NSI shake-up set to leave Britain vulnerable
A GLOBAL coalition of politicians has warned a shake-up of national security takeover rules could leave the UK vulnerable to hostile foreign powers.
The alert from the Inter-Parliamentary Alliance on China (IPAC) came as the Cabinet Office launched a consultation into the National Security and Investment Act (NSI) over fears it is hampering merger and acquisition activity.
Deputy prime minister Oliver Dowden ( pictured) said he wants the act, which allows the Government to screen and block takeover deals, to be ‘as pro-business and proinvestment’ as possible.
But experts warned that watering down the rules could leave the Government
‘ powerless to stop’ foreign powers buying important UK assets. The legislation was implemented in January last year over fears that countries such as China were able to easily snap up British firms, such as infrastructure and technology companies.
Luke de Pulford, executive director of IPAC, which is made up of legislators from a number of countries, said: ‘This legislation is absolutely necessary to protect critical infrastructure. ‘We don’t want a return to the doomed Golden Era of relations with Beijing where China could walk into UK critical infrastructure with ministers powerless to stop it. With the security services hopping up and down demanding more resources to address the threat Beijing poses to our security, now is exactly the wrong time to be removing essential safeguards.’
It comes as the UK’s Takeover Panel, which is funded by fees related to mergers and acquisitions, reported its first deficit in almost 10 years as deal activity dried up.
The watchdog had a deficit of £3.8m in the year to March, as takeover offers plummeted 20pc to 48.
British Foreign Policy Group senior advisor David Landsman said it makes sense to review the act as the ‘UK cannot afford to appear closed to business’. But he said the
Government ‘will have to be aware of the risk of unexpected consequences’.
The Government said 93pc of deals flagged under the act in the last year have not needed further assessment and were cleared within 30 days. However, 17 takeovers were given final orders, which could involve imposing conditions on the transaction or blocking it altogether.
Launching the consultation into the takeover rules, which will run until January 15 next year, Dowden said: ‘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 proinvestment as possible’.