Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Palmer of Childs Hill Excerpts

Committee stage
Tuesday 14th May 2024 Lords Chamber

[Lord Willetts (Con)]

My Lords, I rise briefly to support the points made by the noble Baroness, Lady Drake, and to explain why I have put my name to her amendment. She makes a powerful case, and what I hope sways the Minister is that her case rests very much on the policies enunciated by the DWP and the Chancellor, who are very keen to see pension funds take a broader view of their responsibilities and take account of impact and risk. Indeed, the noble Baroness has cited specific DWP regulations which make it clear that risk is something distinct that it wants pension fund trustees to take account of. What she is proposing here is consistent with the wider direction of government policy about how pension fund trustees, particularly local government pension trustees, should see their responsibilities.

My understanding of the Government’s position is that actually “financial value” already captures all that and that the noble Baroness’s amendment, which I support, is therefore unnecessary. However, I must say that I think it is unlikely, given that so much effort has taken place in the Treasury and the DWP to use some other expressions going beyond “financial value” to capture the responsibilities of trustees, that anyone would automatically accept that the formulation currently in the Bill covers this wider meaning. If the Minister is right that it is the Government’s intention and it should have this wider implication, I do not see any difficulty in making that absolutely clear by accepting this amendment. I very much hope that in the spirit of constructive review and revision of legislation, without in any way challenging the fundamental electoral mandate behind it, this amendment is a proposal that the Government can accept. It is, indeed, entirely consistent with the direction of the Government’s own policies.

[Lord Palmer of Childs Hill (LD)]

My Lords, I support Amendment 27. The Bill has effects that were not thought of in advance. Local government pension schemes and their administrators have one thought in mind, which is to protect the financial interests of the pensioners and of the funds, and this amendment just clarifies the financial aspects of that. The administrators should not be involved in any international political situation, but be there to look after the funds of the pensioners. Amendment 27 does exactly that in clarifying, which is all it is doing, what this aspect of the Bill does. Therefore, I support it from these Benches.

[Baroness Altmann (Con)]

My Lords, I rise briefly to congratulate the noble Baroness, Lady Drake, on her amendment and the others in the group. I understand where they are coming from, but it seems to me that the Government’s argument that this issue is already encompassed in “financial impact” holds some sway. There are concerns that I understand, but I am not sure they are necessary. Indeed, sight should not be lost of the fact that all local government pension schemes are ultimately underwritten by the Government and taxpayers. If the stewardship of these assets were swayed by issues which the Government themselves might not be comfortable with, there are powerful reasons why that stewardship should not be swayed by the kind of considerations that the Bill seeks to ensure does not happen.

Political or moral disapproval is not the same as environmental, social and governance issues. If a board of trustees decided to boycott an investment because of the country in which it is located, based on judgments of that country which do not accord with the views of the elected Government, the duties incumbent on the Government in accordance with this Bill would be at risk. That someone might take legal action against trustees who decide that they do not wish to make certain investments because they make a political or moral judgment that is not in accordance with that of the elected Government could equally be argued the other way. Trustees, certainly local government trustees, should not be taking these decisions.

I believe that was the manifesto commitment. Private pension schemes are not part of government and therefore that is a different decision, but local authority pension assets are ultimately underwritten by government so, should there be concerns about material financial risk and impact, they ultimately rest on the Government’s underpinning them anyway. Given that, as my noble friend said, “financial value” already encompasses these issues, I am relaxed about the current wording of the Bill. I hope that noble Lords across the Committee, especially those who have worked so hard on pension issues and with whom I normally fully agree, will not be too uncomfortable with the explanations that I am trying to put forward for not using pension assets as a disguised tool for political or moral judgments in the way that could happen and which this Bill seeks to deter.