National Security and Investment Bill

Baroness Northover Excerpts

2nd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords
Thursday 4th February 2021 Lords Chamber

[Baroness Northover (LD) [V]]

My Lords, the Bill addresses the real concern of the need to safeguard UK national security and reflects the changing nature of threats to that. Indeed, there is much concern now about the rise of China, as my noble friend Lord McNally has just noted. There are clearly both opportunities and threats here. The debate over Huawei reflected this concern, as did Chinese involvement in our energy infrastructure. The concern that our technology might be stolen is also a huge area.

Devising a legal structure that deals with these potential threats has clearly been a challenge. The Law Society of Scotland points out that:

“It is a complex task to create a system which will balance the need to maintain an open business environment and promote fair competition with the need to protect national security.”


There is a real risk that the Bill will constrain investment into the United Kingdom—as the noble Lords, Lord Leigh and Lord Bilimoria have just said—at a time when, post Brexit, that is necessary, or that the EU might regard us as protectionist and penalise us. Clarity and transparency are therefore clearly vital.

As my noble friend Lord Clement-Jones and the right reverend Prelate the Bishop of St Albans pointed out, national security is not defined, and this therefore leaves much in the hands of Ministers. Difficult as it will be, a definition is surely required. There is huge scope in the 17 sectors which fall under the Bill. Given all the other pressing matters that the Government will have to deal with post Brexit and post coronavirus, their unit is likely to be overwhelmed. On this point, I agree with the noble Baroness, Lady Noakes—a rare event for me. Companies and their lawyers are indeed likely to err on the side of caution and refer themselves in. The Government have probably made a gross underestimate of the number of cases they will need to assess here. The Government have said that they will bring detail through secondary legislation, but that is itself concerning, as this is presented to Parliament on a “take it or leave it” basis.

As for where we see security challenges, we have already seen concern during the pandemic about overreliance on China; for example, for PPE. Who would have thought that cotton could be seen as a national security question? We must add in the Foreign Secretary’s recent announcement that businesses must, rightly, examine their supply chains and not source from the labour camps of Xinjiang or other centres of human rights abuses. We cannot rely on such appalling sources. Given that much PPE may have originated there, the challenge becomes even clearer.

The integrated review of the defence and security of the United Kingdom should surely have preceded this legislation, so that we could see what the Government think are the major threats facing the country: whether cyber, pandemics or other threats. Will the noble Lord tell us when that review is now expected, so that we can look at it alongside the Bill? The pandemic and Brexit have indeed shown us the risks of outsourcing as much as we now do.

How does the Bill sit with any industrial strategy? As my noble friend Lord Clement-Jones noted, we need that too, to understand better the key areas in the UK economy and the threats to them. In 2012, when my right honourable friend Vince Cable drew up his industrial strategy, he emphasised the biosciences. Investment in the Crick Institute, Oxford, Cambridge, Imperial, and elsewhere was increased, and that has paid off in spades in this pandemic, where we have led the world in genomics, vaccine research and much else.

We understand that the integrated review will also emphasise the UK as a science or bioscience power. Tackling climate change must also be part of that, for the UK but also globally. However, we also know that these are areas where China intends to excel, and surely has the resources to do so. China has disproportionate control, for example, over the minerals required for electric vehicle batteries and wind turbines. So, are these areas where our security is at risk? If so, how will the lines be drawn? How will our universities and research centres be impacted by the Bill, as others have asked? The Russell Group points out that they drew in investment worth over £1 billion in 2018-19, and they are concerned about the scope of the Bill, about uncertainty and delays.

This is a challenging area. There are, indeed, new threats to the UK that were not anticipated when the Enterprise Act was passed in 2002. The balance between encouraging investment and maintaining security needs to be carefully considered. As other speakers have said, there are questions here whether the structures proposed will manage adequately to support that investment while also defending national security. I therefore look forward to the Minister’s response.