Security First: The Shifting Priorities of the new Global Britain

By Till Sommer

Huawei and the Government’s meandering path towards finally limiting the UK’s exposure to the company has attracted considerable column-inches in recent months. A look beyond the headlines, however, reveals that the Government is slowly but surely developing a more assertive approach towards defending the UK’s national interest by intervening directly in the economy and in private markets. This has implications for businesses, especially in high tech sectors.

The groundwork for this was laid under Theresa May and might have been regarded as just another expression of the more interventionist style of the May administration. While there were some expectations that the arrival of Boris Johnson in Number 10 would signal a more liberal approach, the current Government seems to be doubling down. It clearly looks like the new Global Britain is as keen on pushing a liberal trade agenda as it is on making strategic interventions to protect UK interests.

The Government’s recent decision to take a $500 million stake in the satellite company OneWeb is probably a good example of this. Yes, the fairly unusual decision can be explained by looking at the UK’s plan to develop a sovereign satellite capability and there might even be an argument that the investment could support the rollout of rural broadband. However, the fact there was a clear interest in OneWeb from China might have played a role too.

Another example is the Government’s announcement on “new protections for UK businesses key to national security and fight against coronavirus” from 21 June this year. The announcement is primarily concerned with extending the grounds on which Government can intervene in mergers and takeovers to include public health emergencies. However, in addition to the direct response to COVID-19, the announcement also covers two additional statutory instruments which:

1. Make it easier for the Government to scrutinise mergers on public interest ground in the following sectors: artificial intelligence, cryptographic authentication technology and advanced materials.

2. Lowered the turnover threshold at which mergers can be called in for these sectors to £1 million.

Similar changes were made in 2018 in relation to military/dual-use technologies, computing hardware and quantum technology and we can expect yet further details on this policy area in the upcoming National Security and Investment Bill. What is becoming clear is that the Government is taking a more active interest in protecting UK national interests, especially in relation to areas of the economy where big innovations are happening and that are seen as crucial for future prosperity.

These are just two examples and a lot of the work is happening behind the scenes, e.g. Project Defend, but the key point remains: we have a Conservative Government that is probably more interventionist than many people expected and this has implications for fast growing companies who will need to factor in the new interest from the state in their long-term business strategies.

The recent decision on Huawei has shown a willingness to sacrifice economic prosperity for very real (as well as perceived) security gains and the Government is slowly but surely giving itself the power for further interventions in the economy. However, this begs the question how Government ensures that businesses in key technology sectors can grow sustainably and quickly within the UK without relying on investment that might trigger the Government’s interest. The May administration had the Industrial Strategy and Eight Big Technologies. The Johnson administration has set a broad ambition to become a Science Superpower but we’ve yet to see the detail on how it will make this a reality. Once such detail is forthcoming, we’re sure to have a headline-grabbing three-word slogan to go with it. Until then we’ll continue to have to read between the lines as the Government’s security policy is developed by stealth.

 

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