Government to stop ‘divisive’ town hall boycotts & sanctions

Action to curtail ‘municipal foreign and defence policies’

Growing spread of militant divestment campaigns against UK defence
and Israeli firms.

Conservatives warn economic and national security from municipal
militancy.

Government to change pension and procurement rules to protect
taxpayers’ interests.

Government Ministers announced today new rules to stop politically-motivated boycott
and divestment campaigns by town halls against UK defence companies and against
Israel. There is growing concern over the militant actions of left-wing councils, spurred
on by trade unions and the Labour leadership, which threaten to poison community
relations and harm Britain’s economic and international interests.
Labour’s Jeremy Corbyn and John McDonnell, alongside Labour-affiliated trade unions,
are urging councils to use their procurement and pension policies to punish both Israel
and the UK defence industry. Faith leaders have expressed alarm at such policies fuelling
anti-Semitism – and worryingly encouraging further protests such as kosher food being
taken from supermarket shelves and Jewish films being banned. Separate hard-left
campaigns against British defence companies threaten to harm Britain’s £10 billion
export trade, destroying British jobs, and hinder joint working with Israel to protect
Britain from foreign cyber-attacks and terrorism.
The Government will amend pension legislation to make clear using pensions and
procurement policies to pursuit boycotts, divestments and sanctions campaigns against
foreign nations and the UK defence industry are inappropriate, other than where formal
legal sanctions, embargoes and restrictions have been put in place by the Government.
The Government will similarly issue new Procurement Policy guidance to implement the
same approach in procurement law.
Greg Clark, Secretary of State for Communities and Local Government, said:
“Divisive policies undermine good community relations, and harm the economic security
of families by pushing up council tax. We need to challenge and prevent the politics of
division. Conservatives will provide the stable, competent and sensible Government that
working people want to see.”
Matthew Hancock, Minister for the Cabinet Office, said:
“Conservatives are on the common ground. We will take steps to stop such outdated
policies being pursued through procurement and pension policies. We will safeguard the
security of families at home and prevent such playground politics undermining our
international security.”
ENDS
For further information, please contact the press office on 020 7984 8121.

Notes to Editors
HARD-LEFT FOREIGN AND DEFENCE POLICIES ON THE RISE

In November 2014, Labour-run Leicester City Council passed a policy to boycott
goods produced in Israeli settlements in the West Bank (link). Jewish groups have
recently launched a judicial review against the council’s decision, warning ‘this
amounts to a get-of-out-town order to Leicester Jews’ (Daily Express, 25 August
2015, link).

In January 2015, Labour councillors on Nottingham City Council debated a
boycott against Israel (link) – the council resolved to consider the issue further
and ‘work with the Nottingham Palestine Solidarity Campaign’ (link). Jewish faith
leaders warned: ‘local authorities need to be guardians of good community
relations and not go down the route of setting one community against the other
by adopting partisan campaigns’ (Jewish News, 26 January 2015, link).

Jeremy Corbyn is a patron of the Palestine Solidarity Campaign radical fringe
group (link). In August 2015, whilst running for Labour leader, he endorsed the
boycott of Israeli settlement goods and was receptive of academic boycotts of
Israeli universities involved with the arms trade (link). He asserted: ‘I fully
support the call to end all trade and investments with the illegal settlements’
(Labour Friends of Palestine and the Middle East, link) and ‘I think the boycott
campaign, divestment campaign, is part and parcel of a legal process that has to
be adopted’ (link).

Corbyn has also called for the removal of Israel’s right to trade with the UK and
the EU: ‘It’s time, indeed past time, to demand the immediate suspension of the
trade agreements between the EU and Israel’ (Morning Star, 2 June 2010) and
cutting all off commercial and diplomatic ties: ‘no arms, no money, no recognition
and no support for Israel’ (Haaretz, 13 April 2002, link). Corbyn was even heckled
at the Labour Party Conference’s Labour Friends of Israel event for refusing to
refer to Israel by name in his speech (Daily Telegraph, 29 September 2015, link).

Labour MPs such as Shabana Mahmood have personally taken part in
supermarkets protests against Israeli goods (Daily Mail, 19 August 2014, link).

Both Corbyn and John McDonnell have sponsored a Commons motion urging the
boycotting of Israeli goods, including demanding that all supermarkets boycott
such goods (EDM 57, 14 May 2012). John McDonnell has told shops in his
constituency of Hayes ‘to boycott Israeli goods... and find alternative suppliers’
(Get West London, 1 August 2014).

In August 2014, the SNP-led Scottish Government published a procurement
notice to Scottish councils which ‘strongly discourages trade and investment from
illegal settlements’, though conceding that ‘decisions need to be taken on a case
by case basis’ (Scottish Procurement Policy Note 4/2014, link). Four Scottish
councils have resolved to boycott Israeli goods: Clackmannanshire, Midlothian,
Stirling, West Dunbartonshire (link).

In June 2015, Labour-affiliated UNISON launched a campaign to lobby councils to
divest their Local Government Pension Schemes from companies linked with
Israel (A UNISON guide to pension fund engagement and divestment, link). In
July 2014, Labour-affiliated Unite resolve to campaign for boycott of goods
produced by Israeli settlements and divest from any financial holdings in any

companies or funds linked to the settlements (Unite press release, 11 July
2014, link). In July 2013, the Labour-affiliated GMB voted to support boycott and
divestment initiatives against Israeli settlements, and banned its members from
visiting Israel on delegations organised by the Trade Union Friends of Israel (link).

By contrast, the last Labour leader, Ed Miliband, opposed such ‘BDS’ policies: ‘I
think the boycotts of Israel are totally wrong. We should have no tolerance for
boycotts. I would say that to any trade union leaders’ (Jewish Chronicle, 7 March
2013, link) and ‘boycotts of Israel will never be a way of advancing the cause of
peace. They are the wrong response and I will never support them. Labour will
continue to resolutely oppose the isolation of Israel. The answer has to be greater
dialogue and greater engagement rather than disengagement and boycotts’
(Jewish News, 1 May 2015, link).

The hard-left Campaign Against the Arms Trade has been lobbying for Local
Government Pension Schemes to divest funds in British manufacturers such as
BAe (link). Jeremy Corbyn has endorsed their campaign: ‘The Campaign Against
the Arms Trade... has a long and honourable tradition... The scale of British arms
sales is truly astounding... we need a clear lead for arms conversion. Let the
brilliance and skill of those in the arms industry be converted for peaceful
purposes’ (Corbyn website).

Shadow Chancellor, John McDonnell, has similarly called for ‘the end of the arms
trade’ (Guardian, 1 April 2009).

DANGEROUS CONSEQUENCES OF HARD-LEFT POLICIES

Local government pensions are a funded scheme. Councils’ goals should be to
ensure that their pension funds investments deliver the best rate of return.
Councils receive £3.1 billion a year from their pension investment returns; in
addition, town hall pensions cost taxpayers a further £6.0 billion a year in
employer contributions – equivalent to over £300 a year on a Band D council tax
bill. Twisting investment decisions on political grounds risks reducing investment
returns, requiring larger employer contributions to compensate: in turn, such
higher costs would force cuts to services and/or hikes in council tax.

It is not for local government to pursue its own municipal foreign or defence
policies – as rightly, that matter is reserved to the UK Government. The
Government has to take into account the international implications of such
policies, and the broader need to maintain stability and security in international
relations. Rather than encouraging legitimate debate, such boycotts are counterproductive – they widen gaps in understanding, poison and polarise debate, and
block opportunities for co-operation and collaboration.

The call for municipal boycotts against Israel threatens to inflame tensions in local
communities, undermining integration and fuelling broader anti-Semitism. Such
militant boycotts have already led to hard-left groups pressuring supermarkets to
take Kosher products off their shelves (link), and Jewish films being banned as
part of such boycotts (link).

The campaign against British defence companies risk harming Britain’s export
trade and would destroy British jobs across the country. The UK defence sector
has a £22 billion turnover a year and contributes £10 billion to UK exports (ADS
fact sheet, link).

This Government wants to enhance the growing economic ties between the UK
and Israel, particular in areas like technology and science, as well as working
together to strengthen security against cyber-attacks and tackle Islamist
extremism (No10 press release, 10 September 2015).

The UK Government has put in place formal legal sanctions and restrictions at a
national level, when justified as in the national interest (link).

GOVERNMENT ACTION
The Government will take action to curtail such municipal foreign and defence policies:

The Local Government Pension Scheme (Management and Investment of Funds)
Regulations 2009 requires local authorities to publish and follow a Statement of
Investment Principles (link). These statements must also comply with guidance
issued by the Secretary of State. The government propose to amend the
secondary legislation to make clear that such boycott, divestment and sanctions
(‘BDS’) campaigns are inappropriate – other than where formal legal sanctions,
embargoes and restrictions have been put in place by the Government. There is
a statutory requirement to consult on the pension law changes.

The Cabinet Office will issue a revised Procurement Policy Note to public
authorities to make clear that boycotts in procurement policy are inappropriate,
outside where formal legal sanctions, embargoes and restrictions have been put
in place by the Government. Indeed, the WTO Government Procurement
Agreement – an international market access agreement – requires all those
countries that have signed up to the Agreement to treat suppliers equally. This
includes the EU and Israel. Any discrimination against Israeli suppliers involving
procurements covered by the Agreement would therefore be in breach of these
treaty obligations.

Procurement guidance relates to England. Local government pension regulations relate
to England and Wales.
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