Sovereignty for sale: the FCDO’s role in protecting strategic British assets Contents

Summary

Foreign investment is an essential contributor to the UK economy. However, acquisitions by foreign entities can serve as the first step towards moving strategically vital companies, assets and intellectual property abroad. This transfer of assets threatens to make us reliant on others for assets and services that are critical to our capacity for independent action and global influence, as well as undermining the UK economy and our national security. Our sovereignty should not be for sale.

The UK National Security and Investment (NSI) Act 2021 is intended to protect UK businesses and critical security interests. It is crucial that the Government gets the new investment screening regime right from the beginning—both to ensure that UK national security is protected and that we remain firmly open to valuable foreign investment.1 The FCDO’s global footprint has the reach to collect the important information required when considering the national security implications of foreign investments and ensuring a balance of perspectives within the newly-established Investment Security Unit (ISU). But the question remains: does it have the capability? This isn’t simply a question of tasking but of bringing together many of the skills that now sit in the Department for International Trade. Properly directed, the FCDO also has an important role to play in facilitating coordination with like-minded countries on matters of investment screening. Given the significant geopolitical implications of foreign investment decisions, it is key that the FCDO contributes meaningfully to the ISU and the consequent outcomes of the review process for investments.

These decisions are, by necessity, based on judgments which must balance many aspects of the UK national interest, including the wider public good. We are concerned that the lack of robust Parliamentary scrutiny of the ISU provided for in the NSI Act leads Parliament to look at only the business aspect of the decision, potentially neglecting the Global Britain strategy. Now, more than ever, foreign investment is an important geopolitical issue with clear implications for the UK’s foreign relations; yet this appears to have been overlooked in the arrangements for scrutiny. Following our close scrutiny of the NSI Act as it progressed through Parliament, we intend to continue to monitor its effectiveness. While we welcome the NSI Act as a vital step towards securing our sovereignty and protecting our businesses, failure to implement it effectively would have catastrophic effects for our global influence and security.

1 Striking the balance: Protecting the UK’s national security through foreign investment legislation - Government response to the Committee’s sixth report. HC1263.




Published: 14 July 2021 Site information    Accessibility statement