Stuart Anderson MP has co-authored a new report on foreign involvement in the UK defence supply chain. It is part of his work as a member of the Sub-Committee of the Defence Select Committee.
The report follows an inquiry by the Defence Sub-Committee that began in July 2020. The inquiry scrutinised the vulnerabilities of the UK’s defence supply chain following the outbreak of COVID-19, with a particular focus on small and medium sized enterprises. As part of the inquiry, Stuart heard from and quizzed a range of panellists, including sector representatives, academics, and Ministers.
While most investment is from close allies and is to be welcomed, the Sub-Committee found evidence of some involvement from undesirable countries in the UK’s defence supply chain. The report details nine companies in the UK that have been acquired by Chinese companies in recent years. It also finds that the Ministry of Defence’s “open and country-agnostic approach” has meant that the supply chain has been open to potentially hostile foreign involvement.
In light of this, the Sub-Committee has called on the Government to publish a list of countries that it considers friendly, and from whom investment should be encouraged. It also recommends that all of those countries falling outside of the list should be barred from investing in the UK’s defence supply chain. This includes China and Russia. The Sub-Committee also supports the introduction of the National Security and Investment Bill, which will provide much-needed screening of foreign direct investment.
In addition, the Sub-Committee found that the defence industry in the UK has remained broadly resilient in the face of financial pressures associated with COVD-19, but that the same cannot be said for all businesses within the defence supply chain, particularly SMEs. As a result, the Sub-Committee found that the financial vulnerability of such businesses could increase the risk of hostile foreign involvement in the defence supply chain. As such, the Sub-Committee has recommended that the Ministry of Defence seek domestic alternatives for supply, shorten supply chains, and improve engagement with small and medium sized enterprises to ensure that they are aware of the support available to them.
Chair of the Sub-Committee on Foreign Involvement in the Defence Supply Chain, 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.”
Stuart Anderson MP said: “As we look to the future after COVID-19, I am determined that we build back safer. 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.”
