Conflict between government departments on whether BDS is illegal for public bodies

Mr Clive Betts (Sheffield South East) (Lab): (right) On the Foreign Office website there is very clear advice to private companies thinking of doing business with illegal Israeli settlements. It states: “Financial transactions, investments, purchases, procurements as well as other economic activities…in Israeli settlements or benefiting Israeli settlements, entail legal and economic risks” and “we do not encourage or offer support to such activity.” Do the Government give exactly the same advice to public bodies, including local councils, with regard to their procurement decisions?

Mr Philip Hammond: Yes, we are clear with local authorities that they are bound by and must follow procurement rules, but we are clear that we do not support boycott movements. The Minister for the Cabinet Office was in Israel just last week and made that abundantly clear then.

Richard Burden (Birmingham, Northfield) (Lab): May I press the Foreign Secretary further on the answer he gave to the Member for Sheffield South East (Mr Betts)? Is there anything in World Trade Organisation or other rules that fetters a public institution’s ability to act on the advice that the WTO puts on its website, which quoted?
Mr Hammond: Public bodies in this country are bound by the EU procurement directive in their purchasing activity and must follow those rules.
Richard Burden: How will the Leader of the House arrange for parliamentary scrutiny of the changes that the Cabinet Office was intending to introduce to local government pension rules and procurement guidelines for public institutions. He may also know that the Minister for the Cabinet Office decided to announce the second of those changes last week, not in the House but in Israel, during a joint press conference with Prime Minister Netanyahu. Given that there is now real uncertainty about what those changes mean, and the apparent conflict between what the Minister for the Cabinet Office considers to be the target of the guidelines and official Foreign Office advice warning of the risks to business of becoming financially involved with illegal actions by Israel in the occupied territories, we are still waiting to hear how all this can be scrutinised. Will the Leader of the House arrange for the Minister for the Cabinet Office finally to come to the House, make a statement and answer questions?

Is the Foreign Office or the Cabinet Office right?

This all started in November 2014 with a motion to Leicester City council not to buy goods from illegal settlements “insofar as legal considerations allow”.  The motion was passed, but a pro-settler lobbying group filed for judicial review, so no action has been taken. Seven other councils have passed similar motions.
In December 2014 the Foreign Office and Business Department published their long-awaited guidance on trade with illegal settlements. This said that buying goods from illegal settlements carried risks, such as legal disputes over ownership of land or natural resources, over the abuse of human rights and they also carried “reputational implications” for companies, so the UK would not “encourage or support” trade with settlements.
This was a long way short of what many MPs had been calling for which was a complete ban on trade with illegal settlements or with firms complicit in the occupation, but at least it was a minimal step in the right direction.
The Israelis, alarmed at the success of the campaign against firms like Veolia and G4S who were at risk of losing local authority contracts, started to put pressure on sympathetic ministers to make it illegal for councils to follow Leicester’s example.
In October 2015 the Conservative Party issued a press release on the day before their conference saying the government would introduce new policy guidance to public bodies and new regulations for local authority pension funds to stop boycotts against countries that were not already being boycotted by the UK goverrnment.
This was announced as a joint initiative by the Department of Communities and the Cabinet Office to stop ‘militant leftwing councils’ boycotting Israeli goods. The Leicester motion on settlement goods was cited as a target.
In November 2015 there was another setback for the Israelis when the EU unanimously agreed new labelling rules. Goods from illegal settlements would have to be labelled “Produce of West Bank (Israeli settlement)”. This extended voluntary labelling rules already in force in the UK since 2009.
Labelling was introduced to enable individuals to boycott settlement goods if they wished. The new business guidance had the effect of encouraging firms to stop  trading with settlements. Would it now be illegal for councils to do what individuals and businesses were being enabled if not encouraged to do?
In February 2016 the Cabinet Office minister Matthew Hancock accounced the new public procurement guidance – at a press conference in Israeli with Benyamin Netanyah – claiming it would prevent “divisive town hall boycotts”, but the wording appeared to fudge the issue of how the guidance related to existing EU and WTO procurement rules.
Lawyers says that the guidance does not remove the power of councils to refuse a contract to a company on the grounds of gross misconduct, which can include using stolen land or mineral resources from an illegal settlement.
But campaigners fear that the guidance will put one more layer of difficulty in the path of councils considering action against illegal settlements knowing it will be contested by well-funded lobbying groups in the courts.
Councillors already take multi-million-pound decisions on contracts and procurement and pension fund investment involving companies that operate in illegal settlements, but so far no one has explicitly said they are taking that into account.
In any case the dividing line between financial and ethical considerations can be difficult to draw. The Foreign Office advises that it may be reputationally and therefore financially wise not to sign a contract with a company that is in breach of international law.
The government itself is facing in two directions on this issue, with the Foreign Office and the Department of Business warning companies and of the risks of doing business with illegal settlements while the Department of Communities and the Cabinet Office try to make it illegal for public bodies to avoid these risks.
Please support Clive Betts MP and Richard Burden MP in their campaign to clarify that ethical procurement and investment policies are both legal and desirable.

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