Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Collins of Highbury Excerpts

Committee stage
Wednesday 20th March 2024 Lords Chamber

[Lord Wolfson of Tredegar (Con)]

My Lords, I spoke on Second Reading, and I am grateful to my noble friend Lord Deben for taking the trouble to read my speech. I wait with anticipation to find out the, no doubt very few, points on which we disagree. That will perhaps be for another day, but I look forward to it.

On these amendments I can be brief, because the central point has already been made: that the proposed amendments, especially those in the name of the noble Lord, Lord Wallace of Saltaire, would add complexity and increase the likelihood of litigation; I declare the obvious interest in that respect. The amendments would therefore make the Bill not more precise but less.

I say that for three reasons. First, introducing words such as “primary or sole” is an invitation to litigation. My second short point—forgive the legal geekiness, but we are in Committee—is that a quick search of legislation.gov.uk indicates that that phrase does not appear anywhere else in legislation. “Sole or primary” does, so in case we go forward with this, I would invite the noble Lord to flip it round, so that we put the more general word “sole” first, followed by the word “primary”. That is not my main point, but as we are in Committee, which is the place for geeky legal points, I may have just made one.

Another amendment introduces the word “material”. That is a really problematic word in law, as are words such as “significant”, because we always have the debate about what the opposite of “material” is. Is it immaterial—that is, de minimis? In that case, that is not really, as I understand it, the force of the amendment. “Material” here really means “of substance”, and it is, I suggest, not a good word to use if one is seeking to get that point across.

However, my main point is that this part of the Bill is drafted clearly and that whether we add “primary or sole” or “material”, that would add complexity and invite more litigation.

[Lord Collins of Highbury (Lab)]

I was going to intervene on the noble Lord, but he finished his speech before I could. Maybe we will have an opportunity when the Minister responds to the debate, because the idea that the words “moral” and “political” are not vague stuns me. Who is to define “moral”? That is very difficult.

This is one of the rare occasions in the House when I can honestly agree with practically all the words of the noble Baroness, Lady Fox. I also agree with the words of the noble Lord, Lord Deben. I want to stress that with the amendments, especially those to Clause 1, it is necessary to probe what the words mean, and get a better understanding of them. Even if I do not personally feel committed to the amendments, it is important to use this stage to elicit from the Minister a better understanding of the intent of Clause 1.

I do not want to repeat what the noble Baroness said, but this is not about how we address BDS strategies. The impact of the clause is far wider and encompasses a whole host of things that the Government may not have really intended. Who knows? Clause 1 does not define “political” or “moral”. It is extremely wide-ranging and could cover any decision or consideration that suggests a negative view of an existing, previous or potential policy action or inaction, or other behaviour associated with a Government or any public authority in another country.

As the noble Lord, Lord Palmer of Childs Hill, said, the reasonable observer of the decision-making process test sets an extremely low bar for considering whether a decision was influenced by political or moral disapproval. It does not distinguish between minor or significant influence, and it does not clearly define a reasonable observer. I hope we can use the amendments in this group to probe substantially on these issues.

I say to the noble Baroness, Lady Noakes, that the consideration of financial, reputational, legal, environmental, social, governance and other risks in procurement and investment decisions are often complex and overlapping, and some considerations may be confidential. How are we going to sort all those things out if the Bill becomes law?

The legislation does not require the reasonable person to be someone who is familiar with the subject matter and decision-making processes. Clause 1(4) and 1(6) do not define a public authority in a foreign territory, so it could include state-run companies in some countries. This could result in additional uncertainty where the conduct of a public authority differs from the official policy of a foreign state, and that is a threat to actions in support of persecuted people across the world.

The sweeping approach to Clause 1 will undoubtedly have a chilling effect on public bodies being able to make ethical procurement and investment decisions and take actions that support upholding international law, democracy and human rights. I know I have an amendment later on, so I will not go into too much detail now.

As I mentioned at Second Reading, the Bill is incoherent and it waters down the Procurement Act 2023. That Act sets key objectives covered by procurement, including supporting public benefit, in Clause 12(1)(b), and acting and being seen to act with integrity, in Clause 12(1)(d). The Act also gave a mandate to commissioning authorities to award contracts based on the “most advantageous tender” submitted. That change of words moves away from the previous priority of the “most economically advantageous tender” under which the previous procurement regime existed. What was the intent of that change in language? The intent was to enable contracting authorities to give more weight to award criteria such as decent work and wider social values. Again, we are coming to other amendments, particularly about the environment.

This wide definition, which is covered in Clause 1, is the fundamental problem with the Bill. The Explanatory Notes state:

“Clause 1 prohibits relevant public authorities from having regard to a territorial consideration in a way that indicates moral or political disapproval of a country or territory’s foreign state conduct, when making decisions … This clause is designed to catch both open participation in boycotts”,


which the noble Baroness, Lady Fox, talked about,

“or divestment campaigns, and more subtle ways of singling out countries or territories that could produce similar results”.

As I say, this sweeping approach will have a chilling effect and will impact on public authorities in upholding international law.

A point I want to focus on is that the UK Government have committed to implementing international standards, including the UN guiding principles on business and human rights—the UNGPs—as well as the commitment made in terms of the environment in the Paris agreement. Carrying out effective due diligence is central to public bodies, as state institutions, being able to fulfil their human rights obligations, implement UNGPs and make ethical procurement and investment decisions. However, because the terminology, such as “political and moral disapproval”, is undefined, this will create problems for public authorities when carrying out their due diligence. That is what will be needed in the due diligence process to avoid falling foul of this legislation, when clarity is so lacking.

--- Later in debate ---

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

My Lords, I thank all noble Lords for their amendments and for their contributions to the debate. I look forward to scrutinising the Bill and these proposed changes in detail during the four Committee days that we have set aside—although this one has been a little truncated. I remain open to listening to noble Lords’ views from all sides, and I hope we can use these sessions to put forward the best possible version of this legislation.

Clarity on all sides is important, and I look forward to further meetings with the noble Lord, Lord Wallace of Saltaire, as the Bill progresses. He knows I enjoy meetings with him on the Bills that we have done together. Probing amendments are also important, as the noble Lord, Lord Collins of Highbury, has just said. We were of course both involved with the Procurement Act and I look forward to discussing how the two pieces of legislation interact and how human rights considerations are respected—as they are.

I hope that, in responding to these six amendments, I can assure the House that Clause 1 as currently drafted is the most proportionate and clear way of fulfilling the manifesto commitment of banning public bodies from imposing their own boycott and divestment campaigns.

Clause 1 sets out three tests that must be met to trigger the ban. First, the ban is narrow. It applies only to procurement or investment decisions. Secondly, the public body must have considered a specific territory or country as part of making its decision. Thirdly, that consideration must reflect political or moral disapproval of the conduct of a foreign state.

I turn first, if I may, to Amendments 3, 4 and 5, tabled by the noble Lord, Lord Verdirame. I am grateful for his general support. However, together, his amendments would alter the scope of the clause. Amendments 3 and 5 would prohibit public authorities from being influenced in any way by foreign state conduct. This would widen the prohibition in Clause 1 to include considerations that relate specifically or mainly to a country or territory in a way that is influenced by approval of foreign state conduct. The current drafting prohibits only disapproval of foreign state conduct, and the inclusion of moral and political disapproval is necessary to ensure that the Bill does not capture legitimate territorial considerations that are not about boycotts and divestment campaigns and would take the Bill beyond the manifesto commitment. An example of this would include encouraging trade with important trading partners. These amendments would therefore prohibit a public authority from favouring goods or services from a particular country or territory, based on approval of that country’s conduct. It therefore captures a broader range of decisions that are not relevant to boycotts and divestment campaigns.

Amendment 4, on the other hand, would narrow the prohibition so that it applied only in the case of disapproval of a foreign state’s conduct within its own territory. It would not apply in the case of disapproval of a foreign state’s conduct outside its territory. I agree with the comments made by my noble friend Lady Noakes: this would effectively allow public authorities to boycott countries whose foreign policy they disapproved of. This could leave a significant loophole—a word I think she used—in the ban and undermine the manifesto commitment.

I will now address Clause 1(7) in response to Amendment 6 by the noble Lord, Lord Wallace of Saltaire, and the concerns raised by the noble Baroness, Lady Janke. This amendment would permit public authorities to engage in boycotts and divestment campaigns as long as they were only a result of pressure from a third party, such as a student union, rather than a result of the public authority’s own moral or political disapproval. Subsection (7) is a necessary element of the Bill, as public authorities such as universities and local authorities are frequently pressured to engage in boycotts or divestment campaigns. For example, student unions at Warwick University and Sussex University have passed motions calling for their universities to divest from Israeli companies. If a university conducted a boycott or divestment campaign because of such pressure, rather than because of its own view of a foreign state, we would want that campaign to be caught. Subsection (7) extends to any person seeking to persuade the public authority. However, for there to be a breach of the ban, an enforcement authority must be satisfied that there is enough evidence that a third party influenced the public authority.

I will address the comments of the noble Baroness, Lady Janke, on decision-making, if she would agree, on group 2 because we are going to be discussing the meaning of a decision-maker for the purposes of the Bill.

Finally, and most importantly, I turn to Amendments 1 and 2, tabled by the noble Lords, Lord Wallace of Saltaire and Lord Palmer of Childs Hill. Amendment 1 would narrow the scope of the prohibition in Clause 1 so that it prohibited public authorities from taking account of territorial considerations only where moral or political disapproval of foreign state conduct is the “primary or sole” factor in the decision. My noble friend Lord Leigh of Hurley asked a question which made this point, while my noble friend Lord Wolfson of Tredegar was concerned that it would increase uncertainty and lead to legal disputes.

Similarly, Amendment 2, tabled by the noble Lord, Lord Palmer, would narrow the prohibition to decisions “materially” influenced by moral or political disapproval of foreign state conduct. Like my noble friend Lord Wolfson, I do not agree with weakening the effect of the Bill in this way. Public authorities buying goods or services, or making investments, should not be influenced by moral or political disapproval of foreign state conduct to any degree, unless—and this is important—one of the exemptions, such as environmental or labour misconduct, applies.

I reassure the Committee that Clause 1 will not capture fleeting and inconsequential remarks made during the procurement or investment decision-making process. The Bill prohibits only considerations that a reasonable observer of the decision-making process would consider a contributing factor to a decision.

[Lord Collins of Highbury (Lab)]

It is precisely that point I want to better understand, because many decisions are going to be complex. While the Minister mentioned the exclusion of things, there could be a combination of issues which would influence the final decision. Somebody might be able to say, “Actually, that combination has become a moral and political thing”. That is what really concerns me. The Minister is very confident that certain things will not be captured, but I do not see that. I would like her to explain in a little more detail that final point she made.

[Baroness Neville-Rolfe (Con)]

We will try to do that. I am also happy to discuss this further, because it is obviously an important point in relation to the Bill and, as we agreed at the beginning, we need to try to find a way that does not create a lot of uncertainty.

The noble Lord, Lord Wallace of Saltaire, commented on the perceived lack of evidence for the Bill, but boycotts have been attempted by several public authorities in recent years. In 2014, Leicester City Council passed a motion boycotting goods from Israeli settlements, as far as the law allows. Several other local authorities have passed boycotting or condemnatory motions, including Swansea Council, Gwynedd Council—

[Lord Collins of Highbury (Lab)]

I am sorry to interrupt, but on that point can the Minister tell us what the FCDO’s advice and the United Nations decisions are in relation to the Occupied Territories?

[Baroness Neville-Rolfe (Con)]

I am certainly very happy to come back to that on a later group of amendments.

[Lord Collins of Highbury (Lab)]

But it is material to what the Minister has just said.

[Baroness Neville-Rolfe (Con)]

I will see if I can come back to it before we finish. I was trying to give the examples that the noble Lord, Lord Wallace of Saltaire, had asked for. There was West Dunbartonshire Council and Stirling Council, and in 2021 Lancaster City Council passed a motion in support of the wider BDS movement.

[Lord Collins of Highbury (Lab)]

I come back to the first point that the Minister made. It is really important that we are clear about this, because one concern we have mentioned—I am not going to make a Second Reading speech—is the impact that this Bill has on the United Kingdom’s foreign policy. If there is a discussion about goods from and investments in the Occupied Territories, she needs to explain why she has evidenced that and how it is supported by the FCDO’s own advice and the Government’s support for United Nations resolutions on that subject.

[Baroness Neville-Rolfe (Con)]

I can certainly provide more detail of the boycotts, if that is helpful.

[Lord Collins of Highbury (Lab)]

No, that is not what I am asking. The first example that the Minister gave was in relation to the Occupied Territories. I really think it is important that we understand why she has referenced that.

[Baroness Neville-Rolfe (Con)]

I was giving a list and I will certainly come back on that question. We have a group relating to the Occupied Territories later on, when we can go into this in more detail. If the noble Lord can give me a bit of slack, I will see if I can get fuller information and come back to that at the end.

I was trying to answer the question on evidence. If I may, I should also like to cite, from September 2023, Islington Council passing a motion in opposition to this Bill, expressing its support for BDS campaigns—which everybody has said that they are very unhappy about—and resolving to:

“Continue to ensure that our own ethical procurement strategy doesn’t include procuring goods and services produced by oppressive regimes”.


I have not covered all the BDS activity in public bodies, but I hope that this demonstrates to the noble Lord that there is a considerable evidence base.

Separately, I note the points made by the noble Lord, Lord Mann, about student unions and the provision of kosher foods in universities. We are going to discuss that point. The noble Lord has tabled some interesting amendments on it in group 3.

--- Later in debate ---

[Lord Wolfson of Tredegar (Con)]

My Lords, I associate myself with the words of my noble friend Lord Pickles about the work done over many years by the noble Lord, Lord Mann, for the Government in an unpaid capacity. That work is well regarded and very much appreciated in the Jewish community and, I am sure, well beyond it too.

Turning to Amendment 9, while I understand its focus and purpose, I am not sure that it is necessary in the Bill. In particular, although this is not my area of law, I wonder whether the thrust of the amendment would not actually be covered by existing provisions under the Equality Act. I do not know whether the Minister or her department has thought of that, but, if this were to go forward, that might be another way of dealing with this issue.

On a narrower point, the amendment is also widely drawn. It would seem to cover, for example, a decision to use one halal supplier or one kosher supplier rather than a different halal or kosher supplier. I think that cannot be within the intention of the amendment, although I think it would be caught by it.

I am conscious of the time, but I will end on a slightly different point. The focus of this amendment is that food is sometimes used to drive a wedge between communities. This might be a strange thing for me to say, but I want to pay tribute to Zarah Sultana MP, with whom I probably agree on absolutely nothing but who, with Charlotte Nichols MP, ran a long-standing campaign in Parliament to have kosher and halal food available here. They found a supplier called 1070, which has both kosher and halal certification to provide that food. As a result, I have had conversations over food with people who I might not otherwise have had those conversations with and I found those discussions extremely helpful. I use this, probably very wrongly, to suggest to the authorities that this kosher and halal food be continued, so that we can not only eat together but discuss and speak together as well.

[Lord Collins of Highbury (Lab)]

My Lords, I too associate myself with the comments of the noble Lord, Lord Pickles, because the noble Lord, Lord Mann, has done incredibly important work in tackling anti-Semitism and ensuring that we remove it from all of our civil life. I pay tribute to him.

I will not delay the House too long, but the important thing with these two amendments is expectations. This is the problem with the Bill. While I want to avoid going back, we have made a plea—my noble friend Lady Chapman made it at Second Reading—that we want to co-operate with the Government to implement their manifesto commitment. I am afraid that this Bill goes well beyond that and brings into question other issues.

The noble Lord, Lord Mann, is absolutely right to put these sorts of amendments down, because they address the concerns of the community. People often think when we are talking about this Bill that we are talking about consumer boycotts and consumer choice. No, we are not. It is about decisions over investment and procurement, but those decisions can involve the sorts of things that the noble Lord, Lord Mann, is talking about—and we heard an example from the noble Lord just now.

How we manage expectations is really important. I suspect that, when we go into other groups, we will hear lots of concerns about issues that go well beyond the scope of the Bill. So I hope the Minister understands why the noble Lord, Lord Mann, has put these amendments in. They are to probe, but also to say that there is a problem, there is an issue and the Bill does not solve it.

[Baroness Neville-Rolfe (Con)]

My Lords, I thank the noble Lord, Lord Mann, for drawing the House’s attention to two important issues with his Amendments 8 and 9. Like my noble friend Lord Pickles, who it is a real pleasure to welcome to our debate, my noble friend Lord Wolfson of Tredegar and the noble Lord, Lord Collins of Highbury, I am really grateful for all the work that the noble Lord, Lord Mann, has done.

My noble friend Lord Pickles and I worked together in my retail days, when he was a leading influence in local government and I worked to have kosher and halal food in many of the Tescos that were spreading across the country. So there were lots of conversations over food. A focus on community concerns is what much of the probing has been about this evening—but that is for another group.

I remain of the view that we need to apply this Bill to universities as we are doing, and I am committed to having a comprehensive debate and discussion on the impact of the Bill on universities at the appropriate moment later in Committee.

As we have heard, the two amendments in this group would add two stipulations to Clause 1. Amendment 8 intends to ensure that the prohibition applies to a decision made by a university to enter into a commercial partnership with another university or research university in a foreign state. The prohibition in the Bill already covers higher education providers in their public functions, including when their procurement and investment decisions form part of a research collaboration. Decisions relating to a commercial partnership are, however, likely to constitute a private function—for example, a decision relating to a research partnership to develop a new product funded by a pharmaceutical company. The ban applies only to public authorities’ public functions, as we have heard, and private decisions are rightly out of scope of the Bill. I note what the noble Lord, Lord Mann, says, but it would be inappropriate to apply the ban to private functions, and it would take the Bill beyond the manifesto commitment.

We have been clear in the Explanatory Notes that Clause 1 is not intended to prevent a higher education provider deciding to terminate a collaboration with a foreign university on the grounds of academic freedom, if they deem it necessary in line with their statutory duties in Part A1 of the Higher Education and Research Act 2017 or other legislation. The Bill is about ensuring that universities and higher education institutions do not have a corporate view on a particular matter of foreign policy when making their investment and procurement decisions. It is right that the Bill does not stray into decisions that could threaten academic freedom, as helpfully highlighted by the noble Lord, Lord Stevens of Birmingham, who spoke at Second Reading. I am sympathetic to the points that the noble Lord, Lord Mann, is making, and the Government do not support academic boycotts, but this Bill rightly does not interfere with academic freedom or private activity.

I turn to the points made by the noble Lord, Lord Mann, about the Jewish community’s support for this Bill. The Jewish community in the UK is widely supportive of the Bill as drafted. Russell Langer, head of policy at the Jewish Leadership Council, provided the following statement in support of the Bill’s restriction on universities’ economic activities:

“Higher education institutions continue to come under pressure to adopt BDS policies ... This legislation will be a valuable tool in assisting our higher education in rejecting this effort”.


The Bill will sit alongside other measures that the Government are taking to protect academic freedom. The Higher Education (Freedom of Speech) Act 2023 will ensure that freedom of speech is protected and promoted within higher education in England, and it will strengthen existing freedom of speech duties and directly address gaps in the existing law. Without action to counter attempts to discourage or even silence unpopular views, intellectual life on campus for staff and students may be unfairly narrowed or diminished, which is why there was a commitment in the 2019 manifesto to strengthen this.