National Security and Investment Bill

Lord Caine Excerpts

Committee stage & Lords Hansard
Tuesday 2nd March 2021 Grand Committee

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

--- Later in debate ---

Let me close by reassuring noble Lords that the UK is not alone in pursuing this approach. Our French and German neighbours both have similar automatic voiding provisions in their investment screening legislation. We are consistent in this with economies with similar national security concerns. To alter it would be to make our regime comparably less effective. I know noble Lords who have tabled these amendments have good policy as their motivation and good law as their objective. Therefore, I hope the points I have been able to provide them with assure them the Government are delivering these in the Bill as it currently stands. I hope, with these explanations, those noble Lords will choose not to press their amendments.

[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?

--- Later in debate ---

Amendment 5 withdrawn.

[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

Moved by

Hospitality Sector Minister

Lord Caine Excerpts

Wednesday 3rd February 2021 Lords Chamber

Asked by

[Lord Caine]

To ask Her Majesty’s Government what plans they have to appoint a dedicated minister for the hospitality sector.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con) [V]]

Responsibility for hospitality is currently split between BEIS and DCMS. Both departments are working closely together to ensure that the sector’s interests are strongly represented in government. The power to create a new ministerial post rests with the Prime Minister; however, whatever is decided, we will work to ensure that the sector is in the best possible place to bounce back from Covid-19 so that it plays a leading role in the UK’s economic and social recovery.

[Lord Caine (Con)]

My noble friend is well aware of the crucial importance of the hospitality sector to our economy, to employment and to our general quality of life. While I completely acknowledge the unprecedented levels of support provided by this Government, the sector still faces massive uncertainty and challenges when we finally emerge from this terrible pandemic. Rather than responsibility being split between different departments, is there not now an overwhelming case for it to be brought under one dedicated senior Minister whose sole focus is to work with the entire sector on recovery? The sector is asking for this through its online petition, which has now attracted 209,000 signatures.

[Lord Callanan (Con) [V]]

I well understand the point my noble friend is making but, as I have said, BEIS and DCMS work closely together. The split in responsibilities reflects the fact that most hospitality businesses are SMEs, and BEIS is very experienced in supporting them. However, hospitality accommodation is more closely aligned with the responsibility DCMS has for tourism. We are co-ordinating our activities closely.

UK Internal Market: White Paper

Lord Caine Excerpts

Wednesday 29th July 2020 Lords Chamber

[Lord Callanan]

These proposals will not affect the ability of the Welsh Government to proceed in those environmental areas if that is a power they already have under the devolution settlement. As I said, we are not removing any of the powers that the devolved legislatures already have. In fact, we are increasing the number of powers that they have, and they can use them to the fullest extent. The only proviso is that they do not discriminate against companies and businesses in other parts of the country.

[Lord Caine (Con)]

My Lords, as a unionist, I welcome the White Paper, which deals with hugely important issues for the whole of our United Kingdom. Will my noble friend confirm that the White Paper demonstrates conclusively that by far the biggest market for Northern Ireland goods and services is here in Great Britain? Does that not underline yet again the huge economic benefits that Northern Ireland gains from being an integral part of our United Kingdom—benefits that could never be replicated under any other constitutional arrangements on offer?

[Lord Callanan]

As he so often is on these matters, my noble friend is exactly right. Some 50% of Northern Ireland’s exports are sold to the rest of the UK, and the figures are even higher for Scotland and Wales. We therefore propose to legislate through this measure by the end of 2020 to guarantee unfettered access for Northern Ireland’s businesses to the whole of the UK internal market, which is so important for it.

Covid-19: Businesses and the Private Sector

Lord Caine Excerpts

Thursday 21st May 2020 Lords Chamber

[Lord Caine (Con)]

My Lords, I thank my noble friend Lord Dobbs for securing this debate—I hesitate to use that word—and congratulate him on his speech. I echo many of his sentiments, including those about getting this House back to work.

The private sector is the engine room of a thriving, prosperous and free economy, and throughout the pandemic it has undoubtedly stepped up to the mark. Noble Lords have referred to many examples of the private sector helping in the national effort against the virus. I wish to refer to one sector: food.

Despite a few bumps with panic buying early on, the UK’s food and farming sectors have done an outstanding job in ensuring continuity of supply, choice and quality. That includes producers, retailers, large supermarkets, and all those down to small butchers—including my own here in Leeds—and grocery stores. Capitalism has kept our nation fed.

As many noble Lords have pointed out, looking ahead, it will be the private sector that leads our economy out of its Covid-induced recession and back to growth. Those who believe that the crisis has made the case for greater state control and intervention could not be more wrong. This country needs more capitalism, not less.

However, in backing private enterprise to help get our country back on its feet, I have one plea. Given the state of the public finances, it would be tempting for any Chancellor of the Exchequer quickly to impose higher taxes and burdensome regulations. I suggest that that risks strangling any recovery at birth and sending many more small businesses to the wall; a lesson that, alas, seems to be lost on that fledgling student politician, the Mayor of London. We need to get out of lockdown, get the UK back to work—including this House—and give business the freedom to thrive.

Coronavirus Business Interruption Loan Scheme

Lord Caine Excerpts

Tuesday 12th May 2020 Lords Chamber

[Lord Callanan]

No, I do not accept that criticism of the banks. They have worked extremely hard, as have the British Business Bank and the department, to try to get as many loans approved as possible for businesses that want them. The Government are—certainly through the bounce-back scheme—supporting 100% of the amount of those loans. Therefore, a lot of work is going on in all the sectors to try to help the businesses that require support.

[Lord Caine (Con)]

My Lords, I strongly commend the Government for their support for business during this crisis. Can my noble friend give more detail of the operation of both the business interruption scheme and the bounce-back scheme in Northern Ireland, which is predominantly an SME economy? Will there be regular updates on the number of successful applications, along with their value? Is he aware of concerns among some big players, including the Bank of Ireland, that they have yet to be accredited for the bounce-back scheme? Finally, has any assessment been made of support available in the Republic of Ireland and how it compares with what is on offer to business in Northern Ireland?

[Lord Callanan]

I know that my noble friend takes a close interest in matters in Northern Ireland. These schemes are available to businesses across all regions of the UK, and many lenders acting in Northern Ireland have received accreditation. However, we are working to get more lenders fully accredited as quickly as possible. Fourteen lenders have now been accredited for the bounce-back loan scheme and we are seeking to get more approved as quickly as possible.