Dr Julian Lewis: On Second Reading both of this Bill and of the Telecommunications (Security) Bill, it was mentioned that in 2013, the Intelligence and Security Committee first recommended measures to prevent high-risk vendors such as Huawei from penetrating our critical national infrastructure in future. It is always the way: you wait seven years for a Bill to protect against infiltration and takeover, then two come along together.
Given that background, the ISC naturally welcomed the introduction of this legislation, and we greatly appreciated the contact that we have had with the Minister, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi). Not only did he keep his promise to write to us about the points made by Committee members on Second Reading, during my period of self-isolation, but he dealt with ISC concerns at the Committee stage and reached out before today’s debates as well. That is precisely the type of constructive engagement that we should like to have with the Government. If I do not secure the concessions that I want after all of that, I shall be very disappointed!
The issue on which I shall focus is parliamentary oversight. Normally, that would be straightforward. As the future arrangements laid down by the Bill will depend on the input of the new investment security unit, and as that unit will be housed in the Department for Business, Energy and Industrial Strategy, one would normally expect that general scrutiny could be conducted by Parliament as a whole and specialised scrutiny by the Select Committee on Business, Energy and Industrial Strategy. Unfortunately, that does not work in this case: much of the work of the investment security unit will depend on input from intelligence and security agencies and similar sensitive sources that cannot and must not be made public.
Furthermore, on Second Reading, the then Business Secretary, my right hon. Friend the Member for Reading West (Alok Sharma), made crystal clear how central secret material would be to the practical application of the provisions of this legislation. He stated that
“the whole point of the Bill is for it to be narrow on national security grounds”.
He also said:
“These powers are narrowly defined and will be exclusively used on national security grounds. The Government will not be able to use these powers to intervene in business transactions for broader economic or public interest reasons”. – [Official Report, 1 November 2020; Vol. 684, c. 206-210.]
It follows that the very areas in which the BEIS Committee would be perfectly qualified to scrutinise policy are specifically excluded from the application of the powers conferred by the National Security and Investment Bill.
That scrutiny gap was addressed, also on Second Reading, by the shadow Business Secretary, the right hon. Member for Doncaster North (Edward Miliband), who said:
“Given the sensitive nature of the issues involved in this Bill, I do think there needs to be a way…for this House to monitor how this is working in practice.
I do not speak for it, but we have a special Committee of the House – the Intelligence and Security Committee – that can look at these issues. I would like to raise the question with the Secretary of State whether it could play a role in scrutinising the working of the regime and some of the decisions being made, because there are real restrictions on the kind of transparency there can be on these issues…The ISC is in a sense purpose-built for some of these issues.” – [Official Report, 17 November 2020; Vol. 684, c. 214.]
It is hard to disagree with that, although I hasten to add that the Committee has not the slightest wish gratuitously to add to its workload, overburdened as we are due to our delayed reconstitution and the fact that we cannot operate virtually, where sensitive material is concerned, during periods of lockdown. Nevertheless, Parliament should be enabled to scrutinise the implementation of the powers given to Government by this legislation, which explicitly puts national security material at the heart of future decision making. It is obvious that there will be potential conflicts between encouraging business on the one hand and safeguarding national security on the other. In 1994, the ISC was established specifically for circumstances such as these – namely, to examine matters that Parliament could not because they were too sensitive for public disclosure and debate.
It has been suggested that the ISC cannot undertake this role this time because the organisation concerned, the new investment and security unit, is based in the Department for Business, Energy and Industrial Strategy, rather than Departments like the Home Office or the Cabinet Office, which traditionally handle national security matters. Yet this is fundamentally to misunderstand the legal basis under which the ISC functions.
There are two interlinked documents: the Justice and Security Act 2013 and the memorandum of understanding between the Prime Minister and the ISC for which that Act provides. The long title of the JSA makes it quite clear that it provides not only for scrutiny of MI5, MI6 and GCHQ, but for
“oversight of…other activities relating to intelligence or security matters…and for connected purposes.”
Section 2(1) of the Act refers to those three intelligence agencies specifically, but section 2(2) spells out our Committee’s wider remit:
“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.”
Section 2(5) explains that that MOU can be altered by agreement between the ISC and the Prime Minister. All that is required, therefore, for a Government activity in relation to intelligence or security matters to be added to the existing list in the memorandum of understanding is a simple exchange of letters between the ISC and the Prime Minister agreeing to do so.
In other words, the 2013 Act and associated memorandum were designed exactly for circumstances such as these, where evolving intelligence and security arrangements create sensitive new functions and/or new units which need Parliamentary scrutiny to be within the same circle of secrecy as the long-established Agencies. To put the matter beyond all doubt, consider finally this extract from paragraph 8 of the MOU about our remit:
“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.”
Inserted at the end of this sentence is a notation for the following footnote which explains:
“This will not affect the wider scrutiny of departments such as the Home Office, FCO and MOD by other parliamentary committees. The ISC will aim to avoid any unnecessary duplication with the work of those Committees.”
Indeed, having chaired the Commons Defence Committee in the previous two Parliaments, I can confirm there was never the slightest friction, overlap or intrusion from the then ISC into the work of the Defence Committee. The ISC looked at defence intelligence and offensive cyber, as set out in its MOU, and the Defence Committee continued to scrutinise everything else.
It really should not be necessary, every time a new unit is set up inside a Department not normally associated with national security or intelligence issues, to spell out in black and white, as I have done today, how and why the framers of the 2013 Act deliberately created the flexible memorandum of understanding arrangement that incorporated its role on the face of that legislation. It was, of course, to deal with exactly the sort of situation facing us today, where the intelligence and security battle in what is increasingly known as the grey zone of conflict mutates and moves into areas of responsibility far beyond traditional boundaries, as Deborah Haynes’ admirable new podcast illustrates so convincingly. That is why Business Ministers, rather than Defence or Security Ministers, are having to grapple with today’s legislation.
Following a constructive discussion with my hon. Friend the Minister yesterday, I was cautiously optimistic that the Government would recognise that the 2013 arrangements provide the correct basis for scrutiny on which to proceed. Of the 14 amendments tabled for today, there is one – new clause 7 – that recognises the scrutiny gap in this legislation and proposes that a special report containing the relevant classified national security material should be prepared for, and provided to, the Intelligence and Security Committee. This Opposition amendment has much to commend it, and, as ISC Chairman, I would be minded to support it if it were the only available option. However, an undertaking by the Minister today that the Government will bring forward their own amendment in the upper House to close the scrutiny gap satisfactorily in a more streamlined way would be even better.
In his appearance before the Public Bill Committee, former chief of MI6 Sir Richard Dearlove had the following exchange with the Minister, who referred to the annual report to be prepared for Parliament as a requirement of this legislation. The Minister asked:
“What is your view on balancing transparency and ensuring Government can take national security decisions sensitively? Where does that balance lie in terms of our ability to be as transparent as we can without harming sensitivities around these decisions?”
Sir Richard replied:
“My view would be that the annual report has as much transparency as possible, but you are probably going to require a secret annexe from time to time.” – [Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 21.]
Whether we go down that route of a classified unpublished annexe to send to our Committee or follow the model used in the ISC’s own reports, which are prepared in full with subsequent redactions made and marked in the main body of the text, such an approach would be the least burdensome for the Department to prepare and for the ISC to scrutinise. Either method would effectively close the scrutiny gap and get this valuable and necessary legislation off to the best possible start.