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Court rules against DCLG in pensions boycott case

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The administrative court has ruled the communities secretary Sajid Javid’s attempt to prevent certain council pension funds boycotts was unlawful.

In 2016, guidance issued by the DCLG said Local Government Pension Scheme funds, when “formulating and maintaining their policy on social, environmental and corporate governance factors, administering authority… should not pursue policies that are contrary to UK foreign policy or UK defence policy.”

The guidance came after the Cabinet Office announced in February it would move to prevent LGPS funds from divesting from sectors or countries on moral grounds as well as preventing councils from boycotting through procurement.

In a statement issued at the time, the Cabinet Office claimed Labour leader Jeremy Corbyn had been “urging councils to use their procurement and pension policies to punish both Israel and the UK defence industry”, which was “fuelling anti-semitism” and hindering “joint working with Israel to protect Britain from… terrorism”.

However, High Court judge Sir Ross Cranston ruled today that in issuing the guidance, the communities secretary had acted unlawfully, in a judicial review brought by the Palestine Solidarity Campaign.

The claimants said Mr Javid’s guidance was unlawful on three grounds: because it was not within the scope of his statutory powers; because it was unclear; and because it was contrary to European laws preventing states from restricting pension funds’ investments.

Mr Justice Cranston rejected the latter two grounds but ruled the guidance had been issued outside the scope of the communities secretary’s statutory powers.

The Palestine Solidarity Campaign claimed Mr Javid’s statutory powers related only to directing councils to take certain actions for pensions purposes, whereas he had used them, in issuing the guidance, for foreign affairs purposes.

Mr Justice Cranston said in his judgement that foreign affairs purposes, as a non-financial factor, could count as pensions purposes provided their use did not put pension fund beneficiaries at significant financial risk. However, in singling out certain types of non-financial factors, Mr Javid had not acted for a pensions purpose, the judge said.

“The secretary of state has not justified the distinction drawn between these and other non-financial cases by reference to a pensions’ purpose. In issuing the challenged part of the guidance he has acted for an unauthorised purpose and therefore unlawfully,” Mr Justice Cranston said.

Hugh Lanning, chair of the Palestine Solidarity Campaign, said: “Today is a victory for Palestine, for local democracy, and for the rule of law.

“Absolutely everyone has a right to peacefully protest Israel’s violation of Palestinian human rights. This ruling upholds the right of local councils and their pension funds to invest ethically without political interference from the government of the day.”

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