Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020 — House of Lords, 2020-07-15
Topic: Foreign Trade
Martin Callanan (Conservative, Centre-right): First, I thank all noble Lords for their valuable and well-informed contributions to this debate, with the normal high standard of speeches that we have come to expect in this House. Both these orders are reasonable, proportionate and essential. As has been said, we live in unprecedented times and it is right that, during such times, the Government reassess their powers to intervene in mergers and acquisitions. This crisis has revealed the need for the powers contained in these orders. Government must be able to act to protect our public health emergency capabilities and to scrutinise worrying mergers in the sensitive sectors we have set out. It is worth noting that many comparable countries have taken similar actions, as indeed was pointed out by the noble Lords, Lord Stevenson and Lord Chidgey, the noble Baroness, Lady Falkner, and a number of other noble Lords In recent weeks and months, we have seen allies such as Australia and Japan, as well as some of our European partners, update their investment screening regimes to ensure that risks around public health capability can be mitigated. Countries around the world, including the USA and Australia, and a number of our European allies, have also taken similar steps to protect their national security from opportunistic investment in sensitive sectors. We are not alone in taking these measures As I have said, these orders do not impact on our commitment to an open, international economy. We have always enthusiastically welcomed inward investment and championed international trade, and we will continue to do so I reassure the noble Lord, Lord Foulkes, that we do not expect to need to use these powers frequently, but we will not hesitate to use them if and when the need arises. We have no wish to stifle creativity, nor to burden business with regulatory red tape—quite the opposite. We believe that these measures are a proportionate reaction to the risks before us. We do not intend these orders to deter genuine investment and we do not believe that they will. Indeed, these orders are in keeping with our approach to maintaining an attractive, secure environment for international investors I repeat that the amendment to Section 23A of the 2002 Act is a short-term measure that will apply until more fundamental reforms can be taken forward through the national security and investment Bill. Indeed, the noble Lords, Lord Stevenson, Lord Reid and Lord German, and the noble Baroness, Lady Bowles, asked about the NSI Bill. It is right that the Government take a considered and evidence-based approach to long-term reform in this area. As was pointed out, the consultation took place in 2018, and for various reasons the Bill was not introduced at the time. It is a top priority for this Government, but it is right that, in the current circumstances and environment, we look again at the policy to ensure that it is fit for purpose. We are of course in a different geopolitical climate from that of 2018, and it is vital that the Bill provides the right protections. It was announced in the Queen’s Speech for this Session and it will be brought forward in due course. I am afraid that that is as specific as I can be on timing A number of questions were posed to me and I will try to deal with as many as possible in the few minutes available to me. The noble Lord, Lord Stevenson, asked whether this will allow for intervention on purely economic grounds. The answer to that question is no. The company involved must be able to provide capability in the UK to combat or to mitigate the effects of a public health emergency The noble Lord, Lord German, asked whether the public health measures would persist once the NSI Bill comes into force. The answer to that is yes. We intend to keep the public health emergency interest consideration as part of the Enterprise Act, so that is permanent, but the national security measure will be repealed by the NSI Bill The noble Earl, Lord Lindsay, asked about the threshold. The lower threshold of £1 million is considered to be the appropriate level of turnover to capture those businesses that, although fairly small, have a critical role in matters that may affect national security. We believe that that threshold is right The noble Lords, Lord Adonis, Lord Liddle and Lord Kennedy, pushed their luck—as is traditional—and went on to subjects which were not directly relevant to the matters under consideration in this debate. Nevertheless, I always try to be as helpful as possible to the noble Lords, so I will say a few words on the CMA. We already have a highly regarded competition regime and it is the role of the CMA to promote competition for the benefit of consumers, business and the economy. We will be appointing a new chairman in due course; the noble Lord will be the first to hear it about it when we do The noble Baroness, Lady Falkner, and the noble Lord, Lord Holmes, asked a very good question: why these particular sectors? It is always difficult to define such things but we believe that these sectors are where the risks from mergers that are not covered by the existing thresholds are the highest, and where it is important to act quickly to deal with these issues. Due to the current economic disruption, companies in such sectors may find themselves in difficulty; it is right that the Government are able to step in for national security reasons if required. There is always a difficult balance to strike but we believe that these measures are proportionate and strike the right balance with economic investment The noble Lord, Lord Chidgey, asked about cyber acts. The measures in respect of cryptographic authentication are indeed intended to help defend against cyberattacks, as are the reduced thresholds on quantum and military. The noble Lord, Lord Mann, talked about state intervention; I maintain the point that the orders do not provide a direct burden on business but rather enable the Government to intervene, if necessary, on a public interest consideration. We believe that this is a proportionate measure to mitigate against the risk The noble Baroness, Lady Jones, returned to one of her favourite subjects: facial recognition. I can tell her that some parts of facial recognition technology will indeed be covered by artificial intelligence and cryptographic authentication. She will be delighted to hear, I am sure, that facial recognition will be covered under the NSI Bill; I look forward to debating the matter further with her then To conclude, these orders form key parts of our Covid-19 response and learning. They ensure that the UK can maintain the capability to combat and mitigate the effects of public health emergencies in respect of qualifying takeovers, and they ensure that the Government can intervene more readily in areas of business where mergers implicate the security of our nation. I repeat that they in no way affect our openness to foreign investment; we continue to welcome genuine investment from around the world into this country. Rather, they reflect the fact that our economy can thrive only when the health and security of the British people are protected. With that, I commend these orders to the House.