Grand Committee
National Security and Investment Bill
Tuesday 2nd March 2021
(3 years, 1 month ago)
Grand CommitteeRead Full debate National Security and Investment Bill 2019-21 View all National Security and Investment Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 165-I(a) Amendments for Grand Committee (for Second Marshalled List) - (1 Mar 2021)
The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
I will call Members to speak in the order listed. During the debate on each group, I invite Members, including Members in the Grand Committee Room, to email the clerk, if they wish to speak after the Minister, using the Grand Committee address. I will call Members to speak in order of request.
The groupings are binding. Leave should be given to withdraw amendments. When putting the question, I will collect voices in the Grand Committee Room only. I remind Members that Divisions cannot take place in Grand Committee. It takes unanimity to amend the Bill, so if a single voice says “Not Content” an amendment is negatived, and if a single voice says “Content” a clause stands part. If a Member taking part remotely wants their voice accounted for if the question is put, they must make this clear when speaking on the group. We will now begin.
Amendment 1
“Objective of this Act
(1) The overarching objective of this Act is to allow the Secretary of State to safeguard national security in respect of economic and social harm.(2) When making decisions under this Act, including for the purposes of assessing a risk to national security, the Secretary of State must have regard to the objective in subsection (1).(3) The Secretary of State must also have regard to the effect of the application of this Act on—(a) technology investment;(b) the research and innovation environment; and(c) business opportunities for small and medium-sized enterprises.”Member’s explanatory statement
This amendment sets an objective for the bill in relation to national security and includes a number of other elements to which the Secretary of State must have regard.
Lord Fox (LD)
My Lords, Amendment 1 is in my name and that of my noble friend Lord Clement-Jones. At Second Reading the Minister described the Bill as
“a major upgrade to the Government’s powers to screen certain acquisitions on national security grounds”,
which builds substantially on the Enterprise Act 2002. It certainly is, but perhaps in the Bill we are dealing with architect’s drawing of the upgrade, rather than a 3D model.
First, let me say without equivocation that those of us on our Benches see the need the Government to scrutinise potentially sensitive transactions, and we think that an upgrade is timely and sensible. However, as the Minister has acknowledged, there is the rub. Defining what is sensitive and what is a transaction of concern are key to the effective operation of the Bill. As we progress through the amendments ahead of us, I would say that virtually all seek to better define the operational process of the new investment security unit within BEIS and to ensure that the disquiet it has caused is alleviated.
At Second Reading, the Minister spoke about reflecting
“the modern economic and investment landscape in the UK.”—[Official Report, 4/2/21; col. 2332.]
In fact, what is proposed here is culturally different from what successive Governments have practised. Blair, Cameron—including and excluding us—through May to Johnson have all, so far, rightly or wrongly, pursued a distinctly hands-off approach. It is not hard to understand the alarm that the Bill might cause in the outside world.
Its publishing sends a message about the future nature of interventionism. This concern comes not just from the traditional free traders of the City but from universities, industry trade associations and sectors as wide as space and bioscience. The abiding link to these academic and industrial concerns is that these are, by necessity, international and collaborative activities.
The overwhelming concern coming from all sides of the House in that Second Reading debate was how this unit was to operate effectively without stifling innovation, scaring off capital and becoming a proxy for wider strategic considerations. It is with this in mind that my noble friend Lord Clement-Jones and I penned this first amendment, which sets out the objective of the Act. By exclusion, it also sets out what is not the objective of the Act and thus what is within and not within the purview of the investment security unit. It is designed to send clear messages about how this Bill will operate in practice.
Looking at the amendment in detail, first, in making regulations under proposed subsection (1), the Secretary of State’s overarching objective must be safeguarding national security. This is reinforced by proposed subsection (2). There is no controversy here, given that this is the purpose of the Bill, and on their own the subsections would offer nothing new. That is down to proposed subsection (3), which would add that
“The Secretary of State must also have regard to the effect of the application of this Act,”
on other things. In our case we have listed:
“technology investment … the research and innovation environment … and … business opportunities for small and medium-sized enterprises.”
We put those three there, because in our view these areas are key elements of our national security. I am happy to debate what should be on that list, but I will explain why we put these in the amendment.
Technology investment is key to keeping ahead of the security arms race, and it is reasonable that the Secretary of State and, by extension, the unit in BEIS would have regard to this technology base. Similarly, the research and innovation environment is needed to deliver that technology leadership. Without vibrancy in investment here our future security is compromised. Finally, in many cases it is the SMEs that bring true innovation to all the 17 sectors on the Minister’s list. They take technology to market and must not be disproportionately disadvantaged by the application of this Bill.
This amendment is designed to send two messages. One is internal, seeking to influence the nascent culture of the investment security unit to ensure that it recognises publicly what elements contribute to the delivery of national security. The second is an external message to the market, our universities and our innovative businesses, big and small. They need to know that these issues are in the Government’s mind when they are making security decisions. They need to be reassured that this is a vehicle to help to reassure them. The Minister may well say “trust me”, and of course I do, but what of future Ministers and future Governments? This amendment would ensure that the Government have regard to the conditions and the culture that will deliver national security and investment in that security. I beg to move.
Baroness Noakes (Con)
My Lords, in principle, I do not support proposed new clauses such as this, whether they are called objective clauses or purpose clauses. I have tabled them myself in the past, but they are usually not much more than an excuse for another Second Reading debate, and we had a little of that in the introduction from the noble Lord, Lord Fox.
Amendment 1 could be positively harmful. It confines national security to “economic and social harm”. The obvious item omitted is physical harm, but other harms could be missing. Purpose or objective clauses would be used as an aid to interpretation of the main body of the Act so, if they are there, they have to be comprehensive in their drafting if they are not to act as a constraint on the operation of the Bill.
Similarly, the “have regard” matters in proposed new subsection (3) could act as a constraint on the Secretary of State. The noble Lord, Lord Fox, explained the rationale for his list, but I could not see why “technology investment” was singled out compared to other kinds of investment—for example, in manufacturing capability or intellectual property. What exactly is meant by “research and innovation environment” is unclear from the drafting, and is the omission of “development”, which is the normal companion to “research”, significant or not? Singling out SMEs, which we are all aware are important to our economy, implies that larger enterprises are not important in the considerations.
There is a good reason why Bills do not often contain purpose or objective clauses. They are traps for the unwary and can do more harm than good.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, there are very wide-reaching powers in this Bill and, to start where I ended my Second Reading speech:
“I am not against the notion of interventions, but the Bill should be more than notion and compulsion, and I hope that it is possible to include more direction and balance.”—[Official Report, 4/2/21; col. 2364.]
That is exactly the aim of Amendment 1. It aims to be positive rather than negative, by defining an overarching objective. One might debate whether it could be slightly different, but the idea is to have an overarching objective to safeguard national security in respect of economic and social harm. “Social harm” is a very broad term. Recognising that broad scope, it specifically lists that the Secretary of State must
“have regard to the effect … on technology investment… the research and innovation environment … and business opportunities for small and medium-sized enterprises.”
I can almost hear the Minister assuring us that the Secretary of State will have regard to a lot of things, and that would be right, but it is also necessary to make sure that there are correct messages given by the Bill—messages that endure and give confidence to the business sectors most likely to suffer, perhaps entirely unnecessarily, from rumours, concern or finger-pointing from competing jurisdictions.
If we take the starting point that the Bill has good intentions, that there are similar moves internationally, that we have perhaps been too slack in the past, and that there are inevitably burdens arising from both notification requirements and notification concern, that will lead to unnecessary voluntary notification. One wonders if there are not more mechanisms that can give an all-clear signal.
Maybe some will become clearer or develop over time but, wherever that is possible, as we work through the Bill, I am mainly looking to see what incremental steps can be made towards certainty. That can be helped right at the start of the Bill by using the combination of broad objective plus a list of the most sensitive “have regard” matters. This appears in various other pieces of UK legislation, not least in the financial services legislation that is occupying both my time and that of the noble Baroness, Lady Noakes, on the days either side of this sitting. Therefore, I hope that the Minister sees the advantage of taking that approach here.
Lord Robathan (Con)
My Lords, I will disappoint my noble friend Lady Noakes by making a comment that is more a Second Reading comment than anything else. But it is important we see this Bill in context. The genesis of this Bill is, I assume, largely about Chinese influence and the debates we have had about Huawei and so on. I want to raise only one issue on the context; it is the way in which British commerce and the economy are so intricately and deeply linked with China. Is that globalisation? I am not sure.
We all know how much we buy now comes from China on the one belt, one road programme or elsewhere. The interdependence between western consumers and economies and the Chinese economy is extraordinarily deep-rooted. I am going to use a little example—a silly one, you may say. Old-fashioned fellow that I am, I try to buy British if I can. Looking for a butter dish online, I bought quite an attractive one from the English Tableware Company. I thought that was pretty safe, until the moment it arrived. I turned it over and found it was made in China, which seems quite strange to me. I took it up with the company, and it came back to me saying its products were all ethically sourced and it had checked the suppliers. Of course, we have no idea about the working conditions or possibility of slave labour in Chinese factories.
Lord Clement-Jones (LD)
My Lords, I declare my interests as stated in the register. My noble friends Lord Fox and Lady Bowles have cogently outlined the purposes of Amendment 1 and the importance of having a framework of this kind for the Secretary of State when he is exercising his powers under the Bill.
I am taken by the fishing analogy which has been used in relation to the Bill. On these Benches, we support the trawling process and its purpose, but a large number of questions in consequence need answering about the extent of the net, the size of the mesh, and which species will be taken on board and which discarded, and how long that will take. We will come to those questions later in Committee. This amendment asks the broader question: what impact on the broader ecology is the trawling having? The Secretary of State cannot be oblivious to the impact on the investment ecology, as set out in the proposed new paragraphs, but must take account of the impact of what he or she is doing. I am sure that the Minister will want to give us assurances on many questions to do with the Bill as drafted. But we need certainty about this aspect and how the Secretary of State will exercise these considerable powers yet not thereby damage what we have in the UK—a thriving investment climate. As my noble friend Lord Fox has pointed out, it is not just the City but universities, trade associations and sectors such as space and biosciences that have raised concerns about the width of the Secretary of State’s powers.
Today, we have seen the outcome of the sector consultation, all 111 pages of it, which allays concerns somewhat, but I anticipate that many will still believe—as I do—that the net is being too widely drawn. This amendment is designed to constructively allay that concern. I hope that the Minister will recognise its merits. It is far from harmful, as the noble Baroness, Lady Noakes, suggested it was. She asked why we singled out these three elements: it is because, looking at the sectors, it is precisely those areas that we believe are most likely to be damaged if a net is drawn too wide. I am going to resist the temptation to pick up the points made by the noble Lord, Lord Robathan, because I am conscious we are not on Second Reading, but he has raised some interesting questions.
Baroness Hayter of Kentish Town (Lab)
My Lords, it was clear at Second Reading, and again today from when the noble Lord, Lord Fox, began, that everyone across the House agrees that national security is the number one priority.
The discussion therefore is twofold. First, will what is, and is not, covered in this legislation be clear enough? Secondly, is the balance between security needs and the desire for economic growth, research, innovation and freedom to invest, correctly delineated? On the first issue, it is obvious that the new regime must be based on the best advice coming from across government, as well as on emerging and current threats, and the behaviour and developments of our adversaries. We will come in the next group to the definition of national security.
This first amendment is focused more on the second question that I posed. Will the unit take sufficient account of technology investment, research and innovation, and business opportunities, particularly for SMEs? From everything said at Second Reading and even today, that is an important discussion. We should not expect the Bill, nor its new unit, to be the generator of investment, research and development—that is for an industrial strategy—but the Government must have a careful eye on whether the workings of the Bill have a detrimental impact on technology investment and innovation, while ensuring that the economy does not override security interests. That is a difficult judgment. If it were not, there would never be any problems for the Government to solve.
I read today—others may already have been aware—of possible changes to the listings regime to help the City compete with New York, Amsterdam and Frankfurt in attracting fast-growth companies by creating an “agile” new economy focused on innovation and technology. We welcome such moves and attention being given to making Britain a more attractive place in which entrepreneurs can take companies public.
We hope that the proposals emanating from one of our colleagues, the noble Lord, Lord Hill, on relaxations on the use of dual-class shares, to allow founders to keep control over their companies by giving them deciding votes on decisions such as corporate takeovers, could work in harmony rather than at variance with the objectives of the Bill. I hope there will be an opportunity to discuss those interplays as we go forward.
In the meantime, we will consider future amendments that will look at whether the right procedures, definitions, timelines and so on strike the right balance as to workability in making those fine judgments between security and economic interests. However, this amendment is calling for the Secretary of State to be required to have regard to those other interests. The Minister will say that, of course, he or she is bound to do so. However, it is a question on which some assurance is needed and we look forward to the Minister’s view on that.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I am grateful to noble Lords, Lord Clement-Jones and Lord Fox, for their introductions to this debate. I thank them for proposing this new clause and for enabling a further discussion on the purpose of the Bill.
Amendment 1 seeks to establish an objective for the Bill and include a number of elements to which the Secretary of State must have regard when using his powers. Let me say at the start that the intent behind this amendment is to provide a clear statement of the scope of the Bill, to prevent so-called mission creep and give certainty to businesses and investors, while avoiding the pitfalls of attempting to define “national security”. However, the legal effect of the amendment presents us with a number of challenges.
The amendment would require the Secretary of State when exercising his powers under the Bill to safeguard national security in respect of economic and social harm, which is reasonable. It is indeed possible that economic or social harms could give rise to risks to national security, but so could other harms such as physical or military harm. For example, a hostile actor could use control over a piece of critical infrastructure to put UK citizens in physical danger or they could acquire companies in the UK defence supply chain and thereby degrade our military capabilities.
The absence of other harms in the factors listed by the amendment suggests that the Secretary of State may not use his powers under the Bill to safeguard national security from those harms that I have outlined. It is also unclear how he should have regard to the factors in subsection (3) of the proposed new clause. As the amendment does not say that they are to be regarded as part of national security, that would suggest the scope of the Bill is being expanded beyond national security. It is important to note that the government position on the issue of defining, wholly or in part, “national security” remains consistent with when amendments in a similar vein to this were discussed at Second Reading and in the other place; I have discussed that with the noble Lord, Lord Fox, previously. The Bill does not set out the circumstances in which national security is, or may be, considered at risk. That reflects long-standing government policy to ensure that national security powers are sufficiently flexible to protect the nation. It also does not include factors which the Secretary of State must or may take into account in assessing national security risks on the face of the Bill.
While it is crucial for investor confidence that there is as much transparency in the regime as possible, there is clearly a limit to how much the Government can and should disclose in this regard, given that the regime deals explicitly with national security matters. National security risks are multifaceted and constantly evolving. What may not constitute a risk today may well do so in future. We may find over time that such specificity becomes outdated. Indeed, as my noble friend Lady Noakes pointed out, it is enough of a challenge to ensure sufficient specificity in the objectives of the Bill, especially with regard to concepts such as those referenced in the amendment.
While I have nothing but gratitude for the noble Lord’s intention—to provide a specific objective for the Bill—it is primarily for the reasons I have set out that I am unable to accept the amendment, and hope that in the light of that he feels able to withdraw it.
Lord Fox (LD)
I am grateful for the Minister’s gratitude. I am also grateful to Members of the Committee who have spoken, but I am a little shocked by the noble Baroness, Lady Noakes, who seems to have an internal inconsistency. I always think of her as such a logically consistent Peer, but in one breath the amendment was dismissed as legislative fluff and in the next it was the most harmful thing that could happen to the Bill; I suggest that it is either one thing or the other. I appreciate the Minister’s solid response.
My noble friends Lady Bowles and Lord Clement-Jones added to the point that is central to this. The culture of how the Bill is delivered by the investment security unit will be central to how it is viewed in the outside world. If the unit has a combative and aggressive culture, that will affect the way in which the investment community regards investment in this country. The amendment seeks to explicitly influence the culture of that organisation, but I am very happy if the Minister’s lawyers can find better ways to do so. However, a Minister simply saying something will not make the unit run that way. In the end, that will be the measure of how successfully the Bill sets the balance between seeking to assure national security while not throwing out all the good things that our current investment world has.
I look forward to debates on other amendments that seek different ways to do the same thing but, in the meantime, I beg leave to withdraw Amendment 1.
Baroness Hayter of Kentish Town (Lab)
My Lords, I shall speak also to Amendments 13 and 83. Perhaps I will take a little more time than usual over this because it is one of the central issues on which we wish to hear the views of the Committee and, indeed, the response of the Government.
Given that national security is clearly the Government’s priority, it is important that to make the Bill work everyone involved in its provisions and their interpretation are clear about how the Government see national security—its range and depth, if I may put it that way. Therefore, Amendment 13 seeks to establish the issues which should be taken into account because clear rules will be vital for businesses seeking funds, researchers, investors and the unit having to take decisions. They need to work on basically the same template.
Let me take a moment to say that the Government have published 112 pages today—the Minister expected someone to say it, so I may as well say it now—but his letter covering the first amendment arrived as he was speaking to it and the Written Ministerial Statement did not even refer to a policy statement that I gather has also been put out, according to my up-to-date information. I think the Committee will understand that we have not had time to digest this and we may therefore have to try to look at some important issues in that.
One of the points relevant to Amendment 13 is that this response states that several respondents indicated that “national security” should be clearly defined. We are therefore interested to know whether the Minister will listen to those concerns which, in a sense, is what Amendment 13 is seeking to do. It is not trying to define exactly what is national security nor, by implication, what is not. It is setting out how people tasked with scrutinising potential investments may approach the first question—“Might this risk our security?”—by listing the sort of factors to be considered. The “have regards”, while not an exclusive list, indicate to officials, the Secretary of State and those handling investments the matters which should be considered in any decision.
We absolutely agree that neither the Government nor Parliament should prescribe or limit what national security covers, as is long-standing practice, and therefore do not seek by this amendment to curtail the Secretary of State’s flexibility to act, but we nevertheless think that the other parties involved who will be impacted by this legislation need to know the range of issues which will be among those considered by the Secretary of State.
Amendment 13 provides a framework which is neither rigid nor exclusive. It simply does what other countries have done, what experts have recommended and what we have heard that people submitting comments to the Government have also said. The Law Society argues that without something like this, there is a risk that a Secretary of State could become exposed to political influence, and the Investment Association says that a better understanding of national security could help calm investors. Therefore, the amendment indicates factors that the Government might consider, such as the impact of a triggering event on defence capabilities or how a hostile actor might be enabled to gain access to critical infrastructure. I hope that the Minister will accept that Amendment 13 provides such a framework and flexibility to help alleviate the concerns that have been raised, particularly in the defence sector.
We are also keen to ascertain whether critical infrastructure is included in the Bill. As we know from the ISC report published last year, Russia has
“undertaken cyber pre-positioning on other countries’ Critical National Infrastructure.”
It would therefore be useful if the Minister could clarify whether that is covered in the Bill.
Later this month—the rumour is a week tomorrow but certainly while the Bill is in this House—we will see published the Integrated Review of Security, Defence, Development and Foreign Policy. Perhaps the Minister could confirm its publication date and that it will indeed be a week tomorrow. He nods—I think I am not going to get a yes that question. Can he also outline how the results of the analysis of that review will feed into the work of the new unit and its decisions on what constitutes a security threat? Will the review focus on the private sector and on the role that the Government see for business, as well as on how the interests of innovation both in academia and in business should be promoted?
Amendment 83, to which the noble Baronesses, Lady Northover and Lady Bennett of Manor Castle, have added their names, highlights the relationship between the review just mentioned and the objectives of the Bill and seeks a government statement on it. Given that the Government have said that the review will include the
“long-term strategic aims for … national security”,
there are questions about how these would align with the Bill’s new regime and how we are able to keep an eye on technological developments in the private sector while keeping pace with security challenges. What we do not want to see is an important new national security regime buried in BEIS which does not link with the UK’s wider and longer-term security concerns and priorities.
The ISC noted
“the extent to which economic policy dictated the opening up of the UK to Russian investment”,
whereas the Bill seeks to put security first and our investment needs second. As I said on the earlier group, it is an important but not always easy judgment to make. It is therefore essential that the Government’s view on security is considered by the BEIS unit and that Parliament is able to see how that is happening by way of the statement suggested in the amendment. That statement should focus both on how the Government will align the provisions in this Bill with the outcome of the integrated review and on how the UK will respond to identified threats, including new technology, biological weapons, cyber and misinformation. The reference to new technology is key since new weapon capabilities could as easily be developed in the private sector as in an MoD lab. The Government will need to procure these assets while preventing certain foreign states also purchasing them.
I return to Amendment 2, which probes whether public order and public safety are included within the Government’s view of national security. The similar German regime captures “public order” as part of its national security, while the Japanese regime applies equally to “public order and public safety” and to national security. Is the UK regime narrower than the approach taken by these other jurisdictions? Perhaps the major issue we want clarified within that is whether an investment which could have an impact on the working of our democracy would be covered.
Last year’s Intelligence and Security Committee report on Russia stated:
“The UK is clearly a target for Russia’s disinformation … Russian influence in the UK is ‘the new normal’ … It is clear that Russia … poses a significant threat to the UK”,
including “interference in democratic processes”.
With regard to elections, the discussion at the time of the publication of the report, which of course was written a whole year before it was published, was more on bots, messages, and so forth, the report noting that
“Russia has carried out malicious cyber activity … including attempting to influence the democratic elections of other countries”.
The Government’s own response concluded that
“it is almost certain that Russian actors sought to interfere in the 2019 general election through the online amplification of illicitly acquired and leaked Government documents.”—[Official Report, Commons, 16/7/20; col. 71WS.]
However, an external force intent on interfering with our elections could instead invest in the electronic gear that stands behind our pencil and paper voting, and perhaps pose a threat that way. Given, as the ISC report notes, the
“fusion of government and business”
in Russia, a business providing advanced IT for elections could have very close ties to that regime, or indeed to any other regime. Indeed, the Government’s response to the ISC noted that the Defending Democracy programme in the Cabinet Office includes consideration of
“direct attacks on electoral infrastructure.”
So the thinking is clearly there. Perhaps the Minister could therefore clarify whether foreign investment in democratic electronic infrastructure would come under the remit of the Bill. It is partly about what we think of as national security.
When the ISC covered this, it noted that
“the issue of defending the UK’s democratic processes … has appeared to be something of a ‘hot potato’, with no one organisation”—
I assume it meant within government—
“recognising itself as having an overall lead.”
Could the Minister outline how such responsibility and oversight will sit within the BEIS unit, such that investment in any democracy-related hardware or software could be included in its remit, and explain how the Government will overcome what the ISC describes as
“nervousness around any suggestion that the intelligence and security Agencies might be involved in democratic processes”,
given the committee’s view that
“Protecting our democratic discourse and processes from hostile foreign interference is a central responsibility of Government, and should be a ministerial priority.”?
The answer to the questions may indeed be no, but to have a discussion on national security and the future of our democracy and our safety without considering this seems to us to miss out a vital ingredient. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I thank the noble Baroness, Lady Hayter, for bringing forward this group of amendments. I will speak in particular to Amendment 13.
In preparing for this stage of the Bill we have received a number of briefings from outside bodies. Every single one has said, in the words of the noble Lord, Lord Clement-Jones, that the trawl is being done far too widely. The Government would not be drawn on that at Second Reading, and it is absolutely appropriate that we try to pin them down through this form of probing amendment.
In leaving the parameters drawn as wide as they are, it is fair to say that all those who have briefed ahead of today would prefer to see a strict definition of what national security is. Am I right in assuming that national security for the purpose of the Bill covers everything that is not defined or covered elsewhere? Water treatment, the water supply and air traffic are covered by other legislation, so does that mean they are not covered by the purpose of the Bill? Are we wrong to assume that the Bill covers critical infrastructure in the way the noble Baroness, Lady Hayter, set out? It would be helpful to know whether we have to work on a process of elimination rather than on a specific reference point such as a definition, as is set out in Amendment 13, which is quite wide in its own right, given its number of “have regards”.
The Law Society of Scotland states that
“national security itself is not defined within the Bill. We note that the Enterprise Act 2002 definition refers to EU legislation”.
Are we right to assume that that definition still applies, or can we safely assume that, because we have now left the European Union, it is no longer valid? A steer from the Minister would be very helpful in summing up this debate.
The Law Society of Scotland goes on to say that
“: it might be helpful to introduce a stand-alone concept appropriate to the current context. An exhaustive definition is likely to be neither possible nor desirable but a general delineation of the concept together with detailed additional guidance as to how this is likely to be applied would be helpful.”
Does the Minister intend to do that as the result of this amendment to date?
I, too, received the letter from the Minister within the last half hour, when I was on another call. In the normal course of events, I would have studied such a letter quite closely to enable me to prepare for today, so it is a matter of some regret that we have not had a chance to read it. Perhaps the Minister will cover its main points in replying to this little debate on this group of amendments.
I believe that either we should adopt something like Amendment 13 in the course of proceedings or the Minister should bring forward some definition of the Government’s own drafting during the proceedings, before the Bill leaves the House.
Baroness Northover (LD) [V]
My Lords, the noble Baroness, Lady Hayter, laid out in her opening remarks the necessity for clarity about what risks this Bill seeks to address, arguing for a definition of national security in Amendment 13. There are indeed arguments for such a definition, as the Law Society of Scotland, and that for England and Wales, have laid out, lest the Government might, for example, respond to political, economic or electoral pressures to define risks which should not be brought within the scope of this Bill. Others see risks associated with such definitions and further legal minefields. However, the Law Society of England and Wales sees a risk in Amendment 2—that extending the scope of the clause to cover “public order and public safety” could give rise to similar concerns, unless these terms could be strictly defined so as not to include political motives. However, I hear what the noble Baroness says about her aim here, and about the risks to our democratic processes.
I speak here particularly to Amendment 83 in the names of the noble Baronesses, Lady Hayter and Lady Bennett of Manor Castle, which I have also signed. The amendment is extremely restrained. The Government have made much play of the importance of their proposed integrated review of security, defence, development and foreign policy. From time to time, these reviews are made. There was one after the general election of 2010, and another after the 2015 general election. Of course, that latter one included pandemic as a risk, and emphasised how important it was to the United Kingdom, economically and strategically, to be at the heart of the EU, through which, as it put it, we amplified our power and prosperity.
One might say that a new assessment is indeed desperately needed. It was due last year but was knocked off course by the pandemic, which did not stop the Government pre-empting its conclusions by merging DfID with the FCO and cutting aid, even though in 2015 this was seen as a mark of our global reach—global Britain, you might say. In addition, the Government announced spending levels for the MoD before Christmas, none of this waiting for a proper strategic review.
So now we have this Bill on threats to national security, without that review having been published. We hear that it is imminent. Could the noble Lord update us? Is it indeed being buried by the Budget coverage? We have certainly heard that it has got thinner and thinner, perhaps one-fifth the length of the 2015 one, and that it is large on rhetoric and small on how it is to be achieved. Nevertheless, this should be an important statement of what the UK identifies as threats and ambitions. Therefore, this should have preceded this Bill and underpinned what it was trying to do, if the Government are to be joined up.
Amendment 83 asks that, when the review is finally published, the Government publish a statement that outlines how provisions in the Act will align with the UK’s long-term security priorities and concerns as identified in the review. The amendment states that this should be
“As soon as reasonably practicable”,
a generous phrase that Baroness Hayter used in tabling this amendment, more generous than the one I would have used.
Perhaps, because there is little confidence in the review, as one would have thought these areas would definitely be covered, this statement should also include how the Bill will respond to emerging threats, new technology, biological weapons, cyber, misinformation and military developments by the UK’s adversaries. One of the successes of the 2015 review was certainly the emphasis on cyber and the subsequent and important expansion of UK capacity in this area. I am sure that this will not be neglected in the new review. The amendment asks the Secretary of State to lay a statement before Parliament. It is surely the least that the Government should do to try to ensure that the Bill is aligned with whatever comes forward in the strategic security review. The Government should be able to simply accept the amendment, and I look forward to the Minister’s reply.
Baroness Noakes (Con)
My Lords, at Second Reading, I said that I felt that a lack of definition for national security was a problem, and I still feel uneasy about that. I understand the need for flexibility to take account of how threats evolve over time. My noble friend the Minister said at Second Reading that national security was not defined in other legislation, but I am not sure that is quite good enough, given that this legislation will have a particularly big impact on commercial transactions, and what the business sector needs is certainty. Other uses of the term have not had that sort of impact on business transactions. I completely understand the difficulties of definition—problems of being too restrictive or insufficiently comprehensive. I think Amendment 13, in the name of the noble Baroness, Lady Hayter, is a better approach than Amendment 1 with its objective clause, but I am concerned that it may still carry some of the defects that I outlined when I spoke to Amendment 1.
The statement that the Secretary of State will make under Clause 3 will certainly help businesses and their advisers but, at the end of the day, national security is the big overarching concept in the Bill which is left without further detail. Several noble Lords have already referred to the letter from my noble friend the Minister to all Peers, which came out while he was speaking earlier. I have had an opportunity to have a quick look at it on my iPad, and I do not think that any Member of the Committee will find that it advances our consideration of the Bill this afternoon at all: it just says that there is a lot more work to do.
If there is no definition or further elaboration of what national security means in the context of the powers created in the Bill, the Government will be giving the courts a blank sheet of paper if, as is probably likely, at some stage a challenge to the use of the powers under the Bill is mounted in the courts. We must remember that we have an activist judiciary, especially over the road in the Supreme Court, and the Government really ought to be alert to that fact and try and proof legislation against what can be done there. I shall be listening very carefully to what my noble friend says are the reasons for leaving national security as such a completely open issue in the Bill, and I look forward to hearing his remarks.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I should perhaps begin by noting my position as the co-chair of the All-Party Parliamentary Group on Hong Kong. The noble Lord, Lord Fox, in opening this Committee, said that most of the amendments were seeking better to describe national security. The noble Baroness, Lady Hayter, said that, without a definition, the Bill is missing a vital ingredient. It would indeed be interesting if, as the noble Baroness, Lady McIntosh of Pickering, said, we were to continue to use the EU definition. My personal position is that we should keep as close to the EU as possible, but that has not seemed to be the Government’s position.
The noble Lord, Lord Fox, noted how successive Governments of different hues had taken a hands-off approach to mergers and acquisitions, those involving both national and international assets. We have had, to an extent matched by few other countries in the world, a “Robber barons welcome” sign out in the process of selling off the family silver in a veritable orgy of privatisation and financial isolation. That has clearly had an impact on public order and national security.
I will not let rip with a Second Reading speech—something that the noble Baroness, Lady Noakes, expressed concern about—but will point out that “have regard to” clauses are at the very core of democracy. If the Government are taking new or extending existing powers, for there to be democratic oversight there surely needs to be an outline of how those powers will be used, a legal framework against which a Government can be held to account, should they go off the rails. As the noble Baroness, Lady Noakes, just said, that does not reflect an activist judiciary; rather, it is one doing its job and fulfilling its constitutional role.
We know that the Government do not like to have such oversight, both democratic and legal, but it is surely the responsibility of this Committee to attempt to insist on it—for nothing more than national security, because of the degree to which it was not secured by previous Governments, having been exposed by the Covid-19 pandemic and imminently threatened by the climate emergency. I will address some of those national security concerns in my Amendment 93, which we will get to later, but I speak now on Amendment 13, in the name of the noble Baroness, Lady Hayter. I thank her for her clearly careful and detailed work on it. I will not address all its elements, but focus on a couple of paragraphs, particularly proposed new paragraph (b)(iv),
“enabling a hostile actor to … corrupt processes or systems”.
There is grave concern about the impact of big money on our quasi-democratic processes, particularly in the age of social media. These are so well known that I do not need to expound on them at length, but I will point to how the 2010 national security strategy already referred to such concerns, and they have obviously greatly grown since. Even in our conventional media, we have a quite astonishing concentration of media ownership, often foreign or offshore. That surely needs to be acknowledged as a national security concern. I note the comments of the noble Baroness, Lady Hayter, about how Amendment 2 seeks to address such issues.
I also point to proposed new paragraph (f) in Amendment 13, which is about
“the likely impact of the trigger event on the United Kingdom’s international interests and obligations, including compliance with legislation on modern slavery and compliance with the UN Genocide Convention”.
This has obviously been of great concern to your Lordships’ House; we reflect on the debate around the Trade Bill. These are surely national security concerns. They are not just moral issues, but of great effect to our national security. A stable world, in which no one is subject to genocide or held in slavery, is a world that is far more secure for every citizen of the UK and the nation as a whole.
I come to proposed new paragraph (g) on
“organised crime, money laundering and tax evasion”.
The security of funding for schools, hospitals, roads, police and all the other services on which we rely depends on companies in our society paying their taxes. When it comes to money laundering, we have seen, in many aspects of our society and internationally, the disastrous impact of dirty money—something that, in some societies around the world, has led to almost a total state breakdown.
Overall, having such a set of definitions, as many noble Lords have said, has been of help to the Government, giving the relevant Minister a list against which their decisions can be checked. Without such a list providing an explanation against its clauses, how can a Minister avoid accusations of corruption, malfeasance or simple neglect of duty?
I am pleased to attach my name to Amendment 83 in the name of the noble Baroness, Lady Hayter, also signed by the noble Baroness, Lady Northover, which refers to the integrated defence review. It is a great pity that we are forced to debate the Bill without that. It is a situation in which we find ourselves in many areas of government work. The reasons for ensuring that we have a tight interlinking between the review and the Bill have been clearly outlined by the noble Baroness, Lady Northover, so I will not go into them further.
Lord Lansley (Con)
My Lords, like other noble Lords, I spoke at Second Reading and referred to this question. Together with the noble Lord, Lord Truscott, I took the view that there were inherent problems in attempting a definition of national security and that the best definition is rendered through the Bill as it stands. Once one defines the nature of an entity, the nature of the assets covered, the nature of the acquirer concerned and the extent of control—or the definition of control for these purposes—I think one arrives at what a trigger event is. By definition, a trigger event gives rise to the question: does this trigger event cause a problem for national security?
I do not dispute that large numbers of consultees to the White Paper and speakers in our debates have said that it would be very helpful to define national security and—I would expect nothing less from her—the noble Baroness, Lady Hayter, has done as well as one is likely to do. However, I fear that Amendment 13 in particular demonstrates all the flaws with providing such a definition. I will not seek to delay our debate too long, but I will go through a number of them.
The noble Baroness asked whether critical national infrastructure was included. In Amendment 13, critical national infrastructure is included but not defined. We do not know which bits of national infrastructure are in the regime and which are outside it. We know, broadly, the sectors in the scope of the mandatory regime even if we have further detail and amendments to them today. However, if I look at what the Government have published, I find the nuclear industry, the communications industry, data infrastructure, energy infrastructure and transport infrastructure, including ports, harbours and airports. I do not find water infrastructure and food security infrastructure. That is the question and, with the greatest respect, Amendment 13 does not answer whether they are in or out.
We will come on to debate these things but it slightly introduces the concept of whether we are using the EU regulation. My noble friend Lady McIntosh referred to it. The EU regulation includes food security and water. Even if we do not follow the EU lead, which of course now we will not be doing, it at least gives us an interesting list to work from and to question why there are differences.
This brings me to Amendment 2. One of the other differences between our proposed legislation here and the EU regulation is that the EU regulation says that it proposes to safeguard against threats to security and public order. Amendment 2 proposes including public order. However, the European investment screening regime includes freedom and pluralism in the media as one of its investment screening criteria. We are not including that in the Bill. Why are we not including it? It is already in the media public interest regime inserted into the Enterprise Act by the Communications Act 2003, on which I served. I also served on the Enterprise Act Standing Committee in 2002. In that sense, we are not pursuing a public order regime here; we are pursuing a security regime.
I now come to some of the other issues with Amendment 13. Proposed new paragraph (c) talks about the characteristics of the acquirer. If you were to say to me that in my little definition of what constitutes a security risk, we have definitions of the natures of the entities and assets concerned and quite exhaustive definitions of what constitutes control, I would say that what we do not have are definitions of the nature of the acquirer, other than that, presumably, it is hostile in intent.
Amendment 13 effectively tries to give us a list of the trigger events that might give rise to an intervention. In some senses, the amendment is far too narrow. There may be all sorts of unanticipated trigger events that would not be included in primary legislation through this amendment. In other respects, it might be far too wide. Proposed new paragraph (c) talks about
“the characteristics of the acquirer, including whether it is effectively under the control, or subject to the direction, of another state”.
There are virtually no Chinese entities for which that is not true. There are many American corporations for which one could say that that was true. One could certainly say the same of a number of state-owned European companies, including EDF and those engaged in our national infrastructure. What does proposed new paragraph (c) tell us? Does it tell us whether those characteristics are a threat to national security or not? It does not tell us either of those things; all it tells us is that we must have regard to them. We know that Ministers will have regard to them because they are having regard to that kind of issue. It does not get us very far.
The same is true on three occasions, in proposed new paragraphs (a), (e) and (f), which refers to
“the likely impact of the trigger event on”.
It does not say whether the impact is adverse, beneficial or on security. Therefore, almost by definition, all that Amendment 13 tells us is that Ministers should have regard to trigger events in relation to these activities, whether they relate to data or defence capabilities. That is what Ministers are setting out to do.
In a couple of respects, Amendment 13 takes us further than we were intending to go in the Bill. The idea that non-compliance with our international obligations is, by definition, a security risk to the United Kingdom seems to be misplaced. It may be a matter on which we have obligations or be of great policy importance but one cannot construe that compliance with our international obligations in every respect is a security risk to this country.
I am afraid that one also has to look at proposed new paragraph (h), which asks
“whether the trigger event may adversely affect the safety and security of British citizens or the United Kingdom”.
It does not say “British citizens in the United Kingdom”. For example, there are hundreds of thousands of British citizens in South Africa. I was in Natal a few years ago, where there are 500,000 British passport holders, many of whom are British citizens. Are they, by definition, therefore included in this security investment regime?
All that I seek to demonstrate is that although Amendment 13 is a helpful effort, trying to define all the trigger events is bound to fail. Therefore, we should focus on making sure that the listing of entities and assets—as, for example, those published today by the Government—is as good as we can make it, and we will have some debates on that. We should define control properly—not too broadly or narrowly—and we should understand what kind of acquirers we are talking about. We will talk about whether something is foreign or domestic, state or non-state, or hostile and in what circumstances. That is where the lack of definition in the Bill is as yet more important. I refer to the question of what kind of acquirers. I hope that we will talk about that matter in later debates but, for the present, I cannot see the merit of adding Amendment 13 to the Bill.
Lord Callanan (Con)
I thank all noble Lords who have taken part in this debate. Let me first say to the noble Baroness, Lady Hayter, that I anticipated that she might be a little critical—in her normal, super-polite way—about the letter coming out late. There were some delays in the internal approval process and, faced with a choice of whether to send it out now or wait until after Committee, I thought that, on balance, it was best to get it out to noble Lords. I was fully aware that when I arrived today, some noble Lords might have criticisms for me, but I thought they would like to see the letter rather than not see it before we started Committee. I hope that during a lull in proceedings, Members might have a chance to read the letter—all 100-odd pages of it.
I am grateful to the noble Baroness, Lady Hayter, as well for her amendments to Clause 1 and after Clause 5, which are Amendments 2 and 13 respectively on the Marshalled List, and I give my combined thanks to her and the noble Baroness, Lady Northover, for the proposed new clause relating to the integrated review.
I will begin with Amendment 2, which would expand the scope of the Bill to include public order and public safety, in addition to national security. The noble Baroness, Lady Hayter, is of course right that public order and public safety are exceptionally important and some of the highest priorities for any Government. However, the Bill is about national security—nothing more, nothing less. Including public order and public safety as grounds for calling in an acquisition would be a substantial expansion in the scope of the Bill, as has been pointed out. We do not wish to see any additions to national security, to ensure that we maintain the careful balance struck in this regime between the appropriateness of government powers for intervention and ensuring that the UK remains one of the best places in the world for investment.
In addition, I note that the regime has been carefully designed with the protection of national security in mind and not public safety or public order, as important as they of course are. For example, the trigger event thresholds in Clause 8 are calibrated to protect against activity that could harm national security due to an acquisition of control over a qualifying entity. It is far from guaranteed that these would also protect against risks to public order or public safety, or that they would be the most effective or proportionate way in which to do so.
For example, a certain type of investment may give rise to a risk to public safety or public order only if an entity were bought in its entirety or if, conversely, any investment could harm public order or public safety. Of course, there may be situations in which a risk to public safety or public order is considered to give rise to a risk to national security as well. I assure Members of the Committee that, in such cases, the Secretary of State will be able to call in the acquisition in question if it meets the tests in the Bill, and will be able to take action if appropriate.
I will pick up on a specific issue raised by the noble Baroness, Lady Hayter. The Bill would apply where a qualified acquisition could undermine democracy in a way that amounts to a national security risk.
Amendment 13 seeks to create a non-exhaustive list of factors which the Secretary of State must take into account when assessing a risk to national security for the purposes of the Bill. It will not come as a great surprise to the Committee to hear that the Government’s position on this issue remains consistent with their position when amendments related to this one were discussed on Second Reading and in the other place.
As drafted, the Bill does not set out the circumstances in which national security is, or may be, considered at risk. That reflects long-standing government policy to ensure that national security powers are sufficiently flexible to protect the nation. It also does not include factors which the Secretary of State must or may take into account under the Bill in assessing national security risks. Instead, factors which the Secretary of State expects to take into account in exercising the call-in power are proposed to be set out in the statement provided for by Clause 3. A draft of that statement was published on introduction of the Bill, to aid noble Lords in their parliamentary scrutiny. The draft statement includes details of what the Secretary of State is likely to be interested in when it comes to national security risks. That includes certain sectors of the economy, and the types of acquisitions that may raise concern.
While it is crucial for investor confidence that there is as much transparency in the regime as possible, there is obviously a limit to how much the Government can and should disclose in that regard, given that the regime deals explicitly with national security matters. Nevertheless, the draft statement goes into some detail about the factors which the Secretary of State expects to take into account when deciding whether to call in a trigger event. The proposed new clause would instead create, alongside this statement, a non-exhaustive list of factors which the Secretary of State must have regard to when assessing a risk to national security.
The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
I have a received a request to speak after the Minister from the noble Lord, Lord Fox.
Lord Fox (LD)
During that comprehensive answer, I think I heard the Minister say something and I would like to test whether I understood correctly. In explaining why people should not be concerned that certain parts of infrastructure are not included in the list, I think I heard the Minister say that the Bill’s call-in power is economy-wide. That suggests to me that the list of 17 issues is irrelevant because everything is on the list. In other words, anything can be called in, whether it is on the list or not. So, the list is merely indicative, but the exhaustive list is the entire economy. Could the Minister explain whether that is the correct interpretation of what I just heard?
Lord Callanan (Con)
If the acquisition in question poses a risk to national security, yes, there is the general power, but the point I was making is that, with regard to areas of political and national infrastructure, there are also separate powers in different pieces of legislation that would help to protect in those areas.
Baroness Hayter of Kentish Town (Lab)
First, I thank everyone for their contributions, which I found extremely helpful and thoughtful. In particular—this will not surprise the Minister—the Minister confirmed that it would be possible to call in any threat to democracy or anything like that. I am sorry he did not feel able to answer on when exactly the integrated review will be published, but we live in hope.
I was a bit disappointed that the Minister said that he did not want to define national security because it was long-standing government practice not to. My heart sank at that point, thinking that the Minister must have a better reason. Luckily, he did and he gave us answers other than, “It’s always been done that way”, which always seems to me a really bad answer. I am not saying I was completely persuaded by his answer, but it is a thoughtful and useful way of thinking about how we approach this. I hope it is not just because the Government would fear a JR if there are words that could be challenged over whether something should or should not have been brought in.
My fear is about the difference between the list and the call-in power. As the list will be mandatory, people will know what they have to do. Where investors, researchers or companies will probably have the biggest fear in respect of the call-in power is that they will not know in advance. I hope that we will come to the possibility of either safe harbours or a quick turnaround—though that does not get over the call-in power—because that seems the area of greatest uncertainty. We will probably have to return to that. In a sense, it is the same issue when it comes to critical national infrastructure. I guess I should leave it to those far more experienced in infrastructure to know whether those comments are helpful.
We heard a thoughtful and challenging response to the amendment from the noble Lord, Lord Lansley. If I understood him correctly, he suggested that we start at the back end: we discuss the assets; we discuss the acquirer; we look at the definition of control—which is the end part of the Bill—and use that to define national security in the front part of the Bill. I am bemused by whether that is the right way round; it may be, but by the time we have defined it, we may have got to it. It seems an odd way round to do things to have a Bill that has “national security” in its title and then to have to work through “Well, if it is that sort of asset owned by that sort of people to that sort of percentage” to decide that it comes into the category of national security. However, I want to read more carefully what the noble Lord said because the elements appear to be there, but it seems slightly upside down. The noble Lord also said:
“We know that Ministers are going to have regard … to that kind of issue.”
If we do, what is the harm in writing them down? He may know that Ministers would have regard to those issues, but will everyone else know what they are?
I have a lot more to think about having heard the wisdom expressed today. It is possible that we will want to come back to this issue on Report—maybe in a more refined way; I am sure that those who have read the Commons debates carefully will have noticed that my words were not all of my own drafting. I thank everyone who has contributed—more sincerely, perhaps, than in other debates. I beg leave to withdraw the amendment.
Lord Leigh of Hurley
Lord Leigh of Hurley (Con)
My Lords, I thank my noble friend the Minister and his officials for his briefing and help. I suppose I should thank him also for his letter of 18 minutes before the start of this debate, but that has been explained adequately, so we look forward to reading that in depth. I also thank others who have been helpful on this amendment and the Bill, particularly friends from the BVCA, the ICAEW and Herbert Smith.
I think we all have a common purpose here; we all know what we want to achieve, and this is not a party-political matter. We all recognise that, last year, there was £170 billion of FDI into the UK. We have been so consistently successful in the UK at FDI that we frequently, if not for a decade or so, come second in the world league tables. We all need to do what we can not to damage our reputation as a country that is easy to invest in, with clarity and the rule of law not subject to the power of lobbying and political whims. I believe that there is unanimity in that respect.
The Bill must strike a balance between national security on the one hand and economic growth on the other. At present, it needs amending by amendments such as mine and those of fellow Peers if it is to strike that balance. Funnily enough, I read Isabel Hardman’s book over the weekend, Why We Get the Wrong Politicians. In it she quotes, anonymously, an MP who says, “You can ram Bills through in the Commons, but it’s much harder in the Lords.” I do not want to let her down.
I declare my interests. I am the senior partner of Cavendish Corporate Finance, which specialises in selling businesses, typically private businesses. Nearly all our clients are SMEs, so I have a lot of experience there. Sixty per cent or so of our buyers of our clients’ businesses are based overseas, the principal country being the United States of America, but they have included pretty much most industrial developed countries of the world, including in Asia. Cavendish is, of course, part of finnCap, the AIM nomad broker. So I have worked hard to encourage overseas investment. I was lucky enough to find myself on the business trip to China with David Cameron a few years ago.
Lord Lansley (Con)
My Lords, we are grateful to my noble friend Lord Leigh of Hurley for his amendment, which is a helpful exploration of this issue. I rather enjoyed the way he introduced it as well, although I must say that the MP who was quoted by Isabel anonymously was clearly not in government in coalition.
I have an amendment of my own in this group; I am grateful to the noble Lord, Lord Bilimoria, for signing Amendment 8 in my name. I shall talk to that amendment and to Amendments 3 and 4, tabled by my noble friend, and leave Amendments 9 and 10 to others, although I think that both add a little to probe the way in which Ministers propose to structure their statement.
Amendment 8 is designed to clarify what constitutes the Secretary of State becoming aware of a trigger event. In the absence of a further definition, a Secretary of State might claim not to be aware in circumstances where any reasonable person would say, “You should have been”. It is a belt-and-braces operation.
What does it mean? I looked to the relevant comparator in the Enterprise Act. The equivalent, in Section 24 of that Act, is whether something has been made public, which is defined as:
“means so publicised as to be generally known or readily ascertainable”.
I simply borrowed that language. Amendment 8 would not say that those are the only circumstances in which the Secretary of State becomes aware, but the Secretary of State should not be able to claim that he was not aware in circumstances that have generally been made public. The purpose of this amendment is to explore what “becoming aware” really means.
Reverting back to Amendments 3 and 4 and the question of “or contemplation”, I think the drafting derives, if it derives from anywhere, from Section 33 of the Enterprise Act 2002 and the question of a merger reference. It is when the Competition and Markets Authority
“believes that it is or may be the case that … arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation”,
so contemplation exists in statute.
The guidance issued by the Competition and Markets Authority on this, published most recently in December 2020, said that “at phase 1”, which colleagues will recall is the earliest investigatory phase,
“the CMA will generally consider that ‘arrangements are in progress or in contemplation’ for the purposes of section 33 of the Act if a public announcement has been made by the merger parties concerned.”
When my noble friend defines “contemplation”, he does so accurately, but that is not how the Competition and Markets Authority has interpreted “contemplation”. It means somebody firmly considering such a thing, which Ministers may well be thinking of in this context, but it is important to make that clear in the guidance.
The Competition and Markets Authority and the Enterprise Act do this for mergers, which are defined acquisitions. Here, we are talking of a much wider scope of acquiring activity in relation to intellectual property, technology, assets, land and minority stakes. A merger control has bitten on 15% or thereabouts, in certain circumstances, but it is a much wider breadth of activity. If contemplation of such acquisitions is to be included, Ministers at the very least have to define it in the guidance in a way that corresponds to the way in which “contemplation” has been interpreted by the CMA for mergers.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, this group contains a range of amendments aimed at improving certainty which I broadly support. In particular I favour the removal of the expression “contemplation” because it is a broad expression that in my understanding, if it is not reinterpreted through guidelines, could range from not even a twinkle in the eye to serious preparations.
When I looked at this, it seemed that the first expression of “arrangements are in progress”, followed later on in the clause by
“which, if carried into effect”,
is already quite broad because it poses the notion that the “arrangements” do not have to be substantial enough to have an effect yet, only if carried through. That seems to cover quite a preliminary range of stages. Even if the Minister does not accept that proposition of deletion, is there case law that can point to what “contemplation” means? The noble Lord, Lord Lansley, has provided some useful indicators. I thought about “in contemplation of matrimony to a given individual”, which is accepted in wills as a means to overcome a negation of a will through marriage, but that will itself is a legal document defining intent. That would not necessarily be the case for just a random contemplation.
From my various adventures as a patent attorney I know better the interpretations of “serious preparations” or “effective and serious preparations”. They are used in patent and trademark law, which has received attention and clarification—or rather verification—in courts. If we have to use something, I prefer to use something akin to those terms, although this shows that it is quite difficult to define when a line is crossed.
As has already been raised, the intention of “contemplation” or anything else could be clarified by guidelines, but if that route is needed, is it not just simpler to delete “contemplation” and explain in guidelines what “arrangements are in progress” is intended to cover? To me, that sounded exactly like what the CMA had done: it had taken “arrangements are in progress” or “contemplation” as one and the same thing and then defined that, which implies something much further down the track than simple contemplation. I am therefore on the side of those who think that the wording just looks too vague, and if it has precedent elsewhere, it needs to be clarified that it does not mean anything more substantial. The CMA has pointed the way to showing that the word is not very much use.
I also support Amendment 8 relating to publication, which aims to give some certainty about when the Secretary of State can be regarded beyond doubt as having been aware of a trigger event. As the noble Lord, Lord Lansley, explained, that reflects the wording of the Enterprise Act and it would help to reduce unnecessary notifications.
The Deputy Chairman of Committees (Lord Caine) (Con)
Lord Vaizey of Didcot. No? We will come back to him. I call the noble Lord, Lord Clement-Jones.
Lord Clement-Jones (LD)
My Lords, it is a pleasure to follow some of the early speeches in this group today. Noble Lords have already started to unpick some key elements in the Bill and have shown how much further explanation and guidance is needed. I will come on to Amendments 3, 4 and 8 in a minute, but, given the absence of the noble Lord, Lord Vaizey, I will speak first to Amendment 9.
As it stands, given the Bill’s very broad definitions of “trigger events”, “qualifying entities and assets” and “control” of entities and assets, businesses are not clear as to those transactions which require notification and those that do not. Although the Bill is retrospective, the Secretary of State will publish a Statement only after it comes into effect, so there will be little clarity for some time. Probably the word that will be most overworked during the passage of the Bill will be “certainty”, but that is exactly what we are all looking for as we proceed. The first person who used that phrase was my noble friend Lady Bowles, but I entirely agree that we must strive for that. If we are not careful, we will have significant overnotification of irrelevant transactions by businesses in order to avoid the risk of penalties for non-notification or subsequent call-in. As a former practising lawyer, I think I can testify to that.
Baroness Noakes (Con)
My Lords, there are very wide powers in the Bill, and the amendments in this group are sensible and proportionate and go some way to reining in the extent of those powers. Other noble Lords have spoken extensively about Amendments 3 and 4, which I fully support. When I first focused on that language, I simply could not believe that the Government would have drafted the basis of calling in being the Secretary of State thinking that somebody else is thinking about something. My noble friend Lord Leigh of Hurley has set out the very dangerous consequences that could have for prospective transactions.
I am grateful to my noble friend Lord Lansley for explaining the link under the Enterprise Act to how the CMA operates. My view is that we should not simply rely on guidance to make an unsatisfactory formulation in legislation work better. I do not believe that “in … contemplation” is the right place to start, and guidance which will go some way to reversing what the ordinary understanding of “in … contemplation” means is not a satisfactory way forward.
I also agree with my noble friend Lord Lansley’s Amendment 8, given that the Bill, as has been pointed out, gives the Secretary of State time limits that start to run from when he becomes aware of transactions. It is just not reasonable for him ever to claim that he has no knowledge of something that is clearly in the public domain. I fully support that.
I also support Amendment 9, which the noble Lord, Lord Clement-Jones, spoke to a moment ago, because the Government need to consider the negative impact that the Bill is likely to give rise to. It is going to be very difficult to avoid the Bill having negative impacts on legitimate economic activity. It is absolutely right that the Secretary of State should actively consider that fact when he draws up his Clause 3 statement.
Like the noble Lord, Lord Clement-Jones, I believe that the volume of precautionary but unnecessary voluntary notifications is likely to be very significant, and it makes sense for the Secretary of State to ensure that his Clause 3 statement gives as many steers as possible to allow transactions to go ahead without having the Bill hanging over them. If the Secretary of State does not get this right it will result in the security and investment unit being overwhelmed by transactions, and that will do nobody any good at all.
The amendments in this group are soundly based and I look forward to hearing my noble friend the Minister’s response.
The Deputy Chairman of Committees (Lord Caine) (Con)
I will try the noble Lord, Lord Vaizey again. Lord Vaizey of Didcot?
Lord Vaizey of Didcot (Con) [V]
Yes, I am definitely here. I am sorry that I did not realise that I had to unmute myself, but I will not detain the Committee with my farcical debut in tabling amendments to a Bill. I will simply say how pleased I am to be in this group of amendments with the noble Lord, Lord Leigh, and how much I enjoyed his introduction to his amendment seeking to delete the word “contemplation”, which I have been delighted to support.
As my noble friend made clear, we are all here to serve a common purpose, which is to tease out of the Minister his thinking on the wording of the Bill. The Minister may well come back with a slam-dunk justification for “contemplation”. One of the advantages of the delayed entry of my contribution is the arguments put forward by other Members of the Committee about that amendment. It seems that it boils down to whether the Minister thinks that “contemplation” has a religious, business or technical meaning. If it has a technical meaning, it seems perhaps important that that is teased out in these proceedings to help people in the future.
As far as my own technical amendment is concerned—and I was delighted as well that my technical ineptitude meant that it was much more ably introduced by the noble Lord, Lord Clement-Jones—it seeks to echo some of the points that I made at Second Reading. Most of us who have taken an interest in the Bill and have discussed it with numerous trade bodies and City lawyers are aware that the Government’s estimate of the number of notifications under the Bill as drafted is somewhat low. We can expect thousands of precautionary voluntary notifications to come about, at least in the first instance.
More importantly—and what the amendment in my name and that of the noble Lord, Lord Clement-Jones, seeks to deal with—is that the Bill will start to have a potentially deleterious effect on foreign direct investment. As the noble Lord, Lord Leigh, pointed out, we are second in the world in terms of foreign direct investment. We often proudly say that we have more of it than Germany and France combined, at least as far as Europe is concerned. Over time, more and more companies looking at potential investments and acquisitions may well start to shy away from the UK if they feel that they have to undergo certain additional hurdles.
No one of course is saying that we should not have a national security framework to protect our vital industries. But just as the Secretary of State under this clause is required in a very good way to give guidance on how he or she is exercising the call-in powers, it is important that a very real contemplation of the potential deterrent effect that the new regime may bring about is front of mind alongside the sectors and technical thinking lying behind acquisitions that might be called in. If this amendment were accepted down the line, it would ensure that future Secretaries of State kept this front of mind.
Lord Fox (LD)
My Lords, I am second to no one in my admiration for the noble Lord, Lord Callanan, but I am quite glad that we have the other Minister in the hot seat for this one, the noble Lord, Lord Grimstone. I suspect that in his previous lives he has seen more of the rough and tumble than possibly the noble Lord, Lord Leigh, and the rest of us put together, so will appreciate the nature of the debate introduced by the noble Lord.
For my part, I have usually been on the home team, the one paying advisers such as the noble Lord, Lord Leigh, huge sums of money to do deals or sell businesses. He hinted at the mischief that could be made around this, and I am sure that the Minister will understand the nature of that mischief: it is pretty ruthless and pretty hard. This gives another tool to those who would wish to cause that mischief, and it is not in the interests of the Government or the wheels of commerce for that mischief to occur.
The noble Baroness, Lady Noakes, made a really important point. It is also in the interests of the Government to sift what comes across the Government’s desk; it does not behove the department to have tens of thousands of deals flowing across its desk. The Bill is designed to pick out the big problems and issues; it is not designed to deal with sacks of chaff that will come over as well as the wheat. It is important that the objectives of these amendments are taken on board by the Government. I am sure that there are many ways of doing that, and we look forward to the Minister contemplating how “contemplation” will be defined. What is the threshold? Is it the one suggested by the noble Lords, Lord Lansley and Lord Bilimoria—is it publishing? And even then, is it in the sense that the takeover panel would require a board to respond, or is it responding to a rumour? Then we are back into mischief territory again. Some sense of that, and of how the CMA has been able to negotiate this, would be helpful.
My noble friend Lord Clement-Jones, in his amendment with the noble Lord, Lord Vaizey, is right that we need some sense of guidance and help as to how this is going to work. I go back to the point that I made at the beginning. How will this thing operate? How will the unit work? The nature of some sort of pre-emptive process seems to take on board more than a unit could normally handle. The advice that the Government have been given by your Lordships is good advice, and I look forward to the Minister’s response.
Lord Grantchester (Lab)
I welcome the Minister responding to this group to his second Bill, this one under the auspices of the business department. I am sure that he will find it an enjoyable experience. In addition to Amendment 9 in the names of the noble Lords, Lord Vaizey and Lord Clement-Jones, I propose probing Amendment 10 to Clause 3(3), on further considerations. Amendment 9 seeks to ensure that the Government provide guidance to minimise the potential volume of voluntary notifications and any chilling effect that the Bill may have on legitimate business activity. Businesses need to be clear when transactions require notification and when it is not needed. There may soon be a time when the department could find this very useful as well.
In assessing the potential to generate unnecessary notifications, the CBI has estimated that the Government could receive up to 10,000 notifications a year. Does the Minister recognise this amount as an outcome? How have the Government calculated possible outcomes in relation to the numbers that have arisen in other countries’ experience in similar regime circumstances? I would go along with the precautionary interpretation by the noble Lord, Lord Clement-Jones. This will have resonance with later amendments probing the resourcing of the new investment security unit and turnaround timings for notifications.
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, I extend my thanks to noble Lords for their invaluable contributions to this debate, which will allow me to clarify some important aspects of the Bill. It is a particular pleasure to be debating these matters with the experienced practitioners around the table, who have direct knowledge of these topics.
I speak first to Amendments 3 and 4, relating to when the Secretary of State can call in a trigger event, as tabled by my noble friend Lord Leigh of Hurley. These amendments would limit the use of the call-in power in respect of trigger events that have not yet occurred to those that are in progress. As drafted, as noble Lords have focused on, the Bill provides that call-in notices may be issued in relation to trigger events that are in progress or contemplation, as well as those that have already taken place. This ensures that potential national security risks can be examined at any stage of the process.
The National Security and Investment Bill draws on precedent in this approach. Under the Enterprise Act 2002, the Competition and Markets Authority and the Secretary of State may investigate mergers that are in progress or contemplation. To reassure my noble friends Lord Lansley, Lord Vaizey and Lady Noakes, this is a tried and tested phrase, and I will come back to that in a moment to elucidate further. Using this precedent ensures the NSI Bill is in good company. It would seem strange to limit the scope of intervention on national security if, through the Enterprise Act, an intervention is allowed on other public interest grounds where a merger is in progress or contemplation.
I said I would give some further details of this. The term “in contemplation” is not new. As I have already said, it features in the Enterprise Act 2002 and, importantly, the detailed guidance that has been issued by the Competition and Markets Authority. Let me give some examples of what this phrase means. First, a party may choose to notify the Secretary of State that they are contemplating a trigger event to get the certainty of the Secretary of State’s judgment. Secondly, a party may notify the Secretary of State that another party is contemplating a trigger event, such as if they have received, or become aware of, an offer to buy their business. We expect that in most cases, call-in notices will be issued following a notification, so these are likely not to be uncommon scenarios. Thirdly, a public announcement of a deal may have been made by one or more parties but not yet implemented. As noble Lords will be aware, there are certain publicity requirements for public takeovers, but this could also happen in relation to a private acquisition. Fourthly, a public announcement of a possible offer or a firm intention to make an offer may have been made, which would itself show that an offer was in contemplation.
Any decision by the Secretary of State to call in a trigger, even in contemplation, would, as with other uses of powers in this Bill, be subject to judicial oversight through judicial review. If the Secretary of State had merely found he had been able to read someone’s mind to know they were in contemplation of a transaction, that would be unlikely to satisfy the requirements of a judicial review. I hope I have provided sufficient explanation of the Government’s approach. It is a tried and tested phrase, which I would say is well known in the market. I hope my noble friend, therefore, feels able to withdraw his amendment.
I welcome Amendment 8 from my noble friend Lord Lansley, which seeks to partially define what is meant by the Secretary of State “becoming aware” of the publicised trigger event by replicating provisions in Section 24 of the Enterprise Act 2002. In relation to trigger events that have already taken place, the Secretary of State would only be able to give a call-in notice within six months of becoming aware of the trigger event. The Bill does not currently define what “becoming aware” means.
The Secretary of State will have a strong incentive to call in trigger events that might give rise to national security risks quickly after becoming aware of them, as he will want to address any risks that they present. Similarly, many parties will have a clear incentive to ensure that the Secretary of State is aware of their anticipated or completed trigger events so that they can achieve deal certainty. That is why we encourage parties to notify trigger events to the Secretary of State, rather than to wait for the trigger events to be detected and called in.
In general, we expect the Secretary of State’s market monitoring team to detect trigger events of interest. However, in a limited number of cases, providing for imputed awareness on the part of the Secretary of State where a trigger event has been publicised so it is generally known or readily ascertainable, may open up protracted arguments about whether the trigger event in question was adequately publicised.
I do not disagree that providing for imputed awareness on the part of the Competition and Markets Authority, as the Enterprise Act 2002 does in the context of merger control, is appropriate. But the NSI regime—this is an important point—will deal with a wider range and larger number of acquisitions, with no de minimis thresholds and a strong likelihood that many will not be comprehensively or accurately reported. This presents much greater scope for ambiguity, and for deals, particularly private transactions, to be publicised in ways that may still cause the Secretary of State to be unaware of the precise trigger event in question. This amendment therefore risks opening up the Secretary of State to greater challenge, while still allowing for substantial uncertainty for businesses and investors.
I will now speak to Amendment 9, tabled by the noble Lords, Lord Vaizey of Didcot and Lord Clement-Jones, and Amendment 10 from the noble Lord, Lord Grantchester, as both relate to the content of the statement under Clause 3. These amendments seek either to add to the non-exhaustive list of the aspects that the statement may include or otherwise to regulate what can be included in the statement.
I turn first to Amendment 10, in the name of the noble Lord, Lord Grantchester. I will put to one side his valid points about sector definitions, as we will return to that topic in a future group. This amendment seeks to require the Secretary of State to have regard to the domestic and future capacity of sectors to promote research and development, and innovation, and to protect national security when preparing the statement.
Supporting the UK’s innovative industries, and research and development, are priorities for the Government. However, the purpose of the Bill is to set up an investment screening regime that is concerned solely with the protection of national security. Therefore, the Secretary of State is able to consider innovation, research and development, and future capacity—very important topics though they are—only in so far as they are relevant to national security risk, when he carries out his functions under the Bill.
Amendment 9 seeks to add to the list of the aspects that the statement may include. Of course, the Government want to promote legitimate economic activity and to minimise unnecessary voluntary notifications. The purpose of this statement is to set out how the Secretary of State expects to use the call-in power. I am afraid that these amendments are not suitable for the statement. The statement looks forwards to future use of the call-in power, not to highlight actions already taken. It sets out how the Secretary of State expects to use the call-in power, and it is not intended to serve as an indicator of wider government action in relation to the regime. It is crucial that the acquirers can look at the statement and that it assists them in coming to a judgment about whether to voluntarily notify. With these points, I hope that noble Lords feel able not to press their amendments.
The Deputy Chairman of Committees (Lord Caine) (Con)
My Lords, I have received one request to speak after the Minister from the noble Lord, Lord Clement-Jones.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for that careful analysis, but I must admit that I am not wholly reassured as a result. I feel as though we have gone in a spiral of logic and I think we ended up where we began, in a cloud of uncertainty. In particular, I thought the Minister’s arguments on Amendment 9, that the statement was forward-looking not backward-looking, were very circular. It all depends on how the statement is constructed. It can be made both forward-looking and backward-looking simply in the way the Bill is amended. So the argument there was extremely circular.
I will read Hansard extremely carefully, but to me the question about the Secretary of State being unaware means that the Government have decided that the net is going to be extremely wide. We have assurances on the sifting process, but in the end everything falls in until it is thrown out. That, I think, is what worries quite a lot of us. The contemplation point may have some precedent, but the noble Lord, Lord Lansley, made the point that these transactions are not just mergers but intellectual property licences, know-how transfer, asset sales and a whole range of things. Is the merger regime fit for purpose for this broad range of transactions?
That is all I want to say at this stage. I thought the Minister valiantly tried to justify the current wording of the Bill, but I do not think he succeeded.
Lord Grimstone of Boscobel (Con)
The noble Lord, Lord Clement-Jones, and I have had the pleasure of debating these matters at a meeting prior to this Committee, and I must confess that I was probably the author of the fishing analogy, which I may live to regret. The point is that when you are dealing with matters of national security, and these matters are so important, it is perfectly appropriate to use a large net to put the fish in, but then it becomes very important that the way your screening unit works removes fish from that net as expeditiously and efficiently as possible.
Lord Leigh of Hurley (Con)
My Lords, I thank the Minister for his response. As the noble Lord, Lord Fox, pointed out, he almost certainly has much greater experience than all of us in this Room combined in advising on transactions. For the avoidance of doubt, sadly the noble Lord, Lord Fox, has not paid me any fees in any matter, as far as I am aware, but I travel in hope. I have to disappoint my noble friend Lord Vaizey, because it does not look like the Minister will accept his very first amendment in whole. On the other hand, I do not think he has provided a slam-dunk answer, as he hoped, to reject Amendments 3 and 4 in particular.
We are very lucky to have the benefit of my noble friend Lord Lansley’s experience and wisdom from the Enterprise Act 2002, and I accept that that is where it came from. However, I do not quite see why there should be a cut-and-paste approach. The CMA will be dealing with a relatively small number of mergers of largely public companies. This will be dealing with all sorts, from minority investments of a few thousand pounds in 15% stakes to IP and—forgive me—a completely different kettle of fish. Therefore, the last thing one wants to do is to have to rely on a traditional review to see this sorted out. That would be hugely expensive and singularly inappropriate for most of the transactions envisaged, which will be of a much larger volume than the CMA and the legislation were structured to deal with. I very much hope that the Minister will have a chance to reflect on this and that he will be persuaded in particular by the point made by the noble Baroness, Lady Bowles—arrangements in progress must be strong enough. I beg leave to withdraw.
Lord Vaizey of Didcot
Member’s explanatory statement
This amendment, with others in the name of Lord Vaizey that substitute “voidable” for “void”, is intended to ensure that transactions are not automatically void. Instead, the Government would have power to declare a transaction (or parts of it) void if it gave rise to national security concerns.
Lord Vaizey of Didcot (Con) [V]
Second time lucky. I am not aware that an amendment like this was tabled in the other place when the Bill was being considered. However, Amendment 5 and the subsequent amendments are fairly clear, in that they substitute the word “voidable” for “void”. The amendments are designed to ensure that transactions are not automatically voided if a company fails to comply with mandatory notification procedures. I hope to set out in my opening remarks why that should be the case.
As far as I am aware, the Government have tried to make it clear that they could retrospectively accept a notification, and therefore in effect ensure that a transaction was not voided, so this amendment seeks to realise what I think is the Government’s ambition. Amending the sanctions in this way would therefore be consistent with their position and would show that the power to unwind a transaction to make it void would be a last resort used only in the most exceptional of cases. I accept, of course, that it is important to have significant sanctions in place where a transaction subject to the mandatory notification obligation is completed without first obtaining approval from the Secretary of State, but such sanctions need to be workable in practice—they need to be credible. Treating such an error as to make a transaction automatically void—as currently envisaged in Clause 13—would in reality give rise to a host of practical difficulties that would make it unworkable in practice.
I also venture to suggest that the approach is inconsistent with other established regimes in other jurisdictions, such as Australia, the US and Canada, where a problematic transaction is not automatically void but the authorities are able to step in and issue unwinding orders for parts or all of a specific transaction. It would be far preferable to provide for a similar “voidable” power, giving the Government the power to declare such a transaction—or parts of it—void if it gave rise to national security concerns but not automatically making that the case. This would mean that the Government could consider the circumstances of each transaction and provide workable steps to take to unwind the transaction where that is considered necessary because of national security concerns.
Declaring a transaction void is effectively to treat it as if it never happened. However, the acquisition which has given rise to the exercise of the voiding may be part of a much wider transaction. For example, as part of the acquisition, the acquirer will have paid consideration to the sellers as well. Following the acquisition, the acquirer may have invested in the business, and third parties may have contracted in good faith with the acquirer in relation to the business. Declaring a transaction automatically void due to breach of the standstill obligation could result in a situation where several parties—many of whom may have had no culpability at all for the failure to notify—are left in limbo and may also suffer financial losses as a result. I submit again that the proposed approach seems unworkable in practice, which is implied in the Government’s own approach but not in the Bill.
Will the Minister also consider a situation where the parties to a transaction have selected a law other than English law as the governing law of the agreement? Is it possible that a foreign court would continue to treat a non-notified transaction as valid? Would that not lead to extraordinary uncertainty? While these provisions will have full force and effect in relation to acquisitions governed by English law, I do not see how they can apply if the transaction is governed by US or other law. I beg to move.
Lord Hodgson of Astley Abbotts (Con)
My Lords, this is the first time that I have spoken in this Committee, so I draw attention to my entry in the register of your Lordships’ House. I wish to speak to Amendments 41 and 44 in this group, which I have tabled with the support of the noble Lord, Lord Clement-Jones, for which I am extremely grateful. I am also grateful to the Law Society for its assistance.
The two amendments build on remarks made by my noble friend Lord Vaizey in moving Amendment 5. Amendments 41 and 44 are to Clause 13, which is entitled “Approval of notifiable acquisition”. I am afraid I have to argue that that title is, at best, ingenuous because, under the wording of the clause as presently drafted, there is no requirement for the Secretary of State to register his disapproval; instead, his silence is all that is needed. I argue that, from the point of view of providing certainty for investors, bankers and—last, but by no means least—companies, their management and employees, this is not good enough. Furthermore, this silence inhibits a proper degree of parliamentary scrutiny, making it more likely that cases can be slipped through under the radar. It will also prevent Parliament having the opportunity of examining how practice may be shifting as regards preserving the delicate balance that this Bill seeks to create and maintain between protecting national security and providing maximum safety for investors’ property rights.
We need the spotlight to be shone on those tricky areas so that decisions taken by the Secretary of State have to be justified openly and publicly. That is what Amendments 41 and 44 seek to achieve. Famously, TS Eliot wrote:
“This is the way the world ends
Not with a bang but a whimper.”
In this difficult policy area, a whimper is insufficient. I see no reason why in an open society the Secretary of State should not be under the maximum pressure to provide a clear, concise and public declaration of his decision and the reasons for it. Our society, together with our business and investment community, are entitled to no less, so I very much hope that the Government will be able to accept these two amendments.
Lord Clement-Jones (LD)
My Lords, it is very difficult to follow the noble Lords, Lord Vaizey and Lord Hodgson, especially after the quotation from the noble Lord, Lord Hodgson, of which I think we must be very mindful. I support both in their very similar endeavours, particularly the noble Lord, Lord Hodgson, in his Amendments 41 and 44, which I have signed.
The case has been very clearly made that automatic voidness creates excessive legal uncertainty for investors and lenders. The proposed wording would mean no automatic voidness but a power of the Secretary of State to impose it. A voidable power would give the Government power to declare a transaction or part of it void if it gave rise to national security concerns and ensure that workable steps can be taken to unwind the transaction to the extent considered necessary. While it is clearly important to apply significant sanctions when a transaction subject to the mandatory notification obligation is completed without first obtaining approval from the Secretary of State, such sanctions must also be workable in practice. Treating such a transaction as automatically void, as envisaged in Clause 13, will give rise to a host of practical difficulties and is simply not workable in practice.
Baroness Noakes (Con)
My Lords, the voiding of a commercial transaction that has already taken place is a massive penalty for those who have entered into the transaction. Parliament should be very wary of legislating in this way if it is not absolutely necessary. I believe that, as drafted, the Bill goes beyond what is necessary.
A transaction may not have been notified where the parties to it did not believe that they were covered by the legislation, perhaps relying on a misinterpretation of the statement that will come out under Clause 3 or perhaps a misunderstanding of advice received from the investment security unit about the transaction. These could occur in situations of good faith, yet the Act is capable of inflicting the penalty of voiding the transaction even in such an instance.
I do not doubt that voiding a transaction may well be the right result if the transaction really does engage national security, but even then it is not necessarily the case that every transaction should be voided. We have to understand that Clause 13 is one of the parts of the Bill that will drive unnecessary voluntary notification, which I know that the Government will wish to avoid. The amendments in this group are helpful and proportionate and I hope that the Government can accept one of the formulations.
Lord Leigh of Hurley (Con)
My Lords, we have heard from a chartered accountant, a banker and a lawyer all in unanimity; it is very worrying. As I understand it, this approach is consistent with some regimes in certain countries. The idea of having a transaction fully voided would lead to many innocent third parties being in limbo. Would it not be better that a transaction or certain parts of it were voidable, as some parts of the transaction may not be in any way relevant to national security. That gives HM Government more flexibility. By being voidable, it allows for negotiation, discussion and parts perhaps to be voided and not the whole thing.
Once again, insisting that the transaction could be voided in legislation will simply deter overseas investors and buyers because it is a huge amount of uncertainty to have such a black and white separation. The amendments still allow for the dictum of the noble Lord, Lord Callanan, in respect of Clause 15 of non-notified acquisitions being able to be retrospectively validated rather than retrospectively invalidated. Giving the Government maximum flexibility seems a wise and good thing to seek.
Lord Fox (LD)
I want to pick up where the noble Lord, Lord Leigh, finished: it seems almost punitively value-destroying to have a mandatory process. There will clearly be times when voiding will be the inevitable consequence, but there are others when a retrospective approval would be best for the country, the value, the shareholders, the employees and all the other third parties connected to that business. To lock the Government into auto-voiding seems unnecessary. It may be designed to put people off from not reporting in future but, by their nature, those who do not report probably are not aware of these sanctions, so it is unlikely to have that deterrent effect.
On Amendments 41 and 44, the “Waste Land” amendments, certainty comes up again, as predicted. All they do is ask for a clear signal rather than something simply not happening being the signal. The noble Lord, Lord Hodgson, raised external messaging, but such clarity would also help build a body of case law which would help future practitioners understand what they should and should not do. Having that case law and those examples clearly delineated by a full stop rather than the whimper that is currently enshrined in law would be a much better way of exposing such cases for the textbook.
Lord Grantchester (Lab)
I thank the noble Lord, Lord Vaizey, for these probing amendments relating to the penalty of deeming mergers and acquisitions void in the event of proper notifications and subsequent assessments by the Secretary of State not having taken place. The Minister will need to explain how this will work. Most of the amendments in this group focus on Clause 13, “Approval of notifiable acquisition”, in Chapter 3. Subsection (3) states that:
“A notifiable acquisition, in relation to which a final order has been made, that is completed otherwise than in accordance with the final order, is void.”
I appreciate the view of the noble Lord, Lord Vaizey, that there could be alternative outcomes to certain elements or aspects of any deal. Has the Minister considered whether the Secretary of State could publish guidance on how the mechanisms of deeming non-compliant transactions void would work in practice? Clarity for SMEs would be most helpful.
The ability for transactions to be deemed void where they have not been approved by the Secretary of State, have not been notified or are non-compliant with any final order could have large repercussions. Clause 15, “Requirement to consider retrospective validation without application”, and Clause 16, “Application for retrospective validation of notifiable acquisition”, raise the issue of retrospection in relation to the legally void provision. Could transactions that took place in the past, even up to five years previously, be immediately deemed void? If the first transaction in a chain were deemed void, that would leave the legal rights and entitlements of all subsequent transactions’ parties in total confusion. There could be conditions in a transaction that came to fruition or were exercisable over a length of time, with these events deemed the trigger events rather than the merger itself. Those elements would have had impact at the inception of any M&A activity. An impossible series of rights, entitlements and developments would have to be unwound, which would cause great legal uncertainty.
The noble Lord, Lord Vaizey, also raised the issue of other jurisdictions or cross-jurisdictions. Have these circumstances, among the many others, been considered in the provision of this power? What are the legal implications for the process where the possible imposition of a transaction to be void is under consideration? Have the Government made plans to publish guidance in this area, even though they may consider that circumstantial evidence may make such guidance highly speculative? Many speakers have found the provision impractical and unworkable.
Lord Callanan (Con)
My Lords, first, I apologise for my noble friend Lord Grimstone, who has had to attend a debate on Kenya in the Chamber. I am afraid you are stuck with me for this one, which is obviously disappointing for the noble Lord, Lord Fox. I thank all noble Lords who have contributed.
We understand the aim of this group of amendments, which is to convert the automatic voiding provisions in Clause 13 into powers to void. Further amendments in this group then seek consistency with associated provisions in the Bill. I thank the noble Lords, Lord Vaizey and Lord Hodgson, for bringing together this grouping. I will first address the purpose of the automatic voiding provisions, before turning to the amendments in detail.
Notifiable acquisitions are those that occur within the most sensitive areas of the economy—sensitive enough that the Secretary of State judges that he must be notified and must clear an acquisition to proceed before it can complete. As such, it is essential that there are clear incentives for compliance with the regime and that any national security risks arising from these sensitive acquisitions being completed without approval are mitigated, as far as possible. Noble Lords present will understand that any Government’s first preference in legislating to create requirements on persons, particularly where the matters relate to serious issues such as national security, is that compliance with such requirements is incentivised and that we do not merely rest on the threat of weighty enforcement.
The automatic voiding provisions in Clause 13(1) mean that there is no way around these requirements and that parties who wish to evade the requirements are unable to complete acquisitions which must be approved by the Secretary of State and have not been. This ensures that the regime mitigates a wealth of national security risks, without the Secretary of State ever being engaged. It is efficient and effective government, and a key tool in protecting our national security.
However, voiding is not a sanction; it is instead the logical implication of not complying with a mandatory regime that concerns only the most sensitive acquisitions. Clause 13(3) ensures that any notifiable acquisition in respect of which a final order has been made, which has been completed otherwise than in accordance with the final order, is also void.
I understand that the voiding provisions have raised some concerns, as outlined by my noble friend Lord Vaizey, that the unaware may be unduly or adversely affected, which would otherwise lead to significant costs for parties who are affected by voiding. I hope that I can offer them the following reassurance. First, those who have been materially affected by the voiding of an acquisition, including sellers and third parties, not just acquirers, may apply for retrospective validation of the acquisition using Clause 16. If a valid and complete application is received, the Secretary of State will have up to 30 working days to decide whether to issue a call-in notice. If he does not issue a call-in notice, for example if there are no national security risks involved, he must validate the acquisition retrospectively. The impact of retrospective validation is that the notifiable acquisition is to be treated as having been approved by the Secretary of State and is, accordingly, not void. Anyone materially affected by the voiding, including those unaware of the requirements, is therefore able to secure retrospective validation, such that the acquisition was always valid in law.
Secondly, there are concerns around what happens if a significant purchase of shares in a publicly listed company is caught by the provision. Usually, for significant purchases, parties are advised by a law firm of high repute. I can also assure the Committee that, where the acquisition involves a takeover, BEIS works closely with the Takeover Panel to ensure the there are no issues in the interaction with the takeover code.
Thirdly, there are murmurings that the voiding provisions might create uncertainty. I do not think that Clause 13 could be clearer and more succinct about the effects of not obtaining the approval of the Secretary of State before completing a notifiable acquisition.
Let me now respond to the heart of the proposition of the amendments in this grouping—that voiding should be exercisable as a power by the Secretary of State, rather than being automatic. I am afraid this raises a number of issues. It is, first, unclear why and when the power to void would be exercised. The Secretary of State is already able to order the unwinding or divesting of acquisitions, following assessment as part of the final order. Why would he need to void the acquisition if it can simply be unwound or divested? Would it be intended that the Secretary of State would decide whether to void the acquisition prior to the assessment? If so, on what basis would he make that decision?
The Deputy Chairman of Committees (Lord Caine) (Con)
I have received one request to speak after the Minister, from the noble Lord, Lord Leigh of Hurley.
Lord Leigh of Hurley (Con)
Does my noble friend the Minister recognise that some countries allow voiding? He pointed out some that do not, but some do. Does he agree that if a transaction is voidable, it could still be declared void?
Lord Leigh of Hurley (Con)
If the legislation says a transaction is voidable, it could still be declared void.
Lord Callanan (Con)
Yes, but we are arguing it should be declared void by automatic obligation of statute, rather than it being a power the Secretary of State could exercise. I have just explained that.
Lord Vaizey of Didcot (Con) [V]
Although I mentioned it at Second Reading, I refer noble Lords to my entry in the register of interests. Also, as noble Lords have done throughout Committee, I thank all the trade bodies that have been so helpful in advising noble Lords on some of our amendments and, particularly, for me, Veronica Roberts at Herbert Smith Freehills. Just for the record, may I also say how delighted I am that it is the noble Lord, Lord Callanan, responding on my amendment rather than the noble Lord, Lord Grimstone? I had a touch of the noble Lord, Lord Grimstone, on my previous amendment, and now, to have the noble Lord, Lord Callanan, frankly, my cup runneth over.
I thank all noble Lords who have supported my amendment. Without wishing to pick any winners, I thought that the noble Baroness, Lady Noakes, put it most succinctly when she spoke of the automatic voiding penalty. She channelled her inner football commentator by saying the automatic voiding was a “massive penalty”. I think that is right. I also point to the noble Lord, Lord Leigh, who has been very good at introducing me to the mysteries of Lords amendments and has marshalled me extremely well. These amendments pose an unanswerable question to the Minister, because if they are accepted and a transaction can be made voidable, it can, by definition, be voided. It is just not automatic. It ensures voiding can apply where the Government think that is the only solution with a transaction that has not been notified.
In the real world, it is unlikely that a mandatory notification would not be made. The tenor of most of the speeches that have been made during the passage of this Bill is that the Government should expect far more notifications than they have estimated so far. The Minister is quite right to say that anyone transacting in the midst of a mandatory area is likely to have some high-powered lawyers advising them.
What I would say in response to the Minister’s excellent response to this debate is that there are certain points that I feel have not been addressed. One is obviously going back to the massive penalty phrase. If you void a transaction where it is part of a wider transaction, how do you go about unwinding it? Would there not be other, more suitable punishments than simply voiding the entire transaction? Indeed, as the Minister indicated, there will be plenty of people—shareholders, for example—who will be unduly punished by the automatic voiding provisions. Surely there must be alternative punishments.
However, by definition, given that you can effectively retrospectively apply to the Government if you have failed to comply with the mandatory notification requirements, you are, as my noble friend Lord Leigh pointed out, effectively making your transaction voidable. You are giving the Government the chance not to void the transaction, yet by introducing an automatic voiding penalty, the Government have precluded themselves from punishing the parties who failed to comply with their requirement for mandatory notification. Giving themselves flexibility by allowing themselves potentially to void a transaction also gives them the flexibility to impose other punishments.
There are other dogs that have not barked in this debate. In other amendments that we have been debating, previous legislation has been cited as an example that has guided the Bill—but there is no similar sanction, as far as I am aware, in any other business-facing legislation in this country. I hope the Minister will not mind me teasing him a bit at the end because I suspect I know—I think I am right in saying—where his sympathies lie in terms of the great debate of the past decade between Brexit and remain. Is there not an irony in him citing the great example of the French and the Germans but ignoring the far more practical Anglo-Saxon common-law tradition evidenced in the US, Canada and Australia? I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Caine) (Con)
Before moving on, notwithstanding the successful last-second intervention by the noble Lord, Lord Leigh, I remind noble Lords that if they wish to speak after the Minister they should email the clerk. We now come to Amendment 6.
Amendment 6
“(2A) For the purposes of this Act, the following shall not be taken into account when considering whether a trigger event may give rise to a risk to national security— (a) adverse effects on levels of employment in the United Kingdom, or a part thereof, except that adverse effects on the employment of one or more specific categories of employee may be taken into account,(b) the existence or extent of opportunities for persons resident or established in the United Kingdom to invest in, or make sales in or into, another jurisdiction, or(c) the protection from competition of business activities carried on in the United Kingdom or business activities carried on by persons resident or established in the United Kingdom, except to the extent that such business activities contribute materially to national security, or are likely to do so in the future.”Member’s explanatory statement
This amendment would clarify that certain factors—namely employment effects, reciprocal investment or trading opportunities, and the desire to protect UK business from international competition—cannot be taken into account in assessing whether a trigger event would give rise to a national security risk.
Baroness McIntosh of Pickering (Con)
I am delighted to move Amendment 6 and I thank my noble friend Lord Hodgson of Astley Abbotts and the noble Lord, Lord Clement-Jones, for lending their support to this amendment. I also thank the Law Society of England for its help in drafting the amendment, and I very much look forward to my noble friend Lord Callanan keeping up his good efforts this afternoon in responding to this debate.
We have not so far succeeded in coming up with a definition of how to limit our understanding of a definition of national security, so I shall approach it by a different route, which is to try to understand, define and limit what constitutes a trigger event. In the view of practitioners, as expressed by the Law Society of England, this amendment is needed as it would ensure that “national security” in the Bill will not be conflated with other issues of political or industrial concern which cannot be seen to relate to security but would still be flexible enough to allow for genuine national security threats to be deemed to be trigger events. I suppose this relates to my noble friend’s earlier comment in summing up a previous debate when he said that trigger events or national security relate to the whole economy, not just parts of it.
The purpose of Amendment 6 is to understand what constitutes a trigger event that would be deemed to lead to or constitute a security risk. It is in terms of being critical to investor confidence in the United Kingdom that the new regime is seen to be focused clearly on national security concerns and free of industrial or electoral influences not relating to national security. Therefore, the Bill would benefit from a clause such as this, explicitly stating the factors that should not be taken into account in assessing whether a trigger event would give rise to a national security risk. I set out here that the factors that would be excluded would cover any,
“adverse effects on levels of employment in the United Kingdom”,
or,
“the existence or extent of opportunities for persons resident or established in the United Kingdom to invest in, or make sales in or into, another jurisdiction”,
and the desire to protect UK businesses from international competition.
I accept that the amendment might not be necessary if we had established a definition for national security but, given that we have not achieved that, I am keen to press this as a probing amendment and include a clause such as this in the Bill, thereby making clear that certain factors such as employment effects, reciprocal investment and trade, and protectionist connections would not be deemed to be trigger events. With that brief explanation, I beg to move.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, it is a pleasure to follow the noble Baroness, Lady McIntosh of Pickering, with whom I am often in agreement—although, I am afraid, not in this case.
In my little over a year in your Lordships’ House I have noticed a strong tendency for Members to sign up to speak on amendments that they support and not those that they oppose. However, this has a clear and damaging effect, and slants the debate. Proponents get to put their case and the Government attempt to bat it away, often on merely technical grounds, and only one side of the argument is put. That sets the tone of the debate beyond just that day; it unbalances it. There is also the issue that, on Bills such as this, as a noble Lord said earlier, we often have an accountant followed by a banker followed by a lawyer. That is not a representative sample of society or opinion. It is for that reason that I signed up to speak on the amendment and express my strong opposition. I will be brief but clear.
The earlier groups of amendments on which I spoke, including Amendment 2, sought to define the national security on which the Bill seeks to allow the Government to act. The amendment does the very opposite by seeking to restrict the Government’s hand. The former amendments were “have regard to” amendments. This is a “shall not be taken into account” amendment. It is extremely ideological and seeks to assert the primacy of the market and the interests of business—which, by definition, given the nature of the Bill, is almost certainly big business, giant multinational companies—over what might be regarded as a key concern of the Government regarding employment. That is also, I would strongly argue, a national security issue—certainly a public order issue—with regard to Amendment 2.
The market is a human creation, not some natural process or action such as photosynthesis or the tides. To say that the market should have primacy over the well-being of society is a profoundly ideological argument that would have been very strange for most of the 20th century and reflects a particular neoliberal political position. Again, we are back to talking about investor confidence and the idea that we have to be a competitive nation—the very ideology that led us to the 2007-08 financial crash.
Baroness Noakes (Con)
My Lords, I respect the opinions of the noble Baroness, Lady Bennett of Manor Castle, but she will not be surprised to find that I do not agree with a single word of what she said. I agree with the sentiments behind Amendment 6, but I expect that the Minister will say that the amendment is unnecessary because the items listed in it could never be considered to be national security considerations. If I am correct in that assumption, I hope that he will make a very clear Dispatch Box statement to that effect, with no hedging about or qualification.
Lord Hodgson of Astley Abbotts (Con)
I put my name to this amendment, but somehow along the way I was left off the speakers’ list, so I am glad to have scraped back on again. My noble friend Lady McIntosh made the case for the amendment clearly and decisively, so I will merely sweep up and say that, at Second Reading, there was general agreement that we were seeking a balance between the fact that the country had to be protected from overseas powers gobbling up key companies in key sectors, yet at the same time keeping our economy open for inward investment, particularly in the tech sector, where we have such a worldwide reputation. We all agreed then, and agree this afternoon, that that is the difficult balance that we seek to strike.
Of course, once the Bill passes into law, Parliament’s opportunity to examine and, where necessary, recalibrate that balance will be limited, to say the least. When the noble Baroness, Lady Bennett of Manor Castle, talks about the dangers of the markets, I think she is headed in completely the wrong direction, with due respect. My concern about the Bill is about not markets but mission creep: that we will end up with the Bill doing nothing that was anticipated when it was first drafted.
Like my noble friend Lady Noakes, I have no doubt that the Minister and his officials will say they have a very clear idea of how the provision will be used, and there is no question of mission creep under the Bill. As we all know, Ministers, parties and policies change, and there are serious dangers if we do not accept some form of amendment such as this.
First, there is the issue of employment under paragraph (a). How easy is it to see a future Secretary of State, faced with some politically unhelpful headlines about unemployment following a potential takeover, being tempted to press the national security button to avoid some disobliging comments? Under paragraph (c), we should never underestimate the lobbying powers of big companies. Hell hath no fury like a big company that finds its market invaded by a smaller, nimbler competitor offering a better, cheaper product or service. The smaller competitor, perhaps growing faster than its internally generated funds can support, may need to find outside capital, and some of that outside capital may come from overseas—it is likely to. How convenient for the big company if it can lobby the Secretary of State to block funding for the growth of its successful smaller rival on the grounds of national security.
Those are just two examples where mission creep might occur; there are plenty of others. I hope the Government will understand that the purpose behind this amendment is to make sure that the Bill continues to do what it says on the tin.
Lord Clement-Jones (LD)
My Lords, it was a pleasure to put my name to the amendment in the name of the noble Baroness, Lady McIntosh, because I think that I understand its intentions entirely. It is also a pleasure to follow the noble Baroness, Lady Noakes, and the noble Lord, Lord Hodgson, in their elucidation of what the amendment is about. I think the noble Baroness, Lady Bennett, has entirely misunderstood the essence of this amendment.
Earlier in Committee today we were trying to get some sort of definition of national security, and I think that the noble Lord, Lansley, in his inimitable way, managed to unpick that rather successfully. As far as national security is concerned, it is a mission impossible to try to carry everything in one bundle in a definition. This tries the other way on and, as the noble Lord, Lord Hodgson, said, it is designed to avoid mission creep. It is trying to make sure that the definition of national security is not used as a blanket term to cover damage to the economy and society. It has the huge benefit of simplicity; it tells us what is not in national security rather than what is in it. It clarifies that certain factors such as employment, reciprocal investment or trading opportunities, and protectionism will not be taken into account when assessing national security. If there was mission creep in the way that was described, it would undermine legal certainty and damage investor confidence in the way that we have heard from a number of noble Lords.
The Government have kept assuring us that this is not, in the words of the noble Lord, Lord Callanan, a national interest Bill but a national security Bill. That is exactly what this amendment is trying to ensure—that we do not have that all-encompassing national security definition used by lobbyists or others to try to bring things into the net. I have seen it happen in the United States. The CFIUS is absolutely that kind of spider-like operation that brings in all sorts of spurious transactions. I very much hope that we will keep this provision absolutely focused, and this amendment is a very good way of doing it.
Baroness Hayter of Kentish Town (Lab)
My Lords, we support the approach of this amendment. As we have all made clear, the new regime must focus on protecting national security. The clue is in the title of the Bill. The definition of national security has to take best advice from across the Government about the threats and behaviour of our adversaries.
While I hope the Government will monitor the impact of the Act on technological investment, innovation and SMEs—which I hope a different part of the Government is actively supporting—those interests, along with employment, investment and competition, cannot and should not trump national security, albeit that I hope that the Government would consider mitigating any detrimental domestic impact of placing security first if that were needed.
Clearly, concerns about any political pressure, rather than any disregard for the issues listed, give rise to this amendment. The tone and the purpose of it are ones that we share.
Lord Callanan (Con)
I thank everybody who has spoken in this debate and thank my noble friend Lady McIntosh of Pickering for tabling the amendment. It seeks to clarify that certain factors, namely employment effects, reciprocal investment or trading opportunities and the desire to protect UK businesses from international competition, cannot be taken into account in assessing whether a trigger event would give rise to national security risks. I was surprised to see that the noble Baroness, Lady Bennett, and my noble friend Lady McIntosh are now differing on some things. That is most unusual; it is something to be encouraged for the future.
My noble friend articulates a reasonable concern here: that a regime used to screen investment for national security purposes could be used to screen investments more widely. Indeed, the shadow Secretary of State, in his opening speech at Second Reading in the other place, argued that the Bill should include an industrial strategy test—I was therefore surprised to see the noble Baroness, Lady Hayter, supporting this amendment.
As such, I have some sympathy with the aims of this amendment. I can, however, reassure my noble friend that the Bill is about protecting national security, nothing more and nothing less. The Bill does not set out the circumstances in which national security is, or may be, considered at risk. As I said on previous groups, this reflects long-standing government policy to ensure that national security powers are sufficiently flexible to protect the nation. The Bill also does not include factors which the Secretary of State must or may take into account when assessing national security risks. Instead, factors that the Secretary of State expects to take into account in exercising the call-in power are proposed to be set out in the statement that we have provided a draft of and is provided for by Clause 3.
The draft statement, published upon introduction of the Bill, includes details of what the Secretary of State is likely to be interested in when it comes to national security risks. This includes certain sectors of the economy, and the types of acquisitions that may raise concern. It does not currently state anything which the Secretary of State intends not to take into account with regard to national security. This is a conscious choice. If the Secretary of State were to start listing areas of the economy or types of acquisition that he considered unlikely to present national security concerns, I suspect that this would result in a long and dense document of little use. We judge that it is therefore more helpful for businesses and investors to set out where the Secretary of State is more, rather than less, likely to use the call-in power.
I understand, however, the concern that without a definition extraneous factors may be taken into account. My reassurance for my noble friend comes from the courts. Were the Secretary of State to seek to use the powers in the Bill for a purpose beyond national security, his decisions could be challenged in the courts through judicial review and could not be successfully upheld. It is with this judicial oversight in mind that the Secretary of State is constrained in delivering the purpose of the Bill. I am therefore confident that the Bill as currently drafted contains sufficient safeguards against inappropriate use of the regime, and that the Government are already providing a good amount of information for parties affected by the regime on its likely areas of focus.
I hope that my explanation, taken together with these points, provides sufficient reassurance to my noble friend, and that she therefore feels able to withdraw her amendment.
Baroness McIntosh of Pickering (Con)
My Lords, I am most grateful to all those who have spoken in the debate, particularly my noble friend Lord Hodgson, and the noble Lord, Lord, Clement-Jones, for their eloquent support.
Like the Minister, I am slightly baffled by the sudden lack of support from the noble Baroness, Lady Bennett, with whom I have enjoyed a deeply cordial relationship. I obviously take issue with a number of issues to which she referred, not least setting out the importance to the economy of foreign investment, which is well established and repeated in the national security and investment government response published, I understand, this week. I also take issue with the fact that I am not a great expert on the financial crash, although I seemed to lose an awful lot of the small amount of money I had invested in the stock market. What is the saying about how to make a small fortune in the stock market? I have forgotten, but, anyway, that burnt my fingers.
I believe that the start of the financial crash was actually in the US, with the selling of mortgages, both in the US and here, for a greater value than the value of the property, and a lot of grief was caused as a result. I am pleased that my noble friend Lord Callanan feels that the Bill is still perfectly formed and fit for purpose, but I beg to differ. My noble friend referred to the statement in Clause 3, but we are told that the Secretary of State only “may” publish such a statement. Clearly, it would be immensely helpful to have such a statement at this stage, if possible, to give an indication of the direction of travel.
Member’s explanatory statement
This amendment reduces the timeframe after a trigger event in which the Secretary of State can make a call-in notice from five years to two.
Lord Hodgson of Astley Abbotts (Con)
My Lords, Amendment 7 shortens the period in which the Secretary of State may give a call-in notice following a trigger event, under the provisions of Clause 2, from five years to two years. I am grateful to the noble Lord, Lord Clement-Jones, for his support.
It was interesting that, when giving evidence to the Public Bill Committee in the other place, on 24 November, Michael Leiter—perhaps related to Felix Leiter—head of national security and the committee on foreign investment at Skadden, Arps, the major US law firm, described the Bill as
“a rather seismic shift in the UK’s approach to review of investment.”—[Official Report, Commons, National Security and Investment Public Bill Committee, 24/11/20; col. 46.]
He stressed the importance of clarity in what was proposed, given the criminal penalties that are now being introduced and that there is no interim period for familiarisation.
This amendment and all the others that I have tabled, two of which I have already spoken to, aim to test both the clarity and, importantly, the practicality of the proposals that the Bill contains. I stress that practicality because, there can be a danger, when Bills like this are in Committee, of focusing on legal terminology and overlooking the flesh and blood consequences of the decisions that Parliament is about to take. I hope that the Committee will forgive me if I spend a moment on two real-life examples, because they give useful background to this and my other amendments.
Members of the Committee may be aware that I am chairman of the Secondary Legislation Scrutiny Committee of the House. In December 2019, our committee was notified of the laying and simultaneous making of two statutory instruments: SI 2019/1490 and SI 2019/1515. The full title of SI 2019/1490 is the Public Interest Merger Reference (Gardner Aerospace Holdings Ltd. and Impcross Ltd.) (Pre-emptive Action) Order 2019. The full title of SI 2019/1515 is the Public Interest Merger Reference (Mettis Aerospace Ltd.) (Pre-emptive Action) Order 2019. These were the first referrals under the new regime with reduced thresholds, and this was the very first time that the Government used pre-emptive powers; that is to say that they were seeking to stop a takeover before any offer was made, rather than reacting to an offer once made. These two statutory instruments therefore give us a glance into the world that the Bill takes us into.
I shall say a couple of words about the protagonists. Gardner Aerospace, the predator and potential acquirer, is based in Derby. It was acquired by Chinese investors in 2017 for some £300 million and has since made a number of acquisitions in the aerospace sector. Mettis Aerospace, one of the targets, is based in Redditch and has sales of £86 million, which is above the old threshold. It is substantially profitable—it made about £9 million of profit before tax—and has some 500 employees. Its customer list reads like a who’s who of world aviation and its two leading customers are Airbus and Boeing.
Mettis’s roots can be traced back to the early days of British aviation. For those who like a historical note to our debates, it produced the framework that held in place the bouncing bombs under the Lancasters flown by Guy Gibson and the men of 617 Squadron in their successful raid on the Ruhr dams in the Second World War. A few years later the company produced the fan blades for Frank—later Sir Frank—Whittle’s first jet engine.
Mettis is owned 25% by the management and 70% by a private equity firm called Stirling Square Capital Partners. The fund through which the investment is being made is based in Luxembourg. Stirling is based in London but, judging by its list of partners, has a strong orientation towards continental Europe. The investment will almost certainly have been made on behalf of third-party investors who have pooled their funds for Stirling to manage. Such investors may very well come from all over the world and this is unlikely to be their only investment in the UK, so if they perceive the treatment of any one of their UK investments as being inequitable, there will inevitably be a ripple effect on their readiness to invest in the UK generally. Mettis made it clear to the Competition and Markets Authority and the Government that it had not put itself up for sale. Gardner’s approach had not been sought and was regarded as being what in the trade is known as a fishing expedition. The outcome was that Gardner pulled away on 27 February, following a heavily redacted CMA report published on 13 February.
The story of Impcross is quite different. It is a much smaller company based in Stroud, Gloucestershire, with a turnover of only £11.9 million, so it would not have been eligible under the old thresholds. It lost money in the year to 30 June 2019, but only a small amount—£350,000—and, significantly, it is controlled by one person. Its accounts reveal a person of significant control, or PSC, holding between 50% and 75% of its shares. That has been built up over a lifetime and it would not be unreasonable if that director now wished to realise the fruits of his efforts. If the state stepped in to prevent that—we cannot be certain exactly what happened—without offering any alternative solution, it seems a hard moral choice. Either way, it all took a lot longer to resolve and it was only on 10 September that Gardner withdrew.
In speaking to Amendments 41 and 45 a few minutes ago, I argued that it was not good enough that, under the provisions in Clause 13, all the Secretary of State had to do to void an acquisition was to say nothing. For Mettis, this was not a problem: the company was clear that the approach was not welcome. For Impcross, there were 10 months of uncertainty with the Secretary of State appearing to set up a sword of Damocles but apparently never having to cut the string. That cannot be the right way to provide certainty for investors in the UK tech sector.
I have one final point. In our debate a moment ago on Amendment 6, tabled by the noble Baroness, Lady McIntosh, the Committee expressed concerns about the degree of parliamentary scrutiny of developing practice in this sensitive area. The two cases I have referred to were authorised by a statutory instrument. Statutory instruments are not amendable, and it would seem vanishingly unlikely that either House of Parliament would seek to reject one—the nuclear option—so any scrutiny of future practice will be at a very high level, and even that scrutiny will be ex-post. Both the above SIs were made and laid on the same day, 6 December 2019, at a time when Parliament was in any case not sitting because of the general election. It would be worthwhile if the Minister could confirm whether in this brave new world of these pre-emptive actions, each would still be the subject of a separate SI, so affording at least some degree of parliamentary oversight.
I turn now to the details of Amendment 7. I have tabled it because giving the Secretary of State the ability to unpick a merger or takeover after five years is to ignore the real world. Acquisitions are made with a view that two plus two will make five and that overall, they will be profit-accretive. In the event, that promise is often not achieved, but that is the idea that people set out with and to do that, changes have to take place at various levels.
First, the acquiring company will want to ensure that the financial performance of the two companies are managed on the same basis so that one company’s financial reporting systems will disappear. Secondly, it is inevitable that in any acquisition, there is extreme nervousness among the staff of the two companies about winners and losers in the new configuration. That nervousness can be reduced by an exchange of staff between the two companies, so that they get to know each other. Thirdly, it is unlikely that it will be cost-effective to maintain two separate research and development facilities, so they will be merged as one. Fourthly, marketing and sales teams are likely to be combined to broaden and deepen product range and market reach. Finally, it may be concluded that the new entity would be more effective and profitable if it operated from a single site, so one facility will be closed and the site sold.
Within five years, all of these steps could have taken place and if they had, the companies would be indistinguishable. I appreciate absolutely that the Government need some power to reach back where a case may have been slipped past them, but I argue that two years should be sufficient. At the same time, there is at least a likelihood of there still being a unit that is sufficiently independent to resume an independent life.
Members of the Committee may remember their days in primary school and the magic of mixing paints. If one mixed blue and yellow paints together then, suddenly and miraculously, one had green paint. That is in effect what one does with the merger of two companies: you mix a blue and a yellow company, and the result is a green one. After some time, and certainly after five years, the two constituent parts will be indistinguishable. That of course is vital, considering the position of investors who may find that they still own an investment which they thought had sold five years previously. I would argue that a maximum of a two-year clawback will provide a better balance between the interests of all the parties in this delicate area. If my noble friend is not inclined to accept the amendment, will he tell the Committee how his officials will undertake the practical challenges of separating the green paint into its original blue and yellow parts? I beg to move.
Lord Clement-Jones (LD)
My Lords, I speak in strong support of Amendment 7, in the name of the noble Lord, Lord Hodgson. I am a former company secretary and legal adviser to a publicly listed company. I know from personal experience what it is like to wait for competition decisions, takeover panel decisions and for all the uncertainties of regulation external to the company as a result of its commercial activities.
Given that, I am entirely in sympathy as the noble Lord, Lord Hodgson, has set out what he calls the flesh-and-blood consequences of the two case studies that he put forward extremely graphically and well. Not least, he has hinted at some of the issues around statutory instruments and the level of scrutiny. There is little that I can add to what he has said about the undesirability of having a massive period of time within which a Secretary of State can act—up to five years. However, I would like to add to the practicality issues that the noble Lord has raised.
The longer a deal has been in place, the more difficult it will be to void or avoid—that is, unwind—a transaction. Unwinding a transaction after five years is a very long time in commercial terms. Thinking back to my own career, subsidiaries are sold, businesses are purchased and the commercial realities change over five years. It would be exceptionally difficult, even if it were possible, for a listed company involving public transactions to unwind those transactions.
Lord Lansley (Con)
My Lords, I am glad to follow the noble Lords, who presented a compelling case that mergers of companies should not be sought to be unwound after five years. However, that is not how I interpret the effect of the legislation.
For Amendment 7, we have to direct ourselves to Clause 2 and the structure of Clause 2(2). It requires that a call-in notice given by the Secretary of State cannot be
“given after the end of the period of 6 months beginning with the day on which the Secretary of State became aware of the trigger event”.
Noble Lords will recall that I was interested in the question of when the Secretary of State “becomes aware”. My noble friends have so far rebuffed the idea that we can define “becoming aware” rather better.
In the case of a merger, particularly between listed companies, but between companies of the kind so ably described by my noble friend, the Secretary of State should become aware of it, because it would appear to be publicly known. The Secretary of State could become aware because the parties to the transactions could themselves provide notification to the Secretary of State. Either way, the question of five years does not arise. That arises only in relation to circumstances where the Secretary of State does not become aware.
It is not a matter of people being exposed to an uncertainty; they can remedy the uncertainty by notifying the Secretary of State. That is why we are going to get a lot of notifications and, to some extent, Ministers accepted that when they revised the number of notifications they are anticipating from the original White Paper, which I think was a few hundred, to about 1,800. I think that is partly anticipating that there will be such notifications.
The circumstances we are talking about are probably not mergers but the trigger events relating to assets. As we previously discussed, this involves quite a wide range of acquisitions of assets including technology, transfers of technology, intellectual property or even potentially land that people did not necessarily understand was sensitive. The five years is not an irrelevance because, as Clause 2(2) says, there is a five-year period which would apply in circumstances where the Secretary of State had not become aware of the trigger event.
At this point, I want to ask my noble friend a question. In so far as the trigger event relates not only to the acquisition and the entity or asset but to the understanding of the nature of the acquirer—I keep coming back to this question of who the acquirer is; we talked about it in the second debate—can the Secretary of State apply the five years in relation to the nature of the acquirer being somebody other than the person whom the Secretary of State thought it was at the point at which the Secretary of State became aware of an acquisition? That is when the five years really begins to bite and the uncertainty begins to become more manifest.
That is true not only because the acquirer might be somebody who the Secretary of State did not understand to be hostile but who turned out to be, but because when we get to Clause 10 and we understand the implications of Schedule 1, which Clause 10 brings in, a person may be held to have acquired an interest or right in relation to an asset or entity by virtue of things such as the fact that they are connected persons, they are in a common purpose or they have an arrangement, all of which might not have been evident in public or to the Secretary of State when the Secretary of State saw the acquisition in public material. Indeed, maybe he did not see it at all but became aware of this interest only at a later stage.
There is a reason for the five years being there, because two years is not very long in relation to these kinds of acquisitions. The Minister might entirely reasonably say that five years is not without precedent: there is five years in the French, Italian and German regimes. With this Government, if it is good enough for the Europeans it is good enough for us, as we often say. However, leaving that to one side, we have to be aware that understanding who is in a common purpose, what is the nature of arrangements that might not have been disclosed and what is their nature in relation to assets, not just mergers, gives one a reason to think hard about the circumstances in which the Secretary of State might have to intervene, even though a significant period of time has elapsed. For those reasons I am inclined to live with five years, on the strict understanding that, to get rid of uncertainty, people make a voluntary notification and then six months is the limit.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, it is always very interesting to follow the noble Lord, Lord Lansley. He is approaching this partly in a similar way to me and partly in a different way. I was, and still am, attracted to the notion of trying to get this time of uncertainty down from five years to two. Part of what I would say to the noble Lord is that, if it is going to take five years to work out who might actually have bought something, that is something we should look at in its own right. If you cannot work out whether somebody is hostile and they have had it for five years, you have missed the boat if it is a question of whether they have learned the technology and found out things you do not want them to find out.
I would be interested to hear from the Minister the reasoning behind the length of the period. It could not really be due to a workload of investigating, because one must presume some sort of steady state pipeline with adequate staffing, but how much of it is fear that something new is not recognisable as having a security application until some time later. That thought was going through my mind: was there fear about missing things? This goes back to one of the issues I flagged at Second Reading about sifting being done by the right kind of skilled people—those who have the right kind of applied science or engineering knowledge, plus knowledge of potential usage in national security fields.
I have to say, these things are not necessarily all that obvious. I have experience of working as a patent attorney in the field of defence. I have worked with people whose job it was to invent—put two and two together and have something inventive at the end of it. If you work in a field where those kinds of things are deemed inventive, you will be very short of the people who have that kind of knowledge because, for the main part, they will probably want to be involved in more interesting and economically useful things than participating in what seems to be an overwide fish-sorting process, as it has been termed. I am turning this back to the Minister. On volume, if you cast the net wide, will you have sufficiently skilled people to be able to do the sorting, or will you find that important fish get missed? Will you then be trying to do things to backtrack on what has not been done or give yourself more time to do things?
That is a slightly different take. I know that there are some safeguards in there, but five years is quite a long time to live with uncertainty. If that uncertainty comes about because of ownership, one should sort the ownership or shareholding issues; I am actually among those people who think that we should have a lot more transparency on those kinds of things.
Lord Fox (LD)
My Lords, in his excellent intervention, the noble Lord, Lord Hodgson, started out by calling for clarity. We need some clarity on the wording of this part of the Bill because a number of different interpretations have emerged. I must confess, my interpretation is similar to that of the noble Lord; by the way, we would seem to be backed up by the Law Society, which took the same view. If the Government’s intention is something different, some different words need to be used to put that forward.
Assuming that, to start with, the intention was as the noble Lord, Lord Hodgson, set out, his counter to that was very clear. I have been involved in lots of what is known as integration, which involves bringing two companies together when one has bought another. Five years is well past the point at which you would find it very difficult to unmake that company. Indeed, the entire product life cycle in the sort of industries we are talking about here is probably about two years, so they will have marched through two and a half product life cycles by the time the five-year period expires.
In a way, I hope that the Government’s intention is more closely aligned to that of the noble Lord, Lord Lansley. If that is the case, I have similar thoughts to the noble Baroness, Lady Bowles. How long do you need to leave the stable door open before the horse has definitely bolted? To me, five years seems much too long for that bolting to occur; two years is probably long enough in that respect. However, if, on the other hand, the Government’s intention is to offer an opportunity for 20:20 hindsight—in other words, the world changes and, looking back over our shoulder, that deal five years ago now does not look like such a clever deal for the nation and we want to unmake it—that is clearly unfair on investors and others but might perhaps be fair to the country.
We need a real understanding of what the Government’s intention was, and the Government need to understand that their intention needs to be articulated in a way that the outside world can understand.
Lord Grantchester (Lab)
I welcome the probing of Amendment 7, in the names of the noble Lords, Lord Hodgson and Lord Clement-Jones, on the extent of five years in which the Secretary of State may issue a call-in notice once a trigger event has taken place.
The debate on how long this period may need to be and the reasons behind these decisions has been interesting. When the Government originally consulted on this, the period was much shorter. The Minister will need to answer why it has changed and been extended for such a long period, as well as the other questions raised. Indeed, five years is a far horizon in today’s fast-moving world—even if it is not long enough for some, often unpopular, Government to be able to continue in office.
Could this length of time threaten the policy stability of the economy across many sectors as well as give rise to unnecessary anxiety for businesses, especially in relation to retrospective elements previously discussed? However, the interpretation of Clause 2 may be that the Secretary of State is unaware of the trigger event but that the intentions of the parties have not materialised. The clause is rather unclear, and I appreciate the remarks of the noble Lord, Lord Lansley, in his interpretation. I would certainly welcome the Minister’s reply.
Baroness Bloomfield of Hinton Waldrist (Con)
I thank my noble friend Lord Hodgson for his amendment, which intends to shorten the time limit for the Secretary of State to call in trigger events which have already taken place. The Bill as drafted allows the Secretary of State to call in trigger events up to five years after they have taken place. This ensures that the regime powers can be applied to completed trigger events which have given rise to, or which may give rise to, risks to national security but which have not been notified to the Secretary of State.
The length of five years is important to give the Secretary of State sufficient time to become aware of the trigger event and to make it difficult for the parties to keep the trigger event hidden. However, the proposed change from five years to two would make it easier for hostile actors to hide their acquisitions and effectively time-out the Secretary of State. It would increase the incentives to keep an acquisition quiet or inactive, as hostile actors would need to do so for only two years.
While not necessarily straightforward, this is clearly easier—both practically and financially—than keeping an acquisition hidden for a longer period. For example, if a hostile actor acquires an entity and intends to merge it with their existing operations, there are practical costs of not doing so within five years. They would not be able to merge IT, payroll, HR, et cetera, or take advantage of that entity and its assets. Likewise, if a hostile actor acquired an entity for its technology, that technology might well be obsolete in five years, so they would need to use their acquisition now to get the benefit.
In the Government’s view, five years strikes the right balance between creating a substantial disincentive for efforts to obfuscate and conceal relevant acquisitions while giving legitimate business certainty that they will not be called in after that period. Importantly, this approach puts us into line with our international partners. For example, in Germany a review may be initiated up to five years after the purchase agreement. It is in line with other countries, including France and Germany, and we believe that it is appropriate. Indeed, it is shorter than some partners, including the USA and Japan, which have no time limits. Further, a five-year reach-back period applies only to trigger events which have completed or which will complete after the introduction of the Bill, contrary to what some observers have suggested. That is to say that no acquisition which has been completed prior to 12 November 2020 may be called in under the Bill.
As helpfully noted by my noble friend Lord Lansley, in the Bill the five-year period is tempered by the requirement for the Secretary of State to call in a completed trigger event within six months of becoming aware of it. This further reduces the time limit for intervention and creates greater certainty for parties to a relevant acquisition. If there is doubt, parties should submit a voluntary notification to the Secretary of State. This will give them certainty on whether their trigger event will be called in.
Before I conclude, in response to my noble friend’s query relating to whether final orders can require the unwinding of acquisitions, that is very much within the scope of the power. The order, however, makes commands and may not deal with practical arrangements. How remedies are given effect will be for parties to finalise, subject to the requirements of the order.
My noble friend Lord Lansley asked about the nature of the acquirer. To clarify, the five-year backstop applies to the date on which the acquisition itself took place. Circumstances where the identity of the acquirer is not known until some time after the trigger event took place are precisely why the reach-back period might be important in certain cases. In circumstances where a notification was given and false or misleading information was given about the true identity of the acquirer, the Bill already provides that the Secretary of State can re-examine such cases.
With reassurance provided for business, knowing that we are acting in line with allies, and for the reasons I have set out, I hope my noble friend will withdraw his amendment.
Lord Hodgson of Astley Abbotts (Con)
I am grateful to my noble friend for her reply. I do not think I heard whether future pre-emptive actions under the new regime will be the subject of a statutory instrument or will just happen from the Secretary of State’s desk. Perhaps, she could answer how this or the other House will know what is happening.
I am grateful to everybody who spoke on this. It is obviously a tricky area. I am grateful to the noble Lord, Lord Clement-Jones. Undesirable, uncertain and impractical—I could not have put it better myself. I am grateful to the noble Baroness, Lady Bowles, for drawing attention to the question of the difference between two years and five years, and what will happen in that three-year period other than causing uncertainty among investors. The noble Lord, Lord Fox, raised very practical points.
Let me meet my noble friend Lord Lansley some of the way. I do not think that this will happen very frequently, but, like the noble Baroness, Lady Bowles, I am not convinced that the three additional years are really needed. The point my noble friend makes, which has certainly eluded the Law Society, is the interplay between the six-month trigger and the five years. In the tech sector, these companies grow like Topsy: they are nothing now, and they will be quite big very quickly indeed. You could have a situation where some event, ex post, could have been described as a trigger event but was not picked up as such at the time. It is unfair for people to have that uncertainty lasting for five years. The Secretary of State could say, “I never became aware of that, so I have more time to start the unwinding process, as long as it isn’t within the five-year period.” I see my noble friend’s point, and I accept that it is a rare occasion, but I still think there is something to be teased out about how the different pieces fit together, particularly in sectors of the market where very fast growth occurs.
I would be grateful if the Minister could tell me about the statutory instruments and how publicity of pre-emptive actions is to be provided.
The Deputy Chairman of Committees (Lord Bates) (Con)
Does the Minister wish to respond?
The Deputy Chairman of Committees (Lord Bates) (Con)
The Minister is saying she will respond in writing. Is the noble Lord, Lord Hodgson, withdrawing his amendment?
Lord Hodgson of Astley Abbotts (Con)
The Minister is going to write, is she?
The Deputy Chairman of Committees (Lord Bates) (Con)
That was the indication.
Lord Hodgson of Astley Abbotts (Con)
Was it the fact or just the implication?
Baroness Bloomfield of Hinton Waldrist (Con)
No, I will respond to the noble Lord in writing.
Lord Hodgson of Astley Abbotts (Con)
Okay, that is fine. We need to go away and put my noble friend Lord Lansley in the blue corner and the Law Society in the red corner and see how we get on. In the mean- time, I beg leave to withdraw the amendment.
Lord Lansley
“(3A) If either House of Parliament resolves not to approve the statement under subsection (2), the Secretary of State may publish a new statement making any changes which appear to the Secretary of State to be necessary in view of the debates in either House of Parliament. (3B) A statement made in pursuance of subsection (3A) above is not subject to the requirements of subsection (1)(a) and (b).”Member’s explanatory statement
This amendment would permit an expedited process for making a new statement where this is required following a resolution not to approve a statement.
Lord Lansley (Con)
My Lords, I am particularly grateful that the Government agreed to group my amendment with their technical amendments, Amendments 12, 37 and 75. I do not propose to refer to Amendments 37 and 75, which are purely technical in nature. Amendment 12 is not strictly technical but relates to exactly the same part of the Bill as my amendment. We are considering Clause 4, and the Government in Amendment 12 are changing subsection (7), which states that the requirement for consultation could be satisfied by consultation carried out before the clause comes into force. The effect would be that not only that consultation but changes to the draft policy statement—such a statement was published at the same time as the Bill—in the light of the consultation can take place before the clause comes into force. That is perfectly reasonable.
My amendment looks at the case that arises under Clause 4(2), whereby:
“Either House of Parliament may at any time before the expiry of the 40-day period”,
that is, after the statement is laid,
“resolve not to approve the statement.”
Under those circumstances, the Government, as subsection (3) makes clear, “must withdraw the statement.” My working assumption is that the Government, having withdrawn a statement, would have to make a statement in the same way in which they have made previous statements—that is, engage in consultation, respond to the consultation and make such changes as are required—and then lay the statement again. That is unnecessary.
My amendment would provide that if a statement was not approved by either House, the Secretary of State should lay a new statement on the basis of making such changes as the parliamentary debates on the previous draft statement required. The Secretary of State would not have to go through a public consultation process or make changes in response to one. That is because the parliamentary objection to a statement may be particular. One can speculate on what that might be but I shall not do so in any way. However, if something led one House of Parliament not to approve a statement, a particular and significant change would be likely to be required. If Ministers make that change, as the amendment would require them to do, they should be able to lay that statement directly. The 40 days would continue to apply because all that would happen would be the resumption of the same process in relation to a new statement.
I hope the amendment means, from the point of view that it does not in any way impinge on the parliamentary scrutiny, that a statement could be in place sooner. That is important because a whole range of things flow from the fact that a statement has been not only published but approved. I hope that Ministers may see merit in the amendment. I beg to move.
Baroness Bowles of Berkhamsted (LD) [V]
My Lords, I broadly support this amendment, although I am also interested in what happens after a statement is declined by Parliament. Statements take effect immediately and things already done under them are not revoked, even if Parliament votes one down, and I did not think that it was entirely clear whether there was anything to stop a new statement being made immediately, because the Secretary of State is under an obligation only to conduct
“such consultation as the Secretary of State thinks appropriate”.
Could they consider that it is appropriate to do none if there has been something tantamount to an exactly equivalent previous consultation?
Baroness McIntosh of Pickering (Con)
My Lords, in the spirit first put forward by my noble friend Lord Vaizey, I would like to tease the Minister at this point, if I may. Clause 3 states:
“The Secretary of State may publish a statement for the purposes of this section if the requirements set out in section 4(1) are satisfied”,
and now we have government Amendment 12, which amends Clause 4 to state that responses to the consultation may be required to be pursued through. What is the situation, if one might occur, if the Secretary of State chose not to publish a statement? Does the Bill permit that in this regard, and what would be the circumstances in which the Secretary of State may decide not to publish a statement?
Lord Fox (LD)
My Lords, as the noble Lord, Lord Lansley, said, government Amendments 37 and 75 are technical and Amendment 12 covers the ground of Amendment 11, so I will speak to the latter. I am broadly supportive. Clearly, this is an issue about “may”—my noble friend Lady Bowles and the noble Baroness, Lady McIntosh, asked the same question. If “may publish” means “may not publish”, where are we in this process, given that the statement is such an important part of setting out the modus operandi of the whole Bill? This is quite an important area.
I support Amendment 11 but it will be important to listen to the Minister’s response to decide how this might go forward in the next stage. I believe that some degree of accountability should not be left as an option to the Secretary of State; there should be an obligation on the Secretary of State to make that statement and, as the Government have said, to have the ability to remake it.
Baroness Hayter of Kentish Town (Lab)
My Lords, we welcome the Government’s Amendment 12 to make changes to the sectors statement in respect of feedback from stakeholders. Can the Minister confirm whether all the suggested changes that come back in that consultation will actually be published?
I will make a comment about the document that has arrived in front of us today because, in a sense, it gives a very good description of how good consultation works—never mind the timing; we have made that point—in relation to the degree of change that looks as if it is going to happen as a result of conversation on that particular issue. However, it then feeds into what happens if, had this been the statement, changes were wanting to be made. For example, what we have heard today, as a result of some very good consultation, is that the definition of AI has been narrowed significantly to focus on three high-risk applications: identification of objects, people and events; advanced robotics; and cybersecurity.
The interesting thing is what happens after you have had a consultation that has got the Government to rethink and that may then have other implications. In this case, with those changes, does this change the Government’s estimate of the number of notifications that that might give rise to, in relation to the change in definition? It is that sort of issue that might come up, and it would want the dialogue that I think is being referred to in the amendment, in relation to whether there is a second stage—if it is turned down, so to speak—about having to go on further. As such, how we handle the feedback is about both the transparency of what has come back in and the full implications of any changes that that has made.
We keep coming up with the figures where, even though the Government have increased the assumption of how many notifications there would be—less than 1% or so—the CBI and other commentators feel it would be much greater. As such, that degree of dialogue is needed in relation to consultation over these very big issues. Some assurance about the results of such a consultation, as well as a second stage, seems very helpful, along the lines in the amendment.
On the Government’s Amendment 75, it would be interesting to know what advice led to the change—we are not questioning it but wondering why it has been made—to extend the regulatory power from a notice or serving an order to include all documents as well. It would be helpful, certainly to me and possibly to other Members of the Committee, to know what other types of additional documents will thus be added to this regulatory power—could the Minister spell that out?
Lord Callanan (Con)
First, I thank my noble friend Lord Lansley for his Amendment 11. With the permission of the Committee, I will speak first to the three minor technical amendments that the Government wish to make to the Bill: Amendments 12, 37 and 75. Briefly, before I begin, I reassure the Committee that the Secretary of State must lay and publish a statement before using the call-in power.
Amendment 12 is to Clause 4, which concerns consultation and parliamentary procedure for the statement pursuant to Clause 3, in which the Secretary of State sets out how he expects to use the call-in power. At present, Clause 4 enables the Secretary of State to meet the requirement to carry out such consultation as he considers appropriate, in relation to a draft of the statement under subsection (1)(a), before Clause 4 is commenced.
However, it does not make it clear that the Secretary of State is able to make any changes that he considers necessary in view of the responses to that consultation under subsection (1)(b) before the clause is commenced. Amendment 12 clarifies this point, ensuring that stakeholders will be able to see a revised draft statement before it is laid before Parliament.
Amendment 37 is to Clause 11, which provides an exemption for certain asset acquisitions which would otherwise be trigger events. Subsection (2), however, provides that assets that are either land or are subject to certain export controls should not fall within the exemption, and subsection (2)(b) sets out the relevant export control provisions. One of these provisions, Article 9 of the Export Control Order 2008, was revoked on implementation period completion day as a result of EU exit by Regulation 4 of the Export Control (Amendment) (EU Exit) Regulations 2019, with which I am sure all Members are very familiar. The amendment would remove the reference to this revoked provision from Clause 11.
Amendment 75 is to Clause 53, which enables the Secretary of State to make regulations, subject to the negative resolution procedure, prescribing the procedure for giving notices and serving orders under the Bill. At present this clause enables the Secretary of State to specify how a notice or order must be given or served, but does not make it clear that these powers are intended to extend to all documents given under the Bill. The amendment would clarify that point, ensuring that the Secretary of State has the power to make regulations in Clause 53(1) in relation to the procedure for service of documents for all the different types of notices, orders and other documents under the Bill. These are relatively small tweaks to the Bill, and I hope that the Committee will see fit to agree to them.
Amendment 11 was tabled by my noble friend Lord Lansley, and I will begin by briefly setting out its context. Clause 4 sets out a consultation requirement and parliamentary procedure for a statement about the exercise of the call-in power which must be published before the Secretary of State may issue a call-in notice. It requires the Secretary of State, before publishing the statement, to carry out such consultation as he thinks appropriate in relation to a draft of the statement, to make any changes to the draft that appear to him to be necessary in view of the responses, and to lay the final statement before Parliament.
My noble friend’s amendment seeks to clarify the process by which the Secretary of State may publish a new statement if either House resolves not to approve the previous version that he lays before Parliament. The apparent stumbling block that the amendment seeks to remove is that the Secretary of State is under a duty to carry out such consultation as he thinks appropriate in relation to a draft of the new statement, and make any changes to the draft that appear to him to be necessary in view of the responses to such consultation. However, I point out that the Secretary of State must carry out such consultations as he “thinks appropriate”, according to Clause 4(1)(a).
The Bill therefore provides the Secretary of State with some measure of flexibility in deciding whether, for how long and how widely the draft statement should be consulted on. Therefore, the Bill as drafted does not in appropriate circumstances prevent the Secretary of State from publishing a new updated statement, reflecting the debate in Parliament, almost immediately without first undertaking a consultation if he does not think that a consultation is appropriate.
In short, while my noble friend’s amendment seeks to ensure that a new statement may be laid speedily if either House resolves not to approve the previous version, the Bill as drafted already allows for this. I am grateful that he has afforded me the opportunity to make the functioning of this clause clear. Therefore, in the light of the explanation that I have been able to provide, I hope that he will feel able to withdraw his amendment.
Lord Lansley (Con)
My Lords, I am grateful to all noble Lords who have participated in this short debate. It is quite helpful just to focus on the question of making a statement because, if one looks back at Clause 1(6), it clearly states:
“The Secretary of State may not give a call-in notice unless a statement has been published (and not withdrawn) for the purposes of section 3.”
Although the word “may” is used in Clause 3, all it means in practice is that, if the Secretary of State chooses not to bring any of this into force, he would not publish a statement—but if he wants to issue call-in notices, he has to publish a statement. My noble friend the Minister is right in the sense that he must do this for the system to operate. The words I want to focus on, however, are “and not withdrawn”. If either House of Parliament resolves not to approve a statement, he must withdraw it. At that moment, the Secretary of State can issue no further call-in notices. My noble friend says the amendment is unnecessary because the Secretary of State has the power to consult only as he thinks appropriate.
Lord Callanan
Member’s explanatory statement
This amendment ensures that as well as carrying out the consultation on the statement about the exercise of the call-in power, the requirement to make changes to the statement in view of the responses to the consultation may also be met before this section comes into force.
The Deputy Chairman of Committees (Lord Bates) (Con)
We now come to the group beginning with Amendment 14.
Clause 6: Notifiable acquisitions
Amendment 14
Member’s explanatory statement
This amendment would impose a duty on the Secretary of State to consult relevant stakeholders when making regulations as specified.
Baroness McIntosh of Pickering (Con)
My Lords, Amendment 14 in my name came about as a result of my working closely with the Law Society of Scotland. I am very grateful to the society for drawing to my attention the fact that, on the present reading of Clause 6, the Secretary of State may make regulations without any further consultation in that regard. The reason for the amendment is that this consultation provides an additional layer of scrutiny by all interested parties. The requirement on the Secretary of State to consult will help to ensure openness and transparency of the Secretary of State’s actions. Imposing a duty to consult will ensure that any draft statutory instrument is exposed to critical comment from stakeholders, which may improve an instrument and help to avoid difficulties when it comes to progressing through Parliament.
All this assumes that the Government will actually pay attention to consultation and the results. It is felt that the provision as drafted gives the Secretary of State very wide discretion to amend the scope of notifiable acquisitions as per the present drafting of Clause 6(5). This can have far-reaching consequences, not least because, as set out in Clause 6(6), it may be used to extend the scope of notifiable acquisitions to acquisitions of qualifying assets. In particular, I want to put on record that Clause 13 states that where a notifiable acquisition takes place without the approval of the Secretary of State, this transaction will be void, although under Clause 15(2) and (3) the defect can be cured retrospectively.
This amendment addresses a concern that there will be a lacuna in relation to the impact on third parties. In particular, if the qualifying asset in question is land, and if it were to be established that a transaction had been void and that the ownership or other interest in the land had not been properly transferred, questions of liability may arise. This could be the case, for example, in relation to environmental or insurance liabilities. Although it appears that the third party would have an action under Clause 16, we are concerned that this could be both burdensome—that is the Law Society expressing its concern—upon that third party and unnecessarily complicated. There is also concern that it might not resolve all the relevant problems.
I welcome my noble friend to her speaking position, for once, this evening; I hope that this is not just paying lip service to diversity. If the Government are not minded to accept this amendment, can she say what the purpose is of introducing regulations at what would be quite a late stage and without having consulted at all with interested parties or stakeholders?
Lord Fox (LD)
My Lords, I fear I might have missed a trick here. I think we have two quite different amendments and I should have been smarter and disaggregated Amendment 94 from Amendment 14. I apologise to the noble Baroness, Lady McIntosh, that I am not going to speak to Amendment 14, although I firmly believe that my noble friend Lord Bruce of Bennachie will speak to it later. I will speak to Amendment 94 in my name and that of my noble friend Lord Clement-Jones.
Under Clause 6 the Secretary of State has great power to make the regulations concerning how this Bill will work. The Secretary of State can specify the description of the qualifying entity for the purpose of identifying a notable acquisition. He or she can amend the circumstances in which a notifiable acquisition takes place or does not take place, exempt acquirers with specified characteristics from the mandatory notification regime and make consequential amendments to other provisions of the Bill. These will be set before Parliament using the affirmative procedure. This was confirmed by one of the other documents that was circulated just before our proceedings began today.
For the commencement of the regime, the Secretary of State intends to make regulations only to specify the sectors subject to mandatory notification—that is, the 17 sectors we have already referred to elsewhere in this debate. This covers the activities of the entities of both sectors which give rise to an elevated national security risk. In the Government’s own words:
“Mandatory notification of certain types of transactions in 17 key sectors will ensure that the Government is informed of potential acquisitions of control or ownership in these particularly sensitive areas”.
As we have heard, using this list they will take action to investigate and mitigate any national security risk. The list is central to the workings of this regime. Therefore, so is the making and updating of it.
For the avoidance of doubt, and possibly to bore the Committee, I want to put on record the length and breadth of this list. It includes advanced materials, advanced robotics, artificial intelligence, civil nuclear, communications, computing hardware, critical suppliers to government, critical suppliers to the emergency services, cryptographic authentication, data infrastructure, defence, energy, engineering biology—which has now been commuted to synthetic biology—military and dual use, quantum technologies, satellite and space technologies, and transport. We heard from the Minister that in fact the Secretary of State can extend beyond this list if he or she feels it appropriate.
The so-called slimline version was published today, as mentioned by the noble Baroness, Lady Hayter, who has just popped out. She referred to the artificial intelligence sector which has been “slimmed down” to the identification of objects, people and events, advanced robotics and cybersecurity. The underlying software for that is going to be machine learning, and therefore that includes all artificial intelligence. While on the face of it this has been narrowed down, the reality is that if a Secretary of State so chose, anything involving machine learning could be dragged into this process. We need to be very wary of this list, which can be expanded and changed over time.
I expect that the Minister will choose to represent the proposed use of the affirmative procedure in the Bill as meaningful parliamentary scrutiny, but in truth the list can be amended by this and any subsequent Government as they please. For one thing, Parliament cannot amend statutory instruments, and for another, this House has voted down affirmative statutory instruments just four times in the past 70 years. That is nearly as long as my noble friend Lord Clement-Jones has been alive. As the Constitution Committee noted in its 2018 report The Legislative Process: The Delegation of Powers:
“Without a genuine risk of defeat, and no amendment possible, Parliament is doing little more than rubber-stamping the Government’s secondary legislation. This is constitutionally unacceptable”.
Affirmative statutory instruments do not constitute meaningful parliamentary scrutiny. This Government, or any subsequent Government, are effectively free to amend that already long list of technologies at will, so we need some sort of genuine democratic process. I am indebted to my noble friend Lord Sharkey; he proposed a very similar amendment to the Medicines and Medical Devices Bill, and I have ruthlessly plundered his thinking as it is just as apposite to this Bill.
As noble Lords know, there is a delegated legislation procedure that allows for significant parliamentary scrutiny. To the Government, it is known as “exceptional procedures”, and to Erskine May, in part 4, chapter 31.14 as the “super-affirmative procedure”. Erskine May characterises it as follows:
“The super-affirmative procedure provides both Houses with opportunities to comment on proposals for secondary legislation and to recommend amendments before orders for affirmative approval are brought forward in their final form … the power to amend the proposed instrument remains with the Minister: the two Houses and their committees can only recommend changes, not make them.”
Amendment 94, in my name and that of my noble friend Lord Clement-Jones, follows this pattern; it is more generally based on the variant of the procedure used by the Government of the day in the Public Bodies Act 2011, so it is not a stranger to government. It refers to the Secretary of State’s regulation-making powers and includes the long list of technologies that I have just read out.
First, the Secretary of State must lay before Parliament a draft of the proposed regulations and a document explaining them; secondly, he or she must request a committee of either House whose remit includes science and technology and business to report on the draft regulations within 30 days; thirdly, in proposing a draft statutory instrument containing the regulations, the Secretary of State must take into account any representations, any resolution of either House and any recommendations of the committee to which the draft was referred. After the expiry of the 30-day period the Secretary of State may lay before Parliament regulations in terms of the original or the revised draft. The Secretary of State must also state what representations, recommendations or resolutions were given in the 30-day period and give details. He or she must also explain any changes made in a revised draft. After that, the normal affirmative process continues.
Lord Bruce of Bennachie (LD) [V]
My Lords, I support Amendment 14, tabled by the noble Baroness, Lady McIntosh, to which I added my name just too late. I also support the more detailed Amendment 94, tabled by my noble friends Lord Fox and Lord Clement-Jones, but as my noble friend Lord Fox has spoken at length and my noble friend Lord Clement-Jones follows me, I will leave them to expand on it, as has already been done. There is a connection, although I accept that there are distinct differences.
Amendment 14 and others that I have tabled reflect concerns that I raised at Second Reading, which have also been drawn to my attention by the Law Society of Scotland. Given the importance of financial services to Scotland and the contribution that Scottish financial services make to the UK economy, surely it is wise to ensure that relevant stakeholders are consulted in advance of any regulations. That is especially important given the importance of the professional services that underpin financial services and draw on different qualifications and traditions within Scotland.
The concerns that are being widely raised across many of the amendments to the Bill are directed not at its purpose, which is broadly supported, but at the possibility of it being applied too widely, with Ministers having too much discretion and with players in the market having inadequate information with which to make decisions and judgments. We are talking about people who have no particular intention to threaten national security but might inadvertently find themselves compromised in doing so.
I see Amendment 14 as trying to avoid unintended consequences or confusion that could prejudice investments made in good faith. As my noble friend Lord Fox has said, the Government can by regulation add new sectors to those designated as covered by the Bill. They can also expand on the definitions within the sectors. So surely it is appropriate that any such changes should be subjected to the same consultation as has been carried out to date with the 17 sectors so far designated. Why would you introduce new sectors or substantially modified ones and not apply the same level of consultation?
There remains a concern that investment transactions may be carried out in good faith, as I have said, without the intention or realisation of a national security dimension. It may therefore not be notified, as people may not feel there is a need to do so. However, if it is subsequently referred or called in and found by the Minister to be in breach, the transaction could be void, and we have had that debate already.
In the circumstance of, say, a land transaction, an area where the Law Society of Scotland has a particular concern, land being transferred could leave significant uncertainty in the air. Land issues have caused problems in Scotland in recent years. For example, landowners—lairds—often made land available for community use in the past, such as for a schoolhouse or cottage hospital. You may argue that that was generous— [Inaudible]— the community appreciated the benefit. Unfortunately, in those cases, formal conveyance did not always take place and, in more recent years, people who have acquired the title to the land have secured financial gain by putting charges on those who acquired the school, building, hospital or what have you and have made a nice little packet. You may say that that has nothing to do with national security, but it shows the problems when there is any confusion in the transfer of land.
Indeed, if I may briefly digress, the mountain from which my title is derived—Bennachie—for 60 years had people, smallholders, living on it on what was common land until, in a land grab, surrounding landowners simply seized that land and gave themselves the title, even though it had been held in common before, and evicted the squatters. We have had some controversial land decisions, but we are more concerned about legitimate transfers of land for environmental, recreational or financial purposes where because, for example, the landowner acquiring or disposing is not a UK citizen or is an institution that the Government may have suspicions about, it could lead to a problem.
Most people engaged in those transactions will look to professional services for appropriate advice. If those professional services have been part of the stakeholder consultation on any changes to the regulations or the detail of them, they will be able to provide transparency and legitimate advice to avoid those kinds of problems arising. That relieves the Minister of a problem and embarrassment and removes the possibility of otherwise legitimate investments being compromised or withheld because of a lack of clarity.
The conclusion I suggest to the Minister is that consulting with relevant stakeholder, when any legislation is being amended or introduced is to the mutual benefit of all players, including the Government and national security. We are talking about a relatively small number of clearly identifiable stakeholders, not a mass of agencies. The Government know who they are and they know who they are. It can be done quickly and efficiently, and the net result is that concerns that were raised would be headed off at the pass. They would not occur, so that we would not finish with legislation that leads to the threat of voiding contracts that in no way compromised national security, but somebody felt that they might have done. Sellers and buyers need clarity on the law; consulting relevant stakeholders will help to achieve this.
Lord Clement-Jones (LD)
My Lords, there are distinct common factors in both these amendments. The proposers do not believe that the current way of approving regulations under Clause 6, purely the affirmative procedure, is satisfactory. That is because of the importance of the regulations under Clause 6. As we heard, they underpin the necessity for mandatory notification for certain types of transactions in 17 sectors and they can be changed. We heard, particularly from my noble friend Lord Fox, that the definitions of these sectors are highly complex.
My noble friend took the example of artificial intelligence, a technology I have taken considerable interest in. As he explained, machine learning technology permeates almost every single sector and every use for both consumers and businesses one can think of—fintech, edtech, regtech, you name it. Artificial intelligence permeates those, and the new description of the AI sector published in the government response today states:
“In narrowing the definition, the definition now provides further clarity for businesses and investors”.
However, the definition still covers:
“the identification of objects, people, and events; advanced robotics and cyber security.”
That is pretty broad.
The policy statement published today is also extremely helpful in emphasising the importance of Clause 6 regulations. The policy statement says:
“Under Clause 6, the Secretary of State has the power to make regulations to:… a) specify the description of a qualifying entity for the purpose of identifying a notifiable acquisition; …b) amend the circumstances in which a notifiable acquisition takes place … c) exempt acquirers with specified characteristics … d) make consequential amendments of other provisions of the Bill resulting from provisions set out in paragraphs (b) and (c).”—[Interruption.]
I hope that I am having some impact on the Minister, my Lords. The policy statement goes on to say:
“For the commencement of the regime, the Secretary of State intends to make regulations only to specify the sectors subject to mandatory notification.”
I underline “only” because you would have thought that was significant enough in itself. This is obviously a self-denying ordinance, but it is not a very large self-denying ordinance when you are dealing with the intricacies of those 17 sectors.
My noble friend Lord Fox has rightly quoted the Constitution Committee’s 2018 report The Legislative Process: Delegated Powers, which talked about the rubber-stamping of the Government’s secondary legislation. He also referred to my long life, and in my already long life I have been responsible for overturning a statutory instrument. The Blackpool casino was very much wanted by the citizens of Blackpool, so the SI for east Manchester was defeated by three votes in the House of Lords, and one of those votes was from the Archbishop of Canterbury—the former Archbishop of Canterbury, I am glad to say. It was I who put the Motion, and we passed it by three votes to deny the Government the right to build the casino in east Manchester. Unfortunately, the Government never came back with a proposal for Blackpool, and that is a sad piece of history. I do not know why they did not; it would have been a great place to build a casino.
However, that does show that, on a simple proposition, it is possible to have an effective debate. When you are dealing with 17 sectors and 111 pages of text, which are going to be the subject of this regulation, that illustrates that the form of affirmative resolution proposed in this Bill is not fit for purpose. This kind of super-affirmative procedure means that there would be a genuine debate on the regulations and the 17 sectors and their extent.
I have huge sympathy with the amendment of the noble Baroness, Lady McIntosh, because of course one wishes to see consultation among stakeholders. In an ideal world, one would like to see both that and the super-affirmative resolution. But, to be frank, consultation is not the same as, or a substitute for, proper parliamentary scrutiny. These are crucial regulations, and it is right that they are opened up for full debate in this way. I am probably going to embarrass the noble Lord, Lord Lansley, by saying that he said earlier we will have some debates about the sectors—well, not really, unless this amendment is accepted.
Baroness Hayter of Kentish Town (Lab)
My Lords, as we have just been hearing, these notifiable acquisition regulations are significant and require proper oversight, not just from both Houses of Parliament but also from experts involved, and with the opinions of those experts being made available to legislators. It will obviously be important to ensure that the stakeholders to be consulted are knowledgeable and, if I may say it, at the cutting edge of technology.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I welcome Amendment 14 from my noble friend Lady McIntosh of Pickering, and Amendment 94 from the noble Lords, Lord Fox and Lord Clement-Jones, which overall seek further consultation and scrutiny on Clause 6 regulations. Perhaps I may say at the outset that we would be delighted to meet the noble Baroness, Lady Hayter, to discuss the concerns of the Wellcome Trust, which, as she said, is a world-class research organisation and worth hearing.
Perhaps I may begin by clarifying for the benefit of the Committee that while acquisitions of land are in scope of the call-in power, they are not in scope of the mandatory regime. Acquisitions of land, as with assets more widely, are expected to be called in only very rarely.
I turn first to Amendment 14, tabled by my noble friend Lady McIntosh of Pickering. It would require the Secretary of State to consult relevant stakeholders before making any regulations under Clause 6. Those regulations are of significance as they define the scope of the mandatory notification regime. As such, the Secretary of State has already consulted on sectoral definitions for the qualifying entities proposed to be in scope of the mandatory regime, and further engagement is planned with particular sectors in advance of turning these definitions into draft regulations. Again, I echo my noble friend’s apologies that the information on sectoral scope arrived only as we came into the Committee. The consultation was extensive and lasted from November for eight weeks. We received 94 responses and have not yet finalised all the sectoral definitions. Further targeted engagement to refine these definitions will be made in advance of laying regulations. The Secretary of State will therefore undertake consultation where appropriate.
I can reassure my noble friend Lady McIntosh and the noble Lord, Lord Bruce of Bennachie, that, given the importance and potential complexity of any future regulations under Clause 6—defining and bringing new advanced technology sectors into the regime, for example—it is difficult to foresee many instances in which consultation of relevant stakeholders will not be required. As such, there is no need to create a requirement in statute to cater for this. Public law duties already create the right incentives.
The second amendment to Clause 6, Amendment 94, proposed by the noble Lords, Lord Fox and Lord Clement- Jones, would require the Secretary of State to lay before Parliament a proposed draft of any regulations made under the clause for 30 days before the draft regulations themselves are laid and are subject to the approval of both Houses. Amendment 94 would also require the Secretary of State to identify a committee to report on the proposed draft regulations and then himself report on his consideration of the committee’s recommendations. The Bill as drafted provides for regulations made under Clause 6 clause to be subject to the affirmative resolution procedure.
While I take the points made by the noble Lord, Lord Fox, that these statutory instruments cannot be amended, they can be declined, as we have seen a small number of times in the past. This ensures an appropriate balance whereby the mandatory regime can be quickly updated should new risks to national security emerge, while still giving Parliament appropriate oversight by requiring it to approve the regulations.
In its report on the Bill published on 22 February, the Delegated Powers and Regulatory Reform Committee concluded that,
“there is nothing in the Bill to which we would wish to draw the attention of the House.”
So, although I was in some way surprised to see the noble Lords’ amendment tabled in relation to Clause 6, in disagreement with the judgment of the committee, we can agree that the powers of the Bill are necessarily drawn widely in order to make the process more efficient. I believe that the committee recognised the careful balance that the Bill strikes in Clause 6 and other clauses between allowing the Secretary of State the flexibility to ensure that the regime is effective in protecting our national security while providing sufficient opportunity for parliamentary scrutiny and input.
I welcome the opportunity to discuss this matter further with noble Lords. However, for the reasons I have set out, I cannot accept these amendments and ask that they be withdrawn or not moved.
The Deputy Chairman of Committees (Lord Bates) (Con)
My Lords, I have received two requests to speak after the Minister: from the noble Baroness, Lady Hayter, and the noble Lord, Lord Clement-Jones.
Baroness Hayter of Kentish Town (Lab)
I forgot to declare at the beginning that I used to work for the Wellcome Trust. It was 20 years ago, but I think it should still be noted.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for her response but I do not think that she has quite got to grips with the full concern about this. It is not so much that there has not been consultation about the current sectors; there has been an extensive consultation and the Government have come back with their views and have explicitly said that they may change them even further. Yet they are still going to return to Parliament with a pure affirmative process. It is not as if parliamentarians will be able to change it. The stakeholder discussion and consultation is going forward as she said, but there is no guarantee that when that set of regulations is passed there will be proper debate in the House, nor will there be thereafter if the sectors are changed and made more specific, less specific, added to—whatever. There is no guarantee that consultation will take place.
The Minister said that there are the right incentives. That is a bit thin. If that is the guarantee of government consultation, it is not very solid, and even then, Parliament is entitled to have a view about the width of those sectors in the light of changing circumstances. It might have different views about new risks emerging, to use the Minister’s phrase. Therefore, it would be entirely legitimate to have that debate if those regulations were revised. The Minister has not got the nub of the concern in all of this.
Baroness Bloomfield of Hinton Waldrist (Con)
I reiterate that we will continue to consult widely on important changes that merit further scrutiny. The Government care deeply that we get these definitions accurately put into the Bill before it receives Royal Assent.
Lord Fox (LD)
I anticipated the Minister’s answer on the subject of time, and 30 days is 30 days, but the Government have shown that they are relatively adept. If there really was a national security emergency requiring quick action using other means, a statutory instrument with a debate in Parliament would act as a plug. My noble friend Lord Clement-Jones made the point that there is such significance, particularly around this list but also around the other elements of Clause 6, so I hope that the Minister will read Hansard and at least find some way of moving towards the very valid arguments that she has heard today on both amendments.
Baroness McIntosh of Pickering (Con)
I thank all those who have spoken on both amendments. The noble Lord, Lord Fox, will recall that we had a lengthy debate about the super-affirmative procedure during the passage of the UK Internal Market Act. I deeply regret that we did not go down the path of that procedure, for reasons that I gave. My noble friend the Minister cares passionately about Wales, and I hope that she will care equally passionately about Scotland and will be prepared to meet with me to bring these matters forward, because I do not accept that it is enough just to have regard to the public law requirements.
The Law Society of Scotland has identified three ways in which these regulations could move the parameters forward which I would like to discuss on a wider basis with her. While an official in the department said that it is not expected at this stage that those three areas will be covered, it is not excluded that that will happen in the future. I want to come back to that, but for the moment, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Bates) (Con)
That concludes the work of the Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room.
House of Lords
Introduction: Lord Khan of Burnley
Arrangement of Business
The Deputy Speaker (Lord Bates) (Con)
My Lords, the Hybrid Sitting of the House will now begin. Some Members are here in the Chamber, others are participating remotely, but all Members will be treated equally. I ask Members to respect social distancing. If the capacity of the Chamber is exceeded, I will adjourn the House immediately.
Oral Questions will now commence. Please can those asking supplementary questions keep them to no longer than 30 seconds and confined to two points. I ask that Ministers’ answers are also brief.
Ynys Môn: Economy
Baroness Humphreys
To ask Her Majesty’s Government, further to the decision by Horizon Nuclear Power to drop their planning bid at Wylfa Newydd, what steps they intend to take to support the economy of Ynys Môn.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, we recognise the need to pursue other opportunities for the region in parallel to large nuclear. In December, the UK Government, working with the Welsh Government and local authorities in the region, committed £120 million to the north Wales growth deal, which has the potential to create over 4,000 jobs by 2036 and to deliver an economic uplift of £2.4 billion.
Baroness Humphreys (LD) [V]
With the promise of future UK Government investment in Wales, will the Government commit to working with the Welsh Government to encourage a major new energy scheme on Ynys Môn, including options for tidal power, with both barrages and free-standing turbines? Further investments in offshore wind and the grid infrastructure to support it would make north Wales an attractive option for low-carbon electricity generation and bring much-needed economic opportunities for young people in north Wales.
Baroness Bloomfield of Hinton Waldrist (Con)
The noble Baroness is right to focus on the energy sector for Ynys Môn. The announcement overnight of the £5 million investment in the Holyhead hydrogen hub, adding to the Welsh Government’s investment, £253,000 from the £120 million north Wales growth deal for the Morlais tidal flow schemes and the commitment to invest in the production of one gigawatt of offshore floating wind, in which Wales has a technological head start, all show that we are delivering on our promises for Wales and working with the Welsh Government.
Lord West of Spithead (Lab)
My Lords, the Minister believes passionately in the need for nuclear power and, judging by her excitement over the result of the match on Sunday, also about Wales. When I asked on 11 January about how many large nuclear power stations were planned as part of our future energy mix, she replied that the country would need “significant, large nuclear capacity”. First, is she able to specify a number? Unless we act now, we will run out of options and, indeed, power stations. Secondly, if we cannot get a major nuclear power station at Wylfa, possibly the best site for one in the whole of the United Kingdom, is there scope for development of advanced small modular reactors, with the benefit of the production of hydrogen as well as power?
Baroness Bloomfield of Hinton Waldrist (Con)
We have been ambitious in our plans for new nuclear. We committed to at least one more gigawatt power plant in the energy White Paper published before Christmas and we are in discussions with a number of operators. There will be two operational power stations in 2030 and, by 2032, the first SMR should be operational too. We will look at all reasonable proposals for the development of the Wylfa site, which is, in fact, the best nuclear site in the world, not just the UK.
Lord Thomas of Gresford (LD) [V]
My Lords, the Government has refused to support the construction of a tidal lagoon in Swansea Bay, whose suitability will be well known to the Minister. She has referred to the possibility of tidal power in the Anglesey area. Will the Government consider the feasibility of tidal power in the Menai Strait between Liverpool Bay and Caernarfon Bay, a large infrastructure project that would provide jobs for Anglesey and beyond?
Baroness Bloomfield of Hinton Waldrist (Con)
Indeed, the Government are committed to exploring all the possibilities for tidal and wave power—in south Wales there is not only the Swansea tidal lagoon but the Dragon Energy Island project, and we will certainly look at other proposals in the north of Wales as well.
Lord Davies of Gower (Con) [V]
Given the unfortunate news that Horizon Nuclear Power has decided to drop its planning bid for Wylfa Newydd, does my noble friend agree that a freeport would transform the fortunes of Holyhead and Anglesey, encouraging greater development, investment and tourism on the island, as was outlined clearly to the House of Commons Welsh Affairs Select Committee last year? Is the Minister able to inform the House as to whether any progress has been made on a freeport?
Baroness Bloomfield of Hinton Waldrist (Con)
The noble Lord, Lord Davies, raises an important point. The freeport bids for England are already in and an announcement is expected shortly. I know that the MP for Ynys Môn, Virginia Crosbie, has worked tirelessly with a group of qualified and interested local stakeholders to put together a bid for a freeport for Ynys Môn. This will be ready to go when we launch the competition for Wales, on which we will work together with the Welsh Government.
Lord Ravensdale (CB) [V]
My Lords, I declare my interests as in the register. The national thermal hydraulics facility is a key part of the nuclear sector deal and will bring jobs and investment to Anglesey, making the most of the strong nuclear skills that exist in the area. Can the Minister say what progress has been made with this facility and, importantly, how it will align with the testing requirements of the UK SMR programme?
Baroness Bloomfield of Hinton Waldrist (Con)
The national thermal hydraulics facility is a key part of the nuclear sector deal and would indeed bring jobs and investment to Anglesey. The issue is very live at present. Collective and separate discussions are taking place between BEIS, the Welsh Government, the UKAEA, Rolls-Royce, whose SMR design is pivotal in this decision-making process, and the Menai Science Park, which would host the hydraulics centre. The technical needs of the Rolls-Royce SMR are being worked into a redesign of the proposed facility, but issues still remain over the height-planning restrictions, extra funding and future financing requirements of the facility. Perhaps all the parties can dig deep.
Lord Grantchester (Lab)
I heard the referee got man of the match. Is Shearwater Energy, which could be generating power by late 2027, under consideration? The energy White Paper announced £385 million for the advanced nuclear fund to support the development of both SMRs and AMRs, with up to £215 million of investment to develop a domestic SMR design. Does the Minister champion a large sum of this funding to support a small hybrid reactor at Wylfa on Anglesey?
Baroness Bloomfield of Hinton Waldrist (Con)
The Shearwater design is indeed an imaginative use of Ynys Môn’s unrivalled potential for generating power, both nuclear and in offshore wind; the Shearwater proposal as I understand it combines both, with an interconnector. The Government remain open to discussing well-developed proposals from all developers for the Wylfa site, and I believe the team has had some discussions with officials in BEIS.
Lord Roberts of Llandudno (LD) [V]
Will the Minister agree with me that what is happening to Holyhead as a port is a very threatening thing indeed? There was no preparation when we were leaving the European Union and the result is that for documentation, lorries from Holyhead, having come over the Irish Sea, now have to go to either Birmingham or Warrington. Has the Minister any proposal at all that will avoid Holyhead becoming a port of the past, with ferries from Ireland going directly to the European mainland? What hope can the Minister bring to Holyhead?
Baroness Bloomfield of Hinton Waldrist (Con)
The noble Lord raises an important point in an area of concern. Freight through all Welsh ports is down more than 50%, unlike freight through most UK ports, which have now recovered to pre-Brexit levels. We have no obvious answer as to the question why, as the landbridge between Ireland and Wales remains a vital transport artery, with significant cost and time advantages over maritime routes. The Minister for Wales in the other place has a meeting scheduled with the relevant freight transport association to discuss these issues and what we can do about them.
Lord Wigley (PC) [V]
My Lords, I welcome today’s announcement of government backing for the hydrogen hub at Holyhead put forward by Menter Môn and Anglesey Council, and indeed proposed in the Senedd a year ago by Ynys Mon MS Rhun ap Iorwerth. Given the aspiration of Anglesey, seen as the “energy island”, what steps will the Government take in partnership with the Welsh Government to ensure that the Wylfa labour force, with its huge skill base in energy-generation technology, is retained in the local energy sector and is not lost to the region?
Baroness Bloomfield of Hinton Waldrist (Con)
The noble Lord makes an extremely good point about trying to preserve the corporate knowledge within Wylfa and I will certainly take back this concern and proposal to the department. Wylfa still has the potential to be part of the north-west nuclear arc, along with the national thermal hydraulic research centre, the Trawsfynydd site for SMR, AMR and, potentially, medical radio isotopes, alongside Bangor University, which is a centre of excellence for nuclear studies.
Lord Lilley (Con)
My Lords, does the difficulty of finding a company to build a large nuclear power station at Ynys Môn not highlight the lack of nuclear expertise in this country—the first country to actually use nuclear for civil purposes. The one area where we do still have it is building nuclear units for submarines. Perhaps I might add my voice to that of the noble Lord, Lord West of Spithead, and ask my noble friend to consider a small modular reactor at this site; after all, additional modules can be added later.
Baroness Bloomfield of Hinton Waldrist (Con)
There are indeed design proposals that involve a number of small modular reactors on that site, and the Government believe that these will play an important role alongside large nuclear for low-carbon energy. As I have said before, the energy White Paper has put £385 million towards an advanced nuclear fund to support research and development into both SMRs and AMRs.
The Deputy Speaker (Lord Bates) (Con)
My Lords, I am afraid that the time allowed for this Question has now elapsed. We come to the second Oral Question, in the name of the noble Lord, Lord Moylan.
Transport for London: Financial Settlement
(3 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Moylan
To ask Her Majesty’s Government what progress they have made in discussions with Transport for London on a financial settlement (1) for 2021/22, and (2) beyond.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)
My Lords, the Government are committed to providing Transport for London with a financial deal that is sustainable, supports London’s recovery and keeps the capital moving. Any deal must be fair to the UK tax- payer. On 11 January, TfL provided us with a financial sustainability plan, which sets out its plans to achieve financial sustainability by April 2023. The Government hope to announce further Covid-related financial support for TfL shortly.
Lord Moylan (Con)
My Lords, TfL has suffered a double blow to its income from the pandemic and from years of irresponsible fare setting by the Mayor of London. While my noble friend grapples with that temporary challenge, will she also bear in mind that a railway needs steady capital investment too, and that there are parts of London Underground operating with signalling and rolling stock that is over 50 years old and is creaking at the seams. Will she, in support of the Government’s infrastructure objectives, seek to ensure that TfL is allowed a medium-term investment programme—however modest—to address these problems?
Baroness Vere of Norbiton (Con)
My noble friend is quite right: there have been some quite interesting fare increases—or not—from the mayor over recent years. We estimate that over the past four years his fares freeze has cost £640 million, which could otherwise have been spent on capital expenditure. But, as my noble friend knows, transport in London is devolved and it is up to the mayor and TfL to assess the merits of capital projects that they might want to invest in. However, it is absolutely clear that the Mayor of London must set a robust budget, demonstrate that TfL is on a clear path to achieving financial sustainability, and prioritise his capital expenditure. He will have to make difficult choices.
Lord Young of Cookham (Con)
My Lords, many of us are old enough to remember renewing our road funds not with the DVLA but with the county council. It was £12 and 10 shillings when I started driving. I see that the Mayor of London has revived this policy as part of the problems of Transport for London, which would also broaden the base for local government taxation. Does my noble friend have a view on the merits of this policy?
Baroness Vere of Norbiton (Con)
My noble friend raises a very interesting period of time that unfortunately I do not remember, but it is the case that the Mayor of London has some very interesting ideas as to how he wants vehicle excise duty to be spent. It is one of the proposals in the financial sustainability plan he has prepared, which I have to say does seem to have been drafted with a money-no-object mindset. Noble Lords will know that vehicle excise duty is used for the strategic roads network, which is the motorways and the major A roads, so unless we are going to stop Londoners from using our motorways and buying products that have been brought into London by HGVs travelling on them, I see absolutely no rationale for devolving VED.
Lord Davies of Brixton (Lab) [V]
My Lords, I read in the Financial Times today that the ONS says that as an average Londoner I receive about £4,000 less in public spending than I pay in tax. As a proponent of progressive taxation, I am happy to pay, but the fable of the goose that lays the golden egg comes to mind. Will the Minister agree that the economic prosperity of the whole country depends on a prosperous London, and that that requires, among other things, a well-connected London with excellent public transport? Is it not remarkable that London is the only major city in the world where there is no contribution from general taxation, from which the whole country would benefit?
Baroness Vere of Norbiton (Con)
The noble Lord is right that London will play a very important part in the economic future of our nation; in 2018 it made 23% of UK GDP. But while much of the funding for Transport for London comes from passenger revenues, there are other routes by which it gets money; for example, business rates retention, which is a retention which would otherwise have gone to Her Majesty’s Government. So one might assume that there is a broad breadth of sources of funding for TfL, but I agree—the Government want to support London’s recovery and we want to keep the capital moving.
Baroness Randerson (LD) [V]
My Lords, train operating companies have received billions of pounds from the start of the pandemic to keep trains running, with minimal requirements in return. Why has Transport for London not been treated with the same generosity, and why are the Government determined to dictate the minute details of the way services are run, which they have not done on railways elsewhere? Surely this could not be political.
Baroness Vere of Norbiton (Con)
My Lords, TfL has also received billions of pounds over the Covid pandemic. I am not sure where the noble Baroness is getting her information from about the differential between the conditions that are put on the train operating companies and on TfL. The Government make demands on the train operating companies. We work incredibly closely with them on, for example, what the level of services should be and whether engineering works should take place. We put significant conditions on our support for them. We put some conditions on TfL support, such as looking at the future of driverless trains and increasing efficiency targets. All these things are perfectly reasonable.
Lord Rosser (Lab) [V]
Instead of levelling up the north, where the Government have cut £4 million from Transport for the North, clearly the Government intend to level down London’s transport network. Virtually every answer that we have heard from the Minister today has confirmed that this is the Government’s approach. Can the Minister confirm or otherwise that the Government are not seeking to force TfL into making cuts to its service level, which would be completely counterproductive and place at risk the economic recovery of central London, which, like it or not, is still the engine of the UK economy?
Baroness Vere of Norbiton (Con)
The Government will provide funding to TfL. We have already said that we will and that we want to keep the capital moving. That is essential. We can also agree that the forecast scenarios that are available for passenger demand will, quite frankly, resolve only over a period of time. The Mayor of London is going to have to think about his capital expenditure and service levels in the future. He may have to make difficult decisions, but there are a number of reforms that the Mayor of London should have done but has not done, and probably should do in the future, in addition to potentially looking at service levels.
Lord Moynihan (Con)
My Lords, pursuant to the Question posed by my noble friend Lord Moylan, and in recognition of the long service that he has given to this subject, significant focus has been placed on new underground lines. However, does my noble friend the Minister recognise and accept that the settlement should focus as much on revenue as on the vital need for a fully funded capital programme to upgrade existing underground lines, in addition to the “new tube for London” programme?
Baroness Vere of Norbiton (Con)
There are many strands to the capital programme. Some of them are short- to medium-term. The Government will expect the mayor to make decisions that encourage the economic growth of London. One of the other important considerations when thinking about how we develop the London Underground will be housing. My noble friend may have seen that the Government agreed to safeguard the land for the Bakerloo line extension. It cannot be built now but it may be built in the future.
Lord Taylor of Warwick (Non-Afl) [V]
My Lords, what assessment have the Government made of the potential for further growth in goods and passenger transport on the River Thames, which, at 215 miles long, is the longest river in England?
Baroness Vere of Norbiton (Con)
As transport in London is devolved, the Government have not assessed the usefulness or otherwise of the River Thames. I suggest that the noble Lord takes that up with the Mayor of London.
Lord Berkeley (Lab) [V]
My Lords, Crossrail’s budget has been under pressure recently, and one of the stations that has not yet been started is Old Oak Common. Can the Minister tell the House what the budget is for Old Oak Common station, and how it is broken down between Crossrail, HS2 and Great Western Railway? If she cannot tell me, can she please write me?
Baroness Vere of Norbiton (Con)
Had the noble Lord given me fair warning of that question, I would have been delighted to answer it for the Chamber. However, I will discuss very briefly the amount of funding that the Government have been able to support for Crossrail. Back in August 2020 the board of Crossrail said that it would need another £1.1 billion, which was probably about the P70 budget. The Government have announced £825 million so that the GLA can borrow further funds to get Crossrail over the line and open to passengers.
Baroness Ludford (LD) [V]
My Lords, the Government commissioned a report into TfL’s finances from KPMG in June 2020. They said at the time that this was to understand TfL’s needs. The Government are now refusing to publish this report despite businesses and politicians urging them to. The suspicion is that they are playing political games. When will they end this secrecy so that Londoners get the transparency that they deserve?
Baroness Vere of Norbiton (Con)
The noble Baroness is right that the Government did commission that report. It extends to many hundreds of pages, and contains a huge amount of commercial information which we would not want to see in the public domain, as it would not be beneficial to the future of TfL. But the report did give us a firm understanding of where TfL is at the current time. It should be remembered that, even before the pandemic, TfL had a deficit in 2018-19 of £494 million. Combined with that KPMG report and the financial sustainability plan that we have received from TfL, we are in a much better place to help the Mayor of London get TfL back on its feet, and the Government are ready to support that.
The Deputy Speaker (Lord Bates) (Con)
My Lords, the time allowed for this Question has now elapsed.
Independent Medicines and Medical Devices Safety Review: Sodium Valproate
(3 years, 1 month ago)
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Lord O'Shaughnessy
To ask Her Majesty’s Government, further to the report by the Independent Medicines and Medical Devices Safety Review First Do No Harm, published on 8 July 2020, what plans they have to bring forward a redress scheme for women and families who have been harmed by sodium valproate.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
My Lords, the Government plan to respond further to the Cumberlege review later this year, as I committed in my recent Written Ministerial Statement. In the meantime, we are carefully considering the recommendation regarding a redress scheme for those harmed by sodium valproate, and measures are in place to limit the prescribing of this drug.
Lord O'Shaughnessy (Con)
I am grateful to my noble friend for his Answer. Since my noble friend Lady Cumberlege published her landmark review, another 150 babies have been born suffering harm from in utero exposure to sodium valproate, to add to the 18,000 children—18,000, my Lords—who have been harmed in this way since the 1970s. These children belong to families whose lives have been turned upside down, and who often cannot afford the costs of caring for their damaged children. They need and deserve a redress scheme now. Why can the Government not move faster?
Lord Bethell (Con)
My Lords, I pay tribute to those who have put together the valproate registry scheme that became live on 11 February. My noble friend is entirely right. There are 22,095 people on the registry; 462 of them had 490 conceptions, and 180 women were prescribed in a month when they were pregnant. A redress scheme is not necessarily the correct solution to this problem. We are considering it extremely carefully, and when we publish our overall response to the Cumberlege review we will include our considered response to the redress suggestion
Lord Hunt of Kings Heath (Lab) [V]
My Lords, the noble Baroness, Lady Cumberlege, concluded in her report that the system still did not know how to minimise the risk of future babies being damaged, despite 27,000 women of childbearing age currently taking valproate in the United Kingdom. In view of that, does it not make the case for a redress scheme absolutely persuasive?
Lord Bethell (Con)
My Lords, I will leave it to the response to the Cumberlege review to make the decision on the redress scheme. In the meantime, our focus is on a regime ensuring that those who take this important drug have the right advice to prevent them becoming pregnant. I emphasise that specialists review the treatment and ensure that an annual risk acknowledgment form is signed by the prescriber and the patient. This is an important measure ensuring that all those who take this potentially life-changing drug acknowledge and understand the implications of becoming pregnant.
Baroness Cumberlege (Con) [V]
My Lords, in our report we suggested that every pregnant woman who is on sodium valproate should be warned by her GP of the potential harm to her unborn child. Can my noble friend please tell me how many of the women exposed to this danger have been notified, and what the plans are to ensure that in future they are told? What incentive is given to GPs through the quality outcomes framework to ensure that they carry out this very important duty?
Lord Bethell (Con)
My Lords, as I explained a moment ago, there is an annual risk acknowledgment form signed by the prescriber and the patient, and that is shared with the patient’s GP. GPs should check that the patient has signed an up-to-date annual risk acknowledgment form each time a repeat prescription is issued. We have instituted a valproate safety implementation group that analyses, along with the MHRA, compliance with this plan. We acknowledge the review’s recommendation to introduce an indicator on safe prescribing in pregnancy for future iterations of the quality outcomes framework, and we will respond on that with the rest of the response to the review.
Baroness Jolly (LD) [V]
My Lords, redress is important, but so too is patient support. Could the Government confirm that they are considering the recommendation that a network of support centres should be set up to support those women who have been affected by Primodos, sodium valproate or vaginal mesh?
Lord Bethell (Con)
My Lords, I completely acknowledge the noble Baroness’s point. Support is incredibly important and our hearts go out to all those who have been hit by any of the three conditions covered by the review. We are absolutely looking at those recommendations to see how they may be implemented to provide the support that the noble Baroness rightly points out.
Baroness Wyld (Con)
My Lords, could my noble friend please update the House on the timetable for the appointment of the patient safety commissioner, one of the key recommendations that I am delighted the Government accepted? I understand that that requires new regulations, and the Government have rightly said that we ought to take time to find the best and widest possible field, but surely that just underlines the urgency of the need to get going with this.
Lord Bethell (Con)
As my noble friend rightly acknowledges, the everyday workings of the commissioner require some work. That work is being finalised and regulations will be made setting out further details about the appointment and operation of the commissioner—for example, the terms of office, the finances and other support for the commissioner. Officials are now working with legal and appointment colleagues to firm up time- lines and begin both the regulations and the appointment process for the commissioner.
Baroness Masham of Ilton (CB) [V]
My Lords, is the Minister aware that, when his noble friend Lord O’Shaughnessy was the Minister, the noble Lord realised the harm that some women had suffered from taking sodium valproate when pregnant? The noble Lord’s support has been inspirational and has given hope to these victims. Will the noble Lord, Lord Bethell, in his position as Minister now, bring forward a much-needed redress scheme for these women and children who have been let down?
Lord Bethell (Con)
I am grateful to the noble Baroness for her tribute to my noble friend Lord O’Shaughnessy, who has done an enormous service to us all by championing this cause, both as a Minister, when he moved this review and made a huge impact, and since then with his patient and thoughtful advocacy of this important cause. He speaks very movingly and thoughtfully, and we are greatly influenced by his persuasion on this subject. The noble Baroness should be reassured that we are absolutely looking at the recommendations for a redress agency, and we will come back with considered thoughts on it when we answer the review in the round. Until then, I welcome all thoughts and advocacy on the subject.
Baroness Thornton (Lab)
I have two points. First, last summer only 41% of the respondents taking valproate said that they had signed an annual risk acknowledgment form, so I would like the Minister to reflect on the fact that some GPs are not doing the job that they should be in terms of protecting women. Secondly, those affected by thalidomide and contaminated blood have a redress scheme, but it took years for that to happen. We simply cannot wait years for this to happen for those suffering from the effects of sodium valproate.
Lord Bethell (Con)
My Lords, I welcome the noble Baroness’s point on the proportion of those who say they have filled in the form. Phase 1 of the registry is a helpful collection of statistics, but we are putting in place phase 2, which will help us to understand exactly how many patients who are taking sodium valproate have actually filled in the form. That will give us the concrete reassurance that we seek on this matter. I recognise that there are redress payments for thalidomide and contaminated blood, but redress payments are not necessarily suitable for every single misfortune that happens in the medical world. However, we will look very carefully at the case for sodium valproate and I take the noble Baroness’s comments on board.
Lord Jones of Cheltenham (LD) [V]
Research from Konkuk University in South Korea has suggested that disabilities caused by the compound could cause autism spectrum disorder transgenerationally—in other words, afflict successive generations within families. What is the Government’s view?
Lord Bethell (Con)
I am grateful to the noble Lord for raising that study. It is not one that I am aware of, and I am keen to go back to the department to find out whether it has done any analysis of it. I will write to the noble Lord with a response.
Lord Singh of Wimbledon (CB) [V]
My Lords, the report First Do No Harm underlines the hurt and devastation that can result from not making patients aware of the possible side-effects of drugs. The harm done by giving sodium valproate during pregnancy cannot be undone, and generous support should be provided. Does the Minister agree that, while the appointment of a patient safety commissioner is a move in the right direction, that in itself underlines the importance of keeping patients fully informed of possible side-effects and listening to their concerns?
Lord Bethell (Con)
The noble Lord puts it extremely well and I totally agree with the thrust of his point. For patients to have the right information about the risks of the medicines that they are prescribed is essential. However, if I may stray into a different subject, there is also patient choice. For many patients, sodium valproate provides an incredibly valuable relief from epilepsy and mental illness. It is a drug that continues to be prescribed because some have no choice and there is no valid alternative to the drug. The number of people being newly prescribed the drug—new starters—is down dramatically from previous years, but for some it really is an important part of their therapy. The decisions that they make are personal ones, and we should respect those.
The Deputy Speaker (Lord Bates) (Con)
With apologies to the noble Baroness, Lady Browning, the time allowed for this Question has now elapsed.
Covid-19: Universal Credit
(3 years, 1 month ago)
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Baroness Sherlock
To ask Her Majesty’s Government what steps they are taking to support claimants of Universal Credit during the COVID-19 pandemic.
Baroness Sherlock (Lab) [V]
My Lords, in January 6 million people were on universal credit, up from 3 million last March. Does the Minister accept—
The Earl of Courtown (Con)
My Lords, could the noble Baroness put the Question first?
Baroness Sherlock (Lab) [V]
I am so sorry; I am out of practice. I beg leave to ask the Question standing in my name on the Order Paper.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, where do I start? I am so proud of the work that my department has done in supporting people during the pandemic. Time does not allow me to reel off everything that we have done, but I shall list these: our plan for jobs; a £2 billion kick-start scheme; increased support for 40,000 jobseekers of all ages; sector work-based academies; the job-finding support service; the help that we have given to 160,000 people; and our £238 million job entry targeted support. There is much more that I could say to the whole House. The department has done an outstanding job.
Baroness Sherlock (Lab) [V]
I am grateful to the Minister for having got that list out of the way, because now she can answer one very simple question from me. Does she accept that cutting £20 a week from the incomes of people on universal credit, whether now or in six months, will push children into poverty and leave out-of-work support at its lowest level in decades, just when unemployment is set to peak? Will she take back to the Chancellor a clear message that he should cancel this cut, extend the £20 to legacy benefits and ensure that our social security system offers a proper safety net to everyone who needs it?
Baroness Stedman-Scott (Con)
The £20 uplift in universal credit has done an outstanding job. The Chancellor put it in place in a temporary way, and I guess tomorrow we will find out the intentions for the future. But please be assured that I am very happy to go back to the Chancellor and share the views of the noble Baroness and many others who have made that point.
The Lord Bishop of Leeds
My Lords, I congratulate the Government on what they have done in this respect in supporting so many vulnerable people during the pandemic. However, does the Minister agree that the danger of the cut that taking away the £20 a week would be is that the Government would get a short-term saving, but would pay far more in the longer term because of some of the social costs? Given the number of people we see using food banks in my diocese and around the country—including working people—and the number of children in poverty and likely to go deeper into it, the remedial costs of supporting them into the longer-term future will far outweigh anything paid now.
Baroness Stedman-Scott (Con)
The right reverend Prelate makes an important point. The £20 uplift has made a significant difference and, like the noble Baroness, Lady Sherlock, he has outlined some of the impacts that would happen should that be stopped. I am terribly sorry, and I wish it were not the case, but I do not have the Chancellor’s ability to make a commitment today.
Baroness Stroud (Con) [V]
My Lords, an analysis by the Social Metrics Commission found that, without the universal credit uplift, nearly 1.4 million people would have been pushed into poverty due to the pandemic. With the £20 uplift and other government interventions, however, 700,000 people have been protected, 150,000 of whom are lone parents. Does my noble friend agree that this is a remarkable achievement? What plans do the Government have for ensuring this continued support?
Baroness Stedman-Scott (Con)
I thank my noble friend for her acknowledgement of the difference that the £20 has made. I had better say now: “Message received, over and out”. I will relay it and replay it to my colleagues in the department and the Chancellor.
Lord Berkeley of Knighton (CB) [V]
My Lords, on a previous occasion the Minister was extremely sympathetic to the plight of freelancers, especially musicians, who have been caught in the government net and unable to get through it—that is, they were not eligible for universal credit or the SEISS. As I say, she was very sympathetic and said that she would look at this with her department. Has she made any further assessment?
Baroness Stedman-Scott (Con)
A number of groups of individuals have been impacted by Covid and their incomes have been put under stress. The department continually reviews the impact on people but this is a timely reminder for me to go back and make some more representation, which I will do.
Baroness Primarolo (Lab) [V]
My Lords, does the Minister agree that the £20 uplift for universal credit should be extended to include claimants receiving legacy and related benefits, the majority of whom are disabled or carers, or have a long-term illness? These people are suffering great hardship and the Government need to take action now. Will she support that?
Baroness Stedman-Scott (Con)
Legacy benefits and the £20 uplift have been the subject of lengthy and great discussions in the department. To be absolutely straight and truthful, the only thing I can say is that the Government have no plans to extend the temporary £20 uplift. I know that that will be a disappointment.
Baroness Janke (LD) [V]
My Lords, further to the question of the noble Baroness, Lady Primarolo, I draw to the Minister’s attention the fact that many people still on legacy benefits have had their finances hit hard by the pandemic. The need to reduce health risks, such as by taking taxis to appointments to avoid public transport, purchasing more PPE for those with respiratory conditions and using more heating to reduce the risk of complications from Covid-19 all incur high costs. In previous questions, we have heard that the costs of disability and sickness are considerable, particularly to people who have little at the moment and are on legacy benefits. I know that the Minister has answered by saying that the Government have no commitment to add the £20 uplift to legacy benefits, but will she commit to looking into the circumstances of people on legacy benefits and their carers—disabled people, particularly—to see what action can be taken to improve their circumstances?
Baroness Stedman-Scott (Con)
I give an assurance to the noble Baroness that I will speak to her in more depth about the points she raises. Once I have done that, I will of course go back to the department and talk to those there.
Lord Farmer (Con)
My Lords, the number of vacancies in the period November 2020 to January 2021 is up by 64,000 from the previous quarter to almost 600,000. What are work coaches doing to ensure that claimants take these vacancies up, and what plans do the Government have to incentivise moving into work by reducing the taper rate and increasing work allowances?
Baroness Stedman-Scott (Con)
I say to my noble friend and the whole House that we should thank God that we have work coaches. Their training has been enhanced, they are focused on the individual and they make sure that those individuals get the support and access to the benefits that they need. More importantly than anything else, they are getting access to the help they need to get back to work. Universal credit was designed to make work pay, so not all of a person’s earnings are deducted from UC. The department has made changes to improve the financial incentives to work by reducing the taper rate to 63% from 65%. All these things are continually looked at.
Lord Clark of Windermere (Lab) [V]
My Lords, a little while ago there were widespread reports that fraudsters were illegally claiming public money from the universal credit uplift. The Government moved quickly and took steps to tackle this. Can the Minister update the House on the latest position?
Baroness Stedman-Scott (Con)
The noble Lord is right to raise the point about people who try to abuse the system with no right to do so. The situation with fraud and recovering sums is being dealt with in the department. To give the best response in the time I have available, I will write to the noble Lord and place a copy of the letter in the Library.
Lord Bird (CB)
When universal credit was first put together, one big thing was to cut through bureaucracy and waste. I would like to think that we have moved towards reducing the ways in which people can get on universal credit. Obviously, there are many problems for people who want to go on to it, and they are still having to wait a long time. My question is more about the long-term effect of universal credit. How much does it cost to actually deliver £1 of social support, because in the old days it used to be about a fiver to deliver that £1?
Baroness Stedman-Scott (Con)
I not sure where the noble Lord gets his figures from; I do not dispute them, but I will have to go back and have a good look. The universal credit business case was agreed in 2018 and demonstrated that it remains deliverable and affordable, and provides value for money. In a steady state, universal credit will generate economic value of £8 billion per year, and it is doing a great job.
The Deputy Speaker (Lord Bates) (Con)
My Lords, I am afraid that the time allowed for this Question has now elapsed.
Covid-19: Brazilian Variant
(3 years, 1 month ago)
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Baroness Thornton
To ask Her Majesty’s Government what assessment they have made of the risk of the P.1 Brazilian variant of COVID-19.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
My Lords, the challenge we have is uncertainty. Genomic sequencing data links the Brazilian variant to the South African variant, the so-called E484K mutation. We also acknowledge that there are anecdotes from Manaus on transmissibility, but none of this is clear cut. We are working towards getting the concrete data necessary to make a confident assessment of this mutation. Therefore, we are taking a precautionary approach and we are committed to limiting its spread by all means at our disposal.
Baroness Thornton (Lab)
I thank the Minister. According to a report by the World Health Organization, the P1 variant that originated in Brazil has been found in at least 15 countries which are not on the Government’s red list, meaning that arrivals from those countries are currently exempt from the hotel quarantine policy. Virologists have warned that the Government’s red list is at risk of becoming out of date at any time because of the time it takes to sequence coronavirus cases. Indeed, these six cases date back to 11 and 12 February. In the light of these facts, and given concerns that the Brazilian variant may be more transmissible and might be resistant to existing vaccines, will the Government review the red list and take urgent action to introduce a comprehensive hotel quarantine system that applies to all UK arrivals?
Lord Bethell (Con)
The noble Baroness is entirely right: this is not the first case of P1 in Europe. As of 11 February, P1 has been identified in 17 countries, with 200 cases reported globally. In the EU, 30 cases have been identified in five countries and areas. We keep the red list under permanent review and have an ongoing process of keeping it up to date. The fact that we have a red list and a managed quarantine programme makes further expansion of the red list possible. It puts our borders and our vaccine under a programme where we can control things, which is to be applauded.
Baroness Jolly (LD) [V]
How confident are the Government that our vaccines will cope with the Brazilian variant of the Covid virus and that the passenger from Brazil, who is somewhere in south Gloucestershire, will be traced? What measures are now in place to ensure that an incoming passenger is not lost again?
Lord Bethell (Con)
We are uncertain on the vaccine. There is a huge amount of speculation, but I would recommend that noble Lords take it with a pinch of salt because we cannot know for sure how the virus will behave with those who have been vaccinated until we have much better and clearer data. Regarding the current managed quarantine arrangements, I pay tribute to the teams which have stood up the system extremely quickly and well. The south Gloucestershire and Aberdeen arrangements have been incredibly impressive. It is extremely frustrating to all concerned that one person did not fill in the form and slipped through the net. But overall, the programme has shown itself to be extremely robust and we have an enormous amount of confidence in it.
Lord Balfe (Con)
My Lords, we seem to be devoting a huge amount of state resources to chasing one person with a mutating virus at a time when the National Health Service is on the point of collapse. Waiting lists are going up and we are in a terrible mess. Will the Government accept that viruses mutate and that we need a strategy to deal with that? Constantly locking people up and extending the list of countries so that you can put more and more people into hotels is a self-defeating policy.
Lord Bethell (Con)
The vaccine is absolutely central to our strategy. It is an approach that has proved enormously popular, and I think I speak for a large number of people when I say that defending the vaccine has to be our number one priority. If there were a highly transmissible vaccine-escaping mutation, it would take us back to the beginning of this whole pandemic. That is why we have put in place red list countries and managed quarantine. That is why we are committed to Operation Eagle and the efforts to track down those bringing variants of concern into this country.
Lord Patel (CB) [V]
My Lords, the scientists are concerned about the P1 Brazilian variant because of three mutations, one of which is common to other variants, making it more transmissible. One of the others is referred to as the “escape mutation”, which may bypass some vaccine-induced immunity. Does the Minister agree that, apart from the measures the Government are taking of trace, track and isolate and surge testing—which I thoroughly approve of—it is important to continue genomic sequencing, at scale, of Covid cases to detect variants that may arise and to monitor and study post-vaccine immune response? That would enable us to modify the vaccines to boost the immune response and deal with the variants.
Lord Bethell (Con)
The noble Lord is entirely right. Our commitment to genomic sequencing, which has lasted for years, has put Britain in great shape to be able to do the sequencing necessary to track these variants. We are doing more sequencing than any other country. But as the noble Lord knows, this is detective work, and it is extremely complex. While the 484K mutation might be the significant change in both the Brazil and South African variants, it might be one of a great many other mutations in its genomic characteristics. This is the detective work we are doing. I am afraid that it will take some time to get to the bottom of it, and it needs to be complemented by field studies into how the mutation reacts in real life, as well as with antibodies. The combination of immunology, virology, biology and real-world clinical study will give us the insight that we need.
Lord Winston (Lab) [V]
My Lords, with due respect to the Minister, I wonder if a pinch of salt is quite the right treatment for some of these variants of the Covid virus. It is not just the Brazilian and other different variants. For example, in addition to Siqueira’s paper, which has just been published from Brazil in the last couple of weeks, the paper from Bogota shows numerous variants which are not quite the same. Some of these may be rather more virulent, and it is possible that they may even cause reinfection—it is certainly not very clear. The point is this: surely we need to be very cautious indeed about our airports and whether the list we have is sufficient. At what stage do we decide that we need to take much firmer action with all incoming passengers to the United Kingdom, making certain that they are properly tracked and traced?
Lord Bethell (Con)
The noble Lord is entirely right. Things are happening around the world which are causing a great deal of anxiety. Stories of possible reinfection in South Africa are extremely concerning and the huge spike in infections in South America has not been properly explained. It is possible that there are a number of mutations, and mutations of mutations, there. The truth is that we do not have the genomic or immunological data that we need to fully understand what is going on. That is why we have taken a precautionary approach, as the noble Lord recommends. We have instituted both managed quarantine and a red list which we keep under review. If we feel it necessary to extend that list, we will do so.
Lord Scriven (LD) [V]
My Lords, tracing new variants will be key in the next phase of this public health challenge. So why does the £22 billion test and trace system not have an individual identifier on each test posted to homes, along with an integrated database? This way, every test could be traced back to an individual, regardless of where the test was sent from, or even if a person incorrectly filled in a form.
Lord Bethell (Con)
I endorse the noble Lord’s observation that tracing is important. I pay tribute to the Operation Eagle team. The noble Lord will note that the South African variant, which made landfall in the UK, is currently being contained through the immense work of this team. They are throwing a blanket over communities and doing a huge amount of forensic, detective work in tracing variants. As to his specific point, it is possible for someone to walk up to a testing station, take the test, be handed a form and not fill it in. We are trying to understand if those were the circumstances in this case.
Lord Flight (Con)
My Lords, are there risks that the Brazilian variant may not provide adequate protection against reinfection and that vaccinations are less effective against this strain? It carries the same mutation as the Kent variation, which is rated 70% more transmissible than previous strains.
Lord Bethell (Con)
My noble friend is stretching my immunological skills to the limit. The Brazilian variant has a number of mutations. It is not clear to us whether those are mutations of transmissibility, vaccine-escape mutations or reinfection mutations, and therefore which we should focus on. All are possible and we are keeping a careful eye on this. An enormous amount of investment and research is going into understanding this more carefully.
Lord Empey (UUP) [V]
My Lords, is my noble friend aware that Brazilian companies have a significant footprint in both parts of the island of Ireland? Given that there is a common travel area between the two, what discussions has he had with the Government of Ireland about this? How is it proposed to deal with inflows of people from Brazil who might be able to travel freely throughout these islands?
Lord Bethell (Con)
I am grateful to the noble Lord for flagging the Brazilian connection with Ireland, which I did not know about. I reassure him that there is an enormous amount of collaboration between Whitehall and Dublin on this matter. There are strong links on the managed quarantine programme within Ireland in order to close the “Dublin backdoor”, as it is sometimes called. I pay tribute to colleagues in Dublin for their collaborative approach. We do not currently have a five nations unified approach, but it is of interest. We are definitely keen to ensure that there is no backdoor entrance for VOCs through Dublin, or in the other direction.
Baroness Finlay of Llandaff (CB) [V]
My Lords, given the inevitability of variants and that some will evade antibody responses, what plans do the Government have for unified messaging, across the whole of the UK, that long-term distancing, mask-wearing and other measures are essential, and to tell the public that this is not like flu and we need to live differently?
Lord Bethell (Con)
The noble Baroness is entirely right, which is why the Prime Minister struck such a cautious tone when he unveiled the road map. We are not through this yet. A substantial proportion of the country is vaccinated, but we have to protect the vaccine. For those who have not been vaccinated, there are risks, and that is why we still have in force a “do not travel” alert and why we are maintaining marketing and communications at every level on the restrictions that are still in place.
Lord Hunt of Kings Heath (Lab) [V]
My Lords, to come back to my noble friend Lady Thornton’s Question, the Minister will know that, at the SAGE meeting on 21 January, there were warnings that geographically targeted bans cannot be relied upon to stop the importation of new variants, partly because of indirect travel. He has just said that he does not want a backdoor entrance through Ireland. But what are the Government going to do about indirect travel, which is a clear route into this country to avoid the current quarantine rules?
Lord Bethell (Con)
Those who travel to the UK must fill in a passenger locator form. On the PLF they have to state whether they have been in a red list country. We also share an enormous amount of information with the aviation industry to cover people’s previous travel, and therefore it is not as easy as the noble Lord might think to take a hop and a skip into Britain through a third country, as has been proved by those who have travelled from Brazil and been caught by the red list. However, his point is well made, which is I why I reinforce what I said earlier: we keep the red list under review and, if it proves necessary to extend the countries on that list, we shall do so to protect the vaccine.
Lord Cormack (Con)
My Lords, at the outset, my noble friend said that the Government wanted to use all means at their disposal to combat the spread of all the variants and mutations. I refer to a point I made last week. One means at the Government’s disposal is to ensure that all those who work in care homes are vaccinated. It is quite wrong that they can refuse it and then attend to the most intimate needs of their patients
Lord Bethell (Con)
My Lords, I remind my noble friend that we have some mandatory vaccination already in place in the health service; those who perform operations and other intimate health interventions are required to have hepatitis and other vaccinations, for instance, so there is a precedent for what he talks about. However, it is a huge step, which impacts people’s personal liberty and choices, to make vaccination mandatory for more than a million social care workers. My noble friend makes a persuasive argument, which is why the Cabinet Office is looking at exactly this sort of matter; there is a strong public health argument for mandatory vaccination. Given that we have not rolled out vaccination across the whole population yet, it is premature to make that decision today, but we are considering it carefully.
The Deputy Speaker (Baroness Fookes) (Con)
My Lords, the time allowed for this Question has now elapsed. I apologise to those Members whom I was not able to call.
Vauxhall at Ellesmere Port and Battery Manufacturing Strategy
(3 years, 1 month ago)
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Lord Bassam of Brighton (Lab) [V]
My Lords, the Ellesmere Port plant is a major employer, and letting it wind down would have devastating consequences, with 1,000 highly skilled jobs lost in the local community. The Government must do all they can to secure the future of the plant, and it is worth reminding ourselves that the automotive sector has had no sectoral support during the pandemic.
To achieve net zero and sustain our automotive industry, we need a plan and action and investment. As such, will the Government bring forward ambitious investment in electric vehicle technology, including the electric battery supply chain, in tomorrow’s Budget—so that manufacturers have the long-term confidence that they need to build new electric models in the UK and so that we can move forward and secure the future of Ellesmere Port as a major automotive producer?
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I assure the noble Lord that we are doing all that we can to ensure that Ellesmere Port has a bright future. The automotive industry in general is an essential part of the Government’s plans for green growth, levelling up across our country and driving emissions to net zero. As the noble Lord will be aware, as part of the Prime Minister’s 10-point plan, the Government brought forward the phase-out date for new petrol and diesel cars and vans to 2030, and, by 2035, all new cars and vans must be fully zero-emission at the tailpipe.
Lord Fox (LD)
My Lords, I am on the executive of the All-Party Parliamentary Motor Group. In his Statement, the Secretary of State boasted that some £1.5 billion of joint funding had gone to the APC and the Faraday battery challenge. To put that into context, that is about a tenth of what the French Government are putting into this sector. The fate of Ellesmere Port will be decided in days, but the Government have had years to get ready for moments like this. Everyone knew and knows that we need significant battery manufacturing capacity in this country. The Faraday challenge has been running for eight years, so what has stopped a battery gigafactory being built already?
Lord Callanan (Con)
Ultimately, of course, these are commercial decisions for the companies involved, but we are working closely with a number of people interested in establishing gigafactories. We have announced £500 million as part of our wider commitment of up to £1 billion to support the electrification of vehicles and their supply chains, including developing gigafactories in the UK.
Baroness Altmann (Con) [V]
My Lords, I congratulate the Government on their aim to ban sales of new internal combustion engine cars from 2030. What specific plans do they have to invest in the production of electric vehicles and batteries to ensure that the UK remains competitive globally in manufacturing? Does my noble friend see a role in this for regions such as the north-west, where Vauxhall is sited?
Lord Callanan (Con)
I agree with my noble friend that it is very important that we see a future for these industries. As I have said, we are doing all that we can to help—I outlined our financial commitment in my answer to the noble Lord, Lord Fox. I come from the north-east, so I want to see it do well along with the north-west, and I repeat my earlier answer that we are doing all that we can to secure the future of the Ellesmere Port facility.
Baroness Boycott (CB) [V]
My Lords, like everyone, I welcome the introduction of full electric vehicles, but the Secretary of State said:
“We want to see a circular economy for electric vehicles.”—[Official Report, Commons, 1/3/21; col 33.]
However, he also said, “If we attain that”. Can the Minister give us an assurance that the Government are looking into how this can be achieved? A recent report by the Transport and Environment Committee found that it is eminently feasible to have batteries that are one-fifth lithium and nickel and 65% cobalt, coming from recycled sources, by 2035. Will the Government put some sort of target into legislation as a statement of intent to drive the industry to do just that?
Lord Callanan (Con)
I outlined in previous answers the support that we are giving; we are looking closely at all these matters. I am sure that it is eminently possible to ensure that a circular economy applies to electric vehicles as much as it applies to many other parts of the economy.
Baroness Jones of Moulsecoomb (GP)
Are the Government aware that electric vehicles can only ever be a tiny part of reducing our carbon emissions—and that it would be more effective to stop building new roads and not open new coal mines? If they are worried about jobs, the Government should be starting up thousands of schemes to train people to retrofit insulation in houses and install clean heating systems. Are the Government thinking about this?
Lord Callanan (Con)
I am pleased to tell the noble Baroness that we are already investing millions of pounds in training for green jobs under the Green Homes Grant scheme. We invested about £7 million in a training competition, and there are numerous other government schemes doing precisely what she suggested: the eco scheme, the home upgrade grant, et cetera.
Lord Woodley (Lab)
My Lords, I appreciate the helpful comments that have already been made, but I must ask the Government to leave no stone unturned in keeping this Vauxhall car plant at Ellesmere Port open—it is crucial, as people have said. Finalising an agreement with Stellantis to manufacture not one but potentially two next-generation battery-driven vehicles is crucial, securing, of course, thousands of high-skilled jobs for Ellesmere Port and, indeed, our country. Battery-driven vehicles are the future for this industry, if we are to have any future at all, and I suggest that it would be unforgiveable if the Government missed the opportunity of this investment and of securing these jobs for our country.
Lord Callanan (Con)
I know the noble Lord’s personal commitment to the north-west, and I agree with him about leaving no stone unturned. I assure him that the Government are committed to securing the future of Ellesmere Port. The Business Secretary and his senior officials are engaging frequently with the company to explore ways to ensure that the plant stays open. The noble Lord will understand that, while these discussions are ongoing, I cannot comment further, but we will do all that we can.
Lord Mann (Non-Afl)
We have the land and the skilled workforce, and we no longer have the bureaucracy of the European Union restricting state aid to new industries. The Minister talks about the private sector—of course it needs to be there. But should we not be in the lead in the world on electric vehicles, with state money—government money—helping to make sure, as we have done with vaccines, that we are first, not second, third or fourth in this technology? Therefore, should those decisions not be made now?
Lord Callanan (Con)
Those decisions have already been made, and I agree with the noble Lord: it is essential for the future of the industry, and in relation to issues such as rules of origin, that we establish domestic supply chains. I outlined in a previous answer the very substantial investments that the Government are making in this area.
Lord Randall of Uxbridge (Con) [V]
My Lords, I was very pleased to hear my noble friend explaining what Her Majesty’s Government are doing to ensure the future manufacture of electrified vehicles, helping us to meet those net-zero targets. Does he agree that there is a huge opportunity for the manufacture of batteries not just for cars but for larger vehicles, such as buses?
Lord Callanan (Con)
I agree with my noble friend and indeed I would include vans as well. He makes a very good point. Developing a competitive UK electrified supply chain is key to maintaining the success of our automotive industry, which I remind noble Lords is one of the most productive and efficient in the world. Doing this will protect and create thousands of high-quality jobs across the UK.
Lord Austin of Dudley (Non-Afl) [V]
My Lords, I draw attention to my entry in the register of interests. The electric vehicle revolution can also bring thousands of well-paid jobs to areas such as the West Midlands, but that requires investment in battery technology and mass production. What assessment have the Government made of proposals for a battery plant at Coventry? I commend to the Minister the brilliant work being done in this area by the Warwick Manufacturing Group, where I and many other parliamentarians sit on the voluntary advisory group.
Lord Callanan (Con)
There are a number of good proposals around the country, including from Coventry, for the location of gigafactory investment. Ultimately, of course, the decision will be a commercial matter. Ministers and officials are in close discussion with those developing the Coventry proposals, the Blyth proposals and other factories around the country.
Lord Field of Birkenhead (CB) [V]
I thank the Government for their statement. What do the Government need to bring to the table? What does Vauxhall need to bring to the table to ensure that we have in Wirral one of the centres for battery production?
Lord Callanan (Con)
A bid from Coventry, bids from the north-west, a bid from the Wirral as well—we totally understand that. The noble Lord will understand that these are commercial decisions. We are willing to stand behind companies and help them develop their proposals, but there are a number of exciting proposals in different parts of the country. I have outlined the financial support that is available. With regard to the future of Vauxhall, or Stellantis as it now is, we are in discussions with it; my right honourable friend the Secretary of State has had a number of meetings with it, and senior officials are meeting it. Those discussions remain confidential at the moment but we are doing all that we can to assist.
The Deputy Speaker (Baroness Fookes) (Con)
All supplementary questions have been asked.
Covid-19: Ethnic Minority Disparities
(3 years, 1 month ago)
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Baroness Wilcox of Newport (Lab) [V]
ONS statistics last week showed that the unemployment rate for ethnic minorities is 9.5%, compared with 4.5% for white people. A key example of a risk factor is socioeconomic deprivation. Research shows that black, Asian and ethnic minority people are more likely to be on zero-hours contracts. One in five people on such contracts is not eligible for statutory sick pay. What plans do the Government have to address precarious work for ethnic minorities specifically? Do the Government acknowledge that this is evidence that structural racism in the labour market and socioeconomic risk factors interact?
The Parliamentary Under-Secretary of State, Department for Education and Department for International Trade (Baroness Berridge) (Con)
My Lords, we recognise that certain occupations have had an increased exposure to the virus. That is one of the risk factors for ethnic minority populations. That is why with transportation, for instance, we have issued two different sets of guidance, for private hire and for public service vehicles, and included those within the mass testing. In relation to the economic disadvantage, we are investing £30 billion in a plan for jobs to enable people who have been put out of work by the pandemic to get work.
Baroness Hussein-Ece (LD) [V]
My Lords, the increasing levels of Covid-19 are now impacting far more on the south Asian community, particularly the Pakistani and Bangladeshi communities. What targeted actions involving public health and policies are being deployed to combat this? Will the Government now publish equality impact assessments on the pandemic responses, including vaccine uptake, given the clear structural social inequalities and institutional racism that have exacerbated the pandemic’s impact on the majority of ethnic minority communities?
Baroness Berridge (Con)
My Lords, the noble Baroness is correct that the report published last Friday revealed that in the second wave of the pandemic sections of the south Asian population were disproportionately affected by the virus. We have funded community champions to get the message out across certain communities through local authorities. In relation to community centres and places of worship, we have now set up asymptomatic testing centres and vaccination centres to try to increase the take-up within those communities, as getting vaccinated is the best way to protect them from the virus.
Baroness Prashar (CB) [V]
My Lords, I commend the work and the actions undertaken by the Government to respond to the disproportionate impact of the pandemic on ethnic minorities. However, as we have heard, the data shows that socioeconomic factors are a major driver for disparities in infection rates. Ethnic minority communities are statistically more likely to be disadvantaged. Does the Minister agree that, as we emerge from the lockdown, we must not only ensure that we build on this evidence and develop appropriate responses but take steps to ensure that we reduce the level of socioeconomic disadvantage faced by sections of the minority communities as part of the levelling-up agenda?
Baroness Berridge (Con)
My Lords, the pandemic has indeed revealed many inequalities, including health inequalities across certain communities. That is not linked only to race: we also believe that certain coastal communities will have been disproportionately affected by the virus. However, we are aiming many of our schemes at those populations within the ethnic minority community; for instance, with the apprenticeship schemes we have had specific promotion to ensure that black and minority ethnic people take up those opportunities where they disproportionately do not do so.
Baroness Verma (Con) [V]
My Lords, are my noble friend the Minister and her department looking at post-Covid job creation, particularly among the low-skilled BAME communities? I reflect on my own home city of Leicester, where many jobs have been lost. If we are going to try to level up, as she has just said, we need to ensure that the right services and right interventions are in place. Will she consider looking at a pilot scheme to go into Leicester to do the levelling-up agenda on the skills matrix?
Baroness Berridge (Con)
My Lords, being relatively local to Leicester in origin, I pay tribute to the people of Leicester, who I think have endured the longest period of restrictions of any part of the country. One of the few pieces of good news for the House over recent weeks has been the FE and skills White Paper and the focus on higher technical qualifications. We are focused on giving skills to people, particularly in low-income jobs, through the lifelong learning entitlement so that while earning they can train themselves up to get better-paid and better-quality work. I will take away the specific idea of a pilot to the Minister for Apprenticeships and Skills.
The Lord Bishop of St Albans [V]
What are Her Majesty’s Government doing to engage with the Gypsy, Traveller and Roma communities, who are often left out of these discussions, to raise awareness of the positive vaccination process that is available?
Baroness Berridge (Con)
My Lords, the right reverent Prelate is correct that this marginalised community is often left out. My noble friend Lord Greenhalgh, who is in the House, is leading a specific initiative out of MHCLG on this community. We now have data on the level of take-up of the vaccine in particular communities. The local directors of public health, who are the best people to know how many vaccines have been offered and how many have been taken up on the ground, should have the detailed information in the coming weeks in order to focus on that particular community in their locality.
Baroness Stuart of Edgbaston (Non-Afl) [V]
My Lords, ethnic minority groups have suffered disproportionately when it comes to health inequalities, economic inequalities and wealth inequality. However, any recovery post Covid will have to be UK-wide, so will the Government undertake to look at best practice and gather data so that we can compare the figures, whether from Birmingham, Belfast, Edinburgh or Cardiff, and therefore learn and overcome the divisions that have been so much more highlighted in the last year?
Baroness Berridge (Con)
My Lords, indeed, the department, among other departments, is regularly in touch with the devolved Administrations, because we want to share best practice on this. Obviously, DWP is a nationwide provision and there are more job coaches there, which we hope will enable those communities, particularly BME communities, to access work as quickly as possible if they have lost work now or lose work after furlough ends.
Baroness Young of Old Scone (Lab) [V]
My Lords, several noble Lords have quite rightly highlighted deprivation, unemployment and poverty as causes of Covid spread and I will not say anything different, though ethnicity per se does not predispose to Covid. People of ethnic origin, particularly in south Asian communities, are six times more likely to have diabetes, a condition that does predispose people to more serious impacts of Covid. Ethnic communities are also more likely to live in overcrowded accommodation and multigenerational households and to be poor. It is really poverty that kills. Can the Minister say what wider economic and social policies, including education, income and housing, the Government will introduce to tackle the poverty gap that has got wider in the last 10 years of Conservative government?
Baroness Berridge (Con)
My Lords, the noble Baroness will be aware that the NHS has an obesity strategy and the pandemic has shone a light, helpfully, on how important that strategy is. I can comment only in relation to the role of education in this—we were on track and had seen an overall closing of the attainment gap over the last 10 years. We recognise that there has been a narrowing in the last couple of years, but we are focusing our catch-up recovery to ensure that children from disadvantaged backgrounds catch up as quickly as possible.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, the report suggests that overrepresentation in certain generally low-paid occupations is a significant factor in the horrific death rate for people from Pakistani backgrounds. There is a lot that might be said about that with regard to structural racism, as the noble Baroness, Lady Wilcox, referred to, but in the pandemic context, does it not demonstrate that employers are not doing enough to protect workers, particularly essential workers? What more will the Government do to force employers to behave better to save lives?
Baroness Berridge (Con)
My Lords, since 1974, I believe, the Health and Safety at Work etc. Act has been in force in this country and, overwhelmingly, employers take their responsibilities in this regard very seriously. The NHS, as a key employer, had by the end of last year done a risk assessment of the overwhelming majority of its ethnic minority workforce. As I said, we are also including certain groups in the mass testing asymptomatic pilots to ensure that we reduce rates of transmission.
The Deputy Speaker (Baroness Fookes) (Con)
The time allowed for this Question has now elapsed, and I apologise to those who were hoping to be called.
Rough Sleeping
(3 years, 1 month ago)
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Lord Kennedy of Southwark (Lab Co-op)
My Lords, I thank the noble Lord, Lord Greenhalgh, for bringing this Statement to the House this afternoon. I draw the attention of the House to my relevant registered interest as a vice-president of the Local Government Association.
The Government promised to “bring everybody in” during the pandemic and, despite good work done in the first wave, today we sadly have many people sleeping rough again on our streets, many very close to this building. The people sleeping on the link bridge between Waterloo station and the street, who I have mentioned before, are still there: I saw them yesterday on my way to this House. According to the Government’s own figures, there were 2,688 people sleeping rough on a single night in autumn 2020. People who are homeless are three times more likely to experience a chronic health need, including respiratory conditions, putting them at higher risk of poor health outcomes, including from Covid-19.
It is tragic that in one of the richest countries in the world, in one of the richest cities in the world, we have people sleeping rough on the streets tonight. So, can the noble Lord tell the House why the response to the homelessness situation of people living on our streets was so much better and more effective in the first wave in comparison with the second wave? What happened in government that led to the response being so much worse this time around? What happened to the Everyone In policy? It created a safe space for people to access the support needed to move on from homelessness.
On the wider picture of homelessness, the situation is even worse, with people living with friends and sleeping on sofas, including up to 130,000 children in England. The Government have a manifesto commitment to end the blight of rough sleeping in England by 2024. The response by the Government to this pandemic must surely be part of the plan to deliver on that commitment, and not an obstacle that puts the policy pledge in jeopardy. What we need from the Government is a strategy in place to ensure that people experiencing homelessness can move on from homelessness or expensive temporary accommodation into secure, safe, warm, dry, long-term accommodation that enables them to start rebuilding their lives.
Local authorities should be congratulated on the work they have done, with limited funding and unclear guidance from the Government. Will the noble Lord, Lord Greenhalgh, identify for the House the various sums of money that are mentioned? Which of those are new money and not just restatements of previous funding commitments?
Housing First is a recognised and accepted method of ending homelessness for people with multiple needs, including mental health issues and addictions. The scheme is in place in Scotland and is being piloted here in England, but the fact is that many people experiencing homelessness in England will need a Housing First offer to finally end their homelessness. There are three pilots in place, which provide around 2,000 places, but this is a long way short of the investment and commitment needed to deal with the issue finally. So when does the Minister expect a decision to be made on rolling out the scheme in England, as has already been done in Scotland, and when does he expect funding for the rough sleeping accommodation programme to ensure that a long-term housing solution is not just an aim but a reality, which is not the case today?
Baroness Grender (LD) [V]
My Lords, I thank the noble Lord, Lord Greenhalgh, for bringing us the Statement. There is no doubt that Everyone In last spring was a significant achievement. Louise Casey, now the noble Baroness, Lady Casey, wrote in her email at the start of the pandemic, after her first week in MHCLG:
“I don’t care what’s happening; I don’t care what’s going on, you’ve got to get everybody in.”
Rough sleeping was treated as an urgent public health issue, resource was prioritised and brought forward, and central and local government worked in tandem with all the charities and the hotel sector and lined up safe accommodation. This was without question a success. But, as so many witnesses to the APPG for ending homelessness made clear, these numbers are never static. Homelessness, like a river, expands and grows. Substantial boulders are the only thing that stop it at source, and those boulders start with social and truly affordable housing.
Will the Minister explain why social housing build last year was only 5,716 homes, far below both Shelter’s annual target and the National Housing Federation’s goal of 145,000 social homes per year? Tomorrow in the Budget we are expecting to see a significant subsidy, not to social housing but to first-time buyers, who will be encouraged to borrow 20% of the purchase price. Will the Minister say where that money is likely to go? What is the possibility that it will end up in the profit margins of the large developers, many of which donate regularly to the Conservative Party? To prevent an increase in the number of people sleeping rough, rapid access to secure, long-term accommodation is vital. This period, following the achievement of Everyone In, is a unique opportunity to do just that and never return to the levels that were way too high just before this pandemic.
The target date of the manifesto commitment—as was mentioned by the noble Lord, Lord Kennedy—is fast approaching, and policies need to be in place now. So surely—as the noble Lord also said—it is time to commit to a rollout of Housing First across England, instead of continuing with the pilots. The scale of current provision is 2,000 places, which falls far too short of the 16,450 places needed that were identified by the charities Crisis and Homeless Link. Can the Minister explain what is preventing the Government rolling out these successful pilots now?
It is welcome news that local authority guidance is encouraging registration of people sleeping rough with GPs, but why are the Government not following the success of some London boroughs, together with Liverpool and Oldham, which are using current JCVI guidance to vaccinate homeless people, in order to mitigate health inequalities? Some local authorities are unclear about this; will the Minister commit to clarifiying the issue? Even at the height of Everyone In some local authorities turned homeless people away. Can the Minister explain why? Does his department know why there were 2,600 people, or more, sleeping rough in October, and how many of them had no recourse to public funds?
The Statement rightly refers to research in the Lancet but not to the wider arguments used. It was clear that what was critical was the absolute refusal to resort to emergency shelters at all. So why are the Government considering using them? Large cities in the US continue to use emergency shelters, to huge detrimental effect. If social distancing is still advised next autumn, should emergency shelters not be ruled out? Can the Minister explain, in detail, in what circumstances they will be used?
The Statement refers to many of the underlying reasons for rough sleeping but fails to mention the precarious position of so many in the private rented sector. Why is that? While it is welcome that the pause on evictions has been extended, that has not stopped every stage of the process. Will the Minister acknowledge that, during the winter lockdown, 500 people were evicted from their homes and that last month 445 were either in arrears or served with eviction notices? Does the Minister agree that if the landlords’ associations and charities have united to ask for assistance, in the form of grants to tenants to keep roofs over their heads, this should be a priority to prevent homelessness?
As we continue to see the economic impact on people’s incomes, it is worrying that there is no longer-term strategy from the Government to ensure that people will be able to keep a roof over their heads. We are expecting unemployment to rise by this summer. The Government have frozen housing benefits once again. Can the Minister give reassurances that the Government are looking at ways to support people to prevent homelessness, including by helping them to avoid eviction due to arrears? Finally, is there any news on the long-awaited end to the use of Section 21, which has such an impact on vulnerable tenants?
There are many paths to homelessness. I sincerely hope that this period has been a pause and we can move forward from here. However, unless some of the problems in areas which give rise to homelessness—such as the private rented sector—are anticipated and stopped in their tracks, we will continue to see rises in homelessness.
The Minister of State, Home Office and Ministry of Housing, Communities and Local Government (Lord Greenhalgh) (Con)
My Lords, the Oral Statement relates to rough sleeping. The figures are very clear: we have seen a 37% reduction in rough sleeping—a huge reduction. There has been a reduction of 43% since the Prime Minister took office in 2019. The 2,688 statistic that was referenced by the noble Lord, Lord Kennedy, in his opening remarks, is down from 4,751 in 2017. This Government retain the ambition to end rough sleeping. I point out, too, that subsequent analysis, in December and January, shows continued reductions in the levels of rough sleeping.
One of the comments made by the noble Baroness, Lady Grender, is not correct: the Everyone In programme continues and by January had helped 37,000 people, with over 11,000 in emergency accommodation and 26,000 moved into longer-term accommodation. The programme continues to operate, along with subsequent programmes and the Protect Plus programme.
It is important to address the comments of the noble Lord, Lord Kennedy, on funding. The commitment on homelessness and rough sleeping in the 2021 budget was £700 million, and that will increase next year—since we had a single-year budget commitment—by a further £50 million, to £750 million. Significantly, within that £750 million is a commitment to a block grant of £310 million for homelessness prevention. That grant is to ensure that there are no further pressures, and to support people at risk of homelessness.
The noble Baroness, Lady Grender, mentioned the Government’s record on social housing. Social housing is underpinned by the multi-billion pound affordable homes grant, which has had record funding. We continue to be committed to build all forms of affordable housing, of all tenures, including social housing.
The Housing First pilot, which was referred to by the noble Baroness, Lady Grender, is a world-class project. It was pioneered in Finland and we are piloting it to get the policy right. It continues to be piloted in three areas—the West Midlands, Greater Manchester and the Liverpool City Region. It is important to use the findings of the evaluation, and other experiences with pilots, to inform our next steps, and we are commissioning a consortium led by the ICF to conduct a comprehensive evaluation of the programme. When you do something new like this, it is important to test what you want to expand and expand what you test, rather than hurriedly implement something and get it wrong.
We remain committed to removing no-fault evictions; that will happen as soon as parliamentary time allows, as I have said in previous answers. We recognise the underlying problems of people on our streets, and that we need to continue to address them. This Government, however, have made huge, unprecedented strides in reducing rough sleeping, and we continue to see that in the latest information that we have published.
The Deputy Speaker (Baroness Fookes) (Con)
We now come to the 20 minutes allocated for Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers. I am tempted to repeat that last sentence, but I will not.
Lord Cormack (Con)
My Lords, I congratulate the Government on what has been achieved. I am particularly glad that they are trying to ensure that every rough sleeper has a GP. Can my noble friend tell the House what percentage are now registered with GPs? Furthermore, has any any study been conducted into how many are driven into homelessness by drugs and how many are driven to drugs by homelessness?
Lord Greenhalgh (Con)
My Lords, I thank my noble friend for showing the complexity that underpins rough sleeping. We know that 82% of rough sleepers have a mental health vulnerability; 83% have a physical health need; and 60% have substance misuse needs. We do not necessarily know the interrelationship between those problems. Getting rough sleepers vaccinated is very much part of the Protect Plus programme, which is backed by £10 million to support and urge local authorities to play their part in getting rough sleepers—whether on the streets or in emergency accommodation —vaccinated when it is their time in the queue. We also continue to work closely with NHS England and Public Health England to ensure that this vulnerable cohort of people gets vaccinated at the earliest opportunity.
Lord Harries of Pentregarth (CB) [V]
The Government are to be congratulated on the initiatives they have taken over rough sleeping during the Covid epidemic, and particularly for their success during the first lockdown. But the key question, of course, is whether there is the right policy, with adequate backing, to ensure that this is a permanent change. There were worrying signs before the pandemic that there were many more first-time rough sleepers; there was a report from Southwark recently, for example, that there are still new people coming on to the streets, with the number of applications from the homeless rising. As the noble Lord, Lord Kennedy, emphasised, the problem is still there before our eyes. Of course, this has a great deal to do with the loss of jobs and the shortage of long-term accommodation, so how do the Government intend to ensure that during the difficult months ahead, we do not slip back into the old, pre-Covid situation?
Lord Greenhalgh (Con)
My Lords, I point to the commitment through an entire Parliament of building 6,000 new homes for rough sleepers, which is backed by over £400 million of funding. We hope to see the reductions that we have seen on the streets of London, which were in line with the national reduction of 37%, continue.
Lord Campbell-Savours (Lab) [V]
On the issue of Covid vaccination policy for rough sleepers, is it not true that they are not treated nationally as a priority group for vaccination and that we have a postcode lottery in operation? Some areas treat them as a priority, others do not, yet they are a particularly vulnerable and difficult group. What action are the Government taking to organise a national framework for rough sleeper priority vaccination? I was concerned when I heard the Minister say, “When it is their turn in the queue”—they should be at the very front of the queue.
Lord Greenhalgh (Con)
My Lords, the JCVI has set the overall framework for vaccination, and there is, by definition, a queue in terms of relative vulnerability and when people are called to be vaccinated. Of course, as part of that it is important that rough sleepers are registered with their GP. Therefore, we have been working closely with local authorities—backed up by £10 million of funding—to ensure that rough sleepers are registered with GPs so that they get the vaccination when it is offered.
Lord Taylor of Goss Moor (LD) [V]
My Lords, we should not be too self-congratulatory about what has happened, bearing in mind that the number of people sleeping rough on our streets is still more than 50% higher than it was a decade ago. The action around Covid has shown that taking direct action can get people off the streets. It is notable that most of those coming on to the streets are not returning but are coming on for the first time. Charities such as Crisis are warning of an imminent peak, however, as special measures, such as housing benefit increases and the temporary ban on evictions, end. Does the Minister agree that there is a real risk of a new peak in rough sleeping? What specific action will the Government take to replace these schemes, which clearly cannot continue for ever, to address this issue?
Lord Greenhalgh (Con)
My Lords, I recognise the risk of a cliff edge given the level of support from the Government during the Covid-19 pandemic. An important plank of the support for people at risk of homelessness is the uplift in the local housing allowance, and there has been a commitment to maintain that at the same level in cash terms. In addition, we have seen increases in universal credit and working tax credit of up to £1,040 for the year. Of course, it is a matter for the Chancellor to decide how that continues as he makes his comments in the Budget.
Lord Robathan (Con)
My Lords, it is very good news that rough sleeping is in decline, and I congratulate the Government and all those concerned on that success. There is one difficult cohort that is not covered in the Statement: those coming temporarily from abroad, often to beg or for other purposes, who, for instance, set up filthy encampments in Park Lane which we can all see. I understand that up to 50% of the rough sleepers in central London are in that category, and they are described as having “no recourse to public funds”. Do Her Majesty’s Government have any plans to address that issue?
Lord Greenhalgh (Con)
My Lords, my noble friend is right that we see more people who are either EU or non-EU foreign nationals on the streets of London. We encourage local authorities, including those in London, to connect those people with family and friends. We can also provide legal support, as well as helping them into work or training where appropriate, so there is flexibility for local authorities to do that for this group of people.
Lord Browne of Ladyton (Lab) [V]
My Lords, I acknowledge the progress of Everyone In, but the debate in the other place exposed some very disturbing factors, such as the Minister admitting wide variances across the country of the delivery of rough sleeping and homelessness services and, shockingly, that many homeless people eventually end up in poor-quality, publicly funded supported housing. What regulatory or other plans do the Government have to level up provision for rough sleepers and homeless people?
Lord Greenhalgh (Con)
My Lords, it is a fairly consistent national picture. I went through the data with a team as preparation for this; in every region in England we are seeing a very significant drop in rough sleeping, and they are very large in the south-east and London. It is only in the north-east, which has relatively low numbers of rough sleepers and where the figure is up by five rough sleepers according to the data, that we have some concern around not seeing a reduction. But we will continue to push the policies that are working in those areas and ensure that we encourage local authorities and others to adopt those in areas where it is proving harder to do so.
Lord Best (CB) [V]
My Lords, the excellent work done in response to Covid in housing those living on the streets followed the implementation from 2018 of the Homelessness Reduction Act, a Private Member’s Bill from Bob Blackman MP which I had the honour of piloting through your Lordships’ House. This was beginning to work well in preventing homelessness and rough sleeping. In congratulating the Minister on the several new initiatives to assist those sleeping rough, can I ask whether he is satisfied that sufficient resources are now available to all local authorities to fully implement the Homelessness Reduction Act to prevent people becoming homeless in the first place?
Lord Greenhalgh (Con)
My Lords, I congratulate the noble Lord on supporting my honourable friend Bob Blackman in the other place. It is an important piece of legislation, and prevention is an incredibly important priority to ensure that we do not see more people sleeping rough on our streets. I remind noble Lords that we are seeing an increase in the budget for next year to £750 million, and £310 million is for the Homelessness Prevention Grant to do precisely what the noble Lord encourages local authorities to focus on: preventing homelessness.
Lord Truscott (Non-Afl) [V]
My Lords, as someone who once worked for a charity supporting homeless people, I welcome the reduction in the numbers of those sleeping rough. Rough sleeping is a blight on any civilised society and must be wholly eradicated, and I am sure that the Minister would agree. But apart from no-fault evictions and existing benefits, how do Her Majesty’s Government propose to prevent an upsurge in homelessness resulting from the end of the furlough scheme and rising unemployment—particularly among private renters, as mentioned by a number of noble Lords?
Lord Greenhalgh (Con)
My Lords, I cannot really comment on any additional measures. It is a matter for the Chancellor to set out the protection that we will be able to afford renters, while recognising the considerable amount that we have already done during this pandemic.
Baroness Blackstone (Ind Lab)
My Lords, the Government’s commitment to end all rough sleeping is admirable. However, if this is to be achieved, they need to do much more in terms of both the immediate response to the numbers continuing to sleep on the streets and of solving the long-term causes. In relation to immediate actions, will the Government commit now to a national rollout of Housing First as soon as the pilots have been reviewed? I understand what the Minister said about the need for the pilots to be evaluated, but the fact that they are in existence must mean that the Government intend to take them further where they are working. I would hope that Housing First will have its funding increased so that around 2,000 places that are being helped by the scheme can be greatly increased to cover the numbers needing support. In the longer term, will they make a commitment that no one will be released from prison without adequate housing to go to?
Lord Greenhalgh (Con)
My Lords, all I can say in addition to my response to earlier questions is that the Government are committed to expanding Housing First. That commitment was made in our latest manifesto, but it is important to take on board the lessons from the three pilots.
Lord Young of Cookham (Con)
My Lords, like others, I welcome the Government’s commitment to end rough sleeping by the end of this Parliament and the progress being made towards that. But the Statement says, of those sleeping rough:
“Many of the individuals will have been offered accommodation but will not have chosen to accept it, for a wide range of reasons.”
How, then, will the commitment be delivered?
Lord Greenhalgh (Con)
My Lords, I commend my noble friend on his tireless work that started in the early 1990s with the launch of the Rough Sleepers Initiative. Recognising that the moral mission of ending rough sleeping will be difficult shows the need to work in harness not only with our health partners and others in local authorities, but also with the community voluntary sector to deal with the underlying problems. The Housing First principle is first to find secure accommodation, then to deal with issues so that the person involved does not return to the streets.
Baroness Uddin (Non-Afl) [V]
My Lords, homelessness and sleeping on the street is never done by choice. It is about our societal and institutional failures. Some 250,000 people, including 130,000 children, are regarded as being homeless and significant numbers of them are sleeping on the streets. They may have no recourse to public funds or be fleeing domestic violence. Among those sleeping rough, there are serious concerns about mental health and substance misuse, for which they do not have any access to services. Last year, almost 1,000 people perished on the streets.
Through the outstanding leadership of the noble Baroness, Lady Casey, the Government have made incredible advances and provided necessary services, which is to be commended. Does the noble Lord accept that banning evictions and regulating the private rented sector, along with supporting local councils to meet and manage housing needs and additional support services, are the correct solutions? They would have the most impact and be the most genuine way of eradicating sleeping on the streets and homelessness.
Lord Greenhalgh (Con)
My Lords, the Government have already made a commitment to ending Section 21 no-fault evictions. I shall return to my previous answer and point out that we have seen a further decrease in the number of people aged 25 or under who have been sleeping rough this year. It is important, if we want to end rough sleeping, that we see a decrease in numbers among our young people.
Baroness Massey of Darwen (Lab) [V]
My Lords, to follow on from what the Minister said, the voluntary sector and local authorities are expressing concern about the number of young people who are rough sleepers. Can he say what is the ratio of homeless young people and what will be done to prevent them becoming homeless by, for example, providing support for conflict in families and for mental health problems, both of which have become increasingly important during Covid?
Lord Greenhalgh (Con)
My Lords, we have put in place bespoke support for local authorities through our homelessness advice and support team, which includes dedicated youth homelessness advisers who will inform the response to support young people. In addition, we recognise the role played by the community and voluntary sectors play if we are to end rough sleeping. That is why, included in the £6 million-worth of emergency funding, is around £100,000 that has been given to St Basils to ensure that we upskill and fund Youth Voice, which is a training scheme for young homeless people across the country.
Lord Randall of Uxbridge (Con) [V]
My Lords, I am very encouraged to hear about the improvements in the rough sleeping figures and I sincerely hope that they can be maintained. Perhaps my noble friend could say what is being done and can be done to relieve the plight of those living rough in rural areas, who so often seem to be forgotten.
Lord Greenhalgh (Con)
My Lords, I point out that in my noble friend’s constituency, the level of rough sleeping has dropped by 90%, which is one of the largest decreases in the country. On the rural figures, of course we work very carefully to ensure that the snapshot includes both rural and urban numbers. The regional figures would seem to indicate an across-the-board reduction in rough sleeping and, in particular, very steep reductions in some of our major cities.
Lord Dubs (Lab) [V]
My Lords, the Government’s ambition to end rough sleeping is of course to be welcomed, provided that there is progress towards achieving it. I want to ask the Minister about two specific groups. One has been referred to by my noble friend Lady Blackstone. She asked what is being done about ex-offenders who find themselves sleeping rough. Can the Minister say a little more about that group? Can he also say something more about members of the Armed Forces? If they have served our country as well as they have, we have a responsibility to ensure that in the end they do not sleep rough when they are discharged. We owe them a better future than that.
Lord Greenhalgh (Con)
My Lords, part of the ministerial working group is looking at the issue of rough sleepers in London who are former members of the Armed Forces. I pay tribute to the work of my honourable friend in the other place, Johnny Mercer. The key is to work with local authorities to identify those people so that we can get support services to them. The support services for our Armed Forces as well as for ex-offenders are in place; it is a question of ensuring that we identify those people so that we can wrap the service support around them.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, I declare my position as a vice-president of the Local Government Association. In the past hour, London has become the largest city in the world to call for a trial of universal basic income. An unconditional income sufficient to meet basic needs would be one way to ensure that no one ends up sleeping on the streets —that conditionality of benefits or insecurity of employment would not lead to eviction. As the noble Lord, Lord Truscott, said earlier, today’s figures report a fall in rough sleeping, but the future of rising unpayable debt, in particular among private tenants, looks grim. The Government keep saying that they will not introduce a national universal basic income, but will they support London and the 14 other local authorities that have voted for trials in their communities?
Lord Greenhalgh (Con)
My Lords, it is indeed blue-sky thinking to guarantee someone an income that is paid by the state. I point out that in the pandemic we have seen the national debt increase substantially to the level of our economic output for a year, which is some £2.2 trillion. In that environment, it is very difficult to make these kinds of spending commitments, and I will certainly leave something like that to the Chancellor.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
My Lords, all the questions have been taken. Before we move on to the next business, I suggest that we take a short breather to allow people to move in and out of the Chamber.
Nationality, Immigration and Asylum Act 2002 (Juxtaposed Controls) (Amendment) Order 2021
(3 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Williams of Trafford
That the draft Order laid before the House on 19 January be approved.
Relevant document: 44th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, this order was laid before Parliament in January and is required to align the juxtaposed controls regime at the seaports of northern France with the regime currently in operation at Coquelles for the Channel Tunnel shuttle service and at the Eurostar rail terminals in France, Belgium and the Netherlands. The order will replicate the legislative approach taken at the other juxtaposed control locations and enable all UK immigration legislation to be applied in the UK control zones at the ports of Calais and Dunkirk.
The security and integrity of our borders depend on the effective enforcement of our immigration controls, particularly at the UK border controls in northern France, where each year thousands of people make perilous attempts to enter the UK illegally. It is essential that Border Force officers working at our border in northern France are empowered to carry out immigration controls to the fullest extent.
As noble Lords will know, the UK has several international agreements with France that allow UK Border Force to operate border controls at specified ports in France. This allows Border Force officers to conduct checks on passengers and freight destined for the UK. It is a reciprocal arrangement, with French officers completing entry checks at certain points in the UK on passengers and freight destined for continental Europe. This form of pre-departure immigration control plays a crucial role in tackling irregular migration and disrupting organised immigration crime.
Currently, Border Force conducts juxtaposed immigration controls at the ports of Calais and Dunkirk, with the French Police aux Frontières undertaking Schengen entry checks at the UK port of Dover prior to travel. The juxtaposed controls in Calais and Dunkirk are provided for at an international level by the 2003 Le Touquet treaty. This was put into effect in the UK by the Nationality, Immigration and Asylum Act 2002 (Juxtaposed Controls) Order 2003, which I shall refer to as the 2003 order. It was made under Section 141 of the Nationality, Immigration and Asylum Act 2002.
The 2003 order granted officers of the Immigration Service, as it was then known, specified immigration powers enabling them to carry out immigration controls in specified geographical locations, known as control zones, at the northern French seaports. At that time, only the powers specified in the order were necessary for the efficient and effective conduct of immigration controls. However, the way in which Border Force operates has changed in the intervening years. Officers at Calais and Dunkirk therefore now operate with fewer powers than are available to their colleagues elsewhere.
The order under debate amends the 2003 order to grant UK Border Force officers working at the juxtaposed ports of Calais and Dunkirk the full range of immigration powers currently available to them under the Immigration Acts. This includes the power to use reasonable force, as set out in Section 146 of the Immigration and Asylum Act 1999, which is available to their counterparts at other locations.
The order therefore empowers appropriately trained Border Force officers at the juxtaposed seaports to use reasonable force under English law when carrying out any power conferred on them by the Immigration Acts. This will enable trained Border Force staff to intervene to prevent harm where an individual’s behaviour endangers themselves, the travelling public or other Border Force staff. It will also allow trained Border Force officers to enforce compliance with immigration processes, including fingerprinting.
Border Force officers will continue to take all reasonable steps to avoid using force, as they do elsewhere, by engaging with the individual and encouraging them to comply. Reasonable force would only ever be used as a last resort where an individual repeatedly refused to co-operate with Border Force officers and such force became necessary either for health and safety reasons or to ensure that full immigration controls were completed.
This measure builds on the steps the Government have already taken to reform the immigration system, strengthen border controls and reduce illegal migration. It will strengthen Border Force’s ability to manage those who seek to frustrate our immigration processes or circumvent UK immigration controls, and it will ensure that Border Force officers are properly empowered to intervene to prevent harm. I beg to move.
Lord Bourne of Aberystwyth (Con) [V]
My Lords, I thank my noble friend for setting out the intention and effect of the order. It seems entirely reasonable. It brings the practice and powers at the French channel ports of Calais and Dunkirk into line with the practice and process at Coquelles and at the Eurostar terminals in Belgium, France and the Netherlands. I support it.
I have some questions to ask my noble friend. Since these powers are exercised outside the United Kingdom’s jurisdiction, although they are provided for by domestic legislation, I assume that express or implied powers for Border Force officers to exercise reasonable force extraterritorially in France are contained in the provisions of the Le Touquet treaty, which my noble friend referred to. This seems highly probable, but it will be good to hear my noble friend confirm it.
Secondly, not only do we have border controls in France, but France exercises controls at the port of Dover. Do the French authorities exercise similar powers to those that we exercise in France?
Thirdly, what discussions do we have with the French authorities about these matters, both specifically on these recent issues and more generally on an ongoing basis about border controls in Calais, Dover, Dunkirk and indeed at the Eurostar terminals and at Coquelles?
The Explanatory Memorandum to the order is explicit that when the border controls were first deployed at these sea ports in 2003 the immigration powers were considered,
“sufficient to effectively administer immigration controls at these locations.”
What has changed is clearly the escalation of attempts to enter the United Kingdom illegally. I understand that—I am sure that we all do—but I would be grateful if my noble friend could update the House on the current position at Calais, Dunkirk and the surrounding area. Obviously, there is real concern in your Lordships’ House on a humanitarian level, not least because of the pandemic. Could my noble friend therefore give the House an assessment of the current position and of the longer-term outlook? I appreciate that it is bound to be a changing position and perhaps fairly volatile, but it would be good to hear how the position is at the moment.
Subject to these concerns, I strongly support what seems a very sensible provision.
Lord McCrea of Magherafelt and Cookstown (DUP) [V]
My Lords, I thank the Minister for her introduction to the order. The controls proposed in it ensure consistency of controls across all the juxtaposed locations and bring these controls into line with current UK operations. Harmonising the legislative regime will allow greater efficiency and effectiveness in border control officers assessing passengers and improve the border process.
Although the international sea traffic to which the order applies currently ends in England, the territorial application remains the whole of the United Kingdom. Another consequence is that the order allows immigration officers to use the full immigration powers available to them under the Immigration Acts, leading to early intervention against individuals or groups aiming to harm the UK or undertake organised immigration crime. It also extends the use of force powers, thereby allowing Border Force officers to use reasonable force if required to enforce compliance with immigration processes.
It is right that we provide the earliest possible intervention to prevent those wishing to do us harm reaching our shores. Unfortunately, there are those who make great profit from organised immigration crime; their plans must be thwarted. At the moment, Border Force officers are not granted powers in English law to exercise force, although they have the appropriate training to do so professionally. There is evidence of numerous attempts by organised criminals to bring people into the United Kingdom illegally through northern French seaports. Thankfully, many of them are intercepted but the officers concerned need enforcement powers for when they are presented with persons who would endanger themselves and others. Serious breaches of security must not be overlooked, and officers must be granted appropriate support to carry out their duties effectively, minimise disruption and contain sensitive situations. It is therefore imperative that we use every possible tool to keep our country safe. I support the order.
Lord Naseby (Con) [V]
My Lords, I, too, welcome the order. I place on record my thanks to my noble friend the Minister for dealing with this difficult area among the many difficult challenges she faces.
My noble friend knows as well as the rest of the House does that the problem of illegal immigration across the channel seems to be growing. I have some questions. First, one wonders why it has taken quite a long time to co-ordinate seaports with the Channel Tunnel and Eurostar. In the interim, we have seen a considerable increase in illegal cross-channel traffic. Can my noble friend elucidate on what more we can do, are doing or should be doing to crack down on this form of illegal immigration?
I am not clear whether Border Force is restricted geographically in where it can go in terms of Dunkirk and Calais; in other words, can it even operate on the beaches there? Also, does the order—I have read the whole of it—apply to the staff at ports in Belgium and the Netherlands as well? The Explanatory Memorandum states that Home Office consultation was undertaken “with operational partners”. That is good, but did any adverse reactions or difficulties come up in that consultation?
Border Force officers do a difficult job well. At the moment, is there a shortage of men and women who are fully trained for the Border Force role? Within that role, is there any resistance to being posted to Calais or Dunkirk?
If I may, I want to widen the issue a little. Can my noble friend the Minister clarify—certainly for me but also, I suspect, for a number of your Lordships—the law on turning back rubber dinghies? At what point can they be sent back to France, and are French officials co-operating fully?
I am nearly at the end of my questions. On illegal immigration, which is increasing, is there a problem coming from Belgium and the Netherlands? Is there a problem for our other east coast ports, such as Hull? While I am on the subject, my noble friend may know that I take a great interest in aviation. Is there any evidence of an increased problem with our small airports, where no Border Force officers operate?
Finally, on monitoring and review, since this illegal immigration from France is very much in the public eye, is there not a case for an annual—or biannual—review of the order’s effectiveness?
Baroness Jones of Moulsecoomb (GP)
My Lords, this is a sad piece of legislation because it perpetuates the Government’s cruel and dehumanising approach to people who want to come to live, work and be safe in the UK. Instead of legislation to ensure safe passage and humanitarian assistance, we see new rules allowing Border Force agents to use physical force in northern French ports. Can this Government really not see that it is partly our fault that people are desperate to get to safety, away from war zones, drought, famine, floods and death? These horrible events happen either because we have sold weapons to despotic regimes or because we insist on climate-destroying activities.
Last week, the Prime Minister seemed to understand the problem. He talked about having to deal with the security aspect of climate change, although Greenpeace called his speech “weapons-grade hypocrisy” when he is
“planning new coal mines at home and stripping funds for carbon-cutting energy efficiency measures.”
I agree. He is all talk and no action—or, as my grand- mother would have said, all fur coat and no knickers.
This “Fortress Britain” approach does not help anyone; it only pushes people into more dangerous routes of entry. The Government should fund the coastguard and RNLI lifesavers. We should be saving and helping people in dire circumstances, not increasing force and risk.
Baroness Gardner of Parkes (Con) [V]
My Lords, when looking into this order, I found myself perplexed that the legislation governing borders and border control is spread across such a great many statutory instruments. It is no wonder that there is a discrepancy between the powers permitted for use on some borders and not on others.
I welcome that this order seeks to rectify that discrepancy by allowing the use of reasonable force where appropriate and necessary, so as to provide a unified approach for UK border officials across our international borders. However, I wonder whether it might be useful for the Delegated Powers and Regulatory Reform Committee—I speak from personal experience as a past member of it—to revisit this order at some stage in the future. It is just the sort of legislation that frustrates parliamentarians—and others, presumably—because it relies on so many statutory instruments, orders and regulations, rather than the primary piece of legislation, to introduce the rules.
I support the order but I believe that review, and perhaps consolidation, would be useful for everyone going forward.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, I thank the Minister for introducing these regulations. It is a pleasure to follow the noble Baroness, Lady Gardner of Parkes.
I understand that this instrument would align the legislative regimes in place across juxtaposed control sites by extending the powers that immigration officers have to use reasonable force, where necessary, at sites such as Eurostar terminals and operations at Calais and Dunkirk.
Like the noble Baroness, Lady Jones of Moulsecoomb, I have certain concerns about this piece of legislation. As a consequence of it, we are all too aware of the tragic scenes of migrants in Calais living in horrendous conditions, fleeing war-torn countries, facing a life of uncertainty and wanting to come to the UK. In dealing with these people, a humanitarian and compassionate attitude is required while working within the legislative requirements. Many of these people have had to make the choice to leave their war-torn country, having been separated from their family and neighbours. Their villages in Syria, Iran and Yemen have been destroyed.
In that context, I have several questions for the Minister. The House of Lords Secondary Legislation Scrutiny Committee noted that this was an instrument of interest and, in its report, indicated issues around reasonable force. Due to the fact that thousands of attempts have been made by individuals seeking to enter the UK illegally via the northern French seaports every year, and with many of those individuals not necessarily complying with immigration processes once intercepted due to the terrible conditions that they are fleeing from, it is considered necessary to grant Border Force officers at seaports the power to use reasonable force.
Can the Minister explain what is meant by “reasonable force” to take fingerprints? Will these people be restrained in some way? Will some form of physical force be used? Will they be placed in detention? Are these fingerprints taken for the purposes of deportation from the UK? What steps will the Government and Border Force officers take to ensure that no forms of xenophobia are displayed towards migrants? Will such elements of reasonable force be human rights-compliant? Have the various human rights organisations commented on this instrument and assessed its compliance with human rights legislation and international requirements in terms of respect for human beings?
I note that no impact assessment was required, a fact that was raised in the other place. Why was that the case? The order will have an impact on Border Force officials and on the individuals who could be subjected to reasonable force—of which I would like a definition. If that is the case, surely an impact assessment is required if there is going to be a significant impact, as this will be a much-enhanced operation when considered alongside the original work.
The Explanatory Note states:
“The Home Office has consulted with operational partners, as the persons most likely to be affected by the matters in this instrument, and are continuing to work with them to implement this instrument.”
Who are these operational partners and what is the nature and extent of their work?
When is the Home Secretary bringing forward the sovereign borders Bill to reform asylum, including curbing litigious human rights claimants who seek to delay their deportation from Britain after their cases are reviewed? I understand that such legislation, which is very worrying, will make provision for judges to place more weight on asylum seekers’ criminal records when considering their appeals against deportation. Is this instrument stage one in the process as the Government move towards the sovereign borders Bill and its implementation?
I am sad to say that I do not see much of an element of social justice in this piece of legislation. With the Covid-19 pandemic still raging, what are the requirements for quarantine arrangements for the migrants, who have already been subjected to so much terror and trauma in their lives? I look forward to the Minister providing answers to these questions.
Lord Bhatia (Non-Afl) [V]
My Lords, this SI has been prepared by the Home Office. The purpose of the order is to harmonise the legislative regimes across the juxtaposed controls, thereby also extending the powers to use reasonable force, as set out in Section 146 of the Immigration and Asylum Act 1999, to the juxtaposed controls at the northern French seaports. The UK currently operates border controls at ports in France, Belgium and the Netherlands. This allows Border Force officers to conduct immigration checks in the same locations, policing and goods checks relating to passengers and freight destined for the UK before they begin their journey.
This is a reciprocal arrangement with the French officers who conduct entry checks at ports in the UK on passengers and freight destined for continental Europe. This optimises the efficiency of border control processes and provides earlier intervention to prevent those who seek to do harm from reaching the UK and are crucial to tackling irregular migration and disrupting organised immigration crime.
With thousands of attempts made by persons seeking to enter the UK illegally via the northern French seaports every year, and with many of those individuals not complying with immigration processes once intercepted, it is necessary to grant Border Force officers at the juxtaposed-control seaports, the power to use reasonable force where strictly necessary when non-compliant persons present a danger to themselves or others.
Will children wishing to join their families or relatives be protected and allowed to enter the UK?
Lord Paddick (LD) [V]
My Lords, I thank the Minister for explaining these amendments. This has been an extremely wide-ranging debate.
If I have understood the Minister correctly, powers are given to United Kingdom officials in control zones in northern France, Belgium and Holland, and to French, Belgian and Dutch officials at Channel Tunnel control zones in the UK, to enable the enforcement of immigration law at the border before passengers enter the destination country. These powers include arrest, detention and the seizure of documents, and for offences committed in control zones to be treated as if they had been committed in the destination country. Arrangements at Channel Tunnel control zones are provided by different legislation: the Channel Tunnel (International Arrangements) Order 1993 in relation to French control zones and the Channel Tunnel (Miscellaneous Provisions) Order 1994 in relation to Belgian control zones.
According to the Explanatory Notes, one part of these regulations is to reconcile the regime at the juxtaposed-control seaports in northern France with that for international rail services via the Channel Tunnel. The other part, Article 2, extends all immigration enactments to control zones in France and makes the necessary modifications to other enactments to ensure that UK immigration controls are able to function properly in those control zones. Why not Belgium? Are there no international agreements between us and Holland? What steps are being taken to extend arrangements to Belgium and Holland?
In effect, this measure ensures a consistent approach to the Channel Tunnel and seaport control zones in France, and that UK immigration law can be effectively enforced within those control zones as if the control zones were in the UK. However, the Explanatory Note fails to explain that French officers operating in control zones within the UK are to be treated as if they were UK immigration officials in relation to offences committed or omitted in relation to an immigration officer, including assaulting an immigration officer.
What I am concerned about, and I hope the Minster can clarify this, is that if the arrangements are entirely reciprocal, there appears to be some kind of double jeopardy where a person could be committing an offence under both British and French law. For example, someone who assaults a French official in a control zone in the UK could be prosecuted both in the UK and in France, were the French to have equivalent legislation to these regulations. If that were the case, who would have precedence in terms of prosecution? Would it depend on whether it was a French national or a British national? My concern is enhanced by the addition of Article 12(7) to the Nationality, Immigration and Asylum Act 2002 (Juxtaposed Controls) Order 2002, which states:
“Any jurisdiction conferred by virtue of this article on any court is without prejudice to any jurisdiction exercisable apart from this article by any French court.”
The regulations appear to significantly expand the enactments having effect in a control zone in France from a specific and limited number of enactments in the 2002 order to all immigration control enactments; the Minister explained that the remit of Border Force officers has expanded since 2002. Even if that is necessary and proportionate, for the sake of clarity should the regulations list those immigration control enhancements so that people know exactly what they are subject to?
The regulations appear to remove the protections provided by the Data Protection Act in relation to data processed in a control zone in France in connection with immigration control. Why is that necessary and proportionate?
On the issue of reasonable force, can the noble Baroness confirm that such powers are already available to Border Force officers where they operate elsewhere and are not an additional power exercisable only under this order?
When I got to this stage of examining the regulations, I had to admit defeat. Can the Minister explain what exactly the effect of the following is? I quote from close to the bottom of page 2 of the order:
“(b) in paragraph 2 (modification of the Terrorism Act 2000 … (i) in sub-paragraph (1)—(aa) after paragraph (d), insert—‘(da) in paragraph 5A omit the words “or 3”;’; (bb) after paragraph (e), insert—‘(ea) in paragraph 6A omit the words “or 3” in each place where they occur”.
I could go on in a similar vein. If the Minister cannot explain the precise effect of these changes now, from the Dispatch Box, how are we supposed to make sense of this impenetrable legislation? I could go on, with pages and pages of similar changes in these regulations where it is not clear at all from the regulation or the Explanatory Memorandum what changes this order brings about.
The Explanatory Memorandum basically says that the order makes other amendments to the 2003 order and makes the necessary modifications to other enactments to ensure that UK immigration controls function properly in the control zones. In effect, it says “just trust us”. My Lords, I do not.
Lord Rosser (Lab) [V]
The Nationality, Immigration and Asylum Act 2002 permits the making of an order to provide for a law of England and Wales to have effect at a juxtaposed control at an EEA port. At present, the juxtaposed control locations governed by such an order in 2003 are at the ports of Calais and Dunkirk in France and, for the French authorities, at Dover.
Unlike their counterparts at UK ports and other juxtaposed locations, Border Force officers working at the northern French seaports have not been explicitly empowered under domestic law to use reasonable force if necessary to carry out their duties when dealing with serious breaches of security at the port, including in relation to those seeking to enter the UK. This order aligns
“the regime at the sea ports of Northern France with the regime currently in operation at the juxtaposed locations in Coquelles and at Eurostar terminals in France, Belgium and the Netherlands, where the full range of immigration powers are available to fully trained officers.”
National security is a key issue for us, and we are not opposed to the order. However, I have a few questions about the impact of the order in the absence of any impact assessment.
In paragraph 12.3, the Explanatory Memorandum states:
“An Impact Assessment has not been prepared for this instrument because there is no, or no significant, impact on the private or public sector.”
However, in paragraph 14.1, the Explanatory Memorandum says:
“Impacts will be monitored through regular collection and analysis of use of force data as well as the existing internal review system.”
On the one hand, the Explanatory Memorandum says that there will be
“no, or no significant, impact on the private or public sector”,
but, on the other hand, it says that “impacts will be monitored.” Could the Government explain this apparent contradiction in their response? What impacts are going to be monitored that will have no impact, or no significant impact, on the private or public sector?
Will this order have any impact on the number of people entering the UK without authority through the northern French ports? If so, what impact will it have? If it will not have any impact, what purpose does the order serve? At other juxtaposed control locations, where Border Force officers already have powers to use reasonable force, on how many occasions per week or month on average do they have to use these powers? How far can they go in exercising “reasonable force”? What actions does it cover and what actions does it not cover? Are Border Force officers who can use reasonable force also armed officers or are they ever armed officers?
The Explanatory Memorandum refers to Border Force officers able to use “reasonable force” as being fully trained. How long does it take to train a Border Force officer in the appropriate exercise of “reasonable force”? Will enabling Border Force officers to use reasonable force at the northern French ports mean that fewer officers will need to be deployed or will the change provided for in this order have no impact on staffing levels? How will we assess the impact of this change, in respect of the use of reasonable force, on national security?
In paragraph 7.4, the Explanatory Memorandum refers to
“thousands of attempts made by persons seeking to enter the UK illegally via the Northern French seaports every year”.
Are the Government saying that, because the power to use reasonable force is not currently available to Border Force officers at these ports, more people have entered the UK without authority through them as a result? In which case, why has it taken this length of time to bring forward this order? Have concerns been raised by the French authorities that Border Force officers do not have sufficient powers in relation to reasonable force and that that increases the responsibilities and workload of the French authorities? Once this order is in force, what impact will it have on the numbers of people entering the UK without authority via the northern French seaports?
I hope the Government can provide answers to all the questions raised in the debate, including those relating to people genuinely fleeing persecution. One would like to think that this order is designed and intended to improve national security in a meaningful and measurable way, and that it is not just about ensuring uniformity across juxtaposed control locations for the sake of it.
Baroness Williams of Trafford (Con)
My Lords, there were indeed a lot of questions, some relating to this SI and others slightly outside it. I will happily try to answer as many questions as I can, and I will write to noble Lords where I cannot.
I hope I have made it clear that the integrity of the UK’s immigration system depends on the effective enforcement of the Immigration Rules. This measure empowers Border Force staff based at the ports of Calais and Dunkirk to exercise their powers to the fullest extent at the UK border controls in northern France.
Border Force officers will always seek first to engage with the individual, explaining the requirement to comply with immigration controls and encouraging the individual to do so. This order will allow suitably trained Border Force officers to exercise reasonable force, where necessary, to enforce compliance with immigration processes, where, for example, an individual attempts to abscond from Border Force custody or refuses to provide their fingerprints. It will also allow trained Border Force officers to intervene if a person’s conduct endangers themselves, Border Force staff or, indeed, the public. I assure noble Lords that such reasonable force would be exercised only as a last resort and only where its use is considered necessary, justified and proportionate. I hope that answers the point raised by the noble Baroness, Lady Ritchie.
The noble Lord, Lord Rosser, asked about training. Training will be provided and only Border Force officers who have been suitably trained will be permitted to use force when carrying out their duties—and only where it is absolutely necessary, justified and proportionate. The Home Office provides Border Force staff with comprehensive training on the use of force and officers are required to refresh this training annually.
On fingerprinting, it is correct that there have been some low levels of non-compliance with fingerprinting at Coquelles, where we are already able to exercise these powers. When encountered, officers have been able to use their training to contain and resolve the situation. It is inevitable that Border Force officers will occasionally encounter non-compliance, but they are trained to deal effectively with these situations; as I have said, they undergo comprehensive training. All incidents involving the use of force are recorded and may, where appropriate, be subject to review and/or investigation so that we can continue to ensure the safety of our staff and ensure that training is sufficient.
I now come to some specific questions. I welcome my noble friend Lord Bourne’s support for this SI. He asked about the juxtaposed controls and EU exit. The juxtaposed border controls are not an EU construct. They have been established through bilateral and multilateral arrangements with partners in France, Belgium and the Netherlands and allow the officers of each state to exercise controls as they would in their own territory. For the UK, this includes officers being permitted to use reasonable force where necessary, as I have said, when carrying out their duties, such as when fingerprinting irregular migrants and in cases where they have to intervene if a non-compliant individual’s conduct endangers themselves or other people.
My noble friend asked about the situation in Calais. The package of support that we have agreed with the French covers four broad areas. It has increased the number of gendarme reservists, with double the number of officers patrolling French beaches from 1 December last year. We have increased surveillance and technology. We have improved port infrastructure to reduce opportunities for smuggling, and we have reception centres, which support migrants into appropriate and safe accommodation in France, informing and enabling them to access the asylum system in France, and taking them out of the hands of criminal gangs.
My noble friends Lord Bourne and Lord Naseby asked about consultation. We have, of course, co-operated closely with the French for many years to tackle irregular migration and maintain the integrity of our shared borders. The measure will strengthen UK border controls at the juxtaposed seaports of Calais and Dunkirk and we are continuing to work closely with our French partners on implementation. My noble friend Lord Naseby asked about any adverse reaction to this; the answer is no—so far there has not been any.
My noble friend Lord Bourne asked whether oversight was in place to ensure that the power is properly exercised. Reasonable force would be exercised only as a last resort and only where its use is considered necessary, justified and proportionate. Border Force has robust internal procedures in place to ensure that its officers are exercising this power correctly. As I said earlier, every incident involving the use of force is recorded and, where appropriate and proportionate, reviewed locally by senior Border Force staff and/or the Home Office’s operational safety unit. Incidents involving serious professional misconduct may be subject to full internal investigation, including, where appropriate, by the professional standards unit. Border Force functions at the juxtaposed controls are overseen by a number of external oversight bodies, including the Independent Chief Inspector of Borders and Immigration and HM Inspector of Prisons.
The noble Lord, Lord Paddick, asked about French officers based at Dover. This order relates to the powers of UK Border Force officers based at the juxtaposed seaports in France. The international agreements that underpin these juxtaposed controls allow the officers of each state to operate immigration controls as they would in their own territory, as he articulated; therefore, British and French law may not necessarily align in this regard. French officers carrying out immigration controls at Dover already have the power under their domestic law to use reasonable force where necessary. The Le Touquet agreement already allows UK and French authorities to use their full range of powers in their respective control zones.
To expand on the point I made to the noble Baroness, Lady Ritchie, about fingerprinting, it is migrants who attempt to circumvent UK immigration controls who may be fingerprinted.
My noble friend Lord Naseby asked what more we can do. We have the sovereign borders Bill coming up—I cannot give an exact date, but it will be soon—which completely overhauls the system to allow for safe and legal routes to this country. My noble friend asked whether there were any objections among our staff to moving to France. I do not know, but I will find out if I can. He asked about constraints on the turning back of rubber dinghies—although this is outside this statutory instrument. The constraints will be dependent on whose waters the boat is in. Clearly, in the Channel, some of the opportunities to turn back do not spread across a great distance at all. He asked about problems with small airports and extensions to other ports. I would imagine—but shall confirm—that extensions to other ports will be considered in due course should the demand arise.
The noble Baroness, Lady Jones of Moulsecoomb, basically asked why we were being so cruel in our use of reasonable force. This use was set out in the Immigration and Asylum Act 1999. It is not a new thing; it is 22 years old and well established. My noble friend Lady Gardner of Parkes asked why there is so much legislation. Of course, we are overhauling the system through the sovereign borders Bill, which will be with us soon. Both the noble Baroness, Lady Ritchie, and the noble Lord, Lord Rosser, asked about the impact assessment. The lack of an impact assessment is because this SI is purely about how UK officers operate in France. The noble Lord, Lord Bhatia, asked about children joining their parents. This is outlined in the existing Immigration Rules, in Appendix FM.
I hope that I have answered noble Lords questions as far as I can today. I will write to noble Lords if I have missed anything out. With that, I beg to move.
Lord Parkinson of Whitley Bay (Con)
My Lords, we must wait until the time shown on the Order Paper for the next business, so I beg to move that the House do now adjourn until 3.45 pm.
Arrangement of Business
The Deputy Speaker (Baroness Henig) (Lab)
My Lords, the Hybrid Sitting of the House will now resume. I ask Members to respect social distancing.
For the debate on the Motion to approve the Authority to Carry Scheme and Civil Penalties Regulations 2021, the time limit is one hour.
Authority to Carry Scheme and Civil Penalties Regulations 2021
(3 years, 1 month ago)
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Baroness Williams of Trafford
That the draft Regulations laid before the House on 28 January be approved.
Relevant document: 45th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the purpose of these regulations, laid under Sections 23(2) and 24(7) of the Counter-Terrorism and Security Act 2015, is to give effect to the authority to carry scheme 2021; to make consequential amendments to the Authority to Carry Scheme (Civil Penalties) Regulations 2015 and to revoke the Counter-Terrorism and Security Act 2015 (Authority to Carry Scheme) Regulations 2015. Once given effect, the 2021 scheme will, in turn, replace and revoke the authority to carry scheme 2015.
Authority to carry is, in effect, the UK’s no-fly scheme. It is necessary to prevent certain individuals from travelling to—or from—the UK, when it is necessary in the public interest. The scheme is operated by the National Border Targeting Centre, which processes information about individuals, both passengers and crew, intending to travel to or from the United Kingdom. Where an individual is identified who is in a class of person described in the scheme, the carrier may be refused authority to carry the individual to or from the UK.
Authority to carry is a key part of the UK’s border security arrangements, preventing individuals—including known terrorists, serious criminals and those subject to sanctions—from being able to travel to the UK. The 2021 scheme applies to all carriers who have been required by law to provide passenger and crew information before departure. It applies on all international routes to and from the UK, as well as to routes to and from the UK from within the common travel area where advance passenger and crew information is received from a carrier.
The operation of the authority to carry scheme has been extremely successful. Since its introduction in March 2015, the National Border Targeting Centre has refused carriers authority to carry individuals seeking to travel to the UK on more than 8,200 occasions. This has included around 200 individuals excluded from the UK, around 3,300 individuals previously deported from the UK, and more than 4,700 individuals using invalid, lost, stolen or cancelled travel documents. It has also included subjects of international travel bans. Those individuals would otherwise have arrived in the UK and been refused leave to enter by Border Force officers. The carrier would have been required to remove them and, in some cases, meet their detention costs. Some of those individuals, once in the UK, might have taken the opportunity to challenge their removal.
The 2021 scheme builds on the 2015 scheme by including additional classes of individuals whom carriers may be refused authority to carry when travelling to the UK. These are: individuals whose visa has been cancelled or revoked; individuals who have been refused leave to enter the UK before their departure for, or in the course of their journey to, the UK; and individuals who are using a travel document that is known to include a false or counterfeit visa or endorsement. One additional class of individual is included in the 2021 scheme in respect of whom carriers may be refused authority to carry when travelling from the UK: individuals using an invalid, lost or stolen travel document.
Although the 2015 scheme provides for the refusal of authority to carry from the UK, as does the proposed 2021 scheme, there has not yet been a case where this has proven necessary. Ports police provide the first response and will intervene prior to departure, rather than the carrier being refused authority to carry. However, by including this outbound class, we will engage carriers to inhibit the use of passports where the Passport Office has notified the applicant that their document should not be used for travel. Equally, there is a need for a replacement scheme following the end of the EU transition period and ahead of the end of the citizens’ rights grace period at the end of June.
The draft 2021 scheme brings into scope the subjects of travel bans made under the new UK sanctions regime established by the Sanctions and Anti-Money Laundering Act 2018. Subjects of United Nations and United Kingdom travel bans will be in scope of the 2021 scheme.
The proposed 2021 scheme removes the distinction that was apparent in the 2015 scheme between EEA and third-country nationals excluded or deported—or in the process of being excluded or deported—from the UK. This is important ahead of the end of the citizens’ rights grace period. The Government are absolutely committed to ensuring the continued safety and security of the UK border. This new authority to carry scheme is central to that effort. I beg to move.
Baroness Warsi (Con) [V]
My Lords, as my noble friend has said, these regulations bring into force the authority to carry scheme 2021, which replaces the authority to carry scheme 2015. I apologise in advance to my noble friend about where I want to take this debate today because it is both timely and necessary in relation to these regulations.
These regulations, which protect the United Kingdom and its citizens, ensure that those whom we do not believe are conducive to the public good are not allowed to enter. They create a mechanism underpinned by financial penalties to ensure the practical application of this protection. However, they also include our responsibility to ensure that we do not allow individuals from abroad who intend to cause harm to others and to us to leave these shores. These regulations stop people from being both carried here and carried from here—as well as, of course, providing the Secretary of State a mechanism to require carriers to remove people upon deportation.
The Explanatory Memorandum published by the Home Office alongside the regulations provides further policy background detail, some of which my noble friend has referred to, so my quotation does slightly duplicate. I quote the Government’s guidance:
“Preventing individuals from travelling to or from the UK”—
the latter is my emphasis—
“is an important part of the UK’s border security arrangements. The ability to intervene, pre-departure and prevent travel has meant that, under the 2015 Scheme, the Home Office has refused carriers authority to carry around 8,000 individuals”,
as my noble friend has referred to, and she has detailed the various categories of those. The quotation continues:
“It also included one member of a flight crew who had been previously deported. These are all individuals who would otherwise have travelled to the UK and would have been dealt with at the border, with the resulting financial and time implications associated with processing, detaining and removing that individual.”
The regulations detail that authority to carry from the UK may be refused in respect of various categories of persons, of which one is children whom the Secretary of State has reasonable cause to believe are intending to leave the United Kingdom for the purposes of involvement in terrorist-related activity.
I want to ask the Minister some questions on this “from” element, in relation to what I term our responsibility to prevent our citizens from causing harm by travelling overseas, including harm to themselves—these are children we are talking about. Noble Lords will be familiar with the case of Shamima Begum, the 15 year-old girl from east London who, along with her teenage school friends, travelled to Syria to become a bride to ISIS recruits. Her tragic story is of a young women groomed, abused and now left stateless in a refugee camp, having given birth to and lost two children, both British nationals, and, five years later, at the age of 20, attempting to return home.
We stripped her of her citizenship, despite her being born a British citizen and having only ever lived here. She was deemed by the then Secretary of State to be a Bangladeshi citizen—a country she does not know and has never taken citizenship of and which has said will not grant her citizenship. It has also said that, if she tried to enter that country, she would be subjected to being sentenced to death because of her association with ISIS.
As such, I will ask the following questions, and, if my noble friend cannot answer them today, I look forward to receiving a written reply. First, how many British citizens have been prevented from travelling overseas under the scheme to date? Secondly, how many children did we protect from becoming involved in terrorism by preventing them from travelling? Thirdly, carriers face a penalty for failing in their duty to protect if they carry someone to the UK under these regulations; what is the Government’s thinking when we fail in our duty to protect by allowing a person—someone who should have been protected and prevented from travelling under these regulations—to travel? Fourthly, what practical measures do the Government take to fulfil their responsibility to prevent individuals in the categories that they refer to in the regulations from travelling?
Finally, does my noble friend agree with me that we have a right to protect our country by revoking the citizenship of those who intend to cause us harm? That is absolutely a right that we have. However, does she also agree with me that that decision should be based on the harm intended, the crime committed or a crime that may be committed, not on the British national’s heritage?
Lord Dodds of Duncairn (DUP) [V]
My Lords, I am very grateful to the Minister for the clear way in which she has outlined the purpose and details of these regulations; I welcome what they are designed to achieve.
The new legislation will reflect the changes that have been brought about as a result of Brexit and some of the sanctions now available under the Sanctions and Anti-Money Laundering Act 2018. I certainly endorse the addition of the new classes of individuals who can now be made subject to a refusal of authority to carry. This is all very welcome and will help to safeguard the people of the United Kingdom, preventing unnecessary travel to and from the United Kingdom by people who should not be here—in the case of people who wish to travel to it and are not eligible for entry. Without it, there would be gaps and loopholes in the statute book, which would be impossible to justify.
Given that this is a UK-wide piece of legislation, covering Northern Ireland and, of course, Scotland, the same regulations and obligations will apply to carriers to and from Northern Ireland from abroad as apply in other parts of the United Kingdom. Today, I am interested in exploring with the Minister the application, implementation and enforcement of the duties and requirements under these regulations, given that Northern Ireland is the only part of the United Kingdom with a land border with another country and given that we have the common travel area, to which the Minister referred, covering the whole of the United Kingdom and the Irish Republic.
Since we have an open border with the Irish Republic for people under the common travel area arrangements, people travelling into the Irish Republic from abroad by seaport or airport can travel into Northern Ireland and cross over into the rest of the United Kingdom without necessarily having any further checks made upon them after their arrival in the Irish Republic.
The Minister referred to the application of the regulations to carriers to the UK by way of the common travel area. If the endpoint is the United Kingdom, someone may well decide to travel into the Irish Republic, stay for a period, and then come into the United Kingdom at a later point. I would be grateful if the Minister could outline how the provisions of the regulations apply in relation to carriers of individuals who are not eligible to be in the United Kingdom, and who may decide to use Dublin, or another Irish port of entry, as a means of accessing the United Kingdom in this fashion.
Do we have the same reporting and other obligations on carriers travelling into the Irish Republic in respect of people who are ineligible to travel to the UK? What is the level of co-operation and exchange of information and details between the Irish and UK border authorities? What obligations are the Irish border authorities under and how can we be sure that they are being properly and rigorously monitored? How is the system of enforcing fines implemented if people who are ineligible to enter the UK are carried into the Irish Republic and then come into the United Kingdom?
Clearly, this is a matter of considerable interest to people in Northern Ireland and is something that is worthy of reassurance to citizens, not just in Northern Ireland but in other parts of the United Kingdom. Given the common travel area arrangements, the systems to control the Irish border—its ports and airports—must be as robust in relation to incoming international travel as those for airports and seaports in the United Kingdom itself.
In welcoming the legislation before us, I seek the Minister’s reassurance that these necessary and important regulations are not in any way undermined or weakened as a result of the current arrangements within the common travel area. I fully support the common travel area arrangements in principle; they have worked to the advantage of both the United Kingdom and citizens of the Irish Republic, and, of course, they pre-date European Union membership. I just want to be assured that in these regulations we have covered all bases and that people cannot use the common travel area arrangements as some kind of back door, and that carriers cannot evade their responsibilities by using them or by means of not having the regulations properly enforced against them if these circumstances were to arise.
Lord Paddick (LD) [V]
My Lords, I thank the Minister for explaining these regulations. As other noble Lords have said, the 2015 scheme that they replace had a sunset clause, meaning that it would cease to have effect in April 2022, but these regulations have been introduced early because of the UK’s withdrawal from the European Union. That means that certain high-harm individuals who would have fallen outside the scope of the 2015 scheme can now be included in the 2021 scheme, including those who are subject to travel-related sanctions under the Sanctions and Anti-Money Laundering Act 2018.
I have a great deal of sympathy with the noble Baroness, Lady Warsi, and the questions that she asked about Shamima Begum. However, the Minister said, if I heard her correctly, that no one had been prevented from leaving the UK under the 2015 regulations, even though that is possible, and that police at the UK border would be used to prevent people departing in the circumstances that the noble Baroness, Lady Warsi, outlined. Although the noble Baroness asked very important questions, I am not sure that they are related to these regulations.
As far as the operation of the scheme is concerned, I have a few questions that I hope the Minister may be able to answer. If she cannot today, perhaps she could write to me. I understand that a visa may be cancelled or revoked, and that the carrier may not be aware this has happened, but an increasing number of travellers are able to visit the UK without a visa. The Government did not take the opportunity of leaving the European Union to require visas for entry into the UK from EU, EEA and Swiss nationals but instead extended visa-free entry using the e-passport gates to citizens of Australia, Canada, Japan, New Zealand, Singapore, South Korea and the United States of America. Rather than taking back control of our borders, this Government threw them open to citizens of seven new countries and kept them open for EU, EEA and Swiss nationals.
The Minister talked about the importance of the scheme and how people could be denied authority to travel, rather than being turned away at the UK border. But the question has to be: how can they be turned away at the UK border if they do not require a visa and can use the e-passport gates? As a result of all these additional people being able to enter the UK without a visa, the authority to carry scheme becomes even more important as checks carried out when someone applies for a visa, which could prevent those who should be prevented from entering the UK, have been ditched in relation to millions of potential visitors to the UK. Indeed, visa checks could reveal that someone previously unknown to the authorities should not be allowed to enter the UK—something the authority to carry scheme is unlikely to pick up.
The Minister talked about the carriers having to provide information on passengers and crew prior to departure. How long before departure do these details have to be provided, and therefore what timescale do UK officials have to respond to that information to prevent people boarding aircraft, for example? On the general question, why did the Government not take the opportunity of leaving the European Union to require more people visiting the UK to have visas, so increasing the security at the border, but instead threw the borders open to nationals from even more countries?
The authority to carry scheme applies only to carriers which have been required to submit details comprising passenger and crew information and, in some cases, according to the draft scheme, in respect of some routes only. Why not all carriers and routes? What are the chances of someone who wishes to enter the UK but should be prevented from doing so from entering it using carriers or routes where no requirement is made to submit such information or, as the noble Lord, Lord Dodds, has just said, evading the authority to carry scheme altogether by entering the UK through Ireland and the common travel area?
Carriers can provide passenger and crew information voluntarily and it is then treated as a request for authority to carry. What happens if the information is not volunteered and there is no opportunity to refuse such authority?
Persons in respect of whom authority to carry may be refused include individuals who are the subject of an exclusion order under the Immigration (European Economic Area) Regulations 2016. I refer again to the draft scheme. These regulations give effect to certain judgments of the Court of Justice of the European Union—CJEU—and address issues concerning the practical application of directive 2004/38/EC within the United Kingdom. Is the UK still bound by these EU directives and judgments of the CJEU?
Finally, to what extent has the existing authority to carry scheme relied on the Schengen Information System —SIS II—to identify those who should be barred from entering the UK? Specifically, of the 8,000 individuals the Home Office has refused carriers authority to carry, how many were refused entry on the basis of information provided by SIS II—a database that we no longer have access to?
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I thank the Minister for her explanation of the purpose of these regulations. I put on record that the Labour Party gives the Government, the security agencies, the police and other law enforcement agencies our full support in their fight against terrorism and criminality in all its forms.
I welcome the measures that strengthen protections at UK borders as they help keep people safe. I noted in the Explanatory Memorandum that the Home Office has refused carriers the authority to carry 8,000 individuals seeking entry to the UK, including 3,000 individuals previously deported from the UK, 4,600 individuals using lost or stolen travel documents, and 180 individuals previously excluded from the UK.
Further, I welcome that these measures support and relieve the pressure on hard-working UK border officials and other operational partners. They save time and money, enhance our security, and stop those who would otherwise be prevented from entering at the border even attempting to make the trip.
I am fully aware of the context for why these measures were in place in the first place: as an additional measure to stop fighters travelling to and from Syria and Iraq. I fully support that aim.
I have a few questions that I hope the Minister will be able to answer. First, the Explanatory Memorandum does not make it clear when the updated guidance will be provided on the operation of the scheme and the penalties for non-compliance. Can the Minister tell the House when this guidance will be forthcoming?
Can the Minister confirm that the maximum penalty will be £50,000? How many carriers have been fined and what was the level of the fine imposed on them? Further, is there a mechanism for uprating the fine so that it keeps pace with inflation? Has the Home Office undertaken any assessment of the deterrent effect of a fine of up to £50,000? If not, is there a plan to do so? If no assessment has been undertaken and there are no plans for one, how do we know that this is the correct figure to provide that deterrent effect?
Can the Minister say a little bit about the carriers’ compliance with the scheme generally? What can the Government do to a carrier that is in persistent breach of its obligations under these regulations beyond imposing a monetary penalty?
The noble Baroness, Lady Warsi, made valid points about the regulations being here to prevent people leaving the UK, as well as people arriving into the UK. She raised the tragic case of Shamima Begum, and legitimate questions about how this matter can be resolved that need to be answered. The case raises important public policy matters that the Government have to resolve about our obligations to the wider international community.
The noble Lord, Lord Dodds of Duncairn, spoke about the risk of individuals who would otherwise not be eligible to travel to the UK seeking access through the Republic of Ireland. It would be good to hear about the measures in place that support the freedoms we enjoy in the common travel area. As the noble Lord said, we cannot have carriers evading their responsibilities under these regulations. To be clear: I fully support the common travel area. Other than my immediate family, all my family live in the Republic of Ireland, so I have made use of the common travel area from my youngest days. I have travelled backwards and forward there many times. I fully support it, but the noble Lord raised a valid point.
With those questions, I am happy to support the regulations before the House. I look forward to the Minister’s response.
Baroness Williams of Trafford (Con)
My Lords, I thank noble Lords who took part in the debate. As with the previous debate, some of the contributions had nothing to do with the SI, but that has never stopped noble Lords before.
My noble friend Lady Warsi asked, with reference to the Shamima Begum case, how many children we prevented from travelling overseas. We never refused authority to carry in respect of any children. The provision was put in place in response to Shamima Begum and her friends, but it has never been used. On what practical measures we take to stop children travelling, as I said, it has not been necessary to refuse any carrier authority to carry from the UK. Of course, ports police will intervene where adults or children of concern or at risk may seek to travel from the UK. In terms of wider practical support, there is the Prevent programme, which has, as its name suggests, prevented children from getting engaged in what might be terrorism down the line.
The noble Lord, Lord Dodds, asked about Ireland to GB. Where advance passenger information—API—is available ahead of travel, authority to carry can be refused from Ireland to GB. There is no reporter requirement under UK law for airlines operating flights to Ireland to provide that information to UK Border Force. Information about persons of concern to the UK and Ireland is shared between the respective border control authorities. The same is true with other countries, in response to the question asked by the noble Lord, Lord Paddick.
I will have to get back to the noble Lord, Lord Kennedy, on when guidance will be provided. He is right about the fine: it is £50,000. There have been 51 breaches of the 2015 scheme, with 18 penalties imposed on airlines for non-compliance, totalling just over £186,000. He asked about uprating. I do not know the answer to that question so will have to get back to him—I am not going to blag my way through that—but I add that airlines are very pleased about this, because it gives them clarity, which always helps. They have been looking for this for a very long time.
Regarding the treatment of EEA nationals, obviously we have amended the 2021 scheme to reflect the end of the transition period, and the distinct category will remain for individuals who have been excluded under the former immigration EEA regulations, but the new scheme also reflects that from January 2021, individuals, whether EEA or third-country nationals, may be deported from the UK under the Immigration Act 1971 and excluded by the Home Secretary exercising prerogative powers. Further to that, non-visa nationals who are excluded or who have been deported will be subject to refusals of authority to carry and should not arrive in the UK, but where they do, their details are available to Border Force officers and the e-gates.
The noble Lord, Lord Paddick, asked how long before departure. It would be 24 hours before departure. He asked whether these details will be provided as passengers check in. Yes, information is provided for all routes ordinarily, but it can be on a route-specific basis if a new route opens and the carrier has different abilities.
The authority to carry scheme has not relied on SIS II information and the updated scheme will be implemented 21 days from the sign-off of the SIs.
As for the figures on the number and scale of fines, I believe I have already addressed both the scale of the fine and the number of fines. The maximum penalty has been £25,000 and the average is around £10,000, and they are determined using the calculation published in the guidance for carriers. I have already said that carriers are very positive about this. They welcome the scheme and do not in any way seek to undermine it.
I think I have probably gone through all the points made by noble Lords. Where I have not, it is because I do not have an answer and I will get back to noble Lords in due course.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
My Lords, the hybrid Sitting of the House will now resume. I ask Members to respect social distancing. The time allowed for the following debate is one and a half hours.
Economic Partnership Agreement: Kenya
(3 years, 1 month ago)
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Lord Goldsmith
That this House takes note of the Economic Partnership Agreement between the United Kingdom of Great Britain and Northern Ireland, of the one part, and the Republic of Kenya, a Member of the East African Community, of the other part, laid before the House on 17 December 2020.
Special attention drawn by the International Agreements Committee, 2nd Report.
Lord Goldsmith (Lab) [V]
My Lords, I am grateful for the opportunity to debate the International Agreements Committee’s second report, which covers the economic partnership agreement between the United Kingdom and Kenya. As the committee’s chair I extend my thanks to the members of the committee for their important contribution to this report, as well as to the staff. I also thank the noble Lord the Minister for his constructive engagement with the committee, both publicly and in private, and for facilitating this debate.
Before I turn to the contents of the report I will take a few moments to make some general comments on the scrutiny by Parliament of international agreements. The House will have heard me say before that international agreements—treaties—affect us all. They can affect important aspects of our lives: the economy, goods and services, our security and our rights. Scrutiny by Parliament must therefore be not an afterthought but an integral part of the overall treaty-making process. As we all know, at the moment Parliament’s role is limited and focused on the end of the process, when a treaty has already been signed.
I have said before that I believe Parliament should have a role at an earlier stage: when the objectives for negotiations are set. This is particularly relevant for trade agreements, and it happens in other countries such as the United States, and in the European Union. So I welcome the two commitments that the Minister made in this House during last week’s debate on the Trade Bill. They were made in response to a Motion put forward by a member of the committee, the noble Lord, Lord Lansley, whom I thank for his efforts in this regard.
I am pleased that the Government have agreed to facilitate a debate on draft negotiating objectives for trade agreements, subject to parliamentary time, if it is requested by the International Agreements Committee, and that the Government will not ratify a trade agreement until a debate has been held, provided it has been requested by a relevant committee in good time.
The subject matter of the report is the UK-Kenya Economic Partnership Agreement—EPA for short. It is, on the one hand, a standard rollover trade agreement that seeks to ensure continuity of trade relations after the Brexit transition period. It replicates the treaty arrangements between the EU and Kenya.
On the other hand, however, it is not a straightforward rollover agreement. First, the underlying agreement—the EU agreement with the East African Community partner states, of which Kenya is a member—is not actually in effect. Instead, Kenya enjoys duty-free access to the EU through something called the EU’s market access regulation.
Secondly, and most crucially, the underlying multilateral EU agreement has been turned into a bilateral one, even if states belonging to the East African Community can apply to join it later. In signing a bilateral agreement with the UK, Kenya has effectively followed a go-it-alone approach. There were clear incentives for the Kenyan Government to do so. As the only country within the EAC not classed as a least developed country, it does not qualify for zero import duties under the general scheme of preferences for least developed countries. As Kenya is a lower-middle income country, it can expect reduced rates of import duty on only some goods. Considering that the UK is among Kenya’s top five export markets, one can see why it could be considered to be in Kenya’s immediate interest to sign a bilateral trade agreement with the UK to avoid import tariffs.
There are, however, issues and questions about what this agreement does to regional coherence. There are concerns that it could have disruptive political and economic consequences for the wider East African Community. For example, the EAC partner states have agreed to a common market protocol which commits them to co-ordinate trade relations among themselves and between the bloc and third parties. The UK EPA appears to undermine this obligation. Also, the EAC has been a customs union since 2005, applying zero customs duties on goods and services within the bloc and applying a common external tariff to imports from countries outside the EAC. The UK-Kenya agreement could undermine this arrangement, as Kenya would be applying a separate and more generous tariff regime for UK imports. While the committee acknowledges in its report that the UK-Kenya EPA could indeed have been the most efficient option for maintaining Kenya’s preferential access to the UK market, we would welcome an assessment from the Minister of the potential disruptive consequences for the EAC.
We would also like to ask the Minister that, were similar concerns to emerge in future agreements, they would be more clearly spelled out in the explanatory materials. The Written Ministerial Statement made by the Minister in response to our report helpfully explains that the UK’s overall objective remains to secure a regional deal with the whole of the East African Community. It also acknowledges that some EAC members
“were not ready to enter into negotiations with the United Kingdom”
at the time. The Statement concludes by saying that it is the Government’s intention that the EPA be a “stepping stone” to stronger regional integration. So I would welcome it if the Minister could specify what steps the Government are taking to make sure that regional integration remains a priority for the UK Government and is not undermined through the bilateral agreement with Kenya.
Conscious of time, I will leave it here for now, having set out the two broad themes of parliamentary scrutiny on the one hand and the impact of the UK-Kenya agreement on regional cohesion on the other. I know that colleagues on the International Agreements Committee speaking this afternoon will reflect on other points of detail raised in the debate. I look forward to what I hope will be a constructive debate. In particular, I look forward to the maiden speech of the noble Lord, Lord McDonald. I thank him for choosing this debate in which to make his maiden speech. I welcome him to the House. I worked with him in government and I remember being hosted by him when he was the ambassador to Israel a few years ago, and I am therefore very keen to hear what he has to say now. However, I am also keen to see the huge contribution that I am sure he will make to the House, given his considerable experience and expertise. I beg to move.
Lord Oates (LD)
My Lords, it is a pleasure to follow the noble and learned Lord, Lord Goldsmith. I have the privilege of being a member of the International Agreements Committee, which he chairs so adeptly. I also look forward to hearing the maiden speech of the noble Lord, Lord McDonald of Salford. Although I have not met him before today, I have a strong connection to him because my nephew James worked for him and my father married him—I should stress that my father is a clergyman.
I join the noble and learned Lord, Lord Goldsmith, in welcoming some of the movement by the Government on the issues of scrutiny, in particular on what I believe has already been dubbed the “Grimstone rule”, by which the Government have agreed that where the IAC has requested a debate on a treaty, the Government will not ratify it before time has been provided for that debate. Some would say that that is the absolute basic minimum requirement that any self-respecting Parliament could accept, but it is welcome none the less.
In the short time I have available, I will focus briefly on two things. The first is the impact on regional integration in east Africa of the decision by our Government to embark on a bilateral agreement with the Government of Kenya rather than pursuing an agreement with the East African Community as a whole. I understand, of course, as set out in our report, that Kenya had a particular issue, being the only country that was not classified as a least developed country. However, as paragraph 13 of the IAC report highlights, the Government have failed to explain adequately what other options they considered for ensuring continuity of trade with Kenya other than by concluding a bilateral EPA, which inevitably has caused huge concern to other EAC members. I hope that the Minister will take the opportunity to explain this in his response.
The agreement causes serious difficulties in the region and appears to place Kenya in breach of its treaty obligations to the EAC. We know, of course, that the UK Government briefly toyed with the idea of breaching our own treaty obligations with the EU, but at least they had the sense to draw back from such action. It is regrettable that, by pursuing the approach they have, the Government have placed Kenya and the EAC in such a difficult position.
Secondly, I hope that the Minister will be able to tell us more about the Government’s overall approach to trade agreements with developing countries. Many of us have been concerned about the approach that the EU took in the past to developing countries. The Minister may be aware of the APPG for Africa’s excellent report on the lessons learned from the EU EPAs with Africa; that report raises a number of issues, including the constraints that they place on development policy space for African countries. I hope that the Minister can address those points.
Baroness Sugg (Con) [V]
My Lords, I welcome the EPA’s focus on development and the commitment to continue to provide duty-free and quota-free access to the UK market for Kenyan goods. This will assist Kenya in seeing the growth benefits from international trade, aided by the appointment of Theo Clarke MP as trade envoy to Kenya and programmes such as TradeMark East Africa, which help promote trade between our two countries.
I appreciate the difficulties that there were in negotiating an EAC-wide agreement before Brexit. However, I share the concerns of the International Agreements Committee and civil society groups that the signing of individual EPAs could risk disruptive economic and political impacts and undermine some of the development objectives, particularly regional integration in east Africa. I would be grateful for my noble friend the Minister’s comments on that.
I am speaking before the maiden speech of the noble Lord, Lord McDonald of Salford, whom I had the pleasure of working with at the FCDO towards the end of his lengthy and loyal service. I agree wholeheartedly with his remarks yesterday that the cutting of our international development budget—moving in the opposite direction to the rest of the G7—is a strategic and regrettable mistake. I look forward to his experienced contributions to this place on that and other international issues.
This economic partnership and our broader relationship with Kenya—indeed, with the continent of Africa—is at risk due to the planned cut in international development. There are reports of our bilateral programmes in Kenya being cut by between 50% and 70%. Can my noble friend the Minister tell me what conversations his department has had with the FCDO about the impact of these cuts? Will the important trade programmes to which the Prime Minister recommitted last year at the UK-Africa Investment Summit—such as the successful TradeMark East Africa programme, which has a budget of $155 million up to 2023 in Kenya alone and has already allocated this funding to 36 projects—be fully protected? These projects are delivered in close partnership with the Government of Kenya, the EU, Ireland, Denmark, Finland and the United States. Will we uphold our commitment to them? Has an impact assessment been made of how the cuts in Kenya will affect our trade relationship?
Finally, does the Minister agree that one department trying to increase trade with Kenya while another undermines our bilateral relations and trade programmes through massive budget cuts is not exactly joined-up government?
The Deputy Speaker (Lord Duncan of Springbank) (Con)
I welcome and call the next speaker, the noble Lord, Lord McDonald of Salford.
Lord McDonald of Salford (CB) (Maiden Speech)
I rise to address your Lordships’ House for the first time. I feel I should introduce myself. Noble Lords know my name and can guess that Salford is important to me. I was born and brought up there. Family is the centre of my life. Every day, I remember family members who are no longer here—today, my dad and my brother, Dominic, in particular.
After completing school in Salford, I studied history at Cambridge. After graduation, I joined the Foreign and Commonwealth Office, where I worked for 38 years. For five years, I was the Permanent Under-Secretary, which explains why international relations will be one of my main interests in your Lordships’ House.
No matter what any of us thought about leaving the European Union, our shared objective now is to protect and promote the interests of the United Kingdom outside the EU. Part of that task is to replace trade agreements from which the UK benefited as an EU member. Time has been short. In future, it will be better when Parliament is consulted by the Government when framing objectives for trade negotiations.
The economic partnership agreement with Kenya is one of the first wave of trade agreements. As a lower middle-income country in a customs union with least-developed countries, Kenya finds itself in a bind. All its neighbours enjoy duty- and quota-free access to the UK. For now, its neighbours are not interested in signing a trade agreement. Kenya’s horticultural exports are vital to its economy and the UK is one of its largest markets. To help our key partner, I believe we should not impose tariffs on Kenya’s flowers, fruits and vegetables. To achieve that in a way that is compatible with World Trade Organization rules, the agreement we are debating today is the best option available.
To support the work of the UK overseas will be my main objective in your Lordships’ House, but I shall not confine myself to foreign affairs. My other interests are the environment and the governance of the UK—the union, the regions and the Civil Service. It is my honour to be the latest Foreign Office PUS to join your Lordships’ House; three of my distinguished predecessors are already noble Lords. My only regret in joining now is that I shall not be able to work with a fourth predecessor, the late Lord Wright of Richmond, but I think of him today and honour his memory, as his successor and son-in-law.
Having spoken for the first time, I plan now to listen carefully before disturbing your Lordships again. Meanwhile, I thank your Lordships for making me feel young and naive for the last time in my life, and for listening to me today.
Lord Kerr of Kinlochard (CB) [V]
What a pleasure it was to hear the noble Lord, Lord McDonald, and what a good foretaste of what he will bring to our debates. It is obviously a great pleasure to follow him. We have heard how well he manages suaviter in modo; I can assure the House that he is also pretty good at fortiter in re. He is quite tough: after all, he endured a couple of years working for me in Washington. He went on to hold very senior jobs across Whitehall, not just in the Foreign Office, and to be a distinguished ambassador in Israel and Germany. He may well have got the suaviter bit from Patrick, Lord Wright of Richmond, his father-in-law, who was so liked and is so much missed here in this House. Like Patrick, and like me, he served five years as Permanent Under-Secretary. His were more challenging times than mine. He brings us considerable wisdom and experience, and I welcome him very warmly to this House.
I am very glad that we are having this little debate on the agreement with Kenya before it is ratified. Like the noble Lord, Lord Oates, I thank the noble Lord, Lord Grimstone, for his assurance on 23 February on the Floor of the House that it would be inconceivable in future that we should not have a pre-ratification debate if such a debate were recommended by the committee of the noble and learned Lord, Lord Goldsmith. I have long envied American negotiators their ability to argue, during a negotiation, that however admirable a suggestion from our side was, “It will never fly on the Hill.” Our negotiators now have a comparable weapon in their armoury.
In the time allowed to me, I can make only two very brief points about the agreement itself. First, of course the cohesion of the East African Community matters and, as the noble and learned Lord, Lord Goldsmith, said, the compatibility of this new agreement with Article 7 of its common market protocol is not at all clear, but I do not believe that in practice the agreement threatens the cohesion of the EAC. Under the agreement, tariff reductions by the Kenyan Government, which might create a perceived need for customs checks inside the EAC, will start only seven years ahead. By then, I would hope that all five other members of the EAC would have acceded to this agreement or a comparable, improved version of it. I very much hope that the Minister will be able to confirm that that is indeed the Government’s aim.
Secondly, the IAC report drew particular attention to the scrutiny of amendments to agreements. It is important, if we are to avoid future disputes, to devise clear criteria for determining when an amendment—or, indeed, a memorandum of understanding, an exchange of letters or an agreed minute—is of sufficient weight to trigger CRaG scrutiny. I am encouraged by the sympathetic hearing that the noble Lord, Lord Grimstone, has so far given to the concept of a criteria-based approach, and I urge him not to weary in well doing.
Lord Boateng (Lab) [V]
My Lords, it is a pleasure to speak in the maiden debate of the noble Lord, Lord McDonald. I had the honour of serving with him as a Minister and then as a colleague. He may be young compared to many of us, but he was never naive—at least not in my experience.
I welcome the opportunity to have this debate and commend the work of my noble and learned friend Lord Goldsmith and his committee in giving this agreement much-needed scrutiny. I particularly support the call, and concerns expressed within it, for the implications of this agreement for economic regional integration. Successive Governments of all political hues have long supported regional economic integration in Africa as one of the best means of lifting people out of poverty. It would be a tragedy if these agreements—this is the first of a number—were to undermine the real progress that has been made in the development and economic integration of the regions of Africa, not least as this is the first year of the African Continental Free Trade Agreement. This free trade agreement creates the largest global free trade area in the world by country number, aims to be a model of cross-border co-operation—something that DfID, as it was, and the current department have long championed—and, importantly, offers a real prospect for a continent currently facing a pandemic that has caused it up to $79 billion in output losses in 2020 alone. Africa has never needed economic integration more than now. The World Bank estimates that the African Continental Free Trade Agreement will boost regional income by 7%, or $450 billion, speed up wage growth for women and lift 30 million people out of extreme poverty by 2035.
If regional integration does not come to pass on the continent, we face the real prospect of holding it back and increasing still further the number of people who will fall into poverty as a result of Covid. I therefore urge the Minister to respond positively to the request in the report that the Government should provide an assessment of the risks posed by the agreement to the East African Community Customs Union, as well as an assessment of the implications of any bilateral agreement for regional integration in East Africa. This is important today, since Ghana has signed—in the Locarno room—a post-Brexit trade agreement with the UK. I commend the hard work of Ministers on both sides for all they have done in that regard. If that hard work is to be turned into benefits for farmers, young entrepreneurs and small and medium-sized businesses, it requires that this report and its implications are taken seriously by the Government so that, when we come to consider Ghana’s free trade agreement with the UK, it will enhance rather than damage regional integration.
Lord McNally (LD) [V]
My Lords, there are times when debates in this House make one feel very old. Between 1974 and 1979 I was a special adviser to Jim Callaghan, working closely with the much-missed Lord Wright of Richmond, the father-in-law of our new Peer. It is also worth remembering that at the time the bright, young Private Secretary to the Permanent Under-Secretary, Sir Tommy Brimelow, was the noble Lord, Lord Kerr. There is one last thought on which the noble Lord, Lord McDonald, might ponder: when Tommy Brimelow came into the House, he joined the Labour Benches. The noble Lord does have a choice.
Kenya is important, not only as a trading partner, as has already been pointed out, but as a country in its own right. It is a member of the UN Security Council and a senior member of the African Union. We have already heard about its membership of the East African Community and, of course, it is a key member of the Commonwealth. It is important that the relationship is endorsed and supported by this House.
Some real worries have already been expressed in this debate. In seeking the new bilateral treaties, the UK must not become a disruptor of existing partnerships, as the noble Lord, Lord Boateng, warned us, which are so important to development in Africa. Although, like my noble friend Lord Oates, I accept that the concessions about parliamentary scrutiny are the basic, minimum requirement, if the Government are sincere in their pledge about bringing sovereignty back not to the Executive but to Parliament, they should look at radical reform of the Constitutional Reform and Governance Act 2010. That would show their real intention to give Parliament the kind of scrutiny that trade and other international relations treaties deserve. We must make sure that they are seen in the wider context of regional stability, our ambitions for climate change targets, development goals and support for human rights, as well as squeezing bribery and corruption out of trade altogether. That is what we want to hear from the Government.
I look forward to the Minister’s reply. Again, I welcome the noble Lord, Lord McDonald, to the House and look forward to his future contributions.
Viscount Trenchard (Con)
My Lords, I thank the noble and learned Lord, Lord Goldsmith, for introducing this debate. Along with other noble Lords, I most heartily congratulate the noble Lord, Lord McDonald of Salford, on his entertaining maiden speech. Your Lordships’ House will gain a great deal from his experience and perspectives as the global Britain programme accelerates.
During the last few weeks of the implementation—or transition—period, all eyes were on the discussions with the EU, led by my noble friend Lord Frost. I trust that we are likely to see rather more of him in your Lordships’ House in future. He successfully concluded the trade and co-operation agreement with the EU on Christmas Eve, a wonderful Christmas present for the British people.
Little attention has been given to the impressive performance of my right honourable friend the Secretary of State for International Trade and her team in sorting out a large number of continuity free trade agreements during December. As of now, the UK has secured continuity or enhanced continuity trade agreements with almost all the 70 countries with which we had previously signed up to free trade agreements as members of the EU. Last month it was announced that we have applied to join the CPTPP, a free trading area with a combined GDP of £9 trillion. This is very exciting and enormously significant for global Britain.
It is also to be celebrated that we have now signed up to seven free trade agreements covering 14 African countries. Important among those agreements to which we signed up in December was that with Kenya. In terms of volume of traded goods, it was perhaps not the most important, but in terms of geostrategic significance I submit that it was rather more important. Some observers have said that the agreement may have a negative effect on economic integration among the members of the East African Community. However, under Article 143 of the agreement, the other members of the EAC are entitled to make an accession request to the UK-Kenya EPA Council.
The International Agreements Committee of your Lordships’ House asked why the Government did not transition the market access regulation into UK law. It seems clear that the reason no other partner state of the EAC chose to ratify the EU-EAC EPA is that they could enjoy duty-free and quota-free access through the EU’s market access regulation. Beyond this, all the other partner states had an additional incentive not to ratify the agreement, as they are least developed countries and, as such, already benefit from duty-free, quota-free access under the EU’s generalised scheme of preferences LDC framework.
Kenya has seen sustained growth for over a decade, rooted in fundamental reforms which have made the Kenyan economy competitive and increased its attractiveness to international investment. I welcome this agreement.
Lord Hannay of Chiswick (CB) [V]
My Lords, I too welcome the maiden speech of the noble Lord, Lord McDonald of Salford, and in doing so express my sadness that his late father-in-law, Lord Wright of Richmond, was not here to see him make it. I worked once for someone who said he was a founder member of the son-in-law club. He was a former Leader of this House, Lord Soames, and his father-in-law was Winston Churchill, of course. He always used to say, “the son- in-law also rises.”
In so far as the UK-Kenya agreement we are debating is one of the category that the Government call continuity agreements—perhaps more clearly described as rollover agreements of the terms which already existed between the UK and Kenya when we were a member of the EU or in transition out of it—there is probably no need to go into too much detail, which is fortunate since, as usual, we have no time to do so.
Perhaps when the Minister replies to the debate he can identify any elements in the agreement which provide better access to our market than Kenyan exporters already had, or provide our exporters of goods or services with better access to the Kenyan market than they already had. What we are talking about, therefore, is running to stand still. I am not denigrating that; it is certainly better than nothing and better than regressing to straightforward third-country treatment of each other. But it is still light years removed from what was promised by the promoters of Brexit once we had shaken off what they described as the “shackles” of EU membership.
That brings me to a wider point, which was raised forcefully in the report of your Lordships’ International Relations and Defence Committee on the UK’s relations with sub-Saharan Africa—a report published last July and still languishing undebated. It is now nearing five years since the Department for International Trade was set up in the aftermath of the 2016 referendum to establish the outlines of the UK’s new independent trade policy, yet to this day not a word has been revealed about what that policy should be towards Africa —a substantial proportion of the world’s population, containing many rapidly growing markets. Not one word has been said about those African countries’ improved access to our market, which must surely be an integral part of any serious partnership between the UK and Africa.
This failure to identify and to promote the countries of Africa as a priority part of our new trade policy is surely a lamentable one which must be remedied. However, the Government’s written replies to our report’s recommendations—two attempts were needed—were vapid and imprecise, and contained no sense of urgency. Clearly, pursuit of the mirage of a UK-US agreement and that of an agreement with the Pacific grouping, with seven of whose 11 members we already have free trade agreements, were crowding out any consideration of Africa. I hope that the Minister can say that this will not continue to be the case and give us chapter and verse on how that lacuna will be filled, at the latest when the report on sub-Saharan Africa is finally debated.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
I call the next speaker, the noble Baroness, Lady Wheatcroft. I beg your pardon, the next speaker is the noble Viscount, Lord Waverley.
Viscount Waverley (CB)
It has happened many times before; not to worry.
My Lords, the maiden speech by the noble Lord, Lord McDonald of Salford, was one of the finest.
The Kenyan agreement should become a beacon of best practice, promoting inclusion, sustainability and green growth, and, importantly, should be based around delivering African priorities. However, the UK’s recent push to sign continuity agreements with African states has drawn criticism for being overly focused on the UK’s needs and not those of the continent. There is an excellent opportunity to reset the trade relationship with Africa and seek an agreement that centres on the priorities of that continent: the African Continental Free Trade Agreement, which aims to boost intra-African trade. This would tie in well with Commonwealth objectives to boost intra-Commonwealth trade, a significant proportion of which should be in Africa, a point borne out in Nairobi at the Commonwealth summit hosted by the Secretary-General, the noble and learned Baroness, Lady Scotland.
However, as a broader strategy of approach, emphasis should not be just on anglophone Africa. The UK’s ambition to be the lead investor in Africa should be seen within the context of opportunities in francophone and lusophone countries, and the Hispanic Equatorial Guinea. Being an international centre for mobile technology, digital trade ought to be prominent and include financial services. The UK should be seeking to agree a modern digital trade corridor, on par with those agreed with Japan and Singapore, with free movement of money, data supporting inward investments services and trade in goods.
Notwithstanding a round of development cuts, we should be seeking to better utilise our diminishing funds to build resilience and capabilities in key areas such as digital connectivity, climate, health and skills. I conclude by saying that we should be mindful too of UK-EU-Africa supply chains—the east African flower trade being a case in point, as has already been referred to. This Kenya agreement should strengthen these things and not have the negative effect of disrupting and undermining them; although, as an aside, I have long been a proponent of the establishment of greater east-west transport corridors.
The Deputy Speaker (Lord Duncan of Springbank) (Con)
I thank the noble Viscount, Lord Waverley. I will not forget again. I now call the noble Baroness, Lady Wheatcroft.
Baroness Wheatcroft (CB) [V]
My Lords, I commend the impressive maiden speech of the noble Lord, Lord McDonald of Salford, and welcome that he is clearly intent on being an active Member of this House. I thank the Minister for giving us the Grimstone rule, to which reference has already been made. It is a small concession to parliamentary democracy, but a welcome one.
This agreement demonstrates why Parliament needs to be involved in formulating these agreements. I love Kenya and have spent many happy times there. It is a country rich in natural resources, but it has a massive problem, which I wish to concentrate on today: corruption. It ranks 124th in Transparency International’s index of 180 countries.
When Kenya’s Ethics and Anti-Corruption Commission was launched in 2016, its director said that Kenya was losing a third of its state budget—around $7 billion a year—to corruption. Sadly, things have not improved since then. A succession of scandals in public procurement have been exposed, year after year. Some have involved massive contracts and some just a consistent pattern of graft. Such corruption deprives the people of the wealth that they could be enjoying and that Kenya, without corruption, would be well placed to deliver. Currently, there are investigations into alleged corruption over Covid-related contracts—although that is of course not unique to Kenya.
So could we not have been more ambitious in pushing Kenya towards transparency in public procurement contracts? The agreement states that the parties will aim to conclude negotiations on transparency in public procurement within five years. I ask the Minister: why did we not push for something more demanding on this vital issue?
The Earl of Sandwich (CB) [V]
My Lords, as a rollover agreement, the UK-Kenya EPA has had rather a bumpy ride through Parliament, both here and in Kenya. This stems mainly from the cavalier treatment of the other EAC members, which are assumed to go along with it since they already benefit from LDC and EBA preferences.
Like other members of the IAC, I have been especially concerned about whether any countries were consulted as individual nations, as well as via the EAC itself. Nairobi has always had the monopoly of communications, as well as of trade, in east Africa; that is a fact of life. But Tanzania, Uganda, Rwanda, Burundi and even South Sudan, and the new applicants DRC and Somalia, all have strong interests in trading with the UK. They do not want any disruption. Even in Nairobi, several MPs complained that their Government had failed to consult fully with their own stakeholders on the agreement, with the result that parliamentary debate was held up and the deadline for ratification missed.
There were some deep-seated civil society and farming concerns that the EPA, like its EU-ACP predecessor, tended to treat Kenya as a supplier of raw materials and primary products, rather than encouraging its SMEs and businesses to develop its manufacturing base. For some, this recalls the UK’s neo-colonial links with Africa and is still a long way short of the vision of fair and sustainable trade that helps the poor. The noble Lord, Lord Boateng, made powerful points on that as well.
There is a real risk that the EPA could destabilise the EAC itself by negotiating with only Kenya and the bloc rather than with individual members. The community was founded in 1999 and is still the strongest regional association in Africa. It held its 21st summit last weekend. It has achieved a degree of integration, but its members still control their own foreign policy. The Minister has claimed that the DIT kept in touch with individual states, but perhaps he could give details today. The fact that they have been formally invited to join the agreement after the event hardly makes a difference if they each have different policy objectives.
I do not blame Brexit for all this directly, but I can point a finger at the last-minute arrangements devised by the Government to patch up a lot of these important trade agreements. The Minister might argue that this was a cunning plan to ensure that the agreement went through just in time, but most people would think, and perhaps Ministers would admit, that it was a messy consequence of doing things in too much of a hurry.
I welcome the noble Lord, Lord McDonald, to our Cross Benches, and thank him for his unambiguous support for our aid programme.
Lord Purvis of Tweed (LD)
My Lords, I am grateful to the committee for its Motion allowing us to debate this agreement and for its work under the noble and learned Lord, Lord Goldsmith. I am also grateful for the opportunity to have heard the maiden speech of the noble Lord, Lord McDonald, who gave evidence to the committee that I sat on in this House. He should feel fully liberated after 38 years. We have the evidence of his two amigos as former Permanent Secretaries who are hardly inhibited in providing their views to the House—so we look forward to the noble Lord doing exactly the same, because he will have much to offer. He will find, as I have over the seven years I have been here, that this House is great for making you feel perpetually young.
I welcome this first application of the Grimstone rule—that we will not ratify agreements before they have been debated if a committee has asked for that debate to take place. I welcome the fact that the Government has ensured that this debate has indeed taken place, as my noble friend Lord Oates highlighted in his remarks. He also referred to the tension there now is within the EAC over the moves to have a bilateral agreement, and I will refer to that.
We know that the European EPA has not yet been ratified by all members of the EAC, as the noble and learned Lord, Lord Goldsmith, said. But, importantly, he highlighted that there are other elements of preferential relationships, and the partnership mechanisms of Aid for Trade and economic development in that EPA, for which we have not provided any continuity with Kenya. Now that this is the mechanism which the Government have said that other countries will be invited to accede to, they will not be acceding to any continuity that had been in existence in the European agreement.
So what is the Government’s intention? Is this an agreement which other countries will be invited to accede to? Or, if a country chooses to enter into an agreement with the UK, within the aegis of the EAC, will we reopen negotiations with those other countries to afford them all of the different partnership and trade for development policies? The MoU that accompanies the agreement will give Kenya and the UK a much greater say than other countries in the EAC acceding to this agreement. It is almost insulting to other members of that community to say that if they wish to have the same arrangements with the UK that they had previously within the EU, they will have to join this agreement. Why was the previously discussed bridging mechanism for Kenya rejected? This was not clear in the Government’s evidence to the committee.
Like the noble Lord, Lord Boateng, I am pleased that the final agreement for Ghana has now been agreed, after two months of applying tariffs to Ghanaian products. As we have heard, the concern of farmers and the rural community in Kenya, who are now seeking legal remedy from their own Government over this agreement, shows that there are deep consequences of our arrangements with these two countries.
With regard to the Kenya agreement, the wider partnership elements are the essence of these agreements. EPAs are not simply tariff agreements or FTAs; they are genuinely partnership agreements—that is the essence of them. Therefore, we need to look at the wider, non-tariff areas of relationships, deliberately framed not to be purely about tariff measures for middle-income countries, or codifying the Everything But Arms approach for other countries in the different categories.
As the noble Baroness, Lady Sugg, said in her very informed and powerful contribution on development support, this is not a continuity agreement. In Annexe 3A of the EU’s Aid for Trade agreement there is a matrix of 23 pages of costed, specified projects for increasing trade, competition and finance from the European Union through its European Development Fund and the members of the EAC and Kenya.
This annexe has been removed from the UK agreement, with no replacement. Indeed, the section on development co-operation in the Government’s report has two paragraphs and leads with what I find are chilling words. Paragraph 57 starts—the noble Lord, Lord McDonald, will have to forgive me, but this is perfect Civil Service speak—with the words:
“In line with the different approaches of Britain and the EU to programming for development cooperation”.
What does that mean? What are “different approaches” to programming for development co-operation? It means, by the last sentence, that while parts of this agreement reflect the ambitions of the parties, they
“do not create any obligations on us to provide financial or non-financial support in specific areas.”
So aid for trade and development support have been stripped out entirely from this agreement.
None of the commitments is binding in Parts III to V. In Part V, the 27 articles have the rider, of course, that there will be no financial commitment or obligations. Technically, under this agreement, which we are being asked to ratify, there is no commitment for a single pound in facilitating aid for trade or trade for development support. Can the Minister clarify what is the aid for trade development support with this agreement? Let me be clear what it is. It relates to food standards and upgrading laboratories. It is connected to all of the areas where we would seek to facilitate UK trade to develop even further. This is sending a very strong negative message.
This leads me to the point that the noble Baroness, Lady Sugg, mentioned with regards to TradeMark East Africa, which has been highlighted by respective Governments over the past decade as a very significant success for the UK. Our support for TradeMark East Africa facilitates $100 million to the benefit of UK businesses, making trade easier and, as the noble Baroness, Lady Wheatcroft, highlighted, tackling corruption and bureaucracy, reducing trade costs by 30%, increasing competition, improving transport corridors for trade, and increasing jobs and prosperity. But TradeMark East Africa now has a sword hanging over it. It has already been asked to make 20% cuts last year by the FCDO, reducing its staff to a four-day week, and now it could see a cut of 50% of its work, which in effect would make it inoperable. You can only cut programmes so far before they are unable to be delivered. This is a flagship project. Such a cut could create significant long-term reputational damage for the UK, putting at risk longer-term projects that we have secured with our partners.
The final point I would like to make to the Minister is that it is not too late to reverse the trajectory. If we are to have better digitisation, anti-corruption measures, better procedures, better standards, policy development and support for women traders, which should be the essence of these EPAs, we cannot see cuts to TradeMark for East Africa. It would be inconsistent with the wider approach and inconsistent with what we are told should be an Africa strategy in the fastest growing, and what is likely to be the biggest, trading area in the world. It is not too late. I hope the Government will persuade the Secretary of State to change course.
Lord Collins of Highbury (Lab)
My Lords, let me start by echoing the remarks of other noble Lords in welcoming the noble Lord, Lord McDonald. He showed remarkable ability in being able to say so much in such a short period of time. I hope he will continue with that record.
I also echo the comments of the noble Baroness, Lady Sugg, which complemented those of the noble Lord, Lord McDonald, on support for the Government’s commitment to ODA. I saw first hand last year the in-country programmes in Kenya, in particular on nutrition and agriculture, which is what this agreement could particularly impact, and the diversity of agriculture which is necessary to ensure proper nutrition. One of the problems with the focus on trade is that often those agricultural products that we import are not delivering for the people of Kenya in the way that they should in terms of nutrition. I hope that we will return to that subject later on.
This continuity agreement is one of 10 that came into effect on 1 January, and it is the only one that has been subject to any form of debate in either House. This illustrates how the CRaG process is totally inadequate in guaranteeing proper parliamentary scrutiny of new trade deals before they come into effect. Like other noble Lords, I welcome the changes that were made in the Trade Bill; I understand that they will now be called the “Grimstone protocols”, which is great news, as I can keep repeating that name.
The Minister may well say that this is just a rollover agreement but, as we have heard in this debate and as the analysis by the International Agreements Committee shows, this is not the case. There should have been a proper discussion before this deal came into effect, given its implications for the rest of the East African Community. As the noble Lord, Lord Oates, highlighted, I hope the Minister will respond in full to the committee’s request to explain what other options were considered for ensuring continuity of trading arrangements with Kenya, and why they were not pursued. In particular, what representations were made by the other EAC members and stakeholders, and how have the Government sought to evaluate those and address their concerns?
As the noble Earl, Lord Sandwich, noted, we know that Kenya’s Parliament failed in December to ratify the trade agreement with the UK, calling for a supplementary report on the economic partnership agreement. Last week, the Kenya Small Scale Farmers Forum sued the Kenyan Government, arguing that the process of the deal’s ratification was extremely flawed as no public participation was conducted by the Kenyan Government before the document was proposed in the Kenyan Parliament. In a statement, the farmers said that
“an open market with heavily subsidized tariffs for the UK farm products like chicken, pigs and maize”
would have
“the dangerous potential to destroy local production of the very same products”.
We had a debate on the EU EPA in this House, in November 2016, when all these issues were raised in relation to the development project and, in particular, the question of how we would deliver on the 2030 agenda to build sustainable development.
One other issue I want to raise, in addition to those identified by the committee, and which I focused on during debate on the Trade Bill, is human rights provisions in the Kenya deal. We have all heard the mantra of Ministers that these agreements simply maintain the status quo from the EU agreements that came before them. In some cases that is certainly true; for example, the agreement with the Ivory Coast signed by the Government in November 2020 and published in sufficient time for it to receive the full 21 sitting days of parliamentary scrutiny before taking effect on 1 January. Annexe 3 to that agreement replicates the effect and language of the EU’s Cotonou Agreement with the African, Caribbean and Pacific states, committing both parties to uphold human rights and the rule of law as an essential element of the agreement, spelling out the process and consequences that would follow any violation of that commitment. The Kenya agreement contains the same Annexe 3 as that of the Ivory Coast but removes the entire section dealing with the consequences of any violations of the human rights commitments. There is no explanation as to why; I hope the Minister will be able to explain that tonight.
I have argued in this House that we should use continuity agreements to strengthen the provisions in trade agreements relating to human rights—but here, in the Kenya agreement, there is a clear example of where the Government have actually done the opposite. One reason that this matters is that, as other noble Lords have pointed out, other East African Community countries will be able to join the EPA—countries that, according to Amnesty International, have a clear poor human rights record. We should focus on the implications of that.
Regional press reports this week say that Burundi, Rwanda, Tanzania and Uganda have demanded the extension of the negotiation period by one year so that they can sign the agreement as a bloc. I hope the Minister will be able to tell us exactly what the implications of that are.
Finally, as the Minister doubtless knows, Africa is home to 30 of the world’s 40 most climate-vulnerable countries, and Kenya ranks 152 out of 181, with an increasing prevalence of droughts and floods. Where once the rains marked the predictable changing of the seasons and could be relied on by smallholder farmers for their livelihoods, climate change and plagues of locusts are wreaking deadly havoc.
However, in the hustle and bustle of Nairobi, Kenya has hope for a bright and green future, planning a new sovereign green bond. The UK’s development budget has been very actively involved in encouraging Kenya’s green transition—so what assurance can the Minister give that the UK’s support for Kenya’s climate ambitions will be protected from the spending cuts that the Chancellor has imposed on this vital work?
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, I thank the noble and learned Lord, Lord Goldsmith, for tabling this debate, and I welcome the opportunity for an informed discussion of the UK-Kenya Economic Partnership Agreement and the Government’s wider approach to securing continuity in our trading relationships with the whole of the East African Community. Of course, this work is so important to UK and east African citizens and businesses alike. In view of the time constraints, I will restrict my comments to the substance of the debate.
It is a great pleasure to see parliamentary scrutiny in action in this debate, living up to the commitments that we made during the progress of the Trade Bill—in particular, following what I like to think of as the “Purvis convention” in the way that we approach these matters. I thank all those who have contributed to this debate, and I will try to respond to the many insightful and well-informed points that have been raised. In particular, the expertise and commitment of the IAC members never fail to inspire me. If I do not fully respond to all the points, I will of course write to noble Lords after the debate.
What a pleasure it is to have a noble Lord choose this debate as the occasion for his maiden speech. The noble Lord, Lord McDonald of Salford, made an observant, judicious and eloquent speech, befitting his nearly 40 years of illustrious service to this country’s diplomacy at the highest levels. I know I speak on behalf of all noble Lords in saying that we not only welcome his presence but eagerly anticipate his future contributions, to the advantage of the quality and expertise of this House’s proceedings.
I also thank the House of Lords International Agreements Committee and its officials for the detailed examination of our continuity agreements, as set out in its Scrutiny of International Agreements report. In responding, I will cover three main points: the UK’s approach to trade continuity with Kenya, our ambitions for a regional deal with the whole of the EAC, and our approach to the ratification of this agreement.
First, as I know this was a matter of concern to a number of noble Lords, I reiterate the UK’s objective of achieving a regional trade agreement with the whole of the EAC. We remain absolutely committed to building a strong trading relationship with the whole EAC that will create jobs and prosperity in east Africa. It is very much our intention that the agreement we have signed with Kenya is a stepping-stone towards even stronger regional integration in future.
Let me give a little of the background to how we ended up where we are today. Back in January 2020, the former Minister for Trade Policy wrote to the EAC’s secretary-general to reinforce the UK’s ambition to work in partnership with the EAC secretariat to build a strong trading relationship that will create jobs and prosperity in east Africa. In so doing, he proposed a meeting in February 2020 between the UK and representatives from the secretariat and all partner states to find a way to replicate the effects of the EU’s current trading arrangements between the UK and the EAC, and to avoid any disruption in our existing trade with the EAC partner states.
We have continued since that date to engage with the secretariat and partner states, but during these discussions the EAC informed us that some partner states were unable to begin negotiations with the UK because of some domestic preoccupations. However, they understood the need to maintain trade continuity and provide certainty for businesses and citizens in all partner states as we approached the end of the transition period. It was therefore on this basis that the UK and Kenya decided to negotiate this agreement, ensuring that our discussions were open to all EAC partner states to join. The fact is that no partner state chose to join these discussions, but I reassure noble Lords that we have left the door firmly open.
In accordance with article 143 of the agreement, any state that is a contracting party to the Treaty for the Establishment of the East African Community is able to accede to this agreement in future. Indeed—some news hot off the press—noble Lords may have seen that on Saturday the EAC Heads of State held their annual summit. One of the things they considered was participation in trade agreements. The Heads of State provided approval to an approach enabling some partner states to proceed to implement the EU’s agreement with the EAC ahead of others.
I am happy that this pragmatic approach by the Heads of State is exactly in keeping with the approach that we have taken in our EPA, and reassured that such a style of approach has now been approved at the EAC Heads of State level. If that is what the Heads of State have decided, I gently say: is it right for us to question this approach? I hope this will put at rest the mind of the noble and learned Lord, Lord Goldsmith, and those of other noble Lords if they feel that we have somehow been a disruptive force in the EAC in these matters. The noble Lord, Lord Boateng, and the noble Earl, Lord Sandwich, were also concerned about this point.
The agreement we have secured will ensure that companies operating in Kenya, including British businesses, can continue to benefit from duty-free quota access to the UK market for a range of important products, including vegetables and cut flowers. It will support jobs and economic development in Kenya and avoid possible disruption to UK businesses such as florists, which will be able to maintain tariff-free supply routes for Kenya’s high-quality flowers. It will also benefit many of the approximately 2,500 UK businesses exporting goods to Kenya each year, including many UK suppliers of machinery, electronics and technical equipment, where continued tariff-free access will be guaranteed.
I turn to the UK’s approach to ensuring trade continuity with Kenya in response to the committee’s request for further detail on the options considered. As one of the largest economies in east Africa, Kenya is of course an important trading partner for the UK. However, as the only EAC partner state that is not a least-developed country, it faced the imposition of new tariffs if we had been unable to secure a deal at the end of the transition period. Kenya faced reverting to less preferential trading arrangements under the UK’s generalised scheme of preferences. Without a deal in place, assuming that the current patterns of trade remain unchanged in future, the annual increase in duties on our imports from Kenya was estimated to be around £10.5 million in 2021. In contrast, as least-developed countries—and this is the important point—all other EAC partner states’ duty-free, quota-free access to the UK was guaranteed under the GSP.
In its report, the committee asked the Government to explain why the UK had decided not to replicate the EU’s market access regulation. The agreement that we have signed allows for the effects of that regulation to be replicated in all material respects with regard to Kenya. Providing permanent duty-free, quota-free access for Kenyan exports benefits UK-Kenyan trade, which was worth £1.4 billion in 2019. The agreement, taken together with the GSP, ensures that trade continuity is guaranteed for all EAC partner states.
While the UK had proposed a no-deal transitional protection measure to Kenya in 2019, that had been developed only to provide an additional 18 months to conclude trade negotiations with certain partners who faced the imposition of new tariffs in the event of a no-deal EU exit. However, as the withdrawal agreement reached between the UK and the EU in October 2019 included an 11-month transition period until December 2020, that gave us the additional time that we needed to conclude outstanding negotiations. The no-deal transitional protection measure then became no longer appropriate.
I turn to the Government’s approach to the ratification of the agreement. In my letter of 9 February 2021, I outlined the steps taken by the Government in accordance with the statutory process for laying agreements under the Constitutional Reform and Governance Act 2010. The Government believe that the explanatory materials published alongside the agreement on 17 December were sufficient and we therefore made the decision not to extend CRaG, which concluded on 10 February. However, I can confirm—and this was absolutely the right thing to do, in accordance with the commitments that I made from this very Dispatch Box during the passage of the Trade Bill—that the Government have not yet ratified the agreement, which we have delayed deliberately until after today’s debate in order to ensure that Parliament has had the opportunity to effectively scrutinise the text.
The UK-Kenya Economic Partnership Agreement provides stability and certainty for UK and Kenyan businesses alike. It guarantees permanent duty-free, quota-free access to UK markets for one of the largest economies in the region. Without it, Kenya would have been left behind through no fault of its own while the other partner states continued to benefit from duty-free, quota-free access to UK markets. That unfairness was an unacceptable outcome for the UK. However, I reiterate that the agreement does not prejudice our approach towards the other EAC partner states. I confirm to noble Lords, particularly the noble Lord, Lord Kerr, that we remain ambitious in our desire to expand the agreement in future, and we have ensured that the agreement contains a clear process for accession.
Before I conclude, I will deal with a point made by my noble friend Lady Sugg and the noble Lord, Lord Purvis. I reassure noble Lords, with regard to the effect of the funding of previous ODA programmes, that trade and economic development—and building future trade and investment partners, including through helping countries to trade—is one of seven ODA priorities. No final decisions have been made on budgets or allocations to individual programmes, but I am happy to reassure noble Lords that we intend to ensure that TradeMark East Africa can continue its important work in promoting trade to east Africa. I will write to the noble Lord, Lord Purvis, and send copies to the committee and the Library, on his point about the differences between this report and the EU report, and his points about the MoU.
The noble Lord, Lord Collins, raised an important point about human rights. I hope I can reassure the noble Lord: Annex III of the UK’s economic partnership agreement with Kenya replicates language from the Cotonou agreement, and the effect of the Cotonou references to the EU’s economic partnership agreement with the East African Community will make sure that respect for human rights, democratic principles, the rule of law and good governance, which are so important to all in this House, are made essential and fundamental elements of the agreement.
In conclusion, therefore, I reiterate my thanks to the committee for its examination of this agreement—which, I repeat, has not yet been ratified—and I respect the committee’s desire for further time, which we have granted today, to enable full scrutiny of its provisions. Our ambition for this agreement was to ensure continuity for Kenya, and I like to feel that we have achieved that ambition.
Lord Goldsmith (Lab) [V]
My Lords, I thank all noble Lords who have taken part in this debate. It has been very valuable, and although noble Lords had only a short time for their contributions, those have all been significant. I too congratulate the noble Lord, Lord McDonald of Salford, on his maiden speech, which was, as anticipated, eloquent and impressive.
I welcome the Minister’s assurances that this was not intended in any way to disrupt the arrangements for the rest of Africa. I thank him for his explanation. We will watch what is said: we will watch closely to see if other countries accede, as he has explained is now possible, and we will look at that closely.
The other issue raised by noble Lords is parliamentary scrutiny. That is important to the International Agreements Committee, as I have said. Whether it is the Purvis protocol, the Grimstone rule or even Lansley’s law, we are pleased with the changes that are taking place: we are edging towards greater parliamentary scrutiny, which is important because we should not be just paying lip-service to it. We will continue to watch that.
I thank the Minister for what he said about not ratifying. The department could perhaps have said that it would extend the time, but I suppose the effect has been the same. With that, I beg to move.