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.