Notice

Foreword to the statement for the purposes of section 3

Updated 21 May 2024

The United Kingdom is open to investment. This is part of the Great British economic model that not only generates growth, but makes us more secure.

Yet in dangerous and uncertain times, our interaction with other markets – through imports, exports, and inbound and outbound investment – can threaten our security, as can our research and academic collaborations.

As I set out in a recent keynote speech at Chatham House, it is vital that we protect our national security, while continuing to allow investment to flow across our country.

That is the balance we are striking with the National Security and Investment Act (2021).

The intention of the legislation was that we would always default to openness, and that is being borne out by its implementation. Very few transactions are called in, and of those that are called in, the vast majority are cleared.

It is important that we continue to work with businesses to make sure we are being as transparent as possible about the way we expect to use these powers, and that the system is as swift and frictionless as possible. That was my motivation for launching the Call for Evidence into the Act in November 2023.

On 18 April I published the Government’s response to the Call for Evidence. I committed to publishing an updated section 3 statement setting out the factors I expect to take into account when exercising the call-in power under the Act. I also committed to publish further guidance on a range of topics to help stakeholders understand how the Act works.

I have fulfilled both of those commitments by laying an amended section 3 statement before Parliament and publishing updates to the extensive market guidance the Government has published on Gov.uk.

The previous version of the section 3 statement was published in November 2021, ahead of the NSI Act’s commencement. Whilst this updated version has a high degree of continuity with the previous version, several key changes have been made to better explain how the Government expects to use the Act’s powers.

These changes include further information on the approach the Government takes to assessing risk in relation to:

• Trigger Events - including the circumstances in which certain acquisitions could be considered under the NSI Act, such as the incorporation of new entities, formation of joint ventures, and Outward Direct Investment.
• The targets of acquisitions - including how the Government may consider technology transfer risks when reviewing asset acquisitions.
• Acquirers - including where the government may see risk from UK acquirers or acquirers that have previously been cleared through the NSI system.
• The control being acquired - including how the Government may consider control risk in cases involving passive and non-controlling investments.
• How decisions are made - including improved examples of how the Government assesses target risk, acquirer risk and control risk.

I have also updated the guidance about our investment screening powers. This includes additional guidance for higher education institutions, as well as new guidance on how the Act can apply to Outward Direct Investment and how statutory timelines are calculated.

Through these changes we are being more transparent about the process and even more considerate of businesses’ needs than at any time since the Act came into force. We understand that they value these protections too: our rules-based system is one of the things that makes the UK’s economy so attractive to businesses.

With our landmark NSI Act, including the updated guidance I have published, we are demonstrating that it is possible both to protect our country and make it the best place in the world to do business.

The Rt Hon Oliver Dowden CBE MP

Deputy Prime Minister, Chancellor of the Duchy of Lancaster and Secretary of State for the Cabinet Office