CHINA
JJJ. We have serious concerns about the incentive and opportunity for espionage that Chinese involvement in the UK's Civil Nuclear sector provides. Investment in Hinkley Point C opened the door, but for the UK to allow the China General Nuclear Power Group to build and operate Bradwell B would be opening a direct channel from the UK nuclear enterprise to the Chinese state.
KKK. While we accept that the risk posed by physical access to Civil Nuclear sites is overshadowed by the vulnerabilities exposed by Chinese investment and operational control, it would be wrong to dismiss the former outright. The Government recognises the risk that a digital back door into the UK’s Critical National Infrastructure might create, but the risk posed by the literal back door of human actors with access to sensitive sites should not be dismissed.
LLL. We are reassured that the Intelligence Community have recognised the *** vulnerability that potentially lies in the supply chains: effort to protect against cyber attacks must include the supply chains.
MMM. While we recognise that the threat of disruption is less likely, the threat of leverage is very real: the fact that China will be able to exert some control over the UK's Critical National Infrastructure will complicate the Government’s calculations in its broader approach to China. In other words, it may not be possible to separate the Civil Nuclear sector from wider geopolitical and diplomatic considerations.
NN. Unlike the Civil Nuclear sector, the Energy sector appears to provide China with less potential for leverage, as it does not have the same long-term reliance issues that we see in the Civil Nuclear sector. Nevertheless, there are concerns in relation to the threat to the Energy sector from economic espionage (particularly in the area of new 'green' energy) and disruption.
OOO. We reiterate that foreign investment cases cannot be looked at in isolation and on their own merits. It is absurd that the (then) Department for Business, Energy and Industrial Strategy (BEIS) considered that foreign investment in the Civil Nuclear sector did not need to be looked at in the round: we question how any department can consider that a foreign country single-handedly running our nuclear power stations shouldn't give pause for thought. This clearly demonstrates that BEIS does not have the expertise to be responsible for such sensitive security matters.[1]
PPP. Previous investments in the sector, or the potential for there to be 'legitimate expectation' that an investment in one area ought to facilitate a linked investment, must be taken into account. If the Investment Security Unit fails to do so, then it will be unable to counteract the 'whole-of-state' approach so effectively utilised by China (amongst others).
- ↑ As previously noted, as part of the restructure of several government departments in February 2023, the Investment Security Unit (ISU) has returned from BEIS to the Cabinet Office. The Committee has not been in a position during this Inquiry to scrutinise the effectiveness of this transfer, or the reasons behind it. In principle, we would have welcomed the move to return the ISU to the Cabinet Office, where the relevant security expertise, capabilities and infrastructure are more likely to be in place. However, as outlined earlier, unfortunately, effective oversight has not been put in place.
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