Written Statements
National Security and Investment Bill and White Paper
(4 years ago)
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The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)
I am today introducing the National Security and Investment Bill to update the Government’s investment screening powers and strike the right balance between maintaining an open economy and giving us the tools we need to intervene in cases of serious concern. I am also publishing the Government’s response to the public consultation on the “National Security and Investment” White Paper, an impact assessment for the Bill and a revised draft statement of policy. In addition, I am launching a consultation on secondary legislation to define the sectors subject to mandatory notification.
This Government are a champion for free trade, recognising that inward investment is economically highly beneficial. Investment in UK plc boosts productivity by backing businesses to create good jobs and develop skills, and will help support our economic recovery from covid-19. Since 2010-11, over 600,000 new jobs have been created in our economy thanks to over 16,000 FDI projects. During that decade, over $750 billion has flowed into the UK as a result of FDI. Investors value our legal system, our highly competitive tax regime, and a stable regulatory approach that cannot be replicated anywhere else in the world. The recently announced Office for Investment will build on the Government’s proud record and ensure that the UK remains a premier investment destination as we take advantage of our new status outside the European Union as an independent country.
An open approach to international investment must, however, also include appropriate safeguards to protect our national security and the safety of our citizens. The UK and our allies face continued and broad-ranging hostile activity from foreign intelligence agencies and others, who seek to compromise our national security. When it comes to investment, we are seeing novel means to undermine the UK’s national security that go beyond traditional mergers and acquisitions and also go beyond the reach of our current powers; such as structuring deals to obscure who is behind them. Such behaviour, left unchecked, can leave sensitive UK businesses vulnerable to disruption and espionage. It is crucial that the Government are able to fully combat these threats.
Our current powers to prevent hostile foreign investment in our businesses are set out in the Enterprise Act 2002. Technological, economic, and geopolitical changes across the globe over the last 20 years mean that reforms to the Government’s powers to scrutinise transactions on national security grounds are required. Currently, subject to minor exceptions, target businesses must have a UK turnover of over £70 million or meet a combined share of supply test before Government can intervene on national security grounds. This means that businesses below the £70 million threshold, including those at the very forefront of technological breakthroughs and national security-sensitive innovation, are too often beyond the scope of the present legislation. The Government are also unable to intervene in acquisitions of sensitive assets whose transfer might have national security implications.
The Government are therefore legislating to update their powers to respond to these changing threats and to bring our regime in line with that of our Five Eyes allies and other security partners.
More security for British businesses and people
The National Security and Investment Bill will require notification and clearance of investments in businesses in key sectors, such as defence and artificial intelligence, to our new Investment Security Unit. A full list is provided at the end of this statement and today we are publishing a consultation paper on the definition of these sectors. This consultation will be used to refine the definitions so that they are clear, allow parties to self-assess whether they need to notify, and are narrowly focused on the specific parts of sectors where risks are most likely to arise. This approach will ensure that the regime is targeted and proportionate, and keeps Britain firmly open for business. The Bill will bring us into line with other countries, such as the USA, whose Committee on Foreign Investment also operates a mandatory notification model that investors will be familiar with.
Other investments can also be notified to the Investment Security Unit or proactively “called in” by the Government for national security assessments. This maintains the current flexibility under the Enterprise Act 2002 so that the Government can address national security risks wherever they arise in the economy. The Bill will cover acquisitions of assets, including intellectual property such as trade secrets and software, so that the risks of such transactions can also be fully scrutinised. This combined approach will provide a proportionate defence against hostile actors targeting sensitive sectors in ever more novel and complex ways.
Transactions subject to mandatory notification will not be allowed to proceed without Government approval and any deal that is completed without approval will be automatically void in law. This approach is in line with powers under the French and Italian regimes.
The regime will be underpinned by both civil and criminal sanctions, creating effective deterrents for non-compliance with statutory obligations, in line with many of our allies’ screening regimes, including France and Germany.
The new powers are not limited by turnover or share of supply thresholds, meaning acquisitions of companies of any size, in any sector, can be examined, providing the Secretary of State reasonably suspects that the transaction has given, or may give rise to, a national security risk.
We have increased the period for “calling in” non-notified transactions which the Secretary of State reasonably suspects may raise national security concerns, to up to five years after they take place—and only those which take place from the point of Bill introduction onwards. Again, this is similar to the French, German and Italian regimes and will help to ensure that the risks posed by hostile actors seeking to complete deals in secret can be addressed. As outlined above, by notifying transactions—including after they take place—which are not covered by mandatory notification but may none the less be of potential national security interest, businesses and investors will be able to get a decision and achieve deal certainty.
Once a transaction has been called in and a full assessment process has been carried out, where the clear legal test is met, the Government will be able to impose remedies on transactions. This includes, in the small minority of cases where it is the only appropriate way to address the risks posed by the transaction, blocking or unwinding a deal. For the avoidance of doubt, the Government expect that the vast majority of transactions will be cleared outright, that only a small minority are likely to require conditions, and that only those transactions that present the most serious risks are likely to be blocked. None the less, it is vital we have all the necessary tools available to keep this country safe and such remedies are consistent with the approach under our existing legislation.
The Business Secretary will be the single decision maker for the new regime and will act with advice from the Investment Security Unit, policy experts in Government and with full information from the interested parties, including the ability to hear evidence from the parties in person. This will ensure consistency of decisions across all sectors, that there is a single avenue of approach for business and investors through the Business Department, and that a pro-business outlook underpins the very heart of our investment screening process.
Slicker investment routes and more certainty for businesses
We will make any interactions with Government simpler and quicker by providing clearance to most transactions within 30 working days, with notifiable investments submitted through a new digital portal. Timelines for assessments will be set out in law and not set by the Government on a case-by-case basis as at present under the Enterprise Act 2002, which can take many months to receive clearance.
The digital portal will be available upon commencement of the new regime. In the meantime, businesses and investors can contact the Government to discuss potential transactions of interest by email at: investment.screening @beis.gov.uk
The National Security and Investment Bill requires notified transactions to be either cleared or “called in” within 30 working days of the notification being given and accepted. If a transaction is cleared, then there is no further opportunity after this point for the Government to intervene—unless false or misleading information was provided—so businesses and investors can achieve maximum certainty.
Once a transaction has been “called in”, the Government will then have 30 working days, extendable—in cases where the specific legal test is met—by a further 45 working days, to carry out a full assessment of the transaction. That may include gathering further information about the deal, identifying the nature and extent of the risks it may pose, and working with the parties to explore potential remedies.
These statutory timescales will enable business and investors to plan their affairs with clarity about when they can expect decisions and give them the confidence they need to do business in the UK. Again, any transaction cleared following such an assessment cannot be re-examined by the Government at a later date—unless false or misleading information was provided—and the outcome of all cases requiring the imposition of final remedies must be published by the Business Secretary.
This, alongside the publication of an annual report as required by the Bill, reflects the Government’s commitment to providing the greatest level of transparency possible within the confines of a national security regime. Businesses, investors and their advisers will be able to use this information to attain greater certainty about their own activities and the types of prospective transactions which should be notified.
A regime in line with our allies
We are not acting in isolation. Many of our closest allies, including our Five Eyes partners and France, Germany, and Japan, have similarly reformed their powers in this area over the last few years.
Like us, the United States has also recently introduced mandatory notification requirements in specific parts of the economy to respond to the changing threats. In July, the Australian Government also released draft legislation requiring foreign investors to seek approval to acquire a direct interest in sensitive national security businesses. We will continue to work with like-minded countries to address the shared risks that we face, including through the vector of investment.
The UK’s proportionate updates build on the best practice established around the world by like-minded countries and deliver a balanced regime that provides the Government with the flexible powers they need while keeping our country firmly open to investment.
The Government have been clear for a number of years about their intention to introduce legislation in the area of national security and investment. As we re-build from covid-19 where sensitive British businesses may be vulnerable, we must go further and ensure that the Government can intervene in any deal across the economy that raises risks.
In summary, the Government believe that the final package of reforms introduced to Parliament in the National Security and Investment Bill today strikes the right balance between maintaining the openness and attractiveness of the UK as a destination for inward investment, while also providing the Government with the appropriate powers they need to protect the country.
I will lay both the Government response to the White Paper consultation and the accompanying Bill before Parliament. I will place copies of the impact assessment, the draft statement of policy, and the consultation on secondary legislation to define the sectors subject to mandatory notification, in the Libraries of the both House.
List of sectors with activities to be covered by mandatory notification
Advanced Materials
Advanced Robotics
Artificial Intelligence
Civil Nuclear
Communications
Computing Hardware
Critical Suppliers to Government
Critical Suppliers to the Emergency Services
Cryptographic Authentication
Data Infrastructure
Defence
Energy
Engineering Biology
Military and Dual Use
Quantum Technologies
Satellite and Space Technologies
Transport
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Economic Crime Plan: Action 19
(4 years ago)
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The Economic Secretary to the Treasury (John Glen)
As part of the Government’s July 2019 Economic Crime Plan[1], the Treasury undertook to consider the case for a Government power to block listings[2] on UK financial markets on the grounds of national security. This work has concluded and indicates that there are possible scenarios in which a proposed listing may potentially give rise to national security concerns. Therefore, alongside today’s introduction of the National Security and Investment (NS&I) Bill, the Government are announcing their intention to bring forward a precautionary power to block listings on national security grounds.
In designing this power, the Government will take full account of the fact that companies from all over the world come to the UK, as a world-leading financial centre, in order to raise capital. They are attracted by the depth, breadth and openness of our markets as well as London’s reputation for clean and transparent markets. This power will reinforce that reputation and help us maintain London’s status as a world-class listings destination. The Treasury will publish a full consultation to inform the design of the power, which we expect to launch in early 2021. Further information will be set out in the consultation document.
[1] https://www.gov.uk/government/publications/economic-crime-plan-2019-to-2022/economiccrime-plan-2019-to-2022-accessible-version.
[2] When a company wants to raise capital, it can do this through “listing” its securities on a public market, such as the London Stock Exchange (LSE).
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Notification of Contingent Liability
(4 years ago)
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The Chancellor of the Exchequer (Rishi Sunak)
The Monetary Policy Committee (MPC) of the Bank of England decided at its meeting ending on 4 November to ask for an expansion in the maximum limit of purchases that may be undertaken by the Asset Purchase Facility (APF). This will encompass up to £150 billion of further purchases of gilts to support the economy.
In light of the recent economic conditions, the MPC judged further asset purchases financed by the issuance of central bank reserves should be undertaken to enable the MPC to meet its statutory objectives, and thereby support the economy. I have therefore authorised an increase in the total size of the APF of £150 billion. This will bring the maximum total size of the APF from £745 to £895 billion.
In line with the requirements in the MPC remit, the amendments to the APF that could affect the allocation of credit and pose risks to the Exchequer have been discussed with Treasury officials. The risk control framework previously agreed with the Treasury will remain in place, and HM Treasury will keep monitoring risks to public funds from the facility through regular risk oversight meetings and enhanced information sharing with the Bank.
There will continue to be an opportunity for the Treasury to provide views to the MPC on the design of the schemes within the APF, as they affect the Government’s broader economic objectives and may pose risks to the Exchequer.
The Government will continue to indemnify the Bank and the APF from any losses arising out of, or in connection with, the facility. If the liability is called, provision for any payment will be sought through the normal supply procedure.
A full departmental minute has been laid in the House of Commons providing more detail on this contingent liability.
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Covid-19: Students Returning Home
(4 years ago)
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The Minister for Universities (Michelle Donelan)
As a Government we have made a commitment to ensure students living at university will be able to go home at the end of term, if they choose to do so. Today, I am announcing the measures that we are putting in place to enable students to return home as safely as possible.
The national restrictions are set in law to finish on 2 December and the Government are committed to this date. In order to ensure that students can return home at the end of the autumn term but also reduce any transmission risk, the Government are asking that students return home once the national restrictions have been lifted, in a “student travel window” lasting from 3 to 9 December. This excludes students who have tested positive or been notified by the NHS Test and Trace system.
Universities should stagger departure dates across faculties and with other institutions in the region to manage pressure on transport infrastructure. In order to ensure that students can travel home during this window, higher education providers should cease in-person teaching no later than 9 December. Moving to online learning by 9 December will allow students to start to return home, and any students who have tested positive to complete their period of self-isolation and return home before Christmas.
As the Prime Minister announced this week, we are also working closely with universities to roll out mass testing for students. We have made huge strides in our testing capability in recent weeks, and we will offer this to as many students as possible before they travel home, targeting this in areas of high prevalence. This will help to provide further confidence that students can leave safely if they test negative. If a student tests positive or they are told to self-isolate by NHS Test and Trace before their departure, they will need to remain in self-isolation, following the relevant guidance. Moving all learning online by 9 December allows enough time for students to complete this isolation period, where required, before returning home for Christmas.
Under the current national restrictions students will have completed a four-week period of national restriction by 2 December, limiting the risk of them contracting and transmitting coronavirus (covid-19). As this is a key measure to reduce the risk of transmission to their families and friends at home, it is very important that students comply with the measures for the duration of the period of national restrictions and manage social interactions safely between 3 December and the point of travel. I ask students to work with us to keep themselves and their families safe, while allowing them to return home at the end of term if they choose to do so.
We are working with the devolved Administrations to ensure that all students, no matter where they live or study, are treated fairly and can travel home as safely as possible to keep all our communities safe.
English students at universities in Scotland, Wales or Northern Ireland should follow the guidance relevant to where they are living before returning home. When they return to England, they should follow their local guidance for their home area. Students returning to their home in England who have not completed the four weeks of national restrictions should undertake at least 14 days of restricted contact either before or after return home to minimise their risk of transmission.
We know that not all students will be able to go home, or may choose not to do so. It is vital that support continues for those who choose to stay at university over Christmas, including our international students, care leavers and those who may be estranged from their families. We have asked universities to ensure they have plans for those students who remain on campus and this includes ensuring that support continues over winter break.
Finally, I want to assure parents, students and staff that their welfare is our priority. The hard work of university staff has meant we are able to keep students and staff as safe as possible during term, and I am very grateful for their efforts to deliver an appropriate balance of online and in-person teaching, as agreed with public health teams. We are pleased we can now announce how students can travel home at the end of term, while keeping themselves, their families, and their communities, as safe as possible.
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