Moved by Lord Butler of Brockwell
70: Clause 26, page 17, line 40, at end insert—“( ) Before a final order is made, the Secretary of State must share with the Intelligence and Security Committee of Parliament any intelligence relevant to such an order, and a final order shall not be made before the Intelligence and Security Committee has made a report to Parliament on the order.”
Something strange is happening here. The Bill gives the Government extraordinary powers to intervene in, and possibly prevent, private sector commercial transactions. I accept that there may be occasions on which the Government need to protect British industries against incursions from foreign companies, particularly if those companies are under the control of unfriendly states, but these powers are extraordinary and their exercise, and the justification for that exercise, will often depend on intelligence information that the Government cannot, naturally, make public. How then is Parliament going to scrutinise and the Government to justify the use of these powers in those circumstances?
In the Intelligence Services Act 1994, the Conservative Government established a parliamentary mechanism precisely for this purpose, by setting up the Intelligence and Security Committee of Parliament. The coalition Government reinforced the committee’s powers in the Justice and Security Act 2013. That committee comprises Members of both Houses of Parliament with experience of intelligence who are admitted within the ring of secrecy so that they can have access to highly classified information and advise the Government and Parliament on its use. I declare an interest, having served on the committee for five years. Yet the Government have refused to provide, in the Bill, for the ISC to have a role in scrutinising the use of the powers in it. It is as if the Government have acquired a watchdog, yet are unwilling to let it bark just when it is needed.
This point was raised by the Opposition parties in the other place, and the Minister produced repeated excuses for denying the ISC an explicit role. Ultimately, the Minister said that the ISC could review the annual report which the investment security unit established by the Bill is required to make to Parliament. That made it necessary for the chairman of the ISC, Dr Julian Lewis, to intervene and say that the annual report would be a public document, which could not, by definition, contain classified information. The Minister’s reply to that was that the ISC could subsequently ask the Secretary of State for such classified information.
The noble Baroness, Lady Hayter, with the support of the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, has tabled Amendment 82, requiring that the Secretary of State should publish a separate annual report to the ISC which can include classified information. The noble Lord, Lord West, who is your Lordships’ current representative on the ISC, has put down an amendment, with the support of the noble Lords, Lord Rooker and Lord Campbell of Pittenweem, requiring classified information to be contained in a confidential annexe to the annual report of the investment security unit, to be made available only to the ISC. I will support these amendments if my own amendment is not acceptable, but if I may respectfully say so, an annual report after the event involves examining the operation of the stable door after several horses may have bolted.
My own amendment requires that, when a transaction is called in, any relevant intelligence should be made available to the ISC, and the ISC should make a report to Parliament before the Secretary of State makes a final order. The assessment period of 30 days under the Bill, extendable to 45 days, provides adequate time for the ISC to assess the intelligence provided to it, take evidence and give its opinion to Parliament. It seems to me unlikely that there will be so large a volume of transactions actually called in as to make this an unsustainable burden. In this House, we are used to Select Committees such as the Delegated Powers Committee and the Constitution Committee scrutinising Bills in short order and reporting on them to the House before the Bills go forward. If Parliament is to have any effective scrutiny of the use of the powers in the Bill, this seems preferable—if it is practicable—to an annual report after final orders have been made.
It is a matter for speculation why the Government have been so coy about giving the ISC an explicit role in the Bill. Paragraph 8 of the memorandum of understanding agreed between the Government and the ISC after the 2013 Act, says that
“only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments whose work is directly concerned with intelligence and security matters.”
Those were the words agreed between the Government and the ISC. The irony is that the ISC’s role is potentially helpful to the Government. Only the ISC can have access to the intelligence information justifying the Government’s intention to intervene. To give an example, I recall that, when I was a member of the ISC, there was a press story that GCHQ was piggybacking on the American NSA to obtain intelligence that it could not obtain under its own powers. The ISC examined the records and was able to reassure Parliament and the public that the reports were false.
Is the reluctance on the part of the Government a hangover from their embarrassment over publication of the ISC’s report on Russian interference before the 2017 election, or is it a result of government pique about the committee’s appointment of its own chairman in place of the Government’s nominee? Whatever it is, it is difficult to understand what the Intelligence and Security Committee is there for if not to have a role on behalf of Parliament and the public in sensitive matters of this sort. I beg to move.
My Lords, I am speaking to my Amendment 78 and will touch on Amendment 70 in the name of the noble Lord, Lord Butler, to which he has just spoken, as well as Amendment 82 in the name of my noble friend Lady Hayter and Amendment 86 in the name of the noble Lord, Lord Lansley. All relate to the same concern and try to resolve it in slightly different ways. I also thank the noble Lords, Lord Campbell of Pittenweem and Lord Rooker, for their support, and the noble Lords, Lord King and Lord Janvrin, for having expressed support for the measure in broad terms. It is rather good that this is the first amendment this afternoon being raised from this side rather than from the Government; that is quite interesting I think.
Noble Lords will be aware it was the Intelligence and Security Committee of Parliament which first raised the fact—and the alarm—that when the Government were considering major investment decisions, national security concerns were not being taken into account. There are those in this House who served on the committee at that time and should be thanked for their work bringing this issue to light. This was some seven years ago, and noble Lords will know from my previous interventions on this topic that I strongly support the need for this Bill, as I think all of us do in this Chamber.
However, there is a glaring hole in the legislation which the Government have not yet resolved: namely, there is no meaningful oversight. This Bill has national security at its heart, yet the Government will not let anyone oversee this secretive heart. The Minister has said that the ISC—the one body Parliament expressly established to oversee secret matters on its behalf—will not be given proper oversight of this secret activity. The offer that the ISC can scrutinise the public report and ask for any further information it wants is not good enough. The public annual report is just that, as the noble Lord, Lord Butler, said—it is public. Parliament itself can therefore scrutinise it, so there is no role for the ISC, which is designed to look at secret reports, not public ones. The Minister says that the ISC can request further information. But there is no obligation for that information to be provided. The ISC can only require information from those bodies that fall within its remit, and the investment security unit is not one of those bodies.
Without specific provision, there is a possibility that, even if this Government are well intentioned—which I am sure they are—future Governments may refuse to provide such information to the ISC. Consequently, I am afraid the Minister’s proposals do not meet the requirement for proper oversight. Worse than that, they represent a step backwards from the current oversight provisions. The unit that currently takes these decisions—the investment security group in the Cabinet Office—is overseen by the ISC. By moving this activity to the investment security unit in BEIS, the Government are actively removing it from ISC oversight. I am sure that this cannot be what the Government intend. This is the glaring hole in the Bill that we must fix, and my amendment does that. I thank the noble Lords, Lord Rooker and Lord Campbell of Pittenweem, for putting their names to this amendment.
Clause 61 mandates the Secretary of State to produce an annual report to Parliament. The information in that report is limited and obviously will not include any sensitive security information. My amendment to Clause 61 will add to that annual report further categories of information: details about the jurisdiction of acquirers; the nature of national security concerns raised; the particular technological or sectoral expertise being targeted; and any other information that the Secretary of State deems instructive on the nature of national security threats uncovered in the new regime.
The amendment then provides a mechanism for the Secretary of State to redact any of this information from the public report, should it be deemed damaging to national security. That information must be moved into a classified annexe, ensuring that, if Parliament cannot scrutinise it, the ISC can, on behalf of Parliament. This is an approach already used by organisations such as the Investigatory Powers Commissioner’s Office under the Investigatory Powers Act 2016.
The amendment proposed by the noble Baroness, Lady Hayter, and the noble Lord, Lord Fox, provides for a second separate annual report to the ISC. It seeks to achieve the same outcome as mine—namely, oversight of the security matters at the heart of the Bill. My understanding was that Ministers in the other place had found the annexe solution more palatable, in that it would minimise the reporting burden on the new unit. However, the ISC itself is ambivalent as to whether there is a secret annexe or a separate report; the key is that there is reporting on the security aspects, in whatever form that takes.
This is not a power grab by the ISC—far from it; we have more than enough work to do as it is, and nor do we have any interest in the wider work of BEIS. It is only the intelligence and security work of the new unit, which is, after all, our job. The ISC was expressly established to scrutinise the intelligence and security activities of government—as the noble Lord, Lord Butler, said—initially, within the three intelligence agencies, and then from 2013, throughout the full national security apparatus. That change in 2013 was a result of the Justice and Security Act. The long title of that Act refers to
“activities relating to intelligence or security matters”,
and these are set out in a memorandum of understanding under the Act, which was then deemed to be a practical vehicle for listing those bodies overseen by the committee, since it could be easily kept up to date. This was best explained by the then Security Minister, who, during the passage of the Act, said:
“Things change over time. Departments reorganise. The functions undertaken by a Department one year may be undertaken by another the following year.”—[Official Report, Commons, Justice and Security Bill Committee, 31/1/13; col. 98.]
And that is exactly what has happened.
Under this Bill, intelligence and security activity is moving from the Cabinet Office to BEIS, yet the Government have not updated the MoU to include it. They have not honoured their clearly stated intention that the ISC should have oversight of all government intelligence and security activities, and it is not just this unit; other units have been set up in other departments to carry out national security and they have not yet been added to the ISC’s MoU. This is not good enough.
The ISC can require information from organisations in the MoU—it must be provided—but as the new unit is not part of the MoU, the ISC can only request it. As I have already said, there is no guarantee that it would be provided. It would be simple to update the MoU. A straightforward exchange of letters between the chairman of the committee and the Prime Minister is all that is required, and would be sufficient to provide oversight of this national security activity, in line with the Government’s commitment to Parliament during the passage of the Justice and Security Act.
However, thus far, the Minister has declined to provide an assurance that the Prime Minister will update the MoU, that the new investment security unit will be added to it, that oversight equilibrium will be restored, and that Parliament will maintain its sight and sovereignty over a crucial part of national security. If there is no movement on this—and I find it extraordinary that there has not been—I will have no choice when it comes to Report but to move this amendment and divide the House.
My Lords, I will speak briefly to my Amendment 86 in this group and express my support for Amendments 78 and 79, in the name of the noble Lord, Lord West of Spithead. I will not repeat his arguments; I thought they were compelling. Amendment 86 would put the investment security unit of the Department for Business, Energy and Industrial Strategy into the remit of the Intelligence and Security Committee in the Justice and Security Act.
I am grateful to the noble Lord, Lord Fox, for supporting the amendment; I am sure he agrees with me on this. We would not need it if Ministers would permit adding the investment security unit of BEIS to the memorandum of understanding, as part of the remit of the Intelligence and Security Committee. If forced to, it would be better to amend the Act to put it into the remit, rather than to put something in the legislation that directly impacts the memorandum of understanding. That is not the way that the MoU should work.
I remind your Lordships that the memorandum of understanding, which was published with the annual report in 2013-14, said:
“The ISC is the only committee of Parliament that has regular access to protectively marked information that is sensitive for national security reasons: this means that only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments whose work is directly concerned with intelligence and security matters.”
That is precisely the point being made here: the ISC must complement the other committees, including the BEIS Committee, in its scrutiny of this work. As the footnote to the MoU said:
It is consistent with scrutiny of activity generally but, for scrutiny relating to intelligence and security matters to happen, confidential material may need to be supplied to the ISC and the ISC needs to have it added to its remit. I hope my noble friend can give us that assurance, if not today, on Report.
My Lords, I too shall begin by declaring an interest, having been a member of the Intelligence and Security Committee for seven years, five of which were enhanced, if I may say, by the presence of the noble Lord, Lord Butler of Brockwell. I have a further advantage because I have been listening, along with other noble Lords, to the three preceding speeches in this debate, which have set out the principles clearly and powerfully against what appears to be intransigence on the part of the Government. At this point, therefore, I shall adopt what has been said by the noble Lord, Lord West of Spithead, with which I agree entirely. I am also influenced to some extent by the fact that your Lordships have been exemplary in the dispatch of business today. I have been watching from the pavilion, as it were, and it seems that the conduct of this Committee stage so far could be recommended or possibly even compelled for the Committee stages of other Bills.
There is nothing that I can usefully add to the arguments put forward by the three preceding speakers, but I can make one further contribution. In advance of the debate today, I consulted the 2013 report of the Intelligence and Security Committee entitled Foreign Involvement in the Critical National Infrastructure. The noble Lord, Lord Butler, and I were members of the committee at the time and the chair was Sir Malcolm Rifkind. Among other things, the committee applied its mind to the issue of Huawei, in particular to its entry into the United Kingdom market and the fact that in doing so it entered into contractual arrangements with BT. What happened was that BT did as it was supposed to do and advised the relevant government departments of the position, but the officials then communicated what had been brought to their attention by BT not to any of the Ministers with responsibility for national security but to the then Secretary of State at the Department of Trade and Industry. That was done on the ground that the only thing which appealed to the officials to draw to ministerial attention was the possible impact on British businesses.
That having happened, for quite a long time, Huawei enjoyed not a privileged but certainly an unremarkable position in the British economy. It was only some years later that it became clear that there were other implications to be drawn from its interest in the economy of the United Kingdom. At that point, the Intelligence and Security Committee deemed it appropriate to include it as part of the inquiry whose report I have described. As a consequence, the committee was able, as has been hinted at already, to come to a much better and more informed judgment about Huawei because of its access to intelligence that would not otherwise have been available either to committees or to Parliament itself. I recommend the report as a good illustration of how an inquiry of that kind should be carried out and how profitable, if you like, the consequences are of so doing.
The issue is clear. If, at the stage of the involvement of Huawei in the economy of the United Kingdom it had been understood and perused by those with access to a very high level of classified intelligence, perhaps, since the moment of Huawei’s arrival into this economy, there would have been a much greater understanding throughout government of the significance of its entry into the United Kingdom and the implications for security which that has necessarily involved. For these and other reasons that I have indicated previously, I support the amendment tabled by the noble Lord, Lord West of Spithead, to which I have added my name.
My Lords, I have attached my name to Amendment 82 in this group, tabled by the noble Baroness, Lady Hayter of Kentish Town, and signed by the noble Lord, Lord Fox. It is perhaps unfortunate that the structure of the debate means that neither of them have spoken in favour up to now. Some of the other speakers have briefly outlined what that amendment consists of. As with all the amendments in the group, it is an attempt to ensure proper parliamentary oversight of the operation of the Bill.
This is a classic “prepare a report” amendment and specifies in considerable detail what would be in that report, including the nature of the national security risks posed in transactions for which there were final orders, the particular technological expertise that was being targeted and any other relevant information. I admit that, having listened to the noble Lord, Lord Butler of Brockwell, introduce Amendment 70, which essentially calls for oversight scrutiny to be in real time as decisions are being made, [Inaudible], and having listened to the debate, on reflection, that would be the best outcome. If I were to make a case for Amendment 82 in comparison, there would be advantages in having a specified list of what the report contains and making sure that full information is being provided to the ISC. I rather suspect that the ISC would be strong-minded if it thought that it was not getting the information it needed.
It is interesting how support for this group of amendments is coming from all sides of the Committee, and it is clear that there is a real problem for the Bill without some kind of provision on reporting to the ISC. That would ideally be done in real time but there should certainly be some democratic oversight. The noble Lord, Lord Butler, was pre-empting a ministerial suggestion that there would not be enough time. As the noble Lord said that, I thought about sitting in the Chamber of your Lordships’ House on
The noble Lord, Lord West, put it well. Without one of these amendments, there is no oversight. No one has referred to this yet but about an hour before we met, the integrated review was finally published and I skimmed through it as fast as I could. One matter highlighted in it was the competitive advantage coming from Britain’s democracy. I will be raising that issue again later but if we are going to claim competitive advantage from democracy, it would be good to have some of it. We have heard the phrase, “Take back control”, a great deal. The structure of our alleged democracy is supposed to rest within Parliament, which is where scrutiny and oversight of the Executive is supposed to happen. I join other noble Lords in saying that we must have some form of reporting to the ISC.
My Lords, I am delighted to follow the noble Baroness, Lady Bennett, who has bravely intruded in this debate involving an old-school reunion of former members of the ISC. I am delighted to follow two of the promising newer Members, in the shape of the noble Lords, Lord Butler and Lord Campbell. Another, the noble Lord, Lord Janvrin, is still to come.
The examples given by the noble Lords, Lord Butler and Lord West, set out the arguments very clearly. Having been involved, as I was for so long, with the founding of the ISC and its initial seven years of operation, what was carried on subsequently—[Interruption] —bugger! I am sorry; excuse my language.
My Lords, I apologise for that interruption; it was a very amateur performance by me. The integrity of the ISC, which has been very well maintained over the years, means that a very effective instrument is available to government. I wanted to take part in this debate because I have been worried for a long time about the enthusiasm in the commercial side of government for yet more encouragement of inward investment without always paying sufficient attention to national security issues that might arise in that connection. I therefore strongly support the Bill, which I wish we had had earlier. It certainly provides the foundations for a much stronger position, getting a better balance between encouraging our economy while protecting our national security.
I am slightly disappointed—with no disrespect to my noble friend Lord Grimstone—that my noble friend Lord Callanan, who was dealing with these issues before and with whom some of us have had discussions, is unable to respond to the debate, but I will listen with great interest to what my noble friend Lord Grimstone has to say. Like other speakers, I do not quite understand the Government’s difficulty. The noble Lords, Lord Butler and Lord West, spelled out ways in which we can make use of the ISC to fill this one gap in the Bill, which has much merit. We need to deal with situations where there is information of such sensitivity that it cannot be put in the public domain, but for which we still need proper accountability and parliamentary oversight in some system or another, which the ISC can provide.
My Lords, it is a pleasure to follow the noble Lord, Lord King of Bridgwater. Unlike him and other noble Lords who have spoken on this issue, I do not have any particular expertise in the ISC or in intelligence and security matters. None the less, it is a privilege to follow the noble Lord, who, as a former Secretary of State for Northern Ireland, was fully aware of many of the intelligence and security issues. I will refer later to one which I think arose during his tenure as Secretary of State for Northern Ireland.
Notwithstanding that, I support the amendments in this group, the context of which was initially addressed at Second Reading by many of their movers: the noble Lords, Lord West of Spithead and Lord Rooker, and the noble Baroness, Lady Hayter. They all revolve around the need for parliamentary oversight and accountability, and thus the involvement of the Intelligence and Security Committee in Parliament.
I am concerned about the impact of inappropriate takeovers and dual ownership of firms that are key to the development of the UK’s infrastructure, including the digital sector. The gaping hole in parliamentary scrutiny and oversight needs to be examined and legislative provision made for it. That is where the hole lies in this legislation.
All noble Lords who have spoken have elaborated on the sensitive nature of investment issues involving other countries which may have a strategic or other ulterior interest in the UK. Those need to be subject to parliamentary scrutiny, particularly decisions on notifications that will be taken by BEIS. A strong case was made in the Commons for the Intelligence and Security Committee to be given an explicit role in scrutinising the outworking of the Bill, but unfortunately the Government rejected it. I thank noble Lords who have spoken and I agree with them. The Intelligence and Security Committee could do a proper and adequate job if it was given a report on how the powers in the Bill are or are not being used.
There is currently no provision for oversight of national security material on which decisions will be taken, hence my support for these amendments as they would expand the current reporting requirements to include reporting to the ISC, incorporating details of the national security decision-making process into the existing annual report in Clause 61, an issue already referred to by the noble Lord, Lord West of Spithead. It is vital that there is oversight of matters that Parliament cannot itself oversee. Oversight and parliamentary scrutiny are key in this respect.
The ISC was established in 1994. I recall that in 1987-88 a company in Northern Ireland that was allocated a demolition contract for Northern Ireland Electricity Service had its contract and its ability to act as a subcontractor withdrawn on national security grounds. It never found out the nature of those national security grounds. No doubt various views were attributed to it. This case was subject to legal proceedings, and the European Court of Justice eventually sided with the inappropriateness of the actions that the Government had taken. I honestly believe that if the ISC had been established at that time, it would have been able to examine papers associated with that case and to judge the appropriateness of the actions and the company. That parliamentary oversight was unfortunately not available at that time, but it is now available and should be utilised to scrutinise global contracts and notifications within the unit in BEIS.
Parliamentary scrutiny is not something that should be feared. It allows engagement, consultation and a degree of transparency, subject to the rules of confidentiality. I support the amendments in this group.
My Lords, it is a pleasure to follow the noble Baroness, Lady Ritchie of Downpatrick. I speak as yet another former member of the Intelligence and Security Committee of Parliament. I strongly support the Bill, but there is a scrutiny gap which has been well identified in this short debate. Other speakers have made the key point in support of explicit oversight by the Intelligence and Security Committee of decisions taken under the Bill based on classified evidence from secret intelligence sources, and I strongly endorse those arguments.
I want to underline very briefly the important point of principle underlying these amendments. The ISC is a vital part of the intelligence agencies’ licence to operate in a democracy by making the agencies accountable to Parliament. It helps maintain public trust and confidence in the secret activities of the state. This obviously includes maintaining trust in government decisions about the activities of the intelligence community. Those broad decisions are taken in the interests of the nation as a whole, but maintaining public trust will surely be just as important when it comes to government decisions that may be narrower but could directly affect the future of individual British companies and the livelihoods of their employees.
The Bill will set up a regime that could materially change people’s lives in the wider interest of national security. However, as drafted, it does so without those people knowing for certain that any decisions based on secret evidence are not automatically subject to scrutiny and examination by the one committee of Parliament specifically set up to be able to do this: the ISC. This seems wrong in principle.
There is then the point of practice. I think we would all argue that effective scrutiny leads to better decision-making. The Minister in another place said that there is nothing to stop the ISC calling for evidence on a specific decision. That may be true, but is it practical? It calls to mind Donald Rumsfeld’s “unknown unknowns”: how does the ISC know which decisions to examine in detail? I question whether such a hit-or-miss approach to scrutiny would lead to better decision-making.
Amendments 70, 78, 79 and 82 all suggest means to provide effective ISC scrutiny. As has been pointed out, Amendment 70, in the name of my noble friend Lord Butler, has the merit of real-time accountability. This should be examined carefully, but the other amendments ensuring regular and automatic classified reporting to the ISC will, I believe, do much to ensure public trust in the processes of the Bill. As the noble Lord, Lord West, said, without one of these amendments, there would be no effective oversight.
I very much look forward to the Minister’s reply, and I hope he will be sympathetic to some kind of movement on this important issue. As I said at the beginning, this is a matter of trust.
My Lords, it is a huge pleasure to follow such assembled knowledge and experience. I shall do my best to sum up from these Benches.
On a previous Committee day, we debated an amendment, tabled by the noble Baroness, Lady Hayter, on defining national security. In his answer to that amendment, the Minister—the noble Lord, Lord Callanan —responded that enshrining national security in law would be an inflexible response and the Government sought the ability to have a “flexible” response to future threats. I found this reasonably persuasive. However, who in the Government and department is defining, at that point in time, what the threat to national security is? Where does the expertise lie? Herein come the amendments before us—all except for Amendment 90, look towards the ISC for that expertise.
In his speech, the noble Lord, Lord Butler of Brockwell, set out what is at stake. These are extraordinary powers that the Government are taking upon themselves to stop private sector activity. That has been the concern of many of us throughout all the amendments that we have been putting forward. A lot of those powers are being kept very close to the Minister and very flexible, as my noble friend Lord Clement-Jones said when speaking on a previous group today.
One of the problems that has concerned those of us speaking about the investment part of the Bill is mission creep. Having a role for the ISC at the heart of it would ensure that this really is about security, rather than other issues that can creep into the picture.
I was persuaded by the noble Lord, Lord Butler, when he said that the committee has sufficient capacity to handle this. I am not sure we yet know what scale of capacity will be required. To be honest, that was my concern about having a day-to-day operational viewpoint.
My other concern is that there is a very important job managing the outward-facing part of the Bill into the investment community and the market. It is clear to me that the investment security unit should be at the forefront of that process, in a sense isolating the ISC from the market part of what is going on. In other words, the market needs to understand what is happening and needs to have it explained. Part of what we have been talking about is having a predictability about how they are dealt with. That would still be the role of the ISU with the ISC sitting in behind.
I very much agree with the noble Lord, Lord West of Spithead, that it is either/or on the different approaches to the annual report. The key is to make sure that the secret element goes before the ISC, whether in a separate report, an annexe or any other means. We can be reasonably agnostic about which way that goes.
What came out through the speech of my noble friend Lord Campbell of Pittenweem is the fact that the ISC can sometimes be ahead of the issue. One thing that is not covered by the amendment of the noble Lord, Lord Butler, is: what if the ISC is identifying an issue that has not been referred to it by this process? What is a mechanism by which, in a sense, the ISC can be more proactive in nipping something in the bud, as my noble friend Lord Campbell explained could have happened with Huawei? As we take this to the next stage, we should think about whether there is a process to be built in, or whether we trust the dialogue between the different elements.
No one has spoken to Amendment 90. I feel that it is a little orphan in this group, so I will say a few words and hope that the noble Baroness, Lady Hayter, who tabled it, will espouse it. It seeks to move the investment security unit from BEIS to the Cabinet Office. In my view—we will wait and see what the noble Baroness has to say—that is no reflection of the quality of BEIS, more a reflection of the nature of the work and the fact that this is so interdepartmental. Putting it in BEIS makes it very bunkerish. From my perspective—again, I will wait to hear what the noble Baroness has to say—the idea is that it would broaden it out to have a pan-government approach. I have a feeling that it would give the unit an ability to walk into a bunch of other departments when it is doing its work.
In his closing remarks, the noble Lord, Lord Butler, rather mischievously suggested that there might be an element of peevishness or punishment about the Government not including the ISC. I am absolutely certain that there is none of that. I am sure that this will come up again on Report, although I hope that it will not have to. I hope that the Minister and colleagues can hear the really knowledgeable voices telling the Government that this is an issue. If they are saying that, it is an issue. The Government need to embrace this and find a way to feed in the expertise, which is at the core of the Bill. The Long Title says:
“Make provision for the making of orders in connection with national security risks”.
This is the body that deals with national security risks and it is not written into the Bill. It needs to be there. I hope the Government see sense; if they do not, I hope that we can work together to produce something that reflects the nature of this debate.
My Lords, the case has been well made as to why the ISC should, and indeed must, have a role in scrutinising the use of powers contained in the Bill—or maybe if not scrutinising them, then, as the noble Lord, Lord Butler, says, having a role before they have been exercised. As my noble friend Lord West and others have said, we have been clear throughout that we support the need for the Bill. However, when broad powers of intervention are expanded, those using such powers must be held to account by Parliament and through greater transparency, as other noble Lords have said.
In the Commons Public Bill Committee, Professor Martin from Oxford University said that
“there should be accountability and transparency mechanisms, so that there is assurance that” the powers
“are being fairly and sparingly applied.”—[
Sir Richard Dearlove said that while the annual report should have as much transparency as possible, it could
“require a secret annexe from time to time”—[
Amendment 82 in my name and those of the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett of Manor Castle, would put on the face of the Bill the case made convincingly here today but also in the Commons, where the chair of the ISC set out how this oversight fell well within his committee’s remit. However, the belt-and-braces approach of Amendment 86 is also welcome, just in case the Government’s only answer to a role being given to the ISC is that such scrutiny would go beyond its existing terms of reference. If so, they should amend the terms of reference.
It is important not simply that the ISC has a role, but—to give confidence to this new regime—that everyone, particularly business and researchers, knows that it has such a statutory role. This will be particularly important, as the noble Lord, Lord Janvrin, just said, where a key investment is stopped or voided. Everyone concerned will want reassurance that the security questions that have come into play were indeed properly analysed and assessed.
The power to be used needs reviewing, and it is not sufficient to say—as I have heard said—that the Business Select Committee is equipped for that. It has neither the specialism and expertise nor the clearance to handle and judge such security information. Nor, as the noble Lord, Lord Lansley, said, is it even able to do so, according to the quotes that he gave us. It is also a committee drawn only from the Commons, which would preclude, as the noble Lord, Lord Fox, just said, those in this House being able to have any input into the scrutiny that can take place through the ISC.
As we heard, in the Commons, the Minister said that the ISC could seek information—so clearly there is no problem in it having the information. We simply say that it should not have to ask—as was pointed out, it can then be rejected—but it should also not have to ask to see what has gone on. The noble Lord, Lord Janvrin, reminded us about Donald Rumsfeld and his “unknown unknowns”. You do not know what you do not know, therefore you do not even know what you should be able to ask. As I pointed out at Second Reading, how do you know what the questions are if you do not know what you have not been told?
Then there is, as has just been referred to, the Bill title. We do not even have to go into the content of it; the words “National Security” are in the title, so it is slightly hard to see why the security committee should be excluded.
Amendment 82 therefore provides for an annual report to the ISC, including certain detailed information in relation to state-owned entities, the expertise being targeted, the jurisdiction of acquirers and other national security threats. We are not wedded to the particular wording—I am sure that we can come to an agreement on what should be there—but it is important for our functioning democracy that new, extensive powers for the Secretary of State go hand in hand with accountability. I would think that the Minister would welcome the expertise—indeed, the challenge—of the expert and experienced members of the Intelligence and Security Committee and the confidence that the knowledge that the committee is looking at it would give to the wider group of stakeholders.
I turn now to what the noble Lord, Lord Fox, called an orphan amendment. Maybe I should have put it into a different group; if so, I apologise. Amendment 90, in my name, and those of the noble Lords, Lord Fox and Lord Rooker, is a probing one, to ask the Government to spell out why they think that BEIS is the correct home for the new unit. We seek assurances that the balance of interests between those concerned with the economy and those with our security have proper channels to have their views heard, and heard in a way that is sufficiently speedy and effective to deal with real or imagined problems.
We have heard a lot, quite rightly, about whether business can get its information handled quickly enough, but the same is true for security: those demands and queries must also be handled in a timely manner. There is a balance between those who are interested in the economy and those who are interested in security—it is the same people, very often—and it is always a challenge to get that balance right. As the ISC noted:
“There is an obvious inherent tension between the Government’s prosperity agenda and the need to protect national security.”
Locating the unit in the business department is a statement about which they think is the more important. It makes some sense, obviously, because the issues are about investment, but it will be vital that all sorts of intelligence, from across Whitehall, about possible targets and areas of investment are considered.
The Department for Transport will know a lot about where investment is flowing and it and others will have critical infrastructure where they need to be involved. The ISC’s Russia report, having reflected on Russia’s attempts to influence electoral outcomes in other countries, notes that the Government’s defending democracy programme and their work to protect the democratic processes from interference is under the leadership of the Cabinet Office. It would be useful to know whether consideration was given to collocating this new unit also under the Chancellor of the Duchy of Lancaster, or, indeed, how sufficient input from the Cabinet Office will flow into this unit.
More widely, the ISC, reviewing the co-ordination of security policy across Whitehall when it was looking at Russia, noted that responsibility fell to 14 different departments and agencies. The requirements of the Bill may well be similar: it will need tentacles all across those agencies and departments. It would be helpful to have some reassurance that there is a strong and appropriate lead and that the Government are confident that that lead is correctly placed in the business department rather than in the Cabinet Office, which normally does that cross-department work—the cross-Whitehall responsibilities are often put there for exactly that reason of drawing on expertise.
The amendment also suggests an advisory body, but what it is really pointing to, again, is the importance of pulling in all relevant parties and stakeholders with expertise to what will be big decisions. We have heard about the sort of investments that could be stopped by this, so these are big and important decisions. We look forward to some reassurance that all the right expertise will be used.
I turn to what is the main subject of this group, the ISC. I do not know whether it is the intransigence mentioned by the noble Lord, Lord Campbell, or whether it is something else that has turned such a cold shoulder on what we would all expect normally to be involved in this issue—that is, the ISC. We are not asking for much from the Minister today, perhaps just a cast-iron assurance that the MoU will be adopted in the way suggested. I think that that would satisfy most of us. I suggest that he puts the speaking notes that the noble Lord, Lord Callanan, passed to him to one side. What we really want to hear from him is that he has listened to the debate today, that he will take this back to the department and that it will be given serious consideration.
My Lords, I am grateful to the noble Baroness, Lady Hayter of Kentish Town, the noble Lords, Lord West of Spithead, Lord Rooker and Lord Butler of Brockwell, and my noble friend Lord Lansley for their amendments on the role of the ISC in relation to the national security and investment regime. I assure the noble Baroness that she will hear my own words rather than those of the noble Lord, Lord Callanan.
I start by saying that I have the deepest respect for the expertise and experience of the noble Lords who have spoken in the debate this evening. I have listened to what they have said carefully and with great attention. However, despite the eminence of those who have spoken, I fear that I may disappoint them in this speech.
I assure noble Lords that the Government are committed to publishing information in relation to the regime that properly balances the desire for information with protecting national security. I shall come back later to the important point about parliamentary scrutiny and accountability. What I am saying also takes account of the existing position in relation to scrutiny of the Department for Business, Energy and Industrial Strategy, BEIS.
These amendments represent a number of approaches to requiring the Secretary of State to provide sensitive information to the ISC. Amendments 78 and 79 would in practice require him to create a confidential annexe to the annual report. Amendment 82 would require an additional, separate confidential report to be provided to the ISC. Amendment 70 would require him to share intelligence relevant to a final order with the ISC and not to make that order until the ISC has reported to Parliament on it.
Amendment 86 would extend the remit of the ISC through amending the Justice and Security Act 2013 to enable the committee to scrutinise the operation of the Investment Security Unit. As we heard, Amendment 90 seeks to relocate the Investment Security Unit, within six months of the Bill becoming law, from the Department for Business, Energy and Industrial Strategy to the Cabinet Office. It would also establish a wide-ranging advisory board to the Investment Security Unit, which should include, but not be limited to, representatives from relevant government departments, security and defence organisations, and business bodies.
I will address Amendments 78, 79 and 82 together. The reports proposed under these amendments would contain very similar information, including in relation to mandatory and voluntary notifications, trigger events that were called in and final orders made. In particular, they would require the Secretary of State to provide details of factors relevant to the assessments made by the regime. These include: the jurisdiction of the acquirer; the nature of national security risks posed in transactions when there were final orders; details of particular technological or sectoral expertise that was targeted; and other national security threats uncovered through reviews undertaken under this Bill. I note that similar proposals were put forward in the other place and it is perhaps not surprising that my views on this align closely with those expressed by the Parliamentary Under-Secretary of State for Business and Industry at the time.
I respectfully draw noble Lords’ attention to Clause 61, which requires the Secretary of State to prepare an annual report and to lay a copy of it before each House of Parliament. This clause provides for appropriate scrutiny of the regime. We judge this to be appropriate, because that information does not give rise to national security issues when published at an aggregate level. It will also rightly give a sense of the areas of the economy where activity of the greatest national security concern is occurring.
Of course, it is right that there is also wider scrutiny of the work of BEIS and the work of the unit within BEIS. We therefore intend to follow the existing appropriate government procedures for reporting back to Parliament, including through responding to the BEIS Select Committee, which, I have to say, does an excellent job of scrutinising the work of the department. Indeed, I note that the BEIS Select Committee can and does handle sensitive material; for example, on our civil nuclear programme. The UK’s merger control regime under the Enterprise Act 2002 currently includes screening on national security grounds, and this function is overseen by the BEIS Select Committee.
In case there is any doubt of this—and coming back to the specific point that the noble Baroness made—there is no barrier to the BEIS Select Committee handling highly classified material, subject to agreement between the department and the chair of the committee on appropriate handling. The BEIS Select Committee will be able to see all the material that it needs in order to make its assessments within its role.
I argue that it is the right committee to oversee the work of the investment security unit within the broader remit of BEIS. We should not forget that the BEIS Select Committee is as much a part of our structure of parliamentary scrutiny and democratic accountability as the ISC. With great respect, I would not want any of our comments to appear to be disparaging to the work of the BEIS Select Committee and the very valuable scrutiny work that it does.
I believe that the BEIS Select Committee is excellently placed to consider how effectively and efficiently the regime interacts with the business community and investors. It can also ensure that the NSI regime does not create disproportionate impacts on the economy, and, with its business expertise, it is able to scrutinise whether the regime is effective in scrutinising relevant acquisitions of control. I have to say, with deep respect, that I would therefore question some of the narrative I have heard that suggests that the BEIS Select Committee is not well placed to scrutinise the NSI regime.
I turn back to the ISC. There are, of course, no restrictions on the ISC requesting further information from the unit or from the Secretary of State for matters where it falls under the remit of that committee. The Intelligence and Security Committee’s remit, however, is clearly defined by the Justice and Security Act 2013, together with the statutory memorandum of understanding. I know that this irritates noble Lords, but that remit does not extend to the oversight of BEIS’ work. I therefore welcome and encourage the Intelligence and Security Committee’s considerable security-specific expertise and its review of the annual report when it is laid before Parliament.
Before turning to Amendment 86, I will first revisit precisely what the Justice and Security Act 2013 provides for. I remind noble Lords that this Act sets out the role of the Intelligence and Security Committee alongside a memorandum of understanding. The Act sets out that
“the ISC may examine or otherwise oversee the expenditure, administration, policy and operations of … the Security Service … the Secret Intelligence Service, and … the Government Communications Headquarters.”
The Act also provides that:
“The ISC may examine or otherwise oversee such other activities of Her Majesty's Government in relation to intelligence or security matters as are set out in a memorandum of understanding” agreed between the Prime Minister and the committee.
The present memorandum of understanding states that the ISC is, in addition, responsible for overseeing the activities of parts of the Ministry of Defence, parts of the Cabinet Office—including the National Security Secretariat and the Joint Intelligence Organisation —and the Office for Security and Counter-Terrorism. The ISC must report to Parliament annually on the discharge of its functions, and may make such other reports as it considers appropriate concerning any aspect of its functions. Redactions are agreed by the Prime Minister for any material that may prejudice the functions of the intelligence agencies or of other parts of the intelligence and security community.
Extending the remit of the ISC to oversight of the investment security unit would be a substantial amendment. In particular, the Justice and Security Act currently refers only to intelligence agencies, of which the investment security unit is not one. Noble Lords will have seen the strength of feeling in both this House and the other place concerning the role of the investment security unit in relation to the national security and investment regime—I am well aware of this. I understand that this proposed new clause is the result of careful consideration and an attempt to find a compromise, and for that I am grateful to my noble friend. However, for the same reasons that the Government have cautioned against other amendments that seek to provide for a more formal role for the ISC in relation to the NSI regime, I cannot accept it.
Amendment 70 seeks a similar privileged role for the ISC but in a way that, I have to say, would present additional problems. The Bill as currently drafted requires the Secretary of State, as the sole and quasi-judicial decision-maker, to follow clearly and tightly defined timescales and to handle sensitive information from a range of sources. Requiring the ISC to review every final order before it could be made would risk adding substantial delays into this process, harming both national security and business certainty.
The Government have faced amendments seeking for a national security assessment to be completed in one-third less time on large and complex acquisitions, for the purpose of limiting any wait by business. This amendment, however, while at the end of the process—and while final orders will, of course, be more limited in number than national security assessments undertaken—seeks to add potentially significant further delay without a clear benefit. There is also a risk that, depending on how long it takes the ISC to produce its report, the Secretary of State could be timed out of making a final order at all, as the tests for extending the assessment period do not currently allow for an extension due to ISC scrutiny. It would also, I think, be an unprecedented role for a parliamentary committee, although I have no doubt that others such as the noble Lord, as an ex-Cabinet Secretary, will have a much better sense of precedent in this area.
The report laid before Parliament, which this amendment would require, would be based solely on intelligence. It would therefore likely need to be so highly redacted as to make it uninformative. I can instead assure the noble Lord that, in making a final order, the Secretary of State will draw on information and expertise from across government, including the intelligence agencies, to ensure that he has all the information he needs.
Finally, I turn to Amendment 90, and begin by saying to the noble Baroness that BEIS is in a unique position to host the investment security unit, as it has prosperity and national security expertise, as I said before, based on its significant history of engaging with business, overseeing critical national infrastructure with national security considerations, and responsibility for intervening in mergers under the Enterprise Act 2002. Indeed, the Defence Committee recently state that it was content with the investment security unit sitting within BEIS, in its report into foreign involvement in the defence supply.
Furthermore, much of the investment security unit has been formed through moving expertise across from elsewhere in government. Once fully operational, investment security unit officials will co-ordinate further input from across government to ensure that the Secretary of State can make well-evidenced decisions. It is better to focus on what the unit achieves than where it is located, and noble Lords are doing an excellent job of holding the Government’s feet to the fire on that during this Committee.
I turn to the detail of the amendment. It also seeks to set up an advisory board to the investment security unit. This would include representatives and experts from various fields. I am not clear on the exact function of such a board. In the amendment, it appears that the board is established without a clear role, and that the investment security unit would continue providing advice to the relevant Minister. The amendment would also not have an impact on the decision-maker under the Bill, as that would continue to be the Secretary of State. My expectation is that this advisory role was envisaged for the board that would be established through the amendment.
I have set out elsewhere in this Committee the engagement undertaken and planned on the regime, which enables the Secretary of State to have a full and ongoing view of what businesses, including SMEs, think in relation to the regime. In addition, I assure the noble Baroness that new subsection (4)(a) to (d) proposed in the amendment is unnecessary, as representatives from each of these government bodies will be involved either in the assessment process or the wider national security policy process, of which this Bill forms part. At this stage, taken together with all the points that I have made on the location of the ISU, I hope that the noble Baroness feels able not to press the amendment.
For the reasons that I have set out, I am not able to accept these amendments. I hope that noble Lords will agree not to press them.
My Lords, I am a poacher turned gamekeeper, as a fully signed-up member of the rolled-up trouser-leg and funny handshake brigade. For many years in the intelligence world, I hated the thought that government, Parliament or anyone else could look at my intelligence; how much nicer not to give any of that away. I am very glad that system does not work in this country. We have set up a mechanism whereby Parliament can see that highly sensitive intelligence that all of us involved in that world are immediately nervous when anyone touches. Of course if you have that intelligence, you want to hang on to it and not tell other people about it. It sounds to me as though the BEIS Select Committee will be delighted that it is to be the one making all the decisions based on the intelligence that it has. I do not really like that as a way of going forward. I could say a lot more about the response from the Government because I am not very happy about it.
Can the Minister look again at this debate and what has been asked for, because it seems very sensible for the ISC, which after all was tasked in the Justice and Security Act to do exactly this? The BEIS Committee was not. It is not too much to ask that this is looked at; it sounds very sensible.
I thank the noble Lord for his courteous comments. Of course I will review the contents of this whole debate to see whether there are any lessons that I can learn from it.
My Lords, I much regret that, due to my own IT incompetence, I was unable to speak today. However, I say to the Minister as politely as I can that he has completely misread the House, and I think he will have to look at this again. The ISC is not a bog-standard Select Committee. I have a question for him, based essentially on the speech of the noble Lord, Lord Janvrin, which I do not think he referred to. How could rumours about government action in respect of a private company which may be market-sensitive be dealt with to public satisfaction unless the ISC has oversight? It would not matter if the ISC reports were redacted; Parliament would accept that; the media would accept it. The Government have a democratic licence to operate only because of Parliament. The Minister should go away and, before Report, explain to those who have spoken and other Peers where the Government’s democratic licence to operate is in this respect, having ruled out parliamentary scrutiny in a very precise way.
I thank the noble Lord for his comments. I apologise to noble Lords if they feel that I have misread the mood of the House. The key point that I want to make in response to him is that the BEIS Select Committee—I say it again—is part of our parliamentary scrutiny and has democratic accountability in the other place. The Government are not avoiding scrutiny of the investment security unit; they are putting it somewhere where they believe that the scrutiny will be most effective, looking at the work of the unit in the round. They believe that the most effective overall scrutiny of the ISU will be found in the BEIS Select Committee.
I have a couple of questions for the Minister. He said that the remit of the ISC under the 2013 Act does not cover the work of BEIS. If that is the case, that justifies even more an amendment to the Bill to amend the 2013 Act to put in such a provision. If the Government wanted to do it, that would be the way. I do not think that we should use the law as an excuse. The law can be changed; we are making an Act now.
I have just double-checked the names, but can the Minister confirm that the current members of the BEIS Select Committee are not all even privy counsellors and certainly do not have security clearance which goes beyond Privy Council? Can he confirm that there is no House of Lords Member on the BEIS Select Committee? Can he also confirm that nothing that we have done in any of these amendments to give the ISC a role removes the role of the BEIS Select Committee—in other words, it can still look at the industrial or investment parts? We are not taking those away from it, so it would continue to have the role that he has spelt out for it, but we are adding another bit. Can he confirm those three points?
I thank the noble Baroness for those questions. First, I repeat that there is no barrier to the BEIS Select Committee handling highly classified, top-secret material. Appropriate arrangements can be put in hand to ensure that the members of that committee have access, after processes have been gone through, to that material. Secondly, of course, the committee is a committee of the other House —that is self-evident. I come back to my core point. Where the agencies which report to the ISC have done work of relevance to this, the ISC will be able to speak to them about such work, but that is very different from the ISC being responsible for monitoring the work of the ISU, which goes far wider than the responsibilities of the ISC. I have deep respect for the opinions that have been put forward, but I am afraid that I do not agree with them.
My Lords, I am grateful for the opportunity to remedy an omission from my earlier remarks, to some extent stimulated by the response of the Minister. During my time in the other place, I was a member of the Trade and Industry Committee, the Defence Committee and the Foreign Affairs Committee. Unless things have changed very considerably, in my time as a member of these committees we were never admitted to intelligence of the quality which is available on a daily basis to the Intelligence and Security Committee. We were never required to sign the Official Secrets Act, which is an obligation incumbent upon those who wish to serve on the Intelligence and Security Committee.
Since the nominations are made by party leaders, it is not unknown for reservations to be expressed about the reliability of a possible member of the Intelligence and Security Committee, the result being that the leader of the party in question determines to withdraw that nomination. To suggest that the quality of information available is the same in Select Committees on security matters as that available to the Intelligence and Security Committee is to misunderstand the different obligations incumbent on membership.
I thank the noble Lord for these comments and in no way want to second-guess the deep experience that he has on these matters. But I repeat yet again: there seems to be a worry that BEIS Select Committee members will not have sufficient security clearance to be able to do the work required of them. I repeat from this Dispatch Box that there is no barrier to BEIS Select Committee members handling top-secret and other classified material, subject to agreement between the department and the chair of the committee on appropriate handling. I am not sure that I can say more than that, but they will be able to have the information they need to carry out their functions.
My Lords, I am grateful for this debate. I am afraid that I have to say to the Minister that, while he may have used his own words in answer to the debate, he used the brief that would have been used by the noble Lord, Lord Callanan. I do not want to decry the work of the BEIS Select Committee at all, but the Minister gave the game away when he said that access to highly classified intelligence for the Select Committee would be based on an agreement between the chair and the Secretary of State. The Secretary of State would control it. In that case, Parliament would be in the position of Glendower in “Henry IV”, who says:
“I can call spirits from the vasty deep.”
So you can, is the reply:
“But will they come when you do call for them?”.
Under the memorandum of understanding, the Intelligence and Security Committee has a right to get the intelligence that it needs. A Select Committee of the House of Commons does not have that similar right.
What has run through this debate, from everybody who has spoken apart from the Minister, is that we want one simple thing. We want to make proper use of a tool that is there for Parliament and has been created for this purpose: the Intelligence and Security Committee. There are various ways of doing it, as has been made clear. It could be by annual reports; it could be by changing the terms of reference, which can be done so easily; it could be a transfer to the Cabinet Office, which would bring it within the terms of the ISC.
I suggested that this should be a real-time operation. If I may say so, the Minister misrepresented that. There is no reason why that should extend the time necessary for the assessment. The Intelligence and Security Committee will be looking at one thing—the highly classified intelligence on which the Secretary of State is acting—and reporting on that. That is not a huge job. The ISC could say quite shortly that it was satisfied, and 99 times out of 100, I think, it would say that there were good grounds for the order that the Secretary of State was proposing to be make. I think that could quite easily be done within the 30 days allowed under the Bill for the assessment. It would not even need to make use of the 15-day extension.
The noble Lord, Lord Fox, said that we need to be satisfied that that is practicable. It is now six years since I served on the Intelligence and Security Committee. If real time is impracticable, I would accept that, but there is an advantage to real time, because it would help catch the case of Huawei that the noble Lord, Lord Campbell, described. Effective action, which was not taken, could have been taken on that. I am afraid that I am not satisfied, and I think that the House is not satisfied, with the Government’s reluctance to use the facility of the Intelligence and Security Committee, and I am sure that we will need to return to this on Report. I hope the Government will think again. In the meantime, I beg leave to withdraw my amendment.
Amendment 70 withdrawn.
Amendments 71 and 72 not moved.
Clause 26 agreed.
Clauses 27 to 31 agreed.
Clause 32: Offence of completing notifiable acquisition without approval
Amendments 73 and 74 not moved.
Clause 32 agreed.
Clauses 33 to 52 agreed.
Clause 53: Procedure for service, etc