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Consultation outcome: National security and investment: proposed legislative reforms

The legislation the government now proposes has evolved in some important ways from the proposals set out in the White Paper. However, in developing the policy, the government has remained committed to the key principles of the White Paper. These include providing certainty, transparency and predictability of the regime and ensuring that the UK is a good place to invest in a business. We have also analysed and taken account of the views expressed in the consultation alongside changes in the wider security and economic context.

Some respondents raised concerns that this regime disproportionately expanded the government’s powers to intervene in the market. The government reiterates that the new regime will only relate to national security.

Under the new regime, the Secretary of State for Business, Energy and Industrial Strategy will be the decision-maker and will undertake that role in a ‘quasi-judicial’ capacity where, given the nature of the decisions being taken, it is particularly important that the decision-maker acts independently and is not subject to any improper influence.

The legislation will establish a clear test that must be met for the government to call in a trigger event for a national security assessment. The legislation will ensure that the Secretary of State must have a reasonable suspicion that a risk to national security may arise where the Secretary of State reasonably suspects that a trigger event has taken place, or is in progress or contemplation, in relation to a qualifying entity or asset.

In addition, under the legislation the Secretary of State will need to reasonably consider that it is necessary and proportionate to impose a final remedy. In making this decision, the Secretary of State will have the objective of preventing, remedying or mitigating, the risk to national security.

The new regime will be subject to judicial oversight, so parties will have the right to challenge decisions in the courts.

The government has also revised its approach on the publication requirements of the regime, responding to the concerns raised during the consultation about the commercial and reputational implications of the publication of the government’s decision to call in a trigger event. Instead, the government intends to only routinely publish information at the final decision stage and usually only in relation to trigger events where final remedies (including blocking orders) are imposed.

The government fully recognises the importance of the regime operating effectively from the first day it comes into force. It is crucial for business and investors that the government acts expeditiously to meet the statutory timescales for screening notifications and carrying out national security assessments. Work is currently ongoing across government to develop the resourcing model for the regime. This will ensure that sufficient resources are in place to handle and process cases.

Read more about the National Security and Investment Bill.