Amendment 18

Economic Activity of Public Bodies (Overseas Matters) Bill - Committee (3rd Day) – in the House of Lords at 3:35 pm on 7 May 2024.

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Lord Verdirame:

Moved by Lord Verdirame

18: Clause 3, page 2, line 36, at end insert—“(3A) Regulations under subsection (2)(b) may include descriptions of considerations (including disregard thereof) to give effect to the United Kingdom’s obligations under international law.”Member’s explanatory statementThis amendment seeks to provide for a clearer way of implementing the international law exception in paragraph 6 of Part 2 of the Schedule.

Photo of Lord Verdirame Lord Verdirame Non-affiliated

My Lords, I rise to move the first amendment in this group, Amendment 18 in my name, with the support of the noble and learned Lord, Lord Etherton. It must be read together with Amendment 29, which is also in this group. I shall speak to both of them together. These two amendments deal with the problem arising from the international law exception at paragraph 6 of the schedule.

A number of noble Lords highlighted this problem at Second Reading. In my speech, I referred to the opinion on the Bill by the Richard Hermer KC. I disagree with certain aspects of his opinion, but I agree with his analysis of the effect of paragraph 6 of the schedule. As he put it, a breach by the UK of an unincorporated treaty does not normally give rise to a claim under domestic law, but paragraph 6 of the schedule provides a domestic law foothold for such claims on a virtually unlimited basis. Unless the paragraph is amended or removed, the consequence will be that, contrary to the purposes of the Bill, local authorities, for example, will make their own determinations about UK compliance with international law obligations. If there is a dispute about the correctness of the position they have taken, that dispute will be decided by our courts.

We do not normally implement international law obligations on such an unspecified and broad basis. What we generally do is give effect to specific international law obligations in a manner that is clear, and thus consistent with the rule of law requirement of legal certainty and clarity. There are countless examples of this approach, from the Diplomatic Privileges Act 1964 to the Human Rights Act. In essence, what happens is that the implementing legislation identifies specific provisions in a treaty that are to be incorporated in domestic law, and sometimes those provisions will be listed in a schedule to the Act. The legislation will then create special rules or mechanisms that Parliament considers are required to give effect to those international law obligations. Examples include the declarations of incompatibility under the HRA and Foreign Office certificates under Section 4 of the Diplomatic Privileges Act.

Paragraph 6 of the schedule to the Bill does not do any of that. It purports to import the entirety of international law—potentially all treaties, whether incorporated or not, and every rule of customary international law, and invites decision-makers to consider for themselves whether their decisions will be compliant with any such international law. It is an inherently uncertain and unclear provision. Moreover, the international law obligations that might be relevant in this field are contested and unsettled.

This is particularly the case for international legal rules on the duties of third parties vis-à-vis a serious breach of peremptory rules of international law—most notably, Article 41 of the International Law Commission’s articles on state responsibility provides for three very general obligations for states faced with a serious breach of international law by another state. Those obligations are non-recognition, non-assistance and co-operation; but whether this rule entirely reflects customary international law and what it specifically requires of a state is not settled.

Public bodies would also have to determine for themselves whether they can avail themselves of the international law exception. That too requires a complex international law analysis. Whether an entity is a public body under domestic law is, of course, a question of domestic law, but whether the conduct of that body is attributable to the state on the international plane is a question of international law. Universities might be an example of public bodies under domestic law—we have been discussing that in previous debates on this Bill—but it is not the case that the conduct of a university would ordinarily be attributable to the state as a matter of international law.

The amendment that we propose would maintain the international law exception but add clarity to it by ensuring that regulations are adopted to include descriptions of considerations, including disregard thereof, to give effect to the UK’s obligations under international law. There may be a better formulation than the one we propose, but in essence the idea is to replicate the manner in which we have given effect to international law obligations that have not yet come into existence: for example, those that may arise in the future under decisions of the Security Council.

An example of this power is in the Sanctions and Anti-Money Laundering Act 2018. It creates the power to make regulations for purposes of compliance with UN obligations and, more generally, for the purpose of compliance with any other international obligation. What happens in practice is that the Foreign Office lawyers, together with the Attorney-General, will consider the specific international law obligations that have arisen and then contribute to the drafting of clear, specific and precise regulations to give effect to those obligations. To be clear, the power that we are proposing will not, of course, replace the power in the Sanctions and Anti-Money Laundering Act. It would be in addition to that.

I understand that the noble Baroness, Lady Noakes, and the noble Lord, Lord Pannick, take the view that that power in paragraph 6 may not be needed and could simply fall away. Our proposal is a compromise that reflects the reality that this is a sensitive area and we thought that embedding in the Act a power to make regulations for purposes of complying with international law may, in this context, be useful. I beg to move.

Photo of Baroness Noakes Baroness Noakes Conservative

My Lords, I have Amendment 28 in this group and I thank the noble Lord, Lord Pannick, for adding his name. I should first say that I am in complete agreement with the thoughts that lie behind Amendments 18 and 29, to which the noble Lord, Lord Verdirame, has spoken so eloquently.

My Amendment 28 is simply a more direct way of dealing with the same problem. It deletes paragraph 6 of the schedule in its entirety, so that public authorities cannot use international law considerations as a means of avoiding the effect of Section 1 of the Bill. Public authorities are not experts in international law but might well seek to use ill-founded concerns about the UK’s adherence to international law as a smokescreen behind which they believe that they can hide their boycott activities. Put simply, it creates a huge loophole in the Bill.

I tried to compare the Bill with last year’s Procurement Act to see whether the exclusions in the schedule to this Bill are the same as the mandatory and discretionary grounds for exclusion in the Procurement Act. This was not easy, because it is clear that two completely different sets of draftsmen have been involved in the two Bills. However, the one thing that I am pretty sure of is that the Procurement Act did not have an international law exclusion ground, so the inclusion of paragraph 6 in the schedule to this Bill is somewhat puzzling.

I shall comment briefly on Amendment 31 in this group, in the name of the noble Lord, Lord Kennedy, and the noble Baroness, Lady Blower, because that would extend the range of things that public authorities could look at to breaches of international law outside the UK. Not only is this way beyond the Procurement Act exclusions as well, but it adds yet another loophole, making the loophole as big as it could possibly be in order to allow public authorities to justify boycotts. For that reason, I cannot support it. I look forward to hearing the Minister’s rationale for the inclusion of paragraph 6 in the schedule.

Photo of Lord Hendy Lord Hendy Labour

My Lords, I shall speak to Amendment 31 in my name and that of the noble Baroness, Lady Blower. I have no observations on the amendments that have just been spoken to.

Paragraph 6 of Schedule 1 disapplies the bar in Clause 1 of the Bill on a public entity, for want of a more precise definition, from taking into account political or moral disapproval of a foreign state’s conduct in making procurement or investment decisions in one particular situation. A procurement decision is defined in Clause 2(2) as

“a decision about a contract for the supply of goods, services or works to the decision-maker”.

Paragraph 6 applies where the decision-maker reasonably considers that its political or moral disapproval of a foreign state’s conduct is relevant to whether the procurement or investment decision would place the UK in breach of its international law obligations. I have no problem with that at all.

Our amendment, however, would insert a new paragraph 6A with the intention of enlarging paragraph 6’s disapplication of the Clause 1 prohibition. It would allow the decision-maker also to take into consideration whether the procurement decision—or the manufacture, provision or supply of the goods, services or works which is the subject of the procurement or investment—would or might involve a breach of international law by another country. There appears to be no logical reason why it should be permissible to take into account procurement that is likely to result in potential breaches of international law by the UK but impermissible to consider procurement likely to involve equivalent breaches by other countries in the supply chain.

My particular concern here is focused on breaches of international labour law. On the previous day in Committee the noble Baroness, Lady Bennett of Manor Castle, gave a telling example of a hypothetical Welsh Government procurement decision

“to block a supplier of staff uniforms because the clothing is made under abusive conditions in an abusive regime

That example is topical, since War on Want has recently reported that 44,000 garment workers in Bangladesh are facing arrest after the Government there issued unnamed arrest warrants in response to November’s protests calling for an increase in the minimum wage from £110 to £172 per month. This is the country in which, on 24 April 11 years ago, 1,100 workers died in a fire in a garment factory in which safety standards were ignored. Public entities in the UK might well wish to question whether to procure from such a country.

Mention of Wales makes me think of another example where local people might also have strong views about public procurement of steel made in countries which do not respect trade union rights if, as seems likely, steelmaking capacity at Port Talbot is reduced and that capacity is substituted by steel made elsewhere in the world.

Before I say more, I should make the obvious point —which the noble Lord and the noble Baroness have already made—that the international law referred to in paragraph 6, and in our proposed new paragraph 6A, is not confined to matters of labour law but covers every area of international law. Therefore, those of your Lordships more focused on international law obligations in relation to, for example, the environment, civil rights or maritime law will share my concern that UK public entities in their overseas procurement decisions should be allowed to take account of breaches of international law by countries in their potential supply chains.

It is true that paragraph 8 of the Schedule already allows decision-makers to take account of a limited range of matters in relation to labour standards, but it is very limited. In essence, paragraph 8 applies only to conduct that would amount to a criminal offence in relation to slavery or human trafficking orders, failure to pay the national minimum wage, and labour market orders under the Immigration Act. For some reason, the Bill does not currently permit those making procurement decisions to have regard to the fundamental labour standards binding on all countries by virtue of their membership of the International Labour Organization. These are usefully set out in Articles 399(2) and (6) of the trade and co-operation agreement—the Brexit deal—signed by our then Prime Minister in 2020.

These provisions commit the United Kingdom to respect, promote and effectively implement the ILO Constitution, which includes the Declaration of Philadelphia; the ILO Declaration on Fundamental Principles and Rights at Work and its follow-up, adopted at Geneva on 18 June 1998; the ILO decent work agenda, set out in the 2008 ILO Declaration on Social Justice for a Fair Globalization; and the fundamental ILO conventions.

Those conventions, binding on every member country on earth, whether or not the country in question has ratified each convention, protect the following: freedom of association and the effective recognition of the right to collective bargaining; the abolition of all forms of forced or compulsory labour; the effective abolition of child labour; the elimination of discrimination in respect of employment and occupation; decent working conditions for all with regard to, inter alia, wages, earnings, working hours, maternity leave, and other conditions of work; health and safety at work, including the prevention of occupational injury or illness, and compensation in cases of such injury or illness; and non-discrimination in respect of working conditions, including for migrant workers.

It is no answer for the Government to say, as was suggested on the previous occasion, that these are matters of foreign policy reserved to Westminster. They are not. The noble Lord, Lord Wallace of Saltaire, explained the distinction. In any event, by its ratification of every one of these international laws, the United Kingdom has declared its foreign policy in respect of these matters. Furthermore, as the noble Baroness, Lady Bennett of Manor Castle, put it, in relation to her example:

“How can it not be right that the people of Wales can decide for themselves that they do not want to see people wearing uniforms from that kind of source? ”.—[Official Report, 17/4/24; col. 1077.]

It is much more likely that breaches of international labour law will occur in supply-chain countries, rather than the destination country, the United Kingdom, for the obvious reason that supply chains are usually constructed to exploit cheap labour, poor conditions, inadequate standards, lack of enforcement, and powerless trade unions. As I mentioned at Second Reading, the International Trade Union Confederation’s Global Rights Index has ascertained that breaches of workers’ rights reached record highs last year. It lists Bangladesh, Belarus, Ecuador, Egypt, Eswatini, Guatemala, Myanmar, Tunisia, the Philippines and Turkey as the 10 worst countries for workers’ rights. No less than 73% of the countries surveyed impeded the registration of unions, or banned them outright, including Belarus, Central African Republic and Guatemala. Worse still, 80% of the countries surveyed violated the right to strike.

After the military coup in Myanmar, 16 trade unions were declared illegal and trade union activists have been arrested, dismissed, blacklisted and murdered. Maung Maung, the president of the Confederation of Trade Unions, Myanmar, spoke at a meeting in your Lordships’ House on the same day as our previous session in Committee. He escaped prosecution only by reason of the fact that he is in exile.

Why should public entities not take such matters into consideration? The Minister was kind enough to write to me on 8 March, after Second Reading, about a question I had raised in debate. She said that public entities would be allowed to take such matters into account, so long as the rejection of the hypothetical tender was not on country-specific grounds. I am somewhat dubious about that, since the obvious bar in paragraph 6 is that breaches of international law are to be taken into consideration only if the procurement might put the UK in breach of its obligations.

If foreign breaches may be taken into account, the problem is that the decision-maker is likely to be deciding on a country-specific basis, weighing all the factors and assessing the nature of the breaches of the particular country from which the tender comes. To do that, the decision-maker will probably, and rightly, make reference to the very detailed review of that country’s adherence to ILO standards carried out by the ILO’s Committee of Experts on the Application of Conventions and Recommendations, conducted each year.

Insistence on international labour standards in supply chains is an important way of improving the conditions of labour in the third world and, at the same time, preventing good employers in the UK being undercut by bad, and unlawful, conditions abroad. The right to insist on such matters of international law is surely an important element of local democracy. It does not detract from Westminster’s ability to enforce international law on a wider basis. I look forward to hearing the Minister’s view on my amendment.

Photo of Lord Etherton Lord Etherton Crossbench 3:45, 7 May 2024

I support Amendments 18 and 29, tabled by the noble Lord, Lord Verdirame, to which I have added my name. In view of what has been said in detail by the noble Lord, Lord Verdirame, and the noble Baroness, Lady Noakes, I can be very short.

Put very simply, the international law exception in the Schedule, as currently worded, leaves entirely to the relevant public body the right to reach its own conclusion as to whether a failure to boycott or a positive decision to make a procurement in relation to the foreign state would place the UK in breach of its obligations under international law. This is contrary to the Government’s own policy in paragraph 6 of the Explanatory Notes that the obligations under international law relevant to a BDS decision must be determined by the Government and not by individual relevant bodies. As we all know, many aspects of international law derived from numerous sources can be highly contentious. One has only to think of disagreements expressed in this House over the past few years on the proper meaning and effect of the refugee convention and the European Convention on Human Rights to see that that is so.

Paragraph 6 of the Explanatory Notes states that decisions of public policy about procurement and investment based on political or moral disapproval of a foreign state are permitted only if the decision is,

“positively consistent with the UK’s foreign policy”—

I emphasise—

“as determined by the Government”.

The Minister, in response to me on Second Reading, was not entirely consistent in relation to this matter. She said:

“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”— which is fair enough. She continued:

“They must reasonably consider the decision relevant to the UK’s obligations under international law”.—[Official Report, 20/2/24; col. 595.]

Therefore, there is an insertion there of “reasonable consideration” but no reference at all to the Government’s policy stated in the Explanatory Notes that foreign policy is to be determined by the Government and not by individual public entities.

In short, we simply cannot have disputes before our domestic courts about the proper meaning and effect of international law sources relevant to decisions under the Bill going through the High Court, the Court of Appeal and the Supreme Court at great cost to the public as well as, of course, to the ratepayers and the council tax payers of the relevant body.

Photo of Baroness Altmann Baroness Altmann Conservative

My Lords, I will briefly support the two amendments, one from the noble Lord, Lord Verdirame, and the noble and learned Lord, Lord Etherton, and the other from my noble friend Lady Noakes and the noble Lord, Lord Pannick. I urge my noble friend the Minister to consider carefully the purpose of these amendments.

I completely support the Bill and I am grateful to the Government for bringing it forward, although I recognise that not all noble Lords will be of the same mind as myself. However, I stress that using a test such as that proposed in paragraph 6 of the Schedule, as to whether the decision would place the UK in breach of its obligations under international law, is problematic.

International law is not well defined, especially in developing areas where international lawyers are increasingly recognising a duty of states to avoid assisting violations of international law by others. It could be easy for activists to assert disputed facts alleged to constitute violations of international law, which might bring this into play. Activists could, for example, promote BDS against Israel by claiming that it is required to avoid placing the UK in breach of its obligations under international law.

The problems are highlighted by a recent letter signed by the noble and learned Baroness, Lady Hale, and Lord Sumption, which claimed that the UK Government have an obligation to cease arms supplies to Israel on the grounds that these might assist Israel to carry out genocide. This was based on a misunderstanding of the International Court of Justice’s initial conclusions on an appeal by South Africa. Paragraph 6 of the Schedule might, I fear, enable activists to argue, in every council and public authority up and down the country, on a similar basis that they should not procure from or invest in a company that does business with Israel, for example, because this might assist some alleged genocide or other alleged crimes, which may be based entirely on a misunderstanding.

I am grateful to noble Lords for tabling these amendments and hope that my noble friend the Minister will consider that paragraph 6 of the Schedule may unintentionally be liable to undermine the purposes of this Bill.

Photo of Lord Hain Lord Hain Labour 4:00, 7 May 2024

My Lords, I support my noble friend Lord Hendy’s amendment. Not only has he made a very powerful case as a renowned labour rights lawyer, but he has mentioned the question of the Welsh Government’s position, which is something I want to ask noble Lords, and in particular the Minister, to consider. Supposing the Welsh Government faced a decision by the UK Government not to support the steel industry with the support that it needs, we could see the closure of the Port Talbot steelworks, which directly employs just under 3,000 people on wages that are high for the area; indirectly, with the multiplier effect, at least 9,000 workers would lose their jobs, and a whole series of supplier industries would be affected. That would be the equivalent of closing mines in former pit villages, which I experienced as a Member of Parliament in the Neath valley, specifically representing those within the old constituency of Neath for nearly a quarter of a century. Closing the Port Talbot steelworks will be the equivalent of ripping the heart out of that whole area, and, as I have said, the multiplier effect will be devastating. It will be equivalent to closing the mines, particularly in the 1980s and flowing on into the 1990s.

I make that point because, if a steel supplier replacing the collapsed British steel industry was found to have labour standards that were in breach of international law, as my noble friend Lord Hendy has so authoritatively explained, why would—and should—the Welsh Government not have the right to say, “No, we won’t source that steel for infrastructure development”, which the Welsh Government largely have responsibility for in Wales under the devolved powers? Why should they not say, “We won’t do that because of the terrible labour standards, which are out of compliance with international labour law”? Why are they being denied that opportunity? Under this Bill, they will be denied that opportunity, unless the Government are willing to accept my noble friend Lord Hendy’s amendment.

This is a terrible Bill. I am normally on the same side of the argument as my friend, the noble Baroness, Lady Altmann, but this is a terrible Bill, and I will further explain why in the discussion on the next group of amendments. I ask the Minister to consider where the Bill is taking public bodies such as the Welsh Government—and Neath Port Talbot County Borough Council, which might be in the same position. If this Government allow the Port Talbot steelworks to close, with devastating consequences for the area, particularly employees in Neath Port Talbot County Borough Council, it might say, “In any future procurement decisions, we will not source steel from this or that country, replacing the Port Talbot steelworks, because of their labour law standards and their failure to comply with international workers’ rights and other matters”.

I cannot understand why the Government are driving the Bill forward without considering detailed amendments like that of my noble friend Lord Hendy. I know that the Minister has not replied yet; perhaps she will surprise us and say, “Yes, I agree with the noble Lord’s amendment”, or, at least, “I will take it away and look at how we might refine it in a fashion that could be acceptable to the Government and which he might be willing to accept”.

I hope the Minister surprises me by doing that but, if she does not, I ask her, the Government and the Conservative Benches to consider where this country is going on such matters. We are not respecting human rights. That is a matter for the next group of amendments, but we are not respecting our international obligations to uphold workers’ rights—conventions, by the way, that we have signed up to as a UK Government. That does not seem a good place to leave this country, and I hope that the Minister, having listened to the speech by my noble friend Lord Hendy, will agree to look at how she might be able to support his amendment, perhaps in a slightly modified form.

Photo of Lord Deben Lord Deben Conservative

My Lords, I remind the House of my declaration of interests. It is exactly from that position that I wish to ask a fundamental question of my noble friend. We spend an awful lot of time trying to get companies not to be complicit with the Government of Myanmar, for example, because of their actions. We are proud that there is a whole series of decent private and public companies that make decisions on those grounds. Are we sure that we should be in a position in which we will encourage public and private companies to make decisions on those grounds but specifically exclude the right of elected bodies—and some non-elected bodies, because they have been designated as public bodies—to make those decisions? I find that a very difficult position to support.

Part of the problem is that we are now in a complex and extremely uncertain area, which is why all the amendments before us are of considerable importance. They say that we are putting public bodies—we are not quite sure what they are—in a position where they do not know quite how they should behave, and we are opening them up to the opportunity of people taking them to court because the decision they have made has not been in conformity with what the plaintiffs suggest should have been their decision in relation to international law. At the same time, we are saying to them that they should not take into account the same things most of us would try to get private companies—and public companies, in that sense—to take into account.

We are getting into a real mess here, and I do not see that this is a carefully written Bill. Indeed, my last point is simply that this is a terribly badly written Bill. I do not know who thought it through. We have now had a series of people taking rather different views—as a matter of fact, I am unhappy about the particular way in which Israel is treated in the Bill. We are all taking different views, but we are all saying that the Bill is so badly written that people will not know how to deal with it.

This is a central concern for this House; we need legislation through which we can explain to people what is happening. If I may say to the noble Lords who put the amendments forward, it took a bit of listening to understand what their problem was, to put it bluntly. How on earth are we going to have public bodies coming to decisions when they have to read that to start with to understand what mess they might be in? I hope my noble friend will help me to understand how this Bill will be simple enough for it, first, to be enforced and, secondly, to be proper. At the moment, I feel it is improper, because it is so badly drafted.

Photo of Baroness Noakes Baroness Noakes Conservative

My Lords, we should get this into perspective. I say to my noble friend Lord Deben and indeed to the noble Lord, Lord Hain, that this Bill is handling one particular aspect: fundamentally, boycotts and divestment decisions. There is a whole range of law in the Procurement Act, which we passed last year, which sets out the UK’s version of the procurement rules we used to take from the EU—they have been modernised for our own purposes, but they are still hugely complicated.

For a very long time, the Government’s own procurement advice to public bodies was that:

“Public procurement should never be used as a tool to boycott tenders from suppliers based in other countries, except where formal legal sanctions, embargoes and restrictions have been put in place by the UK Government”.

In many ways, this Bill provides a more liberal approach to that blanket proposition, which was in a government procurement policy note and which has been governing procurement for a long time. We need to see this Bill in context and in the light of the rather narrow area it is trying to deal with.

Photo of Lord Wolfson of Tredegar Lord Wolfson of Tredegar Conservative

My Lords, unlike the noble Lord, Lord Hain, I think this is a rather good Bill, although I agree respectfully with him that these amendments, particularly those on international law, merit careful consideration by the Minister and the Government. I say that essentially for three reasons, and I can be brief.

First, the general approach in this country is that public bodies do not have their own interpretation of international law. It is the Government who assess international law obligations, because they are binding on the United Kingdom as a state.

That leads me to the second point, which might in part answer that made by my noble friend Lord Deben. The effect of the Bill as drafted is to introduce, by the back door, potentially vast swathes of international law into our domestic legislation. As I never tire of saying in this House, we have a dualist system: international law is not part of domestic law unless and until it is incorporated. So the answer to my noble friend’s point may well be this: if somebody were to say in a domestic court that a public authority was in breach of “the law” because it had not complied with some international law obligation that was not part of our domestic law, the public body’s obvious retort would be to say that it is not subject to that obligation.

The third point is a practical rather than legal one. My concern is that, in the real world, if the Bill is left as drafted it will in practice drive a coach and horses through what it really seeks to achieve, because the courts will be clogged up with arguments, even if they are entirely unmeritorious, as to the scope of international law. I agree with the noble Lord, Lord Verdirame, about Richard Hermer KC’s opinion: it is something of a curate’s egg, and I will perhaps come back to that in a later group. But I agree that, on this point, he is absolutely right to sound a note of warning and to highlight that the Bill as drafted risks undermining the Government’s ambitions for it.

I gently invite my noble friend the Minister to reconsider the Government’s approach to this international law question, which we can perhaps come back to at a future opportunity.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade), Liberal Democrat Lords Spokesperson (International Development), Liberal Democrat Lords Spokesperson (Foreign and Commonwealth Affairs)

My Lords, I apologise to the Committee because I did not participate in previous days in Committee or at Second Reading, but as these groups touch on the areas that I speak on from these Benches—international trade and international relations—I want to ask the Minister for clarity on a couple of areas.

The first is leading on from the points made by the noble and learned Lord, Lord Etherton, about bodies within the UK that are afforded decision-making abilities under our treaties. Numerous treaties afford subnational authorities and decision-makers the ability to make policy decisions or interpret international law, as the noble Lord, Lord Wolfson, said. That may apply to the Scottish Government, the Welsh Government or local authorities. This is quite common in trade agreements. It is a requirement of trade agreements that those subnational bodies, in effect, make a decision about whether their actions within that treaty would bring about a potential breach of the treaty for the United Kingdom itself, so the ability of a public body to make a decision exists. I am seeking clarity from the Minister about the intent behind this legislation for those powers that exist in these areas. Is it to remove them or to provide, as the noble Baroness, Lady Noakes, said, a more liberal provision that will continue the ability of those subnational bodies to make their determinations?

The noble Baroness referenced the Procurement Act, which she went through. We sat through many days on that, as did the Minister. As the Committee will know, UK procurement legislation allows decision-makers to reach their own judgments about whether entering into procurement arrangements with other bodies could potentially be a breach of obligations, such as whether that body is of good character or whether there has been corruption. That exists. On one reading, the Bill will seek to remove that, but paragraph 6 of the Schedule would maintain it. I am seeking from the Minister the intent behind this legislation. Unless the position is crystal clear, accounting officers in public bodies who are statutorily responsible for making those decisions will have no clarity when it comes to some of them.

The second area is the position of UK Ministers on the potential of other nations breaching international law. If we have an involvement in that other country, there is the risk that we would be covered by elements of international law. I know that the noble Lord, Lord Collins, will address human rights in a later group. This is important when it comes to countries such as Myanmar or the Occupied Palestinian Territories because there have been times when Ministers at the Dispatch Box, responding to my questions, have said that they have issued warnings to sovereign countries that their actions run the risk of breaching international humanitarian law or customary law. What is the public body meant to do with that statement? A public body could act proportionately and reasonably—the equivalent would be the risk register—and state that it heard the Foreign Secretary issue a warning in Parliament that that country was potentially in breach of international humanitarian law. Under the Bill, is it asked to do nothing about it or to act reasonably and state that there is a risk with entering into commercial or investment relations with the very body to which the Foreign Secretary, on behalf of the Government, issued a warning? What is the Minister’s statement about that? On one reading of the legislation, I think the public body would be under a duty to ignore the Foreign Secretary’s warning. Under the Schedule, the public body would potentially be able to take that into consideration in acting reasonably and stating that it would not invest or have a relationship.

When it comes to priority countries that the FCDO has stated are potentially at risk of breaching international law, what is the decision-maker reasonably asked to do? I would be grateful if the Minister could provide clarity. At the moment it seems that in this area, for those two aspects, one part of the Bill is contradicting the other.

Photo of Lord Oates Lord Oates Liberal Democrat 4:15, 7 May 2024

My Lords, I share the view of the noble Lord, Lord Deben, that these amendments simply highlight the mess that the Government have got themselves into with the Bill as a whole. The Bill imposes some extraordinary obligations on public bodies, which I presume is the reason for paragraph 6 of the Schedule—it is necessary only because of those extraordinary measures.

Most of the amendments in this group do not deal with the fundamental issue that the Bill is incoherent. Amendment 18, in trying to deal with this issue, potentially gives huge powers to Ministers to profoundly shape or change the nature of the Bill by their powers to set out what should be regarded and disregarded in terms of international law obligations. Amendment 28 pretends that the overall issue with the Bill—which is the reason that paragraph 6 of the Schedule exists in the first place—does not exist. Fundamentally, as the noble Lord, Lord Hain, said, this is a very bad Bill. These amendments just underline why.

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (Equalities and Women's Issues), Shadow Spokesperson (Foreign and Commonwealth Affairs and International Development), Shadow Deputy Leader of the House of Lords

My Lords, I say to the noble Baroness, Lady Noakes, that I wish the Bill was specific and addressed the manifesto commitment of the Conservative Party. The Labour Party has made it absolutely clear that we are opposed to boycotts, disinvestment and singling out Israel. The problem with the Bill is that it is wide. It covers all kinds of issues that will place public bodies in a very difficult position. In the debate on this group of amendments, we have senior legal people all saying basically the same thing: this will end up in court. When that fear of ending up in court occurs—when people read a law and say, “This is so complicated that we don’t know what it means; it will end up with us in court”—what happens then? It is the chilling effect. There will be decisions made not in the interest of the public body but on the basis of it not being sure that it is capable of making this decision. That is the important thing.

I support my noble friend’s amendment on extending the exceptions. The Schedule lays out other obligations on public bodies, not least very positive legislation that this Government have implemented on modern slavery, on other international law issues, on labour-related misconduct and so on. They are naturally there because these public bodies have already been told that these obligations are on them. There will be a lot of confusion. I agree with my noble friend’s point about taking into account potential breaches of international law by the UK but not those by other countries in the supply chain. Most of our experience of labour issues is that those supply chains can be incredibly convoluted. You do not know the origin of certain products. We have had debates in this Chamber about the use of cotton grown in Xinjiang by slave labour and being sold in British shops. Companies have decided to find out where that goes.

My noble friend also raised the Rana Plaza disaster of 2013. I remember it well, and I am sure that the Minister does, too, because many of our retail companies were selling products made in factories that were incredibly unsafe and used child labour. That disaster will stay in my mind. The government response at the time was, “There are potential breaches of international law. We will give the ILO extra money to go and investigate Bangladesh so that it commits to its proper responsibilities”. We did that.

The Government in this legislation are saying, “There are all sorts of factors that we can’t take into account—and even if we can, there are exceptions, the Secretary of State has to be involved, and we know it’s going to end up in court.” That is the problem with this legislation. It is not straightforward dealing with BDS. I wish it were. We will come on to that in the other group.

I have been trying to work out at what point I should read out the guidance on the Occupied Territories in Palestine that the Government have issued to companies. I say to the noble Baroness, Lady Noakes, please read it. The noble Baroness is nodding; she has read it. Great. I shall read it into the record, although it may take longer than the 10 minutes I am allowed.

The UK has a clear position on Israeli settlements: The West Bank, including East Jerusalem, Gaza and the Golan Heights have been occupied by Israel since 1967. Settlements are illegal under international law, constitute an obstacle to peace and threaten a two-state solution to the Israeli-Palestinian conflict. We will not recognise any changes to the pre-1967 borders, including with regard to Jerusalem, other than those agreed by the parties … There are therefore clear risks related to economic and financial activities in the settlements, and we do not encourage or offer support to such activity. Financial transactions, investments, purchases, procurements as well as other economic activities (including in services like tourism) in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks stemming from the fact that the Israeli settlements, according to international law, are built on occupied land and are not recognised as a legitimate part of Israel’s territory. This may result in disputed titles to the land, water, mineral or other natural resources which might be the subject of purchase or investment … UK citizens and businesses should be aware of the potential reputational implications of getting involved in economic and financial activities in settlements, as well as possible abuses of the rights of individuals. Those contemplating any economic or financial involvement in settlements should seek appropriate legal advice”.

That is the Government’s advice, recently issued. As the noble Lord, Lord Deben, said, we are saying that there is one policy for the private sector and another for the public sector. That is absolutely crazy. There are so many contradictions in this legislation that it beggars belief. I hope that the Minister will think hard about the complex nature of the Bill, and perhaps give it due consideration. I shall not repeat my comments on the next group, but we have often said, “Let’s sit down together and come to a solution that meets the requirements that were set out in the manifesto”. This legislation does not; that is why it is so wrong.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Minister of State (Cabinet Office)

My Lords, I will address the various amendments tabled in relation to international law. If the Committee is content, I will start by addressing Amendment 31, tabled by the noble Lord, Lord Hendy. It is a wide-ranging amendment, as some have said, which would allow public authorities to choose not to procure a good, service or works if their manufacture, provision or supply may have involved a breach of international law. Where a judgment has been made that a party has breached international law, it is for the Government and not a public authority to determine the appropriate response. This amendment would give public authorities too much discretion to engage in boycotts and divestment campaigns and would undermine the legislation.

The noble Lord provided a couple of examples for consideration, for which I was grateful, which he is concerned the Bill would prevent. As he is aware, the Bill already contains an exception to the ban for considerations relating to labour market misconduct, including modern slavery and human trafficking. This means that public authorities will be able to continue to have regard to international treaties banning forced labour. This is relevant to the Port Talbot steel example, which the noble Lord, Lord Hain, also spoke about.

Without more detail, I am not able to say for certain whether the Bill would apply to all the noble Lord’s specific examples. If he can provide further details later today, my officials will take them away and provide a response before the next Committee debate. Additionally, we are due to discuss labour standards in more detail when we come to Amendment 32.

The Procurement Act, which we have drawn on, strengthens the way in which these terms are defined. Suppliers may be excluded where there is sufficient evidence that they are responsible for abuses anywhere in the world, whether or not they have been convicted of an offence. We believe that this approach is the right one.

Additionally, I note the concerns of my noble friend Lord Deben, particularly regarding Myanmar. As I have stressed before, it is not appropriate for public authorities to have their own foreign policies. I agree with my noble friend Lady Noakes that they should not pursue blanket boycotts. These are unfair on suppliers operating ethically in those countries.

I want also to highlight to the noble Lord, Lord Purvis of Tweed, that doing business with a country that has breached international law is not always by itself enough to put the UK in breach of international law. Additionally, the Bill contains a power to exclude certain countries and territories from the ban via secondary legislation. The Government will keep their response under review and have made it clear that they regard that provision as important.

Photo of Lord Deben Lord Deben Conservative 4:30, 7 May 2024

My noble friend is saying that, if a regime controls by force and in the most terrible way the whole economics of a nation, I can advise a private company not to deal with it and remove itself from it, but a public body could not say, “I will not trade with or buy from Myanmar”, unless the Government decide that they will not deal with Myanmar in that sense. I find that morally extremely difficult to take. We are asking private people to do things—I am sure the Government would support that—but we are going to exclude those who are democratically elected or who are looking after, for example, a university. I find that very difficult to take.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Minister of State (Cabinet Office)

We are of course dealing with investment and procurement and the public bodies themselves.

Perhaps I should respond to the noble Lord, Lord Collins, who mentioned the Occupied Territories, which we will be coming back to on later amendments. Although the Government recognise the risks associated with—

Photo of Baroness Blackstone Baroness Blackstone Independent Labour

My Lords, I am sorry to interrupt the Minister, but I am perplexed by her view that foreign policy is simply a matter for central Governments. Foreign policy affects the population of the UK; it affects thousands of institutions in one way or another. We live, after all, in a global world. We do not live in a completely isolated country with no contact with the rest of the world. Foreign policy is not just something that can be determined and administered entirely by central government without the engagement, involvement and acceptance of those policies by a very large number of public and private institutions and individual members of this country.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Minister of State (Cabinet Office)

I note what the noble Baroness says, but the Bill does not change UK foreign policy. That is for FCDO and the UK Government to decide. This applies only to public authorities and to investment and procurement, which I have continued to emphasise, because I think some of the discussion is needlessly wide-ranging—and, if I may, I will now make progress.

The Government, as I was saying, in relation to the Palestinian Occupied Territories, recognise the risk associated with economic and financial activities in the Israeli settlements, but we do not support boycotts of the Occupied Palestinian Territories. They are inherently divisive and may lead to inadvertent negative effects on Palestinians, as well as undermining the aim of the Bill, which is to ensure that we speak with one voice internationally. None of this changes existing government guidance.

Photo of Lord Collins of Highbury Lord Collins of Highbury Opposition Whip (Lords), Shadow Spokesperson (Equalities and Women's Issues), Shadow Spokesperson (Foreign and Commonwealth Affairs and International Development), Shadow Deputy Leader of the House of Lords

This is a fundamental point. I have made clear the Labour Party’s position on boycotts. We are talking about investment in factories in illegal settlements in the Occupied Territories. What is the noble Baroness saying to a public body that realises that an investment it had has suddenly transferred from Jordan to a factory in the Occupied Territories? Is she saying that that public body cannot say that the investment is in breach? It causes reputational risk and could fundamentally affect the value of the investment, because it is illegal. What is the noble Baroness saying: that we are going to put it in this Bill, come what may, because that is the foreign policy? It makes no sense to me at all. The Government are talking with two voices. The FCDO is saying one thing and this Minister is saying something completely different.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Minister of State (Cabinet Office)

I do not think there is a difference between us and the FCDO. If I may, I will move on to the other amendments, because I am trying, as I always do, to answer the questions noble Lords have asked. There are a number of different amendments in this group, and I think we should look at them in the round. I will turn to Amendments 18, 28 and 29.

I will start with Amendment 28, which is a probing amendment tabled by my noble friend Lady Noakes, which would remove paragraph 6 of the schedule. She said that was a direct approach. I thank her, more generally, for her support for this legislation and for providing this opportunity to explain why this provision was included in the Bill. Paragraph 6 of the schedule makes an exception to the ban for considerations that a decision-maker in a public authority reasonably considers to be relevant to compliance with the UK’s obligations under international law.

Amendments 29 and 18, as the noble Lord, Lord Verdirame, has explained, would remove the existing exception and replace it with a narrower exception that would only allow public authorities to consider international law in a way that is influenced by moral or political disapproval of foreign state conduct, in line with regulations made by the Secretary of State. I would like to thank him, and my noble friend Lady Noakes, and the noble and learned Lord, Lord Etherton, for raising this matter. I acknowledge the noble Lord’s and my noble friend’s valuable expertise in this area— of course, they have the support of the noble Lord, Lord Pannick, who is not in his place, my noble friends Lady Altmann and Lord Wolfson.

There are very limited examples of when this clause might be relevant to public authorities, such as when abiding by sanctions under international law. It is therefore intended as a safeguard. I appreciate the noble Lord’s concern that public authorities could make their own subjective interpretations of foreign policy that are not aligned with the foreign policy of the UK Government. This exception can only be exercised by public authorities in a way that is “reasonable”. It would be up to the enforcement authority, or the courts, to determine whether the exception was exercised reasonably.

However, I appreciate noble Lords’ various concerns on this matter, including the impact on the courts, and the Government will consider these. We will no doubt return to the international law issue on Report. I thank noble Lords for their insightful contributions—

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat Lords Spokesperson (International Trade), Liberal Democrat Lords Spokesperson (International Development), Liberal Democrat Lords Spokesperson (Foreign and Commonwealth Affairs)

Can I press the Minister on that? My understanding is that, under the Bill, in the absence of a Minister or the Government coming to a determination that international law has been breached, a decision-maker in a public authority can make the decision that there is the potential of a breach. Therefore, a decision-making body at the moment, for example—because Ministers are warning the Israeli Government that their actions in the West Bank and Occupied Territories are potentially in breach of international law—would be permitted under Schedule 6 to make a decision not to invest.

Photo of Baroness Neville-Rolfe Baroness Neville-Rolfe Minister of State (Cabinet Office)

I am not sure that I entirely understand the noble Lord’s question, but I will reflect on it. We will come relatively shortly to a group that will look at these issues more broadly. If I am able to do so, I will come back to him at that point.

As I have already said, various concerns have been raised, which we will consider. I thank all noble Lords for their contributions. I say to the noble Lord, Lord Deben, that we value this House’s expertise, as I said at Question Time only last week. The Government will continue to think carefully about the important points that have been made. I hope the noble Lord will feel able to withdraw his amendment.

Photo of Lord Verdirame Lord Verdirame Non-affiliated

My Lords, I thank all noble Lords who have taken part in this debate. The key driver behind our amendments was a concern about clarity, as the noble Lord, Lord Deben, pointed out. International law is not just a law but an entire legal system, so to say that you cannot breach international law is like saying that you cannot breach Chinese law. The legislative instruction has to be more specific than that. That is the essence of our concern.

I do not think the power we are proposing in my amendments, supported by the noble and learned Lord, Lord Etherton, would be excessive, as suggested by the noble Lord, Lord Oates. We have other examples of that in the legislation. As for the Minister’s comment on sanctions, we already have powers in legislation to deal with sanctions, so there would not need to be an international law exception on such a broad and unlimited basis to cover that situation; we already deal with that in our existing legislation.

I thank those who supported our amendments and analysis, in particular the noble Baronesses, Lady Altmann and Lady Noakes, and the noble Lord, Lord Wolfson of Tredegar. I look forward to the proposals that the Minister said she would consider bringing forward on Report. With that, I beg leave to withdraw.

Amendment 18 withdrawn.