National Security and Investment Bill

Lord Truscott Excerpts

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

[Lord Truscott (Ind Lab) [V]]

My Lords, I, too, congratulate the noble Lord, Lord Woodley, on his excellent maiden speech. I welcome this Bill to ensure that our national security is better protected. For too long, it has been far too easy for foreign interests to take over and strip this country of vital companies, as was mentioned by the noble Lord, Lord McNicol. Concerns were also expressed by the noble Lord, Lord West. As noble Lords have identified, some of these interests represent hostile Governments and entities; others do not, but the impact on some crucial sectors and the ability of this country to protect itself are just as severe.

Our previous attempts to intervene on grounds of national security have been woefully inadequate, dating back most recently to the Enterprise Act 2002 and the limited role of the Competition and Markets Authority. Forget about hostile state actors, for a moment. Under this legislation, we lost defence giant GKN and satellite firm Inmarsat. We face losing British chip giant Arm in a £30 billion takeover and a buyout of security firm G4S, which is a government contractor at prisons and nuclear power stations. Another UK defence giant, Cobham, was sold in January 2020 to US equity firm Advent, despite security concerns. As noble Lords know, Cobham is a world leader in air-to-air refuelling. Lady Nadine Cobham, daughter-in-law of the firm’s founder, rightly said that such a sale would never have been allowed by the US, France or Japan.

The UK has been behind the curve in protecting sectors vital to our national security from foreign takeover. Take the United States: CFIUS, the Committee on Foreign Investment in the United States, was established back in 1988. It has a history of actively blocking takeovers that are deemed not in the national interest. A federal inter-agency committee, it is chaired by the Secretary of the Treasury. Additional members of CFIUS include the Secretaries of Homeland Security, Commerce, Defense, State, Energy and Labor, the Attorney-General and the director of the Office of Science and Technology Policy. The Americans take this very seriously. Perhaps Her Majesty’s Government should take a leaf out of the Americans’ book and set up a similarly high-powered co-ordinating committee. An underresourced investment security unit in the Department for Business, Energy and Industrial Strategy, as proposed in the Bill, is hardly the same.

We are not only well behind the US, but behind the EU. The EU is to beef up investment screening rules to block foreign takeovers of European companies tied to national security. Agreed last March, this came into effect in October. The European move was stimulated by Germany’s experience, back in 2016, after the successful bid by China’s Midea Group for industrial robotics specialist Kuka, which prompted a national outcry.

The UK has been slow to wake up to the dangers. Her Majesty’s Government’s national security risk assessment identified the threat in 2015, only after it had been pointed out in Parliament’s Intelligence and Security Committee report, published two years before. At that time, the ISC investigated Huawei’s involvement with BT and the potential threat to our critical national infrastructure, or CNI. The vulnerability of our CNI, including our communications and national grid, represents one of our greatest security challenges. A debilitating attack on our national grid could cost thousands of lives and billions of pounds. There can be no energy security for the UK where the possibility of interruption to our energy supplies remains.

As one senior nuclear engineer, who has spent decades in the industry, told me, there is no way a country could prevent a foreign-designed or foreign-operated civil nuclear power station from having the means to control it embedded in its systems. We would simply never know. You have to be pretty sure you know who your friends are when it comes to that sort of investment in the UK’s nuclear sector. The ex-diplomat Charlie Parton, who was quoted earlier, said that the Chinese follow a policy of “civil-military fusion”, where it is difficult to see where the state ends and the private sector begins—or vice versa. They are not the only ones globally.

I have a couple of points on the Bill itself. I do not agree with those in the other place and in your Lordships’ House who have talked about amending the Bill to include a definition or framework of national security. The Government must have maximum flexibility to meet any security challenges as they arise. We cannot legislate now for the threats of the future and it would be foolish to attempt to do so.

Secondly, the proposal for an annual report to the Intelligence and Security Committee, as well as to the House itself, is a good idea. Dr Julian Lewis, chair of the ISC, rightly pointed to what would otherwise be a scrutiny gap, as was mentioned earlier by the noble Baroness, Lady Hayter, and the noble Lord, Lord West. With proper scrutiny, however, this legislation cannot come too soon.

Oil and Gas Industry

Lord Truscott Excerpts

Tuesday 22nd September 2020 Lords Chamber

[Lord Callanan (Con) [V]]

My noble friend is right that interconnectors have a key role to play. There are a number of existing electricity and gas interconnectors, which will play a key role in the transition. They also provide security of supply to both imports and exports of energy. We will be supporting them.

[Lord Truscott (Ind Lab)]

My Lords, I refer the House to my relevant interests in the register. BP has forecast that peak oil will come about in the early 2020s—much earlier than previously predicted. What plans do Her Majesty’s Government have to deal with this? Are they ready for it?

[Lord Callanan (Con) [V]]

As we have said, oil and gas have a key role to play in the transition and that is reflected by the independent Committee on Climate Change. Many of these things are, of course, a matter for the market. We have historically low oil prices at the moment, and the Government are well aware of it. We need to transition away from fossil fuel. BP, which the noble Lord mentioned, is doing a tremendous job in supporting, for example, the Net Zero Teesside scheme.

Energy: Hydrogen

Lord Truscott Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Callanan (Con)]

Green hydrogen is relatively easy to make from electrolysis but it uses large amounts of electricity, so we need to work on improving the technology. However, these are all factors that we are already working on with industry in the Hydrogen Advisory Council, which will advise us on the next steps forward with the hydrogen strategy.

[Lord Truscott (Ind Lab)]

My Lords, I declare my interests as a former UK Energy Minister and as listed in the register. The need for a hydrogen strategy is now well overdue, as we have heard. Where is the promised £100 million low-carbon hydrogen production fund? Given that most of the new nuclear schemes have collapsed, how are the Government now going to achieve their low-carbon targets?

[Lord Callanan (Con)]

The noble Lord mentioned the £100 million of investment through the low-carbon hydrogen production fund. We are proceeding with that while also investing up to £121 million between 2015 and 2021 in hydrogen innovation. Yes, we are waiting for the strategy but also getting on with some of the key building blocks in advance of it.

China: Supply Chains

Lord Truscott Excerpts

Wednesday 1st July 2020 Lords Chamber

[Lord Grimstone of Boscobel]

The noble Lord makes some strong points. My department is considering import dependency and will continue to analyse imports, including from China, to determine whether the UK is particularly reliant on certain of our trading relationships. Project Defend is looking at our trading relationships with a range of international partners. It will analyse critical supply chains for a range of non-food items in addition to medical supplies. We will continue working to keep trade flowing by reducing tariff and non-tariff barriers and through our programme of FTAs.

[Lord Truscott (Ind Lab) [V]]

My Lords, yesterday, in his neo-Keynesian “spend, spend, spend” speech in Dudley, the Prime Minister said that he was not a Sinophobe but that

“we need to … protect critical infrastructure from hostile vendors”.

Can the Minister tell your Lordships’ House whether this now includes China and, if so, will Her Majesty’s Government let China build new nuclear power stations at Bradwell and Sizewell?

[Lord Grimstone of Boscobel]

My Lords, in general, as an open economy, we welcome foreign trade and investment where it supports UK growth and jobs. We do not accept investment that will compromise our national security. The noble Lord will be aware that the nuclear industry is one of our most highly regulated industries. He can rest assured that we would not accept any involvement from any party that did not meet our strict criteria.

Covid-19: Business

Lord Truscott Excerpts

Wednesday 13th May 2020 Lords Chamber

[Lord Callanan]

The noble Lord makes a good point. The number of ethnic minority communities that seem to be adversely affected by this virus is indeed very concerning. I can confirm that we have, of course, fulfilled our equality duties within the guidance. We have had this subject constantly at the forefront of our minds as we formulated this guidance. We have consulted widely across all business and industry.

[Lord Truscott (Ind Lab)]

My Lords, I declare an interest as set out in the register. Does the Minister recognise that many millions of the self-employed in SMEs will not benefit from the Government’s generous furlough scheme and, in many instances, cannot yet go back to work? Will the Minister at least commit the Government to extending the self-employed income support scheme until the end of October?

[Lord Callanan]

I thank the noble Lord for his question. As I have said in response to earlier questions, we keep these schemes under constant monitoring and assessment. We are always open to modifying or extending them if it proves necessary.

Queen’s Speech

Lord Truscott Excerpts

Monday 26th June 2017 Lords Chamber

[Lord Truscott (Ind Lab)]

My Lords, it is a pleasure to follow the noble Baroness, Lady Noakes. I agree with much of what she said, particularly on HS2. I also commend both noble Lords who made excellent maiden speeches today.

In speaking on energy today, I declare a non-pecuniary interest as vice-chair of the All-Party Group on Shale Gas Regulation and Planning and as a former UK Energy Minister.

Comparing the recent Tory manifesto to the gracious Speech, I am somewhat perplexed by Her Majesty’s Government’s invisible energy strategy. If this is what strong and stable government looks like, I can only be grateful that your Lordships’ House avoided a coalition of chaos. For example, media reports before the gracious Speech said that the Government had abandoned their commitment to UK shale gas development. I hope that the Minister—who is not in his place at the moment—can reassure or otherwise the House, at least until the next U-turn.

The Conservative manifesto stated that legislation would be introduced to permit non-fracking drilling as a permitted development; major shale planning decisions would be the responsibility of the national planning regime; there would be a new shale environmental regulator; and there would be changes to the proposed shale wealth fund. Now these are all apparently out of the window. Are Her Majesty’s Government still committed to shale in England, have they been won over by Labour’s argument that fracking should be banned, as it is in Wales, Scotland and Northern Ireland, or do they simply believe they cannot get the legislation through Parliament?

The Queen’s Speech mentions nuclear safeguards and proposals to secure critical national infrastructure. Can the Minister enlighten noble Lords about how this will be achieved post-Brexit? Again, the Government seem vague about attempts to protect the UK’s critical infrastructure. Just last September, the Secretary of State for Business, Energy and Industrial Strategy stated that the Government would reform the legal framework for future foreign investment in our critical infrastructure, including nuclear energy. The Tory manifesto said:

“We will ensure that foreign ownership of companies controlling important infrastructure does not undermine British security or essential services”.


The Minister briefly referred to this, but when will we receive the details? Concerns about Chinese involvement in Hinkley and Bradwell on security grounds have been widespread, but in the Queen’s Speech of this there was not a whisper.

Incidentally, as previously mentioned, a recent National Audit Office report said that the Government’s plans for a new £18 billion power plant at Hinkley Point were “risky and expensive”. As the UK’s ageing nuclear and coal plants need replacing or substitution by around 2030, the UK’s reliance on imports has returned to levels not seen since the mid to late 1970s, before production from the North Sea took off. My fear is that the Government do not really have an energy policy and certainly do not have a grip on the issues. A commitment in the gracious Speech to electric cars is welcome, but it is not a substitute for a low-carbon energy strategy. Perhaps it is time for a new energy White Paper. There has not been one for a while.

As mentioned by the noble Lord, Lord Naseby, Britain’s largest storage site for natural gas, owned by Centrica, is to close permanently, leaving the country more dependent on imports and price volatility. The situation is so precarious that a committee of your Lordships’ House advocated varying the pace of carbon emissions up to 2050 to keep the lights on.

While the gracious Speech commits the UK to tackling climate change and the Paris agreement, few independent experts believe the country can hit its emission targets. The noble Baroness, Lady Featherstone, commented on this point earlier. The Committee on Climate Change stated that current policies are likely to deliver at best around half the required UK emissions reduction from 2015 to 2030. A new emissions reduction plan has yet to be published. Can the Minister tell the House when its publication is likely?

I do not think the Government are treating cybersecurity with the seriousness it deserves. Where was the reference to this in the Queen’s Speech? We have already witnessed recent attacks on the NHS and Parliament in this country alone, with attacks also against the US, Ukraine and Iran, among others. The Stuxnet worm was used effectively against Iran’s nuclear power stations. Researchers are now warning the Industroyer virus could bring down power networks in their entirety or lead to our power grid being controlled by either criminals or a foreign nation state. The Cambridge Centre for Risk Studies estimates a cyberattack on the UK’s regional electricity distribution network would cost between £12 billion and £86 billion.

The powers and ability of the National Cyber Security Centre to deal with an attack of this nature are frankly insufficient. It does not have a statutory role and cannot enforce its recommendations. The National Cyber Security Strategy is muddled and unclear, particularly regarding the private sector, which owns most of the UK’s critical national infrastructure. The clock is ticking, but the Government appear paralysed.

Shale Gas

Lord Truscott Excerpts

Tuesday 7th March 2017 Lords Chamber

Asked by

[Lord Truscott]

To ask Her Majesty’s Government what are the economic and environmental benefits of shale gas development in the United Kingdom.

[Lord Truscott (Ind Lab)]

My Lords, in opening this debate, I declare a non-pecuniary interest as vice-chair of the All-Party Parliamentary Group on Shale Gas Regulation and Planning and as a former UK Energy Minister.

This is a controversial subject and, no doubt, your Lordships have heard and will hear many different views. Hydraulic fracturing—fracking—is a technological reality and cannot be uninvented. It is also clear that the Government, and Parliament as a whole, are determined to develop shale gas in the UK. The question is whether this development has been thoroughly thought through in all its ramifications, as we inexorably move towards exploration and production.

Andrea Leadsom, the Minister of State for Energy at the time, said in May 2016 that shale gas could,

“provide jobs for our people and tax revenues for our society”,

and

“help the UK to decarbonise while we move away from coal to lower-carbon energy sources”.

It could secure energy and bring economic growth and job creation.

The suggestion has been that shale gas development could create between 60,000 and 70,000 jobs, stimulate billions of pounds of investment in the UK, provide energy security and help secure “a bridge to a greener future”. On the face of it, these arguments seem compelling, except that none of them is quite as straightforward as it initially sounds.

Let me start with energy security. The assumption is that we lack it. A House of Lords Economic Affairs Committee report into shale specifically referred to the reliance on Russia, Europe’s biggest gas supplier. The only problem here is that the UK imports virtually no gas from Russia and is unlikely to import significant amounts in the future.

In a Written Answer to me last September, the Minister, the noble Baroness, Lady Neville-Rolfe, responded:

“There are no pipelines that allow Russian gas to flow from Norway (our biggest source of imports) or via shipped Liquefied Natural Gas (which comes mainly from Qatar). Some gas of Russian origin may enter via pipelines from Belgium and the Netherlands. However, Belgium has reported virtually no Russian gas imports over the past three years. The Netherlands does report some Russian imports, but we estimate Russian gas via this route would account for less than 1% of the UK’s gas imports and, therefore, much less than 1% of our total gas supply”.


In fact, the UK has now started receiving direct imports of US LNG so, unless we regard Norway and the US as unreliable partners, the energy security argument does not stack up. Of course, it is always better economically to have our own gas than to import it. There may be some environmental benefits if the amount of carbon produced is less, but that is by no means currently certain.

The billions of pounds of investment and thousands of jobs are presently speculative. Hopes of commercial-scale shale in Poland have faded and many of the majors have already pulled out. The number of licences have been halved. Those leaving include Exxon, Chevron, ConocoPhillips, Talisman and Marathon. Put simply, UK shale may or may not be commercially viable. No one will know until large-scale exploration establishes the level of exploitable reserves. This is, of course, a matter for the companies involved, but the experience in Poland shows that you should not count your chickens or your prospective tax-take.

As for the thousands of jobs, these may or may not just replace those already lost in the North Sea, partly as a result of the hydrocarbon glut and price collapse caused by the US shale revolution in the first place. Oil and Gas UK estimates that 120,000 jobs have been lost in the wider British economy due to the North Sea oil and gas downturn, with a barrel of crude falling from about $115 to around $50 since 2014, with a close correlation with gas prices. The US has also experienced the boom and ghost town experience, where some shale operators which initially did well went bust in the downturn, impacting local economies.

Significant UK shale production and downward pressure on prices could further undermine North Sea operators and squeeze margins in what is already one of the most expensive places in the world to exploit oil and gas. So what about a “bridge to a greener future” and the effect on the environment? Well, this is one of the most contentious issues of all. No doubt the Minister will repeat that the UK’s regulations are some of the strongest in the world and that we have 50 years of successful and safe onshore and offshore oil and gas extraction. Shale gas developments will be very closely monitored, shallow drilling will be banned and seismic movements monitored. That is all true, no doubt, but as Piper Alpha, Deepwater Horizon and the Exxon Valdez disasters showed, accidents do happen. No hydrocarbon explorer or producer can 100% guarantee the integrity of its wells, even if they are much deeper than aquifers. Water contamination is possible and earthquakes are inevitable. We have had several hundred already in the UK as a result of mining operations, quite apart from the notorious Cuadrilla quakes outside Blackpool. The US has had thousands of earthquakes, now indisputably linked to fracking. I am still unsure how the UK will avoid the same fate as the US. Perhaps the Minister will use this opportunity to explain that.

By the very nature of fracking and unconventional gas, where production falls off after 18 months, the UK will need to develop thousands, not hundreds, of shale gas wells. This has caused problems in the wide open spaces of the US. How will it work in this densely populated island of ours? What about the truck movements? In the US, the environmental picture has not been great. In 2014, Oklahoma experienced 585 earthquakes with a magnitude of three and over. According to the US Geological Survey, these were caused by the disposal of wastewater reinjected into the wells by the shale operators. A study by the University of Alberta, co-authored by the Geological Survey of Canada, confirmed a definitive link between fracking and almost every large earthquake recorded in Alberta and British Columbia since 1985.

The Pennsylvania Department of Environmental Protection reported that 234 private drinking water wells in Pennsylvania have been contaminated by drilling and fracking operations in the last seven years. Meanwhile, a US Environmental Protection Agency scientist identified groundwater pollution in Pavillion, Wyoming, as a result of fracking. A separate report in April 2016 concluded that there were,

“dangerous levels of chemicals in the underground water supply used by the 230 residents of Pavillion ... Levels of benzine, a flammable liquid used in fuel, were 50 times above the allowable limit, while chemicals were dumped in unlined pits and cement barriers to protect groundwater were inadequate”.

Last week, the leadership of the Pawnee Nation, a Native American tribe, filed a lawsuit against multiple Oklahoma oil companies, claiming that their operations caused a 5.8 magnitude earthquake.

Furthermore, there is serious concern about the amounts of methane released during fracking. Recent attempts in the US under President Obama to limit methane emissions look likely to be overturned by President Trump. Of course, the industry will tell us that it will all be different in the UK. It cannot happen here, the US is different and the regulations will be tighter. Perhaps the Minister would like to comment further on that. However, some states and regions think differently. Maryland in the US has put a moratorium on fracking, as have Scotland, Northern Ireland and France. Fracking was banned in New York in December 2014. What do they know that we do not, or do Her Majesty Government have a monopoly of wisdom on the subject? The UK’s Labour Party also supports banning fracking, with shadow energy Minister Barry Gardiner stating:

“The real reason to ban fracking is that it locks us into an energy infrastructure that is based on fossil fuels long after our country needs to have moved to clean energy”.


We will continue to be dependent on fossil fuels in the foreseeable future, at least up to 2040 or 2050. Her Majesty’s Government are committed to reducing our carbon emissions by at least 80% by 2050, compared to 1990 levels. Professor Kevin Anderson, former director of the Tyndall Centre for Climate Change Research, has said:

“From a climate-change perspective this stuff simply has to stay in the ground”.


The Environmental Audit Committee reported in 2015:

“Ultimately, fracking cannot be compatible with our long-term commitments to cut climate changing emissions unless full-scale carbon capture and storage technology is rolled out rapidly, which currently looks unlikely”.


The Committee on Climate Change also thought that the implications for UK shale gas exploitation for greenhouse emissions,

“are subject to considerable uncertainty”,

and are not compatible with UK carbon budgets unless strict measures are taken.

Finally, a recent survey showed that only 19% of people back shale exploration in the UK despite the various inducements offered to local communities. The Financial Secretary to the Treasury said in the other place last November that the Prime Minister has been very clear:

“Local people must come first”—[Official Report, Commons, 21/11/16; col. 727.]


Will the Minister therefore pledge that local communities will in future decide local planning issues?