Ban China and Russia from investing in UK's defence supply chain, MPs say
MPs have called for a ban on China and Russia investing in the UK's defence industry.
A new report – co-authored by Wolverhampton South West MP Stuart Anderson – called for tougher measures to be brought in to protect British firms from hostile foreign ownership.
It follows an inquiry by the Defence Sub-Committee, which examined the vulnerabilities of the UK’s defence supply chain in the wake of the Covid pandemic.
The inquiry found evidence of some involvement from "undesirable" countries, including nine companies that have been acquired by Chinese companies in recent years.
It warned that the Ministry of Defence’s “open and country-agnostic approach” has meant that the supply chain has been opened up to potentially hostile foreign involvement.
The report called for Ministers to publish a list of "friendly" countries from where investment should be encouraged, and recommended that all other nations – including China and Russia – should be barred from investing in the UK’s defence supply chain.
The Sub-Committee has backed the introduction of the National Security and Investment Bill, which will provide screening of all foreign direct investment.
'Vulnerable'
Conservative MP Mr Anderson said: "The economic disruption caused by Covid-19 may mean that businesses in the defence supply chain are more vulnerable to foreign involvement.
"The recommendations in our report – along with our support of the National Security and Investment Bill – will mean that the Government can more effectively support domestic businesses and mitigate any risks from foreign involvement in the most sensitive areas of defence."
Sub-Committee chair Richard Drax MP, said: “Despite the Government demonstrating an understanding of the risks that foreign involvement in the defence supply chain poses, more should be done to maintain the integrity and autonomy of our defence industry. This heightened awareness of risks must lead to a tightening of regulations and a new approach.”
The report also warned that financial pressures faced by small and medium-sized UK businesses in the defence supply chain made them more vulnerable to take over.
It called on Ministers to beef up support for British SMEs and seek domestic alternatives for supply where possible.
John Spellar, the Labour MP for Warley, said the report was "a wake-up call to complacent officials, military and Ministers". "Time to put real effort into supporting British Industry," he added.
Defence Minister Jeremy Quin told MPs that the MoD was working through an extensive supply chain resilience and risk programme.
