Amendment 39

National Security and Investment Bill - Report – in the House of Lords at 6:45 pm on 15th April 2021.

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Lord Fox:

Moved by Lord Fox

39: Clause 63, page 37, line 39, at end insert—“(6) Before making regulations under section 6(1) the Secretary of State must lay before Parliament— (a) the proposed draft of the regulations, and(b) a document which explains the proposed draft regulations.(7) Where a proposed draft of the regulations is laid before Parliament under subsection (6), no draft statutory instrument containing the regulations is to be laid before Parliament until after the expiry of the 30-day period.(8) The Secretary of State must request a committee of either House whose remit includes industrial strategy, economic affairs, science or technology to report on the proposed draft regulations within the 30-day period.(9) In preparing a draft statutory instrument containing the regulations, the Secretary of State must take account of—(a) any representations,(b) any resolution of either House of Parliament, and(c) any recommendations of a committee under subsection (8),made within the 30-day period with regard to the proposed draft regulations.(10) If, after the 30-day period, the Secretary of State wishes to make regulations in the terms of the proposed draft or revised draft regulations, they must lay before Parliament a statement—(a) stating whether any representations, resolutions or recommendations were made under subsection (9),(b) giving details of any representations, resolutions or recommendations so made, and(c) explaining any changes made in any revised draft of the regulations.(11) The Secretary of State may make a statutory instrument containing the regulations (whether or not revised) if, after laying a statement under subsection (10), a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament as outlined in subsection (5).(12) In this section, reference to “the 30-day period” in relation to any draft regulations is to the period of 30 days beginning with the day on which the initial proposed draft regulations were laid before Parliament.(13) For the purposes of subsection (12) no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.”Member’s explanatory statementThis amendment would introduce the super-affirmative procedure for regulations made under section 6(1).

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

My Lords, your Lordships will be pleased to know that I will not repeat the entire, long speech that I gave in Committee. The wording of this amendment has not changed between Committee and Report, but there are a few points I want to remind your Lordships of. I am sure the speech is still fresh in noble Lords’ minds. To be clear, I will be putting this amendment to a vote at the end of this process.

Under Clause 6, the Secretary of State has great power to make the regulations concerning how the Bill will work. The Secretary of State can specify the description of the qualifying identity for the purpose of identifying a notifiable acquisition. He or she can amend the circumstances in which a notifiable acquisition takes place or does not take place, exempt acquirers with specified characteristics from the mandatory notification regime and make consequential amendments to other provisions in the Bill.

The Minister has represented, as he did in Committee, the proposed use of the affirmative procedure in the Bill as meaningful parliamentary scrutiny. However, the truth is that, from the perspective of these Benches, this means that Clause 6 can be amended by this and any subsequent Government as they please. Parliament cannot amend statutory instruments and, perhaps more importantly, this House has voted down affirmatory statutory instruments just four times in the past 70 years. I refer, as I did last time, because it is important, to the Constitution Committee’s 2018 report, The Legislative Process: The Delegation of Powers, which states:

“Without a genuine risk of defeat, and no amendment possible, Parliament is doing little more than rubber-stamping the Government’s secondary legislation. This is constitutionally unacceptable.”

For this reason, affirmative statutory instruments do not constitute meaningful parliamentary scrutiny. This Government—or, I remind the Minister, any subsequent Government—are effectively free to amend the Bill as and when they please. The Minister sort of said this when speaking to the second group of today’s amendments.

Regrettably, I do not think Her Majesty’s loyal Opposition will roll behind me when this moves to a vote. That is the indication I have been given. I know that the noble Lord, Lord Grantchester, is as up for scrutiny as any man or woman. He likes a bit of scrutiny, and he is possibly not averse to knocking back legislation from time to time. However, his colleagues, particularly those at the other end—who are, even now, trying to measure up ministerial curtains in advance of their march towards power—would not welcome the democratic speed bumps proposed in this amendment, so their reaction, while regrettable in the great scheme of things, can be explained in that way.

Those sitting on the Benches opposite will live to regret not putting in place such measures. Members of their own party are not above adapting powers of Bills to create micromanagement, but we certainly heard enough at Second Reading, from some Members of Her Majesty’s Official Opposition, to feel that there are those who will seek to use this as a proxy for interventionist market strategy. I support having a collaborative strategy for national prosperity, but this Bill should not be used to enforce such aspirations.

The super-affirmative procedure in the amendment would provide both Houses with opportunities to comment on proposals for secondary legislation, and to recommend amendments, before orders for affirmative approval are brought in their final form. However, the power to amend the proposed instrument remains with the Minister. The two Houses and their committees can only recommend changes, not make them. So I ask the Minister what there is to fear from that. I beg to move Amendment 39, and I give formal notice that, unless a miracle occurs, I expect to divide the House on this issue.

Photo of Lord Clement-Jones Lord Clement-Jones Liberal Democrat Lords Spokesperson (Digital) 7:00 pm, 15th April 2021

Noble Lords will be relieved to hear that I have very little to add to what my noble friend has just said. The basic fact is that everything we have discussed in the course of our consideration of the Bill could be changed by regulation. If noble Lords do not believe me, they can look at Policy Statements Regarding Statutory Instruments Required for the Commencement of the NSI Regime, as updated on 2 March 2021. There are eight extensive areas—my noble friend mentioned a few of them—for changing the sectors covered. If that is not a massive change, I do not know what is. Changing the trigger thresholds, which we have been debating today, would effectively change the entire mandatory regime. These changes could all radically change the nature of the Bill. Whether or not noble Lords accept the scenarios put forward by my noble friend, that should be a real wake-up call. No primary legislation should be subject to the possibility of change as broad as that. So I support my noble friend’s amendment, and I very much hope the Minister will rethink the attitude taken by the Government in Committee to this self-same amendment. The super-affirmative process is a good one; it gives proper deliberation to changes and it is far more democratically accountable.

Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy)

I am grateful to the noble Lords, Lord Fox and Lord Clement-Jones, for the amendment, which proposes a super-affirmative process for regulations under subsection (1) of Clause 6, “Notifiable acquisitions”. This was debated at length in Committee, and we certainly agree that parliamentary scrutiny of regulations is not always as meaningful as it might be. We can feel sympathy with the view that notifiable acquisition regulations are highly significant and require proper oversight, not merely by both Houses of Parliament but also by many experts who might become involved.

The opinions of those experts could be sought and made available to Parliament and deliberated on. The importance of consultations with stakeholders who are knowledgeable and familiar with the situation at the leading edge is also recognised. However, the Delegated Powers and Regulatory Reform Committee did not call for the super-affirmative procedure to be adopted for these regulations under the Bill. Indeed, in its report of 22 February it said that

“there is nothing in the Bill to which we would wish to draw the attention of the House.”

It would be unusual to take a view contrary to the considered opinion of that well-respected committee of your Lordships’ House.

We remain somewhat sceptical about how the super-affirmative procedure would work in practice, over and above the normal affirmative procedure, in this case, even if custom and practice deemed the process less than ideal in all circumstances. We feel that experience needs to be gained first before undertaking this extra affirmative process. I hope this confirmation of what the noble Lord, Lord Fox, may have heard about our view on his amendment may not greatly startle him.

Photo of Lord Callanan Lord Callanan Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy)

My Lords, I of course welcome the amendment from the noble Lords, Lord Fox and Lord Clement-Jones, which seeks further parliamentary scrutiny of Clause 6 regulations, and the opportunity to put forward the Government’s case once more. I can spare the noble Lord, Lord Fox, the agony and tell him that, great though my ministerial powers are, I am not a miracle worker and, therefore, probably will not satisfy him.

The Bill as drafted provides for regulations made under Clause 6 to be subject to the affirmative resolution procedure. This amendment would require the Secretary of State to lay a proposed draft of any regulations made under Clause 6 before Parliament for 30 days before the draft regulations themselves are laid and subject to the approval of both Houses. It would also require the Secretary of State to identify a committee to report on the proposed draft regulations and then report on their consideration of the committee’s recommendations.

We have, as the noble Lord, Lord Fox, said, previously discussed the importance of regulation under Clause 6, and I thank the noble Lords for their commitment to ensuring meaningful parliamentary scrutiny of the making of such regulations. However, the Government’s position remains that the affirmative procedure—or regulations made under Clause 6—ensures such scrutiny by requiring Parliament to approve regulations. In Grand Committee, the noble Lord also highlighted the importance of the Secretary of State maintaining “serious technology foresight” and making any regulations under Clause 6 to protect our national security effectively. I can assure noble Lords that the Government are committed to keeping regulations under constant review to ensure that this regime is effective in protecting our national security and reflects technological changes.

The affirmative procedure will, in addition, provide the Secretary of State with the flexibility to update the mandatory regime quickly should new risks to national security arise. For all these reasons, I ask that the noble Lord withdraw his amendment though, in the absence of the requested miracle, I suspect that he is not going to do so.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

I thank the Minister for his response and the noble Lord, Lord Grantchester, for his speech. The Minister is correct: there was no miracle, and there was no surprise. Of course, I was aware that the Secondary Legislation Scrutiny Committee had not recommended opposing this in any way. Sitting through three days in Committee and a day on Report would activate many people who worry about the way in which Governments run their affairs. Therefore, with all due respect to everyone, having been through that process, it would be remiss if someone did not bring an amendment of this kind before your Lordships’ House. To that end, I would like to test the mood of the House.

Ayes 118, Noes 255.

Division number 2 National Security and Investment Bill - Report — Amendment 39

Aye: 118 Members of the House of Lords

No: 255 Members of the House of Lords

Ayes: A-Z by last name

Nos: A-Z by last name

Division conducted remotely on Amendment 39

Amendment 39 disagreed.