National Security and Investment Bill — House of Commons, 2020-11-17
Topic: Foreign Trade
Stewart Hosie (Scottish National Party, Centre-left): I absolutely agree that these services should not sit within another Department. I am not sure whether it would be appropriate for them to be able to request call-ins directly, not least because where the information came from would then become abundantly clear, but there must be a mechanism whereby information that an agency comes across can be fed in to the proper people in order for this call-in to happen It is also self-evident that Members considering this legislation need to have far more information to understand the reasons for the Bill and the changing nature of the threat it is designed to counter. We also need carefully to assess the impact the Bill will have on sectors and infrastructure, not just in the UK as a whole, but in the devolved Administrations and in the English regions, in the light of the future economic opportunities they see and the plans they are already putting in place. It is far too soon to seek assurances, but I hope the Minister will wish to take a little time just to convince himself that there are no unintended consequences, either for the UK or for the Scottish Government’s inward investment plans, when Government agencies of all sorts are out actively seeking investment in some of the areas that may be deemed to be critical national infrastructure. As an example, let me cite the whole of Scotland’s tech sector, but that of Dundee in particular. It now has a digital ecosystem that spreads out across academia and through gaming, software design and development, and data centres. Many of the component parts of that have cross-sectoral application, some of which, depending on who owns them and who wishes to use them, could certainly raise a national security concern, depending on how bits of tech are deployed. How do we ensure collectively that the Bill does not impede growth or investment in such areas I also briefly wish to raise, at this early stage, some issues about implementation. The Bill is set to radically overhaul the UK’s approach to foreign investment, at a time of significant economic uncertainty. On leaving the EU, the UK Government cannot afford to get their global Britain approach wrong and suffer what has been described as the "chilling effect" on investment if this appears heavy-handed. So let me turn briefly to some of the possible implications and costs of these measures First, the impact assessment suggests a net cost to business of £43 million. Can the Government confirm whether that is the direct cost, or whether the figure includes the cost of lost investment? I suspect that it is the former because the latter is incalculable, but if the Government get this wrong, the true figure in lost investment, and the concomitant loss of output and productivity, could be substantial. Secondly, the impact assessment suggests that microbusinesses are in scope. As the Secretary of State will know, some of those businesses develop high-tech, cutting-edge intellectual property, and their business models include selling tranches of shares to raise cash throughout the development and life of the business. What assessment has been made of how these measures might stifle that investment and growth The third point is specifically on universities and academia. Throughout the whole UK, universities all have incubators, start-ups, spin-outs and commercialisable research. What assessment has been made of their ability to continue to thrive if the measures in the Bill inhibit investment by proposed sales being called in—because word will get out—or even investment being put off because of the potential additional risk of those sales being called in? We do not yet quite know what the impact on academia would be. There are some wider concerns about the possible impact on essential investment in energy, particularly renewable energy, and the possibility of retaliatory action against UK investors overseas, but I think they can be explored later in the Bill’s progress Let me return to one particular issue. I said earlier that the impact assessment suggested notifications of up to 1,800 transactions a year. In clause 7(4)(c), the Bill describes a qualifying asset as "ideas, information or techniques which have industrial, commercial or other economic value." I know that this is not the Government’s intention, but wielding a hammer or welding a pipe are techniques that have economic value, and my concern is that companies erring on the side of caution will refer or notify themselves when they need not I have three brief questions that were sent to me by the Photonics Leadership Group. I intend to ask these questions now because they will be typical of what many industrial and new tech sectors are asking. First, there will be a huge number of research groups and businesses for which this Bill is relevant. Has the Department for Business, Energy and Industrial Strategy considered the number involved, and is it ready for the volume of submissions? Secondly, the information that has been sent out to relevant groups includes a flow chart, which suggests that businesses currently engaged in relevant business have from 12 November until this Bill is passed to register. This would suggest that the process is live already, but there appears not to be a template to allow businesses to contact BEIS and ask the question. Thirdly, since many in the sector cannot rely on foreign investment, how are the Government planning to replace this should there be the chill on investment that some fear I am pleased the Secretary of State said that the assessments would be based on information gathered from around and throughout Government, because I think we need to make our own geopolitical assessments. But the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) quoted the Henry Jackson Society. It would be unfortunate if we found that our assessments of which investments may or may not be aligned were being driven, pushed or prodded by someone else’s geopolitical assessment. I say gently to the Secretary of State that we need to guard against that to ensure that national security is protected, but that we do not have the chill on investment that is possible if we get it wrong.