National Security and Investment Bill

Nigel Evans Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Wednesday 20th January 2021 Commons Chamber

[The Secretary of State for Business, Energy and Industrial Strategy (Kwasi Kwarteng)]

I beg to move, That the Bill be now read the Third time.

First, I would like to pay tribute to my immediate predecessor, my right hon. Friend—my very good friend—the Member for Reading West (Alok Sharma), who took the Bill through on Second Reading. I pay tribute to him for being such a motivating force behind this Bill, and also for providing excellent leadership in our Department up to only a couple of weeks ago. I wish him well, and I am sure he will continue the excellent work that he has already started as president of COP26, which I am sure will be a brilliant and vital success.

I would like to return to the very core of why we need this Bill. As my right hon. Friend told this House, the UK remains

“open for business, but being open for business does not mean that we are open to exploitation. An open approach to international investment must also include”—

has to include—

“appropriate safeguards to protect our national security.”—[Official Report, 17 November 2020; Vol. 684, c. 205.]

This Bill provides those safeguards.

Subject to the debate in the other place and the views of the other place, the Government will be automatically informed of certain acquisitions in key sectors and will be able to scrutinise a range of others across the economy. The Government will also be able to look at deals involving assets, including intellectual property, whose acquisition might pose a national security concern. There will be no thresholds for intervention, as there are currently under the Enterprise Act 2002. This means that acquisitions involving emerging innovative businesses will also be covered by the Bill. All this adds up to a significant upgrade to our abilities and powers to reflect the sweeping technological, economic and geopolitical changes across the globe over the past 20 years.

I would like to make further acknowledgement of the work done so ably by those from across the House and in my Department that has got us to this point. I thank the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), and the Bill team for their fantastic work to date. He even managed to convince me. I know he is working flat out to ensure we can all return to normal before too long. I thank those who have ensured that the proceedings of this House continued without any disruption in the meantime. I therefore place on record, Mr Deputy Speaker, my thanks to you, to Madam Deputy Speaker, and to all the House staff who have ensured that today’s proceedings and previous stages of the Bill were undertaken with exemplary smoothness—no mean feat in the circumstances.

I also thank the members of the Public Bill Committee from across the House for their keen and diligent scrutiny of the Bill, and particularly its Chairs, the hon. Member for Halton (Derek Twigg) and my hon. Friend the Member for Altrincham and Sale West (Sir Graham Brady). I also thank all those who contributed to this very important debate. We heard from eminent Select Committee Chairs. My hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) is no longer in his place, but I have known him for a very long time, and I was very pleased to hear his able contribution to this debate. I thank my right hon. Friend the Member for New Forest East (Dr Lewis), the Chair of the Intelligence and Security Committee. His expertise is widely acknowledged across the House and was brought to bear in the proceedings.

In addition, we heard from Members from across the House, including my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes), and my hon. Friends the Members for Beckenham (Bob Stewart), for Isle of Wight (Bob Seely), for South Ribble (Katherine Fletcher) and for Arundel and South Downs (Andrew Griffith). The right hon. Member for North Durham (Mr Jones) is an acknowledged expert, and devotes himself to these highly important issues. There were also contributions I noted from the hon. Members for Aberavon (Stephen Kinnock), for Ilford South (Sam Tarry), for Liverpool, Riverside (Kim Johnson), for Warwick and Leamington (Matt Western), for Caithness, Sutherland and Easter Ross (Jamie Stone) and for Strangford (Jim Shannon). I thank all those right hon. and hon. Members for their important contributions.

Although there have been one or two differences, I have above all been struck by the broad consensus that has emerged across the House on the Bill, and by how important it is that we all agree that the Government should act in this area. There is a degree of debate about the details of the Bill. I thank the Opposition Front Benchers—the right hon. Member for Doncaster North (Edward Miliband) and the hon. Member for Newcastle upon Tyne Central (Chi Onwurah)—and the SNP spokesperson, the hon. Member for Dundee East (Stewart Hosie). All have acknowledged the need for this crucial legislation. Broadly, they have approached the Bill in a constructive manner. For that, my right hon. Friend the Member for Reading West and I are and have been extremely grateful.

Returning to what my right hon. Friend the Member for Reading West said on Second Reading, this country has always been a beacon for inward investment and a champion of free trade. The Bill does not change that. It does not turn its back on that history, but it feels very apposite for me to say that prosperity and security should go hand in hand. The Bill really captures that insight and represents a proportionate approach to the threats we face in today’s world. On that basis, I commend the Bill to the House.

[Mr Deputy Speaker (Mr Nigel Evans)]

As this is the first time I have been in the Chair since your promotion and appearance at the Dispatch Box, I congratulate you on your new role.

[Edward Miliband (Doncaster North) (Lab) [V]]

May I begin by adding my congratulations to the new Secretary of State? Promotion to the Cabinet with such an important role as Secretary of State for Business, Energy and Industrial Strategy must be a proud moment for him, and it is in the interests of the country that he succeeds, so I offer him my warmest congratulations. I also take the opportunity to pay tribute to his predecessor, the right hon. Member for Reading West (Alok Sharma). We all wish him incredibly well in his important job as the full-time president of COP26. He and I approached our exchanges in a constructive spirit, meeting, I hope, the mood of the times, and I hope that I can have the same relationship with the Secretary of State.

If you will allow me to, Mr Deputy Speaker, I extend our congratulations to President Biden and Vice-President Harris; I think it is right to, as they came to office only in the last hour. The world already feels a better, fairer, and safer place than it did yesterday.

In this Third Reading debate, let me make it clear that we welcome and support the Bill as a necessary step in protecting our national security interests. It is important that we legislate to ensure that our national security is preserved in the face of evolving geopolitical, economic and, in particular, technological threats. Our country has been behind the curve on this issue and behind our allies, so action is long overdue. The Bill represents a belated recognition that the country requires a stronger regime to protect its national security.

Protecting national security is the essential, first duty of any Government, but it is only the first building block of an industrial policy. Before I discuss the Bill in more detail and how I hope it will be improved in the other place, I emphasise to the Secretary of State that while it is welcome, it forms only one part, though a particularly important part, of protecting, developing and nurturing key sectors of our economy. There are much wider lessons on which we still need to act on industrial policy. That forms the essential context for the Bill, and I flag it to the Secretary of State, as it is early in his tenure.

I say this in the constructive spirit that I mentioned at the beginning of my speech: I gather that the Secretary of State has said that he is a convert to industrial policy after, if I can put it this way, his wilder, free-market days. The days of his notorious pamphlet, “Britannia Unchained”, are apparently over, but there are important lessons that we have to draw on; the most fundamental is that good words from Government on strategic, mission-led industrial policy are welcome, but too often they are still not matched by deeds. That has been clear during this economic crisis.

One example is the scale of support provided to our manufacturing sector. Time after time, I have spoken to manufacturers who look enviously at support in other countries and say that the Government are simply not in the same league. We see it, too, in plans for a green recovery; I am afraid that the stimulus offered by France, Germany and others puts us in the shade. Indeed, while we have been debating the Bill, President Biden has, on being inaugurated, made a $2 trillion commitment to the green economy.

Our takeover regime is not fit for purpose when it comes to matters well beyond national security, either, as events over the last decade have shown—for example, there was Pfizer’s attempted takeover of AstraZeneca, and SoftBank’s takeover of Arm.

It is clearer than ever that when it comes to the big challenges facing this country, from national security to the climate emergency and our future prosperity, an active industrial policy will be one of the most important tools in our arsenal. The challenge for the Secretary of State is to match his words on industrial policy with deeds, and we will judge him on that. We certainly need to drop the tired, failed cliché that all the state can do to support the economy is get out of the way, deregulate, and cut workers’ rights. If that is the Secretary of State’s view of how best to support our economy, let me tell him that we will fight him every step of the way.

On the Bill, we have approached the task of legislating constructively, and I am grateful to the Secretary of State for acknowledging that. I pay tribute in particular to my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) for the brilliant job she has done in taking the Bill through the House on behalf of the Opposition. I also put on the record my thanks to my right hon. Friend the Member for North Durham (Mr Jones), and my hon. Friends the Members for Southampton, Test (Dr Whitehead), for Ilford South (Sam Tarry), for Warwick and Leamington (Matt Western), and for Aberavon (Stephen Kinnock), for their work on the Bill. I acknowledge the role of the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who has a big and important task relating to public health, and has also done an assiduous job on the Bill.

As we saw on Report, there are three particular ways in which Opposition Members believe that the Bill needs to be improved. I will briefly put them on the record, because they represent unfinished business for the other place. First, there is the issue of the definition of national security, and how it can be clarified for use in the Bill. We recognise, as we have said on a number of occasions, the difficulty of providing a comprehensive definition, given the evolving nature of the threats we face as a country. However, the Bill can and should provide greater clarity, not least for potential investors in the UK. I agree with the Secretary of State that it is important that our country be open for business.

That definition could be provided in the Bill or in other ways, and would be an essential source of reassurance for inward investors. The Foreign Affairs Committee published an excellent report on this yesterday, and as we saw on Report, there is agreement between the Opposition and that Committee on these issues. We hope the Government will continue to listen, and will act on this in the other place.

Secondly, support for business, particularly small and medium-sized enterprises, is vital if they are to navigate this new regime. As my colleagues said on Report, SMEs will account for an estimated 80% of mandatory notifications under the new system, according to the Government. Many small firms will struggle to navigate this new system. This comes at a time when hundreds of thousands of SMEs across the country are in perilous circumstances. That is why we called for dedicated help and support for SMEs—to ease the burden as this new system comes into effect. If we are serious about nurturing cutting-edge businesses in sectors such as robotics and quantum technologies, it is critical that SMEs in these industries are supported through the process.

Thirdly and finally, there is the crucial issue—it is worth spending time on this—of the resourcing, accountability and scrutiny of the newly created unit in the Department and its work. We all know from the experience of both parties in government that good intentions can be overwhelmed by challenges of practical delivery. Under this regime, the Government expect that there may be up to 1,830 notifications by businesses and individuals, with a further 70 to 100 being called in by the Secretary of State. The number could well be higher than that as businesses adjust to the new system. The Secretary of State has a big, profound responsibility, as I am sure he recognises, to make sure this system works.

It is also vital that the new regime be scrutinised and monitored. As we have said throughout the passage of the Bill, that should include a role for the Intelligence and Security Committee in providing an oversight mechanism, through which there is regular reporting to the House, and regular scrutiny of the working of the new unit. Secretary of State, our international allies do exactly that. The US, for example, requires oversight of CFIUS in exactly this way. The Chair of the ISC, the right hon. Member for New Forest East (Dr Lewis), said that the Committee is open to this idea. It is not about simply saying to the ISC that it can have a look at this if it wants to. It needs a proper, acknowledged role in this. It is in all our interests, and indeed the Secretary of State’s, that the ISC performs this role. That would reassure businesses in this country that there is proper scrutiny—undertaken in the right way, given the constraints around national security—of the working of this new regime. I hope the Secretary of State will ponder this matter and keep it under review. I am sure that it will be raised in the other place.

To conclude, we support the Bill as a necessary measure to protect our national security interests from evolving threats. We do so hoping that the Government have heard the constructive concerns that we have raised throughout the passage of the Bill and will continue to raise and that Members in the other place will raise, because I believe we can build on and improve the Bill as it progresses. We believe—I emphasise this point—that this is the first step for the active industrial policy that our country needs. It only marks the start of what is required.

[Mr Deputy Speaker (Mr Nigel Evans)]

I would like to add my congratulations to the 46th President of the United States of America. In the past, I have worked on three presidential elections. I congratulate both Joe Biden and his Vice-President, Kamala Harris. I am certain that when they visit the United Kingdom, they will be guaranteed a very warm welcome.

--- Later in debate ---

[Jim Shannon]

On behalf of the Democratic Unionist party, I congratulate the Secretary of State on his elevation. It is a well-deserved promotion, so congratulations and well done.

May I echo your comments, Mr Deputy Speaker, in relation to the election of the President of the United States, Joe Biden, and his Vice-President, Kamala Harris? I wish them both well and hope they have a very strong relationship over the next few years.

We are all aware that the Foreign Affairs Committee and the Defence Committee both launched inquiries in 2020 that touch on concerns relating to the current Competition and Markets Authority regime. As the Library briefing for this debate makes clear:

“Comments from the Chairs of the inquiries indicated that there could be support for a strengthened regime in order to protect national security”;

I believe that today the Government and the Secretary of State have ensured that. However, neither Committee has yet reported in full, and I am keen to see their recommendations and findings being part of the foundation of any change in legislation. I know that the Government and particularly the Secretary of State, like me, highly value the work of those Committees and the findings that they present. I would be interested to see the work undertaken by those renowned Committees in tandem with the Bill to ensure that we achieve a holistic approach to this matter of national security.

Will the Secretary of State outline how he believes that those concerns are addressed in the Bill? What surety and certainty can we have, for example, that a small independent business that is setting up in Ards business centre in my constituency—a family-run business, with an American investor who is a close family friend—will not fall foul of this legislation, and that the Bill will not prevent investment by foreign investors in Northern Ireland, which undoubtedly has the UK’s most attractive investment potential? I would say that, of course, but I believe it to be the case as well.

Some have questioned this radical overhaul, particularly given that only 12 national security investigations have been undertaken under the existing regime. There are also concerns, I believe, that the expanded notification system will lead to a dramatic increase in cases subject to review, leading to bureaucracy as well as delay and doubts for potential investment decisions—a situation that might discourage investment. Again, can the Secretary of State assure us that investment will be encouraged? The impact assessment published alongside the Bill indicates that there could be 1,000 to 1,830 transactions notified under the new system each year.

Those are some queries—fundamental questions, too—that I believe deserve acknowledgement and a response, so I would sincerely appreciate it if the Secretary of State gave further assurances that we are equipped and ready to deal with these changes, and that we will not lose investment at a time when the need to rebuild is stronger than at any time since the second world war.

We need investment, but I agree with the Government that the security of our nation is paramount. I give my full support in that aim to the Secretary of State and our Government, and I trust that they will enable investment in areas that are straightforward, without backlogs or delays.

Question put and agreed to.

Bill accordingly read the Third time and passed.

[Mr Deputy Speaker (Mr Nigel Evans)]

In order for Members to leave the Chamber safely and others to come in, and for the sanitisation of both Dispatch Boxes, I will suspend the sitting for a few minutes.