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The UK’s national security rules on screening foreign investment in British companies should be strengthened to counter threats from China and Russia and to protect media freedoms, according to an influential committee of MPs.
The National Security and Investment Act, introduced in 2021 amid concerns about foreign ownership of strategic assets, was “not keeping pace” with threats to economic security, the House of Commons business committee said on Friday.
The law allows ministers to block foreign buyers from acquiring stakes in companies in strategic industries on national security grounds, or to require changes to deals to protect the UK’s interests.
China-linked investments accounted for the majority of the government’s 15 interventions in deals in the 12 months to March 2023, according to official figures.
British ministers did not have significant powers to block takeovers on national security grounds until the regime was created. Deputy prime minister Oliver Dowden pledged in November to pare back the rules to make them “more business-friendly”, a move that was attacked by the opposition Labour party.
In a response to calls for evidence on the government’s plans, a subcommittee of MPs on the business committee said the UK should tighten its screening processes in response to a toughening of investment rules in the EU and the US and rising threats from Russia and China.
“It is vital that we do not let our country become a ‘back door’ through which our adversaries acquire capabilities that imperil the collective security of either us or our Nato allies,” said Labour MP Liam Byrne, chair of the business committee.
The submission, published on Friday, called for the UK rules on investment screening to be better aligned with those of the country’s allies. The rules should explicitly capture deals affecting media freedoms, similar to the EU and Australia, it said.
The call comes as the UK government scrutinises an Abu Dhabi-backed bid for the Telegraph newspaper.
The government should also improve transparency by sharing information with parliament about how it makes decisions on whether to intervene in specific deals, the committee said.
The absence of a clear definition of “national security” in the UK rules was causing confusion, it added. This was leading to so many transactions being reported to the government that ministers risked “losing sight of the wood for the trees and missing key transactions with security implications”.
The Cabinet Office said: “The Government is now analysing all the responses and will respond publicly in due course.”
Source: Economy - ft.com
