Recommendations & Conclusions
18 items
1
Conclusion
Sixth Report: Striking the balance: Pro…
Not Addressed
If the Government is not more coordinated and able to think long-term in its approach to foreign investment, we risk losing our most innovative companies overseas, with harmful consequences for our national security. (Paragraph 13) Critique of the National Security and Investment Bill
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If the Government is not more coordinated and able to think long-term in its approach to foreign investment, we risk losing our most innovative companies overseas, with harmful consequences for our national security. (Paragraph 13) Critique of the National Security and Investment Bill
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Government response AI summary
The government's response refers to a committee recommendation (not provided in the item) regarding the clarity of national security risks in legislation, which it rejects, stating it is deliberate not to define 'national security' to allow for rapid responses to evolving threats.
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Foreign, Commonwealth & Development Office
2
Conclusion
Sixth Report: Striking the balance: Pro…
Acknowledged
The Bill in its current form does not provide sufficiently clear guidance on how national security should be understood. This is likely to hinder targeted application of the new law, with adverse repercussions for the UK’s national security and economy.
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The Bill in its current form does not provide sufficiently clear guidance on how national security should be understood. This is likely to hinder targeted application of the new law, with adverse repercussions for the UK’s national security and economy.
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Government response AI summary
The government acknowledges the committee's observation by reiterating its deliberate decision not to define ‘national security’ in the Bill, citing the need for flexibility to respond to evolving risks.
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Foreign, Commonwealth & Development Office
3
Recommendation
Sixth Report: Striking the balance: Pro…
Rejected
We recommend that the new legislation should be as clear as possible about what may or may not constitute a national security risk in the context of foreign investment. Failure to provide greater clarity would be likely to have significant consequences for the credibility of the national security regime and …
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We recommend that the new legislation should be as clear as possible about what may or may not constitute a national security risk in the context of foreign investment. Failure to provide greater clarity would be likely to have significant consequences for the credibility of the national security regime and for UK inward investment. (Paragraph 21) Clarifying the meaning of national security in the context of foreign investment
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Government response AI summary
The government rejects providing a definition of ‘national security’ in the Bill, stating this is deliberate to allow for rapid responses to evolving technological, economic, and geopolitical risks.
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Foreign, Commonwealth & Development Office
4
Recommendation
Sixth Report: Striking the balance: Pro…
Accepted in Part
Businesses, investors and the Secretary of State and the Investment Security Unit need clarity and guidance on the factors that should be considered as part of national security assessments. We recommend that the new legislation and accompanying guidance should clearly distinguish between ‘national security’ and the broader ‘public interest’ or …
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Businesses, investors and the Secretary of State and the Investment Security Unit need clarity and guidance on the factors that should be considered as part of national security assessments. We recommend that the new legislation and accompanying guidance should clearly distinguish between ‘national security’ and the broader ‘public interest’ or ‘solely economic’ concerns that are not within scope, to prevent undue uncertainty for businesses and avoid any misuse of the term ‘national security’. (Paragraph 26) 16 Striking the balance: Protecting national security through foreign investment legislation
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Government response AI summary
The government does not believe defining 'national security' is appropriate, but points to the Bill's explicit references and the Secretary of State's Statement (which will be consulted on) as sources of guidance for businesses on how the call-in power will be used, thereby providing clarity …
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Foreign, Commonwealth & Development Office
1
Recommendation
Third Report - Sovereignty for sale: th…
Accepted
The takeover of Newport Wafer Fab by Nexperia represents the sale of one of the UK’s prized assets to a strategic competitor, at a time when global chip shortages means that the products manufactured by NWF are of vital national importance. Failure to conduct a detailed assessment of this transaction …
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The takeover of Newport Wafer Fab by Nexperia represents the sale of one of the UK’s prized assets to a strategic competitor, at a time when global chip shortages means that the products manufactured by NWF are of vital national importance. Failure to conduct a detailed assessment of this transaction under the NSI Act would indicate that the Government continues to hold an unrealistically optimistic understanding of the Chinese government’s intentions and is prioritising short-term commercial interests over the long-term security of our country. The case of NWF may yet serve to demonstrate that, despite the stated intentions of the NSI Bill, the Government has not yet learned the lessons of previous years.
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Government response AI summary
The government notes the recommendation, states it prioritises national security, and confirms the National Security Adviser is currently conducting a review into the acquisition of Newport Wafer Fab by Nexperia. Further comment is deferred until the review concludes.
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Foreign, Commonwealth & Development Office
2
Recommendation
Third Report - Sovereignty for sale: th…
Deferred
We recommend that the Government calls in the acquisition of Newport Wafer Fab by Nexperia for review and imposes appropriate mitigating measures, as a matter of urgency.
Government response AI summary
The government notes the recommendation and states that the National Security Adviser is currently conducting a review into the acquisition of Newport Wafer Fab by Nexperia, and it would be inappropriate to comment further until this review concludes.
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Foreign, Commonwealth & Development Office
3
Recommendation
Third Report - Sovereignty for sale: th…
Acknowledged
It is vital that there is continuous monitoring of the investment and technology landscapes to catch non-notified transactions, as well as monitoring for changes to board compositions or ownership models, which may not serve the UK’s security interests, after the initial transaction has taken place with Government intervention if necessary. …
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It is vital that there is continuous monitoring of the investment and technology landscapes to catch non-notified transactions, as well as monitoring for changes to board compositions or ownership models, which may not serve the UK’s security interests, after the initial transaction has taken place with Government intervention if necessary. This should be additional to the notification regime established by the NSI Act and will require regular feed-in from multiple departments, including the FCDO, building on the tech ambassador we recommended in our report on the Integrated Review, Brave new Britain
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Government response AI summary
The government agrees that regular market monitoring to identify national security concerns should be a key part of the new regime but does not detail specific additional monitoring mechanisms or multi-departmental inputs.
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Foreign, Commonwealth & Development Office
4
Recommendation
Third Report - Sovereignty for sale: th…
Acknowledged
Ongoing monitoring of the global technology landscape by the FCDO should inform any future changes, as needed, to (a) the sectors subject to mandatory notification under the National Security and Investment Bill, and (b) the factors to be taken into consideration by the BEIS Secretary of State when assessing transactions, …
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Ongoing monitoring of the global technology landscape by the FCDO should inform any future changes, as needed, to (a) the sectors subject to mandatory notification under the National Security and Investment Bill, and (b) the factors to be taken into consideration by the BEIS Secretary of State when assessing transactions, as set out in the Statement of Policy Intent. We recommend that the annual report outlines how this information has been taken into account in the Secretary of State’s decisions.
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Government response AI summary
The government noted the recommendation, stating FCDO will be involved in future revisions of mandatory notification regulations to keep pace with technological changes but did not commit to FCDO's ongoing monitoring proactively informing changes or reporting on it in the annual report.
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Foreign, Commonwealth & Development Office
5
Recommendation
Third Report - Sovereignty for sale: th…
Accepted
For the FCDO to add value to the NSI regime, it will be important that the Department has the necessary skills, expertise and structures to effectively support the ISU. If the Government continues to behave in the same ways and rely on the same skills base as it has previously, …
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For the FCDO to add value to the NSI regime, it will be important that the Department has the necessary skills, expertise and structures to effectively support the ISU. If the Government continues to behave in the same ways and rely on the same skills base as it has previously, it will continue to see the same results—or worse, given our changing security environment.
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Government response AI summary
The government agrees that the FCDO has a key role and states a dedicated FCDO team has been established to support the ISU, raise awareness, and build capability. They are actively identifying and securing necessary short and long-term capabilities.
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Foreign, Commonwealth & Development Office
6
Recommendation
Third Report - Sovereignty for sale: th…
Accepted
The FCDO should demonstrate leadership on the foreign relations aspects of foreign investment decisions. Supporting the ISU’s work in this area is a key responsibility of the FCDO. It will be vital that the Department has the right expertise both at overseas Posts and in London to fulfil this responsibility, …
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The FCDO should demonstrate leadership on the foreign relations aspects of foreign investment decisions. Supporting the ISU’s work in this area is a key responsibility of the FCDO. It will be vital that the Department has the right expertise both at overseas Posts and in London to fulfil this responsibility, including through ongoing monitoring of the global investment landscape. We recommend that the Government outlines how it intends to achieve this in its response to this report.
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Government response AI summary
The government agrees with the FCDO's leadership role in foreign investment decisions and has established a dedicated FCDO team to support the ISU, raise awareness, and build FCDO capability in this area, both in the UK and overseas.
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Foreign, Commonwealth & Development Office
7
Recommendation
Third Report - Sovereignty for sale: th…
Accepted
We support the Government’s decision to keep the NSI Act agnostic of geography or type of actor, so that investments are judged on a case-by case rather than country- 30 Sovereignty for sale: the FCDO’s role in protecting strategic British assets specific basis. The FCDO has a vital role to …
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We support the Government’s decision to keep the NSI Act agnostic of geography or type of actor, so that investments are judged on a case-by case rather than country- 30 Sovereignty for sale: the FCDO’s role in protecting strategic British assets specific basis. The FCDO has a vital role to play in communicating to other parts of government its assessment of the broader strategic intent of foreign governments in their investment decisions, and this information should be a primary consideration when considering specific transactions. The FCDO should be responsible for advising BEIS on these matters and we intend to hold the Department to account for any failure to do so. (Paragraph 37) Cross-Government cooperation on investment screening
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Government response AI summary
The government accepted the recommendation, stating that FCDO will contribute its expertise and assessment of foreign governments' strategic intent to inform NSI screening and assessment processes.
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Foreign, Commonwealth & Development Office
8
Recommendation
Third Report - Sovereignty for sale: th…
Rejected
We recommend that 10 percent of Investment Security Unit staff should be secondees from FCDO, to ensure that FCDO expertise can be drawn upon on a day-to-day basis. (Paragraph 44) Cooperation with like-minded partners and allies
Government response AI summary
The government rejects the specific recommendation to mandate 10% FCDO secondees, stating it is not necessary as the ISU already draws on relevant expertise across government and FCDO has a dedicated team for coordination.
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Foreign, Commonwealth & Development Office
9
Recommendation
Third Report - Sovereignty for sale: th…
Accepted
Given the complex and transnational nature of the global investment landscape, the UK cannot operate alone on this matter. The Government should cooperate on FDI screening with other countries with whom we share values and strategic objectives. We recommend that the FCDO seeks to play a leading role in bringing …
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Given the complex and transnational nature of the global investment landscape, the UK cannot operate alone on this matter. The Government should cooperate on FDI screening with other countries with whom we share values and strategic objectives. We recommend that the FCDO seeks to play a leading role in bringing together countries and partners from overseas and in building alliances to make sure investment vehicles in one country aren’t used as a Trojan horse in others. (Paragraph 54) Transparency and reporting
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Government response AI summary
The government states that the FCDO already works closely with several like-minded countries, promotes its work internationally, and cooperates with Five Eyes and G7 partners on investment security.
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Foreign, Commonwealth & Development Office
10
Recommendation
Third Report - Sovereignty for sale: th…
Accepted in Part
With cross-Government working comes a need for cross-committee scrutiny. If the Government is to succeed in achieving an “integrated” approach to UK security and foreign policy as set out in the Integrated Review, Government departments must be held to account by all committees with the relevant remit and expertise. In …
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With cross-Government working comes a need for cross-committee scrutiny. If the Government is to succeed in achieving an “integrated” approach to UK security and foreign policy as set out in the Integrated Review, Government departments must be held to account by all committees with the relevant remit and expertise. In the case of the Investment Security Unit, this would ensure that scrutiny of Government decisions is not only conducted by select committees with a primarily pro-business lens, but would provide a more balanced and nuanced assessment of its decisions.
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Government response AI summary
The government states the BEIS Select Committee should primarily oversee the ISU and commits to providing information and publishing a MoU for their scrutiny. It will continue to inform other relevant committees but does not grant them the same level of direct oversight.
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Foreign, Commonwealth & Development Office
11
Recommendation
Third Report - Sovereignty for sale: th…
Deferred
We acknowledge the Secretary of State’s concern about the workload entailed by involvement of multiple committees in scrutinising the ISU but would argue that this should not be a barrier to effective scrutiny. FAC’s important contribution to UK national security and foreign investment was recognised in the Government response to …
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We acknowledge the Secretary of State’s concern about the workload entailed by involvement of multiple committees in scrutinising the ISU but would argue that this should not be a barrier to effective scrutiny. FAC’s important contribution to UK national security and foreign investment was recognised in the Government response to our report in February 2021. Following our scrutiny of the National Security and Investment Bill, it is our intention to monitor its effectiveness. This requires the Government to furnish us with the necessary information.
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Government response AI summary
The government rejects the Foreign Affairs Committee's implicit request for necessary information for its direct monitoring of the ISU's effectiveness, stating that the BEIS Select Committee is the appropriate body for primary oversight and will be furnished with the required information.
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Foreign, Commonwealth & Development Office
12
Recommendation
Third Report - Sovereignty for sale: th…
Rejected
We recommend that the Chairs of the Foreign Affairs Committee, Intelligence and Security Committee and Science and Technology Committees are also provided with private briefings on the activities of the ISU on Privy Council terms, to ensure that Government decisions are scrutinised from all angles relevant to the UK’s interests. …
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We recommend that the Chairs of the Foreign Affairs Committee, Intelligence and Security Committee and Science and Technology Committees are also provided with private briefings on the activities of the ISU on Privy Council terms, to ensure that Government decisions are scrutinised from all angles relevant to the UK’s interests. These briefings should be held bi-annually as a minimum. (Paragraph 66) Sovereignty for sale: the FCDO’s role in protecting strategic British assets 31
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Government response AI summary
The government believes the BEIS Select Committee is the primary body for ISU oversight and will ensure other relevant committees are appropriately informed, but does not accept the recommendation for specific private bi-annual briefings for the named committee chairs.
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Foreign, Commonwealth & Development Office
1
Conclusion
Sixth report - Sovereignty for sale: fo…
Acknowledged
In the absence of any evidence to the contrary, we have no choice but to assume that the NSA review that the Prime Minister said he had initiated has not, in fact, been started. In its response to this report, we ask that the Government set out the circumstances in …
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In the absence of any evidence to the contrary, we have no choice but to assume that the NSA review that the Prime Minister said he had initiated has not, in fact, been started. In its response to this report, we ask that the Government set out the circumstances in which the National Security Adviser is engaged in reviews under the National Security and Investment or Enterprise Acts; the reasons why the Prime Minister asked the NSA to undertake a review of Newport Wafer Fab; why the NSA did not undertake such a review; and for an update on the nature of the continued monitoring by the Investment Security Unit
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Government response AI summary
The government states that the Secretary of State for Business, Energy and Industrial Strategy must take decisions relating to national security in a quasi-judicial manner based on facts and evidence, with advice from the Investment Security Unit and potentially the National Security Advisor.
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Foreign, Commonwealth & Development Office
2
Conclusion
Sixth report - Sovereignty for sale: fo…
Acknowledged
The Government has explicitly recognised the criticality of semiconductors to the UK’s national security and wider global interests; likewise, the Chinese Government’s ambitions to achieve self-sufficiency in semiconductors and the means by which it aims to achieve this are well documented. These factors, compounded by the current global semiconductor shortage, …
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The Government has explicitly recognised the criticality of semiconductors to the UK’s national security and wider global interests; likewise, the Chinese Government’s ambitions to achieve self-sufficiency in semiconductors and the means by which it aims to achieve this are well documented. These factors, compounded by the current global semiconductor shortage, mean that the Government’s apparent failure to take this matter seriously is likely to damage the UK’s national interest. (Paragraph 19) 12 Sovereignty for sale: follow-up to the acquisition of Newport Wafer Fab
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Government response AI summary
The government recognises the geostrategic importance of the semiconductor industry and states that the Department for Digital, Culture, Media and Sport are undertaking a review of the sector.
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Foreign, Commonwealth & Development Office