Recommendations & Conclusions
18 items
1
Conclusion
Sixth Report: Striking the balance: Pro…
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
Government response. Recommendation 1. 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 …
Foreign and Commonwealth Office
2
Conclusion
Sixth Report: Striking the balance: Pro…
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.
Government response. As I explained at Report Stage, the Bill does not seek to define ‘national security’. That is deliberate as I believe it is right that the government of the day should be able to respond rapidly to technological, economic, geopolitical …
Foreign and Commonwealth Office
3
Recommendation
Sixth Report: Striking the balance: Pro…
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 …
Government response. As I explained at Report Stage, the Bill does not seek to define ‘national security’. That is deliberate as I believe it is right that the government of the day should be able to respond rapidly to technological, economic, geopolitical …
Foreign and Commonwealth Office
4
Recommendation
Sixth Report: Striking the balance: Pro…
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 …
Government response. As I have set out above, the Government does not believe that it would be appropriate to define ‘national security’. However, the Bill is explicit in its references to ‘national security’ rather than any broader considerations. For example, the legal …
Foreign and Commonwealth Office
1
Conclusion
Third Report - Sovereignty for sale: th…
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 …
Government response. We note the Committee’s recommendation. The Government does not and will not prioritise short-term commercial interests over national security considerations. The Government is committed to the semiconductor cluster and the vital role it plays in the UK economy. While the …
Foreign and Commonwealth Office
2
Recommendation
Third Report - Sovereignty for sale: th…
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. We note the Committee’s recommendation. The Government does not and will not prioritise short-term commercial interests over national security considerations. The Government is committed to the semiconductor cluster and the vital role it plays in the UK economy. While the …
Foreign and Commonwealth Office
3
Conclusion
Third Report - Sovereignty for sale: th…
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. …
Government response. We note the Committee’s recommendation, and agree that regular market monitoring to identify deals that may raise national security concerns should and will be a key part of the new regime. The market monitoring function will also help identify wider …
Foreign and Commonwealth Office
4
Recommendation
Third Report - Sovereignty for sale: th…
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, …
Government response. We note the Committee’s recommendation. In terms of changes to the global technology landscape, the FCDO will be involved in any revision of the notifiable acquisition regulations which underpin the mandatory notification system. FCDO, BEIS and all departments and agencies …
Foreign and Commonwealth Office
5
Conclusion
Third Report - Sovereignty for sale: th…
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, …
Government response. We agree with the Committee that the FCDO holds the key role in supporting the ISU’s work in this area. To deliver that, a dedicated FCDO team has been established to engage with and support the ISU’s work. A key …
Foreign and Commonwealth Office
6
Recommendation
Third Report - Sovereignty for sale: th…
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, …
Government response. We agree with the Committee that the FCDO holds the key role in supporting the ISU’s work in this area. To deliver that, a dedicated FCDO team has been established to engage with and support the ISU’s work. A key …
Foreign and Commonwealth Office
7
Conclusion
Third Report - Sovereignty for sale: th…
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 …
Government response. We agree with the Committee’s recommendation. Following full commencement of the NSI Act on 4 January 2022, ISU officials will coordinate input from across government, including from the FCDO, to ensure the Business Secretary can make informed and well-evidenced decisions. …
Foreign and Commonwealth Office
8
Recommendation
Third Report - Sovereignty for sale: th…
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. Staff in the ISU bring valuable knowledge from across the civil service and the national security community to the investment screening process. The Unit is supported by a network of advisers from across government. The FCDO will continue to work …
Foreign and Commonwealth Office
9
Recommendation
Third Report - Sovereignty for sale: th…
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 …
Government response. The FCDO already works closely with several countries (e.g. USA, France, Australia, Germany and Italy) who have similar investment screening regimes in place. Our Embassies have discussed this at senior level with key partners and host governments to ensure that …
Foreign and Commonwealth Office
10
Conclusion
Third Report - Sovereignty for sale: th…
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 …
Government response. The Government believes it is right that the BEIS Select Committee should oversee the work of the ISU in its operation of the NSI Act. This is the Parliamentary Committee with responsibility for overseeing the work of BEIS, where the …
Foreign and Commonwealth Office
11
Conclusion
Third Report - Sovereignty for sale: th…
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 …
Government response. The Government believes it is right that the BEIS Select Committee should oversee the work of the ISU in its operation of the NSI Act. This is the Parliamentary Committee with responsibility for overseeing the work of BEIS, where the …
Foreign and Commonwealth Office
12
Recommendation
Third Report - Sovereignty for sale: th…
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. …
Government response. The Government believes it is right that the BEIS Select Committee should oversee the work of the ISU in its operation of the NSI Act. This is the Parliamentary Committee with responsibility for overseeing the work of BEIS, where the …
Foreign and Commonwealth Office
1
Conclusion
Sixth report - Sovereignty for sale: fo…
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 …
Government response. Under the National Security & Investment Act 2021, and previously under the Enterprise Act2002, the Secretary of State for Business, Energy and Industrial Strategy must take decisions relating to national security in a quasi-judicial manner, ensuring that he makes his …
Foreign and Commonwealth Office
2
Conclusion
Sixth report - Sovereignty for sale: fo…
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, …
Government response. The recognises the geostrategic importance of the semiconductor industry, alongside the critical role it plays in the UK economy. The Department for Digital, Culture, Media and Sportare currently undertaking a review of the sector.
Foreign and Commonwealth Office