National Security and Investment Bill

Tom Tugendhat Excerpts

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

As I said, the Opposition have come to the Bill in a spirit of constructive support grounded in three priorities: protecting British citizens and British interests, supporting SMEs, and bringing effective scrutiny. National security is too important to play party politics with. For that reason, having called for such action for years, we support the Bill. I hope very much that the Government will look at the amendments in the constructive light in which they have been proposed, as measures to accelerate, improve and execute more effectively the House’s intention to protect our national security and our national interest.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

First, I pay tribute to the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), who has spoken very kindly about the work of the Committee that I am privileged to chair. I also pay huge tribute to the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi). He has been tireless—that word has been overused in this place, but he has been tireless—in reaching out to all Members to speak to them about the Bill and ensure that the amendments tabled are helpful and conducive to not only the public good but the national good. He has been doing that at the same time as he has been running a vaccination programme. I have to say that the Minister’s wife’s loss is the nation’s gain: she has been selfless in allowing him to slave away for our country on two very important subjects.

The reality is that this is a hugely important Bill, and because it is so important and such a big change for the United Kingdom, it raises huge questions that are very difficult to answer. The way that the Minister has approached this is exactly right. He started off by speaking to businesses, to our intelligence services and to our regulators to understand what exactly the threat is, how it is affecting our businesses and how it can be addressed. He has had, I hope, as much help as he possibly can from them, and I hope that the help being offered from the Select Committee that I am privileged to chair and the Committee that my right hon. Friend the Member for New Forest East (Dr Lewis) is privileged to chair is helpful.

We are trying to improve what is already a good Bill and make it into an excellent one. We have had various conversations with not only the Minister but his Whips, who have been extremely helpful—I know that this is a very odd thing to say in the House—in ensuring that he is informed about the way in which we have conducted this discussion. It would not be right for me not to also thank Alice Lynch of our Committee and Nicole Kar of Linklaters, our specialist witness who has helped us through the process of writing this report.

I rise to speak to new clause 4, which is in my name and the names of fellow members of the Foreign Affairs Committee. We looked carefully at the Bill because, over the last two to three years that I have been chairing the Foreign Affairs Committee, much of our work has been on the threat of foreign interference in the UK. One of our earlier reports in May 2018 was entitled “Moscow’s Gold: Russian Corruption in the UK”; I believe the Minister was still on the Committee when we started that report, though he had already been promoted to greater things by the time we published it. The report touched on the way that dirty money plays into our systems and the way in which we must protect those systems.

Since then, we have looked at various aspects of how our foreign policy is fundamentally about keeping the British people safe. We have always focused on the interests of the UK and the interests of the people we are lucky enough to represent. We sit here representing our communities—not other communities, not business and not anybody else, but our communities and what is fundamentally in their interests. We built up, from that early report, into looking at the various ways in which money has moved around, influencing academic freedoms and changing the way in which businesses have acted. As the Minister knows, we have called out those who we feel needed to be called out. That is why I am so pleased that he is in his place and has produced this Bill, because it finally sets a process by which this Government—any Government—can look at decisions that are being taken and assess them properly.

[Mr Kevan Jones (North Durham) (Lab)]

I congratulate the hon. Gentleman and his Committee on the excellent report they have produced, but this is about the scrutiny of decisions of mainly private companies and others. Does he share my concerns about some decisions taken by Departments, particularly in the light of the Ministry of Defence’s decision to buy E-7 Wedgetail aircraft from Boeing, which results in two of them coming from China?

[Tom Tugendhat]

The right hon. Gentleman tempts me, but I am not going to get drawn on the Wedgetail discussion, as that is a slightly separate conversation. He is right to say that this Bill affects not just private business, but the way in which the Government will also conduct their procurement, so it is absolutely right that in future decisions may be looked at in different ways. This Bill, however, is slightly different, because it looks at the purchase of British business and not at the UK purchasing others.

Let me come back to where I was before the right hon. Gentleman cunningly got in his complaint about an MOD decision. This Bill goes a long way to making sure that we are in the right place, but it raises a few concerns, which I will touch on. That is why we have introduced new clause 4, which is not supposed to be a definition of national security, because that would, as the Minister knows, constrain the ability of a Government to adapt this law as national security changes. It would in effect tie concepts from 2021 into the law as it progressed. Given the change we have seen in the past 10 or 15 years, that would frankly be unwise. After all, who could have known that some of the decisions we have taken, perfectly innocently and rationally, over the past decade are some of the worst that a Government have made?

I am referring to two decisions. First, the sale of DeepMind to Google was one of the worst strategic moves a UK Government have taken. I am not blaming anybody for it; it was a decision taken rationally at the time, without understanding the future power of artificial intelligence and the extraordinary strength of DeepMind. That is a huge credit to the team at DeepMind and to much of the investment Google has put in, but it is also a recognition that a change of ownership and geographic basing—even though the people do not change, the ownership changes—has undermined the UK. The second is the sale of Arm to SoftBank. Again, this is one friendly company being sold to a company of another friendly nation. These are not geographically specific points; they are entirely geographically neutral. My guess is that one of Arm’s products is in everybody’s pocket, because they are in 95% of computer products and so will be in almost everybody’s phone. This is one of those moments where we risked losing control of an absolutely fundamental technology that could in future promote Britain’s interests greatly. That moves us into a question about Nvidia that I will not get drawn into now; I am just putting into historical context decisions we made that we will live to regret.

This Bill allows us to look at those things and update with the times, which is why I agree that we should not have a fixed definition of national security—we should have a framework for it. Here I pay tribute to my hon. Friend the Member for Isle of Wight (Bob Seely) and others on the Committee, who came up with this proposal and were extremely rigorous in doing so. I pay particular tribute to Nicole Kar of Linklaters, who helped us with the drafting of it and to the Committee Clerks who got us through it. There is a real opportunity here to enable this framework to defend us.

Governments throughout the European Union and, indeed, around the world have already started to look at how their laws that are similar to ours will apply. If we do not give enough strength to our Government, there is a danger that we will be the only ones found to be naked when the day comes and the choices have to be made. That would be a huge mistake, because the world is changing; there is a lot more cash from state-owned enterprises going around than there has been for many years. Sadly, there is likely to be a prolonged period of economic difficulty as we come out of covid; those companies and countries that are willing to underwrite companies will have an advantage when they start to snap up businesses around the world. That is why we need this legislation now.

--- Later in debate ---

[Nadhim Zahawi]

My hon. Friend makes an important point. As I mentioned, the statement that the Secretary of State has laid with the Bill takes in much of the direction of travel of this amendment from the Foreign Affairs Committee.

I acknowledge that the Foreign Affairs Committee is pushing for more detail rather than less, but I would reassure them that the Government agree with their main conclusion that the Secretary of State should provide as much detail as possible on the factors that will be taken into account when considering national security. Importantly, however, that is only up until the point that the detail risks the protection of national security itself. That is why the Government have taken this approach in the draft statement provided for by clause 3. In that statement, we identify three types of risk that are proposed to form the basis of the call-in national security assessment. These are: the target risk, which considers the nature of the acquisition and where it lies in the economy; the trigger event risk, which considers the level of control and how it might be used; and the acquirer risk, which covers the extent to which the acquirer raises national security concerns.

I would like to address each of the arguments made in the report, so that I can ease the concerns of hon. Members across the House. First, there are concerns that without a narrow definition of national security, the investment screening unit would be inundated by notifications, hampering its ability to deliver its crucial role. I acknowledge that, for business confidence in the regime, it is essential that we deliver on our statutory timeframes for decisions, which is why it is so essential that we do not allow any broadening of the assessment done by officials as part of the regime to occur, whether by inexhaustive lists, as my hon. Friend the Member for Isle of Wight has just said, or by any other form. To include modern slavery, genocide and tax evasion as factors that the Secretary of State must take into account as part of national security assessments, as these amendments propose, would not reduce the demands on the investment security unit but potentially increase them.

Secondly, there is concern that ambiguity could hinder the success of the regime. Let me be clear that this regime is about protecting national security—nothing more, nothing less—hence its real focus. Thirdly, the Foreign Affairs Committee report suggests that the staff responsible for screening transactions may lack sufficient clarity on what kinds of transactions represent legitimate national security risks, leading to important transactions being missed or to a large volume of benign transactions overwhelming the investment security unit. I want to assure hon. Members, and my hon. Friend the Chairman of the Foreign Affairs Committee, that the investment security unit will be staffed by the brightest and best, with many of them being recruited on the basis that they have essentially written the book on national security.

[Tom Tugendhat]

I am grateful to my hon. Friend for highlighting this point. May I assure him that I have absolute confidence that the people he will recruit into the unit will be the best and brightest? I pay huge tribute and send many congratulations to the Secretary of State for Business, Energy and Industrial Strategy, who is sitting next to him. He is a friend of long standing, and I am delighted to see him serving Cabinet; that is well earned and somewhat overdue. I am sure that they are both going to have the best judgment possible. However—I am afraid there is a “however”—there are other people who are going to have to decide whether or not to file, and there is therefore a danger that people will over-file, even though the judgments will have been very cautiously made.

[Nadhim Zahawi]

That is something I have been watching carefully as we introduced this legislation, obviously. We have had around 36 inquiries to the team already, so it feels to me that where we have landed is proportionate and right.