International Investment — House of Commons, 2017-10-17
Topic: Foreign Trade
Gregory David Clark (Conservative, Centre-right): The United Kingdom has a deserved reputation as one of the most open economies in the world, one that 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 of 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 their primary duty to safeguard national security and ensure that the interests of the British people are protected, and it is important for the Government to have both knowledge of potential national security risks to the UK and the ability to act where necessary. Our review has highlighted the need for that to be updated to take account of the changing structure and size of companies in sectors that are critical to our national security. Our reforms will bring the UK in line with many major developed economies. We want to develop clear, consistent and proportionate rules which will enable us to scrutinise the ownership of our infrastructure, but which will also be well understood and will give international investors the clarity and transparency that they require We are proposing a two-stage approach. First, I am updating our current arrangements by consulting on amendments to the Enterprise Act 2002 to enable the Government, if necessary, to intervene in mergers that fall outside the current provisions. In most sectors, the thresholds in the Act allow the Government to intervene in mergers on public interest grounds only if the acquired company has a UK turnover of more than £70 million, or if the share of supply is 25% or more of the market. The thresholds are no longer appropriate for certain sectors, particularly those in which smaller companies may hold technologies that are critical to national security. For those sectors, we are proposing to introduce amendments through secondary legislation that 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 relates to items that are currently subject to export controls. Hostile actors should not be able to acquire such items, or knowledge about how to make them, by buying UK-based businesses. The second relates to companies that are involved in the design of computer chips and quantum technology. Advanced technologies can create threats that 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 in which 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 in certain parts of the economy that are critical for national security, such as the civil nuclear and defence sectors. The Government intend any reforms to be firmly targeted at national security. While the national security assessment must, by its very nature, remain confidential, we will also seek to provide greater certainty and clarity for businesses in respect of the process itself. Our proposals will ensure that our arrangements for protecting national security are aligned with the practices in other major countries, and are more robust in response 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. Those discussions have covered the need for more information and time to allow for the assessment of takeover bids by interested parties, and to enable assurances given during the takeover process to be properly assessed and compliance-scrutinised. We believe that the changes recently proposed by the Takeover Panel would improve the UK’s takeover rules, and we look forward to the conclusion of the consultation The Government will also act, when appropriate, to ensure that public funds are protected in mergers. 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 if the purpose for which the grant was made has changed Let me now turn to an international investment announcement that was made late last night. On Tuesday, I briefed the House on the trade dispute brought by Boeing against Bombardier. My colleagues and I have been constantly engaged from the outset, and have considered all the alternatives that we can bring to bear to resolve the dispute. I am pleased to be able 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 the chairman of Bombardier and the chief executive of Airbus about the joint venture specifically, and I have also discussed the matter 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 As the House well knows, the Shorts factory in Belfast employs more than 4,200 highly skilled workers and supports a supply chain of hundreds of companies and many more jobs across the United Kingdom. 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 interests for the C series to be successful. Both Bombardier and Airbus have made a number of important commitments to me, including commitments 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 the UK supply chain. The UK is already Airbus’s wing factory for the world, and the announcement reinforces that position. The trade dispute brought by Boeing against Bombardier’s C series remains in place. We consider Boeing’s action to be totally unjustified, unwarranted and incompatible with the conduct that we would expect of a company that has a long-term business relationship with the United Kingdom. We reject entirely any suggestion that our support for Shorts contravenes international rules. We will continue to work to see the dispute resolved while Bombardier and Airbus complete their merger 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 to meet Members of Parliament with constituency interests, who have been assiduous in standing up for their constituents. I will do everything I can to secure, at all times, the best possible future for Bombardier’s Belfast workforce and its UK-based suppliers I commend my statement to the House.