Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hendy Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Lord Hendy (Lab)]

My Lords, we live in a globalised world of goods and services where capital seeks the cheapest raw material and the cheapest labour. If—and I hope it still is “if”—Port Talbot steelworks closes, 3,000 men and women in South Wales will lose their jobs. But the needs of Britain for the same consumption of steel will continue; it is simply that 3,000 workers somewhere else in the world, probably on cheaper wages and with worse conditions, less health and safety protection and fewer trade union rights, will produce that steel.

There is no way to equalise wages in our global supply chains, of course, but conditions—minimum conditions, at least—can be equalised. We have the legal tools to do that through international labour standards. I refer to the International Labour Organization’s 1944 Declaration of Philadelphia, and its 2008 Declaration on Social Justice for a Fair Globalisation. Of course, I refer also to the fundamental ILO conventions, which this country was one of the first to ratify: Convention 87 on Freedom of Association and Protection of the Right to Organise; Convention 98 on the Right to Organise and Collective Bargaining; Convention 100 on Equal Remuneration; convention 111 on discrimination; Convention 155 on Occupational Safety and Health; and Convention 187 on the Promotional Framework for Occupational Safety and Health.

The UK ratified them all and was happy to reaffirm them in the Brexit trade deal: the trade and co-operation agreement. Democracy requires that these standards be enforced to defend the conditions of workers both here and abroad. All persons and bodies buying goods and services on the global market should be entitled to take into account adherence to international labour standards. I object to the deprivation of the power of devolved Governments and public bodies—and, indeed, private bodies with public functions—to select their providers of goods and services on the basis of, among other things, conformity to these international laws.

Paragraph 6 of Part 2 of the Schedule, about which the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Verdirame, have spoken, is insufficient protection. So is paragraph 8. They are so narrowly drawn for these purposes that that they fail effectively to exempt such requirements of conformity to international labour standards. Paragraph 6 permits exemption only for conduct that places the UK in breach of its international law obligations. My concern, however, is breaches of international law by Governments in the supply chains to the United Kingdom. Paragraph 8 applies only to conduct that would amount to a criminal offence in relation to slavery, trafficking orders and labour market orders under the Immigration Act. It does not protect against infractions of the right to health and safety at work, the right to strike, the right to bargain collectively, the right to organise and so on.

I learn from the TUC briefing that the International Trade Union Confederation’s Global Rights Index has ascertained that breaches of workers’ rights reached record highs in 2023. It lists Bangladesh, Belarus, Ecuador, Egypt, Eswatini, Guatemala, Myanmar, Tunisia, the Philippines and Turkey as the 10 worst countries for working people, with 73% of the countries surveyed impeding the registration of unions or banning them, including Belarus, Central African Republic and Guatemala, while 80% of the countries surveyed violated the right to strike. Why should public bodies not take such matters into consideration?

As many noble Lords have said, there are exemptions in Clause 3(7) for Israel and the Occupied Territories. Considering Israel’s many breaches of international law in relation to its conduct, including that in Gaza now, what justification can there be for excusing that state from all breaches of international labour standards in so far as public bodies must not take them into account?

I would like the Minister’s help in explaining why international labour standards that are binding on the UK and all nations of the world should not be an appropriate factor for decisions on procurement by public bodies, and why a state that bans trade unions or strikes and imposes penalties on those who participate in them should not be subject to a decision by a public body that it will not buy goods or services from it. I hope the Minister will say she will accept an amendment to allow such matters to be taken into consideration.

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[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.

[Lord Hendy (Lab)]

Can the Minister explain how that works? If a public authority decided that it would not trade with any supplier which banned trade unions or the right to strike, and, subsequently, a tender came in from China, could it or could it not, under the Bill, decide not to accept such a tender?

[Baroness Neville-Rolfe (Con)]

I do not entirely understand the question, but I am happy to research that and come back. The basic point is that public bodies should not be pursuing country-specific campaigns, as foreign policy is a matter for the UK Government alone—but obviously we need to understand the details in the supply chain.

Additionally, the Bill contains an exception to the ban for various considerations where the Government have assessed it appropriate for public authorities to make territorial considerations influenced by moral or political disapproval of foreign state conduct, including considerations relevant to labour market misconduct, which was a concern of the noble Lord.

Bodies that administer the Local Government Pension Scheme are captured by the definition of “public authorities” in Section 6 of the Human Rights Act 1998, and it is therefore appropriate for that decision to be captured. For example, a UN special rapporteur wrote to the LGPS in November 2021 demanding divestment from a number of Israeli companies, and the demand cited its ability to play a “transformational role”. I think we can agree that the role of local authorities is to manage the assets to deliver benefits to members.

The noble Baroness, Lady Young of Old Scone, asked whether the pension fund Nest and the PPF are in scope of the Bill. The only pension funds the Bill will apply to are those in the Local Government Pension Scheme, so they are not within scope.

There was a long conversation about the application of the Bill—which bodies it applies to. It will apply to public authorities, as defined in Section 6 of the Human Rights Act 1998. This definition has been in statute for 25 years and sets the scope for the application of fundamental legislation.

Indicative factors that were relevant to judges’ previous decisions on the issue include the body receiving a significant amount of public funding, the body carrying out acts in exercise of statutory powers and the body providing a public service. I encourage any institution that is unsure whether it is bound by Section 6 of the HRA to seek independent advice, but I have noted various questions on scope that we may come back to in Committee, because there were some useful contributions on that, including from the noble Baroness, Lady Grey-Thompson.

I clarify that the Bill’s Short Title provides a general indication of its subject matter, and it is clear that it applies only to public authorities, as defined in Section 6 of the Human Rights Act.

This legislation delivers an important manifesto commitment. It will ensure that the UK has a consistent foreign policy approach and speaks with one voice internationally. I have not had time to answer every point, but I have been listening carefully. I look forward to working with noble Lords throughout the passage of the Bill to deliver this important legislation and to continue to engage on the various knotty and important issues that have been raised today. I commend the Bill to the House.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hendy Excerpts

Committee stage
Tuesday 7th May 2024 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I have Amendment 28 in this group and I thank the noble Lord, Lord Pannick, for adding his name. I should first say that I am in complete agreement with the thoughts that lie behind Amendments 18 and 29, to which the noble Lord, Lord Verdirame, has spoken so eloquently.

My Amendment 28 is simply a more direct way of dealing with the same problem. It deletes paragraph 6 of the schedule in its entirety, so that public authorities cannot use international law considerations as a means of avoiding the effect of Section 1 of the Bill. Public authorities are not experts in international law but might well seek to use ill-founded concerns about the UK’s adherence to international law as a smokescreen behind which they believe that they can hide their boycott activities. Put simply, it creates a huge loophole in the Bill.

I tried to compare the Bill with last year’s Procurement Act to see whether the exclusions in the schedule to this Bill are the same as the mandatory and discretionary grounds for exclusion in the Procurement Act. This was not easy, because it is clear that two completely different sets of draftsmen have been involved in the two Bills. However, the one thing that I am pretty sure of is that the Procurement Act did not have an international law exclusion ground, so the inclusion of paragraph 6 in the schedule to this Bill is somewhat puzzling.

I shall comment briefly on Amendment 31 in this group, in the name of the noble Lord, Lord Kennedy, and the noble Baroness, Lady Blower, because that would extend the range of things that public authorities could look at to breaches of international law outside the UK. Not only is this way beyond the Procurement Act exclusions as well, but it adds yet another loophole, making the loophole as big as it could possibly be in order to allow public authorities to justify boycotts. For that reason, I cannot support it. I look forward to hearing the Minister’s rationale for the inclusion of paragraph 6 in the schedule.

[Lord Hendy (Lab)]

My Lords, I shall speak to Amendment 31 in my name and that of the noble Baroness, Lady Blower. I have no observations on the amendments that have just been spoken to.

Paragraph 6 of Schedule 1 disapplies the bar in Clause 1 of the Bill on a public entity, for want of a more precise definition, from taking into account political or moral disapproval of a foreign state’s conduct in making procurement or investment decisions in one particular situation. A procurement decision is defined in Clause 2(2) as

“a decision about a contract for the supply of goods, services or works to the decision-maker”.

Paragraph 6 applies where the decision-maker reasonably considers that its political or moral disapproval of a foreign state’s conduct is relevant to whether the procurement or investment decision would place the UK in breach of its international law obligations. I have no problem with that at all.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Hendy Excerpts

Committee stage
Tuesday 14th May 2024 Lords Chamber

Moved by

[Lord Hendy]

30: The Schedule, page 13, line 5, at end insert “and conventions, including the Genocide Convention, the Universal Declaration on Human Rights or any United Nations Security Council Resolution supported by the United Kingdom.”

[Lord Hendy (Lab)]

My Lords, in the unavoidable absence of my noble friend Lady Blower, and at her request, I beg to move Amendment 30, which is intended to add to paragraph 6 of the schedule.

The paragraph, which we discussed in Committee last week, permits a decision-maker to take into account whether the decision might put the UK in breach of its obligations under international law. In the last debate, we discussed the nature of the international law obligations comprehended in this paragraph and the question of who determines whether there has been a breach of them. I do not seek to reopen that debate; this amendment is not dependent on the outcome of it.

The amendment would make it clear that the decision-maker will be permitted to take into consideration and reject a tender or an investment that the decision-maker reasonably considers might put the UK in breach of its obligations under the genocide convention, the Universal Declaration of Human Rights or any UN Security Council resolutions supported by the United Kingdom. The amendment would still stand and have force, whether or not the Government accept amendments along the lines suggested by the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Verdirame, identifying what entity appropriately determines what amounts to a UK breach of international law. Amendment 30 merely clarifies that the conventions and resolutions mentioned in it are to be regarded as UK obligations.

I find it impossible to see what conceivable objection there could be to identifying matters of such grave importance to a law-abiding nation. The rationale is so obvious that I cannot think of anything more to say in support of my noble friend Lady Blower’s amendment, and I look forward to hearing that the Minister will support it.

I will now speak to Amendment 32. Paragraph 8 of the Schedule permits the potential decision-maker on procurement to take into consideration certain forms of “labour-related misconduct”. The problem is that that is a very limited list. We touched on that in Committee last week. In the last debate, the Minister asked me to provide further details on whether the violations of core labour standards would be covered by the provisions of paragraph 8. I looked at that matter again and did not take up her kind invitation to write to her, because Amendment 32, which was not before us last week, makes clear the distinction between the core labour standards identified in the amendment and the standards set out in paragraph 8.

I will explain. Paragraph 8 is confined only to conduct that would amount to a criminal offence in relation to slavery or human trafficking orders, failure to pay the national minimum wage and labour market orders under the Immigration Act. That list does not currently permit those making procurement and investment decisions to have regard to the fundamental labour standards binding on all countries by virtue of their membership of the ILO. As a matter of convenience, we can take those standards from Articles 399(2) and 399(6) of the trade and co-operation agreement—the Brexit deal—signed by our then Prime Minister in 2020, where they are conveniently summarised.

The provisions commit the UK to respect, promote and effectively implement the ILO Constitution, which includes the Declaration of Philadelphia of 1944, the

“ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up, adopted at Geneva on 18 June 1998 … the ILO Decent Work Agenda as set out in the 2008 ILO Declaration on Social Justice for a Fair Globalization”,

and the fundamental ILO conventions. The fundamental ILO conventions are those identified in those provisions of the Trade and Cooperation Agreement and in the amendment. They protect freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; the elimination of discrimination in respect of employment and occupation; decent working conditions for all with regard to, inter alia, wages and earnings, working hours, maternity leave and other conditions of work; health and safety at work, including the prevention of occupational injury or illness and compensation in cases of such injury or illness; and, finally, non-discrimination in respect of working conditions, including for migrant workers.

The only point in that list which is included in paragraph 8 of the Schedule is the second point that I mentioned: the elimination of all forms of forced and compulsory labour. That is the only point at which my amendment and paragraph 8 coincide, because paragraph 8 of the Schedule deals with slavery and trafficking. However, all the other elements of the fundamental labour standards are outside paragraph 8, even though they are binding on every country which is a member of the ILO by virtue of its membership and, regardless of whether they have ratified these conventions, they are matters of customary international law. These are vitally important standards, as the UK government representatives will doubtless reiterate at the International Labour Conference of the ILO, which takes place in June.

Plainly, paragraph 8 does not go far enough. International labour standards are important for ameliorating the conditions of workers in less developed and authoritarian regimes, and, from a more self-interested perspective, for diminishing the extent to which UK manufacturers and UK suppliers of services and works are undercut by competitors seeking to, as I put it on the last occasion,

“exploit cheap labour, poor conditions, inadequate standards, lack of enforcement, and powerless trade unions”.—[Official Report, 7/5/24; cols. 23-24.]

I refer to the examples I gave on the last occasion, but I will not repeat them.

Reverting to the point made by the noble and learned Lord, Lord Etherton, and the noble Lord, Lord Verdirame, on the last occasion, identification of whether there has been a breach of a fundamental ILO convention is not here left to the lay opinion of the decision-maker in the public entity. The ILO has extensive and long-established machinery for determining whether each state is in conformity with each of the fundamental conventions and each of the conventions that state has ratified. The UK fully participates in that machinery and those determinations. Why, then, I ask rhetorically, should the minimum standards of the fundamental international labour conventions, which are all ratified by the UK, not be included in the list of legitimate labour-related misconduct which procurement decision-makers can take into account under the Bill? I wait with anticipation to see whether the Minister will seek to justify their exclusion.

[Baroness Noakes (Con)]

My Lords, when we debated paragraph 6 of the Schedule in an earlier group, I argued that it was inappropriate to include an international law exception in the Bill. Therefore, it will not surprise the noble Lord, Lord Hendy, to find that I do not support the extension to paragraph 6 that his Amendment 30 seeks to achieve.

The briefing sent by the Palestine Solidarity Campaign asserted that without this amendment, the Bill could compel public bodies to contravene the genocide convention. This extraordinary statement was explained in the context of the much-publicised opinion of a number of UK lawyers, including the noble and learned Baroness, Lady Hale, that the International Court of Justice had ruled that there was a plausible case that Israel has committed genocide. As the then President of the ICJ subsequently made clear, this is a complete misinterpretation of the ICJ’s judgment. Judge Joan Donoghue, the then President of the ICJ, has stated that the court decided that the Palestinians had a plausible right to be protected from genocide and that South Africa had the right to present that claim in court. However, to correct something that is often said in the media, the court did not decide that the claim of genocide was plausible. So the items of international law referred to in the amendment, including the genocide convention, basically have the name “Israel” etched on them. Whether by design or otherwise, this amendment would simply make it easier for public authorities to find excuses to boycott Israel and it would be very damaging if this amendment were accepted into this Bill.

Amendment 32, tabled by the noble Lord, Lord Hendy, raises rather different issues. I am conscious that I am in dangerous territory because of the acknowledged expertise in labour law of the noble Lord compared with my ignorance of labour law. However, it is my understanding that the ILO conventions do not have direct effect in the UK. I thought that we achieved compliance through our domestic legislation. The noble Lord spoke about ILO matters on the last Committee day and, while he made the point that the UK is bound by the ILO conventions, I do not think that he claimed that they had any direct effect in UK law.

If I am correct, this amendment is a very unwelcome addition to the Bill because it seems to give full legal effect to the ILO conventions directly. These conventions are not drafted as stand-alone laws but in rather broad terms. They lack a lot of definitions and the language is often rather vague. That is why national Governments have to adopt them using their own legislation. I am not speaking against the ILO conventions; I have no views one way or the other on the conventions. My point is that we comply with these conventions through our national law and that law is the foundation of labour-related misconduct, which is covered in paragraph 8. It seems to me that paragraph 8 means that we can hold overseas suppliers to the same standards to which we hold UK suppliers. In particular, it aligns with the provisions of the Procurement Act which was passed last year. That is a wholly proper basis for this Act, rather than some broader concept of principles that cannot be read directly into our law.

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I do not see any reason why this should provide a chilling effect since, as investors and customers, public authorities can exert influence on corporate behaviour which can transmit into change around the world. For these reasons, I ask the noble Lord to withdraw the amendment.

[Lord Hendy (Lab)]

My Lords, I am grateful to all noble Lords who contributed to the debate, and to the Minister for his reply. I shall be very brief.

In relation to Amendment 30, the noble Baroness, Lady Noakes, argued as to whether or not Israel is in breach of the genocide convention. That is really not the issue. What is proposed is that a decision-maker should take into account whether any country is in breach of the genocide convention. The question of the State of Israel is not raised here. Of course, this matter is before the ICJ and I for one would hesitate to say anything about that until the ICJ has reached a decision.

The noble Lord, Lord Verdirame, made the point that the various conventions and provisions in the amendment are already included in international law. I take that point. I accept that. However, I think the purpose of my noble friend’s amendment to make it clear that those elements were included in international law. If they do not add anything, they do not detract from the original proposition either.

Finally on Amendment 30, the Minister raised whether it is for the Government or a public authority to decide whether there is a breach. This amendment does not touch on that subject. Whoever makes the decision is permitted to take into account the various conventions listed in the amendment.

So far as Amendment 32 is concerned, the noble Baroness, Lady Noakes, made the point that the conventions of the ILO do not have direct effect. Of course, that is absolutely right, but she said that passing the amendment would in fact give direct effect to the ILO conventions. My response to that is: not at all. It does not implement the ILO conventions in UK law; it simply gives permission to decision-makers to take into account whether the proposed supplier or territory is in breach of ILO conventions. The problem is the narrow confines of paragraph 8, which the amendment is intended to expand.

The noble Lord, Lord Verdirame, said that the amendment is directed to countries—forgive me; I am not doing justice to the elegance of his language. He pointed out that the conventions are directed to countries whereas paragraph 8 is directed to companies, to particular suppliers. That is true, but paragraph 8 begins with a disapplication of Section 1, stating:

“Section 1 does not prevent regard to a consideration so far as it relates to labour-related misconduct”.


Section 1 is on the basis of territorial considerations, not company considerations. As I understand it, the Bill would not prevent a public entity discriminating against a particular company as long as it did not discriminate against a country. It is for that reason that it appears to be entirely logical and justifiable to extend paragraph 8 to territorial considerations, which are inherent in the ILO conventions. Nevertheless, if the noble Lord is able to offer me any help in clarifying my amendment, it would be gratefully received.

Finally, the Minister said that he is satisfied that the grounds of exclusion offer sufficient protection for labour rights. With the greatest respect, I disagree. I think these additional protections are necessary. He underestimates the fundamental nature of the ILO conventions that are called into account. Nevertheless, on behalf of my noble friend Lady Blower, I beg leave to withdraw the amendment.

Amendment 30 withdrawn.

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[Baroness Noakes (Con)]

I have never been a member of the Constitution Committee—I am certainly not a current member—so I simply cannot answer that question. I do not know why it has reached the conclusions that it has, but I believe that they are not in accordance with the impact of Clause 4 as drafted.

When dealing with stopping people doing things and making judgments about whether doing so is right, a balance always needs to be struck. In this case, the Government have tilted the scales in favour of social cohesion. People may think that that is the wrong decision and that allowing elected officials to speak on behalf of an authority in the way that they want to is a price worth paying. I believe that, because of the limited nature of Clause 4 as drafted, it strikes the right sort of balance in this case.

We must remember that this Bill does not stop elected officials speaking in their own capacity, nor does it stop bishops doing so—not that that would ever be an easy thing to do. Individuals in public life can have a big impact on social cohesion, but they are not debarred by this Bill from giving their own views on BDS activities, even though they would have such an impact. In that sense, this Bill is a modest change to the status quo on public statements. It is certainly not as far reaching as people have tried to make out. I would like to get a little balance in this debate.

[Lord Hendy (Lab)]

My Lords, the noble Baroness asserted that Clause 4 does not apply to individuals but only to entities. Clause 4 says:

“A person who is subject to section 1 must not publish”,


and so on. In law, a “person” could be a corporation or an individual, but Clause 1 is quite clear in referring to a “decision-maker”, which can clearly be an individual. One can easily visualise a public entity where the decision is made by one person who has had authority delegated to them, a committee or group of people who have the power to make such a decision or the full council, body or whatever it may be. Clearly, Clause 4 is capable of being directed at individuals.

[Baroness Noakes (Con)]

I hear what the noble Lord is saying. Clause 1 affects persons who are decision-makers. Decision-makers are defined in Clause 2, which uses the definition of public authority. As I said earlier, there are a very small number of cases where individuals can be decision-makers. It is not a question of people taking delegated authority to be decision-makers; if I were in a council and delegated to the chief executive, they would not thereby become the decision-maker. The decision-maker remains the public authority under the terms of Clause 2.