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  • Darren Jones – 2020 Speech on the National Security and Investment Bill

    Darren Jones – 2020 Speech on the National Security and Investment Bill

    The speech made by Darren Jones, the Labour MP for Bristol North West, in the House of Commons on 17 November 2020.

    Before I begin my remarks, I should declare my interests as chair of the all-party parliamentary group on technology and national security and the parliamentary internet, communications and technology forum APPG, whose members will no doubt have interest in the Bill; as the chair of a global network of legislators interested in artificial intelligence regulation called the Institute of Artificial Intelligence; and lastly, in my capacity as Chair of the Business, Energy and Industrial Strategy ​Committee, I have had discussions with the management of ARM, its founder Hermann Hauser and the CEO of Nvidia about the proposed takeover.

    I support the Bill and thank the Secretary of State for briefing me on its contents last week. The ability to scrutinise foreign investment and to intervene when there are national security interests is not only a critical function of the state but an increasingly important one, given the impact of technology and data on every part of our economy and our infrastructure, and the use of that avenue to cause harm to Britain’s interests. It is on that basis that we should have a robust scrutiny function, but it should also be finely balanced with the transparent, clear and pro-investment framework brought forward under this Bill. I agree with other colleagues around the House that, by international standards, Britain has been a bit of a laggard in recent years in bringing forward a robust foreign investment regime, and that is why we support the Bill, but I have a few questions today, which I hope the Minister might try to answer in summing up.

    First, on the definition of sectors, the 17 sectors identified include some dual-use functions such as quantum computing, which at this point in its development seems obvious and indeed is in line with the recommendations of the Science and Technology Committee inquiry into quantum computing in the last Parliament, when I was a member of that Committee. However, as has been noted, other sectors are identified merely as “artificial intelligence” or “energy”. Artificial intelligence, for example, is a general purpose technology that will increasingly apply to every aspect of our economy, so how we ensure robust and clear definitions will clearly be important.

    It has been noted that there is a risk under the Bill of over-reporting as an insurance policy. I wonder whether lessons could be learned from other regulators—for example, by introducing regulatory sandboxes within the units in the Department where interested individuals might be able to come to set forward in advance the transaction and get some initial advice on whether it falls within the definitions. If it does not, I think there will be a risk of over-reporting, but also of court cases that dispute the definitions, which, in their own right, can be fairly limited in statutory instruments and will probably not apply to every circumstance. I reaffirm the comment from the Opposition Front Bench on engaging with Parliament on the sector definitions under the statutory instruments—and not just with Parliament as a whole but with the relevant Select Committees, including my own. I also note the interest of my hon. and right hon. Friends from the Science and Technology Committee, the Foreign Affairs Committee and the Defence Committee in this matter.

    Secondly, on the definition of national security, there has been some debate in advance of the publication of the Bill on whether the Government were intending to go beyond national security and to look at broader economic or jobs-related issues. As my right hon. Friend the Member for Doncaster North (Edward Miliband), the shadow Business Secretary, said from the Dispatch Box, we think that there is some legitimacy to Ministers having a right to intervene when, for example, a major employer or a sector that is strategically crucial to the British economy is under threat from a legitimate overseas acquisition that could have an impact on British jobs or British industrial capacity. I welcome the comment that ​this is a broader industrial strategy conversation and note the Department’s intention to rewrite that, as previously advised before Christmas, although it will presumably now take longer. I look forward to that broader debate, but I agree with colleagues on a cross-party basis that at least some legal structure around the definition of national security would be helpful, for reasons I will come on to later.

    Thirdly, this is not just about mergers and acquisitions; as the Government’s Project Defend assessment has shown, there are very long supply chains relating to critical national infrastructure, through which components are sourced from companies in jurisdictions about which Ministers might legitimately have national security concerns. I would be interested to hear whether Ministers plan to expand the scope of the Bill or bring forward other legislation in future to deal with supply chain intervention, in addition to or alongside merger and acquisition issues.

    I also note that while clause 7 of the Bill covers all the corporate vehicles such as limited liability partnerships, trusts and limited companies, it excludes individuals. This is probably very limited, because individuals would not want to take on the liabilities of buying big companies, but I am sure there are potential cases where individuals will buy intellectual property or assets in their own individual right, whether it is a licence to intellectual property or actual property, as my right hon. Friend the Member for North Durham (Mr Jones) mentioned, and they would fall out of the scope of this Bill. I would be interested in the Minister’s view on that.

    Fourthly, the application of the Bill applies from the date of presentation, not from the date the Bill becomes law. It would be useful, given that this is now the regime in the UK, for the Department to set out what current takeovers will be subject to it. Colleagues have mentioned the ARM-Nvidia takeover, which of course is important to the British economy. I understand from press reports that the Department has not felt able to confirm whether that will be subject to this legislation, but I think it would be in Ministers’ interests to be quite clear about that.

    Equally, I would stress again the comments from the Opposition Dispatch Box about the length of retrospectivity. Five years seems a very long time, and I would be interested to understand why a period of five years has been adopted by the Government. One of the attractive natures of the British economy is our policy stability and the way in which the rule of law functions, and I share the concern that five years is a long time. There could be a change of Government, a change of Ministers, a change in leadership in the unit in the Department or a change in the view on national security that could start to unwind a transaction many years after it had gone through. Ministers need to consider that carefully.

    Fifthly, we are still waiting for confirmation of the Government’s intentions for our post-Brexit competition and state aid policy regime. Ministers have been quick to table statutory instruments to say that the European regime will not apply from 1 January but have not yet set out what will. The Bill is implicated in that process. It is the start of a post-Brexit state aid and competition policy. If the Minister feels able to give us a bit of a glimmer in his closing remarks about when the details of our post-Brexit competition and state aid policy might be published, I would be grateful.​
    Lastly, I am not entirely clear what the assessment process is under the Bill. In previous examples, such as the hostile takeover of GKN by Melrose, in which I declare a constituency interest, the national security assessments were undertaken by the Secretary of State for Defence and, perhaps for fair reasons, were done without much oversight or transparency. Given that all those sectors will now be subject to national security assessments, will it be the Ministry of Defence, the Department for Business, Energy and Industrial Strategy, the intelligence services or another body that undertakes them? It would be useful to have some transparency about who is making the assessment and how the Secretary of State will ultimately balance very difficult decisions.

    In sum, I will support the progress of the Bill. I share some concerns about the speed and why it has been brought forward so quickly, and I reiterate my point about the statutory instruments, therefore, being an important part of parliamentary scrutiny when they are introduced. I hope that Ministers will engage fully in the consultation process with stakeholders to ensure that the new framework is not only fit for purpose but gets the crucial balance right between national security concerns and maintaining Britain’s leadership as a pro-investment economy that fits with our broader regulatory position post Brexit.

  • Greg Clark – 2020 Speech on the National Security and Investment Bill

    Greg Clark – 2020 Speech on the National Security and Investment Bill

    The speech made by Greg Clark, the Conservative MP for Tunbridge Wells, in the House of Commons on 17 November 2020.

    It is a pleasure to follow the thoughtful speech of the hon. Member for Dundee East (Stewart Hosie). May I join my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) in paying tribute to the Front-Bench team for their courtesy in being open about the development of the Bill and for their communication with all parties in the House?

    This is an important Bill at an important time. In recent years, we have seen a tendency on the part of some countries to move towards national measures that seek to protect their domestic economics from the open conditions of international trade, not only in goods and services but in ownership and intellectual property, and we of all nations should be a voice against that. Few nations have prospered through pursuing a policy of national self-sufficiency. Over time, they have become deprived of innovation, competition and investment, although the exposure and experience of international trade and investment can be disruptive and uncomfortable. In the end, workers become less productive than in other countries, consumers pay more and those countries use technology that is behind what other more open economies allow. In other words, they become less prosperous.

    The importance of this Bill pivots on its title. Is it exclusively about national security, or is “and Investment” a doorway to a more restrictive view of overseas investment more generally? I am pleased that my right hon. Friend the Secretary of State made it absolutely clear that the Government have decided that it is the former, rather than the latter, although there are some dangers that I want to touch on.

    Do we need a statutory framework to ensure our national security when it comes to commercial investments? Yes, of course we do. There are commercial activities conducted in this country that are essential to our national security—defence contractors are an obvious example. Public policy has always recognised that, whether through the use of export controls on their products or, in the case of ownership, through golden shares and the intervention powers of the Enterprise Act 2002 for national security, which have been referred to.

    Does the framework need to be kept up to date? Yes, of course it does. As the Secretary of State made clear, technologies that are now pivotal to our national security had not been dreamed of 18 years ago when the Enterprise Act passed through this House. The nature of some of those technologies is such that their financial value may not be reflected in the ownership of the company concerned, so they may be pivotal but not trigger the turnover test. The turnover and the value of the transaction may not be a dependable guide to their importance to national security. The control of those technologies may not be confined any more to takeover bids for public companies; it may include ownership outside the stock market of intellectual property or other assets.

    Most nations on earth have a framework for overseeing the national security consequences of investments. It is important that we have one and that ours is up to date. The Government are right not to expand the Bill beyond national security or to introduce, as the right hon. Member for Doncaster North (Edward Miliband) said, a wider public interest or industrial strategy test. I say ​that as the author of our current industrial strategy, of which an essential pillar is our business environment. That strategy says that we need to continue to be

    “an open, liberal free-trading economy in which new businesses can be created easily”

    and

    “existing businesses can attract investment”.

    It is obvious that if a British company has succeeded and has made an international impact, we want it to continue to succeed and prosper in this country, and to do so with its headquarters and operations here. That goes without saying. The most important thing is that the company is founded and prospers in the UK in the first place, as my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) said. Especially in fields such as the tech sector, if we tell the founders of new businesses that, should they succeed, they will be excluded from the possibility that they can receive overseas investment, or at the very least that it will be heavily questioned if they should cede control of the business, and that the more their business succeeds, the more draconian the restrictions are likely to be—although Silicon Valley continues to be a major source of international capital investment—the consequence, no doubt unintended, may be that those firms will not be founded here in the first place but will go to places where there is no risk of there being stranded assets.

    Bob Seely

    My right hon. Friend is making an important point, and there is clearly friction on this side over what we see as the crux, but does he accept that the United States and Australia—two free-market nations—will have significantly tighter restrictions after this Bill than we will, and does that concern him?

    Greg Clark

    Of course we should look at the example of other countries; I am sure we will do so during the course of the Bill. However, I would say to my hon. Friend that those two countries are very different in their markets and the size of their economies. The pool of capital that is available to start-up companies in the US is vastly greater than it is in the UK at the moment, although I hope that will change, for reasons that I will go on to discuss. Australia, conversely, is a much smaller economy, which does not have the network of policy regulatory innovation that we have.

    We have been a leader; that is our international reputation, and one reason that transactions are conducted in this country is the confidence in our rule of law. We should emphasise and champion that, rather than feeling compelled to follow what other countries are doing in their entirety. Our policy—our industrial strategy—must be to make Britain an even more attractive place for innovative companies to be founded and to stay—not because they are compelled to do so, but because the environment that we provide, in terms of scientific research, educated and trained people, the availability of capital at every stage in their development and the public policy environment make it an attractive place for them to want to be.

    Neither must our regime establish, in my view, a list of countries that cannot invest at all in the UK. The test must genuinely be about national security. That is very appropriate. China has been mentioned already in these discussions, and of course it is right and proper that the ​national security concerns that the House has about China should be reflected through this regime, and these powers are important for that. However, when I was sitting in my right hon. Friend the Secretary of State’s place, I fought hard to save, for example, British Steel in Scunthorpe, Skinningrove and Teesside. The Chinese steelmaker that bought the company, Jingye Group, is essential to the employment of many tens of thousands of people across the north and the east of England, and more in the supply chain. From my recollection, there was no intellectual property vulnerability in terms of its operations. Indeed, the retention of that substantial steelmaking capacity has enhanced our economic resilience, whereas losing it would have seen us relying on imports. I might say the same for Geely, the owner of the London Electric Vehicle Company, which my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), being a west midlands MP, will be familiar with, and which gives valuable jobs to many people.

    Richard Graham

    My right hon. Friend is making a very good case for why it is important to look at each investment in its own right. Geely, which bought the London Taxi Company, produced electric vehicles and now exports them to the Netherlands and France while continuing to manufacture in Coventry, is a good example of why that is so important. Does he agree that it is simply not good enough for this country to say, “China is Communist and we will not accept Communist investment, and therefore we will not accept Chinese investment.”? We must be a great deal more sophisticated and open than that.

    Greg Clark

    I would say to my hon. Friend that the Bill’s focus on national security is absolutely right. We should have a beady eye on national security, with substantial powers, as my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) said, to enforce that. I think the Bill has it right in its focus on national security.

    The Committee that examines the Bill will need to consider in detail some of the provisions of the Bill as it is presented on Second Reading. It is essential to provide investors and UK firms with a sense of predictability and confidence, but that can be undermined if the law has administrative consequences that are unintended and not provided for. For example, there are strong reasons to think that there may be a deluge of notifications, as the hon. Member for Dundee East said, when the new unit in the Department is set up, and it must be geared up to handle that right from the outset.

    The prospect of five years’ imprisonment for directors and fines of 5% of turnover, as my right hon. Friend the Secretary of State commends, for failure to notify under a mandatory regime within sectors defined as broadly as communications and transport is, in my view, likely to lead to many small transactions being notified under the voluntary regime for peace of mind regarding those very strong sanctions against an inadvertent breach. It is an enormous challenge for the Department to set up a new unit, especially since the current regime—or the previous one, since the powers are live—has dealt with a very small number of transactions each year.

    As Secretary of State, I reduced the turnover threshold for review from £70 million to £1 million only two years ago. This Bill contains no de minimis threshold, and I will be interested to see during the passage of the Bill ​evidence of why a zero de minimis threshold is necessary, especially when the definition of technology assets extends to “ideas, information or techniques”, which is very broad. This could result in a very large number of very small transactions being notified defensively.

    Even if businesses are confident that they will not be covered by the mandatory notification requirement, the advantages of voluntary notification and clearance, with its exemption from the five-year look-back, may prove to be very attractive and very important in baking in the approval of a transaction against reversal more than five years in the future. It is clearly the ambition of the right hon. Member for Doncaster North to add further public interest tests. As we approach the general election, it may well be attractive, as a defence against the action of future Governments, for companies to notify even when they do not have to. It is very important that the Department is geared up for that.

    Much of the Science and Technology Committee’s work in recent months has been concerned with the nation’s response to the coronavirus. If we can learn one lesson from that—for example, from problems with the test and trace system—it is that, to have public confidence, we need to properly anticipate demand and to set up to meet it from the outset. If that demand is not supplied, public confidence, which is crucial for investment, will be undermined.

    Sir John Hayes (South Holland and The Deepings) (Con)

    Does not the coronavirus provide us with another lesson, which is that Government historically have not been terribly good at assessing risk and modelling the response to it? I say that as a former Minister, like my right hon. Friend. I was always surprised, in all the Departments I served in, at how little time is spent on modelling outcomes of the kind we are now enduring.

    Greg Clark

    My right hon. Friend is right. To look ahead, we need to develop the capabilities to do that, and for a unit in the Department that previously did not have that responsibility—it was with the CMA, advised by others—that is a steep learning curve.

    The foundational feature of the UK’s commercial reputation in the world is a place where people and businesses all around the world can be confident in investing. That derives in no small part from a public policy regime that is rational, stable and rigorously and efficiently administered. We should continue to aspire to take a global position of leadership in this area, so I welcome the focus of the Bill and its ambition to bring our arrangements up to date. I look forward to helping ensure that we can be proud of the Bill and see it as a contribution to our continued reputation for having the highest standards of corporate government and investment security in the world.

  • Stewart Hosie – 2020 Speech on the National Security and Investment Bill

    Stewart Hosie – 2020 Speech on the National Security and Investment Bill

    The speech made by Stewart Hosie, the SNP MP for Dundee East, in the House of Commons on 17 November 2020.

    I start with my ISC hat on because it was the ISC that first investigated UK Government powers and processes for scrutinising foreign investment in sensitive areas of UK industry, found them lacking and called for more powers. In its 2013 report, “Foreign involvement in the critical national infrastructure”, the Committee looked into the issue of

    “foreign investment in the Critical National Infrastructure (CNI)”

    and concluded:

    “The difficulty of balancing economic competitiveness and national security seems to have resulted in stalemate.”

    That is not a criticism and it is not meant to be contentious. This issue has arisen over the past few years and most, if not all, advanced economies are now grappling with it. I therefore welcome the Bill, in principle, or certainly a measure like it.

    While on the subject of the ISC, I offer the apologies of its Chair, the right hon. Member for New Forest East (Dr Lewis), who is self-isolating having been contacted by the English version of Trace and Protect, and is sadly missing this debate.

    The Bill is designed to bring additional scrutiny of foreign investment that may have an impact on national security. I say from the outset that not only is there ​nothing wrong with having a national security eye on investments in critical areas—it is in fact absolutely vital.

    Currently, as we have heard, the ability of the Government to scrutinise investments on national security grounds contained within part 3 of the Enterprise Act—that is, the mergers provisions—is rather limited. In practice, it means that the UK Government are unable to scrutinise on the grounds of national security without the investment first meeting competition concerns or, in very limited circumstances, a public interest test. We know this concern and similar concerns are shared globally. A number of other countries have been tightening up their investment security regimes in response to changing national security-related threats, enabling technology, the loss of intellectual property and the increasing crossover between sectors, which I may touch on later. The Committee on Foreign Investment in the United States is largely seen as setting the standard. We have also seen tightening in Japan, Canada, Sweden, Germany and France at least, with the Japanese regime extraordinarily strict, in some cases limiting ownership to barely 1% of active management or, more accurately, to barely 1% of a company in certain circumstances.

    In the UK Government’s proposals, if both the trigger and the threshold are met, the individual investment can be called in by the Secretary of State for approval. The powers can be retrospective; it can be called in after it has occurred. However, the time to conduct the national security assessment—30 days, with potentially an extra 45—might be deemed to be a little short, given how shrewd, or clever, certain institutions, organisations and individuals are at hiding genuine beneficial ownership. One thinks how long it took to find where beneficial ownership existed for some entities in the UK. Were it not for the Panama papers, we would probably still never know. I therefore question whether that maximum of 75 days is actually sufficient.

    The Bill adds a mandatory notification scheme whereby investment interests in certain sectors and asset types—which I do not demur with—must be pre-emptively or retrospectively declared, but it removes notification of call-ins from the competition authority to a direct serve from the involved parties. In the interests of transparency, I seek clarity from the Government on the reasons why notification via the CMA is being removed.

    The Bill also introduces new powers to increase screening in respect of health and preventing hostile acquisition through strategic buying of health supplies, for example. I welcome that, but the scope of activities that might be caught is very wide. There may be a good reason for that, but it is worth exploring. The statement of policy intent describes the core areas as including things such as advanced technology, which is perfectly reasonable, but it also contains a much wider definition of national infrastructure. The impact assessment for the Bill estimates that the new regime would result in between 1,000 and 1,830 transactions being notified per year. That is very specific and it is also an eye-watering number, given that only 12 transactions were reviewed on national security grounds since the current regime was introduced 17 years ago. The necessary resources, as the right hon. Member for Doncaster North (Edward Miliband) said, and access to intelligence agency assessments, as the right hon. ​Member for North Durham (Mr Jones) said, must be available in the proper manner in order to carry out the work.

    Mr Kevan Jones

    Does the hon. Gentleman share my concern that the Bill sets out a voluntary reporting and a notification system, but it is not clear how the security services enact any concerns they may come across into this system? I shall be making the point that I do not think this should sit within the Department for Business, Energy and Industrial Strategy. Does he have concerns on that issue?

    Stewart Hosie

    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.

  • Iain Duncan Smith – 2020 Speech on the National Security and Investment Bill

    Iain Duncan Smith – 2020 Speech on the National Security and Investment Bill

    The speech made by Iain Duncan Smith, the Conservative MP for Chingford and Wood Green, in the House of Commons on 17 November 2020.

    It is always a pleasure to follow the right hon. Member for Doncaster North (Edward Miliband), not only because he followed me into leadership and discovered just exactly how pointless that really was. On that we can immediately agree, and he may well have stumbled into another point of agreement; he should know, now that he is a Cummings-ite, that I once employed him and then let him go, so maybe it is time for the right hon. Gentleman to do the same. Anyway, beyond that, I want to congratulate him, because there were things on which I did agree with him, as well as, obviously, things that would need further discussion.

    I thank my right hon. Friend the Secretary of State for his deliberations on the Bill, which I will support tonight. It is long overdue. The debates around the Huawei stuff at the beginning of the year really exposed the fact that the UK had lost its way in this area in terms of threats and so on. We were behind the others—Australia, the United States; some of our big Five Eyes compatriots—but at least my right hon. Friend has grasped the nettle and brought this Bill forward, which is laudable. I also thank him for his courtesy in the ​course of this, in the sense that he spoke to me and, I know, to others. I particularly commend the courtesy of his Minister, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), who is a very good friend. He went out of his way to talk this through with colleagues on both sides of the House.

    This debate is in that context. This is right. I particularly like clauses 32 to 39 and onwards, which deal with penalties, fines and incarcerations, the scope of which is up to five years. These are strong recommendations—slightly stronger than I expected, to be quite frank, but they are well worth it. There are many other good things about the Bill. I will not run through them all, because the Secretary of State did that, and I want to tease out a few points that I think are relevant and need inquiry.

    The Bill gives the Secretary of State great powers for industrial strategy—powers to screen these investments that we have been discussing and to address the national security risk that they involve. It also gives him the power to call in investments. We have been through those already. However, I want to pick up on the things that I think are missing from the Bill and that I hope the Secretary of State will look at again in the course of its passage.

    First, we have to accept that parked across this space are two very big threats: Russia and, of course, China. In fact, I think China is now the single biggest threat and problem posed to the United Kingdom and the free world. The way it is going—its problems, its difficulties, and the way it is focusing on internal suppression, external expansion and trashing both World Trade Organisation rules and laws—means that we will have to deal with that, and I suspect that this Bill will progressively be right in the middle of that. In dealing with that, I want to raise a couple of issues. In dealing with that, I want to raise a couple of issues.

    Without this definition of national security, the Government are giving a stick to beat themselves with at the moment. Having such a definition is important for two reasons. First, it helps to improve clarity—a couple of my hon. Friends wanted clarity. I have looked at some of the definitions out there, including the American definition, which may not be perfect but it does cover some of the wider areas that I will talk about soon under transnational crimes and goes into things such as threats from drug trafficking. It is important for the Government to think carefully about this because it will help to define the Bill.

    Bob Seely

    On what the shadow Secretary of State said, there is obviously a genuine and good debate to be had on the elements of the Bill. This is not necessarily about industrial policy—I say with great respect to those on the Benches opposite—which is part and parcel of another debate. It is about the modern definition of national security and whether we see it as narrow or broad, and there is a strong argument today for having a broader definition of national security.

    Sir Iain Duncan Smith

    I agree with my hon. Friend and I agree that this is not the Bill to discuss industrial strategy. The right hon. Member for Doncaster North made wider points which I think are worthy of discussion, but I am not sure that that discussion should take place in relation to this Bill and I want to keep this narrow.​

    First, in China something very special is taking place: the idea of civil-military fusion, which is now infecting every single enterprise and company in China. The Chinese military, as we have already heard, uses this concept and strategy to acquire intellectual property, technologies and research for civilian use and for military use. An external investment screening body, therefore, should be set up under this legislation, to establish and investigate cases where this may now affect UK investments. This is very important, because the rules are very strictly applied in China: you co-operate with the intelligence services or you are out of business. You may be out of not just your livelihood but your freedoms.

    Ms Ghani

    Is it not even more dangerous in that, under the national security law in China, not only do people have to hand over data, but if asked by a foreign state they have to deny they are handing over data? If that is the case, should we not have a bigger debate about social media companies based in this country harvesting our data and our children’s data and where that data might end up down the line?

    Sir Iain Duncan Smith

    I of course completely agree with my hon. Friend and I was just going to come on to the data harvesting point, because it is caught in this. She is right that China’s national intelligence law requires all Chinese firms to assist with state intelligence work and to deny that if they are asked. Let us say the Secretary of State wants to investigate and says he has strong penalties for non-compliance. By law in China they are not allowed to comply with that process at all, so there is already a national conflict in this. TikTok is owned by ByteDance, which is a very dodgy company set up in China that has huge links with the Chinese Communist Government. So we need to be very careful about where we go with this because UK nationals might get caught up and get punished for what is essentially a refusal by the Chinese Government to allow others to do this.

    I am also slightly concerned about some of the things that happened in the past not being caught by the Bill. The Henry Jackson Society has today announced that, having looked through the Bill, only 23 of the 117 Chinese acquisitions over the last decade would have actually been caught. The areas that are outside of this include pharmaceuticals. The Chinese takeover of Bio Products Laboratory, which has a very significant technology with regard to blood products, would not have been caught. In education, 10 universities have many thousands of obligations to Chinese investors, where they get a trade-off on technology, some linked to defence firms. That would not have been caught. Interestingly, Thames Water and Veolia Water have significant share ownership from Chinese firms, but that certainly would not have been called into question.

    Richard Fuller

    My right hon. Friend is referring a lot to China, and I am sure he will not be alone in that this afternoon. Is his perspective that we should be looking in the Bill to restrict all Chinese investments in the UK, or investment in particular sectors, and what is the differentiation if the origins of that is the Chinese state, in this fusion of the state with business?

    Sir Iain Duncan Smith

    My view is that the Bill should help us to identify exactly which of these are genuinely private and not located in China under Chinese law. ​That will be a big issue. I have to tell my hon. Friend that, on that question he is right, because I believe we are now facing a very significant threat from China. So we now need to use the Bill to figure out how we deal with that threat on a wider basis, not just on individual takeovers. The Government need to look at that. Huawei was a very good example of Government policy having to be reversed on that basis. It is a growing problem and he is right to raise it.

    Richard Graham (Gloucester) (Con)

    Does my right hon. Friend agree that it is incredibly important that we recognise that the Bill is not aimed at one particular country or any particular identified sovereign threat? It is a more general Bill about the importance and value of national security assets in this country. Does he also agree that referring to China as communist—although, of course, it is ruled by the Communist party—is a misnomer in the context of a successful model of authoritarian state capitalism with which we will have to deal and the world will have to deal? We will have to separate those companies that offer attractive investment opportunities from those that are genuine threats.

    Sir Iain Duncan Smith

    I thank my hon. Friend for that intervention. I know he has been a big champion of that relationship. We do not agree with each other on this matter because I think that China, with its dictatorial Government, poses a very significant threat. But I did speak about other countries—I did say that Russia also poses a threat—so I recognise his defence.

    I want to move on to the national interest test. This year, the Australian Government invoked the national interest in looking at tests and they used it in similar legislation to block the acquisition of a minor stake—this might deal with the issue that my hon. Friend was talking about—in AVZ Minerals by a Chinese firm. They needed to intervene because the asset, given what has happened with covid and so on, had lowered in value unusually and unnecessarily, and that had opened it up to a takeover which they felt would have been very unhelpful. The other point I want to raise in passing is that we need to look at things like the Confucius Institute, which is here investing in universities with offers but is actually acting on behalf of the Chinese Government to follow lots of Chinese students around.

    Other Members wish to speak, so I will finish my remarks. My main point is that without that national security test the Bill will lack clarity and definition, and fail to understand sometimes where it is actually looking. It could be open to pressures to turn this more into an industrial policy statement, rather than a national security issue.

    The Bill also falls short of similar legislation by Five Eyes partners. My right hon. Friend the Secretary of State is absolutely right to say that they have looked across the scope of what others have done, but other Five Eyes partners have gone further on this. They are competitor countries to us, so it is not as though they have any kind of dictatorial regimes. The Committee on Foreign Investment in the United States and the Australian Foreign Investment Review Board are external bodies.

    This is the point that I wanted to make to my right hon. Friend. I just wonder whether he might want to reflect on the nature of the pressure on somebody such as him, who, under the Bill, will have to sum up and make final decisions on the advice peculiarly to him. ​The other two organisations, in Australia and in the United States, have the ability to say that everybody on the panel makes a group decision on the evidence. I know he will argue that that process takes longer—yes, he may be right about that—but I feel that the pressure is on him.

    I was in government for six years and I know what Downing Street does. It gives you a call and says, “I don’t think you have to go very far with this sort of stuff, do you? After all, this is worth a lot of money to us. Come on.” Others will say that and the Secretary of State will be sitting there thinking, “This is a balanced judgment. Where do I go on this?” I just wonder whether that pressure is fair on the Secretary of State. He would be questioned later on why certain decisions were made. If I was the Secretary of State, I would want to release myself from that situation. I would not want to be dragged to the courts to be accused of being biased in that decision and making a decision that was not agreeable. So I would look for more external bodies to be able to make that judgment.

    I also say to the Government that human rights are vital nowadays. We cannot walk away from it; it is part of what makes us. The reality for us is that far too many companies have allowed themselves to quietly get sucked into the use of slave labour and other labour. We know about that, in Xinjiang province and in other areas too. My right hon. Friend does need to think about that very carefully. I do not want to make the Bill a Christmas tree, but elements of that are involved.

    I congratulate the Government on bringing forward the Bill. It is the right legislation to bring forward. It is overdue, no question. However, the balance still needs to be widened somewhat. I hope that in the course of the Committee and Report stages the Secretary of State will accept that good amendments may come forward from brilliant people—not just me—who may well be able to help him in his adventures.

  • Ed Miliband – 2020 Speech on the National Security and Investment Bill

    Ed Miliband – 2020 Speech on the National Security and Investment Bill

    The speech made by Ed Miliband, the Shadow Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 17 November 2020.

    I will start with the vital context to the Bill. At the heart of it is the first duty of any Government: to protect our national security, while meeting the shared desire across the House for our businesses to succeed and create wealth and jobs. The Bill must be seen against the changing geopolitical and economic landscape; the evolving nature of the threats to our national security in an age of rapid changes in technology; the lessons of covid about the critical nature of unexpected threats, including pandemics, which has thrown into sharp relief the critical need for advanced domestic capabilities in manufacturing and logistics and across supply chains; a shared sense across the House that we as a country have at times been too relaxed about some overseas interests investing in our country, with damaging national security implications; and an understanding that the existing legislation supported across parties two decades ago does not provide the basis for the kind of active industrial strategy that we need to build a safe and successful economic future. Those factors together demand legislation, and that is the context in which we view the Bill, so we support it and the fact that the Government are taking the necessary legislative steps to protect our vital national security interests. It is the right thing to do for our country.

    Our main argument with the scope of the Bill is not so much about what it seeks to do on national security but what it omits on wider issues of industrial strategy. It is notable that the Bill brings us into line with other major economies on the security questions we face but fails to do so on broader issues of public interest and takeovers going beyond national security, despite the clear lessons that have been shown over the last decade. I will return to that point later in my speech, but first let me focus on the specific provisions in the Bill.

    We should be candid that, in drafting the Bill, the Government face the very difficult challenge of keeping our economy open as much as possible to foreign direct investment, which is part of the lifeblood of business and jobs, and protecting our security. Navigating that challenge is hard, which is why getting the specific provisions of the Bill right is so important. This is obviously reinforced by the fact that the Bill goes significantly further in a number of respects than the 2018 White Paper envisaged—notably, the mandatory notification obligation that will apply in 17 sectors and the question of five-year retrospective application.

    I want to raise a number of issues about the Bill in the interests of the constructive scrutiny that is the role of this House. These questions are about the scope of the Bill, ​the issue of retrospection, the capacity of the Government to make this regime work and the scrutiny of its effectiveness.

    First, on the scope of the Bill, we do not take issue with the 17 key sectors identified by the Government. In quantum technologies, engineering, biology, space and a range of other emerging technologies, there are serious potential issues around national security. For example, the acquisition by a firm owned or funded by a foreign power of a company that designs graphic processes, networking routers or microchips could potentially risk national security, especially if the products are used by the UK Government. That is why the legislation is necessary.

    However, as the Secretary of State acknowledged, the Bill goes well beyond those sectors. The call-in ability stretches to any entity or asset in the UK, irrespective of sector. While that was true in the old regime, this power will be viewed in the context of a much more activist, interventionist Government approach. We do not say that is wrong, or indeed out of line with some other countries, but there is a danger of a potential deterrent effect on investment.

    To be fair to the Secretary of State, in his statement of policy intent accompanying the Bill he says that in those non-mandatory areas,

    “transactions are only expected to be called in on an exceptional basis.”

    The central question for businesses and investors in the non-mandatory sectors will be to decide whether or not to notify. The central challenge for the country is to make sure that investors are not put off from investing in the UK.

    I would say to the Secretary of State that there is not yet clear, targeted guidance for market participants on how and when they should notify in those non-mandatory sectors; further detail on that will be crucial in due course. The Secretary of State will be aware of the example of the suspicious activity reports from financial institutions to the National Crime Agency where the system has, according to the Law Commission, been “swamped”. As with suspicious activity reports, there is a risk that the voluntary notification system sees businesses err on the side of over-reporting; the impact assessment already estimates that at least 1,000 notifications will be made each year. I hope that, during the passage of the Bill, Ministers can offer reassurance on that point.

    Secondly, I want to raise is retrospection. The Government consulted on a six-month retrospective power to call in transactions for review, and certain respondents expressed the view that that was too long. The Government have chosen to go much further—for five-year retrospection. I appreciate that that is similar to France, Germany and Italy, and we have no inherent objection to it if the case can be made, but I have read carefully the Government’s response to the consultation, and I do say to the Secretary of State that Ministers need to do a better job of explaining the change in thinking to such a lengthy period.

    In particular, I wonder whether Ministers would explain what the experience has been in those countries that have five-year retrospection—whether they have looked at its effects. As well as the possible deterrent effect on investors, there is obviously a massive challenge in unwinding a transaction that has taken place at five years’ remove. It would help if Ministers explained that, because ​there could be a subsequent series of transactions, so that unwinding from that would be very complex. There is also the issue that has been raised about the voiding, which is that a notifiable acquisition completed without the Secretary of State’s approval is void—not unwound by the Secretary of State, but automatically void without any decision required on his part. That is an unusual concept, and Ministers need to explain how it will work.

    Thirdly—this is really important for practical purposes—I want to focus on how Government can guarantee an effective regime for the new powers. The Government have proposed a new investment security unit in BEIS. It is hard to overestimate the extent of the challenge for the new unit. It will have to respond to a large volume of mandatory, and potentially voluntary, notifications within a tight timeline set out in the Bill. The start of a new regime will always be turbulent.

    The unit will have to track the development of fast-moving, highly complex technologies and monitor each of those markets, and the Secretary of State will have to take decisions on the advice of the unit, which can be challenged in court in the context of highly sensitive information and wide-ranging powers. And the unit will need to develop policy, practice and precedent to provide certainty to a wide swath of the economy. These are, as I am sure the Secretary of State knows, significant challenges, and it is no exaggeration to say that the success of the regime and the effective functioning of an important part of the economy rest on the new unit operating swiftly and effectively. If I may put it this way, the Secretary of State will be aware that his reputation and that of future Business Secretaries—not to be presumptuous —will depend on the resourcing and functioning of the unit.

    I want to raise in particular the issue of small and medium-sized enterprises, which may well find the notification process most burdensome. Take the example of a small tech start-up founded by recent university graduates, who might incur much more debilitating costs in navigating the process than a large global corporation. It is essential that the Government find ways to mitigate this risk.

    In any case, my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) and I are seeking from Ministers assurances that the unit will be adequately resourced, with access to the right technical capabilities; and crucially, there must be a clear flow of information and shared priorities between the unit, protecting our national security, and the Department of International Trade’s new office for investment, whose job is to get inward investment into the UK.

    Mr Kevan Jones

    Does my right hon. Friend agree that what is also going to be needed is some very close relationships and working with the security services, because the information that it could rely on in these cases will mostly not be accessible straightaway by this new unit?

    Edward Miliband

    My right hon. Friend speaks with great knowledge on this issue, and he is completely correct. Indeed, I do not want to answer for the Secretary of State, but one of the issues that was raised was the definition of national security. These things are hard to define, for a whole range of reasons that we can understand, but for the reasons that my right hon. Friend set out, it is absolutely crucial that there is a close relationship with the security services.

    ​Sir Iain Duncan Smith

    Does the right hon. Member agree that the definition of national security provided in spheres such as the United States and Australia would actually help clarify for companies an idea of whether they are likely to fall within it? Without that, they are not quite sure what the judgment will be behind closed doors.

    Edward Miliband

    The right hon. Gentleman has taken a huge interest in these issues and, again, speaks with great expertise, and he may well be right that it is possible to do more on the definition. I am sure that is something the Secretary of State will consider. I can see there are definitely challenges, but I would agree with the right hon. Gentleman that the more guidance there can be for business about this, the better, because the more we will avoid a mountain of notifications that are not necessary and the more clarity there will be and the greater protection for our economy.

    Fourthly, I want to talk about the role of this House in scrutinising the effects of this legislation. A large number of areas are left to delegated legislation in this Bill. Notably, the Bill enables Ministers to add new sectors to those subject to mandatory notification. I understand some of the reasons for this, but I do hope there can be proper scrutiny, if that is the case, in this House and, indeed, interaction with business. Given the sensitive nature of the issues involved in this Bill, I do think there needs to be a way—an annual report is envisaged, I believe, by the Secretary of State—for this House to monitor how this is working in practice.

    I do not speak for it, but we have a special Committee of the House—the Intelligence and Security Committee—that can look at these issues. I would like to raise the question with the Secretary of State whether it could play a role in scrutinising the working of the regime and some of the decisions being made, because there are real restrictions on the kind of transparency there can be on these issues for the reasons raised by my right hon. Friend the Member for North Durham (Mr Jones). The ISC is in a sense purpose-built for some of these issues.

    Again, this is one of a range of issues we will seek to raise during the passage of the Bill, because I think that it is really important. We see our role as a constructive Opposition to get this right. There is a shared understanding across this House that we need to update our legislation. There does need to be proper scrutiny, and I hope that there can be good scrutiny in Committee and an openness on the Government side to the points that are made across the House in relation to improving the legislation and a proper way to look at its operation, which is vital to our businesses.

    Bob Seely

    Is the shadow Secretary of State aware that some people on this side of the House, as part of this process and as part of the scrutiny, have been calling for an annual statement on strategic trade dependency to give ourselves an overview and an understanding of the strategic direction of some of our industries, including specific examples?

    Edward Miliband

    It sounds like a good idea to me, and I would welcome that. Actually, that is a convenient segue to the wider points that I want to make on this Bill.​

    Our view is that this is only one part of the change we need, because I believe that the existing legislation has been found wanting. That legislation was passed by a Labour Government—I checked—and I think it was more or less agreed across parties; certainly, the then Opposition did not vote against it. It has been found wanting not just on national security but on wider issues such as the public interest test for takeovers on economic grounds.

    I just want to raise a very specific issue, because it illustrates the point. We are in the midst of a threatened takeover in the tech sector: the Nvidia-ARM deal. We know that ARM is the crown jewel of the British tech sector. We know that Nvidia competes with companies to which ARM supplies. There is a widespread view across the tech sector and across this House that this takeover could be a risk to the future prosperity and success of the sector in the UK, but looking at the Secretary of State’s statement of intent, I do not think that it falls in this list. The list of trigger risks are: disruptive or destructive actions; espionage; or inappropriate leverage. Those are not the issues with Nvidia. The issue is our wider economic interests, which speaks to the point that the hon. Member for Isle of Wight (Bob Seely) made.

    In the two months since the takeover was announced, we have heard little from Ministers. It is true that there could be a referral on competition grounds—I am sure that the Secretary of State is a bit constrained in what he can say about this, but let us hear it if there is. But we are deeply worried about the future of ARM. We are worried about the strength of the legal assurances on its headquarters and other matters. It would be good if Ministers could tell us what they think about this issue. These are deeply serious issues about our industrial strategy and our economic base, and they go beyond national security and, on my understanding, the tests that are set out in the Bill.

    Andrew Griffith (Arundel and South Downs) (Con)

    The right hon. Gentleman speaks very lucidly about the deterrent effect, which he talked about earlier, as well as some of the challenges in establishing this new unit. Surely he must understand that the answer to this is to make sure that the scope of this Bill is absolutely as narrowly drawn as it can be. With respect, he has fallen into the trap of immediately hanging Christmas-tree-like baubles of employment policy and other areas of his industrial policy in what would otherwise be a very narrowly drawn and constructive Bill.

    Edward Miliband

    I really appreciate the hon. Gentleman’s point. These are not Christmas tree baubles that I have suddenly raised now. In 2010, there was the issue of the Kraft takeover of Cadbury. In 2014, there was the threatened takeover by Pfizer of AstraZeneca that had deep implications for our science base. I have felt for a decade that our legislation is not fit for purpose—and I acknowledge completely that this legislation was put in place by the Labour Government. These are deeply serious questions about the future of our industrial strategy and industrial base.

    I do not pretend that these issues are easy to resolve. Of course there are dangers on both sides of the ledger, and we have to strike a balance between those two dangers, but we have enough experience with Kraft-Cadbury and with Pfizer and AstraZeneca— which did not happen, ​but not because of any powers of Government—to be anxious about Nvidia-ARM. If, as I believe, the whole basis of this legislation is to say that other countries are taking this action when it comes to national security and so should we, the logic applies here as well. It is not straightforward, it is not simple, and I completely acknowledge that to the hon. Gentleman, but I see the case for change.

    Richard Fuller (North East Bedfordshire) (Con)

    The right hon. Gentleman used the phrase “I feel” and then talked about confectionary, then about how he felt about pharmaceuticals and about semiconductor chips that are used in mobile telephony. That is the problem, is it not, Mr Deputy Speaker? His feelings are not an appropriate way to interfere in the development assets of private capital. What could he provide to those businesses to protect their development from the vagaries of his feelings from time to time?

    Edward Miliband

    It is interesting; I believe the hon. Gentleman supports this Bill—I may be wrong—but on national security, the Government will apply some tests and we could apply some tests when it comes to our industrial base. Let me make this point to him: it is not just France, but Germany, Australia, Japan and the United States. It is all of the other major industrial economies that say, “Well, no, we do have a strategic interest in certain industries.” Of course, if we decided to go down that route, we would have a debate in this House about the specific areas in which we wanted to be able to intervene. We would have to look at exactly the criteria, and it is not just about whim, but the question is: is the status quo adequate?

    I say to the hon. Gentleman that the status quo is not adequate, and we do not just have 10 years or more of experience to suggest that the status quo is not adequate; we also have a real situation now with Nvidia and ARM. If anyone in the House wants to get up and say, “We think it is fine. We think this should just go ahead. We are not concerned about what that means for our tech sector”, then fine, but everybody I speak to in the tech sector who knows about this issue, including my hon. Friend the Member for Newcastle upon Tyne Central, says that there is a real worry. Why have we not developed enough of these world-leading companies in this country? Why do we want to see ARM taken over?

    Andrew Griffith

    The right hon. Gentleman is probably aware that on the journey to build the fabulous enterprise that is ARM, which is still employing thousands of British people and will continue to employ many more in the Cambridge artificial intelligence hub, that business made 22 acquisitions to equip itself to be where it is today. Had each and every one of those been subject to the jeopardy and the predations that he talks about, we may not have great British businesses like ARM in the future.

    Edward Miliband

    The hon. Gentleman is absolutely entitled to his view; we just have a difference of view on this. When it comes to our industrial base, I believe that the current legislation is inadequate, and there have been a series of events that illustrate that point. Indeed, I would make this point as well, which is that the Government say that the crisis of coronavirus makes parts of our corporate sector more vulnerable, and I think that only strengthens the case for action.​

    The overall point I would make is this: I welcome the Bill and think it is the right thing to do, but there is a broader picture here about what a modern industrial strategy looks like, and I do not think we can ignore these vital issues around our economic and industrial base.

    Several hon. Members rose—

    Edward Miliband

    I have such an array of options. I think the hon. Member for Newcastle-under-Lyme (Aaron Bell) was first.

    Aaron Bell

    I thank the right hon. Gentleman for giving way. He is perhaps proposing an industrial strategy Bill, rather than a national security Bill, but on innovation and science and technology, does he not worry about the chilling effect of what he is proposing? Individuals who may be setting up a scientific or technology company might prefer now to do that in the United States, where they have every option of going to California and setting up the company in the first place, rather than setting up in the UK, because they might fear that he, as a potential future Secretary of State, as he indicated earlier, might prevent them from cashing in on what they have done?

    Edward Miliband

    The hon. Gentleman makes the point that the United States has exactly the regime that I am talking about and does indeed have those wide powers of intervention, so the notion that people are going to set up in the United States rather than Britain, when they have much stronger powers than us, does not hold water.

    Tom Tugendhat (Tonbridge and Malling) (Con)

    The right hon. Gentleman is of course right that there is a difference between the United States and the United Kingdom. One of the differences is that there are 350 million people in the United States. It is a continental power, a position that the UK sadly does not share. It does mean that our investment regime and our investment protocols have to recognise that we are having foreign direct investment of a very different nature.

    I appreciate that this is a matter for debate, and I also appreciate that this is something where we will probably not agree. In fact, interestingly, the right hon. Gentleman seems to align much more closely with the former Prime Minister’s special adviser Mr Dominic Cummings than he does with me. Apart from that, it is actually a matter for a separate Bill. I may actually have some views where I sympathise more with him, but this Bill is quite clearly about national security. There are issues about how much further it should go, but what he says is not the scope of this Bill.

    Edward Miliband

    I can say to the hon. Gentleman that this is the first time I have been called a Cummings-ite. I have been called many things in my time, but a Cummings-ite after Cummings is really unusual.

    The final point I will make before I conclude, because many hon. and right hon. Members want to speak in this debate, is that when I listen to Government Members, I feel that they accept the logic that we have to move away from the old view—the two decades ago view best embodied perhaps by the Enterprise Act 2002—when it comes to national security. They say, “We are worried about the investment effects, but national security matters.” Of course it does, and I agree with that. But then, when ​it comes to our industrial base, suddenly they have a completely different view, which is, “No, no, no. We can’t go back. We can’t change our view.” I think there is a degree, dare I say it, of inconsistency on that.

    Mr Kevan Jones

    Is there not a direct national security issue around telecoms? When BT was privatised, the old General Post Office was advanced in both mobile technology and fibre optics. It was because the Thatcher Government decided to throw it open to the open market that the advantage we had in this country was lost. That is why we now find ourselves at mercy of Huawei and other companies.

    Edward Miliband

    My right hon. Friend makes a very important point. Indeed, my hon. Friend the Member for Newcastle upon Tyne Central and I were discussing this very issue last night—that these issues can interact.

    I will just say this and then I will conclude, Mr Deputy Speaker, I promise. I think the public are in a different place from some of the Government Members who have spoken. I think the public really recognise this issue. We have many great companies, but some of them have been subject to takeover, and the public do not really understand why and they do not really understand why the Government have not played more of a role. I can see some hon. Members nodding.

    Updating legislation to protect national security is long overdue, and we welcome it. We will support the Government as they seek to protect national security and defend our country. We will push them to go further on industrial strategy and the takeover regime. We think this is the moment to be bold and develop the industrial strategy that 21st century Britain needs, but we want to see this Bill pass through the House. We will engage on it constructively, and I know from the Secretary of State and the way he operates that he will do the same.

  • Alok Sharma – 2020 Statement on the National Security and Investment Bill

    Alok Sharma – 2020 Statement on the National Security and Investment Bill

    The statement made by Alok Sharma, the Secretary of State for Business, Energy and Industrial Strategy, in the House of Commons on 17 November 2020.

    I beg to move, That the Bill be now read a Second time.

    Our country has always been a beacon for inward investment and a champion of free trade. We recognise and celebrate the positive impact of these twin policies in delivering prosperity and opportunities across the United Kingdom. Over the past 10 years, the UK has attracted around three quarters of a trillion dollars of foreign direct investment, which in turn has helped to create 600,000 new jobs in our country.

    In 2019-20 alone, more than 39,000 jobs were created in England thanks to foreign direct investment projects, with more than 26,000 of those jobs created outside London. Almost 3,000 jobs were created in Scotland, and more than 2,500 in Wales and 2,000 in Northern Ireland respectively. That is why we will continue to work relentlessly to ensure that the UK remains a great place to do business and invest. That approach is more important than ever as we look to business to create jobs in our recovery from covid-19.

    The UK is very much open for business, but being open for business does not mean that we are open to exploitation. An open approach to international investment must also include appropriate safeguards to protect our national security. Those are not conflicting approaches; prosperity and security go hand in hand. Otherwise, we leave the United Kingdom open to the risk of being targeted and compromised by potential hostile actors who are looking to disrupt our economic and wider security.

    Ms Nusrat Ghani (Wealden) (Con)

    From the moment that this Bill was started to now, we have learnt a lot more about security and infrastructure. Does my right hon. Friend share my concerns that the Chinese national intelligence law requires Chinese firms to assist with state intelligence work? This was brought to light for me when TikTok gave evidence to the Business, Energy and Industrial Strategy Committee. I am incredibly anxious about the data that it could potentially be harvesting and sharing back with its parent company, ByteDance.

    Alok Sharma

    I know that my hon. Friend cares very deeply about this issue and, indeed, she and I have had discussions about it. I would say to her that the Bill is agnostic as to the domicile of an acquirer. I think that that is right and proper, but it is also right and proper that we look at every single transaction on a case-by-case basis. Let me assure her that if there are security concerns with any transaction, of course we will act.

    Bob Seely (Isle of Wight) (Con)

    There is a lot in the Bill that I am sure we all support, but does my right hon. Friend accept that without a public interest test, a character test, an anti-slavery test and a human rights test, the definition of national security being offered here is extraordinarily narrow and problematic to the broader age that we live in? Does he accept that there will be debate around that point—about what constitutes national security in this age?

    ​Alok Sharma

    My hon. Friend raises a point that I know he has raised with my fellow Ministers, and other colleagues will raise a similar point. He talks about modern slavery. He knows that the Government passed the Modern Slavery Act 2015. The Home Office is looking to update and strengthen that. I note the points that he has raised, but the whole point of the Bill is for it to be narrow on national security grounds, and that is the way that it was constituted when it was first discussed in the Green Paper in 2017 and in the White Paper in 2018. However, I will try to address some of the points that he raised as I go on.

    Those who seek to do us harm have found novel ways to bypass our current regime by either structuring a deal in such a manner that it is difficult to identify the ultimate owner of the investment, or by funnelling investment through a UK or ally investment fund, or indeed, by buying or licensing certain intellectual property rather than acquiring the company. Be in no doubt that the UK and our allies are facing a resurgence of threats. That is why we are updating our powers to screen investments into the UK. Our current powers date back to the Enterprise Act 2002. Technological, economic and geopolitical changes across the globe over the past 20 years mean that the reforms to the Government’s powers to scrutinise transactions on national security grounds are now required.

    Mr Kevan Jones (North Durham) (Lab)

    I welcome a lot of the proposals in the Bill, including on the issue of land and the removal of the thresholds in terms of ownership. One way that people have been able not only to get influence in this country but to launder money has been through the purchase of large amounts of property in the UK, which were highlighted in the Intelligence and Security Committee’s report on Russia. Does the Secretary of State see the Bill addressing that issue?

    Alok Sharma

    I will go on to the detail of that particular issue, but as the right hon. Gentleman identified, the Bill looks at assets and intellectual property. On the point that he raised about the size of transactions, as he knows, under the 2002 Act, apart from some limited exceptions, businesses being acquired must have a UK turnover of over £70 million or, indeed, the merger must meet a minimum 25% market threshold. This means that acquisitions of smaller but technologically sensitive companies are not covered.

    The Government have been clear for a number of years about our intention to introduce new powers. Many of our international allies, including our Five Eyes partners, have also acted to update their legal frameworks to address national security risks. We, in turn, are seeking to update our legislation in a proportionate manner to ensure that we have more security for British businesses and people from hostile actors targeting our country; more certainty for businesses and quicker, slicker screening processes as we remain open to trade and recover from covid-19; and a regime that is in line with our allies, meaning that investors will be familiar with this approach.

    Let me turn to some of the specifics of the Bill. Part 1, chapter 1 introduces a call-in power that the Government may use in relation to a trigger event across the economy that they reasonably suspect has given rise to or may give rise to a risk to national security. Trigger events include acquisitions of certain shares or ​voting rights in a qualifying entity, and the acquisition of material influence over such an entity. As the right hon. Gentleman pointed out, it will be possible for the first time to call in the acquisition of a right or interest in a qualifying asset, including intellectual property, where such an acquisition would enable the acquirer to use the asset or control or direct how it is used. That is similar to the US and other countries’ regimes.

    The call-in approach is consistent with the 2002 Act, but importantly there are no minimum thresholds for the size of the business or asset to be acquired. That means that sensitive businesses and assets that may previously have slipped under the minimum size threshold will no longer do so. That will close the back door into the United Kingdom that hostile actors could exploit.

    However, it is important to reassure the investment community that the Government expect to use these powers sparingly. We estimate that less than 1% of transactions in any given year will be subject to call-in. For transactions that fall outside the mandatory requirement of the regime, the Government will be able to call in a transaction within a period of five years of a trigger event having taken place where they have not been notified. When the Government become aware of a trigger event having taken place, they will have six months to issue the call-in notice. That five-year period is, again, consistent with regimes in Germany and France. The Bill requires that the Government publish a statement of policy intent explaining how they expect to use the power to issue a call-in notice.

    Should the Bill become an Act, the Government’s call-in powers will apply from the date of introduction and will cover transactions that complete during its passage. That will ensure that hostile actors do not rush through the completion of transactions between the introduction of the Bill and Royal Assent as a means to avoid scrutiny under this legislation. My Department has already set up an investment security unit to field enquiries from businesses and investors about transactions under the new regime.

    Under the National Security and Investment Bill, there will be no requirement to publish call-ins. That is of course in contrast to the public interest intervention notices under the 2002 Act.

    Aaron Bell (Newcastle-under-Lyme) (Con)

    I welcome what the Secretary of State just said about the call-in power. Will he confirm that, as a result of the measures in the Bill, most transactions can take place within 30 days, which means that the UK will remain a venue, and be an even better one, for foreign direct investment as we seek to rebuild our economy following coronavirus?

    Alok Sharma

    My hon. Friend makes a very important point. We are giving certainty, and we expect that most call-in decisions will be decided upon within 30 days. I said that we expect that less than 1% of all transactions in any given year will be called in, and only about 10% of those will then face detailed scrutiny.

    Mark Pritchard (The Wrekin) (Con)

    Will the Secretary of the State provide clarity to the House about the jurisdiction of the Bill? For example, if a German technological company was listed in Germany but the IP and research and development was based in the UK, what powers would the Government have to act?

    ​Alok Sharma

    This Bill applies to any transaction that relates to an asset or entity in the United Kingdom. If that were the case, of course it would apply.

    Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)

    I am interested in that point. If a malign actor made an investment in another country with a lower-standard test, which then invested in the UK, putting intellectual property rights at risk, where do the UK Government go on that? Do they give themselves the scope, which I do not see in the Bill, to act on the basis of the original investment?

    Alok Sharma

    I thank my right hon. Friend for his question. He has taken a great deal of interest in this legislation, and we have spoken about such matters. As I said earlier, the whole point of the Bill is that we will be able to scrutinise the precise details of a transaction and of who the ultimate beneficial owner of a particular acquiring entity may be. I would therefore hope that the Bill will indeed cover the particular set of circumstances he outlines.

    Going back to the point about providing assurances, businesses and investors can be reassured that the Government will treat potential national security risks with the discretion they deserve.

    Turning to the mandatory notification elements of the Bill, investors in 17 prescribed sectors of the economy will be mandated by law to notify the Government of acquisitions of entities above a certain threshold of shareholding or voting. That mandatory notification process is similar to the approach taken in the United States, Germany and France. The Government have, alongside the introduction of the Bill, published an eight-week consultation to refine the definitions of those 17 sectors. The discussions that I and other Ministers in the Department have had with the investment community suggest that that has been extremely welcome.

    Many sectors, of course, are well defined, and the purpose of the consultation is to refine them further so that the definitions are clear and narrowly focused on specific parts of sectors in which risks are most likely to arise and will allow parties to self-assess whether they need to notify. The House will appreciate that we could not have published the consultation before we introduced the Bill, with its call-in powers, or we would have risked hostile actors completing transactions in the particularly sensitive sectors.

    Richard Fuller (North East Bedfordshire) (Con)

    My right hon. Friend is quite rightly focusing on precisely defining the sectors. Was he as concerned as I was to hear the Opposition spokesman say today that he would prefer a strategy that did not have that definition, relying instead on the whimsy of a particular Secretary of State at the time? That situation could, like it does in France, lead to a yoghurt company or water bottle business being defined as a national strategic asset.

    Alok Sharma

    My hon. Friend speaks with a great deal of interest and experience in investments. This Bill focuses on national security, and we have been clear that we will define the sectors where mandatory notification is required, which is right and proper. The whole point of the Bill is that we are taking a proportionate approach. We do not want some kind of chilling effect on investment coming into the UK. We have been a beacon for inward ​investment over many years with, as I said earlier, three quarters of a trillion dollars coming into our country over the past 10 years. We would not want that to change.

    Transactions covered by mandatory notification that take place without clearance will be legally void. Again, that is in line with the French, German and Italian regimes. Parties to an acquisition may, of course, voluntarily inform the Secretary of State about their acquisitions to seek swift clearance to proceed. We have also streamlined the information required for notification from 36 pages, as required under the Enterprise Act 2002 for competition modifications, to a third of that.

    The use of digital processes will make interaction with the Government much simpler, more transparent and slicker, and Government will aim to provide clearance for most transactions within 30 working days of notification, as my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) raised earlier. Having spoken to the investment community over the past week, I know that that timely approach to the clearing of transactions is welcomed.

    Moving on to the assessment of called-in transactions, part 2 of the Bill provides powers to assess transactions should the Government call one in. Where the specific legal test is met, the Government may impose conditions or, in extremis, block or unwind transactions. I stress once again that the Government will use those powers sparingly and proportionately.

    The Government will take the necessary powers in the Bill to gather information about any transaction. However, such information will be strictly safeguarded against inappropriate disclosure. That includes, of course, information from parties, regulators and others to make informed decisions on transactions. If no remedies are imposed, a final notification will be provided at the end of a national security assessment. Alternatively, the Government may choose to prescribe remedies.

    Any notification decision under the Bill will be subject to legal challenge from the potential acquirer entity by way of judicial review or appeal, and the Government will be able to apply to the court for a closed material procedure to protect commercially sensitive and national security matters in such proceedings. The investment security unit will ensure that the entire process is streamlined and supported by robust digital structures and governance to ensure swift decision-making on assessments.

    It is worth noting that the new regime will be underpinned by both civil and criminal sanctions, creating effective deterrents for non-compliance with statutory obligations. Again, that is in line with sanctions in the French and German regimes.

    Mark Pritchard

    Is it not the case that a call-in itself could be commercially sensitive, particularly to a listed company? In that regard, a default of self-referral to the Government would probably be a better way for industry to ensure that share prices are not unfortunately affected by what might be a legitimate call-in.

    Alok Sharma

    My hon. Friend raises an incredibly important point. Of course, self-referral, as he refers to it, is possible. In fact, if any company has particular concerns as to transactions that they may be undertaking or part of, they will get a swift assessment from the Government.​

    I make the point, though, that we will not be effectively publicising call-ins when they take place. Clearly, at the end of a transaction, if there was a particular remedy, that would be made public. It is also worth pointing out that the Government will publish an annual report, not on individual transactions, but on the scope of the transactions and sectors that have been looked at. I hope that that will give future investors an opportunity to consider the type of transactions in which the Government have a particular interest.

    The final measure that I want to detail relates to the overseas disclosure of information relating to a merger investigation. Under section 243 of the 2002 Act, there is a restriction on the ability of UK public authorities to disclose merger information to overseas authorities unless the consent of the entity has been given. Clause 59 of the Bill removes that restriction. That will strengthen the Competition and Markets Authority’s ability to protect UK markets and consumers as it takes a more active role internationally, allowing the UK to set up comprehensive competition agreements with our international partners.

    In conclusion, I hope that right hon. and hon. Members on both sides of the House see that the Bill updates our national security powers in a proportionate, pro-trade and pro-business manner.

    Bob Seely

    Unless I missed it, there is no definition of national security in the Bill. Will the Secretary of State provide a definition or will he commit to putting one in the Bill to give us something to work with?

    Alok Sharma

    My hon. Friend raises an important point. As he will know, and I am sure appreciate, I am not going to be able to set out every single test that we will apply when it comes to a national security assessment. The application of the tests will, of course, be based on information that we garner from across Government. He can be certain that in using the powers, the Government will act in a quasi-judicial fashion, we will have regard to the statement of policy that has been published, and we will act, again, in accordance with public law principles of necessity and proportionality. I also made the point earlier that any decision can, of course, be challenged by an affected entity.

    Stewart Hosie (Dundee East) (SNP)

    Before the Secretary of State moves on, will he give way?

    Alok Sharma

    I will move on, if that is all right with the hon. Gentleman.

    These powers are narrowly defined and will be exclusively used on national security grounds. The Government will not be able to use these powers to intervene in business transactions for broader economic or public interest reasons, and we will not seek to interfere in deals on political grounds. They will not and cannot be used for wider economic tests. The Government already have proportionate powers in statute for intervention on the grounds of competition, financial stability, media plurality and combating a public health emergency. Going further than that would risk chilling and destabilising investment in the United Kingdom and reducing growth opportunities and jobs.

    The UK has the lowest corporation tax rate in the G20. We are rated one of the most innovative countries in the world, ranking fourth in the 2020 global innovation index. ​We are one of the top 10 countries in the world for ease of doing business. We have a world-leading research and development environment, and the stability of our institutions, tax system and legal framework are respected globally. It is because of our pro-market approach that the United Kingdom has become one of the premier places to invest in the world, and I certainly would not want to do anything to change that. The powers we seek in the Bill support and enhance our pro-business environment, supporting economic growth, prosperity and jobs across the United Kingdom, while enhancing security for our country. I commend the Bill to the House.

  • Diane Abbott – 2020 Comments about Jeremy Corbyn’s Continued Suspension

    Diane Abbott – 2020 Comments about Jeremy Corbyn’s Continued Suspension

    The comments made by Diane Abbott, the Labour MP for Hackney North and Stoke Newington, on 18 November 2020.

    Labour MPs lose the whip if suspended from the party automatically. De facto you can’t be a Labour MP if you’re not actually in the Labour Party. But removing the whip from Jeremy Corbyn now raises serious questions of due process.

  • Keir Starmer – 2020 Statement on Jeremy Corbyn’s Continued Suspension from the Labour Party

    Keir Starmer – 2020 Statement on Jeremy Corbyn’s Continued Suspension from the Labour Party

    The statement made by Keir Starmer, the Leader of the Labour Party, on 18 November 2020.

    Since I was elected Labour leader, I have made it my mission to root out antisemitism from the Labour Party.

    I know that I will be judged on my actions, not my words.

    The disciplinary process does not have the confidence of the Jewish community. That became clear once again yesterday.

    It is the task of my leadership to fix what I have inherited. That is what I am resolute in doing and I have asked for an independent process to be established as soon as possible.

    I’m the Leader of the Labour Party, but I’m also the Leader of the Parliamentary Labour Party.

    Jeremy Corbyn’s actions in response to the EHRC report undermined and set back our work in restoring trust and confidence in the Labour Party’s ability to tackle antisemitism.

    In those circumstances, I have taken the decision not to restore the whip to Jeremy Corbyn. I will keep this situation under review.

  • Andrew Stephenson – 2020 Statement on the HS2 Land and Property Review

    Andrew Stephenson – 2020 Statement on the HS2 Land and Property Review

    The statement made by Andrew Stephenson, the Minister of State at the Department of Transport, in the House of Commons on 17 November 2020.

    High Speed Two (HS2) is at the heart of our plans to build back better from the covid-19 pandemic, creating thousands of skilled jobs, boosting connectivity between our towns and cities and helping to rebalance opportunity across the country for years to come.

    However, as part of that commitment to build back better, it is crucial that we deliver HS2 in a way that is as considerate as possible of those disrupted by the project, who may face losing their homes and relocating their businesses.

    In confirming HS2 would go ahead in February 2020, the Prime Minister also committed to a step change in HS2 Ltd’s performance and to drive improvements in transparency, accountability and value to the taxpayer. This included a renewed focus on placing people—the communities and individuals who will be impacted by HS2—at the heart of everything the Government do.​
    So following my appointment as the Minister for HS2, I initiated a review of the HS2 land and property acquisition programme, to ensure that those most directly affected were placed at its heart.

    The review examined HS2 Ltd’s operational acquisition processes and, where the evidence demonstrated it, associated wider-Government policies. It focused on four areas:

    How to deliver a step change in community engagement on the land and property acquisition programme;

    How to protect the interests of those impacted;

    How to improve process efficiency and delivery by HS2 Ltd;

    And how to drive a better tone, showing conspicuous respect, courtesy and understanding.

    Today, I am pleased to publish the findings of this review. Copies of the report have been placed in the Libraries of the House.

    The Government are grateful for the contributions made by Members of the House and their constituents, external stakeholders, the HS2 Residents’ Commissioner and the HS2 Construction Commissioner. The review ​also considered lessons from Phase One of HS2 and examined compensation regimes employed on other UK infrastructure projects and abroad.

    The review generated a number of proposals that are designed to speed up property valuations and disturbance payments, settle cases and disputes more quickly and build on the improvements HS2 Ltd have been introducing to engage more effectively with people.

    The focus now will be on how the Government and HS2 Ltd turn these proposals into long-lasting changes that improve not only the delivery of HS2, but also the experience and wellbeing of individuals, businesses and communities impacted by them.

    The Government want to ensure that those living near the route receive the right support at all stages of the project. Importantly, they remain committed to ensuring that those affected are properly compensated and treated with compassion, dignity and respect.

    Attachments can be viewed online at: http://www. parliament.uk/business/publications/written-questionsanswers-statements/written-statement/Commons/2020-11-17/HCWS583/.

  • Robert Jenrick – 2020 Statement on Social Housing

    Robert Jenrick – 2020 Statement on Social Housing

    The statement made by Robert Jenrick, the Secretary of State for Housing, Communities and Local Government, in the House of Commons on 17 November 2020.

    I am today announcing the publication of the social housing White Paper. This White Paper will bring transformational change for social housing residents and the new approach and regulatory changes we set out will make a measurable difference to their lived experiences.​

    A home should always be more than just four walls and a roof. This country has a long tradition of providing homes for those most in need, going back many centuries. Today, the social housing sector provides homes to 4 million households. Many landlords provide a good service to their residents. They provide a decent, safe home. They support thriving neighbourhoods and communities. They are open with their residents, listen to them and treat them with respect. But this is not true of all landlords.

    The tragedy at Grenfell Tower in June 2017 raised critical questions for everyone involved in social housing. The chair of the public inquiry into the Grenfell Tower fire, Sir Martin Moore-Bick, identified broader questions on social housing policy raised through the consultation on the inquiry terms of reference. It was agreed that these broader questions should not be within the scope of the inquiry itself.

    Through the 2018 social housing Green Paper we sought views on a wide range of potential changes by talking to residents across the country as well as launching a call for evidence about how social housing is regulated. Many residents reported positive experiences, but others did not. We heard concerns about safety, and about complaints being handled slowly or poorly: that residents were not listened to or not treated with basic courtesy and respect. This is why today I am delivering on our manifesto commitment and publishing the social housing White Paper: “The Charter for Social Housing Residents”.

    Alongside the changes we are making to improve building safety, our package of measures will make a real change to residents. It will ensure that there will be action for those landlords whose services fall below expectations so that they can be brought up to the level of those that we know already deliver a good service.

    Summary of proposals

    The White Paper establishes a new charter for social housing residents, setting out what every social resident should be able to expect of their landlord:

    1. To be safe in their home

    We will reinforce the regulator of social housing’s consumer regulation objective to include safety explicitly. We will legislate to place an obligation on landlords to identify a nominated person responsible for ensuring compliance with health and safety requirements. We will consult on how we apply the stronger legal requirements on smoke and carbon monoxide alarms in the private rented sector to the social rented sector, followed by a consultation on how to ensure social tenants are protected from poor electrical safety. We will support residents to have a stronger voice on safety matters and promote best practice on safety engagement with landlords.

    2. To know how their landlord is performing

    We will establish tenant satisfaction measures for social landlords to report against on issues that matter to tenants. We will make sure landlords are reporting clearly on how they spend their income and introduce a new access to information scheme for housing association tenants. And, we will require landlords to identify a senior person in their organisation who is clearly identified as responsible for ensuring they comply with consumer standards.​

    3. To have their complaints dealt with promptly and fairly

    We will build on the changes we have already implemented with the Housing Ombudsman Service to improve its performance and reduce its decision times, ensuring swift and effective resolution of complaints. We will raise awareness of how residents can make and escalate complaints. We will expect social landlords to take greater responsibility for upskilling their staff to serve residents better when they make a complaint or raise an issue.

    4. To be treated with respect, backed by a strong consumer regulator for tenants

    We will transform social housing regulation by creating a new, proactive consumer regulation regime for social housing, delivering robust oversight of all social landlords. This means establishing a new arm of the regulator of social housing to regulate proactively on consumer standards including quality of homes, repairs, engagement with tenants and complaints handling. The new approach will raise standards and include routine inspections of the largest landlords every four years, alongside risk-based reactive inspections to deliver scrutiny and investigation of landlords most at risk of failing residents. We will ensure residents can access information about their home and the services they receive, and can raise concerns about systemic failure to the regulator of social housing. We will maintain the robust economic regulation that is already working effectively to support a well-governed and financially viable sector, and make sure the whole system is cohesive and balanced.

    5. To have their voice heard by their landlord.

    We will empower residents by requiring landlords to improve tenant engagement. We will deliver a new opportunities and empowerment programme for social housing residents, to support them in engaging with landlords and holding them to account. We will review professional training and development to ensure residents are treated with courtesy and respect.

    6. To have a good-quality home and neighbourhood to live in.

    We will encourage investment in neighbourhood, place and decency. We will review the decent homes standard and boost the quality of, and access to, green spaces. We will tackle anti-social behaviour by enabling tenants to know who is responsible for action and who can support and assist them.

    7. To be supported to take their first step to ownership.

    We will enable delivery of good-quality, affordable homes including the investment of £11.5 billion in the new affordable homes programme to deliver up to 180,000 homes. The programme will unlock a further £38 billion in public and private investment in affordable housing. We are also introducing a new affordable homes guarantee scheme and implementing a new, fairer and more accessible model for shared ownership.

    Alongside the social housing White Paper, I am publishing the analysis of the consultation responses to the social housing Green Paper 2018 and to the call for evidence on the Government’s review of regulation 2018. I am also publishing a consultation on mandating smoke and carbon monoxide alarms in social rented homes with the aim of ensuring the same legal protections for social housing tenants as for those in private rented homes.​

    This new charter with its focus on transforming social housing regulation, ensuring homes are decent and safe, offering residents swift and effective resolution of complaints and empowering residents will rebalance the relationship between landlords and tenants. This is a strong, coherent package that is going to make a real difference in people’s lives.