National Security and Investment Bill

John Redwood Excerpts

2nd reading & 2nd reading: House of Commons
Tuesday 17th November 2020 Commons Chamber

[John Redwood (Wokingham) (Con)]

I have declared my business interests in the Register of Members’ Financial Interests.

I support the idea of Ministers having powers to prevent foreign acquisitions where security matters are of concern. I trust that Ministers will want to ensure that all the other transactions that do not pose those security issues will go through smoothly, easily and quickly for obvious economic reasons.

There is a wider concern. As Ministers have rightly said, this is not the debate to deal with all the other worries we might have about unsuitable foreign investors, but there is concern out there in the public that we do not want asset-strippers, we do not want large companies that come here in order to gradually close down the UK capacity to take out a competitor, and we do not want them to come in under cover of sustaining jobs in Britain only to take away the intellectual property and then later to discover that they are not so keen on the British business after all.

We do need those protections, but where Ministers are checking their defences on competition grounds as well as on security grounds, they need to ask themselves this fundamental question: why are so many of our assets sold to foreigners? There is, of course, one very simple reason: throughout this century, under all three types of Government we have had so far, we have run a massive balance of trade deficit with the EU on trade account, so we need to raise the foreign currency to pay the bills so we can afford to buy the tomatoes, the vegetables and the German cars and all the other things that we have been importing, not matched by an equal volume of exports to pay those foreign currency bills.

We see that it is having a bigger impact now on our long-term balance of payments situation. Before we ran this long series of huge deficits, we had net assets abroad, which meant that there was a big positive line in our balance of payments, which said that as a country we earned a lot more in interest and dividends from our investments overseas than foreigners earned on the investments they had in the UK. That has now been reversed, and every year now we have a very big deficit on the interest and dividends, because there are so many more foreign claims on us than we have claims on foreign assets.

This is a matter of concern. Ministers need to work on a series of economic revival policies that put much more emphasis on British people investing in Britain, so that we recreate more of that wealth in our own national hands and do not have the vulnerability, that need for foreign currency, which has been brought about by the current twin deficits—the trade deficit and now the deficit on investment income account.

I was very pleased to hear Ministers saying, rightly, that there are many great investment opportunities in the United Kingdom, so we need to deal with this paradox: why is it that foreigners can see them and are piling in with all their money to buy our best ideas, our best companies and our best properties, and why are more British people and British companies not able to do just that? The Government need to work with the British investors, British companies and British entrepreneurs to make it an even better climate for them to do the investing, as well as taking advantage of the foreign investors coming in and giving employment opportunities.

We need that entrepreneurial Britain, which grasps this opportunity and understands that we have a huge opportunity here to take out imports—to grow more of our own food, and to produce more of our own cars and more of our own products generally—so that we chip away at the very big balance of trade deficit, and in turn then generate cash that can be reinvested in the United Kingdom.

This Second Reading debate presents an opportunity to make the wider plea to Ministers that, as we recover from covid and the damage, we remember that £100 billion deficit that we were running in 2019 before covid-19 disrupted world trade and say that that is unacceptable: that means too big an increase in claims by foreigners on our country year after year. That is why we need policies to get the investment in, chipping away at the £20 billion deficit in food with the EU and at the fishing deficit and the car deficit, so that we are generating those jobs on British capital, and starting to reverse that net liability position that now disfigures our accounts.

--- Later in debate ---

[Sir John Hayes]

I do, but the challenge in a democratic polity is ensuring sufficient accountability while maintaining that degree of flexibility. It is all much easier in less democratic countries—I use that term as gingerly and modestly as I can—which are not obliged to legitimise or justify what their Governments do. We are—rightly—so the Government are properly scrutinised and held to account. It is right, as my hon. Friend says, that we maintain enough flexibility to respond to the dynamism that I described. But of course, we need mechanisms in place to ensure that that flexibility does not allow the Government too much scope. That is why—this point was made by my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) and I emphasise it on behalf of the ISC—Committees in this place missioned to do just that need to play an important role. I know that the Government recognise that, and that my right hon. Friend the Member for Wokingham (John Redwood) recognises it.

[John Redwood]

Indeed. This issue—where does security end—is very difficult. If we look at the great wars of the last century, which we do not want to repeat, food supply was absolutely critical and was a great strategic vulnerability of our country.

[Sir John Hayes]

That is true. Vulnerability, of course, is also dynamic. That is why I emphasised, in intervening on my right hon. Friend the Member for Tunbridge Wells (Greg Clark), that the Government need to get better at assessing risk and modelling the response to it. This is what the Bill begins to do. It has been a long time in the making, but I emphasise that it is welcome because it begins to look at appropriate mechanisms for doing that. So it is certainly necessary.