Investment Security Unit: Scrutiny

Nusrat Ghani Excerpts

Thursday 23rd March 2023 Commons Chamber

[Darren Jones (Bristol North West) (Lab)]

I rise today to give a statement on behalf of the Business, Energy and Industrial Strategy Committee in respect of our memorandum of understanding with the Government on scrutiny of the use of powers contained in the National Security and Investment Act 2021. I am grateful to the Backbench Business Committee for giving me the time to do so.

As the House knows, the National Security and Investment Act established a new statutory regime for Government scrutiny of, and intervention in, investments for the purposes of protecting national security. The Act applies to a wide range of sectors, which themselves are broadly defined, and—unlike in other countries—covers all transactions, not just those involving foreign investment. The investment security unit was then established within the Department for Business, Energy and Industrial Strategy to operationalise the Act. At that stage, the Secretary of State for Business, Energy and Industrial Strategy was the decision maker.

When the Bill was going through the House, the Government confirmed their preference that scrutiny of the use of these powers should be done by my Committee. There was a debate in this House and in the other place about whether a departmental Select Committee had sufficient processes, people and protections in place to scrutinise secret information, and right hon. Members from the Intelligence and Security Committee understandably argued that their Committee was best placed to do that work. However, the Government were not minded to accept amendments for a statutory regime of scrutiny in the Bill, nor to change their position on which Committee should have oversight of the regime. As such, Ministers committed to entering into a memorandum of understanding with my Committee to set out how information would be made available to allow us to do our work.

While negotiating that memorandum, my Committee established a new National Security and Investment Sub-Committee and appointed special advisers. We are also grateful to the House for providing us with national security subject specialist staff with relevant levels of security clearance. In addition, we undertook a short study visit to the United States to understand how congressional oversight of that country’s equivalent regime is conducted.

I am pleased to inform the House that the memorandum of understanding between the Government and my Committee has now been agreed, and that we have published it today in our report. I will not test the patience of the House by reading out the whole memorandum, but I will just make two points. First, it has been agreed that scrutiny will largely be done in private and, in so far as it relates to individual transactions, will be done retrospectively following any appeal or legal challenge. This was agreed to prevent actual or perceived political interference in quasi-judicial decision making, and means that we operate in line with our counterparts in the United States. Secondly, the bulk of our work will focus on the effect of the legislation on investment in the United Kingdom and the effectiveness of Government operations.

When the Committee decides that it wants to understand individual transactions in more detail, we will be able to request information from the Government via a private explanatory memorandum, which we will not publish. If the Committee wishes to see more sensitive information that is not contained in the explanatory memorandum, I as Chair of the Committee will be able to request access to such information, and will be briefed on equivalent to Privy Council terms or by notification under the Official Secrets Act. Lastly, while the recent machinery of Government changes have resulted in the investment security unit moving to the Cabinet Office and the decision maker now being the Chancellor of the Duchy of Lancaster, the Government have confirmed that they still intend for scrutiny of the Act to be undertaken by my Committee and, soon, its successor Committee on the basis set out in today’s report and the letter from the Minister received by other relevant Committees.

[The Minister of State, Cabinet Office (Ms Nusrat Ghani)]

I welcome this report, especially paragraph 11. We have always welcomed scrutiny of our decisions. As the hon. Member rightfully pointed out, the investment security unit has left the Department for Business, Innovation and Skills, but I am still responsible and we now sit in the Cabinet Office. Obviously, we want to support businesses to ensure that investment in the UK continues, while also protecting our national security.

I wondered whether the hon. Member could reflect on the fact that the NSI Act is a leading investment screening regime, and that we have good relationships with like-minded partners through which we share best practice and help other countries with similar regimes. Perhaps he could also comment on when I will be in front of him and his Select Committee, because we do not shy away from scrutiny. Finally, perhaps he would like to indulge the House and thank all of the investment security unit staff who worked with us on the unit and on securing this MOU.

[Darren Jones]

I thank the Minister for her question. Of course, for a long time, she was a member of my Committee. She pushed me quite hard to ensure that we got very effective scrutiny of this legislation, so I look forward to working with her collaboratively on the exchange of information as it relates to our interests as a Select Committee.

The Minister invites me to thank her officials, as well as my Clerks on the Select Committee, and I should do so. It took, I think, nearly 13 months to get to this point, sometimes with some frustration, but we got there. However, much of the work has been done and much of the detail has been agreed at length by our officials and Clerks, and we are very grateful to them for their contributions.

As for when the Minister will be summoned to my Select Committee, it is unusual that people are keen to come and be cross-examined by me and my colleagues on the Committee, but we look forward to welcoming her in due course.