National Security and Investment Bill

Baroness Hayter of Kentish Town Excerpts

Committee stage
Tuesday 9th March 2021 Grand Committee

[Lord Fox (LD)]

My Lords, I agree with the analysis of the noble Lord, Lord Vaizey, that Her Majesty’s Government have underestimated the potential workload that this unit will get, but I am not convinced that his solution to reducing that workload is the right one. We have heard many speeches but I would single out those of my noble friend Lady Bowles, the noble Baroness, Lady Noakes, and the noble Lord, Lord Lansley, as reasons why we should not be separating out one set of companies due to their nationality. The noble Lord made the point clearly that the criterion should be: is it or is it not a national security risk, rather than, does it or does it not come from Hampshire or New Hampshire? That should be the rule running through this.

The noble Lord, Lord Leigh, when moving into caveat territory, started to explain why singling out foreign companies becomes an extraordinarily difficult thing to do. First, what is one, and is it a shell company? Is it listed on NASDAQ but actually resident in Beijing? Those kinds of complications start to point to the Government’s analysis that all companies are in. Clearly, it will be easier for the company whose owner your friend meets in a pub to get through the process and not be called in, compared with one that hails from the Far East, for example. Surely, the process should be the efficiency with which the unit can deal with and dismiss issues quickly, rather than accidentally filtering out things that we should not.

On the concept that, “Our friends are our friends, so we include them as ourselves”, the noble Baroness, Lady Noakes, made the wider point about access to the technology. Access can be cut off by our friends as much as by ourselves or, indeed, by external companies. I am sorry, but I am going to repeat the example I gave at Second Reading. A British company with a US-based subsidiary took the technology to the United States, started to produce it and made one small amendment to that technology. The use and sale of the technology back to the UK was then blocked by the Department of Defense under export controls, because it considered it to then be United States strategic technology. I am sure that such things happen all the time—this example is just one that I happen to know about.

Regional agnosticism, the gospel according to the noble Lord, Lord Lansley, is the sensible approach here, and I hope that the Minister can explain his views on this issue.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, we have some sympathy with the intention here, which is to seek clarification about whether certain investors or countries should be more or less encouraged to invest here, although this may not be exactly the right way to achieve that. Such clarification is clearly needed and is sought in a different way by Amendment 91, which we will reach next week, I think, and which stands in the name of my noble friend Lord West.

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Moved by

[Baroness Hayter of Kentish Town]

15A: Clause 6, page 4, line 17, leave out paragraph (b)

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[Baroness Hayter of Kentish Town (Lab)]

Amendment 15A would delete Clause 6(2)(b), because otherwise that paragraph means that someone increasing their interest in a qualifying entity from under 15% to over 15% would then turn it into a notifiable acquisition.

This amendment asks a simple but significant question: why has 15% been chosen and what is the rationale for it? The people we spoke to were a bit bemused by the figure. I think someone mentioned in Committee last week that 15% appeared somewhere else, but those we spoke to across a range of areas could not find, and did not know, where that 15% came from. There is obviously no particular evidence behind it. I am not sure whether it appears elsewhere in legislation, but I am sure the Minister will know the answer and outline the thinking behind that figure.

Not just for pubs but for other early stage start-ups and developments, this could certainly be an impediment to an investment just at the point when it is needed. For these small start-ups there seems to be a more or less continuous need for money, but drip by drip as things develop. It is on a continual basis rather than a great big one-off deal; the more the work begins to show potential, the more extra money is needed. Any concern about suddenly hitting 15% in the case of a small company, particularly a new one, just when it needs the money could jeopardise access to funds when they are most needed.

I am not even absolutely certain about the purpose of Clause 6(2)(b), but, again, I am sure the Minister will elucidate in his reply. Clause 8(2) already describes shareholding thresholds for qualifying entities of a specialist description, where the figures of 25%, 50% and 75% are used, and Clause 8(5) does the same with voting rights. So the references in Clause 6(2)(b) to a 15% threshold for

“a qualifying entity of a specified description”

appear to go over very similar ground, unless the intention is to have two different classes of qualifying entities of a specified description, with the higher-risk one subject to the additional 15% level. If that is the case, it seems to add an extra level of complexity to the legislation. Dropping the 15% level could remove the regulatory burden from at least some fundraising that needs to go on. It might be questionable anyway how much control a shareholding of below a quarter would achieve.

Amendment 29A would delete Clause 8(8), which again is a bit unclear. Perhaps the Minister will be able to spell it out a bit more. It concerns the fourth listed case of a person gaining

“control of a qualifying entity”

as described earlier in Clause 8(1). However, Clause 8(8) is not part of the mandatory regime in the earlier Clause 6, which we are now looking at, because in Clause 8 only cases one to three are cross-referenced with reference to subsections (2), (5) and (6). It does not include subsection (8), so a bit more explanation would be good.

Clause 8(8) is perhaps there to allow for a broad range of call-ins than those covered by the mandatory notification regime, but the imprecision of the language is difficult. It talks of where it

“enables the person materially to influence the policy of the entity”.

As that is fairly broad, it could lead to a lot of excess voluntary reporting and it is hard to know what it means in practice. “Influence” is hard enough to define. Maybe “materially to influence” meets a legal threshold of which I am unaware, but it is quite difficult for a researcher or company to know what that means.

It is true that the CMA uses some of that language when we are talking about much bigger operations. However, it is probably not a phrase that is particularly familiar to most businesses or, indeed, to academia. As I said, it could lead to a lot of extra voluntary notification by parties in an attempt to get certainty. As we have heard, we are worried about too many voluntary notifications clogging up the system.

The reason why 25% in Amendment 17 was chosen might need some spelling out. It may well be correct, but it would be useful to know the thinking behind it.

I beg to move.

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[Lord Callanan (Con)]

I will take that as a comment and not as a question. I continue to look at all aspects of the Bill to see how they can be improved.

[Baroness Hayter of Kentish Town (Lab)]

The Minister referred to the meeting that he and the noble Baroness, Lady Bloomfield, very kindly held yesterday with the Wellcome Trust, and I very much welcome the reassurances that he has read into the record today. The shorthand for this is the nervousness in academia of bringing in assets—IP, information, ideas and software—rather than just entities. That was what we discussed at the meeting yesterday, and the Minister has now read into the record the reassurances he gave there, for which we thank him.

I thought that the suggestion—I was going to call it a wheeze—of the noble Lord, Lord Lansley, was rather crafty: if that is what you mean, why do you not say it upfront? However, from what the Minister said, there seems to be a difference between the objective and the subjective criteria. I do not know whether that is why the Government want them in different clauses, but there is a problem with the subjectivity of this phrase. It is not simply, as the noble Lord, Lord Leigh, just said, about material influence rather than material control, but also the policy, and it is hard to define what that means. It seems to me a very subjective test for the big change made in Clause 6. I remain unconvinced that we have got it clear enough.

I thank the noble Baroness, Lady Bowles, for explaining where the 15% figure, to which the Minister referred again, comes from. The CMA uses it when talking about mergers, but we are talking here about big companies, not small ones. However, because there is no threshold, much smaller companies will be covered by this. It may be absolutely important for the takeover of very large companies whether competition is taken out of the market. The Minister knows that, as a consumer champion, I am always very happy for the CMA to look at the impact on competition. However, I have my doubts whether a regime defined for competition in consumer goods and access should be lifted and shifted—the Minister said that there will not be separate guidance—into something that will sometimes affect small start-ups and new developments.

I certainly know more about the subject than I did 43 minutes ago, for which I thank all those who have spoken on the amendment. As has been said, I hope that the Minister and his draftspeople will look at whether this is clear enough, necessary and appropriate for the sorts of investments we are dealing with. When the Minister gives a bequest in a will as the reason for including a particular provision in the Bill, that feels like clutching at straws to me. I hope there are better arguments than that, but, for the moment, I beg leave to withdraw the amendment.

Amendment 15A withdrawn.

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[Lord Fox (LD)]

My Lords, it would seem, when looking at Clause 29 and listening to the reasoned arguments of the noble Lords, Lord Hodgson and Lord Clement-Jones, that the Government would be hard put not to agree with the objectives they set out for this amendment, so I suppose we have to listen to the Minister to hear why the Government think that the Bill already does the things which this amendment seeks to achieve, unless the Minister wants to explain why those objectives are wrong. There is a similar argument to be made about Amendment 72, which is more complex. Again, why would the Government not wish to achieve what this amendment is seeking to achieve? If they do, it is not clear in the Bill.

I dubbed Amendment 97 the Gilbert and Sullivan amendment, because you have the cousins, the sisters and the aunts all lining up in the connected parties list, or perhaps not. The noble Lord, Lord Lansley, would probably have made a fabulous argument, but in his stead the noble Baroness, Lady Noakes, makes very good points.

Coming back to the substantive point about Clause 8, we have had a long debate on the group beginning with Amendment 15A, and a smaller, shorter debate that has focused on similar issues. My noble friend Lord Clement-Jones called Clause 8 a hybrid, being both specific and broad. I hope the Minister and the Bill team will take from this that there is work to be done on this clause. It is quite clear from the debate we have had that tightening and clarifying are required to take the Bill into Report. Otherwise, I suspect there will be a lot of recalls coming from the sort of debate we have seen, particularly in the Amendment 15A group, but also, to some extent, from this one.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I am still slightly reeling from having to find names of people long since in my past, but maybe Hansard can piece things together.

We have heard today, both in this group and in others, and in the representations that we have all seen, that there are considerable investor concerns about bits of the Bill, some of which Amendments 29 and 72 in particular seek to address. It is important to recognise, although it has been made clear by people in Committee, that the Bill marks a radical transformation of national security screening for mergers and acquisitions. It is a new and different regime, so it is essential that the Government not only maintain business confidence but gain more confidence from businesses and the investors in them. That was why, on the first day of Committee, we set out why we thought we needed a definition of national security to provide clarity for businesses and investors and to build trust in the regime.

However, as has been said in this group, one of the things that would help that confidence is better drafting. The noble Lord, Lord Fox, is right when he says that more work is needed. I know it is the second day back at school, but it feels as if the homework has been self-marked and now needs a slightly more thorough look. As everyone has said, it is not that anyone has objections to the purpose of the Bill; the concerns are about the wording and perhaps the breadth of its scope.

Clause 8 defines the circumstances in which a person gains control of a qualifying entity, thus constituting a trigger event that may be subject to assessment under the regime. This is clearly a key part that must be got right. Amendment 29 would narrow the third circumstance to make sure that it does not capture minority investor veto rights, as has already been mentioned. Perhaps the Minister could clarify whether it is expected that minority investment veto rights would be captured.

The group of amendments raises some broad questions about the number of cases in which a person gains control of a qualifying entity. We are interested in why other cases are not included. We do not necessarily want them included but want to work out the limits that brought certain things to be put in the Bill. It is quite interesting to know what is not there. For example, is an acquisition involving state-owned entities or investors originating in a country of risk to UK national security not a concern? It is not mentioned. Neither is a person who becomes a major debt holder and could therefore gain influence over the entity’s operation and policy. Is that not of interest? It is not that I want to include them, but I am really interested in how the definitions were put together. Maybe the Government, either in writing afterwards because it may be more detailed, or in answer today could spell out why these particular cases were selected and the sort of advice that was taken in the selection process.

Amendment 97, which the noble Baroness, Lady Noakes, has discussed, raises the question of why a former partner should remain a person of concern. Probably all of us here have had difficulties with being a politically exposed person, a PEP. We have found it very difficult sometimes just to open or become a signatory to a charity’s accounts because of being a PEP. A number of difficulties were had, but I think they have been got over now after some work in this House. It really did affect those of us who have step-children and former partners and siblings we never see, and things like that.

This issue needs a little more clarification and protection, if you like. No investor or anybody involved in this wants to get caught up by something which they could not have thought at the time was of any interest. I understand that it might look suspicious if somebody divorced their partner two days before to get rid of some assets, but this is a very wide net. Perhaps the Minister can explain why this clause is needed and needs to be drawn quite as widely. This is a net that would catch whales, never mind tiddlers.

[Lord Grimstone of Boscobel (Con)]

My Lords, I begin by briefly extending my thanks to my noble friends Lord Hodgson and Lord Lansley for tabling the amendments in this group relating to the circumstances determining the control of entities in the Bill, as well as arrangements and the impact of final orders on contracts.

I am conscious of the complexity of some of the matters that we are debating. If I am not able to explain or elucidate these points fully in my comments, I will of course write to noble Lords. I will also be happy to discuss them with noble Lords outside the Committee. Some of these things are quite difficult to get straight across a table like this.

I will start by addressing my noble friend Lord Hodgson’s Amendment 29. For the purposes of the Bill, Clause 8 sets out the circumstances in which a person gains control of a qualifying entity. It explains the four ways in which control can be gained. Subsection (6) sets out the third trigger event:

“The third case is where the acquisition is of voting rights in the entity that (whether alone or together with other voting rights held by the person) enable the person to secure or prevent the passage of any class of resolution governing the affairs of the entity.”


I think that there is broad support for that concept. However, Amendment 29 seeks to narrow this so that only acquisitions of such voting rights over matters that are equivalent to those which require the passing of ordinary or special resolutions under the Companies Act 2006 would be a trigger event.

I sincerely pay tribute to my noble friend for seeking to ensure that the regime is as reasonable and proportionate as possible. I believe that his intent is very much to seek to exclude acquisitions of minority veto rights from constituting trigger events. However, the Government consider that the Bill already achieves this goal to some extent as subsection (6), which my noble friend seeks to amend, is of course subject to the qualifying provision in subsection (7), which explains how references to voting rights in an entity apply to different sorts of entity.

In the case of an entity that has a share capital, this means voting rights conferred on shareholders to vote at general meetings of the entity on all or substantially all matters. In the case of an entity that does not have a share capital—this is where some complexity arises—this means the voting rights conferred on members to vote at general meetings of the entity on all or substantially all matters. The important words in both cases are

“all or substantially all matters.”

I therefore suggest, with deference to my noble friend, that minority veto rights would be captured by subsection (6) only where such voting rights provide the holder with a right to vote on all or substantially all matters, which perhaps takes it rather beyond the worry that some people had about these minority rights being constrained.

I hope that this puts the mind of the noble Baroness, Lady Hayter, at rest but, again, if a further discussion is needed to clarify how this works, I would be very happy to hold one. I also hope that the Committee agrees that it is only right that minority veto rights, in circumstances where they really are broad enough to cover all or substantially all matters, should be in scope of the Bill. For all intents and purposes, they are the same as majority rights if they are able to do that.

I am grateful to my noble friend Lord Lansley for Amendment 30 in respect of Clause 8 and the definition of control of entities for the purposes of the Bill. This clause reflects the fact that there are ways of obtaining control over an entity other than just acquiring shares or voting rights at significant thresholds. As part of the new regime—I say without excuse that we have made this embracing because of the importance of national security—the Secretary of State must be able to scrutinise lower stakes of shares and votes or other rights or interests acquired by a person that allow them materially to influence the policy of the entity. This is consistent with the UK’s merger framework, and businesses and investors alike have welcomed our adoption of the familiar material influence concept that they have been accustomed to under the Enterprise Act 2002.

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[Lord Clement-Jones (LD)]

My Lords, I am not going to speak for any length on Amendments 31 and 33. I just hope that the Minister has a battery of Scots lawyers advising on these amendments because it sounds as if they could be of huge significance and the issues under Scots law may well have been ignored in the drafting of the Bill. I am looking forward to hearing the Minister’s response, no doubt on advice.

I support, in particular, Amendments 34 and 35, tabled by the noble Lord, Lord Hodgson of Astley Abbotts, which he introduced so well. The common factor is that the existing wording of Clause 10(2) appears to catch intragroup investments where an ultimate parent company holds an interest indirectly through a wholly-owned subsidiary and decides to transfer the interest to itself so that it is held directly. Such transactions do not raise new or additional national risks as there is no change in the substantive control. For mandatory filings, as he also described, the initial acquisition will already have been notified and reviewed. Proposed Amendment 34 therefore makes sure that only those transactions where the initial investment took place before the commencement date are caught; they will thus not have been reviewed. Without this provision, each entity within a corporate group would need to make a separate notification for a single trigger event.

Amendment 35 deals with cases where corporate group companies comprise multiple, separate entities because Clause 10, as drafted, also appears to require each entity within the corporate group to make a separate notification for a single trigger event that takes place relating to the group.

These are well-crafted amendments and were well described by the noble Lord, Lord Hodgson, who, as he said, is supported by the Law Society. We have a Law Society group of amendments here relating to England, Wales and Scotland. I am sure that the Minister will have huge pleasure in responding on this group.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I have no new information to bring to the Committee. As we have heard, a number of transactions appear likely to be caught under the Bill which are probably outwith the intention of the authors of the Bill. I think the Minister has to explain why these provisions are in it, rather than noble Lords who tabled amendments having to explain why the provisions should be taken out. We look forward to his explanation of that and, perhaps, his reassurance to the Committee that the Bill is really fit for purpose across the whole of the UK, including for the Scottish legal system.

[Lord Grimstone of Boscobel (Con)]

My Lords, with thanks to all noble Lords who have spoken with such knowledge and eloquence on the amendments tabled, I will begin by speaking to Amendments 31 and 33 in the names of the noble Lord, Lord Bruce of Bennachie, and my noble friend Lady McIntosh of Pickering. The noble Lord, supported by my noble friend, clearly raises important questions on the juxtaposition of Scottish law with the powers that we are looking at in this group.

I am grateful to the Law Society of Scotland for having supported this and, if I may, rather than attempting to deal with these points on the hoof I will take them away. I commit to being in communication with noble Lords as to what needs to be done, if anything, in relation to them. More generally, perhaps putting the important Scottish points on one side for the moment, I completely agree with the noble Baroness, Lady Hayter, that the Bill has to work for every part of the United Kingdom.

These amendments concern Clauses 8 and 9 and the circumstances where acquisitions of control of entities and assets take place for the purposes of the Bill. They seek, I believe, to ensure that rights or interests in, or in relation to, entities and assets held by way of security are exempt from the regime, on the understandable basis that lending and debt arrangements do not give rise to control. Let me agree right away with the thrust of the concern expressed by the noble Lord and my noble friend. The Government do not consider that the provision of loans and finance is automatically a national security issue. Indeed, it is part of a healthy business ecosystem which enables businesses to flourish and grow in this country. Lenders need confidence that they can see a return on ordinary debt arrangements to provide that service, which is of course vital to the proper functioning of the economy. But we must recognise that there are, in a small number of cases, national security risks that can be posed through debt. I will come to this in a moment.

Access to finance is crucial for so many businesses and, to grow and succeed, they will often take out loans secured against the very businesses and assets they have fought so hard to build. That is why the Bill allows the Secretary of State to scrutinise acquisitions of control that take place when lenders exercise their rights over the collateral. The important point is that it is not where the lenders have hypothetical rights but where they exercise their rights over the collateral. This approach is needed because it will prevent hostile actors artificially structuring acquisitions in the form of loans which, following a swift and convenient default—let us put it that way—might otherwise allow them to evade scrutiny. This is a proportionate approach, and one that I am confident will keep finance flowing into UK companies and infrastructure while ensuring that our national security can be protected.

Amendments 34 and 35 in the name of my noble friend Lord Hodgson relate to Clause 10, which, in combination with Schedule 1, sets out various ways in which rights or interests are to be treated, for the purposes of the Bill, as held or acquired. These include indirect holdings whereby, for example, a person holds an interest or right indirectly if that person has a majority stake in an entity that is part of a chain of entities, each of which holds a majority stake in the entity immediately below it, the last company in the chain of which holds the interest or right. That example is relevant because Amendment 34 seeks to ensure that intragroup investments are not covered by Clause 10 and, as a result, Schedule 1 as well.

My interpretation is that my noble friend wishes to prevent internal reorganisations within the same corporate chain of entities from resulting in trigger events by virtue of Schedule 1. I confirm to the Committee that, in the vast majority of cases, that will not have an impact but, depending on the facts of the case, internal reorganisations may be in scope of the Bill. That is because there may be rare cases in which internal reorganisations pose national security risks. That may be true even if the ultimate beneficial owner is the same before and after the trigger event: for example, if there are concerns about changes to the level of control acquired by other links in the chain as a result of the internal reorganisation.

Clause 10(2)(b), which the amendment seeks to amend, is therefore important, because it makes it clear that in circumstances where a person is already treated as holding an interest or right, when something happens that would be regarded as the acquisition of that interest or right by the same person, then it is treated as such.

This means, for example, that an ultimate beneficial owner at the top of a corporate chain transferring existing majority holdings held by entities lower down in the chain to those above them could be a trigger event if it can be regarded as an acquisition by virtue of Schedule 1.

Amendment 35 would insert a new subsection into Clause 10 to provide that only one trigger event arises where more than one person is treated as acquiring an interest or right due to the provisions of Schedule 1. I can clearly see that my noble friend is seeking to help the Government by looking to ensure that the investment security unit is not deluged by duplicate notifications by corporate chains each time a new acquisition is made by an entity towards the bottom of the chain.

I can assure him that we are carefully designing the notification process and forms so that, wherever possible in situations such as these, a single notification providing all the details of the entities in the same corporate structure can be considered together. That is different from his amendment, which would seek to provide in the Bill that only one trigger event takes place. I am afraid that the Government consider that this would introduce ambiguity into the Bill, as it would not make it clear which trigger event is the one which takes place, and which should be discounted.

Hostile actors could try to exploit such a provision to avoid scrutiny by using shell companies at the bottom of long and complex corporate chains to acquire sensitive entities and assets. If only one trigger event is considered to take place by virtue of Schedule 1, the entity immediately above it in the chain could notify the acquisition, while not necessarily disclosing the control acquired by more troubling persons higher up the chain. In these circumstances, the amendment would mean that these could not be treated as separate trigger events, whereas surely they should be.

With the arguments I have outlined and my undertaking to write to the noble Lord, Lord Bruce, and my noble friend Lady McIntosh about the important Scottish matters they raised, I ask that the noble Lord agrees to withdraw the amendment.

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[Lord Fox (LD)]

I remind the noble Lord, Lord Rooker, that this is a particular Bill designed to do a particular thing. It is not a higher education Bill. While he may feel strongly about many of the issues, I will not comment on them, because they do not fall into the remit of the Bill. I point out that I am also not a university vice-chancellor.

The noble Lord, Lord Lansley, set out the danger, and this was supported by my noble friend Lord Clement-Jones. If this Bill is used to police these issues, the deluge that will fall on the agency will be huge. We are back to the point that my noble friend made on the previous group: we are creating a Bill that does everything, then the Government will gradually calibrate what they do and do not need to do. That is not the best legislative approach.

There are issues with the research relationships that universities may have, but this Bill is not the policing agency that we should be using for them. I do not 100% agree about the outset of a relationship, as set out by the noble Lord, Lord Vaizey, in his and my noble friend’s amendment. Sometimes that has to be looked at, as well as the outcome of that relationship, but I do not think this Bill is the place to do it.

To steal a word that was used earlier and use it differently, we are also looking at the nexus between this and export control. Universities seem much more comfortable with export control, and if there is an issue with universities it could be addressed through the increased and more rigorous use of these measures, not through this Bill.

I return to the point which I asked the noble Lord, Lord Grimstone, about last time and which I put to ask the Minister now, what are we seeking to stop? In other words, in putting this Bill together, how many partnership agreements does the Bill team imagine would have been stopped by this process? What sort of things are the Government seeking to arrest, stop or cancel compared to that which the export control regime would be doing anyway?

[Baroness Hayter of Kentish Town (Lab)]

My Lords, as the Minister knows and as has been said, there is considerable concern in the higher education and research sector about the potential impact of the Bill on research partnerships. We agree with the intention of Amendment 40, which is, as we have heard, to provide clarity for the sector. Indeed, it reflects a recommendation from the Russell group which said that a key concern is that it is unclear which type of asset transactions should be referred for screening. That will cause problems for the group as well as to the unit, which could have simply too many referrals. Amendment 40 is also to ensure that research and development partnerships, such as those between commercial organisations and universities to create new intellectual property and potentially qualifying assets, are not required to provide notification of the creation of such partnerships.

Amendment 88 in my name and that of the noble Lord, Lord Clement-Jones, reflects similar concerns. I hope it takes an approach that the Government are able to accept. It would require the Government to publish specific guidance for the HE and research sector, including a clear explanation of asset transactions indicating how contract research, consultancy work and collaborative research and development are affected and how the provisions apply to strategic security partnerships and domestic partners. The amendment also requires—and this is key—the Government to consult the higher education and research sector in a meaningful way in advance of the guidance so that the published guidance reflects what is workable for both sides, particularly in relation to that definition of assets which otherwise could lead to great uncertainty. The amendment therefore is about developing guidance and promoting good practice in that it should be done in co-operation with the sector. I thank my noble friend Lord Rooker and the noble Lord, Lord Lansley, for their support for this approach. The wording of my amendment may not be perfect, and we could perhaps tweak that on Report, but it will be important to have this in the Bill.

Perhaps the Minister who is about to reply—or may be doing that next week—would indicate the Government’s acceptance of this need for guidance as well as the way of getting it. As the Russell group says, without clear guidance a significant proportion of universities’ routine engagement with British business could be inadvertently captured by the Bill. We are all in favour of that engagement between universities and business. We want to make sure it happens. Any hiccups could delay time-sensitive research deals if the unit was preoccupied with this.

Universities want to help make this Bill work. They acknowledge that there are risks. I disagree with the noble Lord, Lord Fox. I think that the issue raised by my noble friend Lord Rooker about the amount of collaboration with certain countries is key and we must face up to it. I think that the leaders of the universities are aware of that. They want to be part of the solution, so I hope that the Minister will accept Amendment 88.