“Mr Speaker, the United Kingdom has a deserved reputation as one of the most open economies in the world; one which welcomes international investment and the benefits it brings. Our position as the fifth-largest economy in the world has been built on international trade and investment. Today’s Green Paper affirms our commitment to that approach and sets out proposed reforms to our scrutiny of foreign investment to ensure that our national security is protected.
An open approach to international investment must include appropriate safeguards. It is vital that the UK Government can deliver on our primary duty to safeguard national security and ensure that the interests of the British people are protected. It is important that the Government have both knowledge of potential national security risks to the UK and the ability to act where necessary.
Our review has highlighted that it needs to be updated to take into account the changing structure and size of companies in sectors critical to our national security. Our reforms will bring the UK into line with many major developed economies. We want to develop clear, consistent and proportionate rules which enable us to scrutinise the ownership of our infrastructure but which are also well understood and give international investors the clarity and transparency they require.
We propose a two-stage approach. First, I am now updating our current arrangements by consulting on amendments to the Enterprise Act 2002 to enable the Government, if necessary, to intervene in mergers which fall outside the current provisions. In most sectors, the thresholds in the Act allow the Government to intervene on public interest grounds only in mergers where the acquired company has a UK turnover of more than £70 million or the merger results in an increase in the UK share of supply to 25% or more. These thresholds are no longer appropriate for certain sectors, particularly those where smaller companies may hold technologies which are critical for national security. For these sectors, we propose to introduce amendments by secondary legislation which would lower the turnover threshold to £1 million and remove the requirement for the merger to increase the share of supply to 25% or more.
Specifically, I am consulting on amendments to the thresholds for the dual-use and military sector and certain parts of the advanced technology sectors. The first of these relates to items that are currently subject to export controls. Hostile actors should not be able to acquire these items, or the knowledge about how to make them, by buying UK-based businesses. The second relates to companies involved in the design of computer chips and quantum technology. Advanced technologies can create threats which are difficult to detect and may mean that devices could be directed remotely, should a hostile actor gain access.
The Green Paper also seeks public views about options for broader reforms to the way we scrutinise investment for national security purposes. In particular, we are seeking views on two proposals: broadening the range of transactions that the Government are able to review for national security purposes; and the introduction of mandatory notification of foreign investment into certain parts of the economy which are critical for national security, such as the civil nuclear and defence sectors.
The Government intend that any reforms should be firmly targeted at national security. While the national security assessment by its nature must remain confidential, we will also seek to provide greater certainty and clarity to businesses on the process itself. These proposals will ensure that our arrangements for protecting national security are aligned with the practices in other major countries and are more robust to the evolving nature of national security threats and technological change.
Let me say something about takeovers more generally, outside the area of national security. We have held discussions with stakeholders, including the Takeover Panel, about the current process for takeovers. These discussions have covered the need for more information and time to allow for assessment of takeover bids by interested parties, and how assurances given during the takeover process can be properly assessed and compliance scrutinised. We believe the recently proposed changes by the Takeover Panel would improve the UK’s takeover rules. We look forward to the conclusion of the consultation.
Alongside this, the Government will act, where appropriate, to ensure that public funds are protected in merger situations. In particular, we will take steps to ensure that government-funded research and development grants can be clawed back following a takeover if the new company would have been ineligible to receive the grant or the purpose for which the grant was made has changed.
I now turn to a particular international investment announcement made late last night. Last Tuesday, I briefed the House on the trade dispute brought by Boeing against Bombardier. Since the outset, I and my colleagues have been constantly engaged and this has included looking at alternatives.
I am pleased to tell the House that yesterday the boards of Bombardier and Airbus announced plans for a joint venture involving the C Series aircraft. The deal is expected to be completed by the second half of next year. I have spoken directly to Pierre Beaudoin, the chairman of Bombardier, and Tom Enders, the chief executive of Airbus, specifically about this joint venture. I have also discussed this with Chrystia Freeland, Canada’s Minister of Foreign Affairs. My top priority has been to emphasise the importance of giving certainty to Bombardier’s high-quality UK workforce now and in the future.
The Shorts factory in Belfast employs more than 4,200 skilled workers and supports a supply chain of hundreds of companies and many more jobs in the UK. Airbus also has a large presence in the UK, employing more than 15,000 people, and is firmly rooted in the UK’s advanced technology industrial base.
It is in all our interest that the C Series is successful. Both Bombardier and Airbus have made a number of important commitments to me, including that C Series wing manufacturing will continue in Belfast and that the strategy will be one of building on existing strengths and commitments. This announcement offers the potential to protect the interests of Bombardier’s Belfast workers and UK supply chain. The UK is already Airbus’s wing factory for the world and this announcement reinforces that position.
The trade dispute brought by Boeing against Bombardier’s C Series remains in place. We consider this action by Boeing to be totally unjustified, unwarranted and incompatible with the conduct we would expect of a company with a long-term business relationship with the United Kingdom. We refute entirely any suggestion that our support for Shorts contravenes international rules. We will continue to work to see it resolved while Bombardier and Airbus negotiations continue.
I remain in close contact with Airbus, Bombardier and the Canadian and US Governments. I will be speaking to the chairman of Bombardier and the chief executive of Airbus again later this week for an update on progress. I will, of course, continue to meet the representatives and Members of this House who have been assiduous in standing up for their constituents’ interests. I will do everything I can to secure the best possible future for Bombardier’s Belfast workforce and its UK-based suppliers. I commend this Statement to the House”.