While still onerous, timely interventions have led to dramatically improved legislation
Today, the UK's National Security Act received royal assent and became law. The legislation was well advanced by the time a key new proposal emerged last year: a foreign influence registration scheme. Its aim, which we supported, was to curb malign covert foreign influence on the UK's political processes. However, the scheme was likely ineffective against such covert activity, yet risked criminalising a huge range of individuals, charities, academics, businesses, and others for overt behaviours usually encouraged as benign.
Our briefings (including detailed and summary versions) set out the damaging consequences with examples. A wide cross-section of business, educational and charitable groups further elucidated the lost investment and chilling impact on the quality of international engagement with the UK that was threatened. In a fine example of the House of Lords in its revising function, the Government listened.
What the scheme means in its final form
Under the "primary tier" scheme, various criminal offences potentially apply to individuals and entities involved in "political influence activities" in the UK. This is much broader than mere political/ policy lobbying and includes communications relating to UK governmental and administrative decisions. These offences relate to those acting at the direction of a "foreign power" or arranging for others to do so. To avoid these offences, arrangements must be registered accurately, by the applicable deadline with the Home Secretary, and kept up-to-date.
The UK Government's last-minute amendments, limiting the primary tier scheme only to where directed by a foreign power, dramatically narrowed its applicability. The original proposals would have applied to direction by any foreign registered or formed entity. The definition of foreign power is limited to the head of a foreign state, the foreign Government itself (or part of it) or the governing political party. In contrast to the equivalent Australian scheme, the UK's amended proposals do not catch state-owned or funded businesses in themselves.
Concerns remain, including for the "enhanced tier" scheme (see here). However, the changes have gone a long way to addressing our original concerns.
Implications for business and investors
The most obvious areas of sensitivity are for organisations:
- which may fall under the foreign power definition, or be directed by a foreign Government (such as sovereign wealth funds); and
- where they act under contractual, or other, obligations to foreign Governments and this requires engagement with UK Government policy or decision makers (such as investment banks).
Such organisations should ensure that they have a compliance policy to address the new scheme. The Home Office proposes that the Scheme will come into force in Spring 2024. In the meantime, the EU is considering its own version of the legislation (although this Summer it was delayed).
For further information, contact Paul Butcher and subscribe to our Policy Matters blog.