Business and Trade Sub-Committee on Economic Security, Arms and Export Controls

The Committee scrutinised the UK’s critical minerals strategy with miners, processors, financiers, industry groups and the Minister for Industry. Key themes were whether the UK can realistically meet future lithium and other minerals demand; how to speed up planning and Environment Agency permitting; how high energy costs and financing gaps are blocking projects; and whether the UK should prioritise domestic midstream processing, recycling and vertically integrated supply chains. Witnesses and the Minister broadly agreed that China’s dominance in processing is the central vulnerability, but differed on the extent to which government should intervene in commodity markets versus using offtake agreements, public finance, and international partnerships. The Minister confirmed around £268 million of allocated support, said an announcement on the £50 million early-stage funding pot was imminent, and set out a hierarchy of priorities: UK processing where possible, then bilateral and multilateral partnerships with G7, EU, Canada, Australia and other trusted partners.

Across three panels, MPs/Peers grilled witnesses on the UK’s critical minerals strategy, focusing on how critical minerals are defined, how the UK identifies and tracks supply risk, and how to derisk reliance on China. Key themes included: the objective methodology used to designate critical minerals and its evolution; the role of international partnerships (MSP/FORGE) and the need for better, targeted international collaboration; the under-investment in midstream processing and refining in the UK; the vulnerability of supply chains due to geographic concentration and energy costs; the scale of funding required to build resilient supply chains (far beyond current £50m allocations); and the case for diplomacy, friend-shoring, recycling, and greater government funding to diversify supply chains. Insights highlight government-facing financial gaps, strategic dependence on China, and proposed avenues such as increased funding, targeted international partnerships, and a more integrated UK approach across government departments and with allies.

The Business and Trade Sub-Committee’s session scrutinised the UK's trade sanctions regime, focusing on end-use controls, the overlap and reach of the common high priority list, enforcement architecture (OTS I, HMRC, OFSI), and cross-government coordination. Witnesses outlined planned legislation to implement sanctions end-use controls, the sequencing of sanctions packages (including Transneft) and the need for timely licensing decisions, enforcement challenges and the potential for greater transparency around compound settlements, and ongoing work on crypto-related evasion and beneficial ownership transparency in Crown dependencies and overseas territories. The committee pressed for faster action on oil derivatives, sought clarity on the enforcement model for CHPL items, and urged consideration of a ban on goods from Occupied Palestinian Territories. Overall, government commitments cited include bringing end-use controls legislation in the current session and closer international coordination, with ongoing reviews of enforcement and transparency mechanisms as priority workstreams.

This evidence session scrutinised the UK’s export-licensing regime for Israel, focusing on whether extant licences could enable human-rights abuses in Gaza and how UK arms-export policy engages with IHL and the Genocide Convention. Key government positions included: (a) the licensing system operates globally and is not bespoke to Israel; (b) 55 end-use licences are active for Israel (9 specifically linked to the F-35 programme) with a broader set of licences involving re-exports; (c) licences are kept under continual review with regular (roughly 6–8 week) IHL assessments, and the government has suspended licences where appropriate; (d) the F-35 carve-out is defended as a balancing exercise under Article 7 of the Arms Trade Treaty, though this interpretation is contested in court; (e) the government emphasises the difficulty of grounding the F-35 fleet unilaterally due to the global nature of the programme and the need for consensus among eight partner nations; (f) hosts hostage-rescue surveillance flights from RAF Akrotiri, which are unarmed and limited to hostage-rescue data; and (g) there is ongoing political tension with allies (e.g., Spain’s genocide remark) and ongoing debate about recognizing a Palestinian state and its implications for arms-control obligations.

This session scrutinised the UK’s approach to economic security, including the National Security and Investment Act (NSIA), sovereign capabilities, and the integration of security with trade policy. Witnesses outlined an agile, alliance-focused strategy, highlighted the need for sovereign onshore capabilities alongside deep domestic strengths (research, universities), and stressed better public-private interfaces (via the Economic Security Advisory Service) to support businesses, especially SMEs. government commitments announced or reinforced included a 12-week public consultation on updating the 17 sensitive areas, establishment of a supply-chain centre and the Economic Security Advisory Service, and scheduled national resilience exercises (national alert test on 2025-09-07 and Pegasus pandemic exercise). The committee explored human-rights considerations in trade deals, sanctions enforcement (including end-use assurances for arms licenses), cross-Government coordination, and how to balance investment, growth, and security in a rapidly shifting geopolitical environment.

The four evidence panels explored how UK retailers and critical sectors experience, respond to, and learn from major cyber-attacks, and what policy actions could strengthen national cyber resilience. Key themes included: the evolving threat landscape (notably Volt Typhoon and criminal-to-state-linked activity), the balance between data protection and continuity of services, and the need for better public-private collaboration and cross-Government coordination. Witnesses urged government action on: (i) mandatory reporting of material cyber incidents to improve visibility and rapid response; (ii) stronger board-level governance and socialisation of cyber risk, with a more cohesive government ownership across departments; (iii) sustained investment in cyber-security, including legacy-system upgrades, with potential incentives or funding support; (iv) a clearer framework for regulatory action vs. voluntary collaboration by the NCSC, and (v) cross-sector information sharing, improved incident response capacity, and faster cross-border cooperation. Legislative signals referenced include the Cyber Resilience Act (EU) and the UK Product Security and Telecommunications Infrastructure Act 2024, as well as ongoing discussions around the Online Safety Act. Together, these discussions underscore a push for a more resilient, well-informed, and collaboration-based national approach to economic security in cyber-space.