The Supreme Court has granted an appeal against last year’s decision by the Court of Appeal that the communities secretary acted legally by banning LGPS investment strategies from imposing political boycotts.
In June last year, the government won an appeal against an earlier High Court ruling that found that it had acted outside its powers by introducing the ban.
This week, a Supreme Court panel granted the Palestine Solidarity Campaign (PSC) permission to challenge last year’s ruling on the grounds that making the ban fell outside the powers granted to the secretary of state by the 2013 Public Service Pensions Act.
Jamie Potter, partner in the public law and human rights team at Bindmans LLP,and solicitor for the PSC, told Room151: “This case has wider implications for the LGPS.
“It is about whether the government can enforce its political position through directing pensions investments.
“It is quite an expansion of their power.
” If the government is allowed this power, then where does it stop?
“Will they in future impose rules to protect the fracking or oil industries?”
In 2016, the government issued guidance which said that LGPS administering authorities “should not pursue policies that are contrary to UK foreign policy or UK defence policy”.
It also said that “using pension policies to pursue boycotts, divestment and sanctions against foreign nations and UK defence industries are [sic] inappropriate ,other than where formal legal sanctions, embargoes and restrictions have been put in place by the government”.
The Supreme Court granted the PSC permission to appeal on one ground –whether the secretary of state was acting with an “authorised purpose”.
Last year, the Court of Appeal ruling said: “Since the secretary of state is empowered to give guidance as to an authority’s investment strategy, it seems to me to be equally plainly within the scope of the legislation for the guidance to cover the extent to which such non-financial considerations may be taken into account by an authority.”
It continued: “In particular, I can see nothing objectionable in his having regard to considerations of wider public interest, including foreign policy and defence policy, in formulating such guidance”.
In November, local government minister Rishi Sunak said the government would reinstate guidance to prevent councils adopting investment policies that it considers contrary to UK foreign or defence policy.
The Supreme Court appeal is expected to be heard in the second half of this year, Potter said.
Hugh Lanning, chair of the PSC, said: “Everyone, including pension scheme members, has a right to heed the Palestinian call and peacefully protest Israel’s violation of human rights – it is their money being invested unethically.
“We look forward to once again challenging the Government in court on this fundamental issue.”
The PSC was denied permission by the Supreme Court to appeal on a second ground – that the ban was in breach of the European Union’s Institutions for Occupational Retirement Provision (IORP) directive.
