At least nine Labour-led local authorities have voted to divest their pension funds from British defence companies, defying government efforts to boost investment in the arms industry. The moves come as councils face pressure from pro-Palestinian activists and Muslim voters opposed to the supply of weapons to Israel. Chancellor Rachel Reeves has been pushing for greater investment in defence firms to strengthen the UK’s industrial base, particularly in light of European re-armament efforts and support for Ukraine. However, councils such as Dudley, Camden, Islington, Tower Hamlets, and Waltham Forest have passed motions to scrap investments in companies involved in arms production, citing ethical concerns and a desire to “contribute towards peace.
The divestment campaigns have been strategically framed to avoid explicit mention of Gaza, though councillors admit the policies are designed to appeal to pro-Palestinian voters. The Avon Pension Fund, which manages £6 billion in public sector pensions, is also reviewing £14 million of investments in defence companies linked to Israel’s military. Meanwhile, Manchester City Council has pressured its pension provider to abandon weapons manufacturers, potentially cutting off investment from one of the UK’s largest local government funds.
The trend has sparked criticism from defence advocates, including Lord West, the former First Sea Lord, who accused the councils of undermining national security. Labour MPs previously opposed a Conservative bill that would have banned councils from participating in boycotts and divestments, a move that has drawn criticism from the opposition. Shadow Local Government Secretary Kevin Hollinrake condemned the divestments as harmful to the UK economy and defence industrial base, calling for Labour to reinstate the anti-boycott legislation.
The Labour Party has officially opposed boycott, divestment, and sanctions (BDS) campaigns, describing them as a threat to the two-state solution in the Middle East. Defence Secretary John Healey has also criticized such actions as “fundamentally flawed,” despite acknowledging the activists’ intentions.
The divestment votes highlight the growing tension within Labour over its stance on Israel and Gaza, particularly as the party faces backlash from pro-Palestinian voters ahead of local elections on May 1.
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