(1) The Secretary of State must, in relation to each relevant period—

(a) prepare a report in accordance with this section, and

(b) provide a copy of it to the Intelligence and Security Committee of Parliament as soon as is practicable after the end of that period.

(2) Each report must provide, in respect of mandatory and voluntary notifications, call-in notices, and final orders made under this Act, details of—

(a) the jurisdiction of the acquirer and its incorporation;

(b) the number of state-owned entities and details of states of such entities;

(c) the nature of national security risks posed in transactions for which there were final orders;

(d) details of particular technological or sectoral expertise that were being targeted; and

(e) any other information the Secretary of State may deem instructive on the nature of national security threats uncovered through review undertaken under this Act.”—(Chi Onwurah.)

This new clause would require the Government to publish an ‘Annual Security Report’ to the Intelligence and Security Committee of Parliament.

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The House divided: Ayes 265, Noes 355.

Question accordingly negatived.

Third Reading

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—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 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, Derek Twigg and my hon. Friend 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 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 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 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). 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—Edward Miliband and Chi Onwurah—and the SNP spokesperson, 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.

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.

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, 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 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 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, 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, 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.

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.

Mr Deputy Speaker, may I begin this short contribution by warmly endorsing what you had to say by way of congratulations to the new Secretary of State? He is genuinely one of the most popular Members in any part of the House, and I am sure that his delayed but nevertheless entirely merited accession to the Cabinet was greeted with wide acclamation.

The best must never be allowed to be the enemy of the good. This is a good Bill, but there are, as Edward Miliband said, opportunities for it to be improved further in another place, which I hope will happen. It is never good form to repeat from the lengthier preliminary stages what one has said in any detail in the final Third Reading debate, so I will just quote one small extract from the memorandum of understanding between the Prime Minister and the ISC, which the Secretary of State may not have heard me read earlier. Paragraph 8 of the memorandum of understanding says:

“only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments”— meaning other Departments such as his—

“whose work is directly concerned with intelligence and security matters.”

On Report, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend Nadhim Zahawi, said that it will be open to the ISC to request the secret information that cannot be published. That is a great step forward, and I thank him for it genuinely, because previously there were remarks to the effect that the ISC’s writ did not run anywhere near the Department for Business, Energy and Industrial Strategy. That appears to have been dropped, and that is a big step forward.

The reason why it is necessary to recognise this is not that we want to make extra work for ourselves. It is because we entirely agree with the Government that the security threats constantly change, morph and spread themselves out into different areas of activity and, inevitably therefore, into different areas for which different Departments have responsibility. We cannot possibly do our job of inspecting and scrutinising those parts of security issue information that have to be classified if we are not allowed to go into those Departments only in so far as that type of information has spread with a new threat into a different Department. If the Government are saying—and I see some nodding heads on the Front Bench—that it is now accepted that the ISC can ask the Department for Business, Energy and Industrial Strategy for this sort of information, that is a huge step forward, and we thank the Government for it. We still believe that it would be better for it to be formalised in the way that Sir Richard Dearlove suggested in Committee.

I will conclude with a message that I would like the Ministers to take to their colleagues in the Cabinet Office. The Cabinet Office seems to have a strange sort of fear of the Intelligence and Security Committee, because every time we try to do our job, it seems to want to push back. The message I wish to give to them is this: “Friends, colleagues—comrades, even—of the Cabinet Office, the ISC is not your enemy. We are your constructively critical friends. You know what? Sometimes we get it right: we got it right over Huawei. It would have been good if successive Governments had listened a bit earlier over Huawei, but they got there in the end. If you lock us out, you are simply shutting off a safety valve and a mechanism for correcting mistakes that you need not make. Don’t make that mistake again. Apart from that, congratulations on a very good Bill indeed.”

I also offer my congratulations to the Secretary of State on his promotion. I thank all the staff who have worked on the Bill so far and the businesses, trade bodies and others that advised on what might or might not be good about the legislation as it has gone through its stages. Finally, I thank Members from all parties—not just those who took part in the set piece debates, but those who put in a shift in Committee as well. They did a fantastic job.

In this short Third Reading speech, I should say briefly that I share the general agreement that this legislation is not just necessary—it is—but overdue. There is a broad consensus that that is the case. Changes may yet be made in the other place—including, I hope, as we just heard from the Chair of the Intelligence and Security Committee, a formal role for the ISC—but whether those changes happen or not, we must now all hope that this legislation will go on to deliver the anticipated additional national security benefits. As that happens, the Government must also step in quickly if the impact of the Bill starts to chill vital investment across different areas of the economy.

I am sure that the first part will happen: that the national security benefits will be there and obvious for all to see. We must all, however, be on our guard and realise that the burdens that we are placing on businesses —to notify when investment is happening or to have investment called in subsequently—may chill investment. We must all guard against that to make sure that, as well as there being additional security for those in the UK, businesses can continue to grow, thrive and seek the investment they need.

I will make four quick points. The first is that I am pleased that we have improved the prospects for national security through this Bill. Well done, everyone! My second point is that I am also pleased that the Intelligence and Security Committee will have some role in the oversight of sensitive investment decisions, albeit in retrospect. I fully expect that to happen, as the Chair of the ISC has already suggested and the Minister has accepted.

My third point is that I am clear that the new investment security unit will have to have close links with the security services—probably with liaison officers. I make my final point as a member of the ISC. I guarantee that our job is simple: to ensure that the pro-business outlook of the Government is tempered, if necessary, by the requirements of national security.

I start by congratulating the Secretary of State on his appointment; I wish him well in the years to come. I also thank the Under-Secretary of State for Business, Energy and Industrial Strategy, Nadhim Zahawi, for how he has conducted himself during the Bill—I just say that Chester-le-Street would be a lot happier if extra vaccines arrived this week. I just wanted to get that plug in yet again.

I also thank my hon. Friend Chi Onwurah, who has led on this Bill for Her Majesty’s Opposition. Following the comments from Dr Lewis about the scrutiny of this Act, once the Bill becomes one, I welcome the recognition that the ISC has a role. The Minister, in response to me and the right hon. Gentleman, said that there is nothing to stop the ISC asking the Business Secretary to come before it or asking for information on the Bill. I do not for one minute doubt the integrity of the two Ministers, but they—like me and us all—are, to use a Robin Day phrase, “here today, gone tomorrow” politicians. Legislation has to stand for a length of time in terms of different Ministers and people who will look at it. The only way to do that is to formalise this.

If we were asking, in terms of the ISC, for an overcomplicated system or something that was completely alien to the culture of scrutiny, I could accept that, but we are not. As the right hon. Gentleman said, the mechanism is there already. All we have to do is enact it. That means that when the two Ministers and I have moved on, and when even the Chair of the ISC has gone on to greater and better things, there will be a mechanism in place to ensure that there is parliamentary scrutiny of those decisions, because some will be very controversial. As I said on Report, there is no way in which the ISC wants to act as a regulator or to have some veto over decisions—it is for Ministers to do that—but it is important to ensure that Parliament has oversight of those decisions. The only Committee that can do that is the ISC, because of its security classification.

I join the Chair of the ISC in saying to the Secretary of State: this is about standing up to the Cabinet Office. On the idea that the ISC can ask for information, sometimes getting information that, actually, we are entitled to see, is like getting blood out of a stone. If we formalised that, as suggested by the Chair of the ISC, it would give oversight of the decisions taken, which would strengthen the decision-making process and ensure that we could at least see what intelligence is there; no one else could see it, apart from the Ministers taking the decisions obviously. That would strengthen the entire process, so I ask the Secretary of State to reflect on the matter, as clearly it will come up again when the Bill goes to the other place.

There is a tendency, which I never liked when the Labour party was in government, for suggestions to be put forward in this place and the Government then to leave things to be changed in the other place, as though it is somehow a sign of failure on behalf of a governing party—I aim this not just at this Government but at any Government. It is as though, if a Bill is amended by a suggestion from the Opposition or anyone else, it is somehow, in this place, a sign of weakness and failure. It is not. That is what we are here to do. As my right hon. Friend Edward Miliband said, this is a very important Bill, which has cross-party support. Anything that we can do to improve it is not being done from a point of criticism of the Government. We are trying to improve the Bill, and the suggestion from the right hon. Member for New Forest East would do that. It is simple, so I ask the Secretary of State seriously to reflect on it.

In conclusion, I finish where I began by welcoming the Secretary of State and wishing him well in the job that he has before him.

Having had the privilege of serving on the Bill Committee, and therefore having analysed it in detail, I believe the Bill ensures that the Government have the necessary powers to scrutinise and intervene in business transactions, such as takeovers, to protect national security. I, too, welcome the Secretary of State to his new role, and congratulate the Ministers, their team, the parliamentary Committees and everyone else involved in preparing this legislation with such care and inclusivity in respect of views and opinions. I respect the Opposition’s constructive approach in Committee and in today’s debate.

Having worked in the financial sector for 25 years before becoming an MP, I believe the Bill provides investors and businesses with the certainty and transparency they need to do business in the UK. As the Conservative small business ambassador for Wales, who strongly believes in the importance of free trade and foreign direct investment for businesses in my constituency, Clwyd South, and in the rest of Wales and the UK, I consider that the Bill strikes the right balance between protecting national security and preserving the position of the UK as an open and liberal international trading partner. Indeed, I would go further and say that the Bill’s provisions strengthen the UK’s position as an attractive place to invest. We are not alone in making such reforms; many of our allies have modernised their investment-screening regimes in recent years, which will mean that investors will be familiar with the approach in the Bill.

In my previous career in finance, I saw at first hand the crucial importance and attraction to overseas investors and companies of the UK’s established legal system, highly competitive tax regime and stable regulatory framework. The Bill reinforces these invaluable assets for the UK by updating our regulatory approach. Having heard many submissions by expert witnesses in the Bill Committee stage, I am convinced that the Bill will also make interaction with Government much simpler and more transparent for businesses and investors, enabling legitimate investments to be screened much more quickly than they are under the current regime.

The Bill is not a signal that the Government have reduced their appetite for foreign investment, but is a proportionate response to the small number of transactions that raise national security threats. One of the most striking parts of the Bill Committee was hearing the severe warnings from experts such as Sir Richard Dearlove about the minority of individuals and regimes that seek to use foreign investment to undermine our national security. The Bill will ensure that that does not happen.

UK citizens’ safety and our economy rely on the Government’s protecting security, and it is only right that with new threats, new powers are put into place to achieve that. If the Government took no further action, unchecked hostile behaviour could leave the UK vulnerable to disruption, unfair leverage and espionage. We cannot let that happen, so I am pleased to support wholeheartedly the Third Reading of the Bill, which brings a much-needed update to the Government’s investment-screening powers, most of which date from 2002 and are not suited to the new world and the modern threats that we face. The Bill is proportionate and measured and will provide much needed long-term security for the UK as one of the most attractive and dynamic countries in which to invest in the world.

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.

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.

Sitting suspended.