Critical National Infrastructure: Ownership

Lord Wallace of Saltaire Excerpts

Monday 22nd July 2013 Lords Chamber

[Lord Harris of Haringey]

To ask Her Majesty’s Government what proportion of the United Kingdom’s critical national infrastructure is owned by foreign-owned companies; and what assessment they have made of the benefits and disbenefits of that level of ownership.

[Lord Wallace of Saltaire]

My Lords, although detailed ownership figures are not held, much of the UK’s infrastructure is foreign owned. More broadly, as a nation the UK has a pipeline of more than £310 billion of potential infrastructure projects over the next five to 10 years. Investment will need to come from a variety of sources, foreign as well as domestic. The UK welcomes all investors, irrespective of nationality, particularly those bringing additional capital into the UK, provided that they meet our corporate governance standards and do not represent an unacceptable national security risk.

[Lord Harris of Haringey]

My Lords, I note that the Minister does not know what proportion of our national infrastructure is owned by foreign interests, but he does acknowledge that most of it is. Our ports are owned by Dubai, the BT network is controlled by the Chinese and London’s electricity is supplied by the French. Does he not think that it is about time that the Government started to take our national sovereignty, and our freedom of manoeuvre, seriously?

[Lord Wallace of Saltaire]

There are several points there. To say that the BT network is controlled by the Chinese is, to say the least, a considerable exaggeration. The issue of the dependence on the supply of equipment from China is a rather different one, and that, as noble Lords will know, is the subject of a recent ISC report. British sovereignty has traditionally and in recent years been debated much more in terms of threat to English common law, and the existential threat which Brussels and the European courts are thought to provide to Britain, than in terms of the threat from foreign investment. I should welcome the noble Lord banging on about one rather than the other—it would make a nice change.

[Lord Spicer]

My Lords, surely one of the good things about foreigners owning bits of our infrastructure is that they cannot take these bits away with them—

--- Later in debate ---

[Lord Bilimoria]

My Lords, today the former Governor of the Bank of England has taken his seat, and we welcome him. His successor is a Canadian. How many other countries would have a foreign national as the governor of their national central bank? We do. Do not the Minister and the Government think that we should be proud that we are one of the most open economies in the world, and that that is a great strength to this country? Regardless of that, and on the other hand, how much longer are the Government going to dither and procrastinate about increasing our airport capacity in London?

[Lord Wallace of Saltaire]

I shall exclude the second half of that question from my response. I rather hoped that the noble Lord would welcome the degree of foreign investment in our automobile industry. Ten to 15 years ago, many would have sneered at the whole idea of Indian investment in our automobile industry. The recent announcement of the expansion of investment in Jaguar Land Rover is extremely welcome for the prospects for British exports.

[Lord Smith of Clifton]

My Lords, how many of our former nationalised public utilities, having been privatised, are now owned or largely controlled by nationalised industries abroad?

[Lord Wallace of Saltaire]

My Lords, a number of French, German and Dutch companies which are partly or wholly state owned participate in our electricity, gas and railway industries. I hope that I shall not upset noble Lords by adding that 10% of Thames Water is now owned by Chinese investors. I hope that that will not make your Lordships worry a bit as you clean your teeth tomorrow morning.

[Baroness Smith of Basildon]

My Lords, the Intelligence and Security Committee has raised its concerns about the degree of foreign ownership of the UK’s telecommunications infrastructure. What assessment have the Government made of its report and how do they plan to tackle the problem?

[Lord Wallace of Saltaire]

My Lords, the Government published a response to that report a few days ago, announcing that they will instigate a review of the Huawei cell, which is the issue very much at stake here. I emphasise that we are talking about a global supply chain in which there are, at most, two potential suppliers of some of the highly sophisticated equipment available—I believe that the other is Swedish. The dependence which we all have on each other for critical national infrastructure in telecommunications is a great deal more complicated than we previously understood. However, Vodafone owns a number of large mobile networks in other countries which are part of their critical national infrastructures, so this is not a one- way trade.

[Lord Spicer]

My Lords, surely it is a win-win situation. We get their money and, because of the infrastructure, they cannot take it away.

[Lord Wallace of Saltaire]

That is a very good comment. I remember, many years ago, when Mrs Thatcher was Prime Minister and an architect of free-market economics nevertheless phoning the Japanese Government to insist that they pressure Japanese banks to make their partial investment into funding Eurostar and the Eurotunnel project.

[Lord Stirrup]

My Lords, I am sure that the Minister shares the concerns about the vulnerability to cyberattack of some elements of our critical national infrastructure. So far, the Government’s approach to this problem has been to seek a consensual solution with the industries involved. To what extent is such an approach likely to be successful with foreign companies?

[Lord Wallace of Saltaire]

My Lords, GCHQ and a number of other government agencies are actively engaged in mitigating the large and, to some extent, unknowable risk of cyberattack. This is a growing problem for all Governments in the world. I emphasise again that the specific issue at stake in the ISC’s recent report was the dependence on foreign equipment and the computer codes which come with it. That is something which GCHQ is much engaged with and which it has now been agreed the National Security Adviser will conduct an inquiry into.

[Lord Kennedy of Southwark]

My Lords, does the £310 billion of projects which the Minister said was in the pipeline include the extension of the Tube to south-east London, which has been waiting since the Second World War for such an extension?

[Lord Wallace of Saltaire]

My Lords, I am answering for the Cabinet Office on the question of critical national infrastructure. I do my best to cover all other aspects of government when challenged, but my knowledge of Tube projects in south-east London is a little more limited than of some other subjects.