Cabinet Office
Detail of outcome
The Call for Evidence response sets out the feedback received and the areas of work that the Government will be taking forward.
Government response to the Business and Trade Committees submission to the National Security and Investment Act Call for Evidence 2023
This is the Governments response to the Business and Trade Committees submission to the NSI Call for Evidence.
Original call for evidence
Call for evidence description
The Government will use this Call for Evidence to consider changes to the NSI regime. We are looking for views from cross economy stakeholders both in the UK and overseas. In particular, this evidence will help the Government:
- Hone the scope of the systems mandatory notification requirements;
- Improve NSI notification and assessment processes; and
- Develop the Governments public guidance and communications on how the NSI Act works and where the Government tends to see risk arising.
How to respond
The call for evidence period began on 13 November 2023 and will rununtil 15 January 2024.
You can respond to this call for evidence using the survey link
If you are not able to submit responses through this online form, pleasecontact nsipolicy@cabinetoffice.gov.uk for alternative ways to contribute.
Do not feel obliged to respond to all the questions.
Foreword
The first duty of government is to protect its people. Bolstering economic security is an increasingly important part of that endeavour; indeed, there can be no security without economic security. The National Security and Investment (NSI) Act 2021 is an important economic security tool, enabling the government to scrutinise and intervene in acquisitions that could harm the UKs national security.
The NSI system must be proportionate and well-targeted, minimising the burdens it places on companies and investors, while providing the certainty they need to do business. As decision maker under the Act, I want this system to be as pro-business and pro-investment as possible.
Security and prosperity go hand in hand. In fact, I believe that the UKs position as a leading destination for inward investment is precisely because we have strong institutions and a robust rule of law, alongside a culture of open markets and free trade. So I want us to follow a small garden, high fence approach: safeguarding the UK against the small number of deals that could be harmful to our security whilst leaving the vast majority of transactions unaffected.
Since coming into force, the NSI Act has functioned well. The number of notifications received under the Act has been as expected. The large majority of notifications (93% in the most recent Annual Report) have been cleared without needing a detailed assessment, meaning we have been able to give these a clear and binding clearance within a rapid 30 working days. Where necessary and proportionate, I have however not hesitated to act to protect our national security. That has included 17 final orders.
In order to be truly effective, the NSI Act must also be flexible, adapting to the changing nature of our economy and evolving to consider all of those acquisitions that might be considered sensitive. At the same time, it must remain as frictionless as possible for those vast majority of deals that dont pose any concern.
I have therefore been monitoring the performance of the Act, including through the latest Annual Report, and listening to feedback from a wide range of perspectives. I know we can continue to improve.
This Call for evidence is an opportunity to share your views on how the system can be even more business friendly while maintaining and refining the essential protections we need to protect our national security. In particular, I am interested in:
- The impact of the system on businesses and investors, and their experience interacting with the process;
- Whether the scope and requirements of the system are proportionate and effective; and
- How well stakeholders understand the NSI system, how it is likely to be used, and what national security risks may be posed by investments.
I would therefore like to use this Call for Evidence to:
- Inform the review of the National Security and Investment Act 2021 (Notifiable Acquisition) (Specification of Qualifying Entities) Regulations 2021 (the Notifiable Acquisition Regulations, which set out the 17 sensitive areas of the economy subject to mandatory notification requirements) and the NSIA post-implementation review;
- Hone the scope, in particular of the mandatory notification requirements, to continue to ensure the Government does not need to be notified of the large majority of deals that pose no national security risk while making sure we are notified of those deals that do warrant consideration under the Act;
- Improve NSI notification and assessment processes to minimise business burdens as far as possible, without compromising Governments ability to conduct proper scrutiny; and
- Develop the Governments public guidance and communications on how the NSI Act works and where the Government tends to see risk arising.
Depending on the responses, I will consider whether more detailed consultation on specific measures or legislative changes are necessary. I am not currently considering changes that would require primary legislation.
Approach to engagement
Through this call for evidence, I would like to hear from as many different stakeholders and interested groups as possible both in and outside the UK who interact with the NSI Act or take the NSI Act into consideration.
Sections 1-4 of this Call for Evidence help us understand who is responding. Sections 5 and 6 then cover the substance of this Call for E
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