Newport Wafer Fab

(Urgent Question): To ask the Secretary of State for Business, Energy and Industrial Strategy to make a statement on the sale of Newport Wafer Fab.

On 25 May, the then Secretary of State for Business, Energy and Industrial Strategy called in Nexperia’s acquisition of Newport Wafer Fab for a national security assessment under the National Security and Investment Act 2021. Following further detailed and thorough consideration, on 16 November, I exercised my powers under the Act to make a final order requiring Nexperia to divest of at least 86% of its shareholding in Nexperia Newport, formerly Newport Wafer Fab.

My decision follows a quasi-judicial process that ensures that all relevant matters are taken into account and that the decision is made fairly. I am sure that the House will understand that I am unable to go into further detail about the national security assessments and implications that informed the decision, nor can I go into further detail about the final order.

What I can say is that the final order requires Nexperia to follow a set process leading to divestment within a specified period. This order has been shared with Nexperia and I published a notice summarising it as well. My officials, with the support of other Departments, will actively monitor compliance with the requirements set out in the final order and ensure that the national security risks continue to be mitigated effectively.

The National Security and Investment Act enables us to continue to champion open investment while protecting national security. Hon. Members can be assured that although we are unashamedly pro-business, the Government will not hesitate to act where there is a risk to UK national security. The UK has a number of strengths in the semiconductor sector, including in south Wales, and the Government aim to set out our semiconductor strategy soon to enable this technology to further support the global economy and national security.

Like many people in Newport West, I am deeply concerned by the decision made by the Secretary of State to order Nexperia to sell Newport Wafer Fab at this time and in this way. Nearly 600 people, with just one month to Christmas, have had the most unacceptable shock and worry heaped on them by this Government. We have heard so much about a commitment to levelling up, but this decision made by Tory Ministers is a disgraceful exercise in levelling down Newport West and south Wales.

Ministers have raised concerns about national security, despite the acquisition being cleared by two previous security reviews, including that by Sir Stephen Lovegrove, the former National Security Adviser. Nexperia, with the interests of its employees driving it, has proactively sought to deliver a range of far-reaching remedies that, if accepted, would fully address the Government’s concerns, but Tory Ministers have chosen not to enter into a meaningful dialogue with Nexperia or even to take the time to visit the site in Newport West.

I have been informed that Nexperia will now challenge the order, and will do everything possible to keep the factory operating and protect its employees in south Wales. They have my support. I am concerned that Ministers have chosen not to listen to my constituents, and have instead taken a decision that now puts their livelihoods and their families, as well as more than £100 million of taxpayers’ money, completely and unnecessarily at risk.

Nexperia has operated in the United Kingdom for nearly 100 years, and it has been at its Manchester site since 1970. Since April 2021, Nexperia has invested £160 million across the Stockport and Newport sites to expand their capacity and introduce new equipment. This is a long-term, well-established relationship, and the Secretary of State has ripped it to shreds. So I would like the Secretary of State to tell us: what discussions has he had with the Welsh Government and Newport City Council about the support Whitehall will provide to mitigate the impact of this decision on our local economy; what assessment has been made about the impact of this decision on my constituents; what specific discussions have Ministers had with the management at Nexperia; and will the Secretary of State publish the security assessment that prompted this decision?

The hon. Lady is quite right to be a doughty defender of her constituents, and I acknowledge that it will be a concerning time for 500 or so employees. She is not privy to the information that I have had to weigh up to come to this national security decision, which I have done with the utmost diligence and taking all of the factors into account; nor, I am afraid, can I accede to her request to publish that information. I would point her to the fact that the then shadow Business Secretary, the right hon. Member for Doncaster North (Edward Miliband), at the time of this takeover did actually call on the Government to use powers under the National Security and Investment Act to scrutinise the takeover, which I have done. In answer to her question about what the Government are doing, we had last week the £1.6 billion confirmation from the Chancellor for the nine Catapults, of which the Compound Semiconductor Applications Catapult in Wales is a part.

I welcome the measures that the Government have already taken in the National Security and Investment Act to protect critical national infrastructure companies from overseas control, but does the Secretary of State agree that it is important we do not just shut the stable door, and that where we become aware that companies may have already come under the control of hostile overseas states, we act against those as well?

My right hon. Friend is absolutely right about this. The interesting thing is that the National Security and Investment Act did not exist when this original takeover took place, which puts this in an unusual category of being a retrospective piece of work. I believe, on the basis of the information that now comes to us and the ability to use the Act, that we would always take these decisions up front. The difference here is that we have had to look at it through a retrospective process. However, I can assure my right hon. Friend and Members across the House that we take these decisions very carefully and cautiously. We have now looked at nearly 100 such decisions, and it is unusual for us to take action to this extent overall.

I call the shadow Secretary of State.

I welcome the new Business Secretary to his responsibilities in the House, and I congratulate my hon. Friend the Member for Newport West (Ruth Jones) on securing this urgent question and on her tireless advocacy for her constituents on this matter. I welcome the fact that a decision has finally been made on Newport Wafer Fab, but the chaotic process and the lack of strategy from the Government have left workers and businesses facing a great deal of uncertainty that the Government are now honour-bound to rectify.

Nexperia first announced a takeover of Newport Wafer Fab in July last year. It has taken 16 months for the Government to make this decision. In April, the Foreign Affairs Committee was forced to conclude that the review had

“not, in fact, been started.”

Finally, the Government have decided to block the transaction. Meanwhile, jobs have been left hanging in the balance, and the costs of unwinding the deal have risen over that time. We also have to question why we are in this situation in the first place. The south Wales compound semiconductor cluster employs thousands of workers in one of the world’s most strategic sectors, but we are still yet to see the long-awaited semiconductor strategy, which has been 22 months in the making.

Of course, the Government scrapped their entire industrial strategy altogether when the current Prime Minister replaced it with the hastily cooked-up plan for growth. That has already been replaced, because it may have been the sixth plan in 12 years but it was the first to cause a financial crisis. Meanwhile, firm after firm in the semiconductor sector has been sold off to foreign businesses. It genuinely has not been easy even to understand what Government policy in this area is, so may I ask the Secretary of State these questions? First, why has this decision taken so long, when the Government have known everything about the transaction for at least 16 months? Secondly, what is he specifically going to do to secure the future of the jobs in Newport Wafer Fab and ensure we retain this capacity in the UK? Finally, when will the Government come forward with a proper plan for growth, including for key industrial sectors? Decisions such as this, while at times necessary, must form part of a coherent and consistent policy and must be made promptly. All businesses get from this Government is chaos and crisis, and it is not good enough.

I think that is a rather unfair assessment of what has happened for this reason: the National Security and Investment Act 2021 only came into existence this January, so to say that there have been 16 months during which we have not made any decisions is simply untrue. Secondly, nobody would expect us, particularly with 500 jobs at stake, to rush to a decision over something this important. That is what Labour seems to be suggesting it wants to do.

I want to make sure that jobs are protected. We will be working with Nexperia on this sale to ensure that plans are, I hope, put in place that do that. I have already referred to the wider investment in semiconductors, of which a large proportion is coming to Wales, so the Government already have a strategy in this exact area. It is one of the reasons why we have 100 companies carrying out work in semiconductors.

More than five years ago, I visited this business as a Minister. It is an excellent business, with cutting-edge technologies. It employs local people, but also international people in high-quality graduate and PhD jobs. While I agree that national security should come first, I urge the Secretary of State to work across every single Department to ensure that we retain those skills that are so needed in the United Kingdom and in particular in this area represented by the hon. Member for Newport West (Ruth Jones).

My hon. Friend will be interested to hear that I think I read a report of his visit to the site. I have taken every opportunity to understand what is happening in Newport, and his experience was helpful. It is also worth the House knowing that, unlike prior to the takeover—I hear some Members still referring to “Newport Wafer Fab”—it no longer does “fab”. What it now does are wafers, and it manufactures purely for Nexperia, and most of that does not end up in this country, unless it happens to be re-imported. The jobs and skills are something we are keen to preserve, and we will be working very closely to ensure that there is a future.

I call the Scottish National party spokesperson.

Certainly from the outside looking in, it is very much a case of the legislation doing exactly what the legislation was meant to do when it received support right across this House. Understandably, there will be local concerns in respect of that, and I understand where they come from—indeed, the Secretary of State has appeared to acknowledge them up until now. I guess what it shows in wider terms is the UK’s lack of domestic self-sufficiency in semiconductors. I suppose it is for the Government to outline why we are in the present situation. It is perhaps not just in relation to the actions that the Government have not taken: we also need to look at the consequences of the action that they have taken in respect of the likes of Brexit. Intel, one of the biggest players when it comes to semiconductors, has outlined that it is not looking to invest in the UK because of Brexit.

In among all that, can I ask the Secretary of State to provide a little more detail on when he expects to come forward with his plan for semiconductors and to put a little more meat on the bones for those living in the local area as to how those jobs will be protected?

The Department for Digital, Culture, Media and Sport holds the plan itself. It is worth the House and the hon. Gentleman knowing that the UK has several strengths in semiconductors. The sector already includes the design of compound semiconductors and academic research, and south Wales is a very important cluster within that. I have already referred to the additional money that the Chancellor announced from the Dispatch Box as recently as last Thursday, and we know that some of that money will head to Wales. It is also important for the House to know that in this context Newport Wafer was only a very small proportion of output to UK companies directly, and it is important that we make sure that capacity is maintained. It is also important to understand what that business was doing and how it was involved in our supply chain.

Nexperia has operated a manufacturing site in my constituency for more than 50 years, and is a major employer in the Cheadle area, with some 1,000 people working at the Pepper Road site. They are understandably concerned by the Government’s decision. Could the Secretary of State please set out what measures he is taking to ensure that we safeguard Cheadle jobs and maintain the UK’s role in the vital semiconductor industry?

We welcome inward investment into this country. We have one of the most open provisions for inward investment of any country in the world, and one of the most open economies, so there is no reason beyond this decision for people to over-interpret what has happened here. This is a specific set of circumstances under a specific final order. There should not be a read-across. I can perhaps reassure my hon. Friend’s constituents, through her, that this decision does not form any kind of change in their relationship.

Is the Secretary of State concerned that the highly skilled employees at Nexperia Newport have threatened to walk out if the previous owner or an investment fund takes over ownership?