Recommendation 11

HM Government Accepted

The Government agrees with the Committee’s assessment that an efficiently operated regime introduced by the NSI Bill will not have a negative impact on foreign direct investment to the UK defence supply chain or the wider economy. The Bill is not intended to deter legitimate investment, but instead will provide a clear and predictable regime that will enhance our legal capacity to protect the defence sector from hostile investment that may damage our national security. This will help to reassure companies and allies that the UK is a safe and secure place to do business. The Government fully recognises the importance of the regime operating effectively from the first day it comes into force–and is committed to working with investors to provide clarity and certainty around the future regime. It is crucial for business and investors that the Government acts quickly to meet the statutory timescales for screening notifications and carrying out national security assessments. This means that investors will know in 30 working days or fewer whether the Government is concerned about a transaction. For the small minority of cases that require further investigation (estimated in the Government Impact Assessment as 70-90 transactions per year), the Government has a further 30 working days to decide whether to clear, apply mitigations or block a transaction. Whilst this timetable is extendable, a higher legal test must be passed in order to do so. As outlined above the Government is in the process of creating the ISU to deal with notifications and inquiries, drawing upon expertise from across the Government to ensure notifications are processed quickly. Notifications will be made via a simple digital platform supported by an inquiry email address. The unit will include a dedicated team of officials for businesses to engage with throughout the screening process. our appetite for foreign investment, but instead represents an enhancement to address the demands of a modern economy. Protecting and nurturing the UK’s strengths and assets is not at odds with an open approach to inward investment. The fundamentals of the UK as an international investment destination–our open, liberal economy, world-class talent and business-friendly environment–remain as strong as ever. The UK will remain one of the best places to do business with many incentives for investors. The Government is committed to ensuring the UK remains a top destination for foreign investment.