The Government is today publishing a White Paper: “National Security and Investment”.
It sets out the Government’s plans to upgrade its powers to scrutinise investments and other acquisitions on national security grounds. These proposals deliver on the commitment made by the Government in the 2017 Queen’s Speech to bring forward reforms to “ensure that critical national infrastructure is protected to safeguard national security.”
This country has a proud and hard-won reputation as one of the most open economies in the world. Our economic success stems from our belief in international trade and our support for foreign direct investment. Of course, an open approach to international investment must include appropriate safeguards to protect our national security – particularly in a world where the threats we face are evolving.
This White Paper is the product of the Government’s consultative approach to reform in this area, following on from the Green Paper published in the autumn and subsequent public consultation. The Government has reflected carefully on the feedback provided by a wide variety of stakeholders, including businesses, investors and law firms.
The Government’s existing powers to screen certain mergers for public interest reasons, including national security, derive from the Enterprise Act 2002. We need to make sure they are kept up to date in light of economic, technological and national security changes.
In June, Parliament enacted secondary legislation to amend the thresholds in the Enterprise Act 2002 for three specific areas of the economy, military/dual-use, computing hardware and quantum technology, enabling the Government to intervene in more mergers that may raise national security concerns.
The White Paper sets out how the Government will address the risks that can arise from hostile actors acquiring ownership of, or control over, businesses or other entities and assets that have national security implications.
The Government will encourage businesses and investors to notify it ahead of transactions and other events that might give rise to national security risks. The majority of transactions raise no national security concerns and the Government expects that it could quickly rule out national security risks in many cases, allowing parties to proceed with certainty.
The Government would be able to “call-in” transactions that may give rise to national security risks to assess them more fully. This “call-in” power would be economy-wide, reflecting the Government’s need for flexibility to address national security risks wherever they arise.
To provide maximum certainty and clarity to business and investors, the Government will publish a statement of policy intent, setting out how the “call-in” power is expected to be used. A draft of this document is published today.
It is important that the Government has a variety of tools available to address risks to national security where they are identified. The remedies proposed by the Government include: confirmation to proceed, approval subject to conditions and – in the rare circumstances where it is the only available course of action – blocking or unwinding a deal, where this has already taken place.
The Government believes that the proposed package of reforms published 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 modernised powers it needs to protect the country.
Today’s publication marks the start of a 12-week consultation, during which time we will continue to work with those with an interest in these reforms and consider the feedback received.
I am laying the White Paper before Parliament in the form of a Command Paper.
This statement has also been made in the House of Lords: