Mr Speaker
Has the Minister been told? Three people are meant to know in an Adjournment debate: the Minister, the Chair, and the person whose debate it is.
Mr Speaker
I am happy, but the courtesies have not been carried out, as I understand it.
The Minister for Digital and Culture (Caroline Dinenage)
I start by thanking the hon. Member for Cambridge (Daniel Zeichner) for securing this debate on an important matter, to which he is right to bring the attention of the House. His constituency is a vital part of our nation’s tech environment, and I fully understand that many of his constituents’ jobs are in the sector.
The Government are incredibly passionate about protecting a vibrant, successful and growing tech sector in the UK, and about remaining at the cutting edge of innovation. A key part of that is the design of microprocessors, which are crucial for building reliable and predictable chips for worldwide customers. ARM is at the heart of that semiconductor ecosystem. As one of the largest tech companies in Europe, it is hard to overstate ARM’s significance to the wider sector, as the hon. Gentleman articulated beautifully. It has massive potential to give our country an advantage in a wide range of sectors and technologies.
The Government closely monitor all acquisitions and mergers. When a takeover may have a significant impact on the UK, we will not hesitate to investigate further and take appropriate action. In this case, we are working hard to understand the full impact of the move and the potential impact it may have on the future. From there, we are able to consider what steps we may wish to take.
Caroline Dinenage
I will in a moment. I will make a bit of progress, then I will be happy to take the hon. Gentleman’s questions.
The Enterprise Act 2002 allows the Government to call in transactions on four public interest grounds: financial stability, national security, media plurality and public health emergencies. When a Secretary of State decides to intervene under the Act, they declare a public interest intervention notice. That triggers a deadline for the Competition and Markets Authority to conduct what it calls a phase 1 investigation. The CMA will then engage with the parties while it gathers the information and publishes an invitation to comment notice. That invites views from the merger parties and other interested third parties on the transaction under review. At the end of that phase 1 stage, the Secretary of State can: clear the merger, clear the merger with undertakings, or refer the merger to a phase 2 investigation. At the conclusion of the phase 2 investigation, the Secretary of State would consider if the transaction meets the threshold for intervention on public interest grounds under the Enterprise Act, and therefore make a decision on the necessary steps if and when it would be appropriate to do so.
The reason I am explaining that to the hon. Gentleman is that I think it is really important to articulate the number of very careful steps we would have to take in that process. In this instance, the Secretary of State for Department for Digital, Culture, Media and Sport would be the final decision maker. It is obviously extremely critical that he does so with an independent mind, having received all the relevant information and without prejudice. I am sure he will understand that while I am very happy to stand at the Dispatch Box and answer as many of his questions as possible, I have to be very careful not to say anything that could in any way prejudice that decision or any future moves. However, I will try to answer as many of his questions as I can.
As the hon. Gentleman will know, on Monday 14 September Nvidia and Softbank Group announced a definitive agreement under which Nvidia will acquire ARM Limited from Softbank in a transaction valued at $40 billion. The announcement stated that Softbank will remain committed to ARM’s long-term success through its ownership stake in Nvidia, which is expected to be under 10%. Furthermore, the statement said that ARM will remain headquartered in Cambridge. Nvidia and Softbank have made statements to the media expressing their commitment to maintaining ARM as a successful business in the UK. They have suggested that they will build on ARM’s R&D presence here by establishing a global centre of excellence and will create a platform for global innovation with industry partners across multiple fields. We will consider all those statements incredibly carefully.
Jim Shannon
Yesterday’s papers suggested that last year ARM paid some £268 million in tax and that it has the potential to be Britain’s first trillion dollar company. Has the Minister had any assurances from the company about its commitment to keeping its tax base here, and thereby the tax it pays to Her Majesty’s Revenue and Customs her as well?
Caroline Dinenage
We have had conversations with the company at various points over recent months. However, I do not want to prejudice the situation in any way, shape or form, so I do not really want to discuss any of its commercial aspects, if the hon. Gentleman will forgive me.
Darren Jones
As a point of factual clarification, could the Minister confirm whether the impact of US trade sanctions is considered in the process that she set out with the CMA?
Caroline Dinenage
I think that that would depend on which aspect, of the four that are under consideration, the Secretary of State was looking at.
As the hon. Member for Cambridge and others know, the UK is a global leader in tech, with a proud history of innovation and invention. Our world-leading universities, financial sector and regulatory environment have produced pioneering researchers, scientific institutions and research projects, and the UK tech sector has the world’s highest proportion of overseas customers, driving our ability to forge global partnerships and attract the very best talent from around the world. From artificial intelligence to biotechnology, the UK has made huge breakthroughs, generating more billion-dollar tech firms than any other country in Europe. Nationally, we now have 82 companies that are worth more than $1 billion—more than France, Germany and the Netherlands combined.
We will, of course, continue to invest in science and technology and R&D-intensive emerging sectors such as artificial intelligence, quantum technologies and robotics. We will also continue to promote the UK as the very best place to start and grow a tech business. We have the skills, the location and the language, alongside a business-friendly environment, strong access to finance and a long-standing reputation for innovation.
Daniel Zeichner
I am grateful to the Minister for taking a further intervention. I just want to clarify who the Government have been talking to. She said that there have been conversations with the company—is that ARM or Nvidia? It is a key difference. I understand the point she makes about the sensitivities, but the same was true in 2016, and it was possible then for the Government to secure guarantees. Why not now?
Caroline Dinenage
Ministers and officials have spoken to various parties in recent days, and we will continue to do so as we seek to understand the full implications of this transaction from every angle.
The hon. Gentleman will know how diverse our tech sector is in the UK. I know that Cambridge has a greater proportion of people in tech than any other city in the UK besides Belfast, so I fully appreciate the worry that this causes for him and his constituents. Well over 2,000 people are based in ARM’s Cambridge headquarters, and we are determined to see that continue. I thank him for his continued interest. I am sorry that I have not been able to answer all his questions as fully as he would have liked me to or as I would have liked to, but I promise that I will keep him closely abreast of this issue as it develops.
Question put and agreed to.