Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Wallace of Saltaire Excerpts

Committee stage
Wednesday 17th April 2024 Lords Chamber

Moved by

[Lord Wallace of Saltaire]

10: Clause 2, page 2, line 3, leave out from “decision-maker” to end of line 4 and insert “is acting on behalf of a public body.”
Member’s explanatory statement
This, alongside another to Clause 2 in the name of Lord Wallace of Saltaire, is a probing amendment to clarify the distinction between a public body and a public authority.

[Lord Wallace of Saltaire (LD)]

My Lords, in moving Amendment 10 I will also speak to Amendment 13 and the others in the group. I would particularly like to say how helpful I thought the amendments from the noble Baroness, Lady Noakes, were in helping us to clarify these very broad terms: public bodies and public authorities. I have just been looking back at some of the debates on the Human Rights Act 1998, during which then Home Secretary Jack Straw said that this was an extremely difficult area on which to find an exact definition; he decided to leave it to the courts for further definition.

One of the things we have to consider while discussing this is how much we do want to leave it to the courts, or to ensure that what it says in the legislation is a little tighter than what we have so far. The drafting of the Bill in so many areas is extraordinarily and dangerously loose. I thank the Minister for the letter she has sent me and no doubt others on the question of individual responsibility and personal liability. I am not sure that I entirely understood it; I showed it to one or two legal acquaintances, and they are not sure that they are much clearer than they were before. That perhaps shows some of the difficulties in which we are engaged.

When I first read this Bill, I noticed that it declared in its title that it was about public bodies, and that in Clause 2 it says it is about public authorities. As it happens, I got into the lift with another Member of this House, with whom I worked when he was a Conservative Cabinet Minister during the coalition Government. I asked him casually: “Tell me, do you think that a public body and a public authority are the same thing?”. He said: “Oh no, of course not. The definition of a public body is far narrower than that of a public authority”.

A Bill that starts by having one of these terms in its title, and then goes on to use the other term in the text, raises a number of questions. This morning I reread the impact assessment, which uses the terms interchangeably, by and large preferring “public body” to “public authority”. I worry about how clear those who drafted the Bill are about what they are doing. We then go into “hybrid public bodies”, which the impact assessment talks about, or hybrid public authorities. When I began to read through Lexis and try to understand some of the case law—in which a number of noble and learned Members of this House emerge as those who have made judgments on this—I discovered that functional public authorities and hybrid public authorities raise many of the questions with which we would have to deal, if and when this became an Act. The line between public and private functions for public authorities that are partly public and partly private is a very delicate one, and one on which litigation leaves much room.

We all know what core public authorities are, but hybrid public authorities are a very loose and broad entity. The Minister said on a previous occasion, in another context, that there were well over 100,000 public authorities. No doubt the definition, after a while, becomes extremely unclear. After all, Section 6(3) of the Human Rights Act 1998 talks about

“any person certain of whose functions are functions of a public nature”.

The question of how many functions need to be of a public nature, and how much that affects how they behave in other areas, has been contested in the courts on many occasions. Court cases have ruled that a privatised railway company, for example, is not a public authority, but that a privatised water company and, in a different case, a private provider of social housing are, for certain purposes, public authorities. Rulings have differed on whether private care providers to local authorities are public authorities.

The impact assessment and the ministerial letter refer to “cultural institutions” as coming within this. In the letter that came to us before Second Reading, the Minister talks about museums and galleries that receive significant amounts of public money. Amendment 13 is intended to probe what is meant by significant amounts of public money. I have suggested in that amendment that the bar should be put at 50%, as opposed to whether this was largely public or largely private with public aspects. A court case in 1999 found that the University of Cambridge—

[Lord Grocott (Lab)]

The noble Lord mentioned at one stage whether railway companies are public bodies. A train operating company, for example, is clearly not a public body when it is a private company, but if it goes bankrupt or has difficulties it gets taken over by the Government. If the Government then get it right in due course, it goes back to the private sector. Can bodies oscillate between the two categories? Is that a further complication?

[Lord Wallace of Saltaire (LD)]

I defer to my noble friends on that. Part of my concern about this law is that there will be a great deal of employment for my learned friends to be found in it, if it were to go through.

Indeed, that is one of the things which appears in the delegated powers memorandum, which says at paragraph 4:

“It is intended that the measures will be widely construed”.


Paragraph 12 says:

“The prohibition will apply to ‘public authorities’ in accordance with section 6 HRA 1998; however, interpretations of section 6 HRA 1998 can create uncertainty which means that the Bill may, including as case law evolves, capture a range of bodies that it was not necessarily intended to apply to. It may be necessary to put beyond doubt that certain bodies (that are outside the scope of the intention to ban public bodies from boycotts and divestments) fall outside the definition of ‘public authority’ for the purpose of the Bill”.


I hope that the lack of clarity of that is clear.

The impact assessment does refer to hybrid public bodies and suggests that it is concerned to prevent them pursuing political and foreign policy agendas, “including with public money”. I interpret that as meaning that such hybrid public authorities may perhaps not be allowed to pursue such agendas, including when they are using private money. That is a question that will concern a great many people, in particular the university sector, from which we have received further correspondence on this precise area.

The Minister has not told us enough about the broad last category, cultural institutions, and whether this includes theatres and orchestras on foreign tours, as well as museums and galleries—and why on earth museums and galleries are in there. That is another area where I suspect that sector would prefer a little more certainty.

Universities have been particularly concerned about the impact on their international partnerships, which are, I am assured by my university friends, part of their private functions. Some of these are education partnerships, some are transnational research partnerships —I declare an interest, in that my son is actively engaged in this—and some are with foreign companies and donors. They can be very sensitive and can raise reputational problems, as some universities, including the one I used to work for, have learned to their cost. Again, it would be helpful if we had more detailed guidance on that.

At several points in the impact assessment, and in the memoranda to the Delegated Powers Committee and others, the Government emphasise the importance of ensuring the coherence of British foreign policy, and that it should not allow others to conduct their own foreign policy agendas. I notice the Express reported the other week that the Government have signed immensely valuable trade deals with Washington state and Texas. It seems an interesting contradiction for the British Government to insist that subordinate entities within the UK state should not be allowed to engage in any sort of deal with other countries while they actively attempt to get past Washington to deal with American states. I am not sure whether these are significant trade deals or not; I have the memorandum of understanding with the state of Washington and it seems rather less substantial than the Daily Express suggests.

The Minister may be thinking that precision does not matter so much in the Bill because it is intended to be largely performative and not to lead, in practice, to any serious enforcement. After all, the impact assessment notes how little boycott activity there has so far been beyond discussion, and the Bill is unlikely to be implemented before the coming election. However, we should not be in the business of permitting the Government to put badly drafted law on to the statute book for show. We need much greater clarity, and I look forward to what the noble Baroness, Lady Noakes, will say about the need for clarity in this area. The Minister shares with the House the responsibility to ensure that the Bill does not become an Act without much greater clarity about its terminology and the extent of its reach over the UK’s public and private bodies. I beg to move.

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

My Lords, I am grateful for the thoughtful contributions from across the Committee. On the first day of Committee, which also touched on the scope of this Bill, we heard from the noble Lords, Lord Collins and Lord Wallace, the noble Baroness, Lady Fox, and my noble friends Lady Noakes and Lord Johnson. We discussed the Bill’s application to hybrid public authorities. Today, we have heard in slightly different terms from the noble Lord, Lord Wallace, my noble friend Lady Noakes and, of course, from the noble Baroness, Lady Chapman. I will try and come back on her essay question if I can.

Obviously, we have carefully considered the points raised in these debates. I would like to expand on our view of the scope in relation to Amendments 10, 11, 12, 13 and 14. As noble Lords have said, the Bill will apply to public authorities, as defined in Section 6 of the Human Rights Act 1998. I would like to explain, in response to the concerns of the noble Lord, Lord Wallace of Saltaire, that “public body” is a general term with no single legal definition. The Bill’s Short Title provides a general indication of the subject matter of the Bill, and it is not unusual for the Short Title to use different terminology from the Bill’s substantive provisions.

[Lord Wallace of Saltaire (LD)]

My Lords, I apologise for interrupting. The Minister will be well aware that there is a particular use of the term “public body” by the Office for National Statistics, which means that debt incurred by a public body is counted as part of the national debt. That means that whether or not some of these hybrid public authorities are defined as public bodies matters a great deal to their financial planning. Again, the university sector is particularly concerned about this.

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[Baroness Neville-Rolfe (Con)]

It depends, and it also depends on case law under the Human Rights Act, which I have undertaken to look at and come back to noble Lords.

[Lord Wallace of Saltaire (LD)]

My Lords, I cannot resist suggesting that one definition of a “public function” is somewhere you are served warm white wine and canapés. That is a suggestion of how loose some of these terms can be.

The concern that a lot of us have about the Bill is that we are not entirely confident that the Government have thought through its full implications. The manifesto commitment was specific to boycotts against Israel and was concerned particularly with local authorities and universities. But we have a Bill here with a much wider set of definitions and a universal set of foreign states to which it applies, which raises a much larger number of questions. We also have a whole succession of loose definitions, which the DLUHC memorandum to the Delegated Powers Committee says, in effect, that we should not worry too much about, as we will do this all with regulations. I hope that the noble Lord, Lord Hodgson, would think that it is not necessarily always a good idea to leave everything to regulations. We are asking for greater clarity, certainty and, above all, precision, and a more limited potential scope for the Bill.

--- Later in debate ---

[Baroness Randerson (LD)]

My Lords, I will briefly go back to the Government’s own list of public bodies on GOV.UK. Of that list of public bodies, there are 18 listed for the Department for Education, none of which is a university. The Minister referred to overlapping definitions in the Bill. I have been sitting here and thinking about that, and wondering where the University of Buckingham sits in the Government’s concept of where universities lie, because that is a private university but one which is fulfilling exactly the same functions as all the other universities in the UK. Those other universities are, of course, exempt charities and so we are on a whole series of conflicting paths here, with just one aspect of the definition of public bodies that this Bill seems to wish to encompass. I raise these issues so that the Minister can perhaps give us some of her thoughts on these overlapping definitions and where they actually sit within the Bill.

[Lord Wallace of Saltaire (LD)]

My Lords, first, we are in the territory of the chilling effect, are we not? If there is a very large number of bodies which are not going to be sure how far they come within the scope of this Bill, they will be very nervous about doing things that they would otherwise do. That is why leaving it so unclear as to how far the definitions of this Bill stretch over the sector, in which public and private institutions, and public and private functions, overlap so closely, is highly undesirable.

Secondly, this clearly will require very substantial subordinate legislation. I think it is the sense of this House that it is a bad thing to pass Bills that need too much subordinate legislation. Yesterday, the noble Lord, Lord Hayward, whom I regard as an extremely good friend, said to me that the subordinate legislation under the Elections Act, which we passed in 2022, is now approaching 1,000 pages, and that the Electoral Commission is spending a considerable amount of its time providing guidance for local authority electoral registration officers on what this means for them. That is bad legislation; we want to avoid that again here.

Thirdly, there have been occasions, as others are aware, where lists of public bodies have been provided. The Minister will remember the SI on trade union levies being taken, or no longer being taken, automatically from pay scales for particular public bodies. That had a list, at the end, in the schedule, of over 200 bodies, which included some quite interesting ones such as the Scottish salmon council, and various semi-charitable local institutions to do with, as I remember, care homes and nurseries.

Fourthly, to add to the question of universities, what universities are most concerned about is whether or not the student loan book, which is a very large sum, is included in the Treasury’s calculation of national debt. That is not a marginal issue; it is quite important. That is why definitions such as this and how they are used by different parts of government and recognised be the courts are extremely important.