Councils barred from ethical investments – Eleanor Laing’s response

It’s been confirmed today (Sunday 27th December) that the Conservative government plans to bar councils from using ethical criteria when investing.[1]

This could lead to councils being obliged to invest in arms companies, tobacco companies, fossil fuels and indirectly support states with questionable human rights records, regardless of ethical concerns or the will of their local electorate.

I wrote to Eleanor Laing MP back in October about this issue. My email and Mrs Laing’s response are reproduced below for information.

It’s unfortunate that Mrs Laing has chosen to put the interests of arms dealers and fossil fuel companies above those of ethics and local democracy.

It’s noteable that Conservative support for localism is on a distinct issue by issue basis, as recent announcements regarding fracking have demonstrated.

My email to Ealanor Laing, Sunday 4th October 2015

Dear Eleanor Laing,

I am very concerned by government plans to stop councils taking ethical factors into account when procuring services and investing.

Councils are elected by their constituents to represent them. If a council decides that investing in, say, an arms manufacturer or isn’t appropriate they are merely implementing their democratic mandate if they choose not to.

Could you please explain how these plans reflect the Conservative Party’s support for devolving power to local authorities? The two seem contradictory to me.

Councils have a lot of spending and investing power which they control on behalf of their consituents. Many don’t invest ethically but that’s their decision; I don’t believe there should be any nationally imposed obligation either way.

Yours sincerely,

David Plummer

Eleanor Laing’s reply, 20th October 2015

Dear Mr Plummer,

Thank you for your email of 4th October regarding the decision to restrict municipal foreign policies in relation to procurement and investment.

I strongly believe that local government should facilitate community cohesion and build stronger relationships with every section of the community. It is unacceptable for local authorities to undermine community cohesion by the pursuit of their own municipal foreign policy. Foreign policy is rightly reserved to the UK Government.

Councils should ensure that their pension funds deliver the best possible rate of return. Politically motivated divestment campaigns run inappropriate risks of reducing returns. I am glad that new measures make clear that boycott, divestment and sanction (BDS) campaigns are inappropriate – other than where formal legal sanctions, embargoes and restrictions have been put in place by the Government.

I also welcome new guidance which will make clear that boycotts in procurement, outside of formal legal sanctions, embargoes and restrictions already applied by the UK Government, are inappropriate. Under the World Trade Organisation Government Procurement Agreement, the UK is required to treat suppliers equally. Discrimination would be in breach of treaty obligations.

I hope this information proves useful.

Best wishes,
Eleanor Laing MP

[1] http://www.mirror.co.uk/news/uk-news/councils-forced-trade-weapons-manufacturers-7076805