UNISON is speaking out against the Government’s attack on Local Pension Funds divestment
On the eve of their conference last October, the Conservative Party made the surprising announcement they would stop what they call “divisive town hall boycotts and sanctions”. The government planned to address non-existent concerns about “militant divestment campaigns against UK defence and Israeli firms” by introducing new rules to ensure that pension investments and procurement decisions in England and Wales follow UK government foreign policy.
This was clearly pre-conference grandstanding; an opportunity to attack the Labour Party, trade unions and campaign groups like the Palestine Solidarity Campaign (PSC). It is unlikely the Conservative Party really believe “the militant actions of left-wing councils” threaten to “poison community relations and harm Britain’s economic and international interests”, but a gesture to the Israeli government, concerned about EU restrictions on settlement goods, may aid diplomatic relations.
In recent months a number of companies have announced their withdrawal from the illegally occupied West Bank, influenced by the efforts of pension scheme members and the public. The Israeli government have responded by lobbying their counterparts for new laws to restrict boycott, divestment and sanctions (BDS), with some success, particularly in the US and now the UK.
In November the Department of Communities and Local Government launched a consultation outlining their plans for the Local Government Pension Scheme (LGPS). Whilst some of the changes are to be welcomed, others give the government unprecedented control over how, and in whose interest, pension funds are invested.
The government want the ability to directly intervene in the investment process in two key ways. Firstly they propose that a proportion of LGPS funds will have to be invested in UK infrastructure. Secondly they want to impose a requirement that investments follow UK foreign policy, and give the secretary of state the power to intervene if they don’t.
It’s clear from the Conservative press release that they want to stop campaigns such as UNISON and PSC’s work, encouraging UNISON branches up and down the country to use their pension funds’ financial muscle to exert pressure on companies that continue to support the illegal occupation of Palestine. Although UK foreign policy recognises “settlements are illegal under international law”, this doesn’t mean that pension funds will be able to divest from companies that support, and financially benefit from, the occupation. The government only highlight the risks of doing business in the Occupied Palestinian Territories, allowing UK companies to decide whether or not to comply with international law.
UNISON believes that pension fund investments should be made in the interests of scheme members, and this is reflected in the EU ‘IORP’ Directive/41/2003 on pensions and the advice of the government’s Law Commission. A pension scheme’s primary concern should be getting a good return for scheme members, but it should also take members concerns into account. If scheme members don’t want their pensions invested in companies involved in the illegal occupation of Palestine, or the manufacture of arms, then their pension fund should take this into account.
UNISON is working hard to get the requirement for pension funds to follow UK Foreign Policy to be dropped, along with the requirement to invest in UK infrastructure. UNISON branches all over the country are responding to the government’s consultation, arguing that the proposed changes breach the EU directive on pensions, and calling for members’ pensions to be invested in members’ interests, not in the interests of the Chancellor of the Exchequer. Other groups working on environmental issues, arms and human rights are also concerned that the changes will also impact on them, and are responding to the consultation. You should do the same, before it closes on 19 February.
The government won’t consult on their proposed changes to procurement regulations; they will simply try to issue a revised policy note banning boycotts. The Thatcher government passed similar legislation as part of the infamous 1988 Local Government Act, to stop local councils boycotting companies doing business with apartheid South Africa.
In 2006 David Cameron said “The mistakes my party made in the past with respect to relations with the ANC and sanctions on South Africa make it all the more important to listen now”. We hope his party does listen before they make the same mistake all over again.
UNISON has produced a guide to pension fund engagement and divestment:
UNISON – The Public Service Union
For the full consultation and to take action: