National Security and Investment Bill (Sixth sitting)

Nadhim Zahawi Excerpts

Committee stage & Committee Debate: 6th sitting: House of Commons
Tuesday 1st December 2020 Public Bill Committees

[The Chair]

I remind the Committee that with this we are discussing clause stand part.

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)]

It is a pleasure to serve under your chairmanship, Sir Graham. As I was saying, after a trigger event is called in, the Secretary of State has 30 working days in which to carry out a full national security assessment, although that may be extended in certain circumstances. During that period, the Secretary of State may use his information-gathering powers under the Bill to gather from relevant parties any further information he requires to make a final decision. I can reassure hon. Members that the Secretary of State will make full use of these powers to fully assess every aspect of an acquisition.

Where, at the end of an assessment, the Secretary of State imposes remedies in relation to a trigger event, the Bill provides a power for him to amend those where appropriate. Such an amendment is really relevant only in cases where a trigger event is called in for scrutiny but ultimately cleared by the Secretary of State outright, without any remedies being imposed. In cases where false or misleading information is provided that materially affects the Secretary of State’s decision to clear a trigger event outright, he may revoke his decision and give a further call-in notice up to six months after the false or misleading information is discovered.

Adding further opportunities to call in a trigger event each time new material information becomes available after the Secretary of State has already had the opportunity to carry out full scrutiny of the trigger event would be disproportionate and give rise to unjustified uncertainty for the parties involved. The Government have been clear that this regime must provide a slicker route to investment by providing clarity and predictability for investors. Sadly, the proposed amendment would create uncertainty for businesses, with them unable to assess if and when the Secretary of State might call in their trigger event again, up to five years after the trigger event has been completed. That is why I am unable to accept the amendment. I hope that the hon. Member for Southampton, Test will agree with me and withdraw it.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Our amendment was genuinely intended to be helpful, to try to ensure that what we see as a loophole is closed. The Minister has indicated that, in his view, that loophole would be closed at the expense of uncertainty in company land, as it were—uncertainty for those companies that might be subject to this procedure.

The circumstances that would see this amendment put into action—I have outlined some possible circumstances—would be very rare; only circumstances in which things had changed very substantially, in terms of global interest in particular areas of our economy, or circumstances in which information that could have been supplied was not supplied, and not because there was an intention to be malicious or misleading, but because people did not get to the bottom of something first time around. In those circumstances, companies would perhaps anticipate that that change might happen, and certainly if there were substantial global changes in who was interested in what, then companies would also anticipate that to a considerable extent. I do not share the Minister’s view that the amendment would place companies in general in a state of uncertainty.

The additional assistance that the amendment would provide to make the process watertight should be taken seriously. However, I hear what the Minister has said and appreciate that a balance has to be achieved between different arrangements so that they are satisfactory both for national security and for company wellbeing and development—I am sorry that he has perhaps come down slightly further on one side than on the other in his appraisal of amendment 10. However, I appreciate what he has said and therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.

Clause 3

Statement about exercise of call-in power

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[Nadhim Zahawi]

I am pleased to speak to this group of amendments, which relate to clause 3. This clause provides for a statement to be published by the Secretary of State, setting out how he expects to exercise the call-in power. Clause 1 requires that this statement is published before the power may be used. There are three amendments in this grouping—amendments 1, 2 and 9—and I will speak to each of them in turn.

I advise the Committee that we have interpreted amendment 1, including with regard to the Members’ explanatory statement, as seeking to amend clause 3(1) rather than 3(3). The effect of this amendment, as we believe it was intended, is to require the Secretary of State to publish the statement. As I set out on Second Reading, the Government are committed to providing as much clarity and predictability as possible for business when it comes to the use of the new investment screening regime that is provided for by this Bill. The proposed statement will provide valuable information to businesses and investors, and help them to determine whether they should submit a notification about their trigger event. Indeed, the Secretary of State must lay before Parliament, publish and not withdraw the statement before the call-in power may be used. In effect, this means that the Secretary of State will need to have published a statement to use the call-in power, which is crucial to the regime.

Of course, as the security landscape changes over time, he may wish to publish an updated statement at a future point; this will need to go through the same consultation and parliamentary procedure as the original statement before it can take its place. I assure hon. Members that the Secretary of State has neither the intention nor the power to run this regime without having first published a statement.

I will now turn briefly to amendment 2, which would allow for the Secretary of State to include a definition of national security in the statement provided for by clause 3. The Secretary of State’s powers under the Bill are expressly predicated on investigating and addressing risks to national security. When exercising these powers, the Secretary of State is required to proceed on the basis that national security is strictly about the security of our nation. That is because what national security means is a question of law, which has already been answered by the highest courts of the land as being the security of our nation.

The Secretary of State will obviously need to comply with the law when exercising the powers in the Bill. There is therefore no need to define what national security means in the Bill. As Dr Ashley Lenihan—a fellow at the Centre for International Studies at the London School of Economics, who was quoted earlier by the shadow Minister—mentioned in last week’s evidence session:

“What we have seen is that most foreign direct investment regimes of this nature all refer to national security. I do not know of a single one that actually defines it or limits itself to a particular definition”.––[Official Report, National Security and Infrastructure Public Bill Committee, 24 November 2020; c. 38, Q42.]

Furthermore, as national security is a term used in the Bill, it would in any event not be appropriate for the Secretary of State to define the scope of the term in the statement; the statement is not legislation and is not subject to approval by Parliament.

Wanting to understand the Government’s aims and expectations for these powers is entirely reasonable—there is no discussion about that. However, I refer the Committee to the comments of Michael Leiter, a partner at Skadden, Arps, Slate, Meagher and Flom LLP, who told us that he would consider that

“it is a bit of a fool’s errand”––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 49, Q55.]

to define national security. Instead, the statement will set out how the Secretary of State expects to use the call-in power, and we plan to include details of the types of national security risks in which the Secretary of State is especially interested.

[Stephen Kinnock]

I just want to come back on the point the Minister made about other regimes not using a definition of national security. The United States Foreign Investment Risk Review Modernization Act provides a sense of congress on six factors: countries of special concern; critical infrastructure, energy assets and critical materials; history of compliance with US laws; control of US industries that affect US capability and capacity to meet national security requirements; involvement of personally identifiable information; and potential new cyber-security vulnerabilities. In his comments, the Minister said that no other regime includes a definition of national security, but that sounds like a definition of national security to me.

[Nadhim Zahawi]

I am grateful to the hon. Member for Aberavon for his comments. I was quoting from the evidence that Dr Ashley Lenihan provided. She said:

“I do not know of a single one that actually defines it or limits itself to a particular definition,”––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 38 Q42.]

if that is what he was referring to.

Instead, what I am trying to share with the Committee is that the statement will set out how the Secretary of State expects to use the call-in power. Within that, we plan to include details of the types of national security risks in which the Secretary of State is especially interested. These include certain sectors of the economy and types of acquisitions relating to entities and assets that may raise concern. I think I have said enough on that.

[Matt Western (Warwick and Leamington) (Lab)]

I am not sure that the Minister has; it is always a pleasure to hear his dulcet tones. In all seriousness, is this not open to interpretation with a change of Secretary of State, in the way that we have seen in the US with a change of President, and how that President chooses to define what national security means?

[Nadhim Zahawi]

I am grateful for the hon. Member’s contribution. Of course, no Government can tie the hands of future Governments, if that is his argument.

Moving on, I commend hon. Members for their interest in the process and function of the regime, made clear through amendment 9, which provides for additions to the statement about the exercise of the call-in power. It aims to ensure that the regime created by the Bill is properly resourced with the right numbers of skilled staff. The hon. Member for Ilford South was thoughtful in his concern about that. However, I would say to him and other Members that the purpose of the statement is to set out how the Secretary of State expects to exercise the power to give a call-in notice. It will provide information on the types of scenarios where the Secretary of State may consider there to be a national security risk. It would not be appropriate to add details about how the regime will be staffed.

Furthermore, internal arrangements on resource and skills are a matter for the Secretary of State and, of course, the permanent secretary at BEIS. I reassure hon. Members, however, that the Bill compels—this is the lever for Parliament, in my view—the Secretary of State to publish an annual report, which will provide information on the number of mandatory notices accepted and rejected, the number of voluntary notifications accepted and rejected, and the number of call-in notices and final orders made. That review is incredibly important in measuring performance. The exact details and requirements for the annual report are set out in clause 61. I will not go through all of them.

For the reasons I have set out, I am unable to accept the amendments and hope that Opposition Members feel able to withdraw them.

[Chi Onwurah]

I thank the Minister for his response. I particularly thank my hon. Friends for the points that they have raised. My hon. Friend the Member for Ilford South set out the importance of reporting on resourcing. I am disappointed that the Minister could not accept that amendment. He said that it was not appropriate to include details of resourcing and staffing. I point him in the direction of the Government’s misinformation unit, which was set up to grand acclaim in order to address that important issue. As the Minister for vaccines, he will have a strong interest in the effectiveness of misinformation, which could harm our wellbeing and future return to normality.

That unit was set up. Written parliamentary questions that I tabled revealed that it had no full-time staff or full-time equivalents, and we see a resultant lack of action on misinformation. I make that point to counter the Minister’s assertion that it is not important to have details on resourcing reported. On the contrary, our experience in Parliament and the civil service suggests that it is what is resourced that will get done, with the appropriate skill and care. With such a great number of cases, and such a great change in the scope of takeover and acquisition legislation that the Bill represents, reporting on resourcing is very important.

I also thank my hon. Friend the Member for Ilford South for such intriguing and at times amusing oratory on the importance of a single word in the right place.

[Nadhim Zahawi]

Southampton, Test.

[Chi Onwurah]

I am sorry. Southampton, Test.

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[Chi Onwurah]

I thank my hon. Friend the Member for Ilford South for moving the amendment. The Committee must support the aims of the amendment and the implementation of the requirement to publish guidance for potential acquirers and other interested parties separate from the policy intent statement. My hon. Friend set out the importance of avoiding uncertainty and of providing certainty for companies and businesses that might come into the scope of this Bill.

Now is perhaps the time to highlight a failing of the Bill and the impact statement, in that the focus is on the acquirers—those who will acquire companies or shares through transactions. The explanatory notes explain why that is the case: because a trigger event might take two or three separate transactions to complete, such as acquiring a 25% interest, so it has to be on the acquirers to make the notification. I understand that, but I think the impact statement dramatically underestimates—in fact, it does not make an estimate—the impact that will have on those being acquired.

By that, I think particularly of small start-ups—our small, innovative new ventures and new enterprises, perhaps spun out from universities or other institutions. As they seek finance to grow and to thrive and to make further discoveries and innovations, they will have to give a lot of consideration to the provisions in the Bill. To be frank, as all of us who have worked in small businesses know, time is at a premium, as is access to legal advice. Small start-ups need this kind of guidance easily and readily available. I fail to understand why the Minister would not want the Department to provide this guidance specifically to companies, separate from the policy intent statement. I support my hon. Friend’s amendment.

[Nadhim Zahawi]

Amendment 11 would require the Secretary of State to publish guidance in relation to the Bill and regulations made under it within six months of Royal Assent. The hon. Member for Ilford South raised an important issue and I welcome the opportunity to discuss the Government’s plan for communicating the application of the proposed new regime, including the requirements that would or might be imposed on persons. It is important that appropriate steps are taken to make such persons aware of the requirements that would or might be placed on them. I have used “persons” here deliberately as it is the correct term, but I wish to make it clear that that includes acquirers.

First, the Government have published factsheets on the digital platform .gov that make clear what the measures in the proposed legislation are and who they apply to. The factsheet “Process for Business” sets out step by step what steps persons must or may need to take to ensure compliance with the regime. Secondly, we have set up the email address [e-mail] specifically for the purpose of providing advice on what may be in scope of the NSI regime for persons to contact to ensure that they properly understand the proposed regime. Of course, the Government believe that the Bill does not require any adjustment but should adjustments happen as it passes the scrutiny of this House and the other place, then any adjustments that affect persons would be reflected in the factsheets.

Thirdly, the Government have published and will continue to publish guidance alongside key documents in the Bill. Hon. Members will, for example, be able to review the information likely to be required for notifications online, as well as draft guidance. It is our intention to complete similar such guidance wherever it would be beneficial to parties. I hope that that provides sufficient reassurance for the hon. Member for Ilford, South and the shadow Minister that the Government are thinking carefully, and will continue to think carefully, about how to ensure that all parties who need to understand the measure are able to. For the reasons that I have set out, I cannot accept the amendment and I hope that the hon. Member for Ilford, South will withdraw it.

[Sam Tarry]

I wish to press the amendment.

Question put, That the amendment be made:

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Question proposed, That the clause stand part of the Bill.

[Nadhim Zahawi]

I hope that hon. Members will recognise that the Government are committed to providing as much clarity and predictability as possible for business on the use of the new investment screening regime provided for in the Bill. Clause 3 is the third clause related to the call-in power, and concerns the statement of policy intent. Colleagues will remember that clause 1 requires that, prior to the use of the call-in power provided for in that clause, the Secretary of State must publish and not withdraw a statement that sets out how they expect to use the call-in power.

The Secretary of State was pleased to publish a draft of that statement alongside the Bill to enable hon. Members, businesses and, indeed, the general public to review the approach he expects to take. As hon. Members will no doubt have seen, the draft statement contains details of what the Secretary of State is likely to be interested in when it comes to national security risks. It includes certain sectors of the economy and the types of entities, assets and acquisitions that may raise concerns.

Although it is crucial for investors to have confidence that there is as much transparency in the regime as possible, there is self-evidently a limit to how much the Government can disclose in that regard given that the regime deals explicitly with national security matters. Nevertheless, the draft statement goes into some detail about the factors that the Secretary of State expects to take into account when making a decision on whether to call in a trigger event. The statement will also be required to be reviewed at least every five years to reflect the changing national security landscape, although in practice it may be reviewed and updated more frequently.

Taken together, I hope that hon. Members will agree that the requirement for the Secretary of State to publish a statement of policy intent prior to use of the call-in power and the requirement to review it regularly provide a good level of transparency and guidance to businesses, while not disclosing our national security vulnerabilities, which of course hostile actors would be grateful to receive. The statement will provide valuable information for businesses and investors and help them, we believe, to determine whether they should submit a notification about their trigger event. I hope that hon. Members feel that I have sufficiently explained and justified the clause and its place in the Bill.

[Chi Onwurah]

Clause 3 is critical, as it sets out the context in which the Secretary of State will exercise the important power to call in transactions. We have sought in our amendments to improve it. I accept the Minister’s response to and rejection of our amendments, and his belief that the clause provides for the guidance and clarity that businesses need. I would just say to him that it was the clear conclusion of just about every witness in the evidence sessions that greater clarity and understanding were required, and that to make this change was an immense mountain to climb.

In some respects, the Government could not give too much support and guidance, within the bounds of national security, to the many companies and persons who will be caught up in the measures. Having said that, given that it is an essential part of the Bill, which we support, we accept that the clause stand part.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Consultation and parliamentary procedure

Question proposed, That the clause stand part of the Bill.

[Nadhim Zahawi]

As I turn to clause 4, I will begin with a reference to clause 3. The statement provided for in clause 3 sets out how the Secretary of State expects to exercise the call-in powers that we have just been discussing. It is the Government’s view that this statement is important in ensuring that businesses have as much clarity and predictability as possible regarding the potential use of the call-in powers, including the areas of the economy where national security risks are likely to arise. Likewise, clause 3 also sets out that the Secretary of State is required to review the statement at least every five years.

It is right that there are mechanisms to ensure that the Secretary of State seeks external input, where appropriate, on the proposed contents of the statement and that Parliament can scrutinise the final version. Clause 4 therefore requires the Secretary of State to carry out such consultation on a draft of the statement as he thinks appropriate and to take into account the responses to any such consultation during the drafting process. Those requirements also apply when the Secretary of State seeks to amend or replace a published statement.

Our plan is to launch a public consultation shortly after the passage of the Bill to make sure that affected parties can provide comments to us in good time. Before the final statement may be published, clause 4 also requires the Secretary of State to lay it before Parliament, following which the statement will be subject to a procedure akin to the negative resolution procedure. If either House resolves not to approve the statement within 40 sitting days, the Secretary of State must withdraw the statement. I can assure the House and hon. Members that the Government are committed to ensuring that this new regime works for those most affected by it. Investor and business confidence is imperative to the recovery from the covid pandemic. That is why the Government propose to put in place these requirements before the Secretary of State is able to publish the statement and exercise the call-in power.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

Meaning of “trigger event” and “acquirer”

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss:

Clause 10 stand part.

That schedule 1 be the First schedule to the Bill.

[Nadhim Zahawi]

I turn now to clauses 5 and 10, alongside schedule 1, which set out much of the detail on the circumstances covered by the Bill. Clause 5 begins to set the scope of what may be called in by the Secretary of State by providing the overarching definitions of “trigger event” and “acquirer”. The Government are clear that these new powers should be sufficiently broad to cover potential risks to national security. Clause 5 sets out that the new regime is focused on the acquisition of control over both qualifying entities and assets. These acquisitions are collectively known as trigger events. I do not intend now to explore what does and does not qualify as an asset or entity. Instead, I would direct hon. Members to clause 7, which provides such definitions.

Following on logically, the person gaining such control is the acquirer, and to address a query raised on Second Reading by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), I should make clear that “person” includes both a body and an individual. Subsequent clauses explain the specific ways that control can be acquired for the purpose of the Bill, but this is a necessary clause to set the broad parameters of the regime. The trigger events within scope of the call-in power are defined in clauses 8 and 9 as acquisitions of control over qualifying entities and assets, but the Government consider that the Bill must supplement that by providing for interests or rights to be treated as held or acquired, and therefore for control to be acquired in certain circumstances, such as acquisitions involving indirect holdings or connected persons.

That is why clause 10, 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 being held or acquired, including, for example, joint arrangements with other parties. These edge cases are critical to ensuring that determined hostile actors cannot deliberately structure acquisitions in certain ways to avoid being covered by the regime. While many trigger events may be straightforward, direct acquisitions by a party without any connection to other persons involved in the target entity or asset, there may be broader factors that need to be taken into account when considering how control over an entity or asset may be held.

It may be that the ability to control the entity or asset is acquired, for example, as a result of arrangements between the acquirer and other shareholders or their relationship to other shareholders. The approach taken in schedule 1 broadly mirrors the concept of holding an interest in a company, already familiar in UK company law through the persons with significant control register, introduced in 2016.

Taking each in turn, paragraph 1 of schedule 1 defines joint interests, whereby two or more people holding an interest or right jointly are each treated as holding it. That means that any joint holdings of the acquirer will be taken into account when assessing whether control has been acquired over a qualifying entity or asset.

Paragraph 2 defines joint arrangements so that parties who arrange to exercise their rights jointly in a predetermined way—for example, to always vote together in a particular way—are each treated as holding the combined rights and interests of all the parties involved in such an arrangement. That is important to prevent hostile actors from being able to co-ordinate the acquisition and exercise of rights that might otherwise fall below the threshold of a trigger event.

Paragraph 3 defines indirect holdings, whereby a person holds an interest or right indirectly through a chain of entities, where each entity in the chain has a majority stake in the entity below it, the last of which holds the interest or right. We know that determined hostile actors are likely to seek to obscure their acquisitions through complex corporate structures, so it is vital that the Secretary of State can intervene in such circumstances.

Paragraph 4 simply stipulates that interests held by nominees for another are to be treated as held by the other, rather than the nominee. Paragraph 5 defines the circumstances in which rights are to be treated as held by a person who controls their exercise; this would cover, for example, instances where a person acquired a stake in an entity, but it was evident that they had an arrangement with a third party about how to exercise the rights that came with that stake.

Paragraphs 6 and 7 provide for the circumstances in which rights that are exercisable only in certain circumstances and rights attached to shares held by way of security are respectively to be treated as held, and mirror corresponding provisions in schedule 1A to the Companies Act 2006.

Paragraphs 8 to 10 define connected persons; as set out, connected persons are each to be treated as holding the combined rights or interests of both or all of them. That would cover, for example, shares in a company separately by a husband and wife or a brother and sister. Finally, paragraph 11 sets out that two or more persons sharing a common purpose are to be treated as holding the combined interests or rights for both or all. That would include two or more persons who co-ordinate their influence in relation to an entity or an asset, similar to joint arrangements. This will ensure that the Secretary of State is able to assess the impact of co-ordinated acquisitions.

Taken together, the concepts detailed in schedule 1 are a crucial part of ensuring that the new regime is flexible enough to deal with the complex reality of some acquisitions of control over entities and assets. Without these provisions, hostile actors could seek to take advantage of the gaps by structuring acquisitions in a way that would be out of scope of the regime, despite the very real risks that that might present. I trust that colleagues on both sides of the Committee want to ensure that the regime covers such cases suitably.

[Chi Onwurah]

I thank the Minister for his comments on clauses 5 and 10 and schedule 1, which are quite technical provisions designed to allow for the different ways in which control may be acquired over a qualifying entity or asset or a trigger event may occur. I shall not repeat what the Minister so ably set out, but simply say that we recognise the need to set out ways to mitigate the impact of hostile actors, as he put it, going to complex lengths to hide their interest in a qualifying asset or entity. However, having the powers and these definitions is not the same as actually using them. There have been several instances in which hostile actors have behaved in entirely transparent ways that we have not identified and prevented. While these provisions are necessary, we need to see the ways in which the Secretary of State will actively identify evolving risks even as they hide behind complex financial organisations.

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[Dr Whitehead]

But if the IP, the patents and various other things have been made off with by another company, and the administrators have presumably agreed to that, although they never hold the rights, where are the shareholders and creditors’ duties and rights at that point? Indeed, what is the remedy as far as the Government are concerned in those circumstances?

I can honestly say I am fairly confused about this, so I do not have the full answer to the hon. Member’s concerns. I am raising this more because I am not sure whether the wording in the schedule is fully adequate for those circumstances. I would be grateful if the Minister gave me some assurance, took some of the clouds from my mind about this, or alternatively said, “Well, we’re going to have a look at this to see whether there is a bit of a problem that we might have to fix.”

[Nadhim Zahawi]

My hon. Friend the Member for Wyre Forest addressed the issue of the administrator’s acting on behalf of the creditors. The important point to focus on—I will happily write to the hon. Member for Southampton, Test after the sitting—is that ultimately, it is the acquirer. If a malign actor were come to acquire those assets, and it is notifiable as part of the 17 sectors, then the transaction is made void. That is the remedy, effectively, because the acquirer would have to come forward and make representations to the investment unit about why they are acquiring and get clearance.

[Chi Onwurah]

I thank my hon. Friend the Member for Southampton, Test for the points that he is making. I wish to put to him, and effectively the Minister as well, an example which was raised yesterday in debate on the Telecommunications (Security) Bill, with which I am intimately familiar as the collaboration is between Nortel, an equipment vendor for whom I worked in the past, and Huawei, on a project to develop new technology. When two entities come together and collaborate, which I do not think will meet any of the trigger events described here, but instead create something which has IP in it which is of value, how does that come under the provisions of the clauses and the schedule?

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[Nadhim Zahawi]

Let us take the example given by the hon. Member of Nortel collaborating with Huawei or any other entity. They have to satisfy themselves that if they wish to acquire something else in future, they will effectively have to go through the same process of national security clearance. Collaboration between entities or in academia are covered under the separate guidance, including from the agencies, on who they collaborate with, but I think that is a different issue. Once an asset is created that has a national security implication for the United Kingdom, the Bill comes into play.

Question put and agreed to.

Clause 5 accordingly agreed to stand part of the Bill.

Clause 6

Notifiable acquisitions

[Stephen Kinnock]

I beg to move amendment 6, in clause 6, page 4, line 27, at end insert—

‘(4A) The Secretary of State must have regard to the protection of critical national infrastructure when making regulations under this section.’

This amendment would require the Secretary of State to have regard to the protection of critical national infrastructure when making notifiable acquisition regulations.

It is a pleasure to serve under your chairmanship, Sir Graham. I congratulate the Minister on his recent appointment as the vaccine tsar. I must say, he is taking multi-tasking to a whole new level, and we wish him well.

I rise to speak in favour of amendment 6, which is closely related to amendments 7 and 8. Sir Graham, should I speak to amendments 7 and 8 as well now, or to amendment 6 alone?

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[Stephen Kinnock]

I thank my hon. Friend. His intervention is telling because it points to a fundamental failing at the heart of Government in terms of being joined up and credible. We cannot condemn aspects of China’s activity and its increasingly assertive behaviour —potential military threats to Taiwan, and sabre-rattling in the South China sea—while opening up our nuclear energy capability to that same hostile foreign actor. Security is about our credibility, resilience and ability to stand strong and united, because we know that the Chinese Communist party will exploit weakness and division. Consistency is vital—consistency and security are two sides of the same coin.

To answer my hon. Friend’s question, I profoundly and sincerely hope that the investment to which he refers would not have passed this test. Frankly, if it had passed this test, the Bill would end up not being worth the paper it is written on. This is about the implementation of the Bill and the Government’s capability to stand up for our national security and critical national infrastructure, which is at the heart of the amendment.

It is worth pointing out that the Intelligence and Security Committee defines our critical national infra- structure as

“certain ‘critical’ elements of infrastructure, the loss or comprise of which would have a major detrimental impact on the availability or integrity of essential services, leading to severe economic or social consequences or to loss of life.”

I am convinced that no Member present would argue with that definition or against putting those considerations at the heart of what Parliament and the Government stand for.

We must include critical national infrastructure. It would follow best practice—our allies the United States and Canada both include critical national infrastructure in their list of key factors to assess as part of national security, so we would not be reinventing the wheel but simply following best practice. In the expert witness sessions, I asked Sir Richard Dearlove specifically whether he thought that a definition of critical national infrastructure should be included in the Bill. He said:

“I would certainly see that as advantageous, because it defines a clear area where you start and from which you can make judgments”.––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 24, Q31.]

As I said the start of my comments, sovereign capability is what this is really about, and our sovereign capability is profoundly undermined by the fact that so much of our critical national infrastructure is not in our own hands. Supply chains are over-extended and often depend on actors that perhaps 10 years ago we did not see as we do now, which has to be taken into account. I urge hon. Members to consider the amendment seriously, because it goes to the heart of what Parliament and Government should be about.

[Nadhim Zahawi]

Amendment 6 would require the Secretary of State to have regard to the protection of critical national infrastructure when making notifiable acquisition regulations. I welcome the intention of the hon. Member for Aberavon to ensure that the protection of critical national infrastructure is considered by the Secretary of State. Indeed, I take it as a ringing endorsement of the approach the Government have taken in clause 6 to define the specific sectors and activities subject to mandatory notification clearance.

As the hon. Gentleman will know, we intend to introduce regulations under the clause once the Bill has received Royal Assent, and we are currently consulting on the sector definitions, which cover much of the critical national infrastructure that he quite rightly shared with the Committee, including energy, civil, nuclear, transport, communications and defence. We are publicly consulting, in particular with sector experts, the legal profession, business and investment communities, to ensure that those definitions provide clarity and certainty, and are focused on the specific parts of sectors and activities that can pose risks to our national security. I can assure the hon. Gentleman that, in developing any notifiable acquisition regulations, the Secretary of State will always take into account the national security needs of the country within the critical national infrastructure sectors, the advanced technology sectors and the wider economy.

[Stephen Kinnock]

I thank the Minister for giving way; he is being very generous. Does he not see the advantage of including this point on the face of the Bill? It makes an important statement—it is a political statement, really—about the need to ensure that, whatever the regulations say, critical national infrastructure is embedded in the Bill.

[Nadhim Zahawi]

I hear what the hon. Gentleman says. The word that slightly worries businesses is “political” statement. I think that that is a concern. I think his intention is right, and the reason why we have taken the route of mandatory notification for the 17 sectors is precisely the point he makes. I assure him that the Secretary of State will always take into account the national security needs of the country within the critical national infrastructure sectors. Indeed, the hon. Gentleman will recall that the Government introduced a statutory instrument to include health in the Enterprise Act 2002 when the covid pandemic hit.

[Dr Whitehead]

I wonder whether I can tempt the Minister to confirm that the 2015 Secretary of State’s investment agreement concerning Chinese control of the nuclear power station and reactor was a naive act by the Government and did not take national security properly into consideration, and that the Secretary of State who signed that agreement in the Minister’s Department clearly did not do so. Will the Minister both reflect on the naivety of that deal and give an indication that such a deal would never be contemplated by this Department in future?

[Nadhim Zahawi]

If the hon. Gentleman is referring to the Hinkley Point deal with EDF, the operator and junior partner in that is CGN.

[Dr Whitehead]

I was not quite; I was referring to the investment agreement on the Hinkley deal that enabled the Chinese state nuclear corporation to develop one third of that series of reactors entirely within its own resources. That was signed into the agreement by the then Secretary of State so that they would be junior partners in Hinkley, equal partners in Sizewell and 100% owners, operators and organisers of Bradwell. That is what I was referring to. The Minister ought to say a few words on the likely actions of the Department in future under the terms of the Bill.

[The Chair]

Crucially, Minister, interesting though this topic may be, those last few words should be firmly in your mind in any response you give.

[Nadhim Zahawi]

I am grateful to you, Sir Graham, for refocusing our attention on the amendment. Suffice it to say that national security is always taken into account when it comes to nuclear or energy, as it was at the time of those agreements. The point I am trying to make is that we must be flexible to ensure that the new regime can adapt to the threats of tomorrow. That is the right approach to ensure that we can keep this country safe. Of course, any such regulations will be subject to parliamentary approval through the draft affirmative procedure, giving Members of this House and the other place the opportunity to ensure that the mandatory notification and clearance regime works effectively. As such, I cannot accept the amendment and I hope that the hon. Member for Aberavon will seek leave to withdraw it.

[Stephen Kinnock]

I thank the Minister, but I am afraid that we will have to push the amendment to a Division, because it is so fundamental to how we see the purpose of the Bill. We have heard lots of assurances today along the lines of, “Trust us. We are on the right track. We get it.” I hope the Minister will forgive us, but we prefer the “trust but verify” model. Therefore, we think that this provision should be in the Bill, and I will have to press the amendment to a Division.

Question put, That the amendment be made.

--- Later in debate ---

[Stephen Flynn (Aberdeen South) (SNP)]

I beg to move amendment 13, in clause 6, page 5, line 3, at end insert—

“(10) Notifiable acquisition regulations must be reviewed one year after they are made, and at least once every five years thereafter.”

This amendment would require notifiable acquisition regulations (including which sectors are covered) to be reviewed one year after they are made, and once every five years thereafter.

It is a pleasure to see you in the Chair once again, Sir Graham. As things stand, I think it is probably a fair assessment, based on what we have heard, that perhaps if the Government had their time again they might have been able to bring forward a consultation in relation to which sectors will be linked to the Bill once it is on the statute book.

I think that a disappointing approach has been taken. It could have been done in a much more constructive manner. The purpose of the amendment is to try to highlight that the issue is a real one, and to highlight the scale and scope of the sectors. As we talked about, there is perhaps concern about whether a specific sector goes far enough. For instance, does artificial intelligence look properly at the role of social media? Does the infrastructure tie into social media in any way, shape or form? There are other examples of that too. Having the review after a year would perhaps allow the Government to be a little more certain about where their priorities lie, and to provide additional certainty to businesses in what is an ever-moving landscape. National security is, of course, an ever-evolving issue, as we have heard passionately from a number of Members.

I will keep my remarks succinct. The amendment is about tightening things up and removing the difficulties that are being caused by the lag between the Bill and the consultation, and doing so in a constructive fashion to try to assist the Government.

[Nadhim Zahawi]

To discuss this amendment, I believe it would be helpful to revisit briefly the role of notifiable acquisition regulations under the regime. A key part of the Bill is the ability it affords the Secretary of State to make acquisitions of certain shares or voting rights in certain entities—notifiable acquisitions, meaning they must be notified and cleared by the Secretary of State before they can take place. Those types of entity are to be specified in regulations by the Secretary of State and the Government have published a consultation on the definitions of those types of entity, which fall within 17 key sensitive sectors of the economy that we propose to initially be covered by the mandatory notifiable regime.

The regulation-making powers in the clause are the best and most proportionate way to enable the Secretary of State to change over time what does and does not constitute a notifiable acquisition. That is crucial for two main reasons. First, it would not be the right approach to set the types of entity covered by mandatory notification and their definitions in stone, forever, in 2020. We all know how difficult this year is. The Secretary of State must be able to update them, in some cases rapidly, as the threats we face evolve and to keep pace with technological development.

Secondly, the Secretary of State must be able to react to the operation of this regime in practice. While the Bill does not include a white list that exempts specific acquirers from the mandatory regime, we have been clear that we will monitor closely the volumes and patterns of the notifications made to the Secretary of State. It may emerge over time, for example, that acquisitions by institutional investors and pension funds are routinely being notified but very rarely remedied or even called in. Such evidence could build the case for using the powers in this clause to make exemptions to the definition of a notifiable acquisition, on the basis of the characteristics of the acquirer.

[The Chair]

Order. I do not know who the person who has just walked in is, but only Members are allowed in the room. Please leave immediately.

[The Chair]

Apology accepted.

[Nadhim Zahawi]

It is therefore right that the Secretary of State keeps a constant watch on the regulations. Indeed, it is vital that he has the flexibility to re-assess and, if needed, seek to update the regulations as soon as is needed, while taking a proportionate approach that gives as much stability to business and investors as possible. Ensuring this vital timeliness and balance means it would not be appropriate to impose particular requirements on when and how frequently the Secretary of State should review the powers, so I cannot accept the amendment. However, I agree wholeheartedly with the hon. Member for Aberdeen South that keeping the regulations up to date and proportionate is of the utmost importance, and I can assure him that that is what the Secretary of State will do.

[Stephen Flynn]

I will certainly take that assurance from the Minister in the spirit in which it is given, but that is probably as far as that will go. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Nadhim Zahawi]

Clause 6 defines the circumstances covered by mandatory notification. The Bill calls them notifiable acquisitions, on the basis that they must be notified and cleared by the Secretary of State before they can take place. The Government have looked carefully at investment screening regimes around the world, in particular those of our Five Eyes allies and other security partners. Common among them all is the inclusion of a mandatory notification component to ensure that the most sensitive transactions must be actively considered and receive clearance by the relevant authority before they can take place. We have concluded that that is the right step for the United Kingdom to take as well. That reflects our developed view that the Government must have greater assurance that certain acquisitions in the most sensitive sectors, including both the national infrastructure sectors and certain advanced technology sectors, are safe to proceed.

--- Later in debate ---

[The Chair]

Before I put the question formally, for the benefit of Members––particularly new Members who have not been able to be here as much in the last year as would otherwise have been the case––let me say that a good way of thinking of the rules of order in Committee is to think of them as being pretty much the same as in the Chamber. Similarly, above and below the bar applies in Committee as well as in the Chamber.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Clause 7

Qualifying entities and assets

Question proposed, That the clause stand part of the Bill.

[Nadhim Zahawi]

Clause 7 provides the definitions of “qualifying entities” and “qualifying assets” within the scope of the Bill, where, if they are subject to an acquisition of control that raises national security risks, the Secretary of State may take action. The Government have deliberately adopted a broad definition of “qualifying entities” to ensure that we can protect national security, regardless of the form of the legal structure of an entity that is being acquired in a trigger event.

Entities can be established or restructured in different forms including, for example, companies, limited liability partnerships and unincorporated associations. The clause includes an indicative, and non-exhaustive, list of the entities in scope. However, “individuals” are explicitly excluded. We expect most trigger events to concern companies, but we must also ensure that hostile actors cannot undermine or bypass the new regime through an entity being structured in such a way as to avoid scrutiny. It is therefore right that the clause provides for a broad definition of an “entity”.

Equally, from time to time, there may be cases that concern the acquisition of control over non-business entities such as trade bodies or industry groups that the Government none the less need to be able to scrutinise. The clause also permits the Secretary of State to scrutinise acquisitions relating to non-UK entities, if the entity carries on activities in the UK or provides goods or services to persons in the UK. As I am sure hon. Members will acknowledge, the cross-border nature of trade and supply chains in today’s world means that conduct abroad may impact national security here. For instance, goods that are critical to the defence of the realm may be supplied from abroad. If those goods were to be interfered with, that could harm our national security.

--- Later in debate ---

[Stephen Kinnock]

I am very happy to have the opportunity to set out what we are trying to achieve with this amendment. While the previous amendment was very much about protecting our assets, this one focuses on the characteristics of the acquirer. It is absolutely clear that any successful screening regime has to be based on a solid understanding of both aspects—both the asset and the acquirer—and that both are equally vital to the successful implementation of the regime.

Harking back to the debate we had about an earlier amendment, the objective here has to be smart regulation. What do we mean by that? If we try to catch everything, we end up catching nothing. We have to prioritise. We have to have a screening system that has a smart, nuanced and well-informed understanding of risk, both in terms of the prioritisation of our assets and the prioritisation of understanding the characteristics of the acquirer. It is on that basis that we prioritise action, and when our investment security unit needs to intervene.

The amendment is focused very much on the characteristics of the acquirer. It is about ensuring that we guard ourselves against the influence of foreign powers that wish to do harm to our country—those that have an agenda. The Minister said earlier that companies get a bit worried when we use the term “political”, but national security is a fundamentally political consideration, because it is about our political analysis of the threat from hostile foreign actors and our understanding of what the national interest is in a holistic sense. We have to give that political leadership. We cannot expect the business community to take that decision for us; we have to give a lead on understanding where the investment is coming from and what the characteristics of the company or investment vehicle are. Fundamentally, going by the old adage that he who pays the piper chooses the tune, where there are state-owned and state-backed entities, it is absolutely clear who is paying the piper and who is choosing to the tune.

The amendment we have tabled would mean that any acquisition involving state-owned entities or investors originating in a country of risk to UK national security—a fundamentally political calculation—and creating a change of influence would count as a person gaining control of a qualifying entity. By including state-owned enterprises explicitly on the face of the Bill, we would be ensuring particular regard to the issue even where shareholding levels are low.

We understand the thresholds for trigger events, but what we are saying is that when the characteristics of the acquirer ring particular alarm bells, that should apply regardless of the shareholding level that is being considered by the acquirer. We know the threat from state-owned enterprises is disproportionate; that is why we are recommending a kind of disproportionate action in this amendment, to address the reality of the characteristics and to ensure that we are carefully guarding against potentially malign actors.

Again, this is not a new concept. Other countries use it in their regimes, and we are simply proposing that we follow suit and have a smarter strategy and approach to regulation at the moment. The clarity that we need, of course, is from understanding that where allied states are involved and the transactions are efficiently screened for approval there is little cause for concern, but with this amendment, even small and discrete investments from hostile states and from state-backed entities within those states would be fully captured.

Let us turn to the expert evidence that we received, particularly from Michael Leiter, the legal expert and lawyer, who said:

“With respect to sovereign wealth funds or state-controlled investments, there is a perfectly good argument that yes, the standard of review might be…more rigorous.”—[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 48, Q54.]

Let us be absolutely clear: we do sometimes see so-called private takeovers, where often the state-backed entity is rather obscured within the ownership structure. They are carried out by companies and investment vehicles that are in fact a front for authoritarian state actors, who have wider political, national security and geopolitical agendas and whose values are frequently at odds with ours.

A recent obvious example is the attempt by an investment vehicle backed by the Chinese state to take over Imagination Technologies. The company was the target of a hostile foreign takeover attempt, and that investment vehicle had direct links to the Chinese state. Then there are even more obvious examples, to which my hon. Friends the Members for Newcastle upon Tyne Central and for Southampton, Test have referred, particularly around Hinkley and Bradwell, where there is a clear ownership structure coming directly from the Chinese state.

We must also recognise the broader agenda with things such as China’s belt and road initiative, which is about creating debt-trap diplomacy. It is about building influence by entering other economies in such a major way that those economies effectively become dependent on the Chinese state. Of course, that comes with lots of strings attached, and it is part of the deal that those countries are not able or permitted to speak out when the Chinese state behaves in ways that we would not find acceptable. I hope that the Government and the Minister will seriously consider the amendment, because the characteristics of the acquirer must be taken into account if we are to have a smart regulation system that prioritises and does what the Bill sets out to do.

[Nadhim Zahawi]

This group of amendments would provide for certain cases to count as a person gaining control of a qualifying entity. The amendments are to clause 8, which defines the circumstances in which a person gains control of a qualifying entity for the purpose of the Bill.

Amendment 7 would ensure, as the hon. Member for Aberavon mentioned, that any acquisition involving state-owned entities or investors originating in a country of risk to UK national security and creating a change of influence would count as a person gaining control of a qualifying entity for the purposes of the Bill. I welcome the hon. Gentleman’s intention to ensure that national security is comprehensively protected. I reassure him that the Bill provides no carve-out or special treatment for state-owned entities or overseas investors where they acquire control of a qualifying entity or asset. They will be subject to the mandatory notification requirements in the same way as any other acquirer, and the Secretary of State will have the power to scrutinise any acquisition of control by such parties where the legal test for call-in is met. That includes the acquisition of material influence over the policy of the entity.

However, the Government have been clear that the regime is nationally agnostic, and that each acquisition will be considered on a case-by-case basis. The draft statement of policy published alongside the Bill simply states that the regime will not

“regard state-owned entities, sovereign wealth funds—or other entities affiliated with foreign states—as being inherently more likely to pose a national security risk.”

I strongly believe that this is the right approach. We must recognise that many such organisations have full operational independence in pursuing long-term investment strategies with the objective of economic return, raising no national security risks.

Moreover, the clause already sets out the circumstances that constitute control of an entity based on levels of shareholding and voting rights and material influence. Amendments such as this could, for example, capture increases of equity stakes at any level, even though many could not realistically be expected to give rise to a national security risk. Developing a list of countries of risk would likely be a moving feast that would quickly become out of date in response to changing geopolitics and would most likely harm Britain’s diplomatic relations and place in the world, giving rise to a chilling effect on investment in these shores.

Amendment 8 would create a new case of a person gaining control of a qualifying entity for “changes to material influence” in industries critical to the UK’s capability and capacity to maintain national security, including economic security. Once more, I welcome the emerging cross-party consensus that the Bill must capture more subjective acquisitions of control, rather than solely levels of shares and voting rights. I reassure the hon. Gentleman that acquisitions of material influence over the policy of an entity are very much in the scope of the Bill. That applies within the 17 sectors but also to the wider economy. Parties can notify the Secretary of State of a trigger event concerning the acquisition of a material influence, and he will have the power to proactively call in such a case if the legal test is met.

I should clarify that material influence is not a scale. It is the lowest level of control that can be acquired over a qualifying entity, which captures acquisitions of smaller stakes or other rights or interests in entities, such as board representation rights. As such, it is not immediately clear to me what circumstances such an amendment would bring into the scope of the Bill, given that it would capture changes to material influence. None the less, I admire the ingenuity of the hon. Gentleman’s seeking, at least in part, to define national security through the amendment and its explicit reference to economic security. As he will know, the Bill does not define national security, and, as I said on Second Reading, I think that is a real strength, not a weakness.

[Chi Onwurah]

The Minister says that this Bill is not country specific. I know he does not want to define national security in the Bill, but does he think that our national security can be country specific?

[Nadhim Zahawi]

I think that the Bill is proportionate and I think that national security is not dependent on a particular country. Malignant actors come from different nationalities. The Committee heard from a number of experts last week the reasons for not defining national security, not least because it might limit the Secretary of State from being able to respond to new and emerging threats that did not fall within the definitions set out in statute. For these reasons I cannot accept these amendments, and I would gently encourage the hon. Member for Aberavon to withdraw them.

[Stephen Kinnock]

rose—

[Nadhim Zahawi]

Perhaps the hon. Gentleman will withdraw the amendment in his intervention.

[Stephen Kinnock]

I thank the Minister for giving way—sort of. One of the key sentences in the Government’s statement of policy intent is in the section on acquirers, which says:

“Clearly, national security risks are most likely to arise when acquirers are hostile to the UK’s national security, or when they owe allegiance to hostile states or organisations.”

I recognise that the statement of policy intent is a draft, but clearly somebody in government thought it a good idea to put that sentence in there, and I absolutely agree with it. It is therefore very difficult to understand the disconnect that appears to exist between the Bill, which is agnostic on different national actors, and the statement of policy intent, which explicitly talks about when acquirers

“owe allegiance to hostile states or organisations.”

On that basis, the amendment touches on a crucial issue and we shall be pushing it to a Division.

--- Later in debate ---

[The Chair]

I think that was an intervention.

[Nadhim Zahawi]

I do not wish to keep repeating myself, but I have set out the reasons why I cannot accept these amendments. I would again gently encourage the hon. Member to withdraw the amendment, but I suspect we will be heading to a Division.

[Stephen Kinnock]

We are moving back and forth here. As I set out, the issues around the characteristics of the acquirer are so important to ensuring that we have a smart approach and the sentence within the statement of policy intent is so absolutely spot on that we will push the amendment to a Division to show our support for that section of the statement.

Question put, That the amendment be made.

--- Later in debate ---

[Mark Garnier]

I am very sympathetic to the amendment tabled by the hon. Member for Ilford South. He refers to the Parliamentary Commission on Banking Standards, on which I sat. There is no question whatever that the bondholders of banks have a huge amount of influence on a bank—more so than the equity holders. I am worried about a couple of things with the amendment. The first is that it is very difficult to define what level of debt ownership constitutes control, because technically there is no control in law. It is possible to have an influence, but we cannot define what control is.

The second point is that tradeable debt, as in bond market debt, is something that is usually stuck to quite a sophisticated company. Most companies will have bank debt. Of course, if we start talking about bank debt, we introduce the tricky concept of where the bank is domiciled. For example, someone can borrow money from Barclays Bank, or they can go to a Russian, Chinese or Hong Kong-based bank. The sentiment behind the amendment is really important, because there is a lot of control by debt owners, be they banks or bond holders. However, it is too complicated to support at this level, because it needs much more debate and scrutiny, and we would need a much more cleverly worded amendment to support this. I do think it is a very important point, and I support the principle behind it.

[Nadhim Zahawi]

These amendments would ensure that a person becoming a major debt holder would count as a person in control of a qualifying entity. Amendment 14 would go further and ensure that a person becoming a top 3 supplier to an entity also counted as a person gaining control of a qualifying entity. I acknowledge that the hon. Members for Ilford South and for Aberdeen South are right to highlight that there are, in a small number of cases, national security risks that can be posed through debt.

Access to finance is crucial for so many businesses. In order to grow and succeed, they will often take out loans that are secured against the businesses and assets that 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 where lenders exercise rights over such collateral, which goes to the point made by my hon. Friend the Member for Wyre Forest. Such an approach will prevent hostile actors from artificially structuring acquisitions in the form of loans, which, following a swift and convenient default, might otherwise allow them to evade scrutiny.

I can provide further reassurance to the Committee that the acquisition of any right or interest that enabled a person to exercise material influence over the policy of a qualifying entity, including by creditors through debt arrangements, would be in scope of the Bill. It was noted by Christian Boney, partner of Slaughter and May, that the Bill strikes an acceptable balance by not having debt providers specified as a separate case. Depending on the facts of the individual case, that might capture the acquisition of rights by the lender to appoint members of the entity’s board. That is a common approach by lenders when striking an agreement to provide significant amounts of finance, particularly for big infrastructure projects, in order to safeguard their funds. The Bill would cover a scenario where that provided material influence over the policy of the entity, but the amendments would go further still and stipulate that any person becoming the holder of 25% or more of an entity’s debt was a trigger event in itself.

The Government do not believe that the provision of loans and finance is automatically a national security issue—indeed, it is part of a healthy business ecosystem that enables businesses to flourish in this country. I fear that such an approach would likely create a chilling effect on the appetite of lenders to support otherwise attractive and viable projects. Lenders need confidence that they can see a return on ordinary debt arrangements in order to provide that service. I believe that such a chilling effect would have a detrimental impact on the range and extent of finance that is available to UK businesses, particularly SMEs, and their future prospects would suffer as a result. That is the very opposite of the Government’s intention. We must support our innovators and entrepreneurs as we seek to build back better from covid, rather than limit their opportunities to succeed.

Amendment 14 would create an additional case for any person who became a top 3 supplier to an entity. In effect, it would be a new trigger event. I share the desire of the hon. Member for Aberdeen South to ensure that business within our most sensitive supply chains can be protected. I believe the Bill does that already by allowing the Secretary of State to call in trigger events across the economy, when he reasonably suspects they may give rise to national security risks. That includes key suppliers.

--- Later in debate ---

Question proposed, That the clause stand part of the Bill.

[Nadhim Zahawi]

Clause 8 sets out for the purpose of the Bill the circumstances in which a person gains control of a qualifying entity as defined in clause 7. More specifically, the clause sets out the four ways in which control can be gained.

The first two cases are where certain shareholdings or voting rights are acquired. The clause stipulates that acquisitions increasing a person’s holding in a qualifying entity above 25%, 50%, 75% or more all constitute trigger events. The thresholds have been chosen because of their significance under UK company law.

Under the Companies Act 2006, a number of key decisions relating to shareholders’ rights in relation to the decision making of a company require a special resolution. Special resolutions require a majority of 75% of votes to be passed. This means that a holding of more than 25% allows one person to, by themselves, block a special resolution. Similarly, a holding of 75% or more allows one person to, by themselves, pass a special resolution.

Under the Companies Act, ordinary resolutions, which apply to more routine shareholder decisions, require a simple majority. This means that a holding of more than 50% allows one person to, by themselves, make decisions affecting the governance of a company.

The Government believe these thresholds represent reasonable proxies for various levels of control over entities. The clause deliberately includes references to both shares and votes to prevent the artificial construction of acquisitions to avoid meeting one of these thresholds—for example, a 40% stake with 51% of voting rights. In most cases, ordinary shares carry the equivalent amount of voting rights: one vote per share.

Recognising that the regime also concerns entities other than companies established under the Companies Act, the third case explicitly extends the same principles on voting rights enabling the passage of a resolution to other entities. That means that any acquisition of voting rights that allows a person to secure or prevent the passage of any resolution governing the affairs of the entity is a trigger event. This is important because other types of entities are not subject to the Companies Act and may have different thresholds for the passing of resolutions.

Finally, the fourth case that constitutes control of an entity is the acquisition of material influence over its policy. This reflects that no single shares or votes threshold is appropriate in every case.

Material influence is an existing concept under the Enterprise Act 2002, which denotes the lowest level of control that might give rise to a relevant merger situation that may be considered for competition or public interest reasons. Material influence captures acquisitions of smaller stakes or other rights or interests in entities, such as board representation and rights, which nonetheless enable a person materially to influence the policy of the entity.

Other factors, such as the status and expertise of the acquirer or a relationship of financial dependence, may be relevant. Clearly, determining whether material influence has been or is to be acquired will require an assessment of all the circumstances of the case by the Secretary of State. It is not possible, therefore, to provide any hard and fast rules that will be applicable in all cases.

The Competition and Markets Authority has published guidance about what it considers to constitute a material influence. The Secretary of State intends to apply that in so far as is possible in the context of this new regime, for the purposes of determining whether control has been or is to be gained over a qualifying entity.

For the avoidance of doubt, the Government have no plans to publish their own separate guidance on material influence. Collectively, these four cases represent the ways in which control of entities can be acquired for the purpose of the Bill. It is vital that they stand part of the Bill so that the Secretary of State may scrutinise acquisitions of control over entities in whatever form that takes. I hope that hon. Members will agree that this approach has been carefully considered to reflect the complexity of the make-up of modern entities.

[Chi Onwurah]

As we are over time, I shall not detain the Committee long, but I want to say a few words on this important clause. Our debate has again highlighted the Minister’s apparent determination and conviction that the Bill cannot be improved on, even as we all acknowledge––and as the Telecommunications (Security) Bill makes absolutely clear––that the Government’s record on national security in this context can very much be improved on. I noted his celebration of the innovators and entrepreneurs, and his concerns about the chilling effect on them of bringing debt holders into the Bill’s remit as proposed in the amendment of my hon. Friend the Member for Ilford South.

The entrepreneurs and innovators seeking investment, particularly foreign investment, are unfortunately to have no such protection from the Minister. We want a consistent and robust approach, given the breadth of powers that the Bill gives to the Secretary of State. I was concerned that, even with the wise intervention of the hon. Member for Wyre Forest, the Minister did not make a proposal to take these constructive amendments away to consider and perhaps return with Government amendments that reflect them later in the Bill’s passage. We will not oppose stand part, but I hope that the Minister will continue to consider our suggestions for the improvement of this and other clauses.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Clause 9

Control of assets

Question proposed, That the clause stand part of the Bill.

[Nadhim Zahawi]

Clause 9 sets out, for the purposes of the Bill, the circumstances in which a person gains control of a qualifying asset, as defined in clause 7. A person gains control of a qualifying asset where they acquire a right or interest in, or in relation to, the asset, and as a result they can do at least one of the following.

First, they can use the asset or use it to a greater extent than prior to the acquisition. This would allow the Secretary of State to intervene, for instance, when an individual purchases a sensitive site and can therefore access and use the site. Secondly, they can direct or control how the asset is used, or direct or control its use to a greater extent than prior to the acquisition. This second mechanism by which a person can gain control over a qualifying asset is particularly important as it brings into the scope of the regime those who may not have complete control over the asset, but who can nevertheless still direct or control its operation. Without that, there would be a control loophole that hostile actors may seek to exploit.

It is worth noting the relationship between this clause and clause 11, which provides an exception for control of assets in circumstances where the acquisition is made for purposes wholly or mainly outside the individual’s trade, business or craft. That is intended to put acquisitions such as consumer purchases firmly out of scope of this regime. I reassure hon. Members that the Secretary of State does not routinely expect to call in trigger events relating to assets. However, I hope that the Committee will agree that it is nevertheless important for the Secretary of State to retain this power to guard against hostile actors who seek to acquire control over sensitive assets as an alternative to acquiring the business which owns them.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Clause 10 ordered to stand part of the Bill.

Schedule 1 agreed to.

Ordered, That further consideration be now adjourned. ––(Michael Tomlinson.)

Healthcare in Oxfordshire

Nadhim Zahawi Excerpts

Tuesday 17th October 2017 Westminster Hall

[Robert Courts (Witney) (Con)]

I beg to move,

That this House has considered the future of healthcare in Oxfordshire.

It is an honour to serve under your chairmanship, Sir Roger. May I, at the outset, thank colleagues from both sides of the House for attending and the Minister for replying? I have deliberately left the wording of the motion quite open, because I want all colleagues to have the chance to set on the record any of their thoughts about the future of healthcare in Oxfordshire.

This is a multifaceted, complex topic. I will of course concentrate on west Oxfordshire and hope I will be forgiven for doing so. We all have particular concerns, and this topic perhaps matters to our constituents more than any other. I would like to broadly separate the debate into the following sections. I will review what was done within the first phase of the sustainability and transformation plan process, how it was handled, the split of the consultation into two phases, how the public were involved in the matter and the outcomes. I will then look forward to phase 2, the proposed changes that have been included and how the clinical commissioning group can work better with the public and all stakeholders throughout the process. I will explore ways in which we can move forward and give Members the chance to raise specific concerns from their constituencies. I will review the past, but for the sake of learning for the future.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Horton General Hospital is unique in that it serves not only Oxfordshire but Warwickshire, Northamptonshire and even Gloucestershire. I was very concerned about the lack of engagement by Oxfordshire CCG with relevant stakeholders in Warwickshire in phase 1 of its consultation. There was very little communication between the Oxfordshire and South Warwickshire CCGs, despite the fact that there is obviously a knock-on effect on Warwick Hospital. Why was there not greater communication? Colleagues have raised that repeatedly, but with few outcomes.

[Robert Courts]

That intervention precisely illustrates the point I will make in the course of this small speech about a lack of public consultation. That is most marked in the areas we will be talking about—in my case, Witney in west Oxfordshire, and in the case of my hon. Friend the Member for Banbury (Victoria Prentis), Banbury and the Horton. The point is that the issues surrounding the Horton go far further than Banbury; they relate to Warwickshire, Northamptonshire and the north of west Oxfordshire. The lack of engagement is perhaps the main theme of my speech, so I am grateful for that intervention.

I will start by talking about Deer Park surgery. I was elected just under a year ago today, when I faced an unfolding local press crisis. There was a lot of press attention and, understandably, an extremely distressed patient group centred around the closure of its much-loved practice, Deer Park medical centre. To give a short history, the practice was run by Virgin Care. The contract ended and was retendered, and Oxfordshire CCG health bosses received a bid from Virgin that, in their view, did not meet the requirements they were looking for, so they decided to close this small but very well-performing and popular surgery that provided an outstanding and much-needed service for Witney and its immediate surroundings.

The real kicker was that there was no real or meaningful consultation with the people of Witney before that took place. There was little discussion with the district or county councils as to how they may be able move things forward or help or to discuss the building that was coming down the line, nor with patient groups, who might have been able to suggest a way forward. The patients and elected representatives were simply told that it was happening. I met the CCG, Virgin and the patient groups many times, including here in Parliament, but the CCG was resolute: it had decided that the practice would close. Its view was that the lower level of service offered in the tender was not sufficient and that it could not justify spending that money on the surgery, even though the significant growth, to the tune of thousands of houses that we know Witney will have in the years to come, means that the need for the practice is not only present now but will remain so in the future.

The decision to close the practice led to legal action by a patient, funded by legal aid, to keep it open. After sustained campaigning by myself, the patient group and local councillors, the Oxfordshire joint health overview and scrutiny committee voted that making that change without consulting was a substantial change in service, which—I hope I am not going beyond my remit in saying this—it clearly was.

The matter was referred to the Secretary of State for Health, who referred it to the Independent Reconfiguration Panel. That was the first time a primary care decision had been referred to that level—the highest possible level. Ultimately, the IRP ruled that the CCG did not have to reopen the practice, but it did provide specific strictures about the way the decision had been handled and about consultation. It specified that the CCG needed to improve the way that it engaged and further to consider Witney’s healthcare needs.

I hope everybody will forgive me if I quote a short chunk of the IRP report that is pertinent to my point:

“The CCG should immediately commission a time limited project to develop a comprehensive plan for primary care and related services in Witney and its surrounds. At the heart of this must be the engagement of the public and patients in assessing current and future health needs, understanding what the options are for meeting their needs and co-producing the solutions. This work should seek to produce a strategic vision for future primary care provision in line with national and regional aims and should not preclude the possibility of providing services from the Deer Park Medical Centre in the future.”

It is quite clear from that report that the CCG requires a separate project to assess the primary healthcare needs of Witney. Its immediate surrounding areas are included, but that wider reading should not include the entirety of west Oxfordshire, which would enable the CCG to—as it seems to wish—simply wrap this piece of work into the wider STP work it is carrying out in any event.

The IRP is clear that the CCG is required to produce a specific, specially focused piece of work on Witney and its primary care needs. That is what the people of Witney should have. That should include a consideration of the impact upon projected housing growth in and around the town and a roadmap for primary care, covering what will be provided, by whom and at what place. Above all, the people of Witney should be presented with a range of options and scenarios, because if there is only one, there is no consultation. The CCG’s approach is a little bit like Henry Ford saying to the customer, “You can have whatever colour car you like, provided it’s a black one.”

I opened with that story and took some time over it because it is a microcosm of the problems that west Oxfordshire is facing with its CCG, and I suspect—we will hear from them in due course—that other Members in Oxfordshire feel the same. Oxfordshire has been facing a systemic issue with its CCG. The public have not been fully consulted and engaged in a dialogue about the overall picture of the future of healthcare in Oxfordshire any more than they were over the future of Deer Park medical centre.

The CCG is embarking on a consultation regarding primary care in Oxfordshire over the next month, and I am sure all colleagues will join me in engaging with that process, but there are lessons to be learned from Deer Park. I focus on it today because I want those lessons to be learned, and I am keen that we look at how we can avoid this happening again, rather than simply look back and dwell on the mistakes of the past.

Let me be quite clear: I am not a doctor. I do not presume to tell doctors, healthcare professionals or those who commission them how to do their job. I am one of those who feel that, by and large, the profession should be left in peace to do what they do best and to practise their job. However, I expect the people of Witney to be consulted at all times. I expect their voice to be heard and listened to, and for their needs to be met.

The impression should not be gained that I am against any change. I accept that healthcare professionals must allocate their resources in the most efficient way to ensure the best treatment for patients. I might not disagree with changes being made per se, if there was a clinical need, they worked well with other healthcare provision in the area and they were in the interests of the people of Witney and west Oxfordshire, including when we consider the challenges of the future, particularly in respect of housing. I might not be against what is suggested, but if there is to be change, the public and local stakeholders must be fully informed and involved in decision making at the earliest opportunity. The local community must not be surprised by changes being sprung on them. They must be aware of how any proposed changes will affect them and why those changes, in the CCG’s view, need to be made. If the changes are indeed for the better, the sensible, reasonable people of Witney and west Oxfordshire will support them, provided that they are properly explained.

I shall move on to the far wider issue of the STP process across west Oxfordshire. As I said, I do not necessarily disagree with decisions that are made from a clinical perspective. I might or might not agree with decisions, although let me be clear that I do disagree with some of the decisions that have been made. However, what always concerns me in every case is the way in which they are handled.

I have made my response to phase 1 of the STP publicly available—it is on my website—and it clearly outlines my concerns. I will not go through it all in detail now, but I will go through the headlines. The first is “Process”. I do not feel that the STP should ever have been split into two phases, and I made that abundantly clear to the CCG at the time. It is a simple headline point. How can we assess Oxfordshire’s healthcare needs when we hive off the decisions for the Horton, which have an impact on Chipping Norton, Warwickshire and Northamptonshire, and then say that there are some other decisions that are linked inextricably to the first section that we will look at at some future point—a date that keeps going further back into next year? The whole point of the STP process is to look at healthcare needs in the round, not piecemeal, with penny-packet decisions made earlier, making that process impossible. As I have said, the CCG has a duty to the public to provide multiple viable solutions to enable true choice and real consultation.

I shall give an example of how local communities have not been involved. The projected ambulance times from the Horton or Chipping Norton to the John Radcliffe Hospital are simply improbable. Indeed, the journey times are wildly optimistic. There is an over-reliance on Google Maps. Anyone who lives locally in Chipping Norton or Banbury can tell us how long it actually takes to get from either of those towns to the John Radcliffe in traffic, because they do that journey all the time. There is a serious lack of indication of any involvement with South Central Ambulance Service, and they are the people who will be taking heavily pregnant mothers in the late stages of labour from north Oxfordshire or the north of west Oxfordshire to the John Radcliffe. The decision permanently to downgrade maternity services at the Horton, which was made by the CCG board in August, has been unanimously referred by the health overview and scrutiny committee to the Secretary of State, alongside the judicial review appeal that we know about. I go no further at this stage than to say that that indicates a seriously flawed decision-making process.

I make it clear at this stage that for those who live in the north of my constituency, around Chipping Norton, the downgrade of the Horton is greeted with utter dismay. It is important to understand why. Chipping Norton is rural. It is one of the highest places in Oxfordshire; it is one of the few places that still gets snow in winter—people do not get it anywhere else, but they do in Chipping Norton. A journey to Oxford takes, with traffic, the best part of an hour, or more if someone is in one of the outlying villages. I made it clear in the baby loss debate last week that I fear the consequences of an absence of proper obstetric services in the north of Oxfordshire, even more so if the Horton midwife-led unit does not have a standby ambulance. Those proposals are simply not safe, and the deeply moving baby loss debate reminded us last week, if we ever needed reminding, of the consequences of getting this wrong.

For the same reasons, the services at Chipping Norton hospital itself must be safeguarded. Chipping Norton is seeing significant development and needs its own NHS services, which are based in a new building alongside a superb GP medical centre. Perhaps the best example of the mess caused by the split consultation is the confusing reference to the possible closure of the Chipping Norton MLU in phase 1, which purports to deal only with the Horton. How on earth can we say, “We’ll have as a possible solution in phase 1 the possible closure of Chipping Norton; oh, but we won’t make any decisions about Chipping Norton until we come to phase 2”—which will be at some stage in the future—when that clearly impacts on the Horton? How can we decide what is right at the Horton unless we know what there will be at Chipping Norton? It is the same point again. We cannot decide on the future of Oxfordshire’s services unless we look at them as a whole. They ought not to be hived off piecemeal.

Let us look ahead to phase 2. I hope that it is clear from the points I have made that the consultation around phase 1 was inadequate. I stress again that I am not a doctor. If the decisions are in the interest of public safety, I of course appreciate their importance.

--- Later in debate ---

[John Howell]

I thank the Minister for that point; I was not suggesting that it was an inevitability. However, at this stage let me extend an invitation to him to visit the hospital so he can see how it works and how it has integrated social care with the medical activities there. It is based around a RACU—a rapid access care unit—which is similar to the EMU—emergency multidisciplinary unit—in Abingdon that is being proposed elsewhere. As I said, it turns the hospital into a diagnostics hospital, similar to a hospital developed in Welwyn Garden City that I went to see.

I saw the difficulty for the CCG with regard to its consultation when I went to a SELF—a South East Locality Forum—meeting. People from Henley were sitting around the table with big beaming smiles on their faces saying how wonderful the hospital was, and a member of the CCG had to stop them and say, “Well, it is a pity you didn’t say that when we were developing the hospital. Right to the end of the consultation you were attacking us on this and on taking the beds out and putting them in a care home at the side of the hospital. That is working very well and now you say that it is absolutely wonderful.” The fact is that, apart from some minor snags with the new hospital, it is a fantastic new investment by the Department of Health. It shows the way a community hospital should be developed not just in Oxfordshire but across the country. I repeat my invitation to the Minister to come and visit.

The great thing about the hospital was not the consultation initiated by the CCG but the support that I got from the Royal College of Physicians, which came out very strongly in favour of an ambulatory healthcare model and very favourably in support of the hospital. That is an interesting point, which goes back to my comments in support of my hon. Friend the Member for Witney about the lack of consultation experience on the part of the CCG. That organisation is willing to learn, and I hope that it will. I also hope that we, as MPs who meet it from time to time, will be able to keep up our pressure on it to deliver the sort of services that we feel our constituents want.

[Nadhim Zahawi]

On the point about learning, the Oxfordshire clinical commissioning group has only one district council from Warwickshire—Stratford-on-Avon District Council—on its board. In phase 1 of the consultation, which began in January, it only met the council in March; the council’s overview and scrutiny committee had requested a much earlier meeting. Should that not be part of the learning process?

[John Howell]

I fully agree that it should be. As I said, I am not here to defend how the CCG does its consultation. If I had the chance, I would make many changes to the consultation, and including others on the list of people who will be consulted as part of the decision-making process would be an important part of that.

I think I have probably said enough both to support my hon. Friend the Member for Witney and to make the point that it is possible to get through even a bad consultation by a CCG and get a fantastic hospital—ours is doing a brilliant job for all the constituents of south Oxfordshire, not just for one town.

Contaminated Blood

Nadhim Zahawi Excerpts

Tuesday 11th July 2017 Commons Chamber

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I am very grateful to you, Mr Speaker. May I join colleagues in paying tribute to the hon. Member for Kingston upon Hull North (Diana Johnson) and the work she has done in leading the all-party group, as well to my hon. Friend the Member for Worthing West (Sir Peter Bottomley), who has been a joint chairman of that group?

I have been working with the victims in my constituency since 2011—for the past six years—and I consider myself a new boy when it comes to this particular tragedy and scandal. My right hon. Friend the Member for North East Bedfordshire (Alistair Burt) has spent many hours working tirelessly on behalf of those of his constituents who are victims. I pay tribute to him; I know he wanted to take part in the debate but could not because of Government business.

I thank the Prime Minister for listening to the victims of this extraordinary tragedy and to colleagues in the House, and announcing the inquiry. I acknowledge the Minister’s saying to colleagues that the Government are in listening mode on the inquiry’s terms of reference and that they will put the victims at its heart. That is what the victims would expect, and they will be grateful for it.

Many victims—this is certainly true of my constituent Clare Walton—initially did not want an inquiry; they wanted a settlement instead. I pay tribute to Andy Burnham for his work on this issue, as well as to the journalists the hon. Member for Kingston upon Hull North cited. The new evidence that was uncovered led Clare Walton to change her view, and she is now very much supportive of and looking forward to engaging with the inquiry.

It is important that the inquiry looks into the subsequent treatment of victims and holds the relevant bodies to account. On Clare Walton’s behalf, I have been attempting to communicate with the Macfarlane Trust, which was one of the five charities set up to help the victims. I say “help,” but I have to tell the Minister that in my experience the Macfarlane Trust has done anything but help my constituent. It has behaved in an utterly despicable way. It refuses to meet my constituent or me—I have requested meetings for the past six years, but they always come back with a reason why they cannot meet.

The trustees of the Macfarlane Trust have bullied my constituent and “fed her with scraps”—those are her words—while at the same time having a charge over her property for all this time and making a profit on it. The trust refuses to discuss the future of the charge on her property. The scheme administrator will soon be changed to the NHS business advisory service, so she wants to know what will happen when that change takes place. I hope the Government will take some of these issues away and respond more fully at the appropriate time. The Macfarlane Trust says that it cannot give any more information until it has clarity from the Department of Health about transitional arrangements; Clare really wants that clarity. I hope the Minister will intimate, as his predecessor did, that the Macfarlane Trust is not much longer for this world. I have struggled even to speak to the trust on the phone.

Another of my constituents, Adrian Melson, is particularly concerned about the discretionary payments on which many victims rely. I hope that as the Minister begins to look at the evidence before him he will look closely at making sure that, if discretionary payments have become something much more permanent, they are recognised as such and not treated as discretionary. Under the previous Prime Minister, whom I commend for coming out and wanting to resolve this issue, we promised our constituents that no victim would suffer financially under any compensation structure we put in place.

I shall take Mr Speaker’s eloquent words on board and end there, other than to say that this is not a party political issue: successive Governments have failed the victims. I hope we can now come together and have this inquiry, but we must make sure that there is a clear timeline and a deadline.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate my hon. Friend the Member for Kingston upon Hull North (Diana Johnson) on her leadership on this issue. On the hon. Gentleman’s point about coming together, it is important for this issue to be considered at a UK level, because it predates devolution. It is important that the Minister—I thought he was going to speak second in the debate—works with the devolved Administrations and that any future compensation is provided at a UK level so that there are no second-class citizens in the United Kingdom.

[Nadhim Zahawi]

I think the victims who looked at the Scottish settlement have taken that point on board—that is certainly the case with Adrian Melson—and I am sure that the Government listened to the hon. Gentleman’s view. Let us come together and provide a clear timeline for when the victims can get not only justice but compensation.

[Several hon. Members rose—]

Contaminated Blood and Blood Products

Nadhim Zahawi Excerpts

Thursday 24th November 2016 Commons Chamber

[Diana Johnson]

Yes; the hon. Gentleman makes a very important point. One of the unintended consequences of devolution is that we are ending up with such a mishmash of schemes, and that is of concern for the people affected.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

One of my constituents, Mr M, makes exactly that point: it is unfair that the Scottish settlement is so different from the settlement for him in Stratford-on-Avon. Most importantly, one of my constituents, who is in the Public Gallery, wants to remind the House that there are fewer than 300 primary beneficiaries left, and it is vital that they are not forgotten.

[Diana Johnson]

Absolutely. That is a very important point. I will come on to the primary beneficiaries in a while, but I will now make some progress.

My first concern was about the different schemes that are available. The second issue, which is also important, is that we know the five existing trusts will be amalgamated into a single body to administer the scheme at some point in 2017. I am deeply troubled by the fact that the administration of the new body looks likely to be done by a profit-making private company. I know that Atos and Capita have attended meetings with Department of Health officials about the new contract. Formal tender submissions will be due soon, with a decision on the contractor set to be made in 2017. No Health Minister has had the courtesy to tell the all-party group of these plans, nor were the beneficiaries asked for their views about this in the survey done in January. Even the Department’s response to the survey, which was published in July, made absolutely no mention of such a prospect. Alongside hon. Members on both sides of the House, I cannot support proposals to contract out provision to Atos or Capita.

Let me remind the House how many in this community were infected in the first place. Many contracted HIV and hepatitis C from American blood products supplied by profit-making private companies. The United States, unlike the UK, has always allowed the commercial purchase of blood products, and those products were often donated by people who desperately needed money and were willing to be less than honest about their chances of infection. This is the reason why so many in the affected community harbour such distrust of private companies.

--- Later in debate ---

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Since being elected to this House, every Friday at surgery I have talked to one or two constituents on this subject. In the few moments that I have, I want to share with the House what it has taught me about the impact of this extraordinary tragedy. I have lived with them through all the frustrations and all the false hope that we will finally reach a settlement.

I pay tribute to the hon. Member for Kingston upon Hull North (Diana Johnson) for the incredible work she has done in leading all of us on a cross-party basis to get the message across in respect of all those people—all those human beings, and all that human suffering. I also congratulate the Minister on her role and pay tribute to her predecessor, who worked hard, working with many of us, to try to get to a full and final settlement. I hope the Prime Minister and the Treasury are listening carefully to this debate, and that it is not beyond us to work together now to get what we have been promising our constituents—those people who, through no crime of their own, have been infected with HIV or hep C—that they will get a settlement and, as the previous Prime Minister said, nobody will be worse off.

This is a question about fairness, as the hon. Member for City of Chester (Christian Matheson) rightly emphasised. I do not think it is fair that my constituents should feel that people infected in Scotland get a better deal than they do in Stratford-on-Avon.

The difficulty for Mr M—as I will refer to him, because it is right that he maintains his privacy—is that for a very long time there has been something called the discretionary payment, which in reality is not discretionary in any way. It is something that he absolutely relies upon to make sure that at the end of the week and the month he can balance the books; he can live just well enough to be able to feel that he has regained his dignity and his freedom. The difficulty for the Minister is that there is this sum of money, but I urge the Government to look again at this matter, because it could lead to a legal challenge if people feel that they are being unfairly treated vis-à-vis Scottish settlements or other parts of our country. Some of my constituents are considering that course of action.

I want to move on to the case of Ms W, whose anonymity I am protecting because she deserves that protection. Her issue has involved the Macfarlane Trust and she is not alone in feeling that the trust is not fit for purpose. I have attempted to deal with the trust on her behalf; every step of the way it has blocked my attempts to get her case across. My message to those on the Front Bench is that it would be an outrage if the trust were to continue to deal with my constituents in any way, because it is simply not fit for purpose.

I will end my speech by mentioning Mr D, who is infected with hepatitis C, to remind colleagues of the urgency of this matter. We must not find ourselves back here again in a year’s time still looking for a settlement. Just this morning I received a call from Mr D’s wife, who works in our NHS, to tell me that he had been admitted to hospital following a severe deterioration in his liver due to the advanced hepatitis C. He might not be around by the time we come to a settlement, so I urge the Minister to remind her Government that this is about fairness and about speed of settlement.

Brain Tumours

Nadhim Zahawi Excerpts

Monday 18th April 2016 Westminster Hall

[Helen Jones]

That £35 million includes spending from the voluntary sector. The report states that it is simply not good enough for the Government to leave decisions on such spending solely to the voluntary sector.

We welcome the decision of Cancer Research UK and Children with Cancer UK to prioritise spending on brain tumour research as a cancer of unmet need, but we are calling on the Government to identify the gaps in funding, to take action to remedy them and most important, to make it clear that they see this research as a priority. We heard evidence that creating a positive research environment with an emphasis on increasing funding would not only keep our scientists in this country, but attract scientists from elsewhere in the world. Britain has the potential to be a world leader in this sort of research but at the moment we are not.

The Government said in their reply to the petition that decisions on funding are based on a number of factors, including the size and quality of the workforce. That ignores the fact that, as the hon. Member for North West Hampshire (Kit Malthouse) said, this is a Catch-22 situation. At the moment, young trained oncologists are having to change specialties or leave this country to pursue their research. Without an increase in funding, we simply cannot attract the good PhD students and postdoctoral researchers we need to make progress and to build up the cohort of young scientists who will go on to research this disease and may make the important discoveries of the future.

There are other barriers to research. One is the difficulty of getting enough tissue to work on. Only about 30% of patients are asked whether they will donate tissue, yet polls show that up to 90% would do so if asked. We do not have enough specialist support nurses and, according to the evidence, we do not even have enough people who can transfer tissue from hospitals to laboratories.

The other problem that researchers come across—the Government really could act in this area—is that they must make applications to many local biobanks to get enough material to work on. Often, those biobanks have different procedures, application forms and so on. We urge the Government, while keeping safeguards in place, to try to tackle the problem of biobanking. Unless researchers have access to tissue, they cannot do the fundamental research that we need. The University of Southampton has started to use tissue left over from diagnosis but, again, the system is grossly underfunded. In the end, I am afraid the issue comes back to money if we want to make progress.

We also highlight other issues, such as the need for access to non-therapeutic drugs, which can improve brain surgery outcomes, and the need for access to off-patent drugs, which can be used for new indications. The Government said in response to the Off-patent Drugs Bill that they did not need a Bill to allow that. We need to make progress in that area urgently, but I will not spend too much time on it now, because we are pressed for time.

I do, however, want to say this to the Government. I said earlier that brain tumours may not be as rare as is perceived, and the reasons for that are simple. The numbers are going up. The system of recording has been changed. The experts who spoke to us said that they do not yet know the reasons for that. Secondary tumours are not recorded, yet they still have to be treated, and benign tumours are not recorded, but they can still kill. It is that, and the huge burden of the disease, that we think the Minister ought to take into account, or at least ought to get his Department to take into account, to deal with this issue. The five-year survival rate for brain tumours is only 19.8%. When it comes to cancer as a whole, 50% survive for 10 years or more. That is the difference, because of lack of funding and lack of research.

I hope that the Minister will look at the personal stories in our report. They are there for a reason. Let me remind people of some of them: Saira Ahmed, dead at the age of 6, Abbie Walker, also dead at 6, Lucy Goulding, who died at 16, and Stephen Realf, whose sister started the petition. An RAF officer who was apparently in excellent health, he was diagnosed at 19 and dead at 26. There are many more, whom I do not have time to name. There are those who died and those who survived—remarkable people such as Hannah Jones, a young woman who gave evidence to us and now devotes her time to promoting the HeadSmart campaign. And there are the families of those who died. In all my time in Parliament, I have never met such an amazing group of people. They had undergone the most appalling tragedies, but did not want to point the finger of blame. They simply wanted to use their experience to make life better for others. They deserve that we listen to what they say.

I say gently to the Minister that it is not often in ministerial life that one gets a chance to make a real difference. We know that Ministers get bogged down in the minutiae of every day and that things come down the chain to them, but this is a chance to make a difference. It is a chance to leave a mark that will be there long after he leaves ministerial office—not that I am hoping he will leave soon—long after most of us have left Parliament, in fact.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

Will the hon. Lady give way?

[Helen Jones]

I am going to wind up my speech, if the hon. Gentleman will forgive me.

This is a real chance to save lives, so I say to the Minister: read the report and champion its recommendations in government. That way we can have world-class scientists in this country and save the lives of many people, including young people, who will have the chance to make an enormous contribution to this country. It is as simple as that. This cancer has been neglected for far too long. That now has to change. [Applause.]

--- Later in debate ---

[Ben Howlett (Bath) (Con)]

It is a pleasure to serve under your chairmanship, Sir Edward. As a member of the Petitions Committee, it is a pleasure to be called to speak in this debate. I add my thanks to those who put together the petition, particularly Maria Lester and the Realf family—their love and passion for their son and brother came across in all our evidence sessions—and to all the others who came along and gave evidence. Hopefully this will be their report.

I declare that I am the chairman of the all-party parliamentary group on rare, genetic and undiagnosed conditions. Given the vast number of factors that cause brain tumours, I join colleagues in using this opportunity to call on the Government to do more to redistribute research funding more fairly among different cancer groups. There are limited resources available.

[Nadhim Zahawi]

I commend the hon. Member for Warrington North (Helen Jones) on securing this important debate. The UK model of partnership between Government, industry, universities, the NHS and charities is the right leadership model. The Government have led the way with a taskforce on anti-microbial resistance; maybe the way forward here is a taskforce on how to deal with early diagnosis and extra funding, as well as bids from charities that would attract that funding.

[Ben Howlett]

I agree that the Government have been leading the way. No doubt we will hear from the Minister about some of the work that they have been doing to create such partnership models. I pay tribute to the work that my hon. Friend has been delivering in that area.

Limited resources are available to fund research. A vast number of conditions fight desperately for every resource available, and researchers in every field work hard to get one step closer to a cure. It is important that we take a moment to thank all our constituents who are working tirelessly to advance medicine, find cures and improve the life chances of all of us.

Contaminated Blood

Nadhim Zahawi Excerpts

Tuesday 12th April 2016 Commons Chamber

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

It is a privilege and an honour to follow the hon. Member for Kingston upon Hull North (Diana Johnson). I commend her for her leadership in bringing Parliament together on this very important subject.

Thank you, Madam Deputy Speaker, for allowing me to speak in this important debate on such a sombre and saddening topic. I speak as the representative of a number of individuals in my constituency whose lives and the lives of those they love have been grievously, unfairly and irreversibly affected by the terrible injustice we address this afternoon.

The Prime Minister, on behalf of the Government, has apologised for the infection of individuals with contaminated blood—an apology that is now more than a year old, for a scandal that is more than 20 years old. When he rightly addressed the matter last year, my right hon. Friend said that it was

“difficult to imagine the feelings of unfairness”—[Official Report, 25 March 2015; Vol. 594, c. 1423.]

that those who have been affected must feel. My constituents and others around the country were let down, when they or their family members were at their most vulnerable, by the health service that was supposed to keep them safe. It truly is difficult to imagine.

I am sorry to say that the feelings of unfairness have not been lessened by the proposals in this consultation; if anything, they have been made worse. Lives have been changed and lives have been taken. So much has been lost, but the Government must now focus on lessening and mitigating this loss as much as can ever be possible.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

On mitigating the loss, I am here to represent several constituents, but one in particular—Andy Gunn. He is extremely concerned by the Health Secretary’s suggestion that the funding might come from the NHS budget. Does the hon. Gentleman agree that that would be highly inappropriate?

[Nadhim Zahawi]

I have had similar representations from my constituents, and I hope that those on the Treasury Bench take on board the comments of Andy Gunn and of others in my constituency.

The vastness of the loss we are addressing today is such that even the ideal solution cannot do much to address it, but what has been proposed does so much less. The proposals contained in the consultation are far from what the victims of this injustice expected or were led to believe they would receive. I know that many of my colleagues have similar stories to tell. I have had constituents visit my surgeries who have always been so incredibly strong about what has happened to them and hopeful for the potential of a good settlement from the Government, but have now been left in tears. They feel let down and fear that these proposals will make life even harder for them.

Those are people whose lives have turned out to be radically different from what they had planned, through absolutely no fault of their own. They struggle to get insurance or pensions—things we take for granted in this place—and have had their careers curtailed. Even worse, they have been unable to have children, or have seen loved ones die tragically soon. These people should be helped and need to be provided with a full and final settlement that allows them to move on, without being worse off.

There remains much misunderstanding about the medical conditions of the victims and the treatments available. The improvements in care for those with HIV/AIDS have been a blessing for many. However, the disease remains incurable, and haemophiliacs and those with other conditions such as hepatitis C cannot take the medication that could help them. We must also properly consider those infected by more than one disease. Those with both HIV and HCV have a threefold greater risk of progression to cirrhosis or decompensated liver disease than those infected only with HCV. We should not misunderstand, underestimate or underplay the dangers of these diseases.

My constituents, and the constituents of so many of us here today, have suffered a grave injustice. It is an injustice that they never expected to suffer, would never have been able to prepare for, and for which the blame rests entirely elsewhere. They or their loved ones have experienced terrible illness and their lives have been changed or ended. “Unfairness” does not seem strong enough to describe it, but that word is the best we can do.

The Prime Minister was right to apologise, but this consultation does not go far enough. When my constituents only have to look north of the border to see a better deal on the table, with talk about public monuments to those sadly lost, and are then faced with an option here that could leave them in an even worse position, anger and resentment are more than understandable.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Does the hon. Gentleman agree that there is a danger that the consultation will undo the good of the apology? The impact assessment states that the intention of the policy is to safeguard the interests of those who are chronically infected and receive an annual payment, but that annual payment is no longer index-linked, and people have made their assumptions on that basis. My constituent, Norah Tracey, has had to take early retirement because she has hepatitis C, and she based her projections on those financial assumptions. If it is no longer index linked, we are making a mockery of what the impact assessment says and we are undoing the sincerity of the apology.

[Nadhim Zahawi]

I thank the hon. Gentleman for that intervention. I have heard similar representations from my constituents. Indeed, the all-party group found that the representations were very similar across the board. I sincerely hope that those on the Government Front Bench are listening to these interventions today.

The Prime Minister said last year:

“As a wealthy and successful country we should be helping these people more. We will help them more”—[Official Report, 11 March 2015; Vol. 594, C. 289.]

I agree with him and support those words entirely. I hope that the Minister and the Department of Health will ensure that the settlement for the victims will meet the intentions of what the Prime Minister said last year.

[Several hon. Members rose—]

Victims of Contaminated Blood: Support

Nadhim Zahawi Excerpts

Wednesday 16th December 2015 Commons Chamber

[Jane Ellison]

I slightly regret the right hon. Gentleman’s tone, and I am totally mystified by his point about the meeting. A meeting was organised with the all-party group and his colleague the hon. Member for Kingston upon Hull North. I think the meeting might have been moved once, at the request of the all-party group, but the details and arrangements for the meeting with me were circulated by that group, and six right. hon. and hon. Members attended the meeting. I am sorry if there was some confusion, but I do not think it was on the part of me or my officials. A number of colleagues came to the meeting. We had a very useful discussion and I have sought to update others since.

The right hon. Gentleman is right that we need to move towards a conclusion, but it is also a matter of record that he was, at times, a member of the last Labour Government, who, for 13 years, did not move forward on this matter.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

The Minister will be aware of my frustration in dealing, on behalf of a constituent, with the Macfarlane Trust, which she knows, from the weight of evidence in the consultation, is not fit for purpose. Will she confirm that any full and final settlement will not be administered by that trust?

[Jane Ellison]

I am well aware of the shortcomings of some of the schemes identified by colleagues and those affected by this tragedy, and I have obviously read the details from the all-party group and other Members’ communications. I have confirmed before that reducing the number of schemes will be part of the consultation on reforming the schemes, so my hon. Friend’s point is well made. For the record, though, I should add that I had a meeting recently with the staff of the schemes—the people who man the phones and deal on a day-to-day, week-to-week basis with sufferers—and I am clear that they, as distinct from the people who head up the trusts, are working hard to offer a service to people in difficult circumstances.

Contaminated Blood

Nadhim Zahawi Excerpts

Thursday 15th January 2015 Commons Chamber

[Alistair Burt]

My right hon. Friend has been a doughty campaigner on this issue, and I have been grateful to her for her support. Let me put some flesh on what she has just said and on those figures. I will start with Hayden. His wife wrote to a friend of mine and said:

“I would dearly like to see an end to the campaigning and put this issue to bed. There needs to be an apology, there needs to be a big overhaul of the various Trusts… definitely not to make you feel as though you are going ‘cap in hand’ to them. That’s disgraceful. I want to go to Hayden’s grave and say once and for all ‘it’s sorted.’ Then I will know he is resting in peace.”

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

On the point about the support mechanism, does my right hon. Friend agree that it is unacceptable that the very organisations that were set up to support individuals, such as the MacFarlane Trust, do not treat beneficiaries equitably? My constituent who went to the trust and questioned the response times was branded a troublemaker and her applications for grants were either delayed or, in some cases, frustrated completely. That is the reality on the ground. Will he say something about some of those organisations?

[Alistair Burt]

My hon. Friend is right that many beneficiaries have expressed deep concern about the workings of the trust. The all-party group report that came out yesterday will be addressed by other colleagues. On the MacFarlane Trust in particular he should know that I share his concerns. I do not believe that that trust is salvageable or saveable, and I will speak about that later.

Oral Answers to Questions

Nadhim Zahawi Excerpts

Tuesday 1st April 2014 Commons Chamber

[Mr Hunt]

The most damaging thing for patient care would be a pay award, which the hon. Gentleman sounds like his is supporting, that would mean the potential loss of 6,000 nursing jobs from our front line. That would be incredibly bad for patients and incredibly bad for nurses. All nurses are getting a minimum 1% rise. That is the right thing to do. That is supported by the shadow Chancellor but not, apparently, by the shadow Health Secretary.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

20. In a report published by the King’s Fund last month, South Warwickshire NHS Foundation Trust was highlighted as a leading example of compassionate care for the frail elderly. Will the Secretary of State join me in congratulating the trust’s staff on the move away from tick-box targets, and visit the trust to see this new emergency care model in practice?

[Mr Hunt]

I much enjoyed a recent dinner where I had the chance to meet a consultant from South Warwickshire NHS Foundation Trust. One of the discussions I remember having with him was how inside the NHS the definition of success for a hospital was in the past too narrowly focused on targets and financial balance, and not enough on patient safety, compassionate care and clinical outcomes. He, and many other people in the NHS, welcome the change that this Government have made in the past year to change that balance.

Hepatitis C (Haemophiliacs)

Nadhim Zahawi Excerpts

Tuesday 29th October 2013 Westminster Hall

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I am grateful for this opportunity, and I congratulate the right hon. Member for Wythenshawe and Sale East (Paul Goggins) on securing this important debate. I know that many colleagues feel passionately about the issue. Indeed, one can feel little else when one realises what a long and painful shadow has been cast on the haemophiliac community. They are people who put their faith in a system that has let them down.

I welcome the points raised by other right hon. and hon. Members on the anomalies in financial support for those who contracted hepatitis C. Indeed, those issues have affected one of my own constituents, Mr Dennis, who was infected with hepatitis C in the 1980s and has since been diagnosed with polyarthritis and, most recently, with liver cancer. He has raised with me on a number of occasions the lack of additional support for those with tertiary conditions such as polyarthritis, as well as his difficulty in obtaining disability benefits, for which previous assessments have been based on his mobility rather than his ability to care for himself and to undertake everyday tasks. Although polyarthritis affects only some 4% of chronic hepatitis C sufferers, it has had a huge impact on Mr Dennis’s quality of life.

There is another group that warrants significant attention, however: those who contracted HIV through their NHS treatment. When we talk about financial support mechanisms, we should learn from their experience of the Macfarlane Trust, which sadly, is not a tale of best practice. One person said that the trust

“neither cares nor understands what we have been, or are, going through”.

Another said that the trust is:

“No longer fit for purpose”.

A third person said that the trust is:

“An embarrassment to the government that funds it”.

Those are just a selection of the damning descriptions of the Macfarlane Trust that I have received from both beneficiaries and, significantly, trustees. I know that Health Ministers have tried hard to regain the trust of the haemophilia community, but the sad fact is that their efforts are constantly undermined by the failings of the Macfarlane Trust.

We cannot turn the clock back and undo the damage done, nor can we pretend that we can wholly make up for the years of distress. However, we can, and must, ensure that the support provided by the Government is not administered in a way that serves as a further source of anger, upset and frustration. Yet I hear time and time again that that is the daily frustrating experience of many beneficiaries. The experience is that policies are created ad hoc with little continuity or clarity, that intrusive and personal details are demanded in response to the simplest of requests and that the attitude towards beneficiaries is one of arrogance. Beneficiaries feel at best confused, and at worst bullied, by the very organisation created to support them.

In preparing for this debate, I have spoken to two previous trustees, who both suggested that the management of the trust was completely out of tune with the needs of beneficiaries. They described an organisation that was completely unwilling to make the case for further funding from the Department of Health and that dismissed complaints without due care and attention. Although I recognise that the trust is independent of the Department, the Minister must recognise the harm that is being done and, in turn, how that reflects on her Government.

I know many of those concerns were raised with the Minister’s predecessor, my hon. Friend the Member for Broxtowe (Anna Soubry), during the recent AGM of the all-party group on haemophilia and contaminated blood, and I therefore hope that the Minister will continue with the internal review that I understand was subsequently initiated, and that she will agree to meet with representatives from across the community. The community do not want to be perceived as victims forced to go “cap in hand” to beg for support.

Clare Walton, another of my constituents, says:

“I want to be empowered, and have autonomy over my own life, rather than continue with this victim culture through charity.”

The sobering reality is that the Government cannot afford to wait another 20 years. The people who need support are dying in ever increasing numbers.

As my hon. Friend the Member for North East Bedfordshire (Alistair Burt) rightly commented, the Prime Minister has an outstanding record of seeking to address historical wrongs. Personally, I cannot think of a better time to address

“the worst treatment disaster in the history of the NHS.”

[Jim Dobbin (in the Chair)]

I thank all hon. Members who have taken part for their time discipline in this extremely important debate.

--- Later in debate ---

[Jane Ellison]

May I continue, as I fear I will not get through the remaining points? I will be happy to speak to the right hon. Gentleman straight after the debate.

We have made available to Lord Penrose any additional documents that he has felt are necessary to his inquiry. While it is continuing, I shall not comment on the inquiry or evidence given to it, but I shall consider whether the Department will make a response. Given that Lord Penrose is considering pre-devolution matters, it is hard to imagine that there will not be implications to which I and the Department shall need to respond. We do not know the exact shape of things, but the inquiry is on my radar, and we shall be considering it.

The hon. Member for Easington (Grahame M. Morris) made a point about specialist hepatitis C nurses. That is the responsibility of NHS England, and I undertake to write to that body to draw its attention to his comments.

I think that I have now covered most of the specific points that I can answer today; unfortunately, I cannot respond to some of the detailed points. There was a challenge about the number of Skipton Fund stage 1 beneficiaries; there are difficulties in identifying the numbers, but we will examine that issue and see whether we can respond in more detail to the challenge given by the hon. Member for Kingston upon Hull North.

Inevitably the debate has been, for me, an invaluable opportunity more to hear some of the arguments than to give specific answers on the important points that colleagues have raised so well on their constituents’ behalf. I am happy to have the meetings that have been suggested.

[Nadhim Zahawi]

Will the Minister give way on that point?

[Jane Ellison]

If my hon. Friend will forgive me, I need to conclude.

I have heard the big challenge that I have been set this morning. It is one that many of my distinguished predecessors have been set, and I do not underestimate its nature or scale. There is, and has been for a long time, great unhappiness about this topic; many people have wrestled with it. I assure right hon. and hon. Members that I will do my best to rise to the challenge.