Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Shipley Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Lord Shipley (LD)]

My Lords, this has been a most instructive Second Reading and I very much look forward to the Minister’s response to the many detailed points that have been raised. I remind the House that I am a vice-president of the Local Government Association and that I have a small local authority pension.

I also make it clear that I support the long-term security of the State of Israel but think that a broad Bill of this kind should not be built on a single country, nor should it include the Occupied Territories—as we have heard from several speakers. No doubt when we are in Committee or on Report, we will pursue that in greater detail.

I have concluded that the Bill is disproportionate. It runs counter to the basic principles of civil liberties, human rights and upholding international law. As my noble friend Lord Wallace of Saltaire said:

“This Bill is ambiguous, confused and contradictory”.


It has been claimed that the Bill will assist community cohesion, but it will not; it will make community cohesion more difficult. As my noble friend Lord Palmer of Childs Hill said, it

“could have a negative effect”

and, as my noble friend Lord Oates said, it will not “combat anti-Semitism”.

Three tests should be applied to any proposed Bill: what problem are Government are trying to solve? Is what is proposed a solution to that problem? What consequential problems might arise if the Bill becomes an Act? In my view, the Bill fails all three tests and we have heard compelling evidence of that from many speakers. I have reached the conclusion that the Bill is too complex, too unwieldy and, in practice, unworkable. It would require a huge bureaucracy to underpin it, at huge cost, with enforcement authorities with powers to issue monetary fines and all the judicial reviews arising from that process. The Bill is not proportionate.

The Government’s own impact assessment for the Bill says:

“The number of actual or attempted boycotts or divestments inconsistent with UK foreign policy is relatively low”.


The Minister has referred to six; in the impact assessment, six are mentioned. But attempted boycotts or disinvestments are just that—unsuccessful attempts. How many have actually happened? How many have actually been successful? It would help if the Minister, when she replies or perhaps later, gives the House a list of all the public bodies and public authorities which have boycotted or disinvested from an overseas country, including Israel, on political grounds, so we can understand the true extent of the problem the Government have identified.

Universities UK has expressed concerns about the unintended consequence for the higher education sector. Universities are not public bodies, and I have concluded that universities should not be part of the Bill, as indeed we have heard from the noble Baroness, Lady Blackstone, the noble Lords, Lord Willetts and Lord Johnson of Marylebone, and others. I say that for three reasons. First, it could influence the outcome of the ongoing ONS review into universities’ status and whether they should or should not be defined as public bodies. Secondly, Clause 4 contradicts duties placed on universities via the Higher Education (Freedom of Speech) Act 2023 to uphold freedom of speech and academic freedom; I have concluded that Clause 4 should be deleted from the Bill. Thirdly, it would give significant new powers and functions to the Office for Students, but is it able to take those on, given all the other duties it has?

I turn to pensions. It is not necessary for the Bill to apply to pensions. The Public Service Pensions and Judicial Offices Act 2022 already gives the Secretary of State powers to issue guidance to pension schemes not to make investment decisions that conflict with UK foreign and defence policy.

In terms of the Local Government Pension Scheme, in a Supreme Court judgment in 2020 the Government were criticised for thinking that the scheme administrators were

“part of the machinery of the state”.

They are not; they do not manage public money. It is a funded scheme, paid for by contributions made by 15,500 participating employers and 7.1 million pension scheme members. Legislation already exists which prevents the Local Government Pension Scheme decision-makers from expressing political disapproval of a territory in making an investment decision. It contains sufficient enforcement mechanisms. Regulations exist which require administering authorities to publish an investment strategy statement, which must be in accordance with official guidance from the Secretary of State. Why do we need this Bill?

The Local Government Pension Scheme is a well-funded scheme with very few regulatory cases for a scheme of its size—with over 7 million members and assets of over £360 billion. The Government’s role is to provide clear guidance to the Local Government Pension Scheme, setting out their foreign policy aims and objectives so that scheme managers can undertake their duties investing in and stewarding global markets.

More broadly, existing legislation is sufficient. I am very grateful for the excellent Library briefing on the Bill. Section 17 of the Local Government Act 1988 already prohibits local authorities from taking non-commercial considerations into account in procurement decisions. They cannot take into account considerations of country or territory of origin of the contractor or their supplies. The Bill would then extend restrictions to cover investments as well as procurement, so I will comment on local government investment policy. Treasury management investments by councils are made largely within the United Kingdom. Where there are investments internationally, the key considerations are return and risk, rather than non-commercial considerations. The Bill will make no significant difference to that process.

Many speakers have pointed out that the Bill would restrict free speech of both public bodies and elected representatives. Clauses 4 and 7 would block discussion of actions against any foreign state. They would impact on freedom of speech and extend the powers of the state to inform itself about discussions within autonomous bodies, as my noble friend Lord Wallace of Saltaire pointed out. Do the Government really mean for that to happen?

Finally, the Constitution Committee has done a very good job in suggesting to the House that it may wish to consider whether Clause 4 should be removed from the Bill. It said:

“In our view, clauses 4(1)(a) and 4(1)(b) unduly limit freedom of speech by preventing public bodies from stating that they would or even might make a procurement or investment decision in contravention of clause 1 had it been lawful to do so”.


There are other conclusions that the Select Committee has made which I support, and which I hope we can debate in Committee.

I say to the Minister and the Government more generally that I wish central government would trust local government a bit more. As my noble friend Lady Janke said, local government is not an outpost of central government.

We shall investigate all these issues in Committee, but I will just point out that if we were to take out Clause 4; if universities were not to be part of the Bill; if the pension problems the Government think exist and which I think do not exist are also taken out; if the role of local authority procurement policy is properly understood; and if we recognise that there is not much overseas investment by local authorities as part of their investment portfolios, there really is nothing much left in the Bill for us to talk about. For that reason, the Government should take a long, hard look at what they are trying to do.

Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Shipley Excerpts

Committee stage
Tuesday 7th May 2024 Lords Chamber

[Lord Wolfson of Tredegar (Con)]

I am extremely grateful to the noble Lord for setting that out so clearly. It brings me to the question I hope he might be able to pick up later, so that I can really understand how this works. We have a public authority, which publishes a set of policy criteria relating to disinvestment in cases concerning contravention of human rights. As he has just set out—and certainly implied by what he just said—it would not be required, for example, to adopt the ECHR in full; it could highlight certain things.

What would happen if a local or public authority decided to say, “We are not going to disinvest or have a policy of disinvesting from countries which do not, for example, allow gay marriage; we will not have a policy of disinvesting from countries that discriminate against women, but we will have a policy, which we will apply consistently throughout the world, of disinvesting from countries that are in control of occupied or disputed territory”? Under the noble Lord’s approach, would that be permitted?

[Lord Shipley (LD)]

Will the noble Lord give way for a moment? This discussion is extremely important, because I do not interpret Amendment 19 as the noble Lord is interpreting it. He says that there could be a statement, and it would have to be applied consistently to all countries. But the amendment also says that it must be in accordance with guidance published by the Secretary of State. The noble Lord has not mentioned the fact that guidance to underpin what a local authority was doing would be in place.

[Lord Wolfson of Tredegar (Con)]

Forgive me, but I think I did mention the guidance right at the beginning of my remarks. Indeed, I made the point that I did not understand that the noble Lord, Lord Collins of Highbury, had identified what that guidance would, should or might contain—so I think we are on the same page.

--- Later in debate ---

[Lord Leigh of Hurley (Con)]

My Lords, to bring us back to Amendment 19, I thought it was a probing amendment—but it seems that perhaps it is a serious one, given the endorsements of the noble Baroness, Lady Jones, and others, so let us think about it. I am querying it only because, if it comes back, it might allow the noble Lord, Lord Collins, to refine and consider it further.

I would add to the questions from the noble Lord, Lord Wolfson. For example, let us assume that there is an egregious gay rights violation in some country, and a local council gets very agitated about it, responds to pressure and announces that it will no longer do business with, or procure works or services from, this country, because it abuses gay rights. Under this amendment, it would then have to apply that to every country that does not fully respect gay rights, so if it wanted to buy product from the Middle East then the only place it could go to would be Israel.

[Lord Shipley (LD)]

My Lords, this has been an extremely helpful debate. As the noble Lord, Lord Mann, identified, there is a conundrum in the Bill. The Minister may wish to reflect on the discussion that has taken place. She said after the first group that she valued the expertise of this House and would go away and think about how the Government would respond. I took that to mean that they may make changes on Report, which is theoretically likely to come in about three weeks’ time, but may take longer.

I have concluded, having listened to so many opinions—I am not a signatory to Amendments 19 or 48, though I have huge sympathy with them—from my noble friend Lord Purvis of Tweed, the noble Lord, Lord Collins, the noble Baroness, Lady Jones, and others, that it would be useful if the Minister would consider trying to bring all those opinions together into one place to talk further. That is the only way in which progress on this Bill will be made.

I think that I heard the noble Baroness, Lady Noakes, say that you cannot have local authorities setting foreign policy. I do not think local authorities want to do so, are doing so or have any ambition to do so. However, they are concerned about human rights and doing the right thing in their procurement and investment policies. Nevertheless, the issue must be discussed.

I took Amendment 19 to mean simply that a statement of policy relating to human rights would need to be considered by those seeking procurement or making investments, and that the statement may not single out individual nations and would therefore have to be applied consistently, as has been confirmed. However, it would have to be in accordance with guidance published by the Secretary of State. I find the concerns we have been hearing against Amendment 19 unfounded. The only solution I can see to this is that the offer made at the outset by the noble Lord, Lord Collins, should be taken up by the Minister. It would be really helpful if that could happen, because otherwise the passage of the Bill on Report will get more and more difficult.

[Lord Wolfson of Tredegar (Con)]

I invite the noble Lord to look at proposed new subsection (4D) because, with the greatest of respect, it is not correct to say that the policy would have to be “in accordance with” the Secretary of State’s guidance. The amendment says only that they must “have regard to” the Secretary of State’s guidance. This is not nitpicking; there is a really important distinction in law between having to follow guidance and merely having to have regard to it. That is one of the reasons why I was asking the noble Lord, Lord Collins of Highbury, those questions.

[Lord Shipley (LD)]

I understand the noble Lord’s point. I am quoting from the Member’s explanatory statement which is part of Amendment 19 in the Third Marshalled List of Amendments.

[Lord Roborough (Con)]

My Lords, I am sorry to disappoint your Lordships’ Committee after so many questions asked of my noble friend the Minister. But I am the Minister representing His Majesty’s Government on this group of amendments. I am grateful to the noble Baroness, Lady Deech, and my noble friends Lord Wolfson and Lord Leigh for refocusing the House on these two amendments. I will answer as many of the broader questions as I have time for after addressing these myself.

Let me begin with Amendment 48, tabled by the noble Lord, Lord Warner. This amendment would require the Secretary of State to lay before Parliament a review of the Bill’s compliance with the Human Rights Act 1998, and in particular Article 10 of the European Convention on Human Rights, within six months of Royal Assent. As my noble friend the Minister has set out, the Bill will apply to public authorities as defined in Section 6 of the Human Rights Act. In the exercise of their public functions these bodies do not have their own rights under the Human Rights Act or the ECHR, including under Article 10. The Bill does not apply to individuals and their private functions; therefore, it will not infringe on any individual’s rights under the ECHR.

As for the questions asked by the noble Lord, Lord Warner, about compatibility, the Government remain strongly committed to the UK’s long and proud tradition of free speech and to the ECHR’s Article 10 right to freedom of expression. The Minister has signed a statement of the Bill’s compatibility with ECHR rights. On sharing legal advice, His Majesty’s Government do not share legal advice, but we do act on it.

Nothing in the Bill goes against the European Convention on Human Rights. The ban will apply only to bodies that are public authorities under the Human Rights Act 1998—