Amendment 8

Telecommunications (Security) Bill - Report – in the House of Lords at 5:30 pm on 19 October 2021.

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Baroness Merron:

Moved by Baroness Merron

8: After Clause 23, insert the following new Clause—“Network diversification(1) The Secretary of State must publish an annual report on the impact of progress of the diversification of the telecommunications supply chain on the security of public electronic communication networks and services.(2) The report required by subsection (1) must include an assessment of the effect on the security of those networks and services of—(a) progress in network diversification set against the most recent telecommunications diversification strategy presented to Parliament by the Secretary of State;(b) likely changes in ownership or trading position of existing market players;(c) changes to the diversity of the supply chain for network equipment;(d) new areas of market consolidation and diversification risk including the cloud computing sector;(e) progress made in any aspects of the implementation of the diversification strategy not covered by paragraph (a);(f) the public funding which is available for diversification.(3) The Secretary of State must lay the report before Parliament.(4) A Minister of the Crown must, not later than two months after the report has been laid before Parliament, move a motion in the House of Commons in relation to the report.”Member’s explanatory statementThis new Clause requires the Secretary of State to report on the impact of the Government’s diversification strategy on the security of telecommunication networks and services, and allows for a debate in the House of Commons on the report.

Photo of Baroness Merron Baroness Merron Opposition Whip (Lords), Shadow Spokesperson (Health and Social Care), Shadow Spokesperson (Digital, Culture, Media and Sport)

My Lords, Amendment 8 is in my name. I am grateful to the noble Lords, Lord Fox and Lord Alton, for their support. It is, of course, the same as Amendment 24 that we saw in Committee, which requires that network diversification is reported on annually.

As we heard in Committee, there is wide cross-party support for the principle that our networks will not be secure if the supply chain is not diversified. For me, this is at the very heart of the Bill and what it should seek to address. Unfortunately, we still have a Bill that seeks to secure telecoms security yet seems to think it is possible to be silent on diversification. Even though the former Minister said in Committee that

“diversification is designed to enhance security and resilience”,—[GC 551.]">Official Report, 15/7/21; col. GC 551.] the Government have said that this amendment is not appropriate. The importance of the amendment could not be clearer. I remind noble Lords that, once Huawei is removed, the UK will be left with effectively only two service providers. This is a matter of the highest concern. We need and must have a diversified supply chain. That means diversity of supply at different points in the supply chain and that different networks do not all share the same vulnerabilities of a particular supplier. This is absolutely crucial for network resilience. It will also support British companies and grow British jobs.

If the Government fail to amend the Bill on this point by accepting this amendment, they are putting our national security at risk. Therefore, I will listen closely to the reply from the Minister, but I must stress that I am minded to test the opinion of this House on this matter. I beg to move.

Photo of Lord Alton of Liverpool Lord Alton of Liverpool Crossbench

My Lords, it is a great pleasure to follow the noble Baroness, Lady Merron. Like other noble Lords, I was remiss in not welcoming the noble Lord, Lord Parkinson of Whitley Bay, to his new role earlier on. I think that is because we have all been so familiar with seeing his face throughout the proceedings on this Bill and many others. It is a great pleasure to see him in his new role.

The Government should be convinced by the arguments that the noble Baroness, Lady Merron, just advanced, simply because of what their own advisers have told them: the lack of diversification constitutes

“an intolerable security and resilience risk.”

There was widespread agreement in Committee and elsewhere about that.

I draw the Minister’s attention to the as-yet undebated report of the International Relations and Defence Committee, on which I have the privilege to serve. The report, titled The UK and China’s Security and Trade Relationship: A Strategic Void, was published on 10 September. It refers specifically to the supply chain vulnerability measures in this Bill, but says that

“such vulnerabilities are widespread in the economy.”

It continues:

“In order to retain its freedom of action towards China, the Government should conduct scenario planning on supply chain vulnerabilities and identify where action is needed to mitigate the risks.”

This amendment would give the opportunity for such discussion to take place in the House of Commons. We have to think about only the case of Newport Wafer Fab to see its importance. This was a deal of £63 million regarding the UK’s largest producer of silicon chips, which are vital in products from TVs and mobile phones to cars and games consoles. As we learned in Committee, a group of UK companies has now stepped up to the plate and hopes to acquire Newport Wafer Fab. When the Minister replies, I would be most appreciative if he would say what progress has been made on that.

Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy)

My Lords, it is a pleasure to follow the noble Baroness, Lady Merron, and the noble Lord, Lord Alton, in supporting Amendment 8. The Government have talked a good game on diversification but are guilty of much compartmentalisation. They have put diversification on one side and security on the other. As the noble Baroness and the noble Lord suggested, you cannot separate the two. Without a diverse supply chain, there is no security.

The issue of having only two key suppliers, which the noble Baroness, Lady Merron, referred to, is down to the fact that there has been a market failure in this area. If the Government do not intervene proactively to right that market failure, we will not get out of the situation we are in now. The Bill is the only game in town to do that. This amendment is therefore really important. During debates on the Bill, a number of Peers highlighted the words of the Government’s integrated review of security, defence, development and foreign policy. It was clear that a

“diverse and competitive supply base for telecoms networks” is vital to a secure future. We think these are wise words from the integrated review. As such, we are pleased to support this amendment and will be happy to vote on it in the event that the noble Baroness, Lady Merron, chooses to test the will of the House.

Photo of Lord Parkinson of Whitley Bay Lord Parkinson of Whitley Bay Lord in Waiting (HM Household) (Whip), The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport 5:45, 19 October 2021

I thank the noble Baroness and the noble Lords, Lord Alton of Liverpool and Lord Fox, for tabling and signing this amendment relating to telecoms diversification. I hope that, during my remarks, I can convince them and other noble Lords that the Bill is not the right place for this amendment for two reasons: first, diversification extends well beyond the security focus of the Bill; and, secondly, legislating for a reporting requirement would be limiting and inflexible as our diversification work evolves. I will also outline the progress made against the diversification strategy, in both government policy and industry outcomes, to seek to reassure noble Lords that progress is being made in this important area.

The Bill will create one of the toughest telecoms security regimes in the world. It will protect our networks even as technologies evolve, future-proofing our critical national infrastructure. Throughout the passage of the Bill, there has been a great deal of debate about how diversification can help to support more secure and resilient telecoms infrastructure. While our work on diversification is intended to support our security and resilience ambitions, not all diversification is necessarily relevant to security and resilience.

The telecoms diversification work that the Government are undertaking moves the market forward by broadening the supplier base in many ways which fall beyond pure security measures; these include boosting quality, innovation, competition and choice within our critical networks. It is for this reason that we have consistently argued that it would be limiting for our 5G diversification strategy to appear on the face of this Bill. Legislating for a reporting element within the Bill, by the same token, would also be restrictive.

Furthermore, as the market and technology evolve, our desired outcomes and areas of focus will evolve too. For example, in the short term, a successful outcome could be a third major vendor in the mobile market. However, once open radio access networks are ready for deployment at scale in urban areas, our measure of success might be the level of interoperability within our networks.

At the moment, we are focusing efforts on diversifying the radio access network, which is where the most critical security and resilience risks are found. In future, a focus on other elements of telecoms infrastructure, including fixed networks, will be necessary to ensure all risks to the ways in which we communicate are tackled. Committing to reporting on specific criteria would limit us to reporting against the risks as we find them today; it would not afford us the flexibility that diversification requires.

While the Government cannot accept this amendment, I hope to reassure noble Lords that our work on diversification progresses—and at pace. The Government’s plans to diversify the market were set out in the 5G Supply Chain Diversification Strategy, which was published in November last year. We also established a diversification taskforce, chaired by my noble friend Lord Livingston of Parkhead, who of course has a wealth of experience in this field having served as the chief executive for BT Group. The taskforce’s role is to provide expert advice to the Government on this important agenda.

The taskforce set out its recommendations in the spring and many of its members have agreed to continue providing expertise as part of the Telecoms Supply Chain Diversification Advisory Council, which had its first meeting last month. Work is already underway to implement many of the taskforce’s recommendations and good progress has been made on the priorities set out in the strategy. For example, research and development was highlighted as a key area of focus, in order to promote open interface technologies that will establish flexibility in the market and allow a range of new, smaller suppliers to compete in a diverse marketplace.

That is why DCMS was delighted to announce the launch of the future radio access network competition on 2 July. Through this competition, up to £30 million will be invested in open RAN R&D projects across the UK to address barriers to high-performance open deployments. This competition is part of a wider programme of government initiatives to foster an open, disaggregated network ecosystem in the UK. This includes the Smart Radio Access Network Open Network Interoperability Centre—or SONIC Labs—a facility for testing interoperability and integration of open networking solutions, which opened in June. A number of leading telecoms suppliers are already working together through this facility.

The Government also continue to work with mobile operators, suppliers and users on a number of other important enablers for diversification, for example by developing a road map for the long-term use and provision of legacy network services, expected to be announced later this year. Alongside this, the Government have led efforts to engage with some of our closest international partners, through both multilateral and bilateral mechanisms, to build international consensus on this important issue. Through the UK’s G7 presidency, the Government made the first step in discussing the importance of secure and diverse supply chains among like-minded partners, and the foundational role that telecommunications infrastructure such as 5G plays in underpinning wider digital and technology infrastructure.

We have also seen movement in the market towards diversification objectives. The industry has taken steps to adopt open radio access networks, such as the European memorandum of understanding, co-signed by Telefónica and Vodafone. Furthermore, organisations such as Airspan, Mavenir, NEC and Vodafone have now announced UK-based open radio access network facilities. This demonstrates that the industry is working alongside the Government here in the UK to drive forward the change needed in the sector. That was further evidenced in Vodafone’s commitment to deploy 2,500 open radio access network sites using equipment provided by leading suppliers, including Samsung and NEC. This is the largest deployment of its kind anywhere in Europe and an important first step in delivering the goal of more open networks.

These commitments show a genuine and significant change in the diversification of our mobile networks. I hope they also demonstrate why placing strict legislative reporting requirements on this area of work would be premature. We are at a point of rapid exploration and experimentation in this work, and I hope that noble Lords would not want to inhibit that work before it has had time to mature.

The noble Lord, Lord Alton of Liverpool, asked about the committee report. It will not fall to me to respond to that report, as I perhaps would have done in my previous role as a Whip covering the Foreign Office, among other departments. We will, of course, reply to it in full in due course. He also asked about Newport Wafer Fab. As I am sure noble Lords will appreciate, I am not able to comment on the detail of commercial transactions or of any national security assessments on a particular case. We will continue to monitor the situation closely and, as part of this, the Prime Minister has asked the National Security Adviser to review this case. Separately, work is under way to review the wider semiconductor landscape in the United Kingdom. The National Security Adviser’s review is ongoing, drawing on expertise from across government as necessary. We will continue to monitor the situation closely and will not hesitate to take further action if needed. The Government are, of course, committed to the semiconductor sector and the vital role it plays in the UK’s economy.

For the reasons that I have set out, therefore, I am not able to accept this amendment. I hope noble Lords have been reassured by what I said, and that the noble Baroness will withdraw her amendment.

Photo of Baroness Merron Baroness Merron Opposition Whip (Lords), Shadow Spokesperson (Health and Social Care), Shadow Spokesperson (Digital, Culture, Media and Sport)

My Lords, I thank the Minister for his reply. I am, of course, disappointed that the Minister cannot see that this amendment seeks to strengthen the Bill. It gives the Government an opportunity to showcase all the things of which the Minister has apprised the House. It is important to look at this proposed new clause. It would require the Secretary of State to report on the impact of the diversification strategy, something of which the Government are proud, and it allows for a parliamentary debate, something I would have hoped the Government would welcome, but this is clearly not the case.

As the noble Lords, Lord Fox and Lord Alton, have indicated, the absence so far of an effective plan to diversify the supply chain is what makes us concerned about security in this country. The Bill is the opportunity to put that right. Therefore, I feel it is only right and proper, in the interests of the security of the country, that we press this matter to a vote and test the opinion of the House.

Ayes 180, Noes 176.

Division number 2 Telecommunications (Security) Bill - Report — Amendment 8

Aye: 180 Members of the House of Lords

No: 176 Members of the House of Lords

Aye: A-Z by last name

No: A-Z by last name

Amendment 8 agreed.