Supreme Court rules government guidance on local authority boycotts is illegal
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Supreme Court rules government guidance on local authority boycotts is illegal

Former minister 'went beyond his powers' with advice as landmark ruling on local authority pension schemes announced

A settlement construction site in the West Bank (AP Photo/Oded Balilty, File)
A settlement construction site in the West Bank (AP Photo/Oded Balilty, File)

Local authority pension schemes will now be able to divest of companies operating in West Bank settlements after the Supreme Court ruled that Government guidance banning them from doing so was unlawful.

The three-to-two majority verdict, delivered by Lord Wilson on Wednesday, marks the end of a four-year legal battle after Government guidance from 2016 stated that “using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are inappropriate”.

The guidance, which was introduced by Conservative MP Sajid Javid when he was the Secretary of State for Communities and Local Government, was challenged by the Palestine Solidarity Campaign (PSC).

In 2017 the High Court agreed with the PSC’s lawyers that the Government guidance was unlawful, however this was overturned by the Court of Appeal in 2018. This week’s Supreme Court ruling, in favour of the PSC, finally decides the matter.

Israeli leaders argue that the Boycott, Divestment and Sanctions (BDS) movement represents an “existential threat” and successive British Conservative governments have sought to limit the ability of BDS-supporting local authorities to divest from funds set up under the Local Government Pension Scheme (LGPS).

The 2016 guidance said local authorities should not pursue policies “contrary to UK foreign or defence policy” which Lord Wilson said was an illegal attempt “to enforce the Government’s foreign and defence policies”.

Lord Wilson said Javid “went beyond his powers” with the guidance. “Power to direct how administrators should approach the making of investment decisions by reference to non-financial considerations does not include power to direct investments they should not make,” he said.

Lord Carnwath added that “the attempt of the Secretary of State to impose policy choices was objectionable… because they were choices to be made by the authorities, not by central government”.

PSC chair Kamel Hawwash said it was “an historic victory” and “represents a major win not just for the campaign for Palestinian rights, but for the fundamental principles of democracy, freedom of expression and justice”.

He added: “At a time when Israel is continuing to ramp up its oppression of the Palestinian people and its illegal acts, including annexing large swathes of the illegally occupied West Bank, the Government should be acting to uphold international law and defend human rights, not attacking peaceful campaigns which seek to do precisely that.”

Jamie Potter, a solicitor at Bindmans, said: “The Government went too far in imposing its political opinions on to the management of the money of LGPS members… They now have the freedom to pursue their own principles.”

A Government spokeswoman said: “We are committed to ensuring public bodies take a consistent approach to investments and to stop local boycotts. We will therefore bring back new legislation that addresses the technical points raised by the Supreme Court.”

CFI Parliamentary Chairmen, Stephen Crabb MP and Lord Pickles, together with CFI Honorary President Lord Polak said in a statement: “The Supreme Court’s technical ruling on local authority divestments serves to reinforce the importance of the Government’s forthcoming legislation. We reiterate our strong support for the Conservative Government’s manifesto commitment to ban public bodies from imposing their own boycotts, divestments, and sanctions, which have all too often sown discord within local communities”.

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