My Lords, I give a “better late than never” welcome to these statutory instruments, because protection of national interests, such as security of critical supply, critical infrastructure and defence of our science, technology and intellectual property base, has for too long been neglected and sacrificed on the altar of “We can buy it in” or, worse, takeovers have been celebrated as “evidence that Britain’s low-tax economy could attract major foreign investment”, which I believe is what some said of Pfizer’s proposed takeover of AstraZeneca in 2014.
It is a good thing that Vince Cable did not see it that way, and I recall that the present Prime Minister did not see it that way either. It is a pity that the Government’s public interest powers to cover the pharmaceutical and science sectors were not extended then, as was mooted. After the financial crisis, the financial sector was added for public interest protection. After a health crisis,
“public health and crisis mitigation capabilities”
have been added, and the farrago of Huawei and Hong Kong alerts us to reasons to have threshold-lowering measures for sensitive technology.
I see the creep towards a more comprehensive policy, but we are too slow. Other countries took faster measures to stop the buy-up of companies while they were cheap, a measure more needed in the UK as takeover is easier. I understand the concern not to overstep, but I share the broad sentiments expressed in the Motion in the name of the noble Lord, Lord Stevenson, that having good time and opportunity to scrutinise the national security and investment Bill would assist in
finding the right balance for strategic economic security, preserving international reputation and even reducing risk of retaliation.
We have had a White Paper consultation already, and reports abound that further changes may be in train. However, there are opponents, especially in those business quarters that make significant money out of the UK’s easy takeover regimes. Do not listen to them: being a global investment and business centre does not have to be on a “UK for sale” basis. Many countries are sprucing up their FDI requirements in the light of experience, and they do not all have minimum turnover requirements, which I also challenge, as did the noble Lord, Lord McCrea. Having a broader set of FDI requirements does not undermine the key words from the Enterprise Act that there should be transparent and predictable decision-making. It is important to retain that, and the comments of the noble Lords, Lord Moynihan, Lord Adonis and Lord Liddle, are relevant to that.
I like the headlines from the new Dutch FDI proposals: ensuring continuity of vital processes; integrity and exclusivity of data and know-how; and avoiding the creation of strategic dependency. We have already ended up with strategic dependency in our energy sector— a matter that has exercised minds in several Lords committees, including the Economic Affairs Committee, of which I am a member, in its 2017 report on electricity. I welcome the inclusion of intellectual property in the additional share of supply order. However, like the Dutch, I would have included know-how, which has all too easily been lost in the past. I agree with the comments of the noble Lord, Lord Lansley, about IP held in separate small entities. It is of course a subject dear to my heart, as a patent attorney, and I have also had the dubious pleasure of coping with the vagaries of MoD secrecy orders on intellectual property, making me well aware of the difficulty that there can be in assessing relevance—which will be reflected in any government team trying to assess strategic issues.
Although couched in terms of security and investment, these are matters of competition policy, which is a sensitive issue on the international stage. Even for a body as strong, well-established and independent as the EU Commission competition body, it works best when there is political consensus. While I was ECON chair in the European Parliament, I was deeply involved in competition policy, bringing about procedural changes and new legislation. That happened largely because the Commissioner recognised the advantages of parliamentary support, not least in its external representation. Now, as the UK forges an independent competition policy—notwithstanding what may or may not be in a Brexit agreement—and hones foreign direct investment policy, I hope that the Government will draw on support from consensus. Competition disputes can last longer than Governments, and the undermining of strategic interests certainly does.
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