Economic Activity of Public Bodies (Overseas Matters) Bill

Baroness Blackstone Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Baroness Blackstone (Lab)]

My Lords, from time to time, bad Bills are introduced, and they have become more frequent over the past 10 years, but in my many years in this House I have not witnessed any worse than this one. It denies the principles of an open society in which freedom of expression is valued and in which ethical considerations are deemed to be valid in decision-making by public bodies. It is shameful in its failure to reflect international law and UK legislation on freedom of expression, and it pays no attention to the position taken in the devolved Governments by Scotland, Wales and Northern Ireland. It also cuts across the established UK position of differentiating between the State of Israel and the territories it occupies, now blighted by large numbers of settlements illegal under international law.

I do not understand how the interdepartmental discussion required by proposed legislation which has implications for several departments could have allowed this shoddy and appallingly drafted little Bill to go through. Either the discussion did not take place or there was a lack of rigour when the Bill was considered. Was any account taken of the fact that many voters in this country have justified concerns about illegal or unethical practices in the environment and in human rights, including employment rights?

As a former vice-chancellor, I would like the Minister to respond to the damaging effects of this Bill on universities, which have been touched on by others. First, how does it affect the ONS review of university status in the national accounts and whether they should be reclassified as public bodies? Is the Minister aware that government policy and, indeed, legislation establishing international partnerships and collaborations is contradicted by the Bill, as are the duties of universities under the Higher Education (Freedom of Speech) Act 2023 to uphold freedom of speech? Universities UK is justifiably concerned about the legislation’s potentially damaging effect on due diligence and open discussion and debate, limiting transparency in decision-making. Only in totalitarian countries is universities’ freedom of expression restricted.

This Bill is overbearing in its treatment of local authorities and exposes them to vexatious legal challenges. It entails disproportionate centralisation, giving more power to the Secretary of State, which could hold up local decision-making, resulting in delay and inefficiency. It is not up to the Secretary of State to denounce elected representatives for debating ethical issues or to interfere in their decisions on investment and procurement. That is gagging and ministerial overreach. It will create unnecessary conflict between devolved or local government and Ministers.

A particular issue in the Bill is its effect on the Local Government Pension Scheme. Under present law, pension funds are required to take into account financially material environmental, social and governance considerations. By outlawing funds taking into account country-specific financial risks, the Bill is in conflict with the Law Commission’s guidance on the fiduciary duties of pension funds. It also undermines the work done by the Local Government Pension Scheme to improve corporate behaviour and protect the long-term value of funds and conflicts with the Procurement Act. Will the Minister tell the House why public bodies and their pension funds should not take into account ethical considerations such as the use of tax havens, child labour, bonded labour, torture or environmental devastation, which are facilitated or permitted in certain territories, when they make their investment and procurement decisions?

I turn to the extraordinary singling out of Israel and the Occupied Territories, giving them unique protection from campaigns against human rights abuses afforded to no other country. In conflating Israel and the Occupied Territories, the Bill conflicts with the UN Security Council resolutions which the UK has endorsed. As such, it is also in conflict with UK foreign policy and its stated aim to promote a two-state solution in Israel and Palestine. Under the Fourth Geneva Convention, it is illegal for an occupying power to transfer any part of its population to occupied territory. Successive Israeli Governments have frequently and fragrantly ignored this convention by allowing settlements on territory designated for a future Palestinian state. Perhaps unintentionally, the Bill implies that the UK no longer accepts that the settlements are illegal under international law nor that they are involved in human rights abuses of West Bank Palestinians.

I end by expressing my bewilderment about how this Bill will reduce anti-Semitism and refer the Minister to a passionate campaigner against anti-Semitism, Margaret Hodge MP. At Second Reading in another place, she said that an outcome of the Bill was that it would increase, rather than reduce, anti-Semitism because it plays into the hands of anti-Semites by singling out Israel

“as the one place that can never be boycotted”.—[Official Report, Commons, 3/7/23; col. 615.]

This Bill really needs to be withdrawn altogether but, failing that, it needs extensive amendment. In the spirit of a revising House, I hope that the Minister will, as she implied earlier, accept that it must be amended substantially to improve it.

--- Later in debate ---

[Baroness Neville-Rolfe (Con)]

The instructions for the drafting were to ensure the distinction and compliance. The Bill sets these out individually and I understand that it is compliant. The Government believe very strongly in the importance of compliance.

[Baroness Blackstone (Lab)]

The Minister says it is her understanding that this applies. I think her understanding is inadequate on this issue because there is nothing in this Bill that makes a clear distinction between the Occupied Territories and Israel itself. Perhaps she could come back to the House, or write to us all, when she has clarified this and set out exactly where this distinction is made.

[Baroness Neville-Rolfe (Con)]

I would be happy to do that and to discuss these clauses in Committee, in the usual way. The Bill does not break international law and will not compel any public authority—

[Baroness Blackstone (Lab)]

This is not just a matter of waiting for Committee; this is a matter of clearing up something very fundamental following questions that have been raised at Second Reading.

[Baroness Neville-Rolfe (Con)]

I made it clear that it is compliant. I will write a letter setting that out in the coming days.

As many noble Lords have said, there has been a rising problem of anti-Semitism since 7 October. I believe we now need this Bill all the more and that it is important to protect community cohesion.

I thank the noble and learned Lord, Lord Etherton, for his kind remarks and his helpful discussion on his concerns with the exception to the ban for considerations that a public body deems relevant to international law. This exception is necessary to ensure that public authorities are not forced to make a decision which could put the UK in breach of its obligations under international law. Public authorities cannot have their own subjective views on what constitutes a breach of international law. They must reasonably consider the decision relevant to the UK’s obligations under international law.

I now turn to China, as the noble Lord, Lord Wallace of Saltaire, and the noble Baroness, Lady Janke, raised the matter. The Procurement Act, which we worked on together, will further strengthen our approach to exclude suppliers where there is clear evidence of the involvement of forced labour or other modern slavery practices. This Bill will not prevent public bodies conducting due diligence and considering the location of suppliers when assessing modern slavery risk and will not prevent public bodies adhering to modern slavery guidelines. We will continue to keep our policy response under review. The Bill’s power to exempt a particular country or territory from its provisions will allow the scope of the Bill to evolve in line with the UK Government’s foreign policy.

Additionally, concerns have been raised around how the Bill will impact the ability of public authorities to protect against human rights abuses. It is the Government’s view that allowing for blanket exclusions of suppliers because they are based in a particular country, for an undisclosed period, is disproportionate and unfair on suppliers from those countries which operate fairly and ethically. However, I can assure Members of the House that the Bill will not prevent public authorities disregarding suppliers involved in human rights abuses on a non-country specific basis. Public bodies should not be pursuing country-specific campaigns.