By Mike Phipps
On February 22nd, Labour List reported that 22 Labour MPs broke the whip to vote against a ban on boycotts of Israel in public pension funds. However, that is not an entirely accurate picture. While this was the narrative that the government was seeking to convey, the Jenrick amendment had far wider implications.
It was an amendment to the Public Service Pensions and Judicial Offices Bill, proposed by ex-minister Robert Jenrick. It was co-sponsored by three Labour MPs, despite an instruction from the whips to abstain.
Jenrick’s public service pension schemes amendment was introduced at a late stage in the Bill and was effectively rushed through. It passed with 296 MPs in favour and 81 against. Labour shamefully abstained, keen not to be associated with the Boycott Divestment Sanctions campaign aimed at Israel. But Jenrick’s amendment goes far wider: It enables ministers to stop authorities from making investment decisions that conflict with any UK foreign policy.
According to Amnesty International, the amendment has huge implications for the ability of the pension schemes of any public bodies such as Local Government Pension Schemes (LGPS) to invest ethically, as well as for the rights of members of such pension schemes to express and have their ethical views taken into account in the investment of their own money.
The proposed amendment’s lack of detail and ambiguous wording about aligning investments with “UK foreign and defence policy” also risk creating a chilling effect on risk-averse pension scheme managers. It could lead to schemes avoiding issues which may be considered ‘foreign and defence policy”.
Such policy is continuously evolving with international events and shifting alliances. As these change, a pension scheme’s obligations would too. Who would be responsible – and pay for – ongoing monitoring of all of the UK government’s foreign and defence policies and understanding their complex application in the investment sphere?
For example, the UK government’s policy is that settlements in the Occupied Palestinian Territories are illegal under international law. But the government also says it opposes boycott campaigns related to this issue. Which of these two policy positions would a pension scheme be expected to comply with?
Other difficult areas include the UK arms industry, where human rights and civil liberties concerns could be interpreted as being in conflict with government defence policy; divesting from companies which source products made with forced labour from Uyghur communities, which could be contrary to UK foreign policy regarding China; acting on human rights and climate change issues with respect to Saudi oil companies, which would impact on the UK’s relationship with Saudi Arabia.
Richard Burgon MP raised these concerns in the parliamentary debate, pointing out that Jenrick’s amendment “risks barring ethical investment decisions across the board”. He said: “Given that future governments might decide to support regimes that abuse trade unionists, for example—as we have seen in Colombia in recent years, or in Chile in the past—the new clause would be not only anti-democratic but would risk ethical investment decisions and human rights policies around the world.”
The amendment could also undermine a pension scheme’s adherence to the UN Guiding Principles on Business and Human Rights. These principles, adopted by the Human Rights Council in 2011, constitute a landmark standard of conduct for companies that investors are expected to use as a benchmark.
Amnesty have pointed out a number of problems with the Jenrick amendment. Divesting from a company is an essential part of an investor’s toolkit to improve the practices of investee companies when other forms of pressure fail. This amendment threatens to remove that option ,
It could also be used by the government to undermine any human rights or environmental campaign that raises concerns about pension investments in any company operating in a country that is not formally on a UK sanctions list. Potentially it could constrain public sector investment schemes from divesting from arms companies, polluting companies and any companies involved in human rights abuses, where such divestment might be in conflict with foreign policy goals.
The amendment seems to be an attempt to overcome a 2017 High Court ruling upheld by the Supreme Court in 2020 that held that similar guidance issued by the Secretary of State was unlawful. As Labour Hub reported over a year ago, in 2016 the Department for Communities and Local Government issued guidance which prohibited Local Government Pension Schemes (LGPS) from pursuing divestment from foreign nations and UK defence industries even if such divestment was consistent with the will of a Scheme’s members.
In June 2017, the Palestine Solidarity Campaign brought a Judicial Review which resulted in the Administrative Court ruling that the decision to prohibit LGPS funds from this kind of disinvestment was unlawful. In a landmark judgement issued on April 29th 2020, the Supreme Court ruled the government was acting unlawfully as it was beyond the powers of the Secretary of State to impose such requirements.
As Peter Frankental, Economic Relations Programme Director at Amnesty International UK, warned then: “The government’s motivation may be to protect trade with certain countries, such as Israel, and certain industries that have been the subject of boycott calls, such as arms manufacturers. But there is a risk that such draconian measures could actually undermine the rule of law, by deterring local authorities from upholding international standards that the UK is, in principle, committed to.”
It was only a matter of time before the government would try to overturn this ruling. Speaking against the Jenrick amendment, John McDonnell MP argued that the government had no right to interfere in the issue, as pubic money was not at stake. He said:
“On the debate about whether or not this is public money, I thought, as a member of the Local Government Pension Scheme, that the Supreme Court was pretty clear that this is not public money in the sense that would enable the government to issue guidance… I work on the basis, as I did when I was employed in local government, that the money I earned and the money forgone to invest in my pension scheme was my earned income; it was not public money under the control of the government.”
He went on:
“On moral grounds, I have argued very strongly within my own Local Government Pension Scheme—so far, I have to say, unsuccessfully—that I do not want the money I have earned, and part of my pension is my earned income, to be invested in a number of states. They include Saudi Arabia, because of its involvement in Yemen… I have argued that I do not want my pension invested in China because of the treatment of the Uyghurs… I have argued against investments going into Colombia because of the murder of trade unionists, and I have also argued against investments going into Israel because I do believe—according to the Amnesty human rights report, and many Jewish institutions—that it is an apartheid state in the way it treats the Palestinians… I do not want my pension invested in armaments or fossil fuels either, and I believe that that is my right. I do not believe it is the role of the state to ride roughshod over my moral choices without extremely good reason.”
In a statement, Amnesty International declared the amendment “could be an unacceptable interference with LGPS scheme members’ right to freedom of conscience.” The amendment forces public sector pension schemes to give effect to the government’s own policies in preference to those which they themselves thought it right to adopt.
Amnesty conclude that the amendment “represents an unjustifiable interference with the rights of individual pension savers to exercise their freedom of conscience… It effectively conscripts individual public sector pension scheme members’ own money to promote central government’s foreign and defence policies regardless of their own wishes.”
Amnesty urged MPs to vote down the amendment. Only 22 Labour MPs joined the Lib Dems and SNP to do so.
The Labour MPs who defied the whip to abstain, and instead voted against the amendment, included John McDonnell, Richard Burgon, and Zarah Sultana MP who also spoke in the Commons debate, pointing out that in 1985,
“123 councils answered the call for solidarity with the South African anti-apartheid movement and adopted policies opposing that injustice, including 39 councils that had divested from companies operating in South Africa and Namibia. While the Prime Minister, Margaret Thatcher, was calling the African National Congress and Nelson Mandela terrorists and Young Conservatives were proudly wearing badges calling for him to be hanged, local authorities were on the right side of history, standing up to the horror of apartheid… The new clause, in the name of Robert Jenrick, would ban local councils from taking such a stand. Had it been in place back in 1985, because the Conservative Government supported apartheid South Africa—let us not forget that—local councils, no matter the strength of local feeling or the righteousness of the cause, would have been prevented from divesting pension funds from apartheid South Africa. They would have been compelled to be complicit in injustice.”
She went on:
“Government members may argue that that is history and things are different now. I contest that the facts say otherwise. The House knows that British-made weapons and diplomatic support are integral to the Saudi war in Yemen. Even as that war has claimed the lives of more than a quarter of a million people, pushed more than 20 million into absolute destitution and resulted in grave violations of international law, British complicity has continued. The new clause could deny councils the right to divest from arms companies whose bombs rain down on the people of Yemen. Similarly, if a local authority wanted to align its pension fund with international law and divest from companies operating in illegally occupied Palestinian lands, the new clause risks denying it that right, too.”
Apsana Begum MP also voted against the amendment, explaining, “I support the right of public bodies to make investment decisions informed by ethical considerations. This can include, for example, decisions not to invest in climate-destroying fossil fuel companies or in the arms industry or to take account of breaches of international law or human rights abuses.”
With the Jenrick amendment passed, ministers have sweeping powers to issue Guidance on divestment in line with UK’s foreign and defence policy. But ultimately it will be up to the courts to determine the boundaries of what is lawful in light of this amendment and other potentially conflicting regulations that Pension Fund Trustees must comply with.
Jenrick is a precursor to the anti-BDS Bill that Michael Gove is expected to introduce shortly. According to Peter Frankental, Economic Relations Programme Director at Amnesty International UK, “This Bill is likely to undermine ethical public procurement where the only human rights hook for excluding tenderers currently is ‘Grave Professional Misconduct’. I’m not aware of a single case in the UK of a tenderer being denied a contract on human rights grounds using this hook. The anti-BDS Bill may close the door even further to any such decisions.”
Campaigns to highlight at local council level the human rights abuses in countries where bidders for town hall services already operate and arguably collude in have proved highly potent in recent years. Two years ago, the UN Office of the High Commissioner for Human Rights published a database of 112 companies directly linked to human rights violations in Occupied Palestinian Territories. It’s a tribute to the success of these campaigns – in action, public opinion and the courts – that the government feels obliged to bring forth new legislation in this area.
Mike Phipps is editor of the Iraq Occupation Focus e-newsletter, available at https://lists.riseup.net/www/info/iraqfocus. His book For the Many: Preparing Labour for Power was published by OR Books in 2018.
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