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Written Statements

Volume 677: debated on Monday 22 June 2020

Written Statements

Monday 22 June 2020

Business, Energy and Industrial Strategy

Business Update

Today, the Government will lay two separate pieces of secondary legislation to amend the Enterprise Act 2002. The first will allow the Government to intervene in qualifying mergers, including acquisitions, to maintain UK capability to combat and mitigate the impact of public health emergencies.

The second will lower the thresholds for intervention in mergers on public interest grounds for three sensitive sectors of the economy, intended to address any national security risks that may arise related to these sectors.

The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020

The Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2020 introduces a new public interest consideration for Government intervention in mergers and acquisitions. This new public interest consideration allows the Government to intervene in mergers involving businesses with a role in combating or mitigating the impacts of public health emergencies, such as the current COVID-19 pandemic.

The economic disruption caused by the pandemic may mean that some businesses with critical capabilities are more susceptible to takeovers—either from outwardly hostile approaches, or financially distressed companies being sold to malicious parties.

These new powers will enable the Government to intervene if a business that is directly involved in a pandemic response, for example, a vaccine research company or personal protective equipment manufacturer, finds itself the target of a takeover.

As this instrument is subject to the made affirmative procedure it has been made today and will come into effect tomorrow.

The draft Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2020

The draft Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2020 will amend the Secretary of State’s powers to scrutinise mergers in three sensitive sectors of the economy on public interest grounds: artificial intelligence, cryptographic authentication technology and advanced materials. These changes are intended to address any national security risks that may arise relating to these sectors. The Government made similar changes in 2018 for three other critical sectors: military/dual-use technologies, computing hardware and quantum technology.

Separately, the Government will lay an accompanying instrument, the Enterprise Act 2002 (Turnover Test) (Amendment) Order 2020, which will be subject to the negative resolution procedure. Together, these two instruments will add the enterprise categories to a list of ‘relevant enterprises’ which are subject to lower intervention thresholds. The turnover test for intervention in these sectors will be lowered to £1 million; and the ‘share of supply’ will be met where an enterprise supplies at least one quarter of all goods of a particular description and there is no longer a requirement for a merger to increase the share of supply.

These orders will therefore allow the Government to intervene on public interest grounds when smaller companies in these critical sectors might be vulnerable as a consequence of a merger or takeover. They will send an important signal to those seeking to take advantage of those struggling as a result of the pandemic that the UK Government are prepared to act where necessary to protect our national security.

I will also be placing copies of the non-statutory guidance relating to these amendments in the House Libraries.


Cabinet Office

Procurement Update

I previously provided a written statement on 29 April 2020 in relation to indemnities granted for IP infringement, in respect of the designs, and against product liability claims against the manufacturers of Rapidly Manufactured Ventilator System (RMVS) products through the Ventilator Challenge. I also laid a departmental minute before Parliament setting out the detail of these indemnities.

The Ventilator Challenge has been a resounding success, with four designs in production and over 7,500 devices delivered to the NHS. The Cabinet Office intends to grant similar indemnities in letters with other parties involved in the BlueSky Ventilators consortium. The contents of these letters are still under negotiation in the majority of cases.

It is normal practice, when a Government Department propose to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Department concerned to present to Parliament minute giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the minute, except in cases of special urgency.

Due to the urgent need to finalise the letters and release payments due to designers and manufacturers, it is not possible to allow the required 14 days’ notice prior to the liabilities going live. Any delay would result in an unacceptable delay in payments due to designers and manufacturers who are supported by a largely SME supply chain.

The precise commercial terms that have been negotiated for each supplier are, and will remain, commercially confidential. While it is difficult to estimate the potential liability exposure, it could exceed £300,000. For this reason, I am informing Parliament of these arrangements.

On this basis, I have today laid before Parliament a departmental minute setting out what these indemnities are.

The Treasury has approved these liabilities. However, if any Member of Parliament has concerns they can contact the Cabinet Office who will be happy to provide a response.

Attachments can be viewed online at: http://www. answers-statements/written-statement/Commons/2020-06-22/HCWS306/.



Contingent Liability

The Monetary Policy Committee (MPC) of the Bank of England decided at its meeting ending on 17 June to ask for an expansion in the maximum limit of purchases that may be undertaken by the Asset Purchase Facility (APF). This will encompass up to £100 billion of further purchases of gilts to support the economy.

In light of the latest economic conditions, the MPC judged further asset purchases financed by the issuance of central bank reserves should be undertaken to enable the MPC to meet its statutory objectives, and thereby support the economy. I have therefore authorised an increase in the total size of the APF of £100 billion. This will bring the maximum total size of the APF from £645 to £745 billion.

In line with the requirements in the MPC remit, the amendments to the APF that could affect the allocation of credit and pose risks to the Exchequer have been discussed with Treasury officials. The risk control framework previously agreed with the Treasury will remain in place, and HM Treasury will keep monitoring risks to public funds from the Facility through regular risk oversight meetings and enhanced information sharing with the Bank.

There will continue to be an opportunity for the Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.

The Government will continue to indemnify the Bank and the APF from any losses arising out of, or in connection with, the Facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.

A full departmental Minute has been laid in the House of Commons providing more detail on this contingent liability.



Educational Disadvantage: Covid-19

Every pupil in the country has experienced unprecedented disruption to their education as a result of coronavirus (covid-19). Those from the most vulnerable and disadvantaged backgrounds will be among those hardest hit. The aggregate impact of lost time in education will be substantial: the scale of our response must match the scale of the challenge. Returning to normal educational routines as quickly as possible will be critical to our national recovery, which is why the Government are working towards all pupils returning to school in September.

To further support pupils to catch up, the Government have announced a package worth £1 billion to ensure that schools have the resources they need to help all pupils make up for lost teaching time, with extra support for those who need it most.

Six-hundred-and-fifty million pounds will be spent on ensuring all pupils have the chance to catch up and supporting schools to rise to the challenge. While headteachers will decide how the money is spent, the Education Endowment Foundation has published guidance on effective interventions to support schools to make the best use of resources.

Alongside this universal offer, we will roll out a national tutoring programme, worth £350 million, which will deliver proven and successful interventions to the most disadvantaged young people, accelerating their academic progress and preventing the gap between them and their more affluent peers widening. The evidence shows that tutoring is an effective way to accelerate learning, and we therefore believe a targeted tutoring offer is the best way to narrow the gaps that risk opening up due to school closures.