National Security and Investment Bill

Lord Rooker Excerpts

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

[Lord Rooker (Lab) [V]]

My Lords, that was an excellent maiden speech by my noble friend Lord Woodley. I have no interests to declare but I note that vested interests on all four sides of the House have been well out in force today, and I encourage the Minister to stand firm on this issue during the passage of the Bill, to which I give my full support. It has been a long time in gestation.

I have fully supported many of those Tory MPs concerned in recent years in a very vocal way at the activities of Huawei in the UK and elsewhere in the West. I have never believed a word of the Huawei PR machine operating in Westminster. There is a pattern, and you can see it now, around Burma and China: when you strip away the covers, you find that the revolutionary guard, the army and the Communist Party actually own the companies and the capacity of the country. Free trade is a good, but it is one that needs looking after. It is the very openness of the West that is used against us by those who seek to oppose and undermine our way of life. How far we go in protecting our openness by clamping down is a paradox. In my view, the Bill is a step in the right direction.

I welcome the speed with which the Government are operating now that the Bill is with us—it is less than three months since the Bill was introduced and published on 11 November. I fully accept that, to protect the economy, it was not possible to publish well in advance the sectors of the economy where notification to the Secretary of State was required. I hope that definitions of the sectors will be well-defined, so as to avoid loopholes emerging. I await with interest, as will others, the secondary legislation that will list the sectors in detail.

I also think attention needs to be paid to the mainly London-based blue-chip accountants and legal firms that facilitate foreign investments, particularly those where it is going to be found that they fall down on national security items. A fortune has been made by some of these companies in recent years, but they operate under the cloak of respectability, and that needs stripping away. The Bill needs to be operating as soon as possible.

If I may just turn around the title of the Bill, I think we need a Bill to encourage investment in manufacturing as a means of enhancing national security. If the noble Lord, Lord Heseltine, had made it to Prime Minister, we would have had such a Bill a long time ago. Yes, I approve of foreign investment in the UK—after all, we do a lot of it overseas—but we need more homemade investment to give our economy greater security. I am not for turning the clock back to, say, the 1960s and 1970s, when I worked in UK-owned factories making and exporting things that we no longer make or export, but the shift against manufacturing at home has gone too far. We should pull some of it back, particularly from areas without the rule of law, such as China.

Remarkably, with the Covid crisis, the manufacture of PPE is being pulled back from abroad—relating to national security, when one looks at it that way—and that is a step in the right direction. Obviously it has been born out of the tragedy of the virus, but it ought to be part of our national plan. We have plenty of land for new premises, by the way; only 12% of England has been built up, so there is no argument that we do not have the space, and we certainly have the people. I hope the Bill can make a difference.

A figure in one of the briefings caused me to go back and check an issue that a previous speaker has mentioned: only 12 transactions have been reviewed on national security grounds since 2003 under the current regime, whereas in table 1 in paragraph 83 of the Bill’s impact statement, the estimate is that between 1,000 and 1,830 transactions are expected to be notified in a year. As a previous speaker pointed out—who had loads of interests to declare, although I am not criticising him—1,830 is a very peculiar figure. It could have been from 1,000 to 2,000. You cannot be that precise in these circumstances. The point is that this is serious work compared to what has happened in the past, so it will need key resources. The Minister has to convince the House that the resources will be there.

My final point is that I agree entirely with my noble friend Lord West of Spithead regarding oversight. There is a big gap here. The Bill is a step backwards, leaving it to the BEIS team. The ISC must be involved; it is clearly fit for purpose. My noble friend’s suggestions —there were more than one—are very positive, and I hope the Minister’s response is equally positive.

National Security and Investment Bill

Lord Rooker Excerpts

Committee stage
Tuesday 9th March 2021 Grand Committee

Perhaps the Minister can tell us what those exchanges have produced to date because engagement is crucial and we must find a solution that creates a proportionate set of circumstances for our universities.

[Lord Rooker (Lab) [V]]

My Lords, although I spoke at Second Reading and have lent my name to later amendments, supporting my noble friend Lord West and the noble Lord, Lord Butler, I have to say that most of the content is way over my pay grade. I have learned an awful lot as I have listened to the debate this afternoon.

My position on the Bill is the same as on the CHIS Bill: I am with the Government. I realise that higher education is large and varied but I am not prepared to give it the blind support that I have done in the past. As such, I do not support Amendment 36.

I want to raise three aspects: pay, academic freedom and security, as it is tied to the Bill. The pay of vice-chancellors is out of control and, like the Army, where no general gets the sack for failure, no vice-chancellor walks the plank. That is due to poor governance, so it is not down to a single person. Many salaries are well north of £250,000 a year—some are £500,000 a year—with whopping increases into five figures annually, on top of which there are vast expenses and, sometimes, free accommodation. In the meantime, the so-called world-beaters screw down the staff on flimsy contracts, with pensions constantly under attack. The treatment of students during the pandemic has been appalling, in some cases. It reminds me of what I read about the Victorian mill owners’ treatment of their workers—but the students are the payees, not the employees. The leadership is not world-class, except as in snouts and troughs.

Then we see the negative aspects of academic freedom —that is, its decline—becoming the norm. The Civitas report makes for very disturbing reading. The study of campus censorship over the three years between 2017 and 2020 is grim. It covered all 137 registered universities and 22 variables were assessed. Noble Lords will be pleased to learn that I do not intend to detail them, but the key finding was that only 19 of the 137 universities were considered “the most friendly”. Seventy—that is 51% of them—were not performing well and were classed as “moderately restrictive”, leaving 48 universities, including some of the highest-ranked ones, performing badly on free speech. They were classed as the most restrictive. It would take too long to list them so I shall give just seven examples: St Andrews, Cambridge, Oxford, Liverpool, Exeter, UCL and Imperial College, London. There are more. There is a very strong correlation of them with the high pay of vice-chancellors. The Russell group of world-class universities did not come out very well either: 42% were recorded as “most restrictive”; 54% were “moderately restrictive”; and only one registered Russell group university came out with a “most friendly” score.

Before I come to my final point, it is worth pointing out that your Lordships’ House does not hear much about this aspect of education. The last time I checked, which was about three years ago, there were over 40 university chancellors in your Lordships’ House. That speaks volume.

My final point on why Amendment 36 should not be accepted by the Government is that too many universities are almost subsidiaries of the Chinese Communist Party Ltd. Tom Tugendhat, the chair of the Commons Foreign Affairs Select Committee, has called for a clamp-down on British university research relationships with China to stop the flow of intelligence secrets. Bloomberg has reported that UK intelligence agencies are concerned about these links and the passing of sensitive information about defence technology from the UK to China. Too much Chinese money is going into UK universities. It is alleged that at least 20 British universities have relationships with 29 Chinese universities with strong ties to the Chinese military, as well as some of China’s largest weapons producers.

Earlier today came the report from the Policy Institute, The China Question. I have not had time to read it all, so I will make just two or three points. In 1990, there were 100 co-authored papers between Chinese and UK universities. By 2000, it was 750. In 2019, there were over 16,000. The report, which I have only glanced at, points out the reliance on significant tuition fee income by UK universities from China, which is used to cross-subsidise research. This creates a strategic dependency and potential vulnerability. We are not managing the risks associated with this aspect of our education and Chinese influence.

In short, it is a sorry tale from higher education. While I support my noble friend Lady Hayter’s Amendment 88, the Government should reject Amendment 36 out of hand.

[Lord Fox (LD)]

I remind the noble Lord, Lord Rooker, that this is a particular Bill designed to do a particular thing. It is not a higher education Bill. While he may feel strongly about many of the issues, I will not comment on them, because they do not fall into the remit of the Bill. I point out that I am also not a university vice-chancellor.

The noble Lord, Lord Lansley, set out the danger, and this was supported by my noble friend Lord Clement-Jones. If this Bill is used to police these issues, the deluge that will fall on the agency will be huge. We are back to the point that my noble friend made on the previous group: we are creating a Bill that does everything, then the Government will gradually calibrate what they do and do not need to do. That is not the best legislative approach.

There are issues with the research relationships that universities may have, but this Bill is not the policing agency that we should be using for them. I do not 100% agree about the outset of a relationship, as set out by the noble Lord, Lord Vaizey, in his and my noble friend’s amendment. Sometimes that has to be looked at, as well as the outcome of that relationship, but I do not think this Bill is the place to do it.

To steal a word that was used earlier and use it differently, we are also looking at the nexus between this and export control. Universities seem much more comfortable with export control, and if there is an issue with universities it could be addressed through the increased and more rigorous use of these measures, not through this Bill.

I return to the point which I asked the noble Lord, Lord Grimstone, about last time and which I put to ask the Minister now, what are we seeking to stop? In other words, in putting this Bill together, how many partnership agreements does the Bill team imagine would have been stopped by this process? What sort of things are the Government seeking to arrest, stop or cancel compared to that which the export control regime would be doing anyway?

National Security and Investment Bill

Lord Rooker Excerpts

Committee stage
Tuesday 16th March 2021 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for his courteous comments. Of course I will review the contents of this whole debate to see whether there are any lessons that I can learn from it.

[Lord Rooker (Lab) [V]]

My Lords, I much regret that, due to my own IT incompetence, I was unable to speak today. However, I say to the Minister as politely as I can that he has completely misread the House, and I think he will have to look at this again. The ISC is not a bog-standard Select Committee. I have a question for him, based essentially on the speech of the noble Lord, Lord Janvrin, which I do not think he referred to. How could rumours about government action in respect of a private company which may be market-sensitive be dealt with to public satisfaction unless the ISC has oversight? It would not matter if the ISC reports were redacted; Parliament would accept that; the media would accept it. The Government have a democratic licence to operate only because of Parliament. The Minister should go away and, before Report, explain to those who have spoken and other Peers where the Government’s democratic licence to operate is in this respect, having ruled out parliamentary scrutiny in a very precise way.

[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for his comments. I apologise to noble Lords if they feel that I have misread the mood of the House. The key point that I want to make in response to him is that the BEIS Select Committee—I say it again—is part of our parliamentary scrutiny and has democratic accountability in the other place. The Government are not avoiding scrutiny of the investment security unit; they are putting it somewhere where they believe that the scrutiny will be most effective, looking at the work of the unit in the round. They believe that the most effective overall scrutiny of the ISU will be found in the BEIS Select Committee.

National Security and Investment Bill

Lord Rooker Excerpts

Report stage
Thursday 15th April 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, the fact that such esteemed Members on all sides of the House have coalesced on this amendment speaks volumes for your Lordships’ concern about this issue.

It has been a heavyweight debate, with all due respect to the four amigos who have been speaking. I will now bring it down to earth with a bit of politics. It has been an authoritative debate and, all other things being equal, we would expect and hope that it causes the Minister not just to listen but to act. However, I fear his hands—metaphorically if not actually—are tied behind his back by other things. A couple of previous speakers mentioned the letter from the Lord President of the Council, Leader of the House of Commons, to wit, the right honourable Mr Jacob Rees-Mogg. This seems to indicate the bindings the Minister is currently under.

In this short tome, as we have heard, Mr Rees-Mogg tells the right honourable Dr Julian Lewis MP, who is, as we know, chairman of the ISC, that decisions regarding committees’ roles and remits should not be made on an ad hoc, Bill-by-Bill basis, and that there needs to be careful consideration.

I suggest this is a patronising view of the proceedings of your Lordships’ House. When have your Lordships’ considerations not been careful? The most reckless behaviour I have seen during the course of this Bill has been the Minister’s wholesale consumption of sugar-based products, so where is the carelessness that the right honourable Member for North East Somerset speaks of? We should be a little outraged by that suggestion.

This Bill is written by BEIS, and it is understandable that BEIS would want to favour its own Select Committee. I am sure that is how we set out along this route. I think it was the noble Lord, Lord Butler, who said that we have set out in the wrong direction. I feel sure that is what happened. Good governance would be to understand that, take advice and make changes.

It would not be so bad if the BEIS Committee had not been so obviously exposed by the comments we have heard today to be the wrong committee to do the security part of the scrutiny of this very important Bill. It is absolutely clear that it is the wrong committee. If the Minister cannot make or promise changes, I believe he can undertake to accurately reflect both the strength of feeling of your Lordships’ House and the facts, rather than the assumption of the facts that appears to be driving the letter that Jacob Rees-Mogg has written.

I ask just one question of the Minister. If the Bill in considered by the Government to be an ad hoc process, what is careful consideration? What does careful consideration look like if it is not the careful scrutiny of legislation?

[Lord Rooker (Lab)]

My Lords, they did not do rugby at my secondary technical school, and I am only guesting for my noble friend on the front row for this debate. I will be brief, as I do not want to repeat what was said in this debate or in Committee, when I spoke briefly.

As has already been commented, my noble friend Lord West has made an irrefutable case for the amendment. It is quite clear that there is a serious problem here. No one is arguing with the committee in the other place or wants to devalue or undermine the role of elected Members of Parliament and the departmental Select Committees. They have been an enormous success since they were introduced in, I think, the 1980s and early 1990s. But they have a specific role, which does not cover security matters. Parliament and government decided together to form a different structure for that purpose, which is effectively what we are debating today.

With all due respect, I feel sorry for the Minister, because others are making the decisions on this and he is but their messenger and will give us their message. The fact is that no acceptable, reasonable reason has been given by anybody in government for opposing the procedure envisaged in this amendment: that the Intelligence and Security Committee should have oversight of these decisions. We have no reason for it at all.

The noble Lord, Lord Campbell, referred to the Government’s docile majority. We have to be careful about that; we are hoping that docile majority will support your Lordships’ House, so in my view they are obviously all very intelligent, alert parliamentarians, putting the interests of the country and their constituents first. It is very important that we take that on board.

The noble Lord, Lord King of Bridgwater, mentioned the cruciality of parliamentary oversight in respect of the committee he once chaired—indeed, he was the first chair—and made it clear that the Select Committee in the other place that oversees the department’s day-to-day activities cannot possibly have the relevant information put before it in all the cases. One is not arguing that every single case of a takeover or merger will be referred.

The noble Lord, Lord Butler, made the point that of course the principal role of scrutiny of BEIS lies in the Commons with the departmental Select Committee. However, the Government seem to be ruling out the ability for questions to be asked of the security services by opposing the amendment. That cannot be good. He wants to know what the objection is.

--- Later in debate ---

Moved by

[Lord Rooker]

35: After Clause 61, insert the following new Clause—
“Higher education guidance
(1) Within three months of the day on which this Act is passed, the Secretary of State must publish guidance for the higher education and research sector in relation to provisions in this Act, which includes, but is not limited to—(a) a clear explanation of asset transactions in respect of which higher education institutions must give notice to the Secretary of State;(b) how the provisions of the Act affect contract research, consultancy work, and collaborative research and development;(c) the application of the provisions of the Act to strategic security partnerships and domestic partners.(2) The Government must consult the higher education and research sector on draft guidance and include feedback in the final publication.”

[Lord Rooker (Lab)]

My Lords, I beg to move Amendment 35, which was tabled in the name of my noble friend Lord Grantchester.

As my noble friend Lady Hayter said in Committee, there is considerable concern in the higher education and research sectors about the potential impact of the Bill on research partnerships. Organisations have been crying out for clarity. Amendment 35, which I move on behalf of my noble friend—I thank the noble Lords, Lord Lansley and Lord Clement-Jones, for signing it—would require the Government to

“publish guidance for the higher education and research sector”,

including

“a clear explanation of asset transactions”

indicating how

“research, consultancy work, and collaborative research and development”

will be affected and how the provisions apply to

“strategic security partnerships and domestic partners.”

The amendment would also require the Government to

“consult the higher education and research sector”

in a meaningful way in advance of the guidance. The amendment is therefore about developing guidance and promoting good practice, in that it should be done in co-operation with the sector. I certainly hope that the Government will agree to that.

The Russell group has said that, without clear guidance, a significant proportion of universities’ routine engagement with British business could inadvertently be captured by the Bill. I am grateful to the Minister for his engagement on this issue; I understand that there has been an indication that the Government have listened. Without getting ahead of the Minister, when he comes to wind up, will he confirm when the guidance will be published by the Government and how higher education and research institutions will be involved in drafting it? Will a draft of the guidance be published beforehand, for example? How will higher education institutions be highlighted in the critical sectors? Will the guidance include hypothetical scenarios so that people can plan?

Universities want to help to make the Bill work, as we all do; the Bill has enormous support across Parliament. We can all be united in recognising the benefits of businesses working with research institutions, which we want not only to continue to support and allow to flourish but to continue increasing. I beg to move.

[Lord Leigh of Hurley (Con)]

My Lords, I thank the Minister, my noble friend Lord Callanan—he is not in his place—for his letter to us regarding guidance products. I was a bit confused by the word “products” but let us let that pass for the moment. The letter tells us about the expert panel, which is welcome; I gather that it has already sat, so that is a good start. I was slightly disappointed not to see any representatives from the insolvency profession on that panel because I think that, when they wake up to it, they will find that this Bill affects them much more than they realise. R3 had already told me that it would like to be on the panel, and no doubt the IPA, after its annual lecture the other week, will be keen to have representations on it. I also hope that the expert panel might include members of the public and practitioners who feel that they can contribute usefully.

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[Lord Grimstone of Boscobel (Con)]

Yes, I am very happy to give my noble friend the assurance that I will write to him on that topic.

[Lord Rooker (Lab)]

In the main, the Minister’s reply was a model of its kind. I beg leave to withdraw the amendment.

Amendment 35 withdrawn.