Madam Deputy Speaker (Dame Rosie Winterton) We now come to the
Select Committee statement on behalf of the Business, Energy and
Industrial Strategy Committee. Darren Jones, Chair of the Select
Committee, will speak for up to 10 minutes, during which no
interventions may be taken. At the conclusion of his statement, I
will call Members to ask questions on the subject of the statement;
these should be brief questions, not full speeches. I emphasise
that questions should be...Request free
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Madam Deputy Speaker ( )
We now come to the Select Committee statement on behalf of the
Business, Energy and Industrial Strategy Committee. , Chair of the Select
Committee, will speak for up to 10 minutes, during which no
interventions may be taken. At the conclusion of his statement, I
will call Members to ask questions on the subject of the
statement; these should be brief questions, not full speeches. I
emphasise that questions should be directed to the Select
Committee Chair and not to the relevant Government Ministers.
Front Benchers may take part in questioning.
1.23pm
(Bristol North West) (Lab)
I rise today to give a statement on behalf of the Business,
Energy and Industrial Strategy Committee in respect of our
memorandum of understanding with the Government on scrutiny of
the use of powers contained in the National Security and
Investment Act 2021. I am grateful to the Backbench Business
Committee for giving me the time to do so.
As the House knows, the National Security and Investment Act
established a new statutory regime for Government scrutiny of,
and intervention in, investments for the purposes of protecting
national security. The Act applies to a wide range of sectors,
which themselves are broadly defined, and—unlike in other
countries—covers all transactions, not just those involving
foreign investment. The investment security unit was then
established within the Department for Business, Energy and
Industrial Strategy to operationalise the Act. At that stage, the
Secretary of State for Business, Energy and Industrial Strategy
was the decision maker.
When the Bill was going through the House, the Government
confirmed their preference that scrutiny of the use of these
powers should be done by my Committee. There was a debate in this
House and in the other place about whether a departmental Select
Committee had sufficient processes, people and protections in
place to scrutinise secret information, and right hon. Members
from the Intelligence and Security Committee understandably
argued that their Committee was best placed to do that work.
However, the Government were not minded to accept amendments for
a statutory regime of scrutiny in the Bill, nor to change their
position on which Committee should have oversight of the regime.
As such, Ministers committed to entering into a memorandum of
understanding with my Committee to set out how information would
be made available to allow us to do our work.
While negotiating that memorandum, my Committee established a new
National Security and Investment Sub-Committee and appointed
special advisers. We are also grateful to the House for providing
us with national security subject specialist staff with relevant
levels of security clearance. In addition, we undertook a short
study visit to the United States to understand how congressional
oversight of that country’s equivalent regime is conducted.
I am pleased to inform the House that the memorandum of
understanding between the Government and my Committee has now
been agreed, and that we have published it today in our report. I
will not test the patience of the House by reading out the whole
memorandum, but I will just make two points. First, it has been
agreed that scrutiny will largely be done in private and, in so
far as it relates to individual transactions, will be done
retrospectively following any appeal or legal challenge. This was
agreed to prevent actual or perceived political interference in
quasi-judicial decision making, and means that we operate in line
with our counterparts in the United States. Secondly, the bulk of
our work will focus on the effect of the legislation on
investment in the United Kingdom and the effectiveness of
Government operations.
When the Committee decides that it wants to understand individual
transactions in more detail, we will be able to request
information from the Government via a private explanatory
memorandum, which we will not publish. If the Committee wishes to
see more sensitive information that is not contained in the
explanatory memorandum, I as Chair of the Committee will be able
to request access to such information, and will be briefed on
equivalent to Privy Council terms or by notification under the
Official Secrets Act. Lastly, while the recent machinery of
Government changes have resulted in the investment security unit
moving to the Cabinet Office and the decision maker now being the
Chancellor of the Duchy of Lancaster, the Government have
confirmed that they still intend for scrutiny of the Act to be
undertaken by my Committee and, soon, its successor Committee on
the basis set out in today’s report and the letter from the
Minister received by other relevant Committees.
The Minister of State, Cabinet Office ( )
I welcome this report, especially paragraph 11. We have always
welcomed scrutiny of our decisions. As the hon. Member rightfully
pointed out, the investment security unit has left the Department
for Business, Innovation and Skills, but I am still responsible
and we now sit in the Cabinet Office. Obviously, we want to
support businesses to ensure that investment in the UK continues,
while also protecting our national security.
I wondered whether the hon. Member could reflect on the fact that
the NSI Act is a leading investment screening regime, and that we
have good relationships with like-minded partners through which
we share best practice and help other countries with similar
regimes. Perhaps he could also comment on when I will be in front
of him and his Select Committee, because we do not shy away from
scrutiny. Finally, perhaps he would like to indulge the House and
thank all of the investment security unit staff who worked with
us on the unit and on securing this MOU.
I thank the Minister for her question. Of course, for a long
time, she was a member of my Committee. She pushed me quite hard
to ensure that we got very effective scrutiny of this
legislation, so I look forward to working with her
collaboratively on the exchange of information as it relates to
our interests as a Select Committee.
The Minister invites me to thank her officials, as well as my
Clerks on the Select Committee, and I should do so. It took, I
think, nearly 13 months to get to this point, sometimes with some
frustration, but we got there. However, much of the work has been
done and much of the detail has been agreed at length by our
officials and Clerks, and we are very grateful to them for their
contributions.
As for when the Minister will be summoned to my Select Committee,
it is unusual that people are keen to come and be cross-examined
by me and my colleagues on the Committee, but we look forward to
welcoming her in due course.
(North Durham) (Lab)
Can I thank my hon. Friend for his statement, but also say how
disappointed I am with it—not from his point of view, but from
the Government’s? The Intelligence and Security Committee, which
I sit on, is the only Committee that can look at the highest
classification of information. My hon. Friend even admits that,
under this process, he might be able to be given some
information, but not all. It would be down to the Secretary of
State. The memorandum says that the ISU is going to the Cabinet
Office. Has he had an indication or clarification of which bit of
the Cabinet Office? If it is the National Security Secretariat,
that is already under the remit of the Intelligence and Security
Committee.
I am in the unusual circumstance, as a member of the Opposition,
of having to put the Government line to my right hon. Friend. I
merely recognise, as he will know from our extensive
conversations, that it has always been the case, in line with the
Osmotherly rules for Select Committees, that we do not have a
statutory power to summon information, as he does on the
Intelligence and Security Committee, but that there is a
presumption that information will be shared with us. He will know
that, if that information is not exchanged in a timely and ready
fashion for us to do our work, the Committee will escalate those
issues via the Committee, the usual channels or on the Floor of
the House. As to my right hon. Friend’s question on where the
unit resides, it resides in the Cabinet Office. I assume it is
within the National Security Secretariat. I think he is therefore
suggesting that that means the ISC has oversight. I know full
well that he and his colleagues will make use of their powers to
try to request information from the Government in their work.
Sir (Kenilworth and Southam)
(Con)
I thank the hon. Gentleman for his statement and recognise that a
huge amount of work has gone into it, including with the
Government. I thank him for the engagement he has had with my
right hon. Friend the Member for New Forest East (Sir ), the Chairman of the ISC, of
which I, too, am a member. I know that my right hon. Friend would
be here if he could be.
If I may, I will put to the hon. Gentleman what the problem with
the arrangement might be. He has said already that arrangements
are to be made for the viewing of material that would normally be
at a higher classification than members of his Committee would be
able to see, but those arrangements as set out in the memorandum
are clearly described as “exceptional”. Is it not the case that
the sub-committee of his Committee that he will set up to deal
with this material is likely to deal with that sort of classified
material on a routine basis? Is there not an advantage in having
staff and members of a committee who are used to dealing with
this type of material? Through no fault of their own, neither his
Committee nor its staff will be used to that.
There is an interesting question there, to which none of us knows
the answer: how routine will it be for us to have to look at
either commercially sensitive or national security-sensitive
information about individual transactions? From our study visit
to the United States, it seemed that most of the transactions
were operationalised, and had not become political or been
escalated to a committee level, because the issues were seen to
be sensible, small or below de minimis thresholds.
There will be examples where there is more political interest in
a particular transaction. In the past year, for example, where
the 2021 Act has been operational, the vast majority of the
notifications that my Committee has received have not warranted
our having to look at the national security information. For some
cases, such as Newport Wafer Fab, the industrial implications of
that decision will warrant our looking at that information in
more detail. Under this memorandum of understanding, we will
request that information when we are permitted to do so—after the
period of judicial review and appeal has closed—so that we may
understand whether the Act is being used in the way it is
supposed to be used, without deterring investment in the
interests of workers and business in this country.
The right hon. and learned Gentleman refers to staff. As I said
in my statement, the House has kindly provided the Committee with
additional staff, who are national security specialists and have
a range of security clearances. In the MOU, there are procedures
and processes for the handling, holding, storage and use of
information, both between my Committee and my Clerks, but also
where necessary within Government facilities.
(South Holland and The Deepings)
(Con)
Just to endorse the comments of my right hon. and learned Friend
the Member for Kenilworth and Southam (Sir ), I know that the hon. Member
for Bristol North West () has behaved in an admirably
collegiate manner throughout. On the issue of exceptional access
to highly sensitive information, the MOU makes clear that members
of the Committee may have sight of that information, but they
will not be able to retain it or analyse it, and the Committee
will not have staff who can keep that information, report back on
it and advise the Committee’s members once they have been able to
analyse it. That is in contrast to the ISC, is it not, which has
all those things. Is that really appropriate? How does he feel he
will navigate that paradox?
We have to give the MOU a whirl and see how it works. I
understand the right hon. Member’s concerns. My only point is
that I am not sure there will be lots of documents we will want
to host in a safe special location for us to keep returning to.
Our job broadly is to look at the implications for investment and
for business in the UK. When something is escalated from a
transactional basis to a political level, we need to understand
why Ministers have made their decisions.
As much as I would like it to be the case, it is not for the
Committee to be the Government, and it is not for us to make
different decisions from Ministers. Ministers—the right hon.
Member’s colleagues—are empowered to make the decisions they
make. It is for my Committee merely to have oversight and
scrutiny of how they have come to those decisions and to
recommend improvements, should the Committee see fit to do so.
While the right hon. Gentleman’s point is correct factually—the
ISC has a whole range of assets and processes and people who are
not available to my Committee—I am not sure in practice how much
of that information would need to be processed in that way for us
to do an effective job of scrutinising the use of the
legislation.
(Chipping Barnet)
(Con)
I welcome the work that has been done to get the MOU agreed. I am
sure the hon. Gentleman’s Committee will do important work in
this space, but like my fellow members of the Intelligence and
Security Committee, I think this is frankly an unsatisfactory
situation. I hope the Government will listen to the points that
have been made today. Will the Chair of the Select Committee be
willing to report back to the House on how these processes are
operating? For the reasons given, it seems impractical for his
Committee to give the detailed scrutiny that is needed.
I hope the right hon. Member recognises that, albeit I have been
in the House for the short period of six years, I am not a timid
politician. If I am blocked or prevented from doing the work I
have been asked to do by the House, I will make it clear that is
the case. I am happy to come back to the House as and when
appropriate to report on the scrutiny of the Committee. As the
Bill was passing through the House, I and my Committee were, to
be honest, fairly ambivalent about which Committees did the work
and on what basis. We were open to other Committees and
colleagues making their case, but ultimately the Government have
made the decision, and we have responded to that and set up our
processes in the best possible way. I reassure her that if they
do not work well enough, I will certainly be back here to make
that case.
Madam Deputy Speaker ( )
I thank the Chair of the Select Committee for his statement.
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