Procurement Bill [HL]

Debate between Lord Fox and Lord Lansley

Report stage
Wednesday 30th November 2022 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am glad to follow the noble Lord, Lord Fox, who has asked some interesting questions to which I will be interested to hear the answers. I suspect the answer is that if a contracting authority has a requirement and sets out various specifications in its award criteria, it would be able to carry on as long as it does not discriminate between potential suppliers from other treaty states.

[Lord Fox (LD)]

With respect, I am not sure that Pepper v Hart works for the noble Lord saying that. We are looking to see what the Minister has to say on this. The noble Lord is very kindly helping on that.

[Lord Lansley (Con)]

Anyway, I am on my feet not to try to answer the noble Lord’s question but to explain Amendment 167. Those present in Committee will recall that debate. There was some degree of uncertainty. Again, I appreciate my noble friend’s time and attention on the issue in the conversations we have had about it.

I will just explain the amendment’s purpose. Under Section 8 and Schedule 9, there is a process for the future whereby procurement-related chapters in future free trade agreements can be added to the Schedule 9 list and, by extension, give access to UK public procurement opportunities by statutory instrument. I agree with that. Because the Bill will achieve that effect, in the Government’s view it can repeal the Trade (Australia and New Zealand) Bill, because the purpose of that Bill is to bring into effect the procurement chapters of the Australia and New Zealand free trade agreements. That will no longer be necessary once this Bill has added them to Schedule 9 and it comes into force.

There are two issues. The first is timing. It was clearly the Government’s expectation that the Trade (Australia and New Zealand) Bill would have proceeded more rapidly through the other place—that it would be here and be concluded well before this Bill completes its passage into law, and that the sequencing would therefore work very straightforwardly. That might still be true, although the Trade (Australia and New Zealand) Bill completed Committee in the other place but has not yet been timetabled for Report. It is going more slowly than was originally intended. As I think noble Lords said in our debate on Monday, perhaps the Minister could attempt to explain the delays in the legislative process. Oh no, it was at Questions: my noble friend Lord Markham was not at liberty to explain the delays in the Government’s legislative programme, which was very sensible on his part. We cannot be sure that the Bills will be that way round but, in any case, it is more likely that the Trade (Australia and New Zealand) Bill will proceed before this Bill completes its passage. Let us hope that is the case.

The second and, in my view, more important question then comes into play. What if the Trade (Australia and New Zealand) Bill were to be amended? For example, there is an Opposition amendment tabled for Report in the other place, the effect of which would be to include impact assessments for a number of years on the Australia and New Zealand trade agreements—so, in fact, it is not restricted to the question of procurement but is about the overall impact of the two FTAs.

The effect of this Bill, as it is drafted in Schedule 11 on page 117 at the back of the Bill, would be to repeal it anyway. We would be in the unhappy position, if we carried on as we are, that we might amend the Trade (Australia and New Zealand) Bill and then find that that amendment, whatever merit it may have, would be repealed by virtue of the Procurement Act in due course. This is not a satisfactory outcome. Will the Minister tell us that the Government are now aware of this potential problem, subject to the passage of events and that, if it should turn out that the Trade (Australia and New Zealand) Bill is amended, the Government will commit to facilitating that any such amendment is not repealed by virtue of the provisions in the Procurement Act?

My amendment would avoid that possibility, because it would repeal only those provisions that were in the Bill when it was introduced on 11 May this year. If the Government cannot accept that, I hope that my noble friend will at least say that the Government will facilitate whatever measure is necessary—because whichever is the second Bill can change the first Bill, because Parliament cannot bind itself. So, almost by definition, the Government will have a mechanism—if they are willing to use it—to put things right using the second Bill. I hope my noble friend will give that reassurance.

Procurement Bill [HL]

Debate between Lord Fox and Lord Lansley

Committee stage
Monday 24th October 2022 Grand Committee

[Lord Fox (LD)]

My Lords, as the noble Viscount set out so speedily, this new concept of dynamic markets is so new that a lot of it did not even make it into the original Bill; it had to be brought in as amendments. Thereby hangs a concern—not with the concept of a dynamic market, which I will come to shortly, but with how this is being put together, the sum of the parts and how it will work. It is difficult to see exactly how this will work in practice from the noble Viscount’s presentation that we just heard, the Bill itself and the original White Paper. That is my concern.

It would be helpful if the noble Viscount came back to us in writing with a simple message as to how this will work. How, for example, does it welcome innovation rather than shut it out? I will give an example. Whether a dynamic is based around process rather than outcome makes a difference, so how will these rules manage dynamic markets that actually deliver constant innovation? How will they be refreshed? How will the system work so that, rather than having the power of incumbency, if you like, which is often what happens with procurement, power will be pushed around to allow innovation, new entrants and new people to work within this dynamic?

We can call something dynamic but how is it dynamic on an ongoing basis if I use this market to buy things or services on a daily basis? Essentially, that is my concern: all these amendments are tinkering around technically with process but, because of the way this has been put together in pieces, will it actually work? Can the Minister come back with some assurance as to how this is supposed to work? How will it be constantly renewed? How will he ensure that it is open to new entrants throughout the life of that dynamic? How will individuals know that they are able to keep entering that market? Tenders will not be going out, so what is the process? If I have a small or medium-sized business, how do I find out about dynamic markets that might suit my product or service set? I am concerned about those kinds of mechanisms and processes.

[Lord Lansley (Con)]

I had not intended to intervene but I am getting a bit confused here. In the Public Contracts Regulations 2015, Regulation 34 describes a dynamic purchasing system. First, I am trying to understand the difference between the dynamic purchasing system that existed in the regulations we are replacing and this apparently entirely new dynamic market; I am not quite clear what it is. Secondly, the dynamic purchasing system in the regulations is an entirely electronic system. This one is not necessarily so.

[Lord Fox (LD)]

I think it is.

[Lord Lansley (Con)]

I hope it is but it does not say so, whereas the 2015 regulations make it clear that it is. I wonder whether this will be an entirely electronic system.

Advanced Research and Invention Agency Bill

Debate between Lord Fox and Lord Lansley

Committee stage
Monday 22nd November 2021 Grand Committee

[Lord Fox (LD)]

My Lords, I thank the noble Lord, Lord Browne, for raising this very interesting issue. Without repeating verbatim what I said at Second Reading, one of the highlighted issues in delivering technology into the market in this country is not the invention phase but the scale-up—getting it beyond technology readiness level 7 and then getting it into the market and scaling up.

I discourage the noble Lord from using the phrase “predator” for venture capital. The money has to come from somewhere to deliver that scale-up, and I doubt that the Government will be the provider. The issue and challenge is that the VC industry in the United States is massive compared with what is available in UK-based funds, and thereby comes the lack of centricity about which the noble Baroness, Lady Noakes, spoke. We should very much consider looking for a way for businesses that have an invention to take it to market. To some extent, this amendment is looking at the other end of the problem; it stops stuff happening rather than allowing it to happen in a different way. I am not sure that it is the answer, but its spirit is very important.

There is another unintended consequence I would be concerned about. In the event that an entity could avoid a takeover, by taking money from ARIA it would in essence lock itself away from any commercial activity that could be beneficial to it as a company, the country and ARIA’s intentions. A one-size-fits-all approach—“We give you the money and you can’t do any commercial activity”—is not in the spirit of what this seeks to achieve. Looking at this again, we need to find a way to deliver that scale-up story. That is really the issue facing this country, not the invention bit that somehow this agency is focused on.

[Lord Lansley (Con)]

My Lords, I very much appreciate that the noble Lord, Lord Browne, has brought forward his Amendment 30 in particular. It is very helpful to our debate and rather complements the discussion we had about ARIA’s ability to exploit the intellectual property it gives rise to and to place the right kind of conditions. We will come back to that on Report; it is important that we do.

I hope the Government can, if not necessarily amend the Bill extensively, certainly make it clear that ARIA, in exercising its functions, should seek not only to promote economic growth and benefit in the United Kingdom but to make sure that—in so far as the public have subscribed through ARIA to the creation of intellectual property—the benefits of that will accrue to ARIA and, potentially, the Government. I would say that they should accrue to ARIA, with the ability to promote follow-on research activity as a result. I am sure the noble Lord is not planning to press his amendment and recognises the risk associated with its structure and the chilling effect it might have on the entities that might otherwise apply for grants, assets or activity.

I will just inject this thought. A number of noble Lords here in Grand Committee were contributors to our discussions on the National Security and Investment Act, and I hope my noble friend the Minister will be able to give us some specific assurances about how Ministers can use National Security and Investment Act powers to secure the protections that the noble Lord, Lord Browne of Ladyton, is looking for.

I worry that there may be gaps, because the National Security and Investment Act has its own criteria and thresholds, and this may relate to activities, projects and assets that do not fit within those criteria—but we none the less want the intellectual property created by ARIA to be protected in some way. So there may be a gap and we need to explore whether there is one and, if there is, how it might be secured: how ARIA, and Ministers through ARIA, can protect the value that might be derived from the intellectual property to which its projects give rise.

Advanced Research and Invention Agency Bill

Debate between Lord Fox and Lord Lansley

Committee stage
Wednesday 17th November 2021 Grand Committee

[Lord Lansley (Con)]

The purpose of Amendment 22 —this is in the part of the Bill about what conditions ARIA might attach to its financial support—is to give ARIA the flexibility to attach whatever conditions it wishes. In some cases, it might give financial support and not seek to retain intellectual property, or it may enter into an arrangement which says that it retains all the intellectual property, or somewhere in between. However, that is for the circumstances of the individual project rather than something mandated in legislation.

[Lord Fox (LD)]

My Lords, the more I look at this and listen to the wisdom of the noble Lord, Lord Lansley, and, previously, the noble Baroness, Lady Noakes, the more curious paragraph 17(2) of Schedule 1 becomes, because of both what is in it and what is not. I am prepared to accept the thesis of the noble Lord, Lord Lansley, that “and other property” would add some copper plating to it.

I hark back to the end of the response of the noble Lord, Lord Callanan, at Second Reading, where I popped up and asked a question about property. The Minister was clear that this would include ARIA purchasing pieces of research equipment. Research equipment can run to many tens, if not hundreds, of thousands of pounds—at least as much as property—yet, somehow, that does not appear to be on this list either. There is perhaps work to be done to understand the objective of this list. I am sure that the Minister will say that it is to afford ARIA the amount of freedom that it needs, but it seems to be quite a selective list, and I wonder what it was based on in the first place.

I turn to the other amendments before us and suggest that perhaps the most important is Amendment 28. It is a great shame that, because of a prior appointment, my noble friend Lord Clement-Jones was not able to be here for this section at least because, when it comes to intellectual property, most of us know that he has a strong expertise. I know that he will read very closely the Hansard report of this and, far from marking the homework of the noble Lord, Lord Lansley, I am sure that it will be the Minister’s homework that he will be marking. I hope that we can return to it.

Looking at Amendment 28, it seems eminently sensible to legislate for success, because we want this to succeed. If this succeeds, there should be a flow of revenue coming back into ARIA. We need to understand that this will not then become a cash cow for other parts of BEIS or indeed the Treasury. What this amendment therefore seeks to do—and, I think, would achieve—is to put that ring-fence in place; for that, the noble Lord, Lord Lansley, should be congratulated.

Professional Qualifications Bill [HL]

Debate between Lord Fox and Lord Lansley

Committee stage
Monday 14th June 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, I rise to oppose Clause 3 standing part of the Bill. Judging from the range of people who have co-signed this amendment and those who would have signed it had there been space, this issue is not confined to one set of Benches. I thank the noble Lords, Lord Trees and Lord Hunt of Kings Heath, and the noble Baroness, Lady Noakes, for signing it. I also acknowledge the craft of the noble Lord, Lord Lansley, in drafting Amendment 56; I will obviously allow him to speak for himself, but it may well be another way of thinking about the clause. We have already heard about some of the issues in Clause 3, as your Lordships have sought to make amendments. Of course, we are in Henry VIII territory again, but there are particular concerns about this clause, which I will highlight.

The Minister told us at Second Reading:

“Clause 3 will enable UK Ministers and devolved Administrations to implement the recognition of professional qualifications elements of international agreements.”


He said:

“To be frank, we acknowledge that these powers are broad”.—[Official Report, 25/5/21; col. 910.]


Broad is a good word. In one of his many letters—for which I thank the Minister, as they arrived at five o’clock yesterday evening—he again confirms the importance of the autonomy of regulators, which he has returned to on many occasions.

However, this clause essentially gives the Government of the day the ability to make whatever provision is required to implement any international recognition agreement to which the UK becomes a party. It includes the power to amend primary legislation and retained EU legislation. If regulators were indeed autonomous, what exactly would this clause be implementing? To date, I am aware of no indications from the Minister or his department as to the nature of what changes might be necessary to implement such international agreements. Perhaps he can give us some examples but, in the meantime, we have to assume that nothing is off the table and that the autonomy of the regulators would not be protected in any way if this Bill were passed with this clause in it.

When I first read the Bill, I was already more than somewhat disquieted by this clause but when I read the Delegated Powers Committee report my fears were amplified. I cannot match its authority, but its damning condemnation of the scale of the powers in this clause are really quite important and should be taken into consideration. As the committee said:

“Implementation of such agreements in UK domestic law could raise matters of considerable public interest (for example, were such agreements to give preference to professional qualifications issued in particular countries—perhaps linked to trade deals).”


In the letter to the noble Lord, Lord Lansley, the Minister confirms that the clause will ensure that the Government can meet their international commitments. Would I be right in assuming that this would include mobility frameworks in free trade agreements?

The DPRRC report goes on to highlight the lack of clarity in changes that secondary legislation would make in domestic law, or the scale of change this law might exert on the 160 or so professions in question by international regulation agreements that the committee implicitly linked to trade deals. It then explains that the justification for this delegation is the fact that the nature of future international agreements cannot be known, which we will come back to. Additionally, the DPRRC notes that the Government fail to try to explain why these

“‘necessary changes’ should …be made by Ministerial regulations rather than by Act of Parliament.”

I expect the Minister to respond to this debate by saying that this clause is vital to Her Majesty’s Government’s plans to implement international trade agreements. But this is true only if the Government refuse to bring these agreements to Parliament for approval. How does he justify the taking of power for the Minister and not leaving it to a future Act of Parliament? How does he respond to the DPRRC’s telling conclusion that

“clause 3 represents an inappropriate delegation of power and should be removed from the Bill”?

[Lord Lansley (Con)]

My Lords, I am very glad to follow the noble Lord, Lord Fox. Like him, I was moved to draft Amendment 56 not least by the report of the Delegated Powers and Regulatory Reform Committee, which at the end of its consideration of Clause 3 said that it

“represents an inappropriate delegation of power and should be removed from the Bill.”

The noble Lord was not proceeding entirely on his own initiative, and I entirely recognise where he is coming from.

I am coming from this as a Member of the International Agreements Committee. We are looking at many of the negotiations taking place between ourselves—now as an independent trading state—and other countries in creating international agreements. I do not personally see the world as divided into trade agreements and other agreements. We are increasingly entering into economic partnership agreements where, to be frank, the issue of services and the mobility of professionals should rightly play an increasing part in the economic partnerships that we forge with other countries. I want to see us enter into frameworks with other countries whereby our professionals can work there, and their professionals can work here. That will be, as trade often is, to the benefit of all parties.

On that basis, I considered whether this may be like the Trade Bill, in which we effectively gave Ministers the regulatory power to amend legislation and bring it in line with the continuity agreements we enter into. The conclusion I reached is that it is not like that; these are new agreements, not continuations of old ones. From our point of view, as a committee charged under CRaG with the scrutiny of new agreements, we are only too aware that this House has no capacity to block such a treaty, and no capacity to amend it.

Where secondary legislation is concerned, the House may have the power to stop statutory instruments, but in this territory, frankly, we would enter very difficult terrain. We would end up with our Government having signed an agreement with another country, intending to be bound by it under international law—indeed, it may have come into force—and, at that point, this House would have to consider its implementation in legislation. It seems to me, therefore, that the remedy of deleting Clause 3—and so requiring that every time Ministers want to implement an international recognition agreement in legislation, they have to do it in new primary legislation—is asking too much. As time goes on, there will clearly be framework international recognition agreements under which Ministers will regularly, or maybe frequently, need to change the secondary legislation affecting a range of professions and regulators.

My thinking was that we should—as we often do—allow Ministers the power to change the statutory instruments and secondary legislation relating to new international recognition agreements, but not the power to change primary legislation. That is why, instead of changing Clause 3 itself, Amendment 56 amends the regulation clause at the end, Clause 13, and would provide that the power in Clause 3 to implement international recognition agreements is a power to modify subordinate legislation but not primary legislation; that would be the effect of Amendment 56. Noble Lords may support the noble Lord, Lord Fox, and others in opposing Clause 3, but—if they share my belief that we will often be in this this territory, with Ministers having to change secondary legislation and much less frequently primary legislation, and that, when they do, they should secure the consent of the House, with our ability, as ever, to insert amendments, conditions and caveats, as well as sunshine clauses and so on—then they should in due course consider an amendment on the lines of Amendment 56 to strike a better balance, giving Ministers power but not a Henry VIII power.

National Security and Investment Bill

Debate between Lord Fox and Lord Lansley

Consideration of Commons amendments
Wednesday 28th April 2021 Lords Chamber

[Lord Lansley (Con)]

My Lords, I am very pleased to follow the noble Lord, Lord Butler of Brockwell. I agree entirely with what he had to say and with the noble Lords, Lord Campbell and Lord West of Spithead, too. It comes down to a very simple proposition: throughout, we have been very clear that if the Government would simply amend the memorandum of understanding with the Intelligence and Security Committee to include reference to the Investment Security Unit, there would be no need for any amendment to the Bill. That remains the case now. The question why the Government are not doing this.

The Minister in the other place said on Monday night:

“The work of the security services on investment security in support of the ISU clearly falls within the remit of the ISC.”—[Official Report, Commons, 26/4/21; col. 154]


If that is the case, what is the impediment to adding the ISU into the memorandum? I think it is that the Government do not interpret the ISC as having a remit that extends beyond what the intelligence services themselves have offered by way of information to the Investment Security Unit in BEIS, to the point where —as the noble Lord, Lord West, quite accurately summarised—the scrutiny of how national security is being maintained in the decisions that become part of the interim or final orders made under this Bill.

The Government’s problem may be that they think that if they were to include the ISU in the memorandum of understanding, they would effectively create some duplication between the scrutiny of the order-making power by the BEIS Select Committee and the Intelligence and Security Committee’s scrutiny. That need not be the case. It is perfectly clear already, within the memorandum of understanding that was quoted by Dr Lewis in the debate on Monday night, that the ISC’s work in looking at the intelligence services

“‘will not affect the wider scrutiny of departments…by other parliamentary committees. The ISC will aim to avoid any unnecessary duplication with the work of those Committees.’”—[Official Report, Commons, 26/4/21; col. 160]

It seems to me that the resolution is very simple—the Government should simply add the Investment Security Unit into the memorandum of understanding. It is clear from what the ISC’s chair and members have said that they would not expect to duplicate the work of BEIS —the primary scrutiny of BEIS’s work—in implementing this legislation, but there are specific questions that relate to the use of intelligence and highly sensitive intelligence materials.

I was not comforted by reading that the chair of that committee in the other place has been told by the Secretary of State that he will brief him on privy counsellor terms. That tells us that the chair of the committee may know something, but the BEIS Select Committee in the other place will not generally know it. Its members will not be able to discuss that information and they will not be able to report on that basis. There is clearly a deficiency, as Dr Lewis quite rightly said—a scrutiny gap—in relation to the use of top-secret material on a routine basis in informing decisions made under this legislation. The inclusion of the ISU in the remit of the Intelligence and Security Committee will close that scrutiny gap.

[Lord Fox (LD)]

My Lords, the Minister used the word heavyweight; I would use the word authoritative about the speeches we have heard from the noble Lords, Lords West, Lord Butler, Lord Lansley, and my noble friend Lord Campbell. I do not have the same authority, but I have an eye for process and an eye for a discontinuity. At the heart of this is a central contradiction. This Bill is called the National Security and Investment Bill, and its central premise is that the world of security has changed. It is not about armies and air forces; it is about technology—the spread of technology and access to that technology. The Bill is built on the idea that we need an approach to the commercial use, sale and protection of this technology for the security of this country.

The speeches that the Minister has heard were characterised in his preceding speech as somehow decrying the abilities of the BEIS Select Committee. The BEIS Select Committee was not put in place to assess the security issues that these companies are facing. That is not its job; its job is to do what BEIS was there to do. This Bill, by its nature, by its very name, is a hybrid of two very important issues: investment and security. The BEIS Select Committee is there and is an expert on the first of those. The ISC is there to protect the country and to offer scrutiny on security issues. There is no problem in asking both of those committees to do what they are good at in order to fulfil the very important task that Bill seeks to undertake.

We can only conclude that, because the Government decided not to do this and because, as the noble Lord, Lord Butler of Brockwell, put it, they have a large majority in the other place, they will continue down this road. There is another opportunity for the Government to think again and do the most sensible thing, which is to amend the MoU. It does not require primary legislation, in my understanding, and would be done very quickly with the consent of this House. For that reason, if the noble Lord, Lord West, decides to put this to a vote, these Benches would like to ask that question of the people across the way, at least one more time.

National Security and Investment Bill

Debate between Lord Fox and Lord Lansley

Report stage
Thursday 15th April 2021 Lords Chamber

[Lord Lansley (Con)]

My Lords, I express my support for the amendments presented by the noble Lord, Lord West of Spithead, and his colleagues. Curiously, we seem to have four on the front row, but I am perfectly happy where I am, because I am quite a big chap and used to play left lock, so that will be fine.

Colleagues will recall that I had an amendment in Committee to extend the remit of the Intelligence and Security Committee under the 2013 Act. I think the place we have reached on Report is right; my amendment was unnecessary and might have led to precisely the criticism which my successor bar five as Leader of the House of Commons has put to the chair of that committee—that it is expanding the role of the committee beyond its original statutory function. Jacob Rees-Mogg has expressed this criticism about where we are now, but I am afraid he is plain wrong. That is precisely not what this amendment seeks to do; it seeks to ensure that the Intelligence and Security Committee can fulfil the role it was given in precisely the terms that the noble Lord, Lord West of Spithead, set out in introducing his two amendments. I very much support him.

I fear the noble Lord, Lord Butler of Brockwell, may have hit on why the Government are resisting this; not for the reasons they have expressed, but because it will enable the quality of some of those decisions to be examined in detail, including with reference to the security risks that must be incorporated into this decision-making. Perhaps they do not wish that to happen, but that is why we have parliamentary oversight and why, in particular, the Intelligence and Security Committee was originally instituted. I was not a Member of the other House at the time it was instituted, but I was director of the Conservative Research Department and my deputy director is now chair of that committee—as my mother would say, as these things go around, they come around. I am very happy to support their role.

I will mention one other thing. He is not with us this afternoon, but in Committee the noble Lord, Lord Janvrin, made an essential point about the Government’s argument that the ISC can go after the information it is looking for and make inquiries of whoever. He said:

“I think we would all argue that effective scrutiny leads to better decision-making. The Minister in another place said that there is nothing to stop the ISC calling for evidence on a specific decision. That may be true, but is it practical? It calls to mind Donald Rumsfeld’s ‘unknown unknowns’: how does the ISC know which decisions to examine in detail? I question whether such a hit-or-miss approach to scrutiny would lead to better decision-making.”—[Official Report, 16/3/21; col. 250.]


We do not want a hit-or-miss approach. Even less, frankly, do we want the ISC to have to go out on fishing expeditions to try to find out on what the intelligence material on which decisions were made was based. I would far rather it was done in a well-constructed manner. I support these amendments for that reason and hope my noble friend, at the very least, will be able to say that the Government will bring back their own amendments at Third Reading to serve this purpose or amend the memorandum of understanding in the right way. If not, I will have to support these amendments this afternoon.

[Lord Fox (LD)]

My Lords, the fact that such esteemed Members on all sides of the House have coalesced on this amendment speaks volumes for your Lordships’ concern about this issue.

It has been a heavyweight debate, with all due respect to the four amigos who have been speaking. I will now bring it down to earth with a bit of politics. It has been an authoritative debate and, all other things being equal, we would expect and hope that it causes the Minister not just to listen but to act. However, I fear his hands—metaphorically if not actually—are tied behind his back by other things. A couple of previous speakers mentioned the letter from the Lord President of the Council, Leader of the House of Commons, to wit, the right honourable Mr Jacob Rees-Mogg. This seems to indicate the bindings the Minister is currently under.

In this short tome, as we have heard, Mr Rees-Mogg tells the right honourable Dr Julian Lewis MP, who is, as we know, chairman of the ISC, that decisions regarding committees’ roles and remits should not be made on an ad hoc, Bill-by-Bill basis, and that there needs to be careful consideration.

I suggest this is a patronising view of the proceedings of your Lordships’ House. When have your Lordships’ considerations not been careful? The most reckless behaviour I have seen during the course of this Bill has been the Minister’s wholesale consumption of sugar-based products, so where is the carelessness that the right honourable Member for North East Somerset speaks of? We should be a little outraged by that suggestion.

This Bill is written by BEIS, and it is understandable that BEIS would want to favour its own Select Committee. I am sure that is how we set out along this route. I think it was the noble Lord, Lord Butler, who said that we have set out in the wrong direction. I feel sure that is what happened. Good governance would be to understand that, take advice and make changes.

It would not be so bad if the BEIS Committee had not been so obviously exposed by the comments we have heard today to be the wrong committee to do the security part of the scrutiny of this very important Bill. It is absolutely clear that it is the wrong committee. If the Minister cannot make or promise changes, I believe he can undertake to accurately reflect both the strength of feeling of your Lordships’ House and the facts, rather than the assumption of the facts that appears to be driving the letter that Jacob Rees-Mogg has written.

I ask just one question of the Minister. If the Bill in considered by the Government to be an ad hoc process, what is careful consideration? What does careful consideration look like if it is not the careful scrutiny of legislation?

National Security and Investment Bill

Debate between Lord Fox and Lord Lansley

Committee stage
Tuesday 16th March 2021 Lords Chamber

[Lord Lansley (Con)]

My Lords, this group should not take us very long. There are just two points in it. Amendment 76 relates to Clause 54, “Disclosure of information,” and in that clause, there is a power for the Secretary of State to disclose information

“to a public authority or an overseas public authority.”

When deciding whether to disclose information to an overseas public authority, under subsection (7) of that clause, there are two issues the Secretary of State must have regard to: the protection against self-incrimination in criminal proceedings; and whether the matter in respect of which disclosure is sought is sufficiently serious to justify making that disclosure.

Amendment 76 in my name proposes to add one further matter to which the Secretary of State must have regard—whether there is a reciprocal agreement with the country or territory concerned. It would not mean that where there was no reciprocal agreement the Secretary of State could not make a disclosure to an overseas public authority, but it should be something that he should have in mind.

I am glad that my noble friend is on the Front Bench because he will have fond memories of Amendment 77. It concerns the disclosure of information where a statutory gateway is made and how such a statutory gateway is to be considered alongside the prohibitions to be found in data protection legislation and in the Investigatory Powers Act. The amendment to Clause 57 covers this. My noble friend will recall that under the Trade (Disclosure of Information) Act 2020, where there was a power to disclose information that might contravene the data protection legislation, that would be prevented, but the duty or power in the 2020 Act was to be considered alongside that prohibition. We can see that in Clause 57(2)(a), which makes it clear that the duty to disclose in this legislation would not contravene data protection legislation or the provisions of the Investigatory Powers Act, but that the duty or power in this legislation must be taken into account.

Clause 57 puts that qualification alongside the data protection legislation, but it has not put it alongside the prohibitions in the Investigatory Powers Act; I do not know why. I know why it is there because we went through this on the Trade Bill. It is there because of the 2016 Supreme Court decision in The Christian Institute & Others v The Lord Advocate made it clear that the decision-maker should have in mind both the prohibitions and the powers in the Act, and balance the two together. In Clause 57(2)(a) this legislation enables the Secretary of State to balance the two. The question is: why not in the Investigatory Powers Act? If the answer is that under no circumstances would a prohibition under the Investigatory Powers Act be overridden by reference to the duty or powers in this legislation, I will be content with that. However, otherwise I do not understand why it is not included in Clause 57(2)(b) in the same way as it is in subsection (2)(a). I beg to move.

[Lord Fox (LD)]

My Lords, I rise to beat the rush and clamour to respond to these two amendments. Taking them in turn, from these Benches, Amendment 76 seems to make a relatively straightforward point. I will be interested to hear from the Minister what possible objection there might be to it. My suspicion about Amendment 77 concerns what normally happens to amendments like this tabled by the noble Lord, Lord Lansley. The Minister will say, “We do not need these powers because—”. I have looked at the legislation and I cannot find any evidence of where the “because” might be. I shall sit down and wait to find out.

National Security and Investment Bill

Debate between Lord Fox and Lord Lansley

Committee stage
Tuesday 9th March 2021 Grand Committee

[Lord Lansley (Con)]

My Lords, I want to say a word on this group, because I am particularly interested in Amendment 29A, which would remove Clause 8(8). This is of interest, not least because of the question of how to define “material influence”, which we will come to later.

Listening to the noble Baroness, Lady Hayter, I understand what she has done; she is testing the question why material influence is there if it is one of the ways in which control of an entity can be established under Clause 8. Currently, it is not referenced in Clause 6(2)(a) as one of the cases by which that control leads to a notifiable acquisition.

Instead, taking subsection (8) out of Clause 8 and putting it into Clause 6(2)(a) would in effect be saying that a notifiable acquisition takes place when a person gains control of an entity. Clause 8 explains how you gain control of an entity. It can be by acquiring various voting shares, as defined, or by exercising material influence over the entity. That has been left out, so putting it into subsection (2)(a)—that is not precisely what we are proposing here, but I am speculating slightly—would be a much cleaner option. It would enable one to do what my noble friend Lord Leigh is proposing, which is to take the 15% out. The 15% is there only because there are conceivably circumstances in which a 15% or more voting share constitutes material influence. As the noble Baroness, Lady Hayter, said, we know that, because the Competition and Markets Authority has on occasion determined such things. It did so on BskyB v ITV, which concerned a 17.9% shareholding, and it did so in the case, which it none the less cleared, of RWE’s stake in E.ON at 16.67%.

We know that voting shares of between 15% and 25% can represent a material influence, but that is not the issue. The point is not about the voting share: 25% is, generally speaking, the voting share that gives rise to an issue of control, but about the need to say, “Material influence is what we are talking about, so why don’t we use that?” Why introduce this potentially rarely used 15% threshold instead?

My contribution is to ask Ministers if they will go away and look at whether it would be cleaner and simpler for Clause 6 to say simply, “A notifiable acquisition takes place when a person gains control of a qualifying entity of a specified description”, and Clause 8 goes on to explain what “control” means.

[Lord Fox (LD)]

Were my noble friend Lord Clement-Jones here he would pick up his fishing rod again and say that this is a question of mesh size. But, actually, the issues raised by your Lordships should tell the Government that there is work to be done on redrafting subsections in Clauses 6 and 8 to try to clarify. Whatever we come up with, we need clarity, because there seems to be some dissonance in how this is read and regarded.

The noble Baroness, Lady Hayter, asked the right question at the beginning of her speech, which was: what is the rationale behind the 15%? My noble friend Lady Bowles set out the sliding scale of different accountabilities and rights that come with different levels of ownership and said that there was some logical mismatch with the 15%. The Minister has taken refuge in the past in the policies of the other European Union countries, and the noble Lord, Lord Leigh, can happily put his mind at rest that France uses 25%, so clearly, if it is good enough for France, it will be good enough for the Minister.

On a more serious note, the issue of material control is interesting. We have seen so-called shareholder activists reversing into companies with far less shareholding than 15% and making material changes to the strategy of businesses. So what is material and what is a change? The point that my noble friend Lady Bowles brought up about the nature of the other shareholders cannot be left out.

Tracker funds tend not to be active in the way a long or a short fund tends to be, and clearly shares get loaned in situations of activity. All these add up to the mess which the noble Lord, Lord Lansley, described well: who is in control of the business, and what is material control? To some extent, the difference between 25% and 15% is less important than where the control lies. That is harder to enumerate, and difficult for the market to understand, but it is clear that the way this stands in the Bill will not work. I hope the Government can sit down with their lawyers and drafters and come up with something that we can look at next time which takes on board the good advice the Minister has received from your Lordships.