Dame Chi Onwurah
MP for Newcastle upon Tyne Central and West · Labour · United Kingdom
“An extraordinary debate is going on right now inside and outside AI companies about whether the possibility of AI destroying humanity is more or less than 10%. The European Union is moving ahead with a comprehensive AI regulatory framework, but the UK continues to rely on existing regulation.”
“The Pope also highlighted how the billions of online digital twins constitute an unprecedented concentration of power in the hands of a small number of men. Among the many consequences of the 40 years of neoliberalism repeatedly called out by the Prime Minister is a libertarian attitude to technology.”
“But this stealth digital twinning violates the integrity, uniqueness and very personhood of our constituents and of all of us. Digital twins can take many forms, from content creation algorithms and deepfakes to chatbots that reflect aspects of our personalities back at us. It is particularly worrying when children are the target.”
“The automated version of our kids will grow with them, using the power of AI to target advertising and products at them, and worse. The Science, Innovation and Technology Committee has heard about some of the tragic consequences of online grooming by algorithms and chatbots—a vulnerable boy persuaded to kill himself; a vulnerable girl fed…”
“In the arts, entertainment and tech industries, many performers are agreeing to the creation and use of digital replicas as part of their work—think of ABBA Voyage. But performers increasingly encounter unauthorised digital replicas of themselves, which pose a threat to their career, livelihood and reputation.”
“Since then, deepfakes have proliferated. The hon. Member for Mid Norfolk (George Freeman) was shown crossing the Floor in Parliament to join Reform, to his constituents’ consternation and his own—it was a fake. Then there were the horrendous photos of naked women and girls that Elon Musk’s AI created on demand.”
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“238.] A member of the Intelligence and Security Committee also said that “we need mechanisms in place to ensure that that flexibility does not allow the Government too much scope.” —[ Official Report , 17 November 2020; Vol. 684, c. 244.] As I have already noted, CFIUS has an annual reporting requirement.”
“There is no requirement to report on any aspect to do with national security. Given that the only report is a public report, that is understandable. That is why we are proposing that a secure sensitive report should also be published and shared with the Intelligence and Security Committee. The hon. Member for Tonbridge and Malling (Tom Tugendhat), the Chair of the Foreign Affairs Committee said that “there is a real role for Committees of this House in such processes and…the ability to subpoena both witnesses and papers would add not only depth to the Government’s investigation but protection to the Business Secretary who was forced to take the decision”. —[ Official Report , 17 November 2020; Vol. 684, c.”
“The hon. Gentleman makes a good point. It must be published, but the details that it sets out are limited. The reporting on other information, as I think the Minister has said, is something that is intended but is not required. We have requested that several other pieces of information be published, but the Minister has said that they may be. The hon. Member for North West Norfolk is absolutely right that there will be an annual report, but that is a public report that will provide only the limited information set out in clause 61(2). Obviously, it will not provide anything that might have an impact on national security. With regard to what is published in the final notifications, for example, that can be redacted to take out anything of commercial interest as well as of national security interest.”
“I thank the Minister for his response, but he did not address the issue scrutiny of sensitive aspects of how the Bill will work. I recognise that the ISC’s remit does not cover BEIS—that is the exact point of requiring such a report. As I think was discussed on Second Reading, the BEIS Committee will not scrutinise any sensitive information or information that is directly relevant to our national security. I am afraid that I cannot accept the Minister’s reasoning for his rejection of the new clause—namely, that it is effectively already covered by clause 61—so I will put it to a Division.”
“I do not know who your secret Santa is, Mr Speaker, but I do know the Minister’s: Google and Facebook. Only, they are not buying presents—just using our data, behaviour and social contacts to tell us what to buy through their domination of online advertising, while our local retailers, who pay significant taxes and employ so many people, lose out. Can the Minister confirm that the digital markets unit’s powers have yet to be defined and that powers in the long-delayed online harms Bill are being watered down? Will she promise now to stop tech companies selling on our data, and put us back in control of our digital lives and Santa back in charge of Christmas?”
“The Government’s “Get Ready for Brexit” campaign looks lovely, but it does not answer the question: get ready for what? Deal? No deal? What deal? Businesses have a pandemic to deal with. Will the right hon. Gentleman admit that the combination of Brexit shambles with the absence of proper support for small businesses facing covid-19 measures, and the total exclusion from support of so many businesses, means that the Government are totally letting down small businesses in the north-east and across the country?”
“I thank the Minister for his comments on clause 22. This possibly shows a lack of understanding on my part, but could he say a little about how the Secretary of State will ascertain, decide or judge that information has been false or misleading?”
“I beg to move amendment 22, in clause 23, page 15, line 15, leave out from “as” until end of line 16 and insert “as agreed by the Secretary of State in accordance with subsection (9)”. This amendment seeks to limit the flexibility of extending the assessment period to the conditions set out in subsection (9), and to remove the need for the approval of the acquirer.”
“In a sort of a mathematical trick that I fail to follow, the Government’s impact assessment talks only of an additional 18% of cases relative to the regime under the Enterprise Act 2002, but also states that there will be an increase from 12 reviews in 20 years—that is the figure under the current regime—to nearly 2,000 under this regime.”
“That will be critical, particularly in the early stages of the regime.” –– [ Official Report, National Security and Investment Public Bill Committee, 26 November 2020; c. 76, Q91.] I ask the Minister to consider whether the clause provides that. This amendment, which sets out to limit the flexibility of extending the assessment period to the condition set out in subsection (9) and to remove the need for the approval of the inquirer, is intended to probe and highlight that. The intention behind new clause 4 is to ensure greater clarity about the apparent omission of any formal complaints procedure for acquirers. We are concerned that it seems as though the Government have not reflected on the scale of the change that our mergers and acquisitions regime is going through in their appreciation of the operational shift needed to deliver on it.”
“Will Jackson-Moore of PwC said, “it is about the application of the legislation, in particular the process, the ability to pre-clear and the timelines actually being met. To understand some of these technologies is not going to be straightforward.” –– [ Official Report, National Security and Investment Public Bill Committee, 26 November 2020; c. 115-116, Q152.] Lisa Wright from Slaughter and May said that “for people doing deals around the world who have already experienced those other regimes, it ought not to have any real negative impact at all, provided that BEIS can deliver on the aspiration set out of a slick and efficient regime, turning around notifications within sensible deal timeframes and providing the kind of informal advice and early engagement promised.”
“I note that the Government’s impact assessment contains no estimate of how many transactions are expected to require additional and voluntary period extensions. We are about to embark on a vast shift in merger control, with far more engagement and intervention by the Government in our mergers and acquisitions landscape. We seek clarity with this amendment, to give confidence to our small and medium-sized enterprises and to ensure that there is confidence in our national security. We seek to ensure that the Government have a plan and a detailed understanding of it will work to deliver on the Bill’s proposals. As I mentioned earlier, during our evidence sessions, there was significant demand from experts to ensure the Bill delivers greater certainty.”
“Then there is a separate bar of reasonable belief for the Secretary of State to order an additional period, in clause 23(8), and a third bar of being “satisfied, on the balance of probabilities” to get a voluntary period extension. What is the difference between the three standards of reasonable suspicion, reasonable belief, and being satisfied on the balance of probabilities? I am sure that there were specific reasons for drafting those three separate standards. Could the Minister share them with us? Is he confident that this tighter approach for each step will allow the Government sufficient room to ensure that there are robust reviews and to protect our national security, especially given that the regime will be an entirely new one, with an entirely new investment security unit interpreting those three separate bars?”
“Does the Minister concede that it is possible, especially given the likely resourcing clashes—we have already talked about potential conflicts of interest—that the voluntary period extensions will soon become default period extensions? Have the Government given themselves sufficient powers to trigger extensions, or is the current situation uncertain for businesses and for Government? That concern is especially important because of the evidential thresholds that are required for the voluntary period extension. The Government have set a bar of reasonable suspicion—that is quite common—for a trigger event to be called in, in clause 1(1).”
“Subsection (9) sets out a number of considerations “on the balance of probabilities”, but subsection (3)(c) implies that the period is at the agreement of the acquirer. What is the process by which an acquirer can deny the extension and what, if any, is the limit on voluntary period extensions? Businesses up and down the country and international investors in Britain’s high-value start-ups will be looking to the Government for greater clarity. We heard numerous calls for greater clarity during the evidence sessions. The Bill presents uncertainty for not just businesses but the Government. If a business can deny agreement to extensions under subsection (3)(c), where do the Government go then? The Bill creates a 15-week assessment period, but our existing merger control process can last for 32 weeks with a full phase 1 and phase 2 review.”
“Our concern is that the clause offers the potential for unlimited expansion of the timeline—currently labelled, as I said, a “voluntary period” extension. That creates uncertainty for businesses and, indeed, for Government. Subsection (3)(c) suggests that a voluntary period extension “may be agreed in writing between the Secretary of State and the acquirer”, and yet subsection (9) sets out the ways in which the Secretary of State might agree a voluntary period where they are satisfied of the need for it. Is it a voluntary period for both parties? Will the voluntary period truly be voluntary for businesses? According to subsection (9), the decision seems to be for the Secretary of State.”
“Clause 23 sets out that the initial period may be extended by the Secretary of State for a further 45 working days if he “ reasonably believes that…a risk to national security has arisen from the trigger event or would arise from the trigger event if carried into effect, and…reasonably considers that the additional period is required to assess the trigger event further.” An extension beyond 75 working days—the initial 30-day period plus 45 days—may be agreed between the acquirer and the Secretary of State, if the Secretary of State “is satisfied…a risk to national security has arisen from the trigger event or would arise from the trigger event if carried into effect, and…reasonably considers that the period is required to consider whether to make a final order”. That is described as the “voluntary period”.”
“To be effective in doing that, the Bill needs to ensure clarity, certainty and competence—competence is a key word—for our businesses. As we have said on a number of occasions, we are particularly concerned about the impact on our small and medium-sized enterprises, which will bear the bulk of the compliance requirements and which do not have the resources that are at the disposal of many of our larger companies. We want the Minister to provide clarity on the parts of the assessment period that we find uncertain. Specifically, the Government have set out an assessment period timeline of up to 15 weeks, which is 30 working days for an initial period and 45 working days for an additional period.”
“Our intention, as we have shown, is to be a constructive Opposition and to make constructive proposals, so I will say at the outset that amendment 22 is a probing amendment that seeks to clarify how the Minister thinks the clause will work in practice. The amendment seeks to limit the significant flexibility of extending the assessment period to the conditions set out in subsection (9), and to remove the need for the approval of the acquirer. As we have said, the Bill marks a radical shift in our nation’s approach to takeovers and investments. It has been labelled a “seismic shift” and a “total transformation”. We want that radical shift to give the Government the powers they need to protect our national security, as we have made clear.”
“I rise to speak to amendment 22, which is in my name and that of my hon. Friends, and to new clause 4. It is a pleasure to serve under your chairmanship once more, Mr Twigg, and to find the Committee reconvened for the perusal of the rest of this important Bill. I thank the Minister for the letters that he has sent to me and my hon. Friends, and to the Intelligence and Security Committee, to address some of the questions that arose in previous sittings. I am glad that, with this amendment, we move on to part 2 of the Bill, which deals with the process of addressing our national security concerns as part of the Bill’s implementation. In clause 23, we are particularly looking at the assessment period. As I have indicated, we support the intention and, indeed, the objectives of the Bill, and we would have welcomed such a Bill some years ago.”
“I thank the Minister for his concern about our encouragement, in our probing amendment, of the Secretary of State having greater powers. When the Minister looks at other organisations, such as the Committee on Foreign Investment in the United States or, even closer to home, the CMA in the UK, which do not have voluntary period extensions, can he understand why there are concerns about how that process would work? What international comparisons has he made?”
“I hear the Minister repeatedly referencing the judicial review process without, I am afraid, addressing our point: judicial review is not an option that will give relief to a small, nimble start-up.”
“I said that amendment 22 was a probing amendment, but I want to test the will of the Committee on supporting greater clarity and understanding for our small and medium-sized enterprises. I will seek to press the amendment to a vote, as I will for new clause 4.”
“Without clarity on that point, the clause allows voluntary extensions that, in practical terms, may not prove to be of use to either the acquirer or the Secretary of State. On the new clause, I do not want to appear cynical, but I am sure that the Minister and those on the Committee who have worked in and with small businesses—particularly in our tech sector and in some of the 17 areas identified for mandatory notification, such as artificial intelligence and data infrastructure—will agree with me when I say that I do think that any small business would see an annual report to Parliament or a judicial review as a relief, given the ever-present desire for investment finance or for progress and innovation at breakneck speed. The Minister has not made a case against the need for a process to address procedural disputes.”
“It allows 45 days for a national security review, including a 30-day limit for the director of national intelligence to submit intelligence analysis and an option of a 15-day presidential determination if needed, but it does not have a voluntary period for extensions. The CMA in this country does not have a voluntary period for extensions. The Government are introducing a voluntary period. I thank the Minister for clarifying that as well as having the acquirer’s approval, the Secretary of State has to meet the conditions in subsection (9), and that both the approval and the conditions in that subsection are satisfied on the balance of probabilities. That does not, however, address the issue that my hon. Friend the Member for Warwick and Leamington raised about whether the acquirer is likely to agree to a voluntary period.”
“I thank the Committee for considering our amendment and new clause, I thank the Minister for his response and I thank my hon. Friend the Member for Warwick and Leamington for his able interventions. I am somewhat disappointed by the Minister’s response. I think it is absolutely true, as he said, that as with so much, we are on the same page when it comes to what we are trying to achieve. There are significant issues with the clause as it stands, however, and I do not feel that the Minister has addressed them in his response. He did not, for example—I am happy to take interventions on these points—address the issue of voluntary extensions. We do not see that in the US process, which has a number of stages.”
“I thank my hon. Friend for giving way and for his excellent comments on the amendment. Does he also recognise that the report under clause 61 is the one that the Minister just described as providing accountability to small businesses regarding their concerns about procedure or how they might be affected by the Bill? Does my hon. Friend therefore agree that adding quality to quantity as a function of that report would be a truly important step?”
“It is important that the Committee recognises the momentous occasion of the first use of the vaccine in this country and congratulates the Minister. It is also important that we reflect on the fact that our fantastic NHS and key workers, rather than the Minister himself, made it possible.”
“My hon. Friend is making a really important point, because we all know that what is measured throws a light on the process behind it. If these orders are not measured, I am concerned that they will effectively be a way for a hard-pressed department to gain more time. We have all seen during this pandemic—I refer not least to responses to parliamentary questions—how pressure on resources has increased timescales in the operation of Government Departments. This amendment would shine a light on that and prevent such misuse.”
“Given that, as my hon. Friend sets out, this information should be of use to the unit’s internal workings and that it would, I hope, be readily available in the Department, as part of the workflow in modern-day information management systems, can he think of any reason why the Secretary of State would not want to make it available?”
“My hon. Friend is making an excellent point. Does he agree that it would be helpful if we could be sure that the Minister’s accuracy were not as low when reporting my hon. Friend’s words as when reporting on the functioning of the clause?”
“I thank the Minister for the progress he is making in reading out the provisions of these clauses, but I am trying to understand the length of time that an interim order can be in force. What is the maximum time an interim order can be in force?”
“I wonder whether this is setting up the potential for a future judicial—or other—review, should any representation be made that was not considered to have been considered. Perhaps the Minister will write to me to give his view on that, or to set out what part of the process that statement is trying to address or give accountability on.”
“Although we have some concerns about how those notifications are to be made, which we shall consider later, a final order, made as effectively and quickly as possible, is clearly important. I am not sure that the Minister made it clear in clause 26(4): “Before making a final order the Secretary of State must consider any representations made to the Secretary of State”. This seems to me to be a very broad statement, yet here we see—as I am sure my hon. Friend the Member for Southampton, Test will observe—that it does not say “may”, but “must”. I am not clear what that is seeking to address, as I would have thought that it was normal practice for the Secretary of State to consider representations made to them.”
“Indeed, we will be looking for greater clarity on who those hostile actors might be, but we have to recognise that hostile actors might seek to circumvent the provisions of the Bill in order to make off with important intellectual property or to otherwise influence the companies’ assets that they are seeking to acquire. We therefore recognise the importance of interim orders, as set out in clause 25. As I have told the Minister, I am not clear about the maximum timeline that the interim orders can be in place. Regardless of that, it is clearly necessary for them to be put in place and to be defined. They need to be reviewed and rewritten, and other provisions in clause 25 set that out. My understanding is that interim orders give way to final orders and the final notifications.”
“Let me start my thanking the Minister for setting out the purpose and details of clauses 25 to 28, which set out the remedies and the process of the timelines that we discussed in relation to clause 23. As he has suggested, and as the Opposition recognise, many of our amendments and arguments have been focused on trying to ensure that the process of assessment, interim orders and final orders works not just as effectively as possible, but as clearly as possible. It should be as clear as possible to the many businesses that will come under the remit of the Bill, particularly the small and medium-sized enterprises that the Opposition seek to champion. On the requirements for interim orders, which are set out in clause 25, the Minister is absolutely right to say that we have to have regard to the actions of hostile actors.”
“I would say, in agreeing to the provisions set out in clauses 25 to 27, that there are concerns that they will not be part of the general reporting, certainly in the provisions of clause 25, and interim reports are not mentioned in clause 61. I share the concerns of my hon. Friend the Member for Southampton, Test about a lack of reporting on the provisions of the Bill, but we recognise the importance of the clauses and will not be opposing them. Question put and agreed to. Clause 25 accordingly ordered to stand part of the Bill. Clauses 26 to 28 ordered to stand part of the Bill.”
“My question is not about the broadness of the orders, or even the discretion that the Secretary of State has, because, as the Minister has observed, we have sought to probe that level of discretion in these powers; it is about the broadness of the provision that: “Before making a final order the Secretary of State must consider any representations made to the Secretary of State”. What is meant by “consider”? How would a failure to do so be identified and reported on, and how would the Secretary of State be held to account? I seek further clarity on that. Perhaps it is obvious to the Minister, and perhaps it is just to me that it is not obvious.”
“I thank my hon. Friend for the amendment and for the excellent point that he is making. Does he think that if a company was being acquired by a hostile actor, and the Secretary of State thought that knowledge of the acquisition would be detrimental to the commercial interests of the company, the clause would allow the Secretary of State to redact that information? It would be in the general public’s interest to know that such an acquisition was taking place.”
“When the Minister responds, I hope that he will set out what he expects the Secretary of State to do when there is a conflict of interest between public knowledge of hostile actors and specific measures in the Bill to ensure that companies related to potential hostile actors, or those for whom our national security is not in their interests—through chains of influence or company holdings, for example—should not be beyond the reach of the Bill. The clause, by enabling the Secretary of State to leave out details that prejudice the commercial interests of any person, seems to put the focus back on commercial interests rather than national security. The amendment would put the focus back on national security and the public interest.”
“I rise to say a few words in support of my hon. Friend’s amendment. The excellent points that he has made have highlighted a theme of the Committee’s discussions: the potential conflict between the Department’s focus on supporting business and investment into the UK, and our national security. As he set out, the public interest might be in knowing that a hostile acquisition was taking place and in being better informed generally about national security. In addition, I can think of many examples in which the knowledge that a company had come into the purview of the Bill could have a detrimental impact on its stock valuation or reputation.”
“I had been just about to conclude by saying that a key reason for the amendment moved by my hon. Friend the Member for Ilford South is that it asserts and requires the supremacy of the public interest over commercial interest in the Secretary of State’s actions in reporting on final notices. I hope that the Minister will accept the amendment.”
“The Committee recognises the importance of giving the powers in the Bill to the Secretary of State in the interests of national security. The powers of redaction are, or could be, in the interests of commercial sensitivity. Does the Minister agree that national security and the public interest should be supreme over commercial sensitivity? Why will he not make that clear?”
“Was my hon. Friend as confused as I was when the Minister spoke about this Bill not being the place to introduce public interest? The Government, however, have introduced commercial sensitivity. We are not seeking to modify national security; it is the introduction of commercial sensitivity that requires the introduction of public interest. We are talking about modifying the importance of commercial sensitivity, not national security. Will my hon. Friend join me in rejecting the Minister’s assertion?”
“I beg to move amendment 24, in clause 30, page 19, line 44, leave out “making of a final order” and insert “making of an interim or a final order”. This amendment would enable the Secretary of State to give financial assistance in consequence of the making of an interim order.”
“One would expect the Treasury to provide a limit in any year, but the Bill does not set any limit on the amount of financial assistance that the Secretary of State can make available. It does not, however, provide for any financial assistance in the case of an interim order. The provision applies only to a final order, specifically in clause 30, on page 19, in line 44. That is why we seek simply to change that to include interim orders under the scope of the financial assistance clause.”
“Clause 30 further states that during any financial year, if the amount given under the clause totals £100 million or more, the Secretary of State must lay a report of the amount before the House of Commons. It states that during any financial year in which a report has been laid before Parliament, if the Secretary of State provides any further financial assistance under this clause, he must lay before the House a report of the amount. I set that out to indicate that, as I understand it, the amount of financial assistance that can be provided is not limited. A report must be provided when the amount given under this clause totals £100 million or more, but there is no limit on the amount which can be provided.”
“My hon. Friends and I have set out how we are seeking to provide constructive support and improvement for this Bill. I am disappointed that the Minister seems to feel that no improvement is possible, but I hope to persuade him otherwise with amendment 24. It is not a probing amendment; it brings a much-needed improvement to what I consider to be an incomprehensible omission in clause 30. Clause 30 provides that the Secretary of State may, with the consent of the Treasury, give financial assistance to, or in respect of, an entity through a loan guarantee or indemnity, or any other form of financial assistance. The financial assistance must be given as a consequence of him making a final order. That is a key point that I will return to.”
“I thank the Minister for his comments. When he says that an interim order can be in place for at most 75 days, I think he is adding 30 days, which is the initial period, to 45 days, which is the additional period. I am afraid that he is forgetting the voluntary periods.”
“The inability to raise finance at a critical moment or to sell to a particular customer, for example, may cause significant financial and commercial damage to a small business or a start-up. I did not hear the Minister reject that point, yet he has rejected the need for any support during the period of an interim order. As I have shown, that is a mistake, and that is why we will press the amendment to a vote. The Minister also made no response to my question about equity.”