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Against a backdrop of geopolitical uncertainty, the Deputy Prime Minister is calling for businesses' feedback about the way the government screens investment to protect the UK's economic security.
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The National Security and Investment Act, which came into force in January 2022, gives the Deputy Prime Minister the power to scrutinise investment and take action to protect assets that are vital to the UK's national security.
13 November 2023: The Deputy Prime Minister, Oliver Dowden, has today announced the publication of a 'Call for Evidence' on potential updates to the National Security & Investment Act to ensure the government's investment screening powers remain up to date, proportionate and transparent for businesses, while protecting national security.
The 'Call for Evidence' will be open for nine weeks and close on 15 January 2024. In this time, the government expects to receive feedback from a variety of stakeholders, including domestic and international businesses, investors, academia, and advisory firms. None of the changes are expected to require primary legislation.
All of the responses will contribute towards an internal review of the government's investment screening powers, including:
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the scope of mandatory notification requirements, to ensure that businesses and investors only need to notify the government about deals that warrant consideration on national security grounds - including the 17 sensitive areas of the economy subject to mandatory notification requirements, such as Artificial Intelligence, to ensure they remain up to date
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the notification and assessment processes, to minimise the administrative burden imposed on businesses while ensuring the government gets the information it needs
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the content of government guidance, to ensure businesses understand the aims of the National Security & Investment Act and how to comply
The National Security & Investment Act gives the Deputy Prime Minister the power to scrutinise, impose conditions on or block the acquisition of businesses and assets that are vital to the UK's national security. It has been used in a proportionate and targeted way since coming into force in January 2022.
As set out in the latest figures published in July, the vast majority of businesses have not needed to interact with the investment screening powers at all. Among those who have, the government has been clearing around 93 per cent of notifications without calling in deals for further assessment, allowing investment to flow.
Where necessary and proportionate, the government has issued 17 final orders to impose conditions on or block or unwind specific deals to protect national security.
Rt Hon Oliver Dowden CBE MP, Deputy Prime Minister and Chancellor of the Duchy of Lancaster, said:
At a time of rising tensions around the world the UK Government must stay ahead of the game to ensure our legislation to protect economic security keeps pace with rapid technological advances.
At the same time, the best way to foster economic security is through a strong and open economy. That's why we've been using the powers effectively so far, only intervening when absolutely necessary to protect national security. Yet two years on, it's right that we formally engage with stakeholders to ensure the process remains as frictionless and effective as possible as we take the long-term decisions for the country.
The significance of semiconductors and critical minerals is well established, but their importance has only increased since the NSI Act came into force. That's why we're considering carving out these industries into stand alone sectors under the National Security & Investment Act.
I encourage businesses and advisors from any relevant sector, anywhere in the world, to share their experience of the investment screening process.
Nusrat Ghani MP, Minister of State Responsible for the Investment Security Unit, said:
The Deputy Prime Minister and I regularly meet with business leaders from around the world, gathering feedback about the government's approach to national security and economic investment. Our conversations make it clear that effective national security regulations provide a sure foundation for secure growth.
This Call for Evidence is the natural next step in our engagement with businesses. Against a rapidly changing geopolitical backdrop, I'm pleased that we're considering ways to ensure the investment screening process remains frictionless for those looking to invest and grow businesses here in the UK.
