Even after an hour and a half of parliamentary debate about whether it was legal for councils to ban trade with illegal Israeli settlements, MPs were still scratching heads and asking what exactly the Cabinet Office minister had meant.

“The answer is that it depends. There are situations where councils will be able to and situations where they will not,” was the nearest that John Penrose (right) came to a clear answer.

“We are clear that settlements themselves are illegal, but a firm based in those settlements may be operating in an entirely whiter-than-white, above-board fashion.”

He cited various laws that allow councils to exclude suppliers that have breached international social, environmental or labour laws, but he said councils could not assume that everything done in an illegal settlement was implicitly wrong.

“A separate case-by-case decision must be made about whether each potential supplier satisfies the rules.”

A geographical ban on suppliers from Israel would be against World Trade Organisation rules, he said, but this would not apply to a ban on settlement goods, he conceded, as “the Government do not recognise the illegal settlements as part of Israel”.

The debate was called by Richard Burden MP, chair of All-Party Britain-Palestine Group, so the Cabinet Office could clarify whether their new Public Procurement Notice issued in February would make it illegal for councils to ban trade with companies based in illegal Israeli settlements in Palestine, as a press release from the Conservative Party had clearly implied.  He put six questions to the minister:

1. Were civil servants consulted before the announcement of the proposed notice in a press release issued at the Conservative party conference?
2. Is there anything in this notice or that is intended by the Government that in any way changes the law?
3. Public bodies may already exclude tenderers from bidding for a contract where there is information showing grave misconduct by a company [or] where there are breaches of human rights. Does last month’s public procurement note in any way change or add to that advice?
4. Does the Minister consider that a breach of the fourth Geneva convention is a breach of human rights. If so, would the note stop a public institution resolving not to deal with a company that was involved in aiding and abetting breaches of that convention?
5. Pension fund trustees are already covered by a fiduciary duty, but will the changes being introduced in any way fetter the judgments that they make in line with that fiduciary duty in relation to not investing in fossil fuels, tobacco or the arms trade?
6. Will the Minister outline what plans he has for parliamentary scrutiny of these changes to pension fund guidance?

At the end of the debate he said: “My six questions have not been answered to my satisfaction, nor have the questions asked by other Members. I ask the Minister to answer in writing.”

Read extracts from the debate

Read the whole debate here..

Richard Burden (Birmingham, Northfield) (Lab): For where this all starts, we need to go back to the Conservative party conference last October. A press release was issued headlined “Government to stop ‘divisive’ town hall boycotts and sanctions” and “growing spread of militant divestment campaigns against .. Israeli firms.” [But] the behaviour most frequently mentioned in the press release was financial involvement with illegal settlements in the West Bank.

It is rather surprising that the Minister for the Cabinet Office (Matthew Hancock) took such exception to public institutions seeking to avoid dealings with co
mpanies involved with illegal settlements, given that the Foreign Office’s own website says there are “clear risks related to economic and financial activities in the settlements and we do not encourage or offer support to such activity”.

Chloe Smith (Norwich North) (Con): I believe that it is wrong for councils to attempt to use local government pension funds and procurement practices to make their own foreign policy, first, because foreign policy is reserved to Westminster, second because local boycotts can damage community cohesion, third because breaches of procurement legislation can result in severe penalties against the contracting authority and, finally, because it does not provide taxpayers with value for money.

Mr Clive Betts (Sheffield South East) (Lab): During the 1980s, some local authorities sought to sever links with firms that traded with South Africa. I think local authorities were right then and I think there is a lot of shame on the Conservative benches about the action that the then Conservative Government took in defence of the apartheid regime.

Can the Minister explain what he thinks the effect will be on race relations in my constituency, which has a large number of people of Muslim faith, if they saw their council tax being used to buy goods from the illegal Israeli settlements? How could that possibly be good for community relations?

Dr Matthew Offord (Hendon) (Con): Supporters of the BDS movement claim to embrace the boycott tactic as a non-violent way to pressure Israel into negotiations. But the Palestinian Authority themselves do not support a boycott. In December 2013 Mahmoud Abbas stated that, with the exception of settlement goods, the Palestinian Authority do not support a boycott on Israel. He said that “we do not ask anyone to boycott Israel itself. We have relations with Israel, we have mutual recognition of Israel.”

John McNally (Falkirk) (SNP): I would like the Minister to explain to me the reasons for interference with the decisions made by trustees on behalf of local communities, who appoint fund managers to look after the pension funds for them. The Chancellor of the Exchequer has stated that he wants to start Northern powerhouses; he wants to give local people more say in what is happening in their local communities. Yet he is telling them, “Sorry, you’re not going to get a say in what your pension funds do.”

Justin Madders (Ellesmere Port and Neston) (Lab): Local government procures around £12 billion a year of goods and services. Ethical procurement can produce tangible benefits. For example, in my local Labour council, the new adult social care contracts adhere to Unison’s ethical care charter, which stipulates that 80% of the workforce must be on contracted hours, not zero-hours contracts.

Our local authority had all-out elections last May. Ethical procurement was one of the key parts of the manifesto commitment, and it has been delivered. So I say to Ministers: resist the temptation to micromanage local government. Show us that the Government are genuine about devolution and withdraw the regulations.

Tristram Hunt: The point about local government is that democracy is not all focused in this place. Decisions about spending, representation and taxation can also be made at a local level. If we strip that out, it undermines the pluralism and democracy of this country.

Andy Slaughter (Hammersmith) (Lab): The specific issue being dealt with in this debate relates to the Occupied Palestinian Territories. This issue should not be conflated with BDS. The fact that we have labelling guidance, which the Government have maintained, allows people to make individual choices.

Let us remember what we are talking about here: theft of land, occupation, colonisation, and the arbitrary detention of many thousands of Palestinians. Those are crimes in international law as great as anything that happened in South Africa.

Robert Jenrick (Newark) (Con): BDS is unlikely to further the peace process. I personally believe that settlements are extremely unhelpful. I support the British Government’s policy in objecting to them and trying to use any opportunity, to try to change minds and to further that argument, but I do not think the BDS movement is at all likely to further that argument. In fact, it is likely to be totally counterproductive.

Naz Shah (Bradford West) (Lab): BDS is about upholding international law. Nobody in the House is saying we should boycott Israel; what we are saying is that councils and people should have a legitimate right to make decisions on procurement. It was shameful when this House voted against sanctions on South Africa. That is not how I want to go down in history.

Martyn Day (Linlithgow and East Falkirk) (SNP): The Scottish Government strongly discourages trade and investment with illegal settlements. For a company to be excluded from competition, it has to have been convicted of a specific offence or committed an act of grave misconduct in the course of its business. One view, supported by the Scottish Government, is that where a company exploits assets in illegal Israeli settlements in occupied Palestine, it may be guilty of grave professional misconduct, and it may therefore be permissible to exclude it from a procurement process.

Richard Burgon (Leeds East) (Lab): I visited Jerusalem and the West Bank recently and I was concerned that the Cabinet Office Minister announced the proposals not in the Commons—which was in recess—but at a press conference in Israel, with the Prime Minister of Israel, Benjamin Netanyahu. The experience that we had in the West Bank clarified why some councils might want to take action on illegal settlements. The policies pursued by the Government of Israel in allowing illegal settlements to flourish are a physical and political barrier to peace and a two-state solution.

Tommy Sheppard (Edinburgh East) (SNP): It is interesting that, rather than choosing an English town hall in which to make a pronouncement about the affairs of local authorities, the Minister for the Cabinet Office travelled to Tel Aviv to make an announcement alongside the Prime Minister of Israel and chose to illustrate his announcement by referring to the impact of local authorities’ actions on the settlements in the occupied territories.

Now, if we are to say that local councillors should not be having a foreign policy and should concern themselves with local matters, we might rightly ask ourselves, “What are the Ministers responsible for the UK civil service and English local authorities doing travelling to foreign countries to make pronouncements on foreign policy?” We need to understand whether this is actually a dispute among colleagues in the Cabinet and an attempt by some who disagree with the established position of the Foreign Office to undermine it.

I have visited the area recently and spoken to many Palestinians who are involved. They are absolutely of one mind in telling us that they want us to call for disinvestment in the illegal settlements in the occupied territories.

Jonathan Ashworth (Leicester South) (Lab): Councils such as Leicester and Tower Hamlets were not making decisions about Israel as a nation; it was about illegal settlements, which the Government recognises and accepts are illegal.

Is it not right that local councils should make such decisions and be accountable to the people who elect them? Leicester City Council, the area I represent, made its decisions in 2014 and the councillors who put those decisions to the council chamber stood for election in 2015. They were re-elected with people knowing about those decisions on trade with illegal settlements in the West Bank, not trade with Israel.

Sir Alan Duncan: At the beginning of his comments, will the Minister clarify an important point of fact, which is the kernel of this issue? Will the Government’s proposed procurement rules permit a local authority to adopt a policy against investment in, or purchase from, Israeli settlements in the Palestinian West Bank?

Cabinet Office minister John Penrose: The answer is that it depends; I am sorry to be a little indistinct. I hope to give him a proper answer, rather than just a straightforward yes or no, because there are situations where councils will be able to and situations where they will not.

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