National Security and Investment Bill — House of Lords, 2021-04-15
Topic: Domestic Commerce
Robin Granville Hodgson (Conservative, Centre-right): My Lords, once again I have the pleasure of flying in the slipstream of my noble friend Lady Noakes. Before I turn to my own Amendment 18, I will say that I entirely support the remarks she made about Amendments 15, 16 and 17, to which I have added my name Amendment 18, like my noble friend’s, is a probing amendment and seeks to discern the possible financial impact of this Bill on the small battalions. I hope the House will forgive me if I become a little granular and practical about how this clause might work. It can far too easily be assumed that this Bill will impact only on big companies. That is not the case. It has not been the case in the past and certainly will not be the case in future, with the big increase in the number of sectors of the economy falling within the provisions of the statute I would like to take the House back to our first day in Committee, when I raised the case of Impcross Ltd. Impcross had been the subject of a reference under the old regime. It was statutory instrument 2019/1490. I am not—repeat, not—going to ask my noble friend to comment on the details of the Impcross case. It would be utterly improper for me to ask, and probably even more improper for him to answer. But I want to use the Impcross case as an example of how drastic an impact the provisions of this Bill could have on smaller companies and their owners Impcross is based in Stroud and machines parts for the aerospace industry. Its annual turnover is just shy of £12 million, so it is not a large company but a small one, and one that in the year to 30 June 2019—according to the records at Companies House—made a small operating loss. Significantly, it has a person with significant control. In this case, the accounts reveal that a particular individual owns between 50% and 75% of the company. If you look back through the records, you can see that the individual appears to have been at the company for many years, so it is not fanciful to believe that the company is the result of a lifetime’s work and effort and, further, that perhaps the particular individual is now considering his future options, which might involve selling up the company and enjoying the fruits of his labours One exceptionally important and helpful aspect of the Bill the Government have brought forward is the establishment of timeframes, which we have already talked about today. We are a bit nervous about how good the timeframes are—we think they may be a bit too flexible for our wishes—but nevertheless there are some there. The Impcross case was referred in early December 2019. It was not until 10 September 2020, nine months later, that Gardner Aerospace, the Chinese-owned potential buyer, withdrew. That cannot have been an easy nine months for all involved, but it serves to underline—if I may say so to my noble friend on the Front Bench—the real importance of sticking to the fixed timetables. Otherwise, the company in the gun sights has a very uncomfortable time indeed This does not deal with any potential economic consequences. Let us take the example a little further. If companies are in interesting sectors, they are often sold on a multiple of turnover. Let us say it is two and a half times turnover, which would mean Impcross was worth £30 million. Let us suppose that was the figure that Gardner Aerospace offered, but that when it was refused permission to complete the transaction the next best offer was £27 million, a reduction of 10%; it could well be more. My noble friend the Minister, who has enormous and extensive experience of the City, knows that once an offer has failed to complete, there is always a concern among other buyers that there is something they have not spotted and that there is something wrong that they will need to look at more carefully.