National Security and Investment Bill

Baroness Ritchie of Downpatrick Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 4th February 2021 Lords Chamber

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, it is a pleasure to follow the noble Baroness, Lady Bennett of Manor Castle. I welcome the noble Lord, Lord Woodley, to the House and congratulate him on his maiden speech.

The aim of this Bill is to reform the way in which inward investment into the UK is investigated to ensure that hostile Governments or other entities do not use it to undermine the UK’s national security. It follows calls for reform, including from the Intelligence and Security Committee of Parliament, to which the noble Lord, Lord West of Spithead, has already referred.

The purpose of this Bill is to prevent international economic crime impacting on major businesses in the UK, but a lot more bureaucracy and resources will be required to execute its provisions. Combined with the provisions in the Financial Services Bill, it will give the Government more legislative teeth with which to address economic crime and corruption. But will the legislation actually benefit businesses and university research? We are still in the Covid pandemic and it will take some time to come out if it.

The Government have argued that these powers are necessary because of the resurgence of state-based threats to national security and the risk of UK businesses being controlled by entities with close ties to hostile foreign Governments. It is important to stress that inward investment and global competitiveness should not be compromised as a result of these new measures, which are undoubtedly the result of private Chinese interventions in the digital sphere. We need to be open for business and to have a continued inward investment platform. As the noble Lord, Lord Dodds of Duncairn, has already mentioned, in Northern Ireland we rely significantly for our manufacturing and business sectors on foreign direct investment. We also work directly with the universities on technology transfer. It is important that those industries are not impacted or undermined further by these proposed legislative developments, because it would have major repercussions for our fragile jobs sector. Our fragile business economy—particularly the aviation sector—must not be further threatened. High-level research must be encouraged and supported.

I want to concentrate on several areas. First, we need to increase parliamentary scrutiny of how the Secretary of State may use the powers in the Bill. This has been referred to during debate on the various stages in the other place. Businesses need clarity about how the powers in the Bill would be used and the definition of national security. We also need to ensure that this is not straight-down-the-line protectionism. There needs to be a mechanism for greater reporting to Parliament about the use of the powers. The Intelligence and Security Committee should have a role. The Secretary of State should publish guidance about the Bill and the regulations made under it within six months of it being passed. Will the Minister ensure that government amendments come forward in Committee or on Report to address the need for greater parliamentary scrutiny?

It is also important that small and medium-sized businesses are not undermined. There is a fear that the notification process could become burdensome on such businesses, which would now fall within the scope of the new regime. The possible impacts on businesses of the new regime must be properly assessed, and legislative measures put in place to ensure that they are mitigated. Will the Minister commit to protecting small and medium-sized businesses in this way?

I turn to the position of universities which host incubators and start-ups. University research and innovation are vital for the UK. They have close links with inward investment and the business and industrial sectors. This must not be compromised as a result of these new legislative measures.

Like many other noble Lords, I have received a briefing from the University of Cambridge, which is involved with the business sector, especially with university technology transfer. I hope that the Minister and his colleagues in BEIS will find some solutions to deal with those issues.

Let us remember that national security has been invoked in the past in the context of Northern Ireland. This led to a major demolition company losing a big contract, with investment and job repercussions. All these issues must be addressed. We need to achieve a balance in the contents and proposals of this Bill.