In spite of – or in some ways, perhaps because of – the disruption caused by Covid-19 and Brexit, the Government has this week resumed its push to tighten rules on foreign investment across a range of industries deemed critical to the UK’s infrastructure and security.

Yesterday’s long-awaited publication of the National Security and Investment Bill didn’t go unnoticed, but neither did it attract the level of attention that might be expected in more normal times. Billed variously as a “radical” overhaul containing “sweeping” reforms, it marks a profound shift in UK industrial intervention policy.

At its core is the reasonable and rational desire to protect strategic industries, key intellectual property and critical national infrastructure from falling into the hands of what Business Secretary Alok Sharma yesterday described as “hostile actors”. Though the legislation has been carefully drawn up in a country-neutral manner, there is no doubt that China is at the forefront in this line of thinking.

Earlier this year, rebel Conservative backbenchers led by Iain Duncan Smith were successful in forcing a partial U-turn on Huawei’s controversial role in the UK’s 5G network. Though Huawei denies it has ever been asked to engage in any spying on behalf of the Chinese state, it will be stripped out of the UK’s 5G networks by 2027, with no new Huawei kit to be purchased after the end of this year.

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Since then, the former Conservative leader has further called for a formal review of all Chinese investment in the UK. In doing so, he highlighted the case of BPL Group, the UK’s leading supplier of blood plasma, which has been owned by Chinese investment firm Creat since 2016.

Meanwhile, China General Nuclear’s role in the Hinkley Point C power station has come under scrutiny after the state-owned conglomerate appointed a chairman with close ties to the Chinese Communist Party and the country’s military nuclear programme.

Leaving aside the merits or otherwise of establishing a hostile environment for one of the world’s leading providers of foreign direct investment, the new NSI Bill will apply to investors from any country, and this is what concerns some business lobbyists. With an economy crippled by the pandemic and facing further challenges from Brexit, they argue that now is not the time to create either the illusion or reality that the UK has become a more difficult place in which to do business.

“This could spell costly delays for M&A activity in the UK and may add more pressure to a challenging post-Brexit outlook next year,” said Cornelia Andersson of financial data specialist Refinitiv.

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Mr Sharma was at pains yesterday to balance the tightrope between being open for investment, but not exploitation, noting that the UK “remains one of the most attractive investment destinations in the world”. The new regulatory regime will be “targeted and proportionate”, with claims that most transactions will be cleared without any intervention.

“This bill will mean that we can continue to welcome job-creating investment to our shores, while shutting out those who could threaten the safety of the British people,” Mr Sharma said.

Since 2002, there have been just 12 interventions by the UK government over national security concerns. Under the original Enterprise Act 2002, the grounds for any intervention were limited to issues of national security, financial stability and media plurality. In June of this year, public health emergencies were added to that list.

The new bill will ask companies to seek approval for any potential deal – including acquisitions, assets sales and intellectual property agreements – from a new Investment Security Unit based within the Department for Business, Energy and Industrial Strategy (BEIS). Unlike previously, it will cover deals and businesses of all sizes, rather than just those at the larger end of the spectrum.

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Firms that fail to comply could be fined, and executives could be jailed. Any transaction where notification is deemed mandatory would be declared legally void if procedures were not followed.

In addition, ministers will have the power to retrospectively scrutinise deals they were not told about for up to five years. That applies as of yesterday in a move designed to ensure there is no rush to complete potentially questionable contracts while the bill makes its way into law.

Of the 17 sectors where the Government expects “some” transactions to face mandatory notification, there are activities that one would naturally expect to see on a list of security concerns: nuclear, defence, energy, transport, military and space technologies all feature. And considering how the coronavirus pandemic has thrown a spotlight on the need for robust supply chains, it’s no surprise to see “critical suppliers” to the Government and emergency services included as well.

Thereafter, the register of sectors coming under more intense scrutiny starts to straddle the line between commerce and national security. Indeed, the Government specifically mentions “military or dual-use technologies”, along with other fields such as artificial intelligence, autonomous robotics, computing hardware, advanced materials, engineering biology and cryptographic authentication.

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If critics of the UK’s move to abandon its light touch approach to foreign direct investment are correct, tighter takeover rules will threaten the flow of backing that supports industries in these sectors. How might that play out across efforts to stimulate Scotland’s technology ecosystem, as outlined in the Logan Report published in August?

In that review, former Skyscanner chief operating officer Mark Logan ranked funding third, behind education and infrastructure, of the most important factors in creating a truly digital nation. This was based on the observation that investment funds “already struggle to find enough credible candidate early-stage start-ups in which to invest”. That would appear to somewhat diminish the significance of the funding element, but as Mr Logan also points out, every aspect is vital as they are all mutually reinforcing.

The use of personal data to distort communication, as outlined in The Social Dilemma docudrama from Netflix, clearly illustrates how technologies developed for one purpose can be turned into a weapon for undermining rivals. It’s a scenario few gave much serious thought to 20 years ago, and shows how dramatically the competitive playing field has altered in a relatively short space of time.

Some operating in these sectors may feel aggrieved by yet another layer of regulation on their commercial activities, but there’s frankly little chance of securing blanket exemptions. The question therefore is how in this new environment to boost the growth needed for the technology sector to play its role in the UK and Scotland’s post-Covid economic recovery.