Economic Activity of Public Bodies (Overseas Matters) Bill

Written Evidence Submitted by Conservative Friends of Israel to the Public Bill Committee on the Economic Activity of Public Bodies (Overseas Matters) Bill

(EAPBB23).

About Conservative Friends of Israel

· CFI works to strengthen the bilateral ties between the UK and Israel. We engage with stakeholders across the Conservative Party to educate and inform about the importance of our partnership with Israel.

· This evidence is provided by CFI’s Executive Director James Gurd.

Executive Summary

· The Economic Activity of Public Bodies (Overseas Matters) Bill is an important piece of legislation which will effectively:

o Restate and protect His Majesty’s Government’s foreign and trade policy prerogatives;

o End the practice of public bodies pursuing costly, divisive and harmful Boycott, Divestment and Sanctions (BDS) activities, which have adversely affected the UK’s Jewish community.

· The legislation has been necessitated by the trend of public bodies adopting activities endorsed by the hardline anti-peace BDS movement. The Bill will bring much needed legislative weight to earlier Government guidance, which has been the subject of successive legal challenges.

· We commend the Government for its continued commitment to tackling this long-standing problem and the legislative approach it is taking.

Boycott, Divestments and Sanctions (BDS)

1. The Bill is a targeted and necessary legislative response to UK public bodies’ endorsement of the divisive BDS movement. Regarded as a hardline anti-peace movement, no major political party in the UK currently endorses BDS.

2. BDS is an international campaign calling for organisations and individuals to pressure Israel by cutting off its economic and cultural ties to the rest of the world. BDS leaders have repeatedly called for the destruction of Israel and rejected a two-state solution. Omar Barghouti, the co-founder of the Palestinian BDS National Committee (BNC), has expressed his opposition to Israel’s right to exist as a state of the Jewish people and refers to sovereign Israel instead as ‘Palestine’. [1] BNC members include the Council of National and Islamic Forces in Palestine (CNIF), a coalition of Hamas, Palestinian Islamic Jihad, and the Popular Front for the Liberation of Palestine – terror organisations proscribed by the UK.

3. Public bodies involved in BDS are advancing a controversial political agenda on a complex and sensitive foreign policy issue, and exclusively target Israel. It has caused community divisions and it is right and just that the Government is legislating on this matter.

4. Since 2016, the Government has made repeat attempts to end the practice of public bodies adopting BDS through the issuance of guidance documents. The striking down of these by court judgments necessitates this Bill and we support the Government’s conclusion that further legislation is required. In so legislating, the UK is following a growing number of allies acting against BDS and its direct contribution to the increase of antisemitism, including France and more than 35 U.S. States. This Bill’s approach is more measured than those laws adopted by U.S. States, many of which require state and local government to divest from companies adopting BDS and also require companies entering contracts to confirm that they do not endorse BDS.

5. The Local Government Act 1988 (Section 17) requires local authorities or councils to exercise procurement without reference to territorial considerations, but this has proven inadequate. We share the Government’s view that the existing Act has provided only "partial coverage in preventing boycotts across local authorities and does not include any wider public bodies and divestment campaigns". [2]

6. The Bill recognises the unique nature of the BDS campaign against Israel – which is why Israel is explicitly named on the face of the Bill (Clause 3(7)). The inclusion of this legislative ‘brake’ is a reasonable response to BDS’s specific targetting of the Jewish State, and would warrant the scrutiny of primary legislation. Its removal would undermine the Government’s stated intention of tackling BDS and the harm it has caused to the UK’s Jewish community.

Reserved powers: Foreign policy and trade interests

7. The primary objective of the Bill is to restate and protect the UK Government’s foreign and trade policy prerogatives. In supporting or advancing boycotts and divestments against a foreign country or territory, public bodies have an adverse effect on the UK’s economic and international security, and harm the UK’s reserved foreign policy and trade interests.

8. It is a long-established principle in the UK that public bodies conduct procurement and investment activities in line with Government policy. The UK Government’s ability to speak with one voice internationally is firmly in the public interest.

9. The UK Government is democratically elected to be have responsibility for foreign and trade policy. Public bodies – such as local councils – adopting BDS undercuts the UK Government as it is out of step with national policy. This Bill will ensure public bodies will no longer be able to adopt independent foreign policy.

10. BDS activities are intended, uniquely, to undermine UK Government policy towards Israel. The UK and Israel are close allies, with the strategic partnership set to expand further over the next decade in accordance with the 2030 Roadmap. The UK and Israel enjoy a healthy trade relationship valued at £7.3 billion in the four quarters to the end of Q1 2023. [3] The UK is one of Israel’s largest trade partners, and hundreds of Israeli companies operate in the UK driving growth and jobs – adding around £1 billion gross value to the UK economy and creating about 16,000 jobs in the last 8 years. The UK’s friendship with Israel makes British citizens healthier, safer and more prosperous. The vocal minority calling for politically-motivated boycotts fail to appreciate the significance of Israel’s contribution to the UK.

11. The UK Government is committed to expanding trade with Israel - as evidenced by negotiations for a UK-Israel Free Trade Agreement – and this Bill clearly aligns with and advances this policy. While the UK-Israel trade relationship is strong and growing, the UK is still regarded by many Israelis as the global centre for BDS. This disincentive has had an undeniable cooling effect on UK-Israel trade potential and a by-product of this Bill will be the UK signalling that it is open for business with Israel.

12. The Bill follows the Public Service Pensions and Judicial Offices Act 2022, which prevents local government pension schemes (LGPS) from making investment decisions which conflict with UK foreign and defence policy. It was understood that this was a targeted legislative response to the trend of LGPSs targetting Israel for divestment activities.

13. Public bodies adopting BDS activities undermine UK Government efforts to secure a peace agreement between Israel and the Palestinians. The BDS movement opposes efforts to bring Israelis and Palestinians together, dismissively branding peaceful coexistence initiatives as ‘normalisation’. BDS also sends the Palestinian Authority the message that it can continue to circumvent direct peace talks that require both sides to make difficult compromises to reach a lasting peace.

14. Economic sanctions are a valuable tool for the UK Government – one which can be expected to evolve in accordance with world events. Clause 3(5) explicitly empowers Ministers to disapply the Bill by regulation with respect to certain countries or territories in accordance with future Government sanctions policy – this is an important provision. The Government has indicated its intention to do this in relation to Russia and Belarus, to enable public bodies to legitimately continue their enforcement of sanctions, embargoes and restrictions. [4]

15. BDS measures by any UK public body undermines the UK’s negotiating position with international trading partners. It is also liable to breach a series of World Trade Organisation framework agreements (Government Procurement Agreement and General Agreement on Tariffs and Trade) governing international trade to prevent discrimination, to which the UK is a party. [5] A breach could justify other countries adopting sanctions against the UK.

16. BDS activities in the UK specifically risk impacting the UK’s trade relations with the United States because the Trade Facilitation and Trade Enforcement Act of 2015 in the United States explicitly "opposes politically motivated actions that penalize or otherwise limit commercial relations specifically with Israel, such as boycotts of, divestment from, or sanctions against Israel". [6]

Antisemitism

17. Combatting antisemitism in the UK is another crucial purpose of the Bill. Religion and belief are protected characteristics in the UK and evidence clearly indicates that BDS has harmed the Jewish community. Some European countries have already formally recognised BDS as antisemitic, including the German Parliament in May 2019.

18. The Government rightly identifies BDS activities as having legitimised and driven a significant increase of antisemitic hate crimes within the UK, and that BDS activities by public bodies have directly harmed community cohesion in the UK as a result. [7] The Community Security Trust – which provides security to the UK’s Jewish community – has reported that the UK is experiencing record levels of antisemitism. [8] We share the Government’s recognition of the need to tackle BDS.

19. Extensive studies conducted at U.S. universities, by the AMCHA Initiative, have found a close correlation between BDS activity and the targetting of Jewish students. In a 2015 report, AMCHA found that "the best statistical predictor of anti-Jewish hostility, as measured by actions that directly target Jewish students for harm, is the amount of BDS activity". [9]

20. An independent report into antisemitism in the National Union of Students (NUS) by Rebecca Tuck KC found that NUS support for "the BDS campaign along with initiatives on campuses such as Israel Apartheid Week […] do impact negatively on Jewish students" – a finding accepted by NUS. [10]

21. The Bill has strong support from the UK’s Jewish community, including the main representative communal bodies – the Board of Deputies of British Jews and Jewish Leadership Council. [11] The Jewish Chronicle – the community’s main newspaper - has also supported the Bill. [12]

UK-wide application

22. We are encouraged that the Government has taken the approach - through Clauses 2(1) and 17(1) - of applying it to all public bodies UK-wide; devolved institutions, regional and local authorities, and other bodies governed by public law. The evidence shows that BDS activities are not an England-only concern.

23. The Government has justifiably adopted a broad definition of public authorities, to include hybrid bodies such as universities and cultural institutions (when carrying out public functions) - as defined in Clause 2(1) as in section 6 of the Human Rights Act 1998.

24. The BDS movement has particularly increased its presence on university campuses across the UK, with reports of antisemitism amongst its advocates, and a number of violent incidents where pro-Israel or Jewish groups have been targeted. [13] BDS activities on university campuses have resulted in an intimidating and hostile environment for Jewish students, which has been condemned by Government Ministers. [14] Accordingly, the Government is justified in including universities within the scope of the Bill and it will enhance free speech on university campuses.

25. Publicly funded cultural institutions have advanced BDS activities to the direct detriment of the UK Jewish community, such as London’s Tricycle Theatre refusing to host the UK Jewish Film Festival in 2014 due to it receiving partial funding from the Israeli Embassy. [15]

26. The need for the Bill to apply UK-wide is evidenced by the acceleration of public bodies adopting BDS over the last decade. These have principally come from the devolved administrations and public bodies operating within those regions. These have had significant implications for UK trade and foreign policy interests.

27. A number of English councils have implemented BDS, including Leicester (2014) and Lancaster City (2021). Birmingham City Council threatened not to renew a contract with French multinational company Veolia in 2014 due to its operations in the West Bank. Wirral Council Pensions Committee considered divesting from Israel-linked holdings in 2022, including Expedia and Motorola. [16]

28. BDS activities in Scotland have been particularly notable. In 2009, West Dunbartonshire Council adopted a policy on the boycott on the purchase of Israeli goods, including books printed in Israel. [17] A Council spokesperson was quoted by the Daily Express as saying that Israel was the only country being boycotted by the Council, and there was no intention of issuing a ban on products originating from any other country, including Iran, Syria or Libya. [18] Dundee council also reportedly considered enforcing a boycott of Israel but its legal advisers said it was likely illegal under European Union law. [19] At the time, the UK was a member of the European Union, which forbids member states from boycotting products from countries that have not had an official embargo imposed upon them.

29. The Scottish and Welsh Government’s have both indicated their intention to issue policy notes to contracting authorities which would target Israel – a clear incursion of the UK Government’s reserved powers. [20] The Welsh Government proposed a controversial Procurement Advice Note in 2020. [21] The PAN would have advised public authorities in Wales to exclude from public tenders any company conducting business in occupied territories, but the Welsh Government specifically identified Israeli settlements in Occupied Palestinian Territory.

30. On each occasion, the decisions of these public bodies have generated significant criticism from across the Jewish community and effectively brought into disrepute those bodies considering and adopting BDS.

31. The Bill is a reasonable legislative step since much of this BDS activity has been undertaken despite earlier Government guidance making clear to public bodies its opposition to BDS.

Competition

32. Public bodies have a fiduciary duty in their use of public resources and the need to work in harmony with Parliament . Adoption of BDS activities has directly undermined this. The Bill will ensure greater competition in public procurement, as the removal of boycotts will give access to a wider range of suppliers. Service users and taxpayers will benefit from reduced costs and increased quality.

Monetary penalties

33. Clause 9 of the Bill stipulates that monetary penalties can be imposed if the enforcement authority identifies non-compliance by a public authority – this is a welcome provision. Incidents of BDS must have serious consequences. Contracting authorities pursuing discriminatory BDS activity by public bodies must be subject to tough penalties, including civil financial penalties. The prospect of monetary penalties – in addition to the possibility of judicial review proceedings (Clause 5) and issuance of compliance notices (Clause 8) – will prove an effective deterrence.

Compatibility with UK Government policy

34. The Bill does not change Government policy on Israel, the Palestinians and the Middle East Peace Process, contrary to claims. It is incorrect to claim that the legislation is in conflict with United Nations Security Council Resolution 2334.

35. The Bill is in accordance with the Government’s current position that Israeli settlements in the West Bank are illegal under international law. While holding this view, the Government does not boycott goods from Israeli settlements. This is a crucial distinction.

36. It is established UK Government policy that operating in and trading with occupied and disputed territories is accepted practice. Additionally, i t is internationally regarded a s a normal commercial practice carried out by numerous leading, reliable businesses . It does not provide grounds for questioning the reliability of a contractor to carry out a public procurement in the UK. This is in accordance with WTO and European Union agreements and directives, which require that companies are entitled to non-discriminatory treatment if operating or trading in occupied territories.

Conclusion

37. The Bill provides a comprehensive, targeted and necessary legislative response to the harmful trend of publicly-funded bodies adopting BDS activities. This legislation will achieve the Government’s stated aims of creating consistent foreign policy, focusing public bodies on their core purpose, and preventing divisive campaigns which have driven a rise in antisemitism.

September 2023.