Councils fly flags to support Ukraine – but block defence spending

Yahoo

12 hours ago

Councils are flying flags for Ukraine from their town halls while blocking investment in the British defence industry.
At least a dozen English councils have passed motions to 'divest' from defence companies because of the war in Gaza, or have taken steps to reduce their holdings in arms companies.
A report by two Labour MPs has found that defence companies have missed out on at least £30 million in investment because of action taken by local councils to focus their pension funds on 'ethical' firms.
Despite this, several of the councils have displayed the Ukrainian flag from their town halls in solidarity against Russia.
The MPs, Luke Charters and Alex Baker, said there was 'untapped potential' in local government pensions that could be used to boost investment in the defence sector, which often struggles to access finance.
They argued that supporting British defence companies would help Ukraine, which has received more than £18 billion in military and humanitarian support from the UK.
The MPs said there was a 'concerning trend among UK councils to divest from defence, with at least a dozen authorities implementing partial or full exclusion policies since 2022'.
The MPs did not name the councils, but The Telegraph has found evidence of town halls in London, Bristol, Somerset, Oxford and Dudley where motions have been passed banning defence investment in support of Palestine.
Dudley council, which is under no single party's overall control, passed a motion to divest from defence companies with the support of Labour and Liberal Democrat councillors.
The council has flown the Ukrainian flag several times since the Russian invasion in February 2022, and lit up its town hall in blue and yellow.
Labour-run Manchester city council, which voted to pressure its pension provider to abandon weapons manufacturers in November last year, has celebrated Ukrainian independence day and spent £50,000 to support Ukrainian refugees arriving in the city.
The motion noted that councillors 'recognise the inextricable link between war, climate destruction, and human suffering' and that 'armed conflicts not only result in loss of life, including civilians and children, but also lead to intense environmental destruction'.
Labour-run Waltham Forest Council, which announced plans to sell all defence investments in August last year, has hosted events for Ukrainian residents affected by the 'crisis' in their home country.
Mr Charters told The Telegraph: 'With war on our continent, this is not the moment for councils to pull back from investing in UK defence.
'Firms and financiers have been clear when we have engaged with them: barriers like weak demand signals, short-term contracts, divestment, and regulatory uncertainty are holding the sector back.
'Our report calls for urgent engagement with local government pension schemes – and sets out 12 reforms to help unlock the capital and credit our defence sector needs to grow.
'Financing sovereign defence isn't optional – it's vital to our security and economic future.'
The report's findings also include an apparent admission from the parliamentary pension scheme for MPs that their savings are often deliberately not invested in defence.
A letter to the MPs from the chair of the fund said that while there was no specific ban on defence investments, 'environmental, social, governance and climate change issues tend to be more pronounced in some defence companies'.
Mr Charters and Ms Baker said: 'There needs to be a holistic review by officials to understand how public investment vehicles are performing when it comes to defence sector investment.
'The UK cannot afford to miss this moment due to outdated ethical aversions.
'Defence investments represent not only a financial opportunity, but also an ethical obligation to secure the nation's future amidst an increasingly volatile geopolitical landscape.'
Dudley council, Manchester city council and Waltham Forest council have all been approached for comment.
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