Recommendation 7

HM Government · verbatim extract Accepted

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. The FCDO will contribute the expertise and local knowledge from the global network, including its assessment of other governments’ intent, to inform NSI screening and assessment processes. The FCDO will also continue to monitor and report more broadly on the strategic intent of foreign governments and their investment decisions. 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) 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 exceptionally closely with the ISU. We note the specificity of the Committee’s recommendations, but do not consider it necessary to mandate that a specific percentage of ISU staff should be seconded from the FCDO. Our priority is to ensure that the ISU can draw on relevant expertise and input from across Government, wherever it may be, in a timely way, and we will implement the most effective way to do so. That is why the FCDO has created a dedicated team in the National Security Directorate to coordinate casework and input into shaping BEIS’ processes. This team coordinates across the FCDO network of Posts, including other government departments that operate in overseas posts, and with the relevant geographical and thematic FCDO Departments. We will continue to keep staffing and structures under close review, to ensure that we are providing the ISU with high-quality advice and support, and that the information flows are smooth. 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) 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 there is good understanding of the rationale behind the NSI Act and the processes that we are putting in place to implement it. This is an ongoing discussion. We are continuing to promote our work on investment security, and to encourage countries that do not yet have similar investment security regimes to follow our lead in this area. We are continuing to explore additional ways to further our co-operation with like-minded partners and allies. The FCDO’s work complements, and is complemented by, the work of other Government partners including BEIS and MOD, and our conversations and cooperation with Five Eyes, and G7 partners including through the Investment Security Experts Group (ISEG). This cooperation has been invaluable in the development of the UK’s investment screening reforms. The Government will continue to learn from our partners, share best practice, and tackle shared risks alongside our international partners.