On 22 February 2022, the UK government passed an amendment to the Public Service Pensions and Judicial Offices Bill (‘new clause 1’). This amendment empowers the Secretary of State to issue guidance to administrators of public sector pension schemes to ensure that their investment decisions will not conflict with the government’s foreign and defence policy.
MP Robert Jenrick, who introduced new clause 1, asserted in the House of Commons that the clause focussed on preventing public pension schemes from pursuing ‘pseudo foreign policies’ and was not aimed at limiting the freedom of speech or action of individual citizens. Jenrick’s defence of the inclusion of new clause 1 in the Bill seemed to be three-fold. First, the government should have a say in the regulation of public service schemes because they are public funds and underwritten by the state. Second, the pursuit of non-financial policy goals by administrators of public service pension schemes can be perceived by foreign governments as British state policy, undermining the UK’s relationship with its foreign allies. Third, new clause 1 pursues a broader objective of tackling the Boycott, Divestment and Sanctions Movement (‘BDS’) within the public sector and public institutions. This is a step towards the Government fulfilling its 2019 manifesto promise to ‘ban public bodies from imposing their own direct or indirect boycotts, disinvestment or sanctions campaigns against foreign countries.’
None of these justifications are convincing.
With regards to the first claim that the relevant funds represent public money, and thereby legitimate government oversight, the Supreme Court has already rejected this argument in a judicial review decision in 2020. In this case, the Court held that the then Secretary of State for Housing, Communities and Local Government (none other than Jenrick) had acted ultra vires (beyond his powers). Jenrick had told administrators that, whilst they could take into account non-financial considerations, this did not include the use of ‘pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries … other than where formal legal sanctions, embargoes and restrictions have been put in place by the government.’ Significantly, the Supreme Court emphasised that the contributions made by employees into pension funds are deducted from the income of employees themselves. Contrary to Jenrick’s assertion, the Supreme Court confirmed that this money could not be conceived as public funds.
Jenrick’s second claim was also dispensed with in the same decision, as the Supreme Court noted that the notion that administrators were an extension of the British state was a view that could be described as ‘superficial at best.’ Indeed, the second assertion was challenged in the House of Commons debate by Scottish National Party MP Peter Grant, who highlighted that pension trustees are legally independent and are not to be conceived of as an arm of the government.
The third claim pertaining to BDS merits further discussion. Jenrick advanced several reasons for his opposition to BDS (rather oddly in the context of the Pensions Bill debate). He argued that BDS is problematic in its exclusive focus on Israel, the only Jewish state; that studies have supposedly shown that BDS is the best predictor of anti-Jewish hostility; and that BDS would be an impediment to the recently improved situation in the Middle East and much more cooperative relations between other Arab nations and Israel.
Boycott movements have necessarily always been selective. It is therefore unreasonable to claim that this selectivity is somehow problematic in the Israeli context, but not, for example, in how boycotters in the Indian subcontinent focussed on colonial Britain, how civil rights activists focussed on white business owners in Claiborne County in Mississippi, or how global focus was aimed at apartheid in South Africa. Moreover, as was highlighted during the Pensions Bill debate by Labour MP Lloyd Russell-Moyle, the Labour Party’s sister parties in Israel (Israeli Labor and Meretz parties) have themselves called for divestments from companies operating in the occupied territories.
Furthermore, although Jenrick’s claims of BDS activity correlating with anti-Jewish hostility lacks citation, he appears to be quoting from a 2015 report by AMCHA Initiative, a highly problematic publication that repeatedly conflates BDS activity or expressions of anti-Zionism with antisemitism.
Finally, with regards to the winds of improvement blowing in the Middle East, prominent Israeli and international human rights organisations, including B’Tselem, Human Rights Watch, and Amnesty International, disagree by countering that Palestinians are living under apartheid.
The wider negative consequences of this amendment cannot be understated. The amendment is dangerously broad, which means that there is a significant risk that ethical investment decisions which conflict with the current government’s foreign policy stance may fall afoul of new clause 1. The chilling effect on democratic dialogue and solidarity activism is apparent when we note that, effectively, local authorities will be constrained by the UK government’s speed to condemn and adopt solid sanctions in response to human rights atrocities.
This type of situation is clearly demonstrated by the 1980s South Africa apartheid example. The Thatcher government refused to impose sanctions and local authorities, in opposition to this policy, joined the global anti-apartheid struggle. In the Israeli settlements context, whilst the UK government warns that there are ‘clear risks related to economic and financial activities in the settlements,’ it has not imposed any substantive sanctions on businesses which are benefiting from involvement in these illegal settlements. As MP Andy Slaughter pointed out, this leaves public investment administrators in the awkward position of being unable to withdraw their at-risk assets, as divestment will likely be construed as contrary to the government’s foreign policy position.
New clause 1 will cage local authorities and prevent them from taking action when the government is unwilling or unable to impose sanctions on states such as Israel, Saudi Arabia, and China for their human rights abuses. Forcing public pension administrators to be mouthpieces of the UK government thus demonstrates a desire to suppress the historical success of local government activism. The reasons offered by Jenrick are untenable and provide no justification for what is a clear attack on the plurality of democratic dialogue in this country. As such, this amendment should be roundly condemned.
Mehleen Rahman is an MPhil candidate in human rights law at St Cross College. Her thesis focussing on the compatibility of free speech guarantees with the legal treatment of boycotts is supervised by Catherine O’Regan and Ekaterina Aristova. Before starting her MPhil, Mehleen completed her LLM at NYU School of Law, where she was an International Law and Human Rights Fellow. She completed her LLB at UCL Faculty of Law, where she received Law Faculty Prizes in Public International Law and for her overall performance.