Letter of the 201H March, Containing Follow-Up Questions to My Correspondence Addressing Questions Arising from My Select Committee Appearance in February

Department for Business, Energy Alex Chisholm Permanent Under-Secretary of State &Industrial Strategy 1 Victoria Street London SW1H OET Rachel Reeves MP T:+44 (0)20 7215 5916 House of Commons E: [email protected] London Our ref: AC/CC/0724 SW1AOAA

gth April 2018

Thank you for your letter of the 201h March, containing follow-up questions to my correspondence addressing questions arising from my Select Committee appearance in February. I am glad you found my answers helpful and detailed, and I am of course delighted to provide you with further information. Gender pay gap To answer each of your points in turn:

• Of our Executive Agencies we do not have data for Met Office, Insolvency Service, or UK Space Agency (the last one due to size) separately. Executive Agencies are not required to report independently of BEIS and these three have chosen not to. However, the data for IPO and Companies House can be found here lPO: https://www.gov.uk/government/publications/ipo-gender-pay-gap/ipo-gender pay-gap Companies House: https://www.gov.uk/government/publications/companies-house gender-pay-gap-report-and-data-2017

• We have broken down each of our Partner Organisations by gender of Chair and CEO in Annex A. I should point out that Christine Tacon of the Groceries Code Adjudicator, and Paul Newby of the Pubs Code Adjudicator, do not fit neatly into the definition of Chair or CEO, holding as they do the collected responsibilities of both, and have been included under Chair only to avoid duplication.

• I meet with the CEOs and Chairs of our Partner Organisations quarterly, and have used these occasions to reinforce our shared commitment to diversity and inclusion. The next meeting will be 19 April, at which BEIS' Head of Diversity and Inclusion will be leading a discussion on our approach to D&I and our latest expectations of activity we expect POs to undertake in this space as a minimum. At present, none of the Partner Organisations below the disclosure threshold have opted to disclose gender pay data, but I will use your letter as further encouragement for them to do so. Brexit-related work Turning to your questions on EU Exit related work.

• You asked for the list of BEIS' 21 priority workstreams. I am afraid I cannot share it at this stage as it is sensitive and there is a risk that it would prejudice negotiations with the EU. As you will appreciate, this is an HMG position, not a BEIS policy. That said, I would be happy to provide the Committee with further briefing on our priority workstrands at the point where I am able to do so.

• You asked about potentially nugatory expenditure on preparations for a no deal scenario. I would like to assure you that BEIS has systematically approached its EU exit planning to identify wherever possible solutions that can be adapted to fit all outcomes of negotiations including no deal, to minimise potential nugatory spend. I can confirm that some spend has been authorised but, in each case, it is necessary as the deliverable would be required in any outcome scenario. For example, agreement has been reached that the UK is leaving Euratom. We need to deliver a domestic nuclear safeguards regime as a priority. Spending has been authorised and commenced on delivering this. We have a similar requirement to build a domestic (product safety) market surveillance database. On 19 March the Secretary of State provided me with a Ministerial Direction to authorise spending to take this forward.

• You asked about the location of the staff recruited to deliver our EU Exit work. I would first like to clarify the number of staff being recruited for our Brexit-related work - as I said at the hearing, this is an additional 350 staff. 580 is closer to the total number of staff working on Brexit in the Department. London based staff are primarily policy specialists and include staff working on EU Exit. There is a good reason for this as these roles require regular interaction with other Whitehall-based departments such as the Department for Exiting the European Union and the Department for International Trade, and must also be embedded in existing policy teams who are predominantly based in London.

I think it is important to say that I am committed to maintaining our strong regional presence and we are working with the Cabinet Office Places for Growth team on developing options for future estates strategy. In that context, 90% of all BEIS staff work outside London, the majority in our Partner Organisations. Each of our Partner Organisations has been developing plans for dealing with EU Exit, and in many cases this will require additional staff, all across the country.

National security and takeover bids: With regard to the seven national security interventions since 2002 under the Enterprise Act, you requested details about the criteria used to assess the need for intervention, the nature of the undertakings and whether the criteria used for interventions had changed in the last five years. You also asked when the Government's assessment of the case for intervention relating to GKN/Melrose will be completed and announced. Under the Enterprise Act 2002 the Secretary of State may intervene in a qualifying merger in which he has reasonable grounds to believe that one of the public interest concerns listed in the Act is raised. The Act does not specify any criteria which the Secretary of State needs to take into account, though all interventions must be reasonable and proportionate. In national security cases, his decision is based on advice and evidence on whether the transaction may affect the UK's national security, from the relevant Government department and intelligence agencies, where required. There have been no changes to this in the last five years. Importantly, each merger is considered on a case by case basis so the exact reason for intervening can differ substantially. As you are aware, the Government has laid the draft Statutory Instrument: The Enterprise Act 2002 (Share of Supply Test) (Amendment) Order 2018 before parliament. This will ensure that the Government can intervene in mergers in certain sectors which might give rise to national security implications, subject to the views of parliament. These sectors include items for military and dual-use, quantum technology and computing hardware. The undertakings made in each national security public interest intervention are outlined in Annex B. Further details can be found in public documents in the links provided. These documents include the statutory reports provided by the Competition and Markets Authority and its predecessor, the Office of Fair Trading, regarding the national security concerns relevant to those cases, including the views of the Ministry of Defence. The Government is reviewing whether the proposed takeover of GKN by Melrose raises national security concerns and if so, whether a statutory intervention is required. Due to the quasi-judicial nature of this process it would not be appropriate to comment on the nature or timings of these assessments. It is important that in all cases, Ministers act, and are seen to be acting, impartially, on the basis of an open mind and on the evidence available.

I hope you find the above responses helpful in your further consideration of the work of the Department.

Alex Chisholm Annex A: Partner Organisation Chairs and CEOs

Partner Organisation Chair Male Advisory, Conciliation &Arbitration Service Sir Brendan Barber British Business Bank Lord Robert Smith of Kelvin British Hallmarkinq Council Noel Hunter Central Arbitration Committee Stephen Redmond Civil Nuclear Police Authority Vic Emery

Coal Authority l Stephen Dingle Committee on Climate Change Lord Deben Committee on Fuel Poverty David Blakemore Committee on Radioactive Waste Management Interim :Campbell Gemmell Competition &Markets Authority David Currie Competition Aooeal Tribunal Sir Peter Roth Copyright Tribunal Judge Richard Hacon Electricity Settlements Company Dr Martin Read Financial Reporting Council Sir Win Bischoff Innovate UK Phil Smith Insolvency Service Stephen Allinson Intellectual Property Office . Bob Gilbert Land Registry Michael Mire Low Carbon Contracts Company Dr Martin Read Low Pav Commission Brian Sanderson - - Met Office Sir John Beddington (Acting) National Physical Laboratory Sir David Grant Nuclear Decommissioninq Authority Tom Smith Nuclear Liabilities Fund Richard Wohanka OF GEM David Gray Oil and Gas Authority Sir Patrick Brown Ordnance Survey Kieran Murphy Post Office Ltd Tim Parker Pubs Code Adjudicator Paul Newby Regulatory Policy Committee Anthony Browne Research Council - AHRC Sir Drummond Bone Research Council - BBSRC Sir Gordon Duff Research Council - EPSRC Dr Paul Golby Research Council - ESRC Dr Alan Gillespie Research Council - MRC Donald Brydon Research Council - NERC Sir Anthony Cleaver Research Council - STFC Prof. Sir Michael Sterling Small Business Commissioner Paul Uppal UK Atomic Energy Authority Prof. Roger Cashmore UK Green Infrastructure platform Niall Mackenzie UK Space Agency Prof. David Southwood UKSBS Tim Knighton UKRI (April 2018) Sir John Kingman ...... Chair Female Certification Officer Sarah Bedwell

Companies House - Lesley Cowley Competition Service Susan Scholefield Groceries Code Adjudicator Christine T aeon

Partner Organisation CEO Male British Business Bank . Keith Morgan Central Arbitration Committee James Jacob Civil Nuclear Police Authority Mike Griffiths Coal Authority Philip Lawrence (Lisa Pinney from 1st June 2018) Committee on Climate Change Interim : Adrian Gault Competition and Markets Authority Dr Andrea Coscelli Competition Appeal Tribunal Charles Dhanowa - Registrar Competition Service Charles Dhanowa - Registrar Electricity Settlements Company Neil McDermott Financial Reporting Council Stephen Haddrill Intellectual Property Office Tim Moss Land Registry Graham Farrant Low Carbon Contracts Company Neil McDermott Met Office Nick Jobling National Physical Laboratory Peter Thompson Nuclear Decommissionina Authority David Peattie OF GEM Dermot Nolan Oil and Gas Authority Andy Samuel Ordnance Survey Nigel Clifford Research Council - AHRC Prof. Andrew Thompson Research Council - EPSRC Prof Philip Nelson Research Council - ESRC Prof Tony McEnery Research Council - MRC Prof John Savill Research Council - NERC Prof Duncan Winqham Research Council - STFC Dr Brian Bowsher UK Atomic EneraY Authority Prof. Ian Chapman UK Space Agency Graham Turnock UKSBS Jo Brigham UKRI (April 2018) Prof Sir Mark Walport Partner Organisation CEO Female Advisory, Conciliation & Arbitration Service Anne Sharp Companies House Louise Smyth Innovate UK Dr Ruth McKernan Insolvency Service Sarah Albon Low Pav Commission Sarah Morqan Post Office Ltd Paula Vennells Research Council - BBSRC Prof. Melanie Welham

Partner Organisation • British Hallmarking Council No CEO Equivalent Certification Officer No CEO Equivalent Committee on Fuel Poverty No CEO Equivalent Committee on Radioactive Waste Management No CEO Equivalent Copyright Tribunal No CEO Equivalent Groceries Code Adjudicator No CEO Equivalent Nuclear Liabilities Fund No CEO Equivalent Pubs Code Adjudicator No CEO Equivalent Regulatory Policy Committee No CEO Equivalent Small Business Commissioner No CEO Equivalent UK Green Infrastructure platform No CEO Equivalent National Security and Takeover Bids Annex B: Undertakings in national security public interest interventions

Merger Year Background Undertakings Link Com(2etition and Markets Authority jurisdiction Lockheed Martin 2005 lnsys had capabilities in combat, weapon and 1) Maintenance of strategic httQ:LLwebarchive.nationala Corporation/lnsys communication system integration and research capabilities rchives.gov .u kL200906090223 Group Ltd capabilities. 27LhttQ:LLwww. be rr.gov. ukLwh 2) Protection and Exploitation of -atwedoLbusinesslawLcom 12 etiti National security concerns based on: Technology and Information onLmergersL12ublic • The new owner could choose to rationalise its interestLnational defence activities and lnsys had essential (and some secu rityLi ndex. htmI unique) capabilities that could be run down, sold off or transferred abroad. The MoD viewed it as essential for the protection of the UK's national security that these capabilities were maintained in the UK; • US control of the business raises concerns due to ITAR and the implications for UK security of supply if UK information and technology was combined with US information and technology; • The need to ensure highly classified information and technology remains in the UK.

Atlas Elektronik 2009 UWS was a key supplier of research, technology, 1) Maintenance of strategic httQs:LLwww.gov.ukLgovernment UK's acquisition systems and support for current and future maritime capabilities Lu12loadsLsystemLuglo-adsLattachm of QinetiQ's platforms for the Armed Forces (including ballistic ent dataLfi1eL581095LAtlas Under Water missile submarines and the attack submarine fleet). 2) Protection and Exploitation of UWS UIL-28-09-09.Qdf Systems division Technology and Information National security concerns were based on: • The new owner could choose to rationalise its defence activities and UWS had unique and essential capabilities that could not be replicated without significant MoD investment; • The new owner being German could mean day to day management of programmes would move to German and German export controls could apply to output for the MoD; • The new owners being non-UK could prejudice operational security and capability; • A significant part of UWS work was research and advice. The MoD were concerned that the impartiality of this advice would be compromised if UWS was owned by a major manufacturer.

Hytera/Sepura 2017 Hytera is a Chinese communications systems 1) Maintenance of strategic httg_s://www.gov.uk/govern me ntL business. Sepura designed and supplied radios for capabilities ug_loadsLsystemLugloadsLattachme the public sector including the Airwave-TETRA nt data[file[613860[seg_ura radios used by the emergency services and other 2) Protection and Exploitation of hytera-signed-undertakings.Qdf UK authorities. Technology and Information Link to documents including National security concerns based on: CMA report • Protection of sensitive information and technology; • Although this technology was to be phased out, ensuring that repair and maintenance capabilities were maintained in the UK.

European Commission jurisdiction General 2004 Alvis was the design authority for the majority of the 1 )Maintenance of strategic ht tg://weba rch ive.nation ala Dynamics/Alvis British Army's fighting vehicle fleet. capabilities rch ives.gov.uk[200906090223 pie 27[httg:L[www.berr.gov.uk[wh National security concerns were based on: 2) Protection of Classified atwedo[businesslaw[comg_etiti • Maintenance of strategic UK capabilities given the Information on[mergersLg_ublic company's unique skills and knowledge. The MoD interest[national believed that it was essential that these capabilities 3) Intellectual Property Rights security[index.htm I will be maintained in the UK. Without these capabilities, the MoD contended that it would be unable to unilaterally update equipment to maintain the ooerational advantaae; • The need to ensure highly classified information and technology remains and in the UK and is protected.

Finmeccanica 2004 The target business was the design authority for the 1 )Maintenance of strategic htt12 :LLweba rch ive . nationala S.p.A./Agusta majority of the Armed Forces helicopter fleet. capabilities rchives.gov.u kL200906090223 Westland N.V. 27Lhtt12://www.berr.gov.uk[wh National security concerns were based on: 2) Protection of Classified atwedoLbusinesslawLcom12etiti • Maintenance of strategic UK capabilities given the Information onLmergersL12ublic company's unique skills and knowledge. The MoD interest[national believed that it was essential that these capabilities 3) Intellectual Property Rights secu rityLi ndex. htm I will be maintained in the UK. Without these capabilities, the MoD contended that it would be unable to unilaterally update equipment to maintain the operational advantage; • The need to ensure highly classified information and technology remains and in the UK and is protected.

Finmeccanica 2005 The target business was active in military avionics in 1 )Maintenance of strategic httQ:LLwebarchive.nationala S.p.A. acquisition particular airborne radar, electro optics and capabilities rchives.gov.u kL200906090223 of parts of the electronic warfare. 27Lhtt12://www.berr.gov.ukLwh military 2) Protection of Classified atwedoLbusinesslawLcom12etiti communication a National security concerns were based on: Information on[mergers[12ublic nd avionics • The fact that the business was the design authority i nterestL nation aI businesses of for the majority of avionics fitted in UK air platforms 3) Intellectual Property Rights secu ritvLi ndex. html BAE Systems pie and the company has unique skills and knowledge relating to them. The MoD believed it was essential for the protection of national security that these capabilities were retained in the UK. Without these capabilities, the MoD contended that it would be unable to unilaterally update equipment to maintain the operational advantage; • The need to ensure highly classified information and technoloav remains in the UK and is protected. General Electric 2007 Smiths Aerospace was a supplier of aerospace 1 )Maintenance of strategic htt12:LLwebarchive.nationala Company/Smiths systems and equipment with critically important capabilities rchives.gov .ukL200906090223 Aerospace capabilities within the UK in combat, weapon and 27Lhtt12:LLwww.berr.gov.ukLwh communications systems. 2) Protection of Classified atwedoLbusinesslawLcorn12etiti Information onLmergersL12ublic National security concerns were based on: interestLnationaI • The transfer of ownership outside the UK (to the 3) Intellectual Property Rights secu rityLi ndex. htm I US); • The fact that Smiths was a key supplier of sub systems for a number of weapons platforms and it was essential to maintain these strategic capabilities in the UK to develop operate and maintain the Smith technologies independently of other nations; • The potential leakage of classified technology and information outside the UK which could prejudice operational security and capability; • US control of the business raises concerns due to ITAR and the implications for UK security of supply if UK information and technology was combined with US information and technology.

http://webarchive.nationalarchives.gov.uk/20090609022327/http://www.berr.gov.uk/whatwedo/businesslaw/competition/mergers/public interesUnational-security/i ndex. htm I