Economic Activity of Public Bodies (Overseas Matters) Bill (First sitting)

Kim Leadbeater Excerpts

Committee stage
Tuesday 5th September 2023 Public Bill Committees

[Brendan Clarke-Smith (Bassetlaw) (Con)]

I have also been on a trip funded by Conservative Friends of Israel, and I am also a friend of James Gurd.

[Kim Leadbeater (Batley and Spen) (Lab)]

I have been on a trip funded by Caabu, who are not giving evidence this morning, but I believe they are later on.

[The Chair]

Are there any more? I do not think there are any more Members!

We will first hear oral evidence from Jo Donnelly, who is the head of pensions at the Local Government Association, and Jon Richards, who is vice-chair of the Local Government Pension Scheme Advisory Board. Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill, and we must stick to the timings in the programme order the Committee has agreed. For this panel, we have until 9.55 am. To begin with, could the witnesses please introduce themselves for the record?

Jo Donnelly: I am Jo Donnelly, head of pensions at the Local Government Association.

Jon Richards: I am Jon Richards, vice-chair of the Local Government Pension Scheme Advisory Board. In my day job, I am assistant general secretary for Unison, the public services union, although I am here specifically in my role as vice-chair.

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[The Chair]

I think this will be the last question.

[Kim Leadbeater]

Q Thank you, Chair, and thank you to the witnesses for joining us this morning. You have said that you are there to deliver on behalf of the members of your schemes. Many of my constituents will have pension funds and some may well have a view on how those funds are invested, which is surely right. How will this legislation affect the ability of fund managers to respond to those concerns of members?

Jo Donnelly: It depends on the terminology. I would interpret “fund managers” as the asset managers: the investment professionals who manage the money in the pension scheme. They are tasked and given a mandate by the administering authority, by the pensions committee, which makes the decision as a collective. There is no individual decision making in the LGPS; it is all done as a collective by committee, which is one reason why there is some confusion for us about who the decision maker is, because that is never an individual in the LGPS.

In terms of fund managers as investment managers, they will continue to operate in line with the mandate that they are given by their client, which is the local authority or, in some cases, the investment pool, if it is one of the eight LGPS pools that exist in England and Wales. As long as those mandates do not breach the law, they will continue to operate as they do now. They make day-to-day commercial decisions about investments, taking into account all the relevant risk factors. If asset managers feel that there needs to be a change in an investment profile because of risk factors, they will make those decisions, normally without having to check that with the client—the authority that has invested the money.

Jon Richards: Can I just add that we have a series of oversight bodies that take those decisions? Obviously there is a pension fund committee in the council, which has the administerial authority. We also have separate pension boards which have half representatives of employers and half of employees, which again matches what we have at national level, where our board is six councillors and six member representatives. The chair is a Conservative councillor, the chair of the employers’ side is a Conservative councillor and I am a trade union official.

We have never had to vote at the national level. We have voting powers, but we have never used them because we have never needed to: we understand that we have a fiduciary duty. That is where we agree with Conservative councillors. We disagree very heavily on politics and all sorts of things, but when it comes to the committee we are pretty clear about what it is we need to do, and also about the need to improve governance to ensure that members’ representatives and members’ views are taken into account when people make those investment decisions.

[Kim Leadbeater]

Q You do not think this legislation will have a negative impact on that process?

Jon Richards: I do not think so. I think there are wider problems with this legislation. There are ways of dealing with governance and how members can feed in and put their views forward at local and national level. The Bill has a series of other difficulties that will cause us significant administrative, governance and legal problems.

Jo Donnelly: I think there are some concerns about the exceptions and how they work. In the schedule, there are exceptions to permit considerations around environmental, social and governance factors, which are obviously now standard practice to consider when looking at investments. But there are some concerns about the wording of those provisions, whether they will allow things to continue to operate, and whether committees will be able to consider specific concerns brought by scheme members.

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[Kim Leadbeater]

Q Thank you for joining us this morning. Like all my colleagues, I abhor antisemitism, and I agree that if further measures are needed to eradicate it from public life, of course we will support them. However, is there not a risk that because this Bill very publicly singles out the state of Israel as a special case, it may provoke greater antisemitism, which is the very thing that none of us want to see?

Russell Langer: I have heard this argument and it is really important that it gets a clear answer, which is that antisemitism is not a response to Government legislation. It is not a criticism of the Israeli Government; antisemitism is the hatred of Jews. And I am really cautious about any argument that this piece of legislation would increase antisemitism. I think that it is an argument that we really need to steer clear of.

Daniel Sugarman: I would add that, from our point of view, the reason why it is right that Israel is singled out here is because, as far as I am aware, Israel is the only country that is regularly targeted for such boycotts via public bodies. No other country is targeted in such a manner. Therefore, it seems correct that there is some acknowledgement of that and some way to ensure that it does not happen.

[Kim Leadbeater]

Q And you do not have any concerns that this Bill could have a negative impact on communities within the UK?

Russell Langer: I think it will have a positive impact on communities here in the UK. Unfortunately, what we see here in the UK—it happens with other foreign issues, but it happens specifically with the Israeli-Palestinian conflict—is that we see a foreign conflict affecting intercommunity relations here in the UK. Worst of all, we then see public bodies—it is a minority, but some public bodies—seeking to then get involved in that debate and make those tensions worse, when I think they should be getting involved to improve the situation. I completely agree with you, but I think I come to a different point.

Daniel Sugarman: It will certainly make things better for Jewish communities—particularly small Jewish communities—who have been in positions where they sometimes feel that, unless they vocally criticise Israel, as Jews, they will not get a hearing. I admit, I do not have a huge amount of sympathy for people who might feel that they no longer have the means to make such Jewish communities feel uncomfortable.

[Steve McCabe]

Q Good morning. When I first heard about the Government’s intentions to legislate in this area, I understood it to be legislation to prevent public bodies from boycotting the state of Israel, which I welcomed. I just wonder whether you think that the Government have made life easier or more difficult for themselves by extending the range and scope of the Bill, or whether it would have been better to have concentrated on preventing the boycott of the state of Israel.

Daniel Sugarman: That is an excellent point, but I think that, had the Government focused specifically on Israel, and not on anything else, we would have seen some of the same people who are raising questions in general—well-meaning questions as to why Israel is singled out specifically in the Bill—and I think that the questions as to why only Israel was being focused on would have been 1,000 times louder. I think it makes sense that the Government have widened the scope for this, while singling out Israel within the wider Bill.

Russell Langer: I would add that part of our reasoning to believe that public bodies should not be boycotting Israel is that it contravenes UK Government policy, and that it is a foreign-policy issue being taken up by public bodies. Therefore, I can understand the wider scope to tie that in to that national picture of public bodies not taking foreign-policy decisions contrary to national Government.

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[Dr Luke Evans (Bosworth) (Con)]

Q Councillors Deering and Jamieson, this question is to both of you. Councillor Deering, you said the point around pensions should not be political. In your experience as councillors, how much of an increase have you seen in talk about, for example, previous slavery, the environmental side, Israel and Palestine, China and Russia? How much more of this debate is happening at a local council level, as opposed to 10 years ago? Was this debate happening then? Is it becoming more prevalent?

Councillor Deering: Well, I do not quite go back 10 years in local government, so I cannot quite answer for that period. I became a county councillor in 2017, I think, but I have been involved in the finance and performance side more or less ever since day one. I would say that the answer to your question is: a bit. Not only is there slightly more of this discussion because of general issues and political issues, but also in part because all councils are under financial pressure and every now and again there is a view expressed by someone—from wherever they might be on the political spectrum—that, “There seems to be an awful lot of money in the pension fund, and can’t that somehow be used?” Obviously that is inappropriate. In our council, everybody understands that, but it is a frustration that is expressed from time to time. Coming back to your question, yes, there is a little bit more of what you asked about, but maybe that is because there are an increasing number of events in the world that might lead to the thought being ventilated.

Councillor Jamieson: The modern world—with the increase in social media, the ability for electronic petitions and so forth—has meant that councils are subject to more petitioning and more demand from groups of the public. It is easier to put these things on the agenda than it was in the past, so I think it is inevitable that we are seeing more of whatever it is that we are talking about compared with 10 years ago; in fact, I can go back 14 years, so compared with 14 years ago.

[Kim Leadbeater]

Q I will pick up on a point that has kind of been covered already. Do you have anything further to add on the issue of freedom of speech, or any further concerns that this Bill will undermine local democracy by restricting what councils and councillors can say and do? You are very fortunate in your area if you have not been impacted by some of the more contentious issues that the Bill covers, but I have some concerns around freedom of speech for local representatives and undermining local government autonomy. Is there anything else you want to add?

Councillor Deering: Personally, I am a very big believer in freedom of speech, and just freedom. If I might make a huge point, it is one of the things that this country is pretty good at, actually. I am very strongly in favour of it and would not want to see it impinged, but we all need to find a way to work together and achieve objectives. I repeat that our institution is not particularly vexed about the issue that underlies your question; we can see it, but I do not know that we are vexed by it.

Councillor Jamieson: If I can come back to this—I am in danger of repeating myself—I do think it is important that there are some tweaks to the legislation. One is that writing the minutes of a meeting that reflect a view expressed in the meeting should not be a reason to be referred to the Pensions Regulator or for judicial review. Also, if the reference to a decision having been “influenced” was changed to “substantially influenced”, that would make life a lot easier.

I also have a big concern with judicial reviews. My biggest area of experience with judicial reviews is in the planning system, where they can be hugely expensive and time-consuming. I really do not like the fact that councils will be subject to judicial reviews, which will make vexatious JRs and so forth much easier. We are covered by the Pensions Regulator, and if the legislation were changed to say that it is the Pensions Regulator that makes the decision, and the Pensions Regulator could then be judicially reviewed if somebody felt it had not made its decision correctly, that would reduce the risk of vexatious JRs. That should also be linked to who can claim that they have been impacted. At the moment, pretty much anybody in the UK is in a household where there is a ratepayer; does that mean that anybody can mount a challenge just on the basis that they are potentially influenced or potentially a taxpayer?

The definition of who can mount a JR should be tightened, then, but ideally we should remove the ability to JR councils for the decisions. We should be monitored by the regulator and complaints should be made to the regulator, which should make that decision. If the regulator makes a decision and a member of the public is not happy with that decision, they should JR the regulator, not the council. I think that would make people feel a lot more comfortable about expressing their views and not having a vexatious JR or worrying about whether a minute in a meeting might contravene the rules or whatever.

[The Chair]

The regulator might consider itself to be an exception to that rule.

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[Chris Stephens]

Q Hannah, I think you were present when I put this question earlier. You mentioned the Union of Jewish Students. As I understand it, your organisation and the Union of Jewish Students are on record as saying that this Bill restricts freedom of expression rather than directly addressing the issue of antisemitism, and you are both on record as saying that it does not address the very epidemic—that is, the evil of rising antisemitism—that it claims it wants to tackle. Could you expand on that further, please?

Hannah Weisfeld: I am not sure whether that is a direct quote—I am not sure whether those were our words or the words of the Union of Jewish Students—but our sense is that the Bill will severely limit freedom of speech, as has been mentioned a lot this morning. Clause 4 already gags the ability of local democracies to express their opinions. That is very troubling in a democratic society—the idea that we legislate against free speech. As Jews, we don’t do well in societies that clamp down on free speech, and I think that there is a really big debate in the community about that. There is a very big debate inside Israel about that, and inside Jewish communities in America, where there has been similar legislation.

I think it is worth drawing your attention to anti-boycott legislation that the Israeli Government passed in the Knesset in 2011. Some very mainstream Israeli political figures—people you will know—came out very strongly against it, such as Ruvi Rivlin, who was the last President of Israel, and Tzipi Livni and Dan Meridor. They were all very clear that clamping down on boycotts and doing so in a legislative way does not help Israel and does not solve questions of antisemitism. Dan Meridor, who was the Likud Deputy Prime Minister, said:

“This law helps in delegitimising Israel, and makes Israel look like a country that prohibits free speech. It is useless. Those who boycott are a small group of people. I oppose boycotts, but they should not be illegal.”

That is the kind of sentiment that we echo.

Going back to the Minister’s question about why we do not support BDS, it is possible to say that we do not support something but that we protect the rights of other people to have that opinion. That is a very important principle in a democratic country, and it is one that we—as an organisation that is committed to Israel, committed to Jewish life in Britain and committed to democracy—want to see being upheld, which is why we have an issue with this legislation.

[Kim Leadbeater]

Q You have talked a little bit about your concern about community relations in the UK as a result of this Bill; I think that that has been heard. What impact will the Bill have on your organisation’s work in Israel and Palestine?

Hannah Weisfeld: I do not know whether people have seen it, but a letter was sent by 14 human rights and civil society organisations in Israel that went both to the Opposition and to the Government. They were very clear—I think this is very important—that the current political climate in Israel, which people may or may not be following closely, is extremely dangerous. It is very, very problematic. There are hundreds of thousands of people protesting on a weekly basis. I read yesterday that the police estimate is that there have been 7 million attendees at protests for 35 weeks—not 7 million individuals, but 7 million appearances at protests—and there are very severe clampdowns on free speech.

In the last year, civil society organisations in Israel have already faced two attempts, I think, to severely curtail their funding and to shut down dissent against the Israeli Government. What our partners in Israel wrote to the Government here and to the Opposition is worth quoting from: “We know all too well the consequences of shutting down dissent and disagreement. Today in Israel, there is significant civil unrest involving weekly protests of hundreds of thousands of people, reservists refusing to show up for military service and companies divesting their funds out of Israel. This legislation is giving in to Israel’s far-right Government’s desire to shut down debate, protest and dissent.” Certainly on the ground in Israel, civil society organisations involved in protests see this legislation as a gift to the Benjamin Netanyahu Government.

I should add that there is huge concern in the Jewish community here about the ascendancy of Benjamin Netanyahu’s Government and the far right. Today, literally about two minutes ago, the Government Minister for Diaspora Affairs was just uninvited from JW3, the main Jewish community centre in London, because of his opinions and because of his far-right position. He was due to have a tour there at, I think, 5 or 6 o’clock this afternoon, but about five minutes ago he was uninvited. That is the depth of feeling in this community: 79% of people who were polled in July said that they disapprove of Israeli Prime Minister Benjamin Netanyahu.

We have a community here and partners on the ground in Israel who are deeply worried about the direction of travel. What this Bill will do is say, “It is business as usual—not only business as usual, but we will give you a gift, which is forever to put Israel and the occupied territories beyond public scrutiny.” By keeping the clause that specifically lists Israel, the OPTs and the Golan Heights, we are saying that despite the fact that there are now Israelis divesting and dissolving companies and moving them outside Israel, there can never be any circumstances in which it is OK for public bodies in Britain to do that. I think that that is very, very troubling, given that I think everybody here is committed to Israel’s existence as a democratic and Jewish state.

[The Chair]

I am afraid that that brings us to the end of the allotted time for the Committee to ask questions. On behalf of the Committee, may I thank the witness for taking a position that does not necessarily conform to some of the other views that we have heard but that makes it absolutely clear what you stand for? We are very grateful for that.

Hannah Weisfeld: Thank you for inviting me.

Examination of witness

         James Gurd gave evidence.