Clause 61 - Annual report

National Security and Investment Bill – in a Public Bill Committee at 12:30 pm on 10th December 2020.

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Photo of Sam Tarry Sam Tarry Labour, Ilford South 12:30 pm, 10th December 2020

I beg to move amendment 31, in clause 61, page 36, line 20, at end insert—

“(m) the average number of days taken to assess a trigger event called in under the Act;

(n) the average number of days taken for acceptance decisions in respect of mandatory and voluntary notices;

(o) the average annual headcount allocated to the operation of reviews of notices made under sections 14 and 18 over the relevant period;

(p) the proportion and number of Small to Medium Enterprises in the overall number of notices and call-in notices.”

This amendment would require the Secretary of State to report on the time taken to process notices, the resource allocated to the new Unit and the extent to which Small to Medium Enterprises are being called-in under the new regime.

Photo of Derek Twigg Derek Twigg Labour, Halton

With this it will be convenient to discuss clause stand part.

Photo of Sam Tarry Sam Tarry Labour, Ilford South

Before turning to the amendment, it occurs to me that the Minister, in his new role as vaccinations tsar, could consider this Committee Room as somewhere to store some of the vaccine.

Amendment 31 would simply require the Secretary of State to report on the time taken to process notices, on the resource allocated to the new unit, and on the extent to which small and medium-sized enterprises are called in under the new regime. It is about requiring greater accountability from BEIS in the investment security unit’s service standards. That sounds anodyne, but it does something very important.

Throughout our discussions, there has been one point of agreement across the Committee: hon. Members, across party lines, have raised concerns about the capacity and capability that a new investment security unit will have to deliver on the Bill’s ambition. A number of the expert witnesses added to that concern, describing the shift as “seismic”—totally transformational—and said that changes will need to be thoroughly resourced in that unit, which should be especially prepared to work closely and efficiently with our innovative start-ups.

Indeed, some of the experts were pretty clear on that point. David Petrie of the ICAEW said:

“The first point I make about that is that this new investment security unit will need to be very well resourced. A thousand notifications a year is four a day; I am just testing it for reasonableness, as accountants are inclined to do. That is quite a lot of inquiries.”––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 53, Q60.]

Photo of Peter Grant Peter Grant Shadow SNP Spokesperson (Europe), Shadow SNP Deputy Spokesperson (Treasury - Chief Secretary)

I certainly sympathise with the hon. Gentleman’s desire for that information to be published. Can he explain why the Bill should require that it be published, rather than leaving it to ongoing scrutiny by the relevant Select Committee? Does he think that the wording of paragraph (o) of the amendment needs to be more precise to be part of an Act of Parliament? If scrutiny were left to the discretion of a Select Committee, it would not need to be quite so clear about what “average” means, for example, because five or six different words mean “average” to statisticians.

Photo of Sam Tarry Sam Tarry Labour, Ilford South

The hon. Gentleman raises a good point. I think that the wording is precise enough. The accompanying guidance to the Bill could perhaps clarify some of those points. The key reason that we want that in the Bill, rather than for it to be overseen in the way that he has suggested, is that—

Photo of Derek Twigg Derek Twigg Labour, Halton

Would the hon. Gentleman face the Chair when he is speaking, please? Thank you.

Photo of Sam Tarry Sam Tarry Labour, Ilford South

Certainly, Chair. It is incredibly important to give that sense of clarity and time to small and medium enterprises. That has been a running theme for a number of our amendments, and there are three reasons, which it might help the hon. Member for Glenrothes to understand: first, the unit’s efficiency; secondly, its capacity; and thirdly, its focus on SMEs.

I will expand on that. First, on the unit’s efficiency, by reporting the aggregate time taken for decisions—both assessment decisions and initial acceptance or rejection notices—we would have a mechanism to ensure that the new regime works more efficiently for SMEs. Secondly, on capacity, the amendment drives towards taking stock of the resources behind the unit’s work, so that Parliament and the public will have a mechanism for holding the Government to account for what will be a major new centre for merger investment screening in the UK. Thirdly, we in the Labour party have really tried to make that focus on SMEs paramount in the Bill, so that we have a climate in which SMEs can thrive. That would simply mean that the unit could track the focus of SMEs in its work, and would be able to highlight specific concerns and the experiences of our most innovative start-ups when interacting with the new regime. Seeing that in live time would be useful for the forward planning of SMEs, and for the Government and Parliament to be able oversee how the process is working once it is in place.

Each paragraph of the clause maintains the Government’s power to act to protect national security. The clause simply holds power to account through what we would call aggregated transparency.

Photo of Nadhim Zahawi Nadhim Zahawi Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), The Parliamentary Under-Secretary for Health and Social Care

I am grateful to the hon. Member for Ilford South. We are not quite at minus 70 °C, but we are probably very close to it.

I will speak initially to clause 61 stand part before turning to amendment 31. It is crucial for investor confidence that there is as much transparency as possible in the regime, but of course there is evidently a limit to how much the Government can disclose, given that the regime deals explicitly with national security matters. That said, alongside appropriate protections for personal data and commercially sensitive information around national security assessments, the Government are committed to providing as much transparency as possible when it comes to how the new regime functions at an aggregate level.

Hon. Members will appreciate that, due to the sensitive information generated by the regime with respect to personal and commercial data and national security risk, there is a limit to how much the Secretary of State can disclose publicly. The clause requires the Secretary of State to report annually to Parliament on the use of the powers under the regime. The details of what the report must contain are set out in subsection (2), but I would like to highlight a few points to assist the Committee’s scrutiny.

The report must include information on the sectors of the economy in which voluntary, mandatory and calling notices were given. This will provide Parliament and the public with the ability to scrutinise how effectively the definitions of the mandatory sectors are functioning. It will also give a sense of the areas in the economy where the greatest activity of national security concern is occurring.

The report must also provide the expenditure incurred by the Secretary of State in connection with providing financial assistance to entities in consequence of the making of a final order under the power in clause 30. Those details will, along with those others set out in the clause, provide Parliament with good insight into how the regime is functioning in practice.

It is our view that this annual report will also serve a further important function—to assure investors of Her Majesty’s Government’s technical and dispassionate approach to the screening of investments, providing investors with a predictable and transparent regime, which will continue the UK’s reputation as a great place to do business and to invest.

Amendment 31 seeks to add much to the long list of information that clause 61 requires the Secretary of State to include in the annual report. I will endeavour to be brief in my response. The first part of the amendment seeks inclusion of the average number of days taken to assess a trigger event that has been called in. Hon. Members will remember that clause 23 provides statutory time periods for assessment under the regime. Given those time limits, which are as short as we are able to make them, while also ensuring there is time for appropriate national security assessment, I see no grounds for nor benefit from including average times in the annual report.

Secondly, in relation to the time taken for deciding whether to accept mandatory notices and voluntary notices, the Secretary of State must already, as soon as reasonably practicable after receiving a notice, decide whether to accept or reject. Additionally, if rejected, the Secretary of State, as soon as practicable, must provide reasons in writing for that decision to the relevant parties.

Thirdly, the amendment seeks the inclusion of the average headcount of the investment security unit in the annual report. I refer the hon. Member for Ilford South to my response to amendment 9. Arrangements on resourcing are an internal matter for the BEIS permanent secretary. As the Committee will know, it takes only a small group of exceptionally gifted people to improve our nation’s security, as we are doing here in the scrutiny of this Bill. Look around you, Mr Twigg: everybody here is incredibly talented and therefore doing an incredible job in refining the Bill. There will, of course, be sufficient resourcing allocated to the unit in any case.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport) 12:45 pm, 10th December 2020

I wholeheartedly endorse the Minister’s words on the skill and talents in this Committee Room. He said we were improving the Bill, but he is yet to accept any changes, so I am intrigued to understand what improvements he feels we have made.

Photo of Nadhim Zahawi Nadhim Zahawi Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), The Parliamentary Under-Secretary for Health and Social Care

It is the challenge the hon. Lady offers that allows a Minister as junior as the one standing before hon. Members to be able to make the argument.

Finally, the report will also give a sense of the sectors of the economy where the greatest activity of national security concern is occurring. The Secretary of State may include additional information in relation to SMEs if he considers that to be appropriate. For those reasons, I am unable to accept the amendment, and I hope that the hon. Member for Ilford South can withdraw it.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (Digital, Culture, Media and Sport)

I will say a few words in support of the amendment and on the clause, and will respond to the Minister’s comments. I think we all recognise the importance of reporting annually on the seismic shift in our national security, and of scrutiny of mergers and acquisitions. Yet it has to be said that the Bill does not say what the report’s objective is. Neither did the Minister, in listing what was included, give an understanding of the reasons the items have been included, even as he rejected the amendment of my hon. Friend the Member for Ilford South, which seeks to add points of particular interest to small and medium-sized enterprises.

I note, for example, that the number of final notifications is given but not the number of interim notifications or interim orders made. It is hard to see whether the objective of the report is to give greater confidence, to enable us to fully understand the working, or to enable us to see whether the limited contents of the impact assessment prove to be accurate. The kind of information in the report, and in my hon. Friend’s amendment, is the information that a well-run Department should wish to have. Although we are unclear on the objective of the report, which is not set out, reporting on those items as fully as possible would certainly improve the workings of the Bill, as my hon. Friend has said he seeks to do.

Photo of Sam Tarry Sam Tarry Labour, Ilford South

I listened to the Minister’s assessment. We want to tackle a number of other substantial issues this afternoon, so on that basis I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 61 ordered to stand part of the Bill.