The Government has been accused of launching a “direct attack on local democracy” by preparing to slip through Parliament an unprecedented curb on councils divesting from trade and investments they regard as unethical.
Councillors, MPs and a wide range of NGOs fear that the move, which they complain will be forced through the Commons without proper scrutiny, could stop local authorities refusing to trade with, or include in their pension fund portfolios, companies involved in the arms trade, fossil fuels, tobacco products and Israeli settlements in the occupied West Bank.
Ministers are consulting on changes to pensions regulations and are preparing new procurement guidelines to stop town halls operating “municipal foreign and defence policies” through “politically motivated boycott and divestment campaigns... against UK defence companies and against Israel”. A 2007 survey of local authorities showed that they were investing £300m in BaE alone.
Campaigners say that decisions in the early Eighties to divest from South Africa by anti-apartheid councils, including those of Glasgow, Newcastle and most London boroughs, would have fallen foul of the proposed new regulations. Planned amendments to the Local Government Pension Scheme Regulations 2009 are designed to “make clear to authorities that in formulating these policies their predominant concern should be the pursuit of a financial return on their investments... They should not pursue policies which run contrary to UK foreign policy.”
But Andrew Smith of Campaign Against Arms Trade said: “Public money should be used for the public good, not to support destructive industries like the arms trade that profit from war. The Government is always stressing the importance of localism, but this is a direct attack on local democracy and decision-making.
“At the moment the focus may be on arms companies and Israel, but if these changes are allowed to go ahead then they could affect almost all campaign groups.”
Paul Parker, the recording clerk of Quakers in Britain, which was the first Christian denomination to divest from fossil fuel companies, said: “Organisations should be free to spend and invest money in a way that reflects the views of their members.” The pensions committee of London’s Labour Hackney council is to consider calls to divest from fossil fuel companies at a special meeting in January.
The move by the Government is equally designed to prevent councils from boycotting Israeli companies or public institutions in response to calls by the pro-Palestinian Boycott Divestment and Sanctions [BDS] campaign. But activists also fear that the ban could stop councils from divesting from companies operating in Israel’s West Bank settlements – despite the fact that the Foreign Office (FCO) currently advises private sector businesses against trading with or investing in such companies. Britain, like most other Western counties, regards the settlements as illegal under international law.
The FCO guidance was defended in the Commons last week by Secretary of State for International Development Justine Greening. Asked by the Labour MP and shadow transport minister Richard Burden whether she agreed it was “perfectly reasonable for both public and private institutions to pay due regard to that advice when they make their own investment and procurement decisions”, Ms Greening said: “They should do that; that is good Foreign Office advice.”
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1/17 22 June 2017
Cosplay fans (L-R) George Massingham, Abbey Forbes and Karolina Goralik travel by tube dressed in Harry Potter themed costumes, after a visit to one the literary franchise's movie filming locations at Leadenhall Market in London, Britain
2/17 22 June 2017
Racegoers cheer on their horse on Ladies Day at the Royal Ascot horse racing meet, in Ascot, west of London
3/17 21 June 2017
A reveller walks among the tipi tents at the Glastonbury Festival of Music and Performing Arts on Worthy Farm near the village of Pilton in Somerset, South West England
4/17 20 June 2017
A police officer lays some flowers passed over by a member of the public, close to Finsbury Park Mosque in north London, after one man died and eight people were taken to hospital and a person arrested after a rental van struck pedestrian
The Borough Market bell is seen in Borough Market in central London following its re-opening after the June 3 terror attack
Two women embrace in Borough Market, which officially re-opens today following the recent attack, in central London
Mayor of London Sadiq Khan attends the re-opening of Borough market in central London following the June 3 terror attack
People walk through Borough Market in central London following its re-opening after the June 3 terror attack
News Corp CEO Rupert Murdoch, with one of his daughters, visit Borough Market, which officially re-opened today following the recent attack
A woman reacts in front of a wall of messages in Borough Market, which officially re-opened today following the recent attack, in central London
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Richard Arnold, Roy Larner, Piers Morgan and Susanna Reid on 'Good Morning Britain'
14/17 11 June 2017
England players celebrate after defeating Venezuela 1-0 to win the final of the FIFA U-20 World Cup Korea 2017 at Suwon World Cup Stadium in Suwon, South Korea
15/17 11 June 2017
England players celebrate with the trophy after the final match of the FIFA U-20 World Cup 2017 between Venezuela and England at Suwon World Cup Stadium in Suwon, South Korea
16/17 11 June 2017
Great Britain's Alistair Brownlee celebrates winning the Elite Men Columbia Threadneedle World Triathlon Leeds
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17/17 11 June 2017
Two men drink beer outside the Southwark Tavern which reopened for business today next to an entrance to Borough Market which remains closed in London
But it is not clear that the FCO or Ms Greening’s department was consulted when the move was launched. A press release issued by Conservative Central Office on the eve of the party conference in October cited the case of Leicester City Council, which decided earlier this year on a boycott limited to goods from West Bank settlements. An application by local Jewish groups for judicial review of the decision will be heard in the High Court next year.
The Communities and Local Government Secretary Greg Clark said in the release: “Divisive policies undermine good community relations, and harm the economic security of families by pushing up council tax. We need to challenge and prevent the politics of division.”
The French-owned multinational water, energy and waste management company Veolia – which collects refuse for a wide range of British local authorities – announced in April that it was closing down its operations in Israel. The move followed a concerted campaign to persuade it to halt its work in West Bank settlements, during which Labour-controlled Birmingham became at least the third council to warn Veolia it might not renew its £35m per year waste disposal contract when it runs out in 2019 if the company continued to operate in the occupied West Bank. The requirements in the city’s Business Charter for Social Responsibility – currently being reviewed with a view to strengthening its ethical elements – include suppliers’ compliance with the Universal Declaration on Human Rights.
A Department of Communities and Local Government (DCLG) spokesman said: “Councils should not be using pensions and procurement policies to pursue their own boycotts and sanctions against foreign nations. We are tightening up the rules to ensure taxpayers’ and the UK’s interests are protected.”
Whitehall sources added that the “social, environmental and governmental” policies of council pension funds should reflect government foreign policy and that a reference to the Foreign Office’s guidance on business risks abroad would be included in the new guidelines for the pension funds. But the DCLG did not say whether councils would therefore be free to boycott companies operating in Israeli West Bank settlements.
Mr Burden, chair of the All Party Palestine Parliamentary Group, said the Government appeared to target councils that were acting in line with Foreign Office advice against trade with companies in the settlements of West Bank, because it carries financial, commercial and certainly ethical risks. They seem deliberately to be conflating divestment from these illegal activities with a generalised boycott of Israel. If they don’t know the difference that’s very worrying and if they do know the difference – as the FCO does – they are being misleading.”
Mr Burden said he would be challenging ministers on this “bluntly crass” and “potentially anti-democratic” policy when the Commons returns in January. The wider issue was that it would “prevent councils pursuing goals like community cohesion, environmental sustainability and human rights in line with the best practice of the progressive private sector. It’s called corporate social responsibility. The right ethical investment decisions in the long term are often also the right business decisions.”Reuse content