly say that Israel’s settlements in the OPT are illegal under international law. If that is the Government’s position, I welcome that recognition, but there is an obvious question: why does Britain still permit trade and financial activity that helps sustain those illegal settlements?

In a matter of days, it will be two years since the ICJ advisory opinion was given, which people have commented on. Two years on, the Government are yet to explain how they intend to give effect to those obligations in UK law and policy. In a statement on 9 June, the Foreign Secretary said:

“I have strengthened our business risk guidance to make it clear and unambiguous”.—[Official Report, 16 June 2026; Vol. 787, c. 162.]

I had a look at that guidance this morning. It goes no further than advising against economic and financial activity in the settlements. It does not say that trading with settlements is unlawful, and it does not say that such trade, financial services or investment are prohibited.

That contradiction was exposed during the Great Israeli Real Estate Event in London, where property in illegal settlements was marketed to British buyers. The Government referred the organisers to the Advertising Standards Authority. With respect, this is not principally an advertising issue; it is a question of whether commercial activity linked to illegal settlements should be taking place at all. If such activity is taking place through Britain’s financial system, Britain’s regulators should be asking whether it is facilitating activity connected to settlements that this Government accept are unlawful. That is why my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) and I, as co-chairs of the Britain-Palestine all-party parliamentary group, have written to Britain’s anti-money laundering supervisory bodies—but they bounce the matter straight back to the Government.

Ministers point to travel bans, sanctions on two Israeli Ministers and updated guidance. Those are all welcome, but they do not answer the wider question of whether Britain is using every available tool to uphold international law. The Government say they lack the powers—we have heard today that they do not. They cannot occupy two positions at once; they cannot say that settlements are illegal while allowing British commerce to help sustain them. They cannot condemn them in speeches and maintain those positions.

Today’s motion cannot change the law, but it can tell the Government that Parliament expects the law to reflect its own state’s position. This country has a history of having betrayed the Palestinian people since 1915, with the betrayal of the Sharif of Mecca in 1917, the 1936 put down of the uprising, and the facilitation of the Nakba. It is about time we discharged our legal and moral responsibilities to the Palestinian people.

--- Later in debate ---

[Chris Bryant]

I will in a moment.

The violence is criminal too. We are grossly alarmed at the expansion, including the proposed E1 settlement bloc, and at the Israeli’s Government’s legislative changes to entrench Government control.

I know that not everything we have done has pleased everybody, and that we have not gone as far as many would like, but it is important to say that we have taken action. We have recognised Palestinian statehood, although I note that some people do not support that. We have stopped negotiations on a free trade agreement, although I know that some people do not support that, as we have just heard. We have strengthened the enforcement of tariff differentials between green-line Israel and the illegal settlements, but to be honest, I do not think it is as effective as we would like it to be. That is one of the significant problems both for what we are doing now and for what we might want to do in the future.

We have also suspended and blocked military and dual-use licences for equipment that could be used, or is being used, in humanitarian abuse in Gaza. We have sanctioned individuals and organisations linked to the settler movement. We have recently pushed the Charity Commission to look into UK charities that are linked to activities in the illegal settlements.

Let me be absolutely clear: of course we support Israel’s right to exist. I do not think that any hon. Member who has taken part in the debate, certainly not on the Government side of the House, is anti-Israel, as the hon. Member for Grantham and Bourne (Gareth Davies) suggested. It is perfectly legitimate to criticise the activities of the Israeli Government without wanting to undermine the existence of the Israeli state. That is a really important distinction to make.

The hon. Gentleman is right, however, that many UK businesses are engaged in perfectly legitimate trade in green-line Israel, which is a powerhouse in many sectors including high tech, pharmaceuticals and so on. I pay tribute to those who have established strong economic relations between Israel and the UK, and, for that matter, between Palestine and the UK—I would like to strengthen that latter connection more. I would like to name UK companies that engage in trade in medicines, food and beverages, and financial services completely legitimately, and in a way that will be supported by everybody in this Chamber, in green-line Israel. Frankly, however, I will not do so for fear of reprisals against those companies, and that in itself tells a tale about the toxicity of this debate.

As I have said, the settlements are illegal. There is therefore a legal obligation on us as a Government not to aid or assist the occupation. The immediate corollary of that is that we need to stop UK businesses providing economic support and legitimacy to illegal settlements. Of course, we want to design measures to stop trade with settlements in a way that balances that with enabling British businesses and citizens to benefit from a strong trading relationship with Israel and with Palestine. That is one of the tricks we have to pull off.

There are four key things that we could do and are seriously considering. First, we could ban imports to the UK of goods from the illegal settlements. I think all UK consumers would want us to do this effectively, and lots of supermarkets and other chains have been looking to do it in their own way. The challenge is—and this is not an excuse, to respond to the question from the right hon. Member for North West Hampshire (Kit Malthouse); it is just a fact—that there is no properly verifiable means of determining the real source. [Interruption.] No, if the right hon. Gentleman will allow me to make the argument, he can criticise me afterwards if he wants to. This situation is very different from Ukraine, because in Ukraine there is a verifiable process to determine whether something is from occupied Crimea or from Ukraine. That is a significant difference. This is not an insurmountable difficulty, but it is a challenge.

[Andy McDonald]

If that is a problem and we want to implement the ban, the issue of distinguishing the goods is Israel’s problem; it should not be ours. We should not be held over a barrel by being told that distinguishing goods is a problem for us. It is Israel’s problem to distinguish which goods to prevent, and we should ban those goods in totality.

[Chris Bryant]

My hon. Friend makes a perfectly legitimate point, but the danger is that, if we end up banning all trade with Israel, we fall foul of the other problems I have mentioned.