The UK government has embarked on a consultative programme aimed at protecting the nation’s tech and military sectors from foreign takeovers that raise national security concerns.

Potential government legislation of the technology sector

Business and Energy Secretary Greg Clark has outlined proposals that will allow the government to block deals that involve companies that “design or manufacture military and dual use products, and parts of the advanced technology sector”.Mr Clark told BBC Radio 4’s Today programme on Tuesday, “We had an assessment, a national security risk assessment in 2015, that pointed out that there are increasing threats from overseas in areas like cyber and technical components, and looking at our current regime we can only screen for national security for takeovers where the turnover is for example over £70 million.“So the advice was that we should look to be able to scrutinise smaller investments, given that sometimes very small companies can have very critical technology.“The National Security Assessment identified particular pieces of chip technology, for example, where it is possible to embed aspects of its operation that would allow a hostile party to disrupt the system into which it was embedded, which might be in national infrastructure, it might be in our defence systems.“And given that those companies can be quite small, not to be able to conduct a security assessment unless they have a turnover over £70 million seems an obvious flaw, so we’re moving to correct that.”

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Balancing national security and tech sector investment

However, Mr Clark insisted that “no part of the economy is off-limits to foreign investment and the UK will continue to be a vociferous advocate for free trade and a magnet for global talent”.Edwin Morgan, interim director of policy at the Institute of Directors, said, “The IoD understands that national security concerns must be taken into account when certain mergers happen, but the government must be careful that they don’t cast their net too wide.“Military products are one thing, but we will be looking closely in the consultation at how much of the advanced technology sector is covered.“The thresholds proposed do look quite low – a company with a £1 million turnover is not a large business – so ministers should exercise caution in order not to throw too much grit on the wheels of normal mergers and acquisitions.”For related news and features, visit our Technology section.Relocate’s new Global Mobility Toolkit provides free information, practical advice and support for HR, global mobility managers and global teams operating overseas.Access hundreds of global services and suppliers in our Online Directory  

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