Enterprise Bill

[back to previous text]

Mr. Djanogly: Superguns.

Mr. Waterson: My hon. Friend's mention of superguns is a helpful reminder of an episode that is not long past. We know, because we have been told, that people such as al-Qaeda have—rather like Al Capone in the 1920s—moved sharply into legitimate business in all sorts of ways, which include buying ships and no doubt buying some of the things that go into those ships, such as terrorist materials. International terrorism is another national security consideration.

The mainstream concern about which we all assume that we are talking is defence, which concerns this country's ability to continue to make equipment for our armed forces and to have access to such equipment to provide for our national defence. That opens up the question, which my hon. Friend the Member for South Cambridgeshire has raised more than once in Committee, of how we approach foreign companies. We are looking at preventing state defence secrets from being exported from these shores through mergers.

Those are the narrow concerns. The production of equipment used by the intelligence community is another possible area of concern. I would hope that the Under-Secretary and those who advise her have a series of categories, examples or merely rough scenarios that they have thought through in that context. I would like to press the Under-Secretary. Is the process any more elastic than I have suggested, or is it as I have described? Does public security mean something subtly different from what the clause describes as national security?

I can only endorse what my hon. Friend the Member for South Cambridgeshire has said and emphasise the tremendous concern in my party not just about the lack of certainty for business—I have gone into that before—but the sheer matter of principle that a narrow and important exception should become so elastic, in what can be added by subsequent Secretaries of State, when no one could envisage any circumstances in which that might happen.

Miss Johnson: Members of different parties have different desires in relation to such matters, but the Government are clear about why they are pursuing their line. I have reassured Opposition Members when debating earlier clauses that we have no intention of adding anything. We have attempted to make sure that the unforeseen can be dealt with because it is, indeed, unforeseeable. Opposition Members want to envisage something unforeseen, but cannot. The unforeseeable often comes around the corner to surprise hon. Members and Ministers.

Mr. Lansley: I acknowledge that it is difficult to deal with matters that are purely theoretical. However, let me put it to the Under-Secretary that I was pointing out—it would be helpful if she would respond—that if national security is in a category of its own, the

Column Number: 356

provision should apply to national security. At the risk of making a complex Bill even more complex, does she accept that any consideration of public interest that does not concern national security should be dealt with not in this way, but in a way akin to the former merger reference procedure under the Fair Trading Act? In that instance, the Secretary of State could not make decisions about what is in the public interest according to her subjective criteria, but only by reference to the decisions of the Competition Commission.

Miss Johnson: The hon. Gentleman makes a number of assumptions. His suggestion that we have two separate regimes would complicate the matter, particularly because neither he nor I could foresee whether any matter that was subject to provisions in this and related clauses was closer to national security than the other matters to which he suggests it should be likened under the normal procedures. We cannot speculate because we do not know.

The Competition Commission's competition expertise will be used in all cases. The Secretary of State is an appropriate person to have a final decision on the public interest test because it is the Secretary of State who is responsible for wider matters of public interest and has wider accountability through Parliament.

In relation to the interesting discussion about the definition of national security, it is important that the Secretary of State can intervene where necessary to protect national security. I think that all hon. Members would agree. I do not think that national security should be so tightly defined as to be considered on a case-by-case basis. National security primarily concerns defence issues. It includes public security, but only matters of great importance to the state. As the hon. Member for Eastbourne said earlier, national security is like an elephant: one knows it when one sees it.

Mr. Lansley: On this occasion, I am afraid that the Under-Secretary is not even close to a good argument. If it is national security, it will be specified in clause 56. If it is not national security, it will have to be separately specified. We are discussing a hypothetical situation—one that the Under-Secretary must envisage, although she cannot say what form it might take—in which public interest considerations that are not national security considerations might give rise to the Secretary of State wishing to amend section 56.

The Under-Secretary has not given me a good reply. The Bill should be amended so that, although circumstances may give rise to the Secretary of State's concern such that she would issue an intervention notice and amend section 56—she might even override any recommendation from the Office of Fair Trading and cause a reference to be made to the Competition Commission—the other public interest criteria should be determined by reference to the advice of the Competition Commission, as is the case in the Fair Trading Act now.

I am afraid that the moment that the Under-Secretary talks about the final arbiter of public interest, she is indicating that many years ago we

Column Number: 357

should have amended the Fair Trading Act so that the Secretary of State could override the Monopolies and Mergers Commission reports when they were received. Even if the MMC said that a merger was not against the public interest, the Secretary of State could have simply overridden it. That would have moved merger policy in this country in the opposite direction to the one that the Government profess to believe to be right.

6.45 pm

Mr. McWalter: Surely the hon. Gentleman would agree that there may be major civil emergencies of various sorts. Certain activities may threaten the purity of the water supply or the air or possibly heavily contaminate the biosphere. Potentially, several situations could be as alarming for a Government as, say, a threat by enemy action. For instance, a merger might create a rather irresponsible company that the Government might view as a threat. Does the hon. Gentleman accept that such a case would have to be included in the parameters of the Bill?

Mr. Lansley: No, I do not think that I do accept that. I do not have the definition in front of me, but I suspect that the public security definition under the EC merger regulations is wide enough to deal with major threats such as water supply contamination and so on. If it is not, and if the Secretary of State wishes to amend the measure to give that as a cause for an intervention notice, I see no reason why on such grounds the Competition Commission is not competent to advise her—in effect, to make a decision for her. I fail to see why the Secretary of State should be able to override it.

The classic case from the past is the series of references made by the then Secretary of State under the Lilley doctrine, to which I referred earlier, in relation to foreign ownership. If I recall correctly, four references were made against the advice of the Office of Fair Trading. In almost all of those cases, the MMC did not uphold the reference but found that there was no adverse public interest. In effect, the then Secretary of State and the subsequent one were deflected from that part of the policy.

That may or may not be right; I shall not debate the merits of it. The point is that the Secretary of State believed one thing, but the MMC believed another on the basis of what was regarded in the wider marketplace as more objective grounds. Let us accept that national security occupies a sui generis position and that the Government cannot delegate responsibility for its maintenance. However, it is perfectly reasonable for Ministers to delegate what is not national security to the Competition Commission in just the same way as they have delegated the responsibility to reach a conclusion about such matters to the Monopolies and Mergers Commission.

Miss Johnson: There is not much more that I can add to help the hon. Gentleman. I do not think that where we want to go and why we want to go there are very different in essence from what he is arguing for. The only area of dispute between us concerns what happens if something unforeseen crops up. He would

Column Number: 358

like there to be no provision for any unforeseeable circumstances, but I say that there is a need to ensure that unforeseen circumstances can be dealt with.

Mr. Lansley: To—I think—correct the Under-Secretary, I am not saying that there should not be provision for unforeseen circumstances. What I am saying is that, if the Under-Secretary wants to provide for unforeseen circumstances, she should do so through the mechanism of a reference to the Competition Commission, and allow the Commission's decision on whether something operates against the public interest to be the determining decision.

Miss Johnson: There is clearly a difference between the Competition Commission, whose role relates to competition matters, and those best placed to judge public interest. The Secretary of State and this House, with its accountability role, are in a better position to judge those issues than the Competition Commission, whose expertise lies in the competition field.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 30 April 2002