Recommendation 35

HM Government · verbatim extract Accepted

In a rapidly evolving global landscape, where dependencies are increasingly weaponised, our approach to sovereign capability must be dynamic. Instead of a strict definition we need a flexible approach which takes account of multiple factors, including but not limited to those listed by the committee, and which adapts to changes over time. Any published list risks becoming outdated as technologies advance, and risks inadvertently telegraphing our specific vulnerabilities to hostile actors or signalling areas of strategic strength to competitors. Businesses need clarity and certainty to invest. We are delivering that certainty not through a restrictive list, but through our strategic frameworks. Our Industrial Strategy provides clear, long-term signalling to industry on our priority eight high-growth sectors, as well as the foundational sectors on which they rely. Alongside this, the National Security and Investment Act (NSIA) provides a robust, predictable, and transparent regime for businesses, clearly outlining the 17 sensitive areas of the economy where we will safeguard assets from hostile foreign investment. The DIP will also set out the UK’s capability priorities for the next ten years, providing a clear signal to industry. Conclusion: Industry lacks an adequate signal from Government on the allocation of spending across the defence, security and resilience sectors. This impacts the ability to plan research and development spending in a way that aligns with Government objectives, and prioritises the most important sovereign technologies. For SMEs in particular, this contributes to their vulnerability to acquisition by foreign investors, compromising their ability to contribute to security and sovereignty goals. (Paragraph 163).