Climate Change Committee: Carbon Budget Report

Lord Grantchester Excerpts

Tuesday 16th March 2021 Lords Chamber

[Lord Callanan (Con)]

I certainly agree with the first part of my noble friend’s question about the need for trust and openness. The Government are currently examining how best to support the public in making green choices and adopting sustainable behaviours. This includes identifying information that people need and how it can best be communicated, and providing it in an accessible format.

[Lord Grantchester (Lab)]

My Lords, one year into the pandemic, what lessons have the Government learned to encourage behavioural change in relation to net zero, given that the Public Accounts Committee reports this month that the

“Government has not yet properly engaged with the public on the substantial behaviour changes that achieving net zero will require”,


via co-ordinated, cross-department, consistent messaging?

National Security and Investment Bill

Lord Grantchester Excerpts

Committee stage
Tuesday 16th March 2021 Lords Chamber

Thirdly and finally, when we debated export licences under the Export Control (Amendment) (EU Exit) Regulations 2020 in December, the Government brought forward these provisions. The UK now operates two sets of legal duties, from the UK and the EU. Any company trading in or through Northern Ireland continues to be covered by EU regulations, and the UK now has to operate under the export control regulations for the European Union as well as the United Kingdom. What interaction will there be with the investment security unit in operating under European law with regard to any trade that goes through Northern Ireland? Under this legislation, I could not see that interaction with Northern Ireland, and there could be one very large loophole if any operation wished to trade through Northern Ireland when operating in the EU. Can the Minister clarify those points?

[Lord Grantchester (Lab)]

Amendments 39 and 87, tabled by the noble Lord, Lord Lansley, probe the Minister around the question of the interaction of the NSI regime with the export control regime. The Committee must be assured that this new regime is not buried within the Business Department but works effectively across government, not least in relation to export controls. The Government’s response to the sector consultation in the report already mentioned states

“how the NSI regime sits alongside export controls to provide a comprehensive regime protecting our national security capability”.

It is not merely a question of sitting alongside, however that may be interpreted, but of interacting and co-ordinating with the Department for International Trade. The Government seem to recognise this in the comment:

“We must ensure that the export control criteria cannot be circumvented by allowing the acquisition of companies that produce such goods, rather than buying the goods themselves, without effective screening.”


More clarity and information in the procedures to this eminently sensible statement would be very welcome from the Minister.

The Government responded to the consultation that they intend to capture all materials that are considered likely to give rise to national security concerns and which are contained in the relevant legislation set out in the UK’s strategic export control list. I would be grateful if the Minister could provide better information on their intentions, and how and when this will become clear and transparent. Will he provide a guarantee that this will happen—the assurances that the noble Lord, Lord Lansley, has required during the passage of the Bill?

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

First, I thank my noble friend Lord Lansley for these two amendments, which seek to ensure seamless integration between the new regime provided for by the Bill and the existing export control regime. I shall take his amendments sequentially.

Amendment 39 seeks to ensure that the Secretary of State can, through regulations, exempt from the regime certain acquisitions of control over qualifying assets that are subject to export control orders. Clause 11 provides for exceptions relating to control of assets. Subsection (1) sets out that acquisitions made by individuals for purposes wholly or mainly outside the individual’s trade, business or craft are not to be regarded as gaining control of a qualifying asset and are therefore excluded from the scope of the call-in power. This does not apply in relation to an asset that is either land or subject to certain export controls set out in subsection (2)(b).

Subsection (3) also provides a power for the Secretary of State to amend the list of assets that are outside the scope of this exemption or to prescribe other circumstances in which a person is not to be regarded as gaining control over a qualifying asset. That includes being able to prescribe circumstances in which the acquisition of an asset subject to export control legislation is not to be regarded as gaining control over a qualifying asset. Any use of this power in subsection (3) would, of course, be guided by the operation of the regime in practice and any patterns of activity that are observed. As such, I can therefore assure my noble friend that the Bill already provides for what his amendment intends to achieve.

Amendment 87 would require the Secretary of State to ensure that any interim orders or final orders made in relation to acquisitions of control over assets take into account controls imposed under the Export Control Act 2002 and related provisions. I thank my noble friend for his proposal and commend the intent behind it. It is, of course, very important that the Secretary of State’s use of the powers provided for by the Bill is in keeping with the Government’s measures under other legislation. The Secretary of State must take into account all relevant factors when making decisions about the use of interim orders and final orders.

The legal tests in the Bill require the Secretary of State, before making an order, to reasonably consider that the provisions of the order are necessary and proportionate for the purpose. In the case of final orders, that purpose is to address a risk to national security, and in the case of interim orders, it is to prevent or reverse an action that might undermine the national security assessment process. Whether controls have been imposed under export control legislation will be relevant to whether the envisaged provisions of an order are necessary and proportionate. For example, where export controls in relation to an asset are already in place, it may not be necessary or proportionate to make an order under this Bill prohibiting the transfer of the asset overseas, but this will depend on the facts of each case.

Addressing the questions of the noble Lord, Lord Purvis of Tweed, about why we need the Bill when we already have the export control regime, I say that the export control regime is a licencing regime for certain controlled goods. It is an important part of the safe- guarding of our national security and it sits well alongside the proposed national security and investment regime. The two regimes are distinct though, and do not perform the same role. For example, the export control regime does not provide the Government with the ability to scrutinise acquisitions of UK companies or direct the use of sensitive assets used in the UK, whereas of course the NSI regime would.

On the noble Lord’s points about standard individual export licences if they have been granted for an export, I tell him that a standard individual export licence is granted to one person to export specified items to a named recipient. If the parties involved precisely follow the terms of a standard individual export licence that has already been granted following an assessment of national security risks, it is unlikely that the Secretary of State would reasonably suspect that the export might give rise to national security risks. In this situation, it is unlikely that he would be able to call that export in under the NSI regime. However, it is important to say that any decisions would need to be made on a case-by-case basis. It is important that the Secretary of State retains the ability to call in and scrutinise trigger events involving the export of assets in the event that national security risks are present.

The noble Lord asked about Northern Ireland. Qualifying entities as assets in Northern Ireland sit within the scope of the Bill, and that ensures that there are no loopholes. A trigger event under the Bill is not based on the application of EU law. For completeness, I should also say that the Secretary of State will, in any event, be subject to public law duties requiring him to consider all relevant factors when deciding whether to make an order under the Bill. Therefore, where export controls are relevant, the Secretary of State will need to take them into account when making that order.

I hope that that has explained, for the benefit of the House, the interaction between the two pieces of legislation. With the explanations that I have provided, I hope that my noble friend will feel sufficiently reassured that his concerns have been taken into account, and that he will not press his amendments.

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[Lord Clement-Jones (LD)]

My Lords, these amendments are very much of a piece with many of the amendments we have heard in Committee—all designed to create a much tighter and less discretionary regime. That is quite right in the case of these amendments, which one would have thought the Government would find extremely straightforward to accept.

Under Clause 14, the Bill currently envisages that the investment security unit will reach an initial decision as to whether to clear a notified transaction or to call it in for a detailed assessment within 30 working days of acceptance of the notification as complete. As the noble Baroness, Lady Noakes, said in her excellent introduction, there will be a significant number of transactions that fall within the scope of the mandatory notification requirements—they are set out in the impact assessment—due to the target’s activities being in a specified sector but which clearly do not raise national security concerns.

Timescales for decision-making are currently extremely unpredictable. Even before defined timescales for decision-making kick in, the Secretary of State has an initial period, as has been described, to decide whether a notification has been submitted in the correct form. The Secretary of State must make this decision as soon as reasonably practicable. That is a set of weasel words which suit the convenience of the Secretary of State, not the investor.

This lack of clear timescales creates uncertainty for investors, universities and businesses, making domestic and foreign investment in university spin-outs less attractive, while disincentivising industry partners from engaging in collaborative R&D. These are all the downsides of uncertainty, as we have heard throughout this Committee. In addition, the Secretary of State has 30 days in which to review the notice after acceptance. Especially in circumstances of fast-moving corporate finance transactions, 20 days, as proposed, seems much more proportionate. Similarly, under Clause 18, relating to the voluntary notification procedures, greater certainty would be achieved if these amendments, regarding when a voluntary notice is accepted and setting out how long the review period should be, were included.

The noble Baroness, Lady Noakes, made an extremely good point: these provisions, where the timescales say “as soon as practicable” or 30 days, will be adhered to, to the letter. They are not going to be done speedily. Civil servants are going to interpret them extremely conservatively, as my own profession—the legal profession —would, because the penalties of getting it wrong will be seen to be too high. People will not want to get it wrong, whether they are in the position of giving advice to the Secretary of State or advising investors. That is why we need very clear provisions in the Bill, and we are certainly not there yet.

[Lord Grantchester (Lab)]

I thank the noble Baroness, Lady Noakes, for her Amendment 49, to which I have added my name. It leads this group of probing amendments which focuses on one theme: how long will businesses and organisations have to wait in suspense for responses from the Government concerning the notification procedures? This theme stems in part from the fear that the Government will be swamped by notifications, with the CBI suggesting that the department could have to deal with up to 10,000 of them each year. Some discipline needs to be set up from the outset that will require the Government to keep up.

Of course, we support the aims of the Bill to monitor, guarantee and protect our UK national security, so in this probing group I have not added my name to Amendments 53 or 65, in the name of the noble Baroness, Lady Noakes. This is not because I specifically disagree with her—quite the contrary. However, it can be appreciated that some notifications will take more time than others to review, with some of them likely to raise more concern—alarm, even—thus requiring more extensive considerations and checks. The length of the period is a maximum duration, not a target for delay and procrastination. It should be understood how financial takeovers can become incredibly complex, so it is entirely correct that complexity is reviewed sufficiently and deeply. However, perhaps the Minister could answer as to whether a full six weeks may be needed and whether a four-week period could be maintained.

Overall, it is understood that unnecessary delays can lengthen anxieties that legitimate investments may fall through and exclusivity terms expire, leading to research partnerships breaking down or, in worst-case scenarios, businesses running out of cash and finance facilities. This heightens the requirement for the new unit to be properly and adequately resourced. This could be enforced through transparency about the turnaround times for notifications. These amendments also pair up neatly with Clause 14 on mandatory notifications and Clause 18 on the voluntary notification procedure. As the wording in the Bill is consistent across both alternatives, are the two distinctive categories so similar in importance and workload to require symmetry in their determinations?

With these thoughts, I have added my name to Amendment 62 in the name of the noble Baroness, Lady Noakes, giving the Secretary of State five working days instead of the nebulous “reasonably practicable” length of time. What does “reasonably practicable” actually mean to a Government? It is vague for SMEs and an elastic piece of time for the department. The Law Society has raised concerns, especially on the voluntary notice procedure in Clause 18, as “practicable” implies that a degree of delay will be acceptable and is to be tolerated. How does the Minister react to that? Can he explain whether five working days could be practicable and, if not, why not?

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Moved by

[Lord Grantchester]

80: Clause 61, page 36, line 33, at end insert—
“( ) the average number of days taken to assess a trigger event called in under the Act,( ) the average number of days taken for acceptance decisions in respect of mandatory and voluntary notices,( ) the average staff resource allocated to the operation of reviews of notices made under sections 14 and 18 over the relevant period,( ) the number and proportion of notices and call-in notices concerning the acquisition of a small or medium-sized enterprise,( ) in respect of the acquisition of a small or medium-sized enterprise, the sectors of the economy in relation to which call-in notices were given,( ) the minimum, average and maximum turnaround times for notifications.”

[Lord Grantchester (Lab)]

I am pleased to open this group of amendments by moving my Amendment 80, concerning the department’s annual report on this legislation. Generally speaking, Governments, regrettably, do not tend to offer widespread information in reports, whether annual or not—except, of course, where they consider that they heap praise on themselves.

Clause 61 can be made to look extensive, comprising as it does a total of 12 mandatory pieces of information—13, should the addition of the noble Lord, Lord Lansley, not be considered unlucky. This list can form the basis of information on the way the Government provide a dashboard to view the new unit. However, in considering how well it is performing and its relationship with and effect on the business community, any audit certainly needs to ask for the additional six listed in my amendment.

My Amendment 80 requires the Secretary of State to report on the time taken to process notices, which was part of our earlier discussion on the resource allocation to the new unit and the extent to which small and medium-sized enterprises are called in under the new regime. The amendment is about requiring a greater degree of accountability from the department regarding the investment security unit’s service standards and functions. It states that the report needs to include the aggregate time for decision-making, in both assessments and initial answers, acceptances and rejection notices, providing a measure to ensure that the screening process is working effectively and efficiently for SMEs.

Secondly, on elements of capacity monitoring, the amendment enhances the ability to take stock of the resources behind the unit’s work, so that Parliament and the public can appreciate the report as a mechanism for holding the Government to account for what will be a major new centre for merger investment screening for the security of the UK.

Thirdly, we are keen to maintain a business climate in which SMEs can thrive. It would be beneficial in this respect for the unit to track and monitor the focus of SMEs in its work. Information would be able to highlight any specific concerns and the experiences of the most innovative start-ups in their interactions with the new regime.

The general questions across the Committee regarding how the new unit will operate, be resourced, perform and impact those throughout the economy whom it will affect can be answered in the more comprehensive information that an annual report can offer. In addressing the Commons Committee, David Petrie of the ICAEW wanted to test the capabilities of the regime in an accountant’s way by assessing the reasonableness of his assumption that even 1,000 notifications a year amounts to four a day and a considerable workload. How will that work and what information must be provided to check it through the annual report? What will be the annual budget for this regime and what increase for the department will be necessary? Will the new unit be able to request and receive additional funding to meet the challenges it has yet to experience?

I will not steal the thunder of the mighty guns of my noble friend Lord West by saying much at this point about his Amendment 91, which is in this group. He has already spoken authoritatively on security matters. However, we are sympathetic to and support his amendment, as businesses in the defence sector have asked that the impact of the new regime on them be clarified. The amendment reflects the Defence Committee’s report on foreign investment, which called for banning investments in the UK’s defence supply chain from certain countries, namely, China and Russia. What is the Minister’s view on this?

In considering the annual report and the guidance my noble friend seeks for the defence sector, and the other reports undertaken under, for example, Amendment 78 or Amendment 82 in the name of my noble friend Lady Hayter, it would be helpful if the Minister could also outline the relevant interactions, not least with reports from the export control regime, in order to provide a comprehensive assessment. It would be unfortunate to find information disappearing into gaps between them and vulnerability opening up in the security screening process. I beg to move.

[Lord Lansley (Con)]

Noble Lords will be pleased to know that this is the last time they will hear from me in this Committee. My amendment is terribly simple. In so far as the annual report lists the number of final orders made, Clause 27 provides the power for the Secretary of State to vary orders or revoke them. One of the things that one might want an annual report to do is to enable one to understand the stock of orders as well as their flow. Therefore, I have suggested in Amendment 81 that the number of orders varied or revoked should be added to the list of subjects in the annual report.

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[The Deputy Chairman of Committees (Lord Lexden) (Con)]

I have received no requests to speak after the Minister, so I invite the noble Lord, Lord Grantchester, to conclude the debate on his amendment.

[Lord Grantchester (Lab)]

I thank those who have taken part in this short debate on the annual report, especially the Minister for the tone of his reply. It has been very helpful. The dashboard of information to be provided in an annual report must be extensive enough to provide clarity on the operation of the unit and how it has performed. I have always considered annual reports an excellent opportunity to promote an organisation’s credentials and it is surprising to hear that the Minister would not wish to show how the unit has performed effectively against statutory targets. I thank him for expressing the wish to discuss this further and I look forward to doing that with him.

Defence in the supply chain is a particular vulnerability and, on my noble friend’s guidance, the need can be found in the government response to the sector consultation. The defence chapter states:

“Some respondents stated the definition could capture contractors or subcontractors who are providing goods or services unrelated to defence”.


This returns the Committee to its considerations regarding clear definitions of national security and how these may be provided. They are certainly important issues to consider further in the light of the Minister’s reply. I beg leave to withdraw the amendment at this stage.

Amendment 80 withdrawn.

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Moved by

[Lord Grantchester]

84: After Clause 61, insert the following new Clause—
“Equity stakes and national security review
(1) Within one month of the day on which this Act is passed, the Secretary of State must conduct a review of business loans and grants which have been distributed in response to severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) to sectors in relation to which the Secretary of State considers that trigger events are more likely to give rise to a risk to national security.(2) If loans and grants have been accepted by businesses in these sectors, the Secretary of State must consider converting loans and grants into equity stakes if there is a clear economic and national security rationale for doing so.”

[Lord Grantchester (Lab)]

I am glad I am providing balance for the noble Lord, Lord Lansley, before he departs the Committee. This side of the House is tabling amendments and challenging the Government on this legislation. We too want the Bill to work well and consider that it is important that various elements have been fully considered. One of the elements to reflect on concerns the effect on the SME sector. We champion clarity and support for SMEs and innovative start-ups, so often the engine of growth, jobs and prosperity.

SMEs may experience degrees of anxiety about potentially having to engage with a whole series of new regulations under the Bill. Amendment 84 is a probing amendment to ask whether the Government are considering whether the Covid business loans and grants in any sectors under national security screening could be converted into equity stakes should there be a clear economic or national security rationale so to do. The public will generally look back in appreciation of the support provided by the Government to businesses over the pandemic interruptions. That could also mean ensuring that gains from public support—not merely the losses of failure—accrue to the benefit of all of us. Simply, are equity stakes being considered in these circumstances, even if the Government are generally not in favour of taking equity risks, even in terms of securing our national security? What are the recoverabilities of loans and the implications for security of these vulnerabilities? What assessments have the Government given to this?

Amendment 85 would go a long way towards ending uncertainties and anxieties for SMEs, ensuring that the Government act with clarity, competence and care. It would ensure a business climate of appreciation of the SME sector in which it can thrive. SMEs have been inquiring how best to engage with government in the many changes that will apply. We propose that part of the new unit be dedicated to the SME sector, as some 80% of the likely notifications of the new regime and the requirements this will generate will be borne by SMEs. The screenings will also be most challenging for them, especially in regard to SME funding rounds, especially since, for tech start-ups, the necessary speed of response that could be required to the many weeks of inquiries could present insurmountable challenges. SMEs do not generally have deep pockets to fund a comprehensive array of advisers to help them navigate the Government’s less than clear process. The unit, and consequently the legislation, need to be aware of the pressure this puts on innovation start-ups, which need the confidence to be able to respond effectively.

A dedicated SME division, as outlined in Amendment 85, would do just that. It would ensure prompt, accessible guidance, as industry experts have been demanding in their briefings, to engage with SMEs prior to formal processes to ease the burden of bureaucracy. Could the Minister outline the specific support that the Government could provide SMEs in assistance targeted on the good working of the new investment unit? How will a focus on SMEs be hard-wired into the new unit? I beg to move.

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[Lord Callanan (Con)]

I am not sure there were any questions for me there; the noble Lord has made some observations. I understand that he was unhappy with my replies, but I am afraid I cannot agree that the Bill is “furtive” or “hiding in the dark” at all. We are committed to transparency as much as possible. He says he has six additional points on market guidance notes. If he wants to send them to me, I will happily have a look at them and see what we can do. We said a maximum of five years, but of course the Secretary of State has the ability to do earlier reviews if necessary. That is a maximum date, and we could bring that forward. I take on board his points and am sorry if he is disappointed by my replies.

[Lord Grantchester (Lab)]

I thank the noble Lord, Lord Bilimoria, for his amendment in this group proposing a review of the Act and its engagement with businesses. I am sure it will become clear and the appropriate responses will be forthcoming from the department.

I thank the noble Lord, Lord Clement-Jones, for his sympathy. The effect of the regime on SMEs is very relevant, and high-quality guidance for businesses has been recognised in the Minister’s replies. I thank him also for his replies on the pandemic and the business environment with the call-in powers of the Secretary of State. He returns to the issue of the annual report, thus giving room for these matters to be considered slightly further. With that in mind, I beg leave to withdraw the amendment.

Amendment 84 withdrawn.

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[Lord Fox (LD)]

My Lords, I feel justifiably aggrieved to have been admonished by the noble Baroness, Lady Bennett, for not being passionate or plentiful enough. Telling people off who are here because there are not enough of us is perhaps a little unfair. Perhaps she could reserve her fire for colleagues who have decided not to be here. There is also a certain symmetry here. During our debate on the first amendment I had the pleasure of speaking on I was roundly admonished by the noble Baroness, Lady Noakes, for using it as a chance to repeat my Second Reading speech—which of course I denied.

The noble Baroness, Lady Bennett, has a point. There is a very important element of security around the climate emergency and she is right to highlight that we need to factor in how climate, environment and ecological damage will affect the future security of this country. When we debated Clause 6 much earlier in this process, we looked at the 17 technologies that had been identified by the department as technologies of concern. That is an area where I think some input on this level could be made, and I would be happy to work with the noble Baroness, Lady Bennett, going forward to look at that list and make some suggestions on whether there are missing technologies related to environmental and ecological damage issues that should be factored in.

I do not like to be self-referential—but I will be anyway. During the Budget debate I made it very clear that one of the things missing from the Budget was a strategy to get to the 2050 net-zero target. It was completely absent. There is no strategy to get there. I would advise that that is where we should focus our energy. The Government, the Opposition and everyone in Parliament should be delivering an integrated strategy to get to what in this case is our public policy for 2050. I know that different parties have different targets, but that process would tease out the technologies, the businesses and the areas of activity that we need to make sure we retain access to in order to move forward and deliver on the strategy.

The noble Baroness, Lady Bennett, is right to bring this issue up, but I am not sure that adding a clause to this Bill is the right route. As I say, however, I would be happy to work with her on the list of technologies, and indeed I am happy to work with everyone to try to deliver the route map to get to net zero.

[Lord Grantchester (Lab)]

My Lords, unlike the noble Lord, Lord Fox, I am not unduly fearful of the noble Baroness, Lady Bennett. I have always thought that being Green does not allow for having a whip. However, I thank the noble Baroness for proposing this new clause to the Bill. I am certainly clear that the climate emergency must hang as a backcloth to every action that we undertake.

The aim of Amendment 93 is completely understood and appreciated. It seeks a Ministerial Statement on how the provisions set out in this Bill will be exercised in relation to the national security impacts caused by climate, environmental or ecological damage. The climate crisis is not only a threat to our way of life in the long term but a threat to national security in the short to medium term. Only last week, Jens Stoltenberg, the NATO Secretary-General, said that

“climate change makes the world more unsafe, so NATO needs to step up and play a bigger role in combating it.”

A few weeks ago, even the Prime Minister made a comment that climate change is a threat to our society. How will the new regime take account of this and reflect on his comments?

The Committee has already questions about the list of sectors affected, especially the energy sector, as well as about protecting green infrastructure. I have raised with the Minister the EV infrastructure, solar and wind industries and how their growth should be protected. It is certainly important that we hear more from him on the issue and what the difficulties would be in undertaking to produce the kind of statement being proposed by the noble Baroness, Lady Bennett. If the Government are resistant to producing such a statement, could the issue be included as an integral part of the annual report?

[Lord Callanan (Con)]

My Lords, let me thank the noble Baroness, Lady Bennett, for her amendment and begin by expressing my heartfelt sympathy to the noble Lord, Lord Fox, on being admonished by her. All that I can say is, welcome to the club.

The amendment would require the Secretary of State to publish within six months of the Bill becoming law a statement on how the regime will be exercised in relation to national security impacts caused by climate, environmental and ecological damage. As the noble Baroness, Lady Bennett, knows—we have debated these matters on numerous occasions in this House—this Government are committed to tackling climate change. We are especially looking forward to the COP 26 conference in November, which will highlight our leadership on this issue and promote co-operation on climate action through the UK’s G7 presidency, as Alok Sharma MP set out in a speech to the UN on 8 February. Of course, the COP 26 preparations continue to be led by Alok Sharma, who opened Second Reading on the Bill in the other place. I am sure that we all wish him well as he strives to bring the world to ambitious agreements in Glasgow.

The Bill, however, focuses on national security risks arising from acquisitions of control over qualifying entities and assets. If we were to view national security through a particular lens, as the amendment seeks to do through environmental concerns, we would be in some way defining national security. We have deliberately avoided defining it in the Bill, a matter that we have debated previously. We have expounded on that at some length in this House and in the other place.

Without rehearsing those arguments, which I am sure noble Lords are familiar with, I hope they will understand that we cannot accept amendments that seek to define national security in a particular way. The noble Baroness’s amendment asks for a statement on how the provisions in the Bill will be exercised. The most fundamental provision is the call-in power. The Bill already requires the Secretary of State to publish a statement on how that is expected to be exercised before being able to use the power. A draft of that statement was published on introduction of the Bill in November. The Government would be very pleased to receive comments and have committed to consult on it publicly. The final version of the statement must be laid before Parliament and will be subject to the negative resolution procedure.

Finally, two provisions in the noble Baroness’s amendment—proposed new paragraphs 2(a) and 2(b)—address specifically environmental concerns. Laudable as they are, they are not directly connected to the national security and investment regime proposed in the Bill. That is because the regime concerns whether the acquisition of qualifying entities and assets poses a risk to national security, not the actions of those entities or assets themselves. Given the Government’s commitment to environmental policies, but recognising that the Bill deliberately avoids defining national security, and given that a statement on how the call-in power is expected to be used is already provided for, I hope that the noble Baroness, in the light of what I have said, is able to withdraw her amendment.

Offshore Gas Rigs

Lord Grantchester Excerpts

Thursday 11th March 2021 Lords Chamber

[Lord Callanan (Con)]

The noble Lord is right that that is not in my remit, but I am happy to tell him that my department has not undertaken any research in this area because, to date, there is no known evidence of significant impacts identified. Some species of birds migrating across the North Sea may become attracted to offshore light sources. To this extent, the 2015 OSPAR convention developed guidelines to reduce the impact of offshore installations on birds in the OSPAR maritime area.

[Lord Grantchester (Lab)]

Besides the philosophical objections for the Government, what are the difficulties for introducing a Norway-type zero-flare policy? Could the Government bring flaring into the emissions trading scheme and make it subject to carbon taxation?

[Lord Callanan (Con)]

There are significant practical and operational difficulties, which the noble Lord alludes to. However, I am happy to tell him that flaring intensity decreased by 22% in 2020 from 2019 levels, as production facilities cut the overall volume to 33 billion cubic feet.

National Security and Investment Bill

Lord Grantchester Excerpts

Committee stage
Tuesday 9th March 2021 Grand Committee

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Leigh, is correct to say that the Bill is far more important than the outside world seems to realise. When I have been speaking externally, I have been trying to remind people of the Bill’s existence and the need for them to read it. Perhaps we should adopt the policy of the Ancient Mariner and stop in one in three in the street and tell them about it because it does not seem that the message is getting through. Perhaps we will just have to work on their behalf.

A strong case has been made by the proponents of Amendments 20 and 24. When the Minister, the noble Lord, Lord Callanan, speaks on a number of different issues, he often talks about flexibility and keeping options open. This seems another example of where the Government are seeking to keep their options open and, as the noble Baroness, Lady Noakes, set out, there might or might not be good reason for that. When I sat on your Lordships’ Science and Technology Committee, it held an inquiry into the challenge of scale-up and the need for patient capital and for money to come in. It is very clear that the United Kingdom has a way to travel in getting the sort of funding that we are talking about for these scale-up situations. I am interested to hear from the Minister what sensitivity studies have been done on this. How much work has been done in talking to the investment and venture capital community about how it views it? Perhaps the Minister could write to us with the evidence has been received about its reception and the Government’s impression of it. I am persuaded that there is an issue. The question is how big an issue it is, given that we have a suboptimal venture capital regime in this country for this sort of scale-up. How badly and to what extent would damage be wrought?

I read Amendment 25 differently from the noble Lord, Lord Lansley. I read the words “examples include” to mean that that is not exclusive and I think the noble Lord has what he wants without having to put the words in. Perhaps the Minister can clarify that.

I find myself in complete agreement with Amendments 52A, 55A, 64A and 67A. If these transactions are not supposed to be impacted by this, let us get them out of the system as quickly as possible. The doctrine expressed by the noble Baroness, Lady Noakes, about the workability of the regime, the amount of friction it introduces and our responsibility to remove that friction wherever possible is completely correct, so those four amendments deserve noble Lords’ complete support.

[Lord Grantchester (Lab)]

I thank the noble Lords, Lord Clement-Jones and Lord Bilimoria, for the opening amendments in this group, which give rise to various considerations. We recognise the caveat in Amendments 20 and 24 to mitigate the impact of hostile actors going to complex lengths to hide their interests in a qualifying asset or entity. It is also understandable to set de minimis thresholds. Having the powers in the definition still requires a thought process to initiate using them. There have been several instances in which hostile actors have behaved entirely transparently that have not been identified and prevented. Indeed, mitigating actions may have been rejected even by the Government.

One needs only to recall the debate over the growing dependency of many nations on China and the resultant rejection of identifying potential harm that could result. It could be raised here regarding dependency on research skills and partnerships in the technology fields, with security implications. Indeed, the Government’s assessment of risk can be mysterious. In relation to the Bill, perhaps what we need to see are the ways in which the Government will actively identify evolving and growing risks, whether or not they hide behind complex organisations or a complex process of additionality. Has the Minister considered this and when a risk may change its colours?

To the proponents of the £10 million threshold in the amendments, is there some logic or any evidence that this is indeed the correct level, other than that other jurisdictions may have chosen it? The valuation of some of these types of asset is hard to quantify and the value of a database code or algorithm will be considered much greater once in the hands of a hostile intent. The intention not to overburden SMEs with the bureaucracy of this regime is worthy and commendable, but may not be easily carried out. How many SMEs would be excluded as a consequence and would it also benefit the department not to have to devote resources to excessive screenings of transactions?

Amendments 52A, 55A, 64A and 67A, also thoughtfully proposed by the noble Lords, Lord Leigh and Lord Clement-Jones, are for the fast-track procedure for notifications. Has such a procedure been considered by the Government? It has yet to be identified how the regime proposed by the Bill will deal with so-called everyday transactions in the business community and the amount of resources that will need to be committed to so-called evidently non-controversial activity. Would this allow the possibility of experience gained through the Bill to mature into a more workable format?

In the drafting of the procedure, care would need to be taken regarding the person being given the ability to give the relevant notice. In one interpretation it could be the company initiating such a request, not only the person acting on behalf of the Secretary of State. That would result in everyone requesting a fast-track procedure. The Minister’s remarks will be interesting in this respect. Overall, it would be perhaps best to ensure that the regime is set up in the first instance in the Bill to be properly resourced and to have properly identified targets for all its 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 thank my noble friend Lord Leigh of Hurley for his Amendments 20 and 24, my noble friend Lord Lansley for his Amendment 25, the noble Lord, Lord Clement-Jones, for his Amendment 26 and my noble friend Lord Leigh and the noble Lord, Lord Clement-Jones, for their package of Amendments 52A, 55A, 64A and 67A. I will take them sequentially.

I completely agree with my noble friend Lord Leigh and the noble Lord, Lord Clement-Jones, that we must be careful to do nothing that diminishes the entrepreneurial or innovative spirit in our country or to diminish the attractiveness of this country for investment. You might imagine that, as the UK’s Minister for Investment, I am especially concerned about the latter point. In answer to the noble Lord, Lord Fox, I have spoken to many investors and VCs and, once the rationale and the processes of the Bill are explained to people, I have been very reassured by the reception that the Bill has had. The key point one has to explain is that the investment screening unit will be a rational unit that will seek to minimise time spent and maximise efficiency wherever it can.

With the permission of my noble friend Lord Leigh, I will address his Amendments 20 and 24 together, given that both relate to introducing de minimis thresholds into the regime. Clause 7 defines the meaning of “qualifying entity” and “qualifying asset” for the purposes of the Bill. These definitions underpin reasonable and proportionate powers for the Secretary of State to scrutinise acquisitions of control of qualifying entities and assets where that raises national security risks.

--- Later in debate ---

[Lord Fox (LD)]

This follows on quite well. Throughout this debate and lots of debates about Bills, we hear your Lordships use the phrase “unintended consequences”. Actually, giving the department credit, I assume that this is an intended rather than an unintended consequence, so I would like the Minister to explain exactly what it is seeking to achieve or prevent happening. What past examples would have been arrested, had this law been available then? Being a practical person, that would help me and others to understand what the Government are getting at.

This clearly does not have extraterritorial reach, as my noble friend Lord Clement-Jones said. It seeks to deal with all activities when it might be better to separate and segment them. I take the point of the noble Baroness, Lady Noakes; it would help us if we understood what the Government are getting at with this wording.

[Lord Grantchester (Lab)]

I thank the noble Lord, Lord Hodgson, for his three amendments in this group and the noble Lord, Lord Clement-Jones, for adding his name to the first, Amendment 21. He has an alternative to Amendment 27, Amendment 26, which was in the previous group, but both amend activities in general, so that they are more specifically attached to the person controlling those activities. The noble Lord, Lord Clement-Jones, has recognised his amendment as “rogue”.

The noble Lord, Lord Hodgson, queries the extension of Clause 7(3)(b) to suppliers of

“goods or services to persons in the United Kingdom”,

and asks for an explanation. Have there been previous incidents and what specific goods or services were involved, with what implications?

Clause 7(6) specifies land as well as “moveable property” and, in relation to Amendment 27 of the noble Lord, Lord Hodgson, gives rise to my reflections on the question of land and its use. While clearly an asset, the distinction is not made between the Bill’s application to ownership of land, in the sense of control, and any lease of its use, whereby a person other than the owner could be said to be in control. The Bill merely has the words “used in connection” to activities. Is this distinction relevant and what proof would be needed to clarify which person is in control of land?

One of the key sentences in the Government’s Statement of Policy Intent is in the section on acquirers:

“Clearly, national security risks are most likely to arise when acquirers are hostile to the UK’s national security, or when they owe allegiance to hostile states or organisations.”


Land, and the use of it in such a context, is made relevant as a qualifying asset. Yes, an operation needs to operate somewhere and will require land. Does this require any further reflection with regard to the workings of the regime? Can land in a particular country be considered a particular threat?

Amendment 32, in the name of the noble Lord, Lord Hodgson, to Clause 9, regarding control of assets, returns us to Clause 7(6). The Minister may wish merely to identify the strategic risk attaching to land in particular locations only.

[Lord Grimstone of Boscobel (Con)]

My Lords, I welcome these amendments from my noble friend Lord Hodgson of Astley Abbotts, which concern the extraterritorial application of the call-in power. Amendment 21 seeks to ensure that where an entity is formed or recognised under the law of a country or territory outside the UK, it will be a qualifying entity only if it carries on activities in the UK but not where it supplies goods or services to persons in the UK, as the clause currently provides.

I am afraid that I was slightly unclear on the precise intent of Amendments 27 and 32 so, for the benefit of the Committee, I am interpreting them as seeking to remove the provision currently in Clause 7(6)(b): that an asset situated outside the UK or the territorial sea is a qualifying asset if it is used in connection with the supply of goods or services to persons in the UK. This would mean that an asset situated outside the UK or the territorial sea is a qualifying asset only if it is used in connection with certain activities carried on in the UK.

It is important that entities formed or recognised outside the UK which provide goods or services to persons in the UK are captured through the Bill as their acquisition may give rise to national security risks to the UK. The noble Lord, Lord Fox, asked for some examples, and I am happy to provide them. For example, a foreign-registered company that does not carry on activities in the UK may still provide essential goods or services to parts of our critical national infrastructure. If a hostile party were to acquire control over that supplier, it could use that control to degrade our infrastructure. To take another example, imagine an overseas supplier of machinery or compounds to a UK-based entity producing cutting-edge advanced materials for our military. Control over that supplier could provide a hostile party with an insight into certain military capabilities or a means to sabotage the work of the UK entity to harm our military. As my noble friend Lady Noakes recognised, this could have a severe effect on national security.

Similarly, it is important that land and moveable property assets situated outside the UK or the territorial sea and intellectual property assets used in connection with the supply of goods or services to persons in the UK are also captured as their acquisition can give rise to national security risks to the UK. For example, as I have said previously, the acquisition of a wind farm situated outside the UK and its territorial sea that provides critical energy supplies to UK industry and consumers may give rise to national security risks, even though it is not strictly used in connection with activities in the UK. If the noble Lord, Lord Clement-Jones, would like to hear this example a third time, he only has to lay a further amendment.

Of course, any extraterritorial use of the powers under this Bill should be proportionate as well as meeting the other tests in the Bill. That is why the Bill explicitly sets out a UK nexus requirement that means that the Secretary of State may intervene to assess an acquisition overseas only where it has a clear connection to the UK. Remedies may be imposed at the end of an assessment only if the Secretary of State reasonably considers that they are necessary and proportionate for the purpose of safeguarding the UK’s national security. As such, the extent of an acquisition’s connection to the UK will be a clear factor in that decision.

The Bill also explicitly limits the application of remedies to persons outside the UK to those who have a clear connection to the UK—for example, UK nationals or companies, or those who carry on business in the UK.

I am conscious that I may not have answered fully the questions from the noble Lord, Lord Grantchester. If I reflect, after looking at Hansard, that I have not, I may write to him. I understand, taking these amendments as a group, the desire to probe the Government in this area, but I hope that, with this explanation, my noble friend will feel able to withdraw his amendment.

--- Later in debate ---

[Lord Grantchester (Lab)]

The amendments in this group split into two: Amendments 22 and 28, and Amendments 23 and 38. Amendments 22 and 28, drawn to our attention by the noble Lord, Lord Vaizey, continue reflections on the term “land” through consideration not only of any strategic placement in its own right but in relation to proximity to a sensitive site, as provided for under the US security regime. Here in the UK, Amendment 28 has it as

“any site identified as such by the Secretary of State and published”.

What that proximity is and whether it might need to be adjacent are further considerations.

Amendment 23 seeks to ensure that a disproportionate burden is not placed on businesses generally, although I am not sure whether the drafting of the amendment—

“which are not generally and widely available on the commercial market”—

is quite right. More normal “business as usual” procurement, such as the purchasing of software licences and standard network equipment, does not need to be captured in the definition of a qualifying asset. Procurement is not mentioned in the impact assessment. Certainly there needs to be a balance between protecting procurement contracts and not overburdening “business as usual” procurement. How many notifications does the Minister expect to see arising from procurement, however it may be interpreted?

The data infrastructure section of the consultation document and the Government’s report published last week state that one option for mitigating risk includes producing procurement guidance for data infrastructure operators. Will the Government publish this before Report? Does the Committee need to ask what procurement guidance for other sectors needs to be included, most notably defence?

Amendment 38, tabled by the noble Lord, Lord Lansley, seeks to carve out from the regime

“Intellectual Property (IP) licences that do not transfer ownership of the asset to the licensee … as the licensor can impose restrictions on the use of the IP.”

It identifies that clarity is needed on how hostile actors may seek to circumvent the provisions of the Bill to acquire important IP or influence the company’s assets that they seek to acquire. This is a difficult area of increasing sophistication. In the Commons deliberations, Charles Parton of the Royal United Services Institute—RUSI—commented:

“On the question of intellectual property rights, China has a very rigorous campaign to get hold of our IP.”


David Petrie from the Institute of Chartered Accountants in England and Wales remarked:

“It is possible to gain access to intellectual property through means other than ownership, so … that is something that the unit is going to have to assess on a case-by-case basis.”—[Official Report, Commons, National Security and Investment Bill Committee, 24/11/20; cols. 12-55.]


I listened carefully to the noble Lord, Lord Lansley, but it is not clear how permanent transfers might be defined so as to be workable and worth while, as explained by the noble Baroness, Lady Bowles.

National Security and Investment Bill

Lord Grantchester Excerpts

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

[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.

--- Later in debate ---

[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?

--- Later in debate ---

[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.

Trade Bill

Lord Grantchester Excerpts

Consideration of Commons amendments
Tuesday 23rd February 2021 Lords Chamber

Moved by

[Lord Grantchester]

Leave out from “disagreed,” to end and insert “do disagree with the Commons in their Amendments 6C, 6D and 6E in lieu, and do propose Amendment 6F in lieu—

6F: After Clause 2, insert the following new Clause—
“Standards affected by international trade agreements
(1) If regulations under subsection (1) of section 2 of this Act, or any other provisions of primary or subordinate legislation to implement an international trade agreement as defined in section 2(2), contain provision about healthcare services, the provision must be consistent with maintaining UK publicly-funded clinical healthcare services.
(2) If regulations under subsection (1) of section 2 of this Act, or any other provisions of primary or subordinate legislation to implement an international trade agreement as defined in section 2(2), include provision in any of the areas listed in subsection (3), the provision must be consistent with maintaining United Kingdom levels of statutory protection in that area.
(3) The areas referred to in subsection (2) are—
(a) the protection of human, animal or plant life or health;
(b) animal welfare;
(c) environmental protection;
(d) employment and labour;
(e) data protection;
(f) the protection of children and vulnerable adults online.
(4) In this section—
“UK publicly-funded clinical healthcare services” means publicly- funded clinical healthcare services provided in the United Kingdom, or in the part of the United Kingdom in which the regulations or other provisions have effect, on the date on which a draft of the regulations is laid or (as the case may be) the provisions are first published;
“UK levels of statutory protection” means levels of protection provided by or under—
(a) primary legislation,
(b) subordinate legislation, or
(c) retained direct EU legislation,
which has effect in the United Kingdom, or in the part of the United Kingdom in which the regulations or other provisions have effect, on the date on which a draft of the regulations is laid or (as the case may be) the provisions are first published.””

[Lord Grantchester (Lab)]

I thank the Minister for his introduction and explanation of the Government’s amendment in lieu on the non-regression of standards. Indeed, I am grateful to him for fulfilling the commitment made earlier to bring forward the Government’s amendment at this point and in the Commons earlier this month.

The amendment marks a tremendous step forward for the Government and is to be welcomed. Together, we have built on the initial agreement negotiated in 2019 through the standards amendment to the then Trade Bill that set standards on food, environmental protection and animal welfare into statutory form in trade agreements. That set up the progress that was fulfilled in the then Agriculture Bill—now the Agriculture Act—and is translated further into the Trade and Agriculture Commission, which is implemented in this Bill.

As that progress has been made, the equivalent standards amendment has needed to reflect the wider interpretations of the standards into further relevant areas. While that list may vary among people, as may the relative importance of its elements, it is welcome progress that the Government recognise the fundamental area of employment and labour law, now with the addition of the National Health Service, data protection and online harms. I recognise these important concessions, agreed with the Government, which they have included in their amendments. I thank the Minister for all the discussions he has conducted on the issue.

However, the Government are still stumbling over one important facet of this. In 2019, the nation was in a different place regarding trade agreements. At that time, the amendment related to rollover agreements, which this Bill primarily focuses on. However, that is not the full extent of the Bill as it now stands. Then, rollover agreements had yet to take place. Two years later, as the Minister reminds the House with regular updates, our trading relationships have now been extended to some 70 countries with the continuation of rollover deals. The issue is no longer as pertinent to those deals, as the Government’s achievements in maintaining EU-wide agreed standards has recognised. The Government’s attention is now focused on the more precarious area of potential trade agreements with countries such as the United States of America, Australia and New Zealand, which would break new ground.

My amendment’s focus is different from that of the Government’s amendment in lieu as it will also apply to all future trade agreements yet to be secured. With all the delays to this Trade Bill and reinterpretations over developments and over time, this demarcation—this line of argument—has become rather muddled. Indeed, the Government recognised the extension over that line in the Commons, where the Minister there supported an earlier amendment in lieu tabled by Sir Robert Neill which covered new trade agreements, albeit on another issue. Referring back to the Agriculture Act, the main concession reached there was the addition of Clause 42, which created a reporting mechanism to all trade agreements through an amendment to the CRaG process. So it is a rather muddled line indeed.

Taking this patchwork approach together, it is clear that the Minister and the Government understand that UK standards can be affected, even diminished, by trade agreements—both those that exist through agreed EU rollovers and new agreements—and that the UK needs effective protection. I welcome that, but it seems that we are not altogether there yet in terms of having complete effective protection from the impact of future trade deals. However, from the Minister’s submission and his further remarks when he comes to reply, this technical drafting can translate into a practical interpretation that it will be all but impossible not to respect the non-regression of standards in all future trade agreements. Does the Minister agree with that statement? Across all the proposals supported by your Lordships’ House, the processes of scrutinising and agreeing trade agreements will need to be explored and experienced in how they will work; the Minister’s confirmation would certainly be appreciated.

--- Later in debate ---

Motion C2 (as an amendment to Amendment 6F) withdrawn.

[Lord Grantchester (Lab)]

I am grateful to all who spoke to this amendment and sincerely thank the Minister for his approach. I note what the noble Baroness, Lady McIntosh, said about further measures that we would have wished to secure. The Minister, however, has been convincing enough that alternative methods to secure adequate maintenance of food standards will be sufficient. Of course, we wait to see how that proper maintenance will be achieved.

Everyone has contributed to making this as effective as possible, given the Government’s resolve not to be prescribed in their future actions while they undertake to continue the non-regression of standards. We will see how all that works. Meanwhile, it has been important that so many have spoken up and I have certainly appreciated that support. However, on this occasion, I beg leave to withdraw.

Motion C1 (as an amendment to Motion C) withdrawn.

Electricity Supplier Payments (Amendment) Regulations 2021

Lord Grantchester Excerpts

Tuesday 23rd February 2021 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of the regulations before the House tonight. They are essentially non-controversial, and on this side of the House, we do not take issue with them. The contracts for difference regime has been moderately successful in bringing forward renewable energy developments at least cost to the consumer and in reforming the previous energy market. As the Minister explained, the CfD counterparty is the responsible body managing it. It collects levies from energy suppliers for its budgetary costs. The capacity market has a similar body, the settlement body, that collects levies to pay generators the agreed capacity market payment systems’ costs. Both bodies work together, and the two are connected, as in both cases capacity market interventions are dependent on overall anticipated energy demand levels.

In preparing for this instrument, I note that I am the only person still in post after the passing of the initial Energy Act 2013 and subsequent instruments on supplier payments, the last one being in March 2018. The energy market has changed substantially over that period, yet the CfD regime has provided long-term price stability for low-carbon generators and has incentivised investments to come forward at generally the least cost to consumers. The lights have been able to stay on and switched throughout that period. I congratulate the Government on that.

In 2018, we agreed with the Government that the best stability, certainty and consistency to suppliers’ levies would be maintained by setting budgets three years ahead. While appreciating the present circumstances of the pandemic, the recent fall in energy demand and the extension of the CfD and capacity market to greater development from more energy sources and generators, the amendment today in favour of a one-year costs regime is understandable—albeit that the situation will be constantly monitored. Can the Minister commit that a return to three-yearly terms will be restored as soon as possible? That would be important to hear. The noble Lord, Lord Bourne, a previous Energy Minister, posed several further questions around a return to three-yearly budgets.

Back in 2018, the first three-yearly term was set up after the workings of the regime settled down into familiar regularity from the start of the initial regime under the Energy Act. It is interesting to reflect that the same concerns expressed then are being repeated today and it would be interesting to hear the Minister’s interpretations on the outcome of the experiences against the expectations at that time. In 2018, the main concerns were operational costs and how the levy rate was increasing to cover them, given that they all pass through to consumers.

At that time, there was enormous cost inflation—some 700%—to cover the following three years from 2018 until this statutory instrument. Can the Minister give the outline of how costs indeed rose over that period now that, once again, over a potential one-year period, a further 18% cost rise is envisaged? How have the relative costs of operations between the various cost factors changed over this time? The number of participants from inception to 2018 increased from 46 to 447. What is the number of participants now and how is it expected to increase, given a further large increase in offshore wind deployment as well as the opening of the CfD regime to onshore wind?

Operational costs should have reduced as a percentage of the whole scheme to 0.6% in 2020, against the expected forecast in the fall of gross energy demand of some 2%. Can the Minister update the House on the actual figures on how the outcome of a further 18% increase in operational costs and levies is being transferred through? That seems to be a huge rise. At this precarious time for the economy, the rise will be reflected in increased energy bills, albeit that the Explanatory Memorandum forecasts that this will translate only to a 40p per annum increase on the average household bill.

The considerations of the Minister’s department over the longer period, beyond the pandemic experiences, have been expressed throughout this debate. It would be useful to understand some of those considerations from him. The noble Baroness, Lady McIntosh, as well as the noble Lord, Lord Oates, raised the point that the review of the Energy Act is now long overdue.

With the increased pressure to decarbonise the economy faster in the much-awaited green recovery expected soon, and with the extension to further technologies, policy changes and investment still required, does the Minister expect these sorts of increases in levies to continue, or will his department begin thinking of alternative ways to fund CfD levies into the future? It is important to keep paying attention to the requirement that development must be at the least cost to the consumer. It is fundamental to hear from the Minister and his department further long-term investment cost schedules now that the energy White Paper has been published.

National Security and Investment Bill

Lord Grantchester Excerpts

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

[Lord Grantchester (Lab)]

I start by thanking everyone who has spoken in today’s excellent debate. It reminds me just how extensive the array of expertise present in the House is, especially from the security, defence, technology and business sectors. I join colleagues in congratulating my noble friend Lord Woodley on his maiden speech. My noble friend Lord West welcomed him as a fellow sailor; I welcome him to your Lordships’ House as a fellow Evertonian. I look forward to his further contributions during the Bill’s passage.

As my colleague and noble friend Lady Hayter said in her opening reply to the Minister, national security is Labour’s top priority, as it should be the first and foremost task of any Government to protect their own citizens. That is why Labour strongly welcomes the Bill and agrees that it is necessary. Inward investment is crucial for businesses across the UK and our economy. It is also crucial that the UK Government have the correct powers in place to scrutinise and intervene on business transactions that could have implications for our national security. It is essential that the balance of the Bill is correct to ensure that it does not deter foreign direct investment, while being certain that national security is protected.

Nevertheless, it is regrettable that, once again, Ministers have acted too slowly in bringing forward these changes. They have acted slowly in comparison with other countries, including the US, Germany and France, all of which have already taken steps to update their legislation in line with evolving security threats. In Committee in the Commons, Charles Parton of the Royal United Services Institute—many have quoted him—said that

“the Government have not really been attending to the problem with the attention that they should, given the nature of the threat, particularly from the Chinese”.—[Official Report, Commons, National Security and Investment Public Bill Committee, 24/11/20; col. 5.]

The Government have acted slowly in relation to technological change. It was only last year that artificial intelligence was added to the relevant section of the Enterprise Act. The Government have been somewhat behind the curve in recognising this critical sector, explicitly highlighted by the takeover of DeepMind by Google. Naturally, they have acted slowly again on this Bill. Last January—a year ago—the noble Viscount, Lord Younger, promised that the Government would soon be

“publishing a draft national security and investment Bill, to strengthen the Government’s powers to investigate and intervene in business transactions … to protect our national security”.—[Official Report, 9/1/20; col. 438.]

But this—and any pre-legislative scrutiny, as argued for by the Secondary Legislation Scrutiny Committee—never happened. This slowness might have implications for our national security, so we are ready to help the Government pass this legislation as soon as possible and will work on this Bill with all colleagues around the House to achieve this.

I turn now to the Bill. Labour will be seeking assurances in some critical areas. During the debate, a number of common themes have emerged, perhaps five main ones: the scope and meaning of national security with enterprise policy; the investment security unit workload and the implications of the process on business; competitiveness, risk and agility; intangible assets, IP and algorithms in a networked world, not forgetting fintech. My noble friend and colleague Lady Hayter mentioned an important fifth theme highlighting how we will look for improvements in scrutiny and a greater role for Parliament’s Intelligence and Security Committee. This was echoed by my noble friend Lord West. We need to have proper oversight of security issues, to which my noble friends Lord Rooker and Lord Foulkes added their cogent comments.

Returning to the themes, most importantly, Labour will be probing to make sure that the new investment security unit to be set up by the Bill will have the capacity to handle its workload and is properly resourced to help small businesses through the challenges they may face. It is hard to overestimate the extent of this challenge for the new unit. It will have to respond to a large volume of notifications within the tight timeline set out in the Bill. The impact assessment estimates that more than1,800 notifications will be made each year, and many speakers have wondered how imaginary this number is.

During an evidence session in the Commons, the head of national security for the financial firm, Skadden, Michael Leiter, said:

“I am concerned that no Government are ready for that rate of change.”—[Official Report, Commons, National Security and Investment Bill Committee, 24/11/20; col. 41.]


A submission from the Russell Group of universities—I thank the group for its briefing—states: “Research institutions and businesses across the globe require regulatory environments that allow deals to be concluded at pace.” The investment security unit will have to track the development of fast-moving and highly complex technologies, and monitor each of the listed markets. The Secretary of State will have to take decisions on the advice of the unit, which can be challenged in court in the context of highly sensitive information and its wide-ranging powers. The unit will need to develop policy, practice and precedent to provide clarity and certainty to a wide swathe of the economy.

In Committee, it will be important to consider how the new unit is to be sufficiently resourced, have the right skills to monitor a fast-moving landscape and be able to turn cases around fast enough not to hold up possible investments. Many speakers, notably the noble Lords, Lord Bilimoria, Lord Hodgson and Lord Leigh, have defined the Bill as “difficult for business”. We need to probe whether the unit will be sensitive enough to assist SMEs which themselves might not have the capacity to deal with the increased administrative burden being introduced by this new regime. We believe that a specific SME engagement division within BEIS may be needed to assist and support SMEs through the national security screening process. A reporting requirement on the Secretary of State is needed on staff resourcing for the unit.

Another critical consideration will be how cross-departmental working will be assured via the unit, as this will not happen if it is merely siloed away within a department. This cross-departmental independence could be enhanced, as the Minister said in his opening remarks, through representation of all the relevant departments, Armed Forces personnel, and security and foreign policy expertise. It is interesting to note that the Office for Investment was set up only two days before the Bill was introduced to the Commons. How will this cross BEIS-DIT body work with the investment security unit to ensure overall effectiveness and focus? The Office for Investment will need to inform the department on my third and fourth themes of competitiveness and modern intangible assets, as well as the ISC on security implications. The impact assessment states that

“Geopolitical, economic and rapid technological changes are producing an evolving national security landscape.”


Focusing on geopolitical changes, how will the Bill’s measures fit in with the soon-to-be-published integrated review, of which national security will be a key component?

That will lead us to probe again why the definition of “national security” has been omitted from the Bill —the first and foremost theme throughout the debate. Ministers will argue that there needs to be flexibility—a point on which we are not totally unsympathetic. Nearly all speakers examined the implications of that oversight. The Commons considered that a way forward might be provided by a framework scoping key features, while determining national security and flexibility on a case-by-case basis. We will examine how these possible solutions can be made more transparent, as this will be very important for business.

Finally, although it is important legislation, the Bill does not provide the basis for a more active industrial strategy. However, it suggests it and presents a further opportunity for considerations to be made on bringing forward a more comprehensive industrial policy to support and grow British businesses. My noble friends Lord Rooker, Lord Woodley, Lord McNicol and Lord Foulkes all drew attention to the potential benefits of the enhanced security that this might bring. Let us not make this a missed opportunity. Considering the current levels of unemployment, there is a need to encourage businesses to rebuild and create jobs as the country emerges from the pandemic.

Trade Bill

Lord Grantchester Excerpts

Consideration of Commons amendments & Ping Pong (Hansard) & Ping Pong (Hansard): House of Lords
Tuesday 2nd February 2021 Lords Chamber

[Baroness Thornton (Lab)]

I thank the Minister for his opening remarks and the reassurances that he seeks to give us about health, social care and data. We return to this issue because we raised it in Committee and on Report and there has been considerable support across your Lordships’ House. A Division took place on 7 December at around midnight, which was won quite substantially. I am again inviting the Minister to accept this amendment so that the Government can proceed with their trade negotiations, confident that Parliament has expressed its clear intention.

The reason this is so important is that although the Government have repeatedly promised that the NHS will be “off the table”—those promises were repeated at some length by the Minister, for which I am very grateful—to ensure that this is the case, and that future Governments are able to reform the NHS and the interface with social care moves towards a more collaborative model, the Bill must ensure that the health and social care sectors are excluded from the scope of all future trade agreements, including services and investment chapters.

While the Government have repeatedly pledged that the NHS is not on the table in trade negotiations, we also know that there have been detailed conversations between the UK and US negotiators, revealing that health services have been discussed and that the US is probing the UK’s health insurance system and has made clear its desire for the UK to change its drug pricing mechanism. I was reassured by many of the things the Minister said, but he repeated what the Government have always said about the NHS—they guarantee that it will be free at the point of use. That is great, but it does not say, “We are protecting the public ownership of our NHS.” That really is the point; many things can be free at the point of use that are not publicly owned. It is important to recognise that that takes us only so far.

The Bill is being discussed in the context that Parliament does not yet have adequate powers to guide and scrutinise trade negotiations; I sat in on the end of the previous discussion, which was about work in progress. The current process provides no legal mechanism to directly influence or permanently block trade agreements—hence the amendments which we have discussed throughout the passage of the Bill. I thank the noble Lords, Lord Patel, Lord Freyberg and Lord Fox, who supported this amendment on Report.

This amendment is a merging of the important amendment about NHS data tabled by the noble Lord, Lord Freyberg, with the one about the NHS and public health. These are national assets which must not be put in jeopardy or squandered in whatever the future holds for UK trade with the world. To guarantee protection, the Bill must ensure that the health and social care sectors are excluded from the scope of all future trade agreements. It is important that the Minister says that this is the case, and he has done so this evening.

The Bill must rule out investor protection and dispute resolution mechanisms in UK trade deals to ensure that private foreign companies cannot sue the UK Government for legitimate public procurement and regulatory decisions that we decide to take with regard to our public services, including the NHS. If a future Government want to change the structure of the NHS, they must not be prevented from doing so by trade deals that this Government might agree. The Minister needs to guarantee that this will not happen. I beg to move.

[Lord Grantchester (Lab)]

Motion E1 in my name is on the non-regression of standards in international trade agreements. Your Lordships’ House will remember the outcome of the Agriculture Bill—now the Agriculture Act—on the subject of standards on imported food and the inclusion of Clause 42 in the legislation. Indeed, the Minister has referred to this already. The three key areas in relation to international trade negotiations and agreements are listed in subsection (2) as

“human, animal or plant life or health”,

together with animal welfare and environmental protection. To this, the basic non-regression of standards underlined by the withdrawal agreement and the EU-UK Trade and Cooperation Agreement, clarity and certainty must be provided in relation to the UK’s ability and competence to be able now to diverge in its standards.

As befits the non-regression of standards in an international trade context in the Bill, certain other fundamental standards across society and how the United Kingdom operates must be added to that list. The earlier amendment supported on Report by your Lordships’ House included the importance of employment labour law as well as human rights, child and women’s rights and international obligations, but this amendment now also includes two further key vital areas on which the House and the public have spoken loudly and clearly, which were also listed in subsection (2): online harms and the National Health Service.

Once again, the Government will assert that they have no intention to regress, but this must be clear in a fundamental area of UK law. The public are rightly fed up with the abuse on social media of their black footballers and heroes. Anonymity should no longer be somewhere for abusers to hide. The Government are treading slowly towards more detailed legislation to come on online harms, and I thank the noble Baroness, Lady Kidron, and others, who have so boldly paved the way for this to happen.

The National Health Service is another fundamental area, cherished throughout all four nations of the UK. I thank my noble friend Lady Thornton for her introduction of her Motion D1. She is correct that the NHS is a national asset, not to be jeopardised as the UK begins to make new trade agreements but to be guaranteed protection in her amendment and in my amendment as part of the non-regression of our nationally recognised standards.

This amendment has heard and recognised the debate in the Commons on your Lordships’ amendments sent to them in previous weeks. This amendment signals that I wish to resolve with the Government by returning to the agreement secured on the last Trade Bill, so ably guided through your Lordships’ House by the then Minister, the noble Baroness, Lady Fairhead. This reflects her drafting that implemented trade agreement provisions, including any primary or secondary legislation, must be consistent with maintaining the existing statutory protections as listed.

At the time, the focus was on leaving the EU and securing rollover deals to the existing EU agreements. The Government will say that they have abided by their commitments without legislation. Certainly, I congratulate them and the Minister on having secured 62 rollover agreements; the process is very nearly done. I now assert that this amendment is needed more than ever, as work is under way in the next phase of trade deals. I would be grateful if the Minister could confirm in his response, first, that he agrees that we need a clear, all-embracing statement of our commitment to the non-regression of standards on the face of the Bill; and, secondly, having said that, and understanding that the Government will not proceed with a new deal if they consider that Parliament may not be supportive, why do they undertake deals piecemeal, as they contend, deal by deal? Surely this sort of amendment can help us to do better. Is the Minister expecting Parliament to be tied up with detailed consideration of each individual deal from now on? However, I am heartened by his opening remarks.

I would also like to mention the amendments in the name of the noble Baroness, Lady Boycott—Motions H1 and J1—and thank her for returning to the important subject of food. The Commons has now had a chance to reflect on the wording of the Trade Bill, in conjunction with the wording of the Agriculture Act, and I thank the Minister for our continuing discussions. I also thank Heather Hancock, the chair of the Food Standards Agency, for discussions with her as well. However, certain issues may remain on which it would be helpful if the Minister could reply to provide clarity and certainty regarding how this non-ministerial government department will work with the Trade and Agriculture Commission to provide advice to the Minister, which will then become part of reports to Parliament on all future trade agreements in relation, importantly, to the new arrangements under earlier amendments taken already today.

The Minister is aware of the questions I have raised. After the debate and his responses, I will write to him—if I may—with any that require further deliberation, and ask that, as decisions are taken, they be announced as ministerial Statements.

I therefore conclude by stressing the importance of my amendment on standards, on which I will be seeking the opinion of the House. Standards define who we are as a society and as a nation. Standards define how we nourish ourselves as human beings. Standards define how we cherish the world in all our environments. Standards define how we respect our relationships with all other animals. Standards define how we treat each other in all our working relationships. Standards define how we treat each other online as in our interfaces with each other. These reflect our values; all this will be reflected in our laws. I conclude that this amendment is how we should insist we will continue in all our trading relationships.

[Baroness Kidron (CB)]

I rise to speak to Motion F1 in my name and to speak in support of Amendment 6B. I refer the House to my interests, particularly as founder and chair of the 5Rights Foundation. I noted the Minister’s words at the outset, and I will return to them. But for the purposes of the House and those who might be drafting such an amendment, I want to set out my reasons for the amendment that we have before us.

Since we last debated this amendment, a number of significant things have happened which have made it necessary to re-present it. First are events in Canada: against the will of many politicians of all stripes, the free trade agreement between the United States, Canada and Mexico saw the inclusion of Section 230-style protections for tech firms. At the time, the Canadian Government promised parliamentarians that nothing in the agreement would impinge on their ability to regulate companies under existing or future Canadian law.

Canada is the base for Pornhub, the largest pornography site in the world. But when Pornhub was found to be monetising child rape and child sexual abuse material, the Canadian Government representative in the Senate, Senator Marc Gold, had to admit that

“there are provisions in the”

USMCA

“that make it difficult to deal with a company like Pornhub.”

Canadian parliamentarians scored one small concession during the passage of that free trade agreement: to keep domestic criminal laws on prostitution, sex trafficking and sexual exploitation. It is agreed by the Government that these are now the only Canadian domestic laws in this policy area that take precedence over the terms of the agreement.

Motion F1 does not refer to a theoretical concern. This is a clear and present danger, and it is designed to prevent the powerlessness currently experienced by Canadian lawmakers as we speak. It would, if it were adopted as a whole, put UK online protections beyond doubt.

I have been very grateful for the time given to me and Members of the other place by the Minister and his colleague Greg Hands, the Minister for Trade, and I actually agree with them that we are entirely aligned in this policy area and that the Government have reason to be proud. None the less, I have to challenge their assurance that it simply could not happen on their watch—because it already has.

--- Later in debate ---

Moved by

[Lord Grantchester]

At end insert “and do propose Amendment 6B in lieu—

6B: After Clause 2, insert the following new Clause—
“Standards affected by international trade agreements
(1) If regulations under subsection (1) of section 2 of this Act, or any other provisions of primary or subordinate legislation to implement an international trade agreement as defined in section 2(2), include provision in any of the areas listed in subsection (2), the provision must be consistent with maintaining United Kingdom levels of statutory protection in that area.
(2) The areas referred to in subsection (1) are—
(a) the protection of human, animal or plant life or health;
(b) animal welfare;
(c) environmental protection;
(d) employment and labour;
(e) online protections for children and vulnerable users;
(f) health and care, and publicly funded data processing services and
IT systems in connection with the provision of health and care; and (g) human rights and international obligations.
(3) “United Kingdom levels of statutory protection” means levels of protection provided for, by or under any—
(a) primary legislation,
(b) subordinate legislation, or
(c) retained direct EU legislation, which has effect in the United Kingdom, or the part of the United Kingdom in which the regulations or other provisions have effect, on the date on which a draft of the regulations is laid or (as the case may be) the provisions are first published.”

--- Later in debate ---

[Lord Grantchester (Lab)]

My Lords, I thank all those noble Lords who have spoken so eloquently tonight. It has been wonderful to hear such powerful speeches, all making such important points. I am also very grateful to the Minister for committing, in his opening remarks, to perfecting this agreement on the basis of including all the measures listed to which the whole House wishes to have attention drawn. He can also reflect more widely on other amendments proposed tonight.

However, working on any further perfecting of amendments must not be limited merely to rollover agreements. This amendment is tabled on that basis, and for those reasons. The Government have done as much in the past to meet us on these issues, and it is very important that we get an important, all-embracing statement on the face of the Bill. We must be firm in insisting on it now. The Minister started in a most emollient fashion, but, unfortunately, he has ended most frustratingly. I beg to move, and I beg leave to test the opinion of the House.

Trade Bill

Lord Grantchester Excerpts

3rd reading & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords
Monday 18th January 2021 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, I will be brief in my remarks on Amendment 1 in the name of the noble Lord, Lord Grantchester. I will restrict my remarks to this amendment rather than to the underlying amendment that it would amend.

We disagree with the fundamentals of the clause voted into the Bill on Report. However, we believe that there is no sense in dividing your Lordships’ House over this amendment, which aims to clarify ambiguities in the drafting in a previous amendment. I noted carefully the comments made by my noble friends Lord Lansley and Lady McIntosh of Pickering.

As far as the code of practice and its timing are concerned, until the Bill has completed its passage and been subjected to ping-pong, we will not know exactly what will be in it, so we have not yet turned our attention to the detail and substance of the code.

I agree completely with the comments of my noble friend Lady McIntosh on the importance of food standards; we have been pleased to reiterate that constantly during the passage of the Bill. I join her in applauding the great work our farmers do day in, day out.

We will not oppose this minor and technical change to the clause, and we will return to debate the detail of this provision at the appropriate time.

[Lord Grantchester (Lab)]

My Lords, I shall start with a quick apology. My train down this morning was part of the new lockdown schedules and did not exist, so I took the next one; I thought that I would still be all right but, as we discovered, I was two or three minutes late. I apologise for that. I thank my noble friend Lord Collins for standing in for me and moving the amendment formally, which is all I would have done in any case as this amendment was discussed earlier during the passage of the Bill. I was notified that it was slightly unclear—hence the correction before the House today.

I am grateful for the further comments I received from noble Lords in looking at the amendment again, but the substantive point is that we are happy to have this part of the Bill looked at again by the Commons and to have time to discuss it, because the points are well expressed and the thrust of the amendment is very cogent. The Commons will look at it among the totality of the clauses in the Bill. I am sure that this will give an opportunity for further clarity, assimilation and—how can I put this?—alignment between the various clauses to make better sense of it.

On the point made by the noble Baroness, Lady McIntosh, yes, it is important that statutory instruments come with impact assessments. As to whether an impact assessment is required for every trade Bill—or, indeed, every statutory instrument needed for every trade Bill—I am sure that the Minister, when he is going through trade Bills and the CRaG procedures as determined already, and by amendments to this Bill, will clarify that and make it clear. I am sure that he will also make it clear that, of course, once this Bill becomes legislation, the Government will do all they can to facilitate a full debate in both Houses.

Amendment 1 agreed.