The Secretary of State for Digital, Culture, Media and Sport (Oliver Dowden)

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I beg to move, That the Bill be now read a Second time.

Cutting-edge technology such as 5G and gigabit broadband have the potential to transform our lives and this Government are investing billions of pounds in their roll-out nationwide, but we can only have confidence in that technology if we know it is secure, and this Bill will create one of the toughest telecoms security regimes in the world, one that will protect our networks even as technologies grow and evolve, shielding our critical national infrastructure both now and for the future.

This Bill acts on the recommendations of the United Kingdom telecoms supply chain review, which in turn was informed by the expert technical advice at the National Cyber Security Centre in GCHQ. First, it establishes a tough new security framework for all the UK’s public telecoms providers. This will be overseen by Ofcom and the Government, and they will have a legal duty to design and manage their networks securely. Rigorous new security requirements will be set out in secondary legislation, and codes of practice will set technical guidance on how providers should meet the law, and where providers are found wanting, Ofcom will have the power to impose steep fines. For example, under the current regime fines for failing to protect security are limited to just £2 million or £20,000 per day, while under the new regime they will rise significantly, to up to 10% of turnover or £100,000 per day. Under the current regime Ofcom has limited monitoring and enforcement powers. Under the new regime it will have the power to enter premises of telecoms providers, to interview staff and to require technical systems tests.

If we pass this Bill, few other countries in the world will have a tougher enforcement regime, and the point of this Bill is not just to tackle one high-risk vendor; it raises the security bar across the board and protects us against a whole range of threats. According to the NCSC, the past two years have seen malicious cyber-activity from Russia and China as well as North Korea and Iranian actors. While I know that telecoms providers are working hard to protect our networks against this hostile activity, the Government have lacked the power to ensure they do so. This Bill puts a robust security framework in place, guaranteeing the protection of our networks.

Oliver Dowden

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The purpose of this Bill is to give us flexibility so that we do not get bound by the particular circumstances of today, and we have designed it to give us that. The four big threats we consistently face in cyber in this country are, as my right hon. Friend knows, in relation to Russia, China, North Korea and Iran, and we are seeing an evolution in some of those threats, particularly in relation to China.

This new security framework is just one half of the Bill; the second half gives the Government unprecedented new national security powers to identify and tackle high-risk vendors. Under the Bill the Government will be able to designate specific vendors that pose risks to our national security and issue directions to telecoms providers to control their use of goods, services or facilities provided by those vendors.

Oliver Dowden

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In short, yes, the right hon. Gentleman is absolutely correct. What this Bill does is bite in three respects. First, it sets out the overarching duties on mobile network operators and other telecoms providers in statute. It then empowers the Government through secondary legislation to provide further requirements on them. On top of that, for the tier 1 providers, which will basically be all the big telecoms providers, it also introduces a code of practice whereby they have to comply with that to ensure that they are secure. Across the board, the Bill tightens the requirements on them.

Oliver Dowden

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I cannot imagine what my hon. Friend is alluding to. This is aimed at the telecoms providers, but in tightening the security requirements on them, it in turn, of course, tightens the security for individual telecoms users. The Bill makes it a duty for telecoms providers to comply with those directions and introduces robust penalties for those that fail to do so.

The point is that these powers will protect us against both the high-risk vendors of today and the threats of tomorrow. I know that for right hon. and hon. Members there are significant concerns about one high-risk vendor, Huawei. This has rightly attracted the attention and concern of many hon. Members and I want, first, to reassure them that I have heard them, that I am acting and that I am taking a clear-eyed approach to protecting our national security.

In July, I announced that UK telecoms providers should cease to procure any new 5G equipment from Huawei after 31 December 2020 and remove all Huawei equipment from our 5G networks by the end of 2027. This Bill enables us to implement those decisions in law.

Oliver Dowden

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My hon. Friend makes a very important point, and I will be coming on to that in a minute. It is actually happening now because telecoms providers and mobile network operators know three things. They have to remove Huawei equipment in respect of 5G by 2027 entirely. They cannot purchase any equipment from the end of this year, and—I will come on to this shortly—we have double locked that, as it were, by having the installation requirement. Mobile network operators are already working on that assumption.

Oliver Dowden

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To clarify the position for the right hon. Gentleman, mobile network operators cannot purchase from December this year—so they can purchase it now— and the installation limit will then apply from September 2021. The point of these measures is to address the concerns that Members rightly raised that companies could be incentivised to purchase large amounts of stock, stockpile it and then roll it out right the way through to 2027. I told the House in July that I would set us on a clear and unambiguous path to 2027, and these measures do exactly that.

Oliver Dowden

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I thank my right hon. Friend for his intervention. The interventions are tempting me to jump around points that I intend to make, but he is right about the importance of diversification. We have published the diversification strategy, which is available for Members to examine, and I will come on to it in a moment.

It is this Bill and this Bill alone that gives Members the assurances they seek for the security of our networks both now and in the future. Further to the point made by my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), operators are already taking our approach seriously—they are working now to meet the Government’s requirements. For example, BT has signed a deal with Ericsson for 5G equipment to enable it to phase out Huawei and is already in the process of using Ericsson products to replace Huawei in its core. Where operators can go further and faster without jeopardising the stability of our network, we will of course encourage them to do so, but it would be a big risk to force them to go even further. BT and others have warned that moving faster could put our networks under considerable strain, creating significant risk of blackouts, and it would take longer for 5G to reach the parts of the country where it would make the most difference.

Oliver Dowden

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My Department is in close contact with mobile network operators. I do not think that the sort of risk my right hon. Friend describes of companies going bust is remotely the case. Furthermore, we have given clear advance notice of this. For example, we made the first statements in January this year. We updated the guidance in July, and we also consulted extensively with the mobile network operators on the requirements in relation to installation that I am announcing today.

Oliver Dowden

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I will make some progress. I may come back to the right hon. Gentleman later, but I have already given way to him twice.

I know that some Members are concerned that we have not named Huawei on the face of the Bill and that our approach could be reversed in years to come. I want to reassure those Members on a number of fronts. We have not chosen to name Huawei for two compelling practical reasons. First, as we discussed, this Bill is designed to tackle not only the Huaweis of today but the Huaweis of tomorrow, wherever they come from. It needs to be flexible enough to cover future threats and not tie our hands by limiting our response to one company and one company alone. Secondly—this is the most crucial point—making reference to any one company would create a hybrid Bill, dramatically slowing the passage of the Bill and therefore our ability to combat all high-risk vendors, including Huawei.

However, as a concrete sign of our commitment to tackling the national security risks posed by Huawei, I can confirm today that we are going further in two significant ways. First—I hope Members will have had a chance to see this—we have published an illustrative designation notice and an illustrative designated vendor direction to demonstrate how the Bill’s powers in relation to a high-risk vendor could be exercised. Given the level of concern in this House and in the other place about Huawei’s role in 5G infrastructure, these illustrative drafts name Huawei explicitly, clarifying our position beyond doubt, and set out a clear pathway to the reduction and removal of its equipment.

Oliver Dowden

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My hon. Friend raises an important point. We are clear-eyed about putting national security first. If national security and economic interests are in conflict with each other, national security comes first. But within the context of that, we have properly weighed up the risks as between different dates. I believe that 2027 strikes the appropriate balance in that it can be delivered with impact, in the way that I described in my statement to the House in July—it will have an impact in terms of cost and roll-out for mobile network operators—but it does not run the risk that we go too far and too fast, whereby we risk some sort of blackout and loss of provision.

In addition to the draft directions, we are going a step further by using the illustrative directions to set out a new hard deadline for the installation of Huawei equipment. That direction makes it clear that all operators must not install Huawei equipment in their networks from the end of September 2021.

That clarification has clear practical implications. It will prevent any operator from stockpiling Huawei kit in the hope that the ban might be reversed. The new installation deadline will create cold hard facts on the ground, effectively turning the plan for Huawei’s removal into an irreversible reality.

The powers in the Bill also allow us to keep an eagle eye on the progress of Huawei’s removal. They enable us to require Ofcom to obtain information from companies to see whether a provider has complied, or is complying, and they allow us to require providers to prepare a plan setting out exactly how they intend to get to zero Huawei by 2027.

Using those powers, we will not just publish an annual report of compliance on the removal of Huawei equipment, but keep a close watch on the future progress of all telecoms companies where Huawei is concerned. Under this rigorous monitoring and reporting system, no provider will be able to drag their feet. They will need to provide proof that they are working to meet the 2027 deadline. But, critically, we can do this only if we secure these important powers—the powers that will enable us to take action in relation to Huawei to protect our networks, but also to take action against any other potential high-risk vendors now and in the future.

Oliver Dowden

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I say to the hon. Gentleman—[Interruption.] I beg his pardon. It is the right hon. Gentleman. I stand corrected. I say to the right hon. Gentleman that, first, this Bill and the measures in it implement what we announced as a Government in January and July, which, in turn, was based on the advice of the National Cyber Security Centre and GCHQ. In relation to whether I, or any Secretary of State, has sufficient powers in the Bill, I refer him to clause 16(2), which inserts new section 105Z8(4)(a) to (l) into the Communications Act 2003, which sets out a very wide range of bases on which I can designate a provider as high risk and take measures, so I am confident that I have those sufficient powers.

We must never find ourselves in this position again. Over the last few decades, countless countries across the world have become over-reliant on too few vendors, thanks to a lack of competition in the global telecoms supply chain. While this is a global problem, today this Government are officially leading the way in solving it. Alongside the Bill, we have published an ambitious diversification strategy—the first such strategy to be published anywhere in the world. It sets out our vision of what an open, competitive, diverse supply market for telecoms will look like, and the measures we will bring forward to develop an innovative and dynamic market.

We want to make progress as quickly as possible, so today I can also confirm that we are committing £250 million to kick-start this work. That includes funding and building a state-of-the-art national telecoms lab, which will bring together suppliers from across the world to test the performance and security of their equipment. We are also running a 5G open radio access network trial with the Japanese supplier NEC in Wales to help the entire UK benefit from this exciting new industry. That, of course, comes on top of NEC establishing a global open RAN centre of excellence in the UK just last month. We also know that Vodafone has recently announced that it intends to deploy open RAN technology across more than 2,600 of its sites—the largest commitment of its kind across any European network.

Oliver Dowden

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I am pleased to say that the Minister for Digital Infrastructure has met every one of the parties my hon. Friend named; indeed, I have met many of them. Essentially, we are working across three strands. First, we are working with the existing vendors—there were three, now to become two—to secure them and make sure we do not lose a further one. We are also working with new potential incumbents such as NEC and Samsung. In addition, we are working across a range of countries, in particular the D10, to ensure that we work together to improve standards in telecoms.

Oliver Dowden

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My right hon. Friend highlights one of a range of different market distortions that have been going on. To a certain extent, there will be some market correction, but the Government also need to intervene, and our diversification strategy addresses that. If we are to get existing vendors who are not currently in the UK market back in, or to create a new open RAN solution, we need to provide financial incentives, and the diversification strategy touches on many of the steps that we propose to take.

We are taking concrete steps towards a solution, but diversification is not just a problem to be solved. It is also an opportunity to be seized. As part of our strategy, we will invest in homegrown solutions that will put us at the forefront of developing 5G technology and all the transformative benefits it brings. The next phase of this work will be taken forward by the Telecoms Diversification Task Force, chaired by Lord Livingston, formerly of BT, and others. I am grateful for the work that he, industry and academic experts have done in developing the strategy and in taking it forward.

The Bill has not been designed around one company, one country or one threat. Its strength is that it creates an enduring, flexible and far-reaching telecoms regime, one that keeps pace with changing technology and changing threats, that supports billions of phone calls, email exchanges and file transfers in this country every day, and that is essential to the UK’s economy and its future prosperity.

I listened carefully to the concerns of Members on both sides of the House in designing the legislation, and I have sought to address those concerns head on in the Bill as it stands before the House. I genuinely hope that the Bill will command cross-party support and that we will be able to work together in the national interest to ensure the security of our telecoms networks. I commend the Bill to the House.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)

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I thank all Members for a well-informed and important debate. We have heard across the House that all Members believe that this Government should be putting national security at the very top of our agenda. That is what we are doing tonight. We are also putting forward a strategy that will allow the UK to derive all the benefits that we possibly can from all the enhanced digital reliance that we have seen across the country over the course of this pandemic and, of course, before it.

We have all heard this evening just how much connectivity matters and just how much our national security matters. We heard upwards of 20 speeches, which clearly demonstrated the critical importance of the security of our telecoms networks, especially as we move into the next phase of digital connectivity. As the Secretary of State has said, this Bill will raise the security bar across the board. It will provide us with the capabilities that we need to protect ourselves from a range of threats, both now and in the future. I am pleased that the Bill has support across the House. It is clear that we are all keen to put the UK’s national security interests first.

I hope that Members are reassured that the Government are taking these issues seriously. A number of Members referred to the Huawei interest group. Much as I have enjoyed being the subject of the Huawei interest group’s interest, I am glad that we have come to a position that has been welcomed across the House. The Government have taken steps today both to lay out our diversification strategy—an important £250 million commitment that is detailed and has real potential to see British companies grow in the way that my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) identified—and to publish illustrative designations and directions demonstrating the transparency that many Members across the House have asked for. Through that, I think we have demonstrated our commitment to dealing with the risks to our networks and the national security threats that come from high-risk vendors.

I turn to some of the points that have been raised in the course of the debate. The first, which was raised across the House, is the important matter of human rights. We want respect for human rights to be at the centre of all business that takes place in this country. These are vital issues that go much wider than telecoms. A number of Members rightly pointed out that the Telecommunications (Security) Bill will be focused on matters related to telecommunications and security, but of course we have serious concerns about the human rights situation in Xinjiang, including the extrajudicial detention of over 1 million Uyghur Muslims and other minorities in political re-education camps, systematic restrictions on Uyghur culture and the practice of Islam, and extensive invasive surveillance targeting minorities.

Where China is not meeting its obligations under international law, the UK Government will continue to speak out publicly. Indeed, the 30 June formal statement that the UK read out on behalf of 28 countries at the UN Human Rights Council highlighted arbitrary detention, widespread surveillance and restrictions targeting ethnic minorities. The Government published their response to the consultation on transparency in supply chains in September, and we are committed to taking forward an ambitious package of changes to strengthen and future-proof the transparency provisions in the Modern Slavery Act 2015. While, as many have said, issues of human rights are not matters directly for this Bill, they are acutely important, and Britain will continue to take that leading role.

Matt Warman

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As I said earlier, we would want to apply those standards not just to telecoms companies but to the garment industry and in a host of other areas where we know that there is the potential for similar abuses. I absolutely hear what my right hon. Friend says, but Britain can do better than focus simply on the relatively narrow aspect of telecoms.

Matt Warman

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I am not going to engage too heavily with my hon. Friend’s trousers, but I will say to him that, as I said a minute ago, we are committed to taking forward an ambitious package of changes to strengthen and future-proof the Modern Slavery Act 2015, and that is one of several significant avenues that are open to him.

On the important matter of diversification, the telecoms supply chain review asked how we can create sustainable diversity in our telecoms supply chain. That question is addressed by the new diversification strategy that we published today, which is crucial to ensuring that we are never again in a situation in which we are dependent on just a handful of vendors who supply the networks on which so many of us have come to depend. I wish to spend a little time on this issue. The Government have been working at pace to develop the 5G supply chain diversification strategy, which sets out a clear vision for a healthy, competitive and diverse supply market for telecoms and the set of principles that we want operators and suppliers to follow.

The strategy is built around three key strands: first, securing incumbents; secondly, attracting new suppliers; and thirdly, accelerating the development and adoption of open and interoperable technologies across the market. That is why, in the diversification strategy that we published today, we commit to exploring commercial incentives for new market entrants as we level the playing field; to setting out a road map to end the provision of older legacy technologies that create obstacles for new suppliers; and to investing in R&D to grow a vibrant and thriving telecoms ecosystem here in the UK.

I say gently to the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) that we have directly addressed a number of the issues that she raised in Westminster Hall last week. I look forward to engaging with her more on the strategy because it is important that we should work together to try to make sure that we all derive the benefits of a serious £250 million Government commitment that will drive early progress and ensure that our 5G diversification strategy not only bolsters the resilience and security of our digital infrastructure but creates opportunities for competition, innovation and prosperity.

Matt Warman

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We do not anticipate legislation as a direct result of the diversification strategy, but of course there are other important avenues to explore as part of the broader industrial strategy. A lot of what is in the diversification strategy does not need to be delayed by the legislative programme, and I think my right hon. Friend would welcome that.

A number of Members raised the role of Ofcom. Ofcom will monitor, assess and enforce compliance with the new telecoms security framework that will be established by the Bill. It will report on compliance to the Secretary of State alongside publishing the annual reports that he mentioned on the state of the telecoms security sector. I want to be absolutely clear: we have had productive conversations with Ofcom already. Ofcom will continue to have the resources it needs. We appreciate that those needs will be affected by the changes that we are bringing in today, and we will agree their precise nature with Ofcom. We will make sure that Ofcom has all the security clearance that it needs to do the job, and all the resources, external or otherwise, to do the job, because this is an important new power.

Ofcom may also play a role in gathering and providing information relevant to the Secretary of State’s assessment of a provider’s compliance with a designated vendor direction, and it may also be directed to gather further information to comply with the requirements specified in a direction. The Bill already enables Ofcom to require information from providers and, in some circumstances, to carry out inspection of the provider’s premises or to view relevant documents. Ofcom’s annual budget, as I say, will be adjusted to take account of the increased costs it will incur due to its enhanced security role.

Let me turn to a couple of issues raised by the hon. Member for Newcastle upon Tyne Central. We will of course be working with local authorities and with networks to minimise any disruption, but we do not anticipate that the decisions that we have made over the past few months will have a direct impact on existing commercial decisions. As the Secretary of State said, we do not expect the two to three-year delay to be extended by what we have said today, but we will keep in close contact with the networks and continue to make sure that we do everything we can to remove the barriers to the roll-out of the networks as far as we possibly can. I do, however, expect companies to do as much as they can to minimise the effects. These are commercial decisions that have been made by companies over a number of years. We have already seen, as a result of the Government’s approach over the past few months, significant changes to decisions. I welcome the neutrORAN project that my right hon. Friend the Member for Vale of Glamorgan mentioned, as well as a number of others that have been taken by networks that already see important changes to how they procure their networks.

Matt Warman

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Those decisions, as I said, were taken in the context of the environment that people were already well aware of, and they are taken at a degree of commercial risk. However, we have worked closely with the networks to ensure that there will be no additional delays as a result of this decision. I think it is the right thing that puts national security at the absolute heart of our programme, but it also does that in the context of not jeopardising the clear economic benefits and the clear practical benefits of improving connectivity across the country that we would all like to see.

On the emergency services network, we anticipate that these announcements concerning Huawei will have a very low impact on the emergency services network. We do not anticipate any impact on the programme schedules. There is some Huawei equipment in the EE part of the emergency services dedicated core network that EE is already working towards removing.

Let me cover one other aspect raised by the Chair of the Intelligence and Security Committee, my right hon. Friend the Member for New Forest East (Dr Lewis). I look forward—maybe that is not quite the right phrase—to appearing before the ISC in the next few days. We will always co-operate with it, and I am very happy to work with it on the best way to balance the obvious requirement between transparency and national security, although we would always seek to be as transparent as we possibly can be within those important bounds.

Matt Warman

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I will simply say that the Government will always put our national security interests first, and of course we are always alive to the commercial interests of the companies that seek to engage with us in this matter or any other. I look forward to further engaging with my right hon. Friend and his Committee.

To conclude, this Bill does not simply produce a framework that will address one particular company or even one particular country. It sets up the futureproof regime that will allow us to deal with the company that we have spoken about so much this evening and also its successors in successor networks. The intention of this legislation is to persist well beyond the current challenges that we face. I am glad that it commands the support we have seen across the House. I am immensely grateful for what has been a genuinely well-informed debate and one that I look forward to carrying on in Committee. The Telecommunications (Security) Bill will create one of the toughest telecoms security regimes in the world. It will enable us to protect our national telecoms infrastructure, and it is also a chance for the UK to become the world leader in the development of new 5G technology that we all know we can be.

Question put and agreed to.

Bill accordingly read a Second time.

Telecommunications (Security) Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Telecommunications (Security) Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 19 January 2021.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(David T. C. Davies.)

Question agreed to.

Telecommunications (Security) Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Telecommunications (Security) Bill, it is expedient to authorise any increase attributable to the Act in the sums payable under any other Act out of money so provided.—(David T. C. Davies.)

Question agreed to.

Telecommunications (Security) Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Telecommunications (Security) Bill, it is expedient to authorise provision requiring public communications providers to pay certain costs incurred by the Office of Communications.—(David T. C. Davies.)

Question agreed to.

Telecommunications (Security) Bill (Carry-over)

Motion made, and Question put forthwith (Standing Order No. 80A(1)(a)),

That if, at the conclusion of this Session of Parliament, proceedings on the Telecommunications (Security) Bill have not been completed, they shall be resumed in the next Session.—(David T. C. Davies.)

Question agreed to.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)

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Q Thank you to all of you for your engagement today and with the Government up to this point. Given the time, I have one, simple question. The Bill is setting up a new telecoms security framework to enhance network security. How confident are you that you will be able to comply with that in full, and what else would you like to see from the Government to enable you to do that?

Andrea Donà: We need the clarification that I mentioned of what is, and what is not, in scope, so that we have absolute clarity from the word go. We all work together to understand the profile of that implementation. It cannot be a big bang—everything complying from day one. We obviously need to do a detailed risk assessment of the areas that we need to work on immediately on the Bill’s coming into force, and of what can afford to be done at a secondary stage, based on the risk assessment and the risk management analysis of the various assets in our network.

Derek McManus: As I said in my opening remarks, collaboration to date on getting the Bill to this stage has been positive. We should continue that. My request is for flexibility to help us execute effectively, while balancing the other demands on the industry.

Matt Warman

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Q Thank you to BT for your engagement thus far. I have two questions. The first is the same question I asked the other operators and is about the telecoms security framework. How confident are you that you will be able to comply with all the strictures in that? Secondly, to develop one of the questions that you have just answered, 2027 is very much a deadline and not a target. It is important that we hear more about your ability to meet that target. How taxing is that? How do you plan to make sure that everything you do can encourage the presence of a third—or more—vendor over the time we have between now and then?

Howard Watson: Let me take the final part of that question first, Minister. We are very much aware that that is a deadline, not a target, but we welcome the fact that the deadline is 2027. I have given evidence previously and have talked with Government significantly about the real risks to the availability of service if we pull that date forward.

We have a lot of infrastructure. That deadline allows us to plan carefully how we can switch off a site, if we have to, to replace it and swap it out, so that the spike has overlapping coverage from adjacent sites. Were we to be required to bring those timescales forward, we would be talking about mobile blackouts in the UK, which clearly we all want to avoid, given the increasing dependence of UK citizens on networks. We have a plan that gets us to that. The 35% by 28 January 2023, just two years away, is a little bit more challenging, but we have a plan to get us there. The pandemic is making that challenging, but right now we are on track for that too. I think that answers the second question.

In answer to your first question, the ambition that we have, and what will become requirements across the TSRs, will put the UK ahead of the pack, in being a safe place for people to work and run businesses, secure in the knowledge that we have a high level of protection against cyber-threats. We welcome that, particularly in the environment in which we are now operating.

We have remaining questions—we raised some of those in our written evidence—about the sequence by which the requirements will be applied. We think it is critically important that there is a strong baseline level of compliance that applies to everybody who operates a network in the UK. We do not want to have entry points through weak links across our environment.

Alex Towers: A large majority of what is in the TSRs reflects current best practice and we are already complying with it. There are some places where there is a stretch for us to do more, which is good. The key point, I suppose, concerns Howard’s point about making sure that the baseline for all operators is higher and strong enough, given that these are inter-connected network, as you have already heard this morning. The whole edifice is only as strong as its weakest point. We are concerned about the idea that the code of practice might not apply to some operators, for example. That is the sort of detail that we will begin to see debated further as the Bill goes through.

Matt Warman (Boston and Skegness) (Con)

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Q Thank you, Mr McCabe, and thank you both for your engagement and for welcoming what we are doing. I am interested to know what you feel will be the best way to work with the sectors that you represent, particularly in taking forward the diversification strategy. It is an increasingly diverse sector. The Government want to get the best they possibly can out of that £250 million initial tranche of diversification money. What are your thoughts on how we have worked with the sector thus far and what more should be going on in the future?

Hamish MacLeod: My meeting following this hearing is with the operators addressing that very point. This is something that we want to work extremely closely with the Government on. We are meeting officials next week to continue the conversation on doing things such as setting out the road map for what needs to be done R&D-wise to develop open RAN, what needs to be done from the point of view of the test programme, and what needs to be done on the standardisation road map. We will be taking a very close interest, both as individual operators and jointly.

Matthew Evans: To add to that, I echo that we have had excellent engagement with the Minister’s officials. It is about keeping the momentum up while working with the grain of industry and making sure that we are getting the incentives on the supply side, in the R&D and in the testing, and also in the demand side. That is all about making sure that we have the right commercial incentives for operators, but also that we have the right skills and, if necessary, reinforcing the operators on some of those points as well.

Matt Warman

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Q Again, I thank both NEC and Mavenir for the productive conversations that we have had already about getting involved in UK networks. Obviously, one of the things that was in the diversification strategy is the project with NEC—the NeutrORAN project that we have talked about a little bit today already; and I hope we could do, if possible, something similar in the future with Mavenir. What is striking about the NEC project—it is genuinely significant for UK networks —is that it is a £1.6 million initial jolt of funding. First, Chris—but I am very interested in Mavenir’s perspective as well—will you say a little about how Government can best target the funding? One of the things that we learnt in our previous discussions with you was that this is not solely about the scale of the funding but about the targeting, the way in which we do it and how we get the best value for taxpayers. Chris, will you say a little about that, then we can hear from Mavenir about what the equivalent sort of things might be?

Chris Jackson: First of all, thank you very much indeed, Minister, for support in that particular trial. We believe that this is very important, because it has given us the opportunity to showcase 4G and 5G open RAN capability with multi vendors, and we are doing it in supporting the share of your network, which we know is an important KPI for the UK Government, in terms of increasing that capability across the UK. They want to ensure that the investment is targeted at areas within the UK—where the UK will receive the most benefit—and, more importantly, or as importantly, an opportunity for a trial that brings multiple companies together. So, although NEC is leading this particular trial, we are working with a number of other companies to bring this overall solution together. That is exactly what open RAN is trying to embrace, and that is the way forward. We would be delighted to work with Mavenir; we are already involved with Mavenir as well. That is not a hurdle or obstacle for us.

Stefano Cantarelli: There are several angles. The first one is the neutral hosting. I would like to draw attention to the fact that we have already done work with British Telecom, two years back, on neutral hosting, so that has now been talked about for a long time. Also, you might have noticed in the market that companies—the one that comes to mind is Vilicom—have been doing this type of thing, where they deploy Mavenir infrastructure to provide neutral hosting capabilities. So, we are fully supportive and believe that this kind of funding is particularly important.

We understand that that there is some interesting funding. We are in discussion with DCMS. We are discussing some projects that we believe will boost a lot of the innovation in this space. For example, we are trying to get funding for our R&D activities for open source software that could boost the availability of radio units. We say that the radio unit is hardware, but in reality there is of course a bit of software on top. This type of software, which is mainly interfaced towards the rest of the software and the control of the operation and maintenance activities, is not differentiated for each radio unit; it is just standard. By having an open source like that, you can fundamentally get the radio vendors to focus on their IPR for analogue development and being able to produce a radio unit with different frequencies, as Pardeep said before, which we believe could boost the market. That type of funding is particularly useful, because it is aimed at boosting the market and giving availability in the open RAN of these radio units.

I would also like to add that most of the frequencies that are used today in the UK are available in our view for open RAN, so I do not see that as a problem. But that type of investment is particularly important—in R&D—so the trial that you have funded in the first round of the 5G Create programmes is particularly useful to get learning and experience. As I said, in the SONIC, we are particularly active, although that is not a 5G Create programme but a different one. We believe that in the second round, you can focus on funding some R&D specifically to boost the ecosystem of the open RAN.

Matt Warman

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Q Finally, would you agree that there are plenty of opportunities for us to use those trials and test beds to boost British companies, particularly in software, around open RAN? That is probably where British firms are likely to focus, at least in the first instance, rather than hardware.

Stefano Cantarelli: First, remember that, as John mentioned, we acquired ip.access, which is a British company that has been in hardware for some time, so there is still space for hardware as well. Software is definitely where the majority of the innovations are. That is particularly clear—Chris mentioned this—in the IT space, where they moved from generic servers. I want to reinstate that, with servers generically available everywhere. The whole thing has really flipped on to different software. That will definitely boost the ability of a lot of companies to bring innovation.

As we always repeat, competition means innovation, and innovation is the only way. Many years ago, I was part of Vodafone. I built the 3G network for Vodafone in the UK, and at that time I had only one supplier in my network—I will not say who. I introduced another one, and it was only then that the other suppliers started to be active. Some legacy suppliers—I would say most of them—start to sit down and lie back if they are the only one in the network, because there is no motivation. From my experience from all these 30 years, that component is so important.

Matt Warman

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Thank you.

Matt Warman

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Q Thank you both for what has been a really interesting discussion. I wanted to ask, partly because you mentioned it specifically: when it comes to looking at other parts of the network, such as the internet of things, are you aware of the work that we have been doing—for instance, in October we published work specifically on regulating smart devices—and do you see that sort of work as being complementary to the kind of work that we are talking about here today in relation to the Bill? Perhaps once you have dealt with that, we can deal with the Bill itself.

Julius Robson: I think it is important. What we are looking at in the 5G era is the application of mobile technologies for specialist industries, and it is entirely relevant that those industries have their own requirements for security and other requirements that apply on top of what is necessary in the basic mobile network. I do not think we need to duplicate that effort. Where we are using mobile in certain scenarios, the scenario should define the requirements. The base level of mobile connectivity should be something suitable, and affordable, for the consumers and the masses.

Dr Bennett: I am aware of the work you have been doing on security for the internet of things. I think it is complementary and extremely important. Everything should have security by design in it. It is very important to cover these types of points.

Matt Warman

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Q In saying that, it seems to me that it supports the point of view expressed earlier, that this piece of legislation should not be expected to do everything. It is part of a broader Government response. You laid out a lot about what you think a secure network looks like and what its characteristics might be. They are not controversial in themselves. The point of debate seems simply to be whether those are for a regulator to define and be able to update on a regular basis, because we need to able to respond, or whether they should be on the face of the Bill.

I would have expected you to say, if I can put words in your mouth, that you would like the agility of the regulator’s ability to update those codes of practice, to be able to say to networks, “This is what secure looks like. If you are complying with these kinds of codes of practice, then we will be able to understand that you are meeting the requirement.” You seem to actually be saying that you want greater rigidity. I am interested to understand whether you would like the codes of practice to have the flexibility offered by the writing from the regulator or whether you would like to see them on the face of the Bill.

Dr Bennett: I think we actually want both. There should be mention in the Bill of some of the ones that I think are key, so that people realise that there is going to be a code of practice on that they should follow. It is very important to be able to be agile and to get early information, from something like a technology reference panel, about things that are coming along, in order that you think about them before they get attached to the network. Trying to do it after you have attached something to the network is frankly a nightmare, so you need to be anticipating. It is not clear that there are mechanisms for that anticipation in the Bill.

Given the SolarWinds Orion hacking, which is a recent example of something that will take a long time to sort out and is precisely what you do not want to happen in the future, it would be sensible to get someone like NCSC to test whether the things in the Bill, and things that should be in the Bill, would have enabled the mitigation of that problem to happen faster than it has. The Bill ought to be doing something like what the Americans are doing in response to that now. The Government should consider a rapid response, co-ordinated unit to deal with similar incidents in the future, because they will happen. That is the kind of thing that ought to be in the Bill to say, “This is how we are going to be able to mitigate these problems when they happen, as quickly and sensibly as possible.”

Matt Warman

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Q I suppose, in a sense, you are already seeing some of that, are you not, with us already publishing the draft designations, the draft directions and some of the secondary legislation that would be enabled by this Bill? I think you are arguing for as much transparency as possible, of the sort that you have already seen from the extensive NCSC blogs on what the standards might look like. I do struggle to see how you would put that on to a statutory footing in the way that you have described without constraining some of the agility. Fundamentally, however, your argument seems to be in favour of transparency above all else.

Dr Bennett: Yes, and anticipating things as early as possible.

Matt Warman

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Q Thank you, Mr McCabe, although Dr Steedman was articulating some of the answers to the question that I am going to ask. Dr Steedman, the diversification strategy, as you described, lays out the importance of our work in international bodies and in international co-operation. Could you lay out what you think the most influential bodies are and where the Government should be focusing there? And Mr Parton, could you talk about how you see this Bill fitting together with the National Security and Investment Bill, to try to tackle some of the issues that you described yourself a few moments ago?

Dr Steedman: Thank you, Minister. I might suggest that this is very much a matter of horses for courses. There is a range of organisations. I mentioned the ORAN-ALLIANCE; that is clearly one. We know, obviously, about 3GPP and the role of ETSI and 3GPP; that is another. And there may be roles for the formal bodies. We need to discuss the ITU-T, the UK participation in ITU-T and how we can strengthen that. With respect, this is an area that we need to work further on; and in the diversification taskforce, we are talking about the detail of that and how we might approach it from a United Kingdom perspective.

I am optimistic that the initiatives that have been taken today with the diversification taskforce, under Lord Livingston’s leadership, are going to produce for you really quite powerful ideas and initiatives to be taken forward in the years ahead. This is possibly the first time that the UK has really co-ordinated its input in this way to try to achieve some industry transformation and behavioural change.

The other areas I have mentioned, Minister, that are really important are in the area of procurement. This is not just about the technical standards; it is also about the way standards are used in the supply chain to stimulate behaviours and to enable SMEs to participate, rather than our just being locked into large-scale providers. I am very keen that we should comment on and discuss that, and those standards are not in the technical environment; they tend to be more in the business environment, where the UK has a very strong position already in global business standards. So there is another tool in our tool shed, to be used when we come to looking at shaping the market. I am looking forward to discussing that further with you in the taskforce.

Matt Warman

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Q Mr Parton, will you comment briefly on the co-ordination between the NS&I Bill and this Bill in a more wide-ranging response to the Chinese situation?

Charles Parton: I cannot possibly deal with this in one minute. Obviously, telecoms is a very crucial—an increasingly crucial—part of critical national infrastructure, so they are very closely linked. It goes back to what I was saying earlier. There is this question of where in the science and technology field and our research and development we allow ourselves to co-operate with China, given that its attitude is one, I think, that is really quite risky. So, when the DCMS talks about the extremely fine idea of setting up a national telecoms laboratory, I do hope that, in setting it up—it talks about co-operating widely internationally—it takes that sort of thing into account, too. I think that there will have to be great restrictions there.

This might be another example. I am well out of my field here, but we have designated high-risk and non-high-risk vendors, but what happens if some of the Chinese—they do not have to be Chinese—higher-risk vendors try to sneak under the wire by purchasing or using proxies? Again, I think that needs to be considered.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)

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It is a pleasure to serve under your chairmanship, Mr Hollobone. I echo the thanks of the hon. Member for Newcastle upon Tyne Central to you and the House staff for facilitating this Public Bill Committee. I also echo her praise for the temperature of the room and especially her commitment to crack on and not fill it with further hot air. That is to be welcomed.

Like the hon. Lady, I will briefly talk about the broader context of the Bill before I directly address this group of amendments. As we all know, security should be the first priority for any Government, and the Bill demonstrates this Government’s commitment to securing the UK’s telecoms networks.

Clauses 1 to 14 raise the bar for security across the whole telecoms sector, and the subsequent clauses—15 to 23— provide the mechanism for the Secretary of State to manage the role of high-risk vendors. The part that telecoms plays in our security is undeniable and has become even more evident in the midst of this global pandemic. At present, the internet provides absolutely everything for workplaces, schools, families and friends, and the Government are committed to improving that through our gigabit programme. New technologies have the potential to be transformative, but they have the opportunity to reach their full potential only if they are secure, and the Bill will ensure that.

Before I explain the Government’s response to amendments 7 and 8, it is necessary to explain briefly how they would interact with clause 1. New section 105A in clause 1 places a duty on providers to take “appropriate and proportionate” measures. Those measures oblige providers to identify and reduce the risks of security compromises and require them to prepare appropriately for those risks. New section 105A also addresses the interaction between the duty and the national security and law enforcement activity, such that these activities are appropriately excluded from the definition of a security compromise. I will return to new section 105A later—I know that will excite the Committee.

Alongside the overarching security duty in new section 105A, new section 105B gives the Secretary of State the powers to make regulations that impose duties to take specific security measures. Clause 1 creates a duty for providers to take “appropriate and proportionate” measures to protect their networks and services from security compromises. “Security compromise” is then defined in new section 105A.

Matt Warman

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I simply say that, as the right hon. Gentleman knows, the NCSC and others already work very closely with the networks. What he seems to be talking about, in some ways, is a very day-to-day way of talking about security concerns. That happens a lot already, and what the codes of practice and other documents will do is set up the framework by which that is formalised. As he knows, that process of very quick action being taken as soon as something is spotted, both by the networks themselves and by our agencies, is already well established, and the Bill gives considerably greater force to it.

As the right hon. Gentleman knows, the Bill is aimed at ensuring that providers take responsibility for the security of their networks and services in a way that has not happened, in legislative terms, in the past, and it then provides the Government with the powers that we need to enforce that. In so far as any supply chain components give rise to risks to the security of a network or service, new section 105A already requires providers to take appropriate action and proportionate measures to identify those risks. I appreciate that this is a probing amendment, but in a sense what the right hon. Gentleman is seeking to do through it is already there, and it will be enforced in the documents, such as the code of practice, that I have mentioned.

Furthermore, the addition of the presence of a supply chain component as a security compromise would not be consistent with the security framework’s definition of a security compromise, but I do not think that we need to get into too much detail about that in the context of a probing amendment. The concept of a security compromise is used in other provisions in the Bill, and it is important that we are consistent.

More fundamentally, the right hon. Gentleman’s amendment would put the onus on providers, rather than the Government, to determine a national security risk, but, as he implied, it is absolutely down to the NCSC and, ultimately, the Government and agencies to make that definition. Placing the responsibility for determining what does and does not constitute a threat to national security on the shoulders of all individual providers is not the right thing to do, and I think, to be fair, the right hon. Gentleman is not really suggesting that it is, either.

Matt Warman

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As I have said, new section 105A partly provides the legal basis that the right hon. Gentleman seeks, but in practice no one is suggesting—the Secretary of State talked about this on the Floor of the House—that it is solely the name on the box of a piece of kit that defines international security status. We are not naive to the possibility of the supply chain being another vector of attack. That would be reflected in codes of practice and elsewhere around the legislation.

Public telecoms providers can and should consider the security of the resilience of their networks and services throughout the supply chain in a sensible and proportionate way. National security considerations are inevitably much broader than the issues that can be addressed solely by private companies. I think that is reflected in the distinction drawn up in this Bill.

The amendment would have implications for Ofcom’s monitoring and enforcement of providers’ compliance. The Bill includes provisions for Ofcom to collect information on behalf of the Secretary of State in narrow and specific areas related to national security, but this amendment would require Ofcom more actively to take some of the compliance judgments. In the evidence session the right hon. Gentleman was keen to see that it was not asked to make those judgments.

Matt Warman

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In so far as codes of practice will be published by Ofcom, the answer to the right hon. Gentleman’s question is yes. The more nuanced answer is that it is a co-production between Ofcom, the Government, NCSC and others.

To conclude, the Government are immensely sympathetic to the issues that the right hon. Gentleman and the hon. Lady seek to probe, but we take the view that this amendment would do something that is, ultimately, already covered in the Bill. I hope that, in that spirit, she will withdraw the amendment.

Matt Warman

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I start by acknowledging the incredibly important work that the ISC does. Its role in overseeing the work of the UK intelligence community is vital to maintaining public trust, as the right hon. Member for North Durham described, and its members make important contributions to public debates on national security matters of all kinds. The right hon. Gentleman has done that for a number of years. Because he is a member of the ISC, he will know that I have proactively engaged with it on the substance of the Bill. I did so enthusiastically—if any Minister can ever regard a Select Committee appearance enthusiastically—and in recognition of the interest that I knew that Committee would have in the Bill. I will be writing again to the ISC on a number of matters raised in the Bill, and I have instructed officials from my Department to continue to engage with the ISC as the Bill proceeds through Parliament, building on the work that it has already done and on the transparency that we have already demonstrated by publishing the draft of the security framework regulations on 13 January, copies of which have been provided to the members of the ISC and a number of other interested Committees. I hope that all that demonstrates the Department’s commitment to working constructively with the ISC, despite the fact that, as the right hon. Gentleman said, DDCMS does not normally fall within the ISC’s formal remit.

It is none the less important to acknowledge that the ISC is not the only legitimate avenue to scrutinise this framework. We fully intend to make use of all the appropriate parliamentary procedures.

The regulations and the explanatory memorandum accompanying them will all be there for the ISC to scrutinise. There is also further guidance to providers in connection with the measures specified in the regulations that can be provided in the code of practice, which must be published, with a copy laid before Parliament. Also, beyond the usual arrangements for secondary legislation, new section 105Z of the Communications Act 2003 provides for Ofcom to produce security reports. Clause 11 of the Bill enables those reports to be published by the Secretary of State, and clause 13 provides for a review of the effectiveness of the framework, including any regulations, after five years.

It is in that context that I point to the enthusiasm with which we have engaged with the ISC. We will continue to do so and ultimately—this is perhaps the reason why the right hon. Gentleman described this process as an ongoing campaign, rather than something that we should address piecemeal—the ISC is clearly defined in the Justice and Security Act 2013. I do not think it would be right to address the memorandum of understanding that he referred during our consideration of the Bill. We should not go at it in piecemeal fashion. The role of the ISC as set out in that MOU is to oversee the work of the security agencies, to provide oversight of certain intelligence or security matters within Government. Ultimately, if the right hon. Gentleman wants to change the MOU, that is a broader issue for him to take up. I note that he is not the only Member of this House to have made that point, but it is not my place to take a view on the role of the ISC; that should be for the ISC itself.

I am confident that we will continue to engage with the ISC; I personally will certainly do so. I know that the DCMS Committee will continue to take an interest, and I will simply say that we will co-operate as fully as possible. I will set out more in the letter I mentioned, and I look forward to the future salvos in the right hon. Gentleman’s campaign.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)

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It is a pleasure to serve under your chairmanship, Mr McCabe.

We are redefining UK telecoms security, but I worry that we are also redefining the aspiration of the hon. Member for Newcastle upon Tyne Central to crack on, so I will try to be brief. The good news that I can deliver, briefly, is how the aspirations of both the hon. Lady and the right hon. Member for North Durham are met in the legislation, and how we envisage those aspirations’ being implemented.As the Committee is aware, the Government have published an early draft of the security regulations. Certain draft requirements are relevant to the aims that we have talked about today. If hon. Members look at regulation 3(3)(a), with which they will be familiar if they are insomniacs, they will see a duty for network providers

“to identify, record and reduce the risks of security compromises to which the entire network and each particular function… of the network may be exposed”.

That is already there and key to the issues that hon. Members have been talking about.

Matt Warman

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I think this would be impossible to identify without carrying out some kind of audit. There is a danger of a semantic argument, but I understand the point the hon. Lady is making. We want people to be in the position to make the kind of identifications that we are requiring. I do not see how they could do that without the records to which she refers, in terms of both the existing kit and future kit that they might put into their network.

Matt Warman

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The regulation that I cited is an example of the Government not relying on assumptions. It is an example of us publishing, in advance, exactly the sort of material that demonstrates that this is not assumptions, and that it is there in black and white. That is an important distinction and it demonstrates the cross-party consensus that we have had thus far. We continue to be on the same page in terms of the level of detail required.

The evidence sessions with industry demonstrated that national providers already maintain some asset registers. Witnesses were clear that those registers are maintained and updated as technologies are updated. That is an important part of the existing landscape, but our regulations will ensure this kind of best practice is extended across public telecoms providers.

In addition, the Bill contains measures with regard to the use of particular vendors’ equipment. Inspection notices under clause 19 enable Ofcom to carry out surveys of a specific network or service where Ofcom receives a monitoring direction from the Secretary of State to gather information on a provider’s compliance with a designated vendor direction. Alongside that, clause 23 enables the Secretary of State to require the provision of information about the use of goods, services or facilities supplied, provided or made available by a particular person. That could be used to require information about a provider’s use of a particular vendor’s equipment.

Taken together, the issues that have been raised are not only entirely legitimate, in the view of the Government, but are addressed in black and white already, both in the Bill itself and in the drafts that we have published. We are ensuring that “hardware of interest,” whatever that might be, is subject to proper oversight and monitoring. That objective does not need the approach that might come as a consequence of this amendment, because it is already there. For that reason, I welcome the probing nature of the amendment. I hope that my answer has satisfied some of the concerns, and I look forward to doing so further in future answers.

Matt Warman

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It is good to reach this landmark point. I do not propose to go over all the ground we have covered, because we have already covered a large chunk of this in discussing the amendments.

As I mentioned, proposed new section 105A means that telecoms providers will need to take appropriate action to ensure adequate security standards and limit the damage caused by any breaches. To support that duty, the proposed new section will create a new definition of “security compromise”. The definition is purposely broad. It includes anything that compromises the availability, performance or functionality of a network or service, or that compromises the confidentiality of the signals conveyed by it. That addresses some of the points made by the right hon. Member for North Durham a moment ago. This is a comprehensive approach that will help to ensure providers protect their networks and services properly in the future.

Earlier, I mentioned law enforcement and national security. This part of the Bill excludes certain conduct that is required or authorised under national security legislation or for law enforcement from the definition of “security compromise” in subsections (3) and (4). Those subsections also clarify the fact that, for example, disruption of the use of unauthorised mobile phones in prisons would not be a security compromise.

Proposed new section 105B will give powers to the Secretary of State to make regulations imposing duties to take specific security measures. The power will enable more detailed requirements to be imposed on providers, further to the overarching duty set out in proposed new section 105A(1). This will give greater clarity to providers about the measures that they must take. It will also allow the legal framework to be adapted as new threats arise and technology changes.

These security requirements deliver on our commitment in the telecoms supply chain review to place targeted, actionable and proportionate requirements on a statutory footing. Taken together, the new overarching security duty and requirements will, in secondary legislation, make clear what the Government expect of public telecoms providers. The provisions in the clause are crucial for improving the security of our telecoms infrastructure.

Matt Warman

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I am happy to write to the hon. Lady on the matter she has discussed. We anticipate draft directions in due course that will be network specific, because each network is different, but the overall tenor will be in the same direction. This is probably a matter that we can talk about outside the Committee in a bit more detail to make sure she gets the answers she wants.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Duty to take measures in response to security compromises

Question proposed, That the clause stand part of the Bill.

Matt Warman

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We are one thirtieth of the way there. The clause will place a duty on providers to take measures in response to security compromises through proposed new section 105C. When managing security, providers should seek to reduce the risk of security compromises occurring under their duty in proposed new section 105A. As security threats and attacks evolve, it will never be possible for providers to reduce that risk to zero. Therefore, should a security compromise occur, it is crucial that providers take swift and effective action to mitigate its effects. Taking action quickly will also help to mitigate the risk of any further incidents.

Mirroring the approach taken in clause 1, the new duty in proposed new section 105C is overarching and sets out a general duty on providers. It is supported by proposed new section 105D, which will provide the Secretary of State with powers to make regulations requiring providers to take specific measures in response to security compromises of a description specified in regulations. Although it will clearly not be possible to anticipate every security compromise that might occur and to set out how providers should respond, this will enable more detailed provision to be made in appropriate cases. Measures can be specified in the regulations only where the Secretary of State considers those measures appropriate and proportionate.

In practice, the first set of requirements will be contained in a single set of regulations made under the powers of proposed new sections 105B and 105D. A draft of the regulations has already been made available to members of the Committee, and published on gov.uk. Regulations made using this power will give providers clarity about the measures that they need to take, and having those measures set out in secondary legislation has the benefit of allowing the regulations to be reviewed as technology and security threats change over time.

In summary, this duty on providers is an integral part of the new framework, which will ensure providers take control of the security of their networks and services at a time when the UK stands on the cusp of a 5G and full fibre revolution. We must keep those technologies secure to enjoy their full benefit, and the clause is essential to doing that.

Matt Warman

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I apologise in advance, having said that we should crack on, for detaining the Committee for a few minutes on this group of amendments. They relate to clauses 3 and 4, which deal with the codes of practice for security measures and informing others of security compromises. Ultimately, the new telecoms framework comprises three layers. There are strengthened overarching security duties set out in the Bill, there are specific security requirements in secondary legislation, and there are detailed technical security measures in codes of practice. Clause 3 deals with the final layer of the new security framework. Specifically, it provides the Secretary of State with the power to issue and revise the codes of practice and sets out the legal effects of any published codes of practice.

Clause 4 addresses what would happen should there be a security compromise. It puts in place a process for users to be informed of significant risks of a security compromise. The clause also places a duty on public telecoms providers to inform Ofcom of any security compromises with significant impacts, and it creates the power for Ofcom to inform other persons in turn, including users.

I turn now to amendment 5, which seeks to ensure that the NCSC is also informed of security compromises. From a drafting point of view, the NCSC is part of GCHQ, and I take the amendment to refer to GCHQ in that sense. Within the new telecoms framework, the Department for Digital, Culture, Media, and Sport will set the policy direction, Ofcom will regulate and the NCSC will provide technical and security advice. As the UK is an world-leading national authority on cyber-security, we expect the NSCS to share its expertise with Ofcom in order to support the implementation of a new telecoms security framework.

For that reason, the Government absolutely agree that it is crucial that the NCSC receives information about telecoms providers’ security. That is why such information-sharing provisions already exist. Under section 19 of the Counter-Terrorism Act 2008, Ofcom or the Secretary of State is able to share with the NCSC any information that would support the NCSC in carrying out its functions. That would of course include the passing on of details of security incidents. Under new section 105L of the Communications Act 2003, which this Bill inserts, Ofcom must report all serious security incidents to the Secretary and State and can pass on information about less serious incidents as well. On receiving such information, the Secretary of State can then share the information with the NCSC, as I have set out. Although these probing amendments are well-intentioned, it is obvious that the provisions are already there.

Matt Warman

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I understand the hon. Lady’s point, and I will come to something that I think will address it in a moment. Before I do, I will speak to amendments 6 and 10, as they would be functionally identical amendments to new section 105F in clause 3.

New section 105F sets out the process for issuing a code of practice. It requires a statutory consultation on a draft code of practice with the providers to whom the code would apply, Ofcom and other persons such as the Secretary of State considers appropriate. The amendments would apply an additional requirement to formally consult the NCSC when publishing a draft code of practice. I can reassure the Committee that we will continue to work closely with technical experts at the NCSC, as we have done over a number of years.

The telecoms supply chain review demonstrated the Department’s capability to work with our intelligence and security experts to produce sound recommendations, backed by the extensive and detailed security analysis that I know Members of all parties would like to see. That initiated the next phase of the collaborative work that culminated in the introduction of the Bill, and the codes of practice continue that theme. The purpose of such codes is to provide technical security guidance on the detailed measures that certain public telecoms providers should take to meet their legal obligations.

We have already been clear that NCSC guidance will form the basis of an initial DCMS-issued code of practice. The NCSC has already developed a set of technical measures that is in the process of being tested with the industry, and those technical measures have been refined and improved over the last two years. The NCSC will continue to update the measures to reflect any changes in the landscape of threats, as the right hon. Member for North Durham described, and the relationship between the work of the DCMS and that of the NCSC means that such changes would be reflected in the code of practice. Alongside the DCMS and Ofcom, the NCSC will play a key role in advising public telecoms providers on how to implement detailed codes of practice.

Matt Warman

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The right hon. Gentleman keeps going on about ministerial impermanence, but I will not take it personally.

Matt Warman

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Too kind! The key part to this is that, obviously, Ofcom remains an independent regulator and will be working closely with others. The right hon. Gentleman makes a fair point about the inevitable balance between national security and a whole host of other issues, but ultimately that independence is absolutely essential. In the light of our long-standing and established working relationships across the DCMS, NCSC and Ofcom, it seems reasonable to say that there is a track record demonstrating what he has asked for. But given the Committee’s interest in the role of the NCSC in this regime, I will just make one last point. Its role is not explicitly described in the Bill, as the NCSC already has a statutory remit, as part of GCHQ, to provide technical security advice and to receive information on telecoms security for the purpose of exercising that function.

The NCSC and Ofcom will very soon publish a statement setting out how they will work together. I think that addresses some of what the hon. Member for Newcastle upon Tyne Central mentioned; I believe she has some familiarity with Ofcom. I think it is right, because they are independent, that that statement comes from them, as well as the Government expressing a view on this. The statement will include information on their respective roles and their approach to sharing information on telecoms security, and it should provide greater clarity, which hon. Members are entirely legitimately asking for, about the NCSC’s role, including how it will support Ofcom’s monitoring, assessment and enforcement of the new security framework.

I hope that the sorts of matters that I have talked about provide the kind of reassurance that Members have asked for.

Matt Warman

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The Committee has already heard me talk about some of this, but I think it important to provide a little more detail. The code of practice, which we have discussed, is a fundamental building block of the regime and will contain more specific information on how telecoms providers can meet their legal duties. It will provide guidance on how, and to what timescale, certain public telecoms providers should comply with their legal obligations, and will be based on technical analysis by the NCSC. Individual measures will therefore reflect the best protections against the most pressing threats to network security. The code will, for example, set out the detailed technical measures that should be taken to segregate and control access to the areas of networks that process and manage customers’ data.

We recognise of course that different companies have different ways of setting up and running their networks, and because our telecoms market is dynamic and competitive, providers range in scale from multinational giants such as Vodafone down to innovative local start-ups. We want therefore to ensure that the code of practice is proportionate, and that public telecoms providers take appropriate security measures.

I will touch as briefly as I can on how we intend to achieve that proportionality through a tiered system. Tier 1 will contain the largest national-scale public telecoms providers. Should any of those providers have a significant security incident, it could bring down services to people and business across the UK. Those operators will have the greatest level of oversight and monitoring from Ofcom. Tier 2 will contain medium-sized public telecoms providers. Those providers may not be as large, but in many cases they are critical to regions and to business connectivity. They are expected to have more time to implement the security measures set out in the code of practice.

Tier 3 will contain the smallest public telecoms providers, including small businesses and micro-enterprises, which, of course, must also comply with the law. They are not anticipated to be subject to the measures in the code of practice, but will need to comply with their legal duties as set out in new sections 105A and 105C, and in any regulations. Our expectation is that Ofcom would regulate those providers more reactively.

New section 105F describes the process for issuing a code of practice. When the Government publish a draft code of practice, we will consult with industry, Ofcom and any other appropriate persons. Specifically, publishing the first code of practice will include consulting on the thresholds of each of the tiers that I have described and on the timings for their implementation. Following the consultation period, and once the code is finalised, it will be published and a copy will be laid before Parliament.

New section 105G gives the Secretary of State the power to withdraw a code of practice. Again, that will follow consultation with industry and Ofcom. A notice of withdrawal will be laid before Parliament. The legal effects of the code of practice are described in new section 105H. To be clear, the code of practice is guidance only; it is an important tool that operators should use to comply with their legal duties.

Matt Warman

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The legislation places a duty on providers. Meeting the strictures of the code of practice would be the way of demonstrating that they were meeting that duty as an initial step, but of course, we see individual companies making decisions, for a host of reasons, to exceed codes of practice in every area of regulated life,

and I would expect that to continue in the area in question as well.

Where relevant, provisions in a code could be taken into account in legal proceedings before courts or tribunals, which I think gives some sense of their status. That would include any appeals against Ofcom’s regulatory decisions heard by the Competition Appeal Tribunal. Ofcom will take account of the code of practice when carrying out its functions as required in new section 105H(3) in relation to telecoms security, as I have just described.

Under new section 105I, if Ofcom has reasonable grounds for suspecting that a telecoms provider is failing, or has failed, to act in accordance with a code, it can ask public telecoms providers to explain either how they meet the code of practice or, if they do not meet it, why. For example, if the network set-up of a particular telecoms provider meant that it could achieve a level of security equivalent to that in the code by other means, it could explain that in its statement responding to Ofcom. In such a case Ofcom might be satisfied that the provider was complying with its security details, but hon. Members will see that we are again trying to ensure a proportionate approach to the relevant part of the framework.

We believe that the code of practice will provide an appropriately flexible framework, which will be able to change as new security threats evolve, providing clarity for telecoms operators on what is required of them by this new telecoms security framework.

Matt Warman

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As with clause 3, I have already spoken to clause 4, addressing an amendment on this issue. It will be crucial that we ensure that the Government, Ofcom, public telecoms providers and their customers have the information that they need to understand when security compromises have occurred, and then use the knowledge to prevent compromises in the future. New section 105J requires that providers inform their users of significant risks of security compromises and actions that they can take to avoid or mitigate any adverse consequences.

We want to ensure that this is done in a transparent and open way, so the clause specifies that telecoms users should be notified in clear and plain language, and given a named contact they can get in touch with if they have any further questions. Giving users that information will help to ensure that, where possible, they can take swift action to protect themselves and raise broader awareness.

New section 105K requires security compromises to be reported to Ofcom. That information will provide Ofcom with insight into the security of individual telecoms providers and security risks across the landscape, enabling us to target its regulatory action more effectively. The Bill also requires that providers report pre-positioning attacks on the network. These are attacks that do not affect the network or service at the time but allow access that could result in further security compromises. These attacks pose real risks but too often remain invisible to a regulator.

Finally, under new section 105L, Ofcom is required to share information about serious security compromises with the Government. It may also share information on less serious compromises if, for example, it would help the Government with developing telecoms policy and future regulation.

The clause explains how Ofcom can share information about security compromise with other groups and organisations, and the Bill allows information sharing at Ofcom’s discretion with overseas regulators, other providers, telecoms users and, where appropriate, the wider public. It allows Ofcom to advise network and service users of the measures that they should take to prevent, remedy or mitigate the effects of the security compromises, to direct providers to give such advice themselves.

The clause ensures that the regulator has access to the information that it needs, and will help to ensure that the entire industry is aware of new and evolving risks and can respond accordingly—be that a customer changing their password or an operator tightening its defences against a new attacker.

Matt Warman

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I will pretend I have not finished, and give way to the hon. Lady.

Matt Warman

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Obviously, there could be an overlap in those notification requirements, but our expectation would not be that anyone would receive multiple notifications. That is why there is an emphasis on the nature of communications being clear and obvious to laypeople.

Matt Warman

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I will reply briefly. On the point about compensation, essentially new section 105W of the Communications Act 2003, which is inserted by clause 8, covers the civil liability point, which I think opens the door that the right hon. Member for North Durham seeks to open. Then there are the notifications to industry of what is essentially best practice and recent threats. Of course, as he implied, there is a balance to be struck with the existing work of all those involved, but ultimately it would feed into the codes of practice, so there is both an informal and a formal mechanism, if I can put it like that.

On the hon. Lady’s final point about the international sharing of information, it would depend on the nature of the information, as she implied. Some of it would pertain to national security, and some of it would pertain to the kind of criminality that she has spoken about about, where there are existing provisions as well. In that sense, of course, it is all covered by our own data protection regime, which has the sorts of carve-outs I have just described but operates in that holistic framework.

Matt Warman

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I am not sure I fully understand the right hon. Gentleman’s point.

Matt Warman

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As I said in response to the hon. Lady, there is obviously a potential overlap. The focus of this Bill is on clarity of communication to the consumer, but I am very happy to write to the right hon. Gentleman or the Committee with further details of that potential overlap.

Matt Warman

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I am very happy to do so. I think it is obvious that clarity of communication would be incompatible with duplication.

Question put and agreed to.

Clause 4 accordingly ordered to stand part of the Bill.

Clause 5

General duty of OFCOM to ensure compliance with security duties

Matt Warman

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The amendment would add to the general duty in clause 5 that places on Ofcom the duty to ensure that providers comply with their security duties. The duty as written in the Bill makes clear Ofcom’s increasing role. The duties imposed on public telecoms providers in the Bill are legally binding, so as the Bill is written providers should not be taking decisions that would prevent them from complying with those duties in the future. If they were not to comply, they would be in breach of their legal duties and liable for enforcement action, including the imposition of the significant penalties set out in the Bill.

The underlying purpose of the amendment—that Ofcom should take a proactive role in regulating the regime—is already core to what is in the Bill and the Government absolutely agree with the principle that the hon. Member for City of Chester set out. We need to ensure that Ofcom has the tools to be forward-looking so that, in a world of fast-changing technologies and threats, it can understand where operators are taking their networks and how that will affect their security. That is an absolutely essential part of the Bill.

Matt Warman

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I think the Bill is perfectly drafted down to every comma and punctuation mark. To be slightly more serious, what we have sought to do in the drafting is to strike the balance between proportionate regulations and the overarching requirements for national security. That is the balance that we have struck and it is exactly for that reason that we already do in the Bill what the hon. Member for City of Chester and the shadow Minister seek with the amendment.

In section 135 of the Communications Act 2003, as amended by clause 12, Ofcom is already allowed to require information from providers about the future development of networks and services that could have an impact on the security of the network or service they are providing. That would enable Ofcom, for instance, to assess the security risks arising from the deployment of a new technology or from the proposed deployment of a new technology. For those reasons, I hope that the hon. Members are reassured not just that the Bill does what they seek, but that previous drafts of the Communications Act already did so.

Matt Warman

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The sort of horizon scanning that the hon. Lady describes is core to all essential regulation, and the relationship that Ofcom has with those whom it regulates promotes the ability to have such conversations. But as I said, the key point is that an operator that proposes knowingly to introduce a risk into its network would clearly not be complying with the statutory provisions of the Bill. That is the essential nub of the issue.

Matt Warman

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I enjoyed the semantic gymnastics by the hon. Member for City of Chester as he tried to expand the scope of the Bill, but I shall try to stick to what is in it. There is a lot of consensus across parties, so I shall resist the temptation of saying that £50,000 is a demonstration that Labour is willing to put a price on national security, which this party will never do, but I understand the points that he makes on both fronts.

The clause provides Ofcom with strengthened powers, including powers to give assessment notices to a provider, that are vital to enable it to fulfil its expanded and more active role. Assessment notices are an important new power in the regime that will give Ofcom tools to assess fully a provider’s security and the extent to which it complies with its security duties. It is Ofcom’s intention that when assessing a provider’s compliance, its first port of call would be to use its information-gathering powers under section 135 of the Communications Act 2003. Ofcom would then use its power to give an assessment notice if it wanted to check the veracity of the information or to follow up a security concern. While Ofcom will therefore use its powers in a targeted and proportionate way, it is also the case that a provider with good security practices would expect to be subject to a lighter-touch assessment. Providers’ duty to bear the costs of assessments will therefore have an incentivising effect.

The amendment would insert a new subsection into new section 105N, limiting the costs that Ofcom could incur in carrying out an assessment. Fundamentally, a hard cap of any sort will always be an arbitrary number which will potentially put an additional hurdle in place. It might be necessary for some of those tests to require genuinely extensive assessment—penetration testing, or red teaming, as exercises are sometimes called, where penetration tests mimic the action that an attacker might take to access the network. Those attacking actions may of course be from sophisticated sources, and the costs of mimicking them in an entirely legitimate way could be substantial; but it is right, in the interest of national security, that Ofcom does not reduce the quality of its testing. We would not seek to limit that either, notwithstanding its independence.

I can offer the Committee some reassurance, however, that Ofcom’s assessment costs will not be excessive. It has a general duty to act proportionately and to follow other principles representing regulatory best practice. Finally, a provider’s duty is to pay only such costs as are reasonably incurred by Ofcom in an assessment, so there is a balance there.

As to the proposed new subsection that would limit those able to carry out assessments to Ofcom or a UK Government agency, the assessments, as the hon. Member for City of Chester knows, may be complex and need specialist skills. Methods such as penetration testing might need specific technical skills and we should not limit Ofcom in that way. However, we should also bear in mind, as the hon. Member for Newcastle upon Tyne Central mentioned, that the independence and expertise of Ofcom is the greatest bulwark against such entirely unfounded but legitimate concerns as those raised by the hon. Member for City of Chester, about who might be appointed by this or any Government to carry out a task in the national interest. None of us would want—and I do not suggest that the hon. Gentleman is doing this—to get into the business of questioning Ofcom’s independence in performing the tasks in question.

Matt Warman

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Ofcom itself is best placed to exercise discretion as to whether it should carry out those assessments in-house, or whether it should have the flexible capacity to have the capability brought in as necessary. Ultimately, I do not think that anyone would wish to prevent Ofcom from having the ability to do what it thinks necessary by forcing it to use in-house staff only, because we cannot predict the future, as Members on both sides of the Committee have highlighted. Although the cause that the hon. Member for City of Chester is pursuing is a noble one, its unintended consequence would be to constrain Ofcom in both the expertise that it has at its fingertips and the costs that it might incur. We would not want to limit Ofcom’s discretion to make those decisions as an independent organisation.

Matt Warman

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If the hon. Lady were right, the only people from whom we would have heard evidence over the last few days would have been public sector employees. She knows just as well as I do that the cyber-security sector is a vast mesh of public and private expertise, which is inevitable given that we have private networks offering communications services. Although I understand her point, and I am all for Ofcom having as much expertise as it needs to do its job properly in-house, I simply do not think that we should constrain what it can access in the way that the amendment would.

On this, I think we probably agree on far more than we would perhaps like to admit, but the reason that this is a probing amendment, as the hon. Member for City of Chester said, is because imposing artificial constraints would not be beneficial to Ofcom’s work. We understand what he said, however, and in broad terms, the Government agree.

Matt Warman

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I will go very briefly over the diversification strategy, which is essentially a £250-million initial tranche of investment to diversify the UK network, with a focus, to a certain extent, on open RAN, as the hon. Lady said. On the information that she would require, I agree with her so comprehensively that the provision is already in the Bill. Section 135 of the Communications Act 2003, as amended by clause 12—she is right that the provision is not in this clause—provides Ofcom with the power to gather information on diversification where Ofcom considers the information necessary for the purpose of carrying out its functions. Clause 12 specifically provides that such information can include information concerning future developments of a public electronic communications network or public electronic communications service that could impact on security. As I said, I agree with her so comprehensively that we had already foreseen the issue and the provision is already in clause 12. The addition of it to this clause would not change that fact. I hope that that provides—

Matt Warman

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The approach that we have adopted across the Bill is that powers such as those in clause 12 are more than wide enough to cover exactly what is needed. What I am essentially saying, I suppose, is that the legal interpretation of clause 12 absolutely does what the hon. Lady seeks, because it is an absolutely essential part of one of the purposes of the Bill. That is why I hope she can take the necessary comfort to withdraw her amendment.

Matt Warman

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I am very happy to write to the hon. Lady to clarify why it is our belief that the Bill does that. What I would say is that the kind of specificity that she seeks would have the unintended consequence of narrowing what we do, rather than retaining the broad powers that we have in the Bill. As has been the case so often today, we do not disagree on the intent that she is seeking to obtain, and that is why the Bill is drafted as it is. As I say, I am very happy to write to her to try to clarify some of that.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)

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It is a pleasure to be back under your chairmanship, Mr Hollobone. As we discussed during the debate on amendments to this clause in our previous sitting, clause 6 inserts proposed new sections 105N to R, providing Ofcom with strengthened powers to assess whether providers of public electronic communications networks and services are complying with their security duty. These powers are vital to enable Ofcom to fulfil its expanded and more active role, giving it the tools to monitor and assess providers’ compliance with the new telecoms security framework and providing the basis for commencing any enforcement action.

Proposed new section 105O provides the power to give assessment notices to a provider. Assessment notices may impose a duty on a provider to do a number of different things, which I will briefly summarise. First, providers can be required to carry out, or arrange for another person to carry out, technical testing in relation to their network or service. Secondly, they can be required to make staff available to be interviewed, enabling Ofcom to gain insights into how a provider’s security practices and policies are implemented.

Thirdly, providers can be required to allow an Ofcom employee or an assessor authorised by Ofcom to enter their premises to view documents or equipment. I recognise that that is a significant power, but it is necessary. It is subject to certain restrictions to protect legally privileged information and to limit entry to non-domestic premises only. To provide clarity for telecoms providers, Ofcom will also publish guidance setting out how and when it will use the power. Importantly, providers have a right of appeal.

The powers of assessment set out in the clause are key to enabling Ofcom to carry out the effective and extensive monitoring and assessment of providers’ security practices that is necessary.

Matt Warman

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I will seek to move relatively rapidly through these four clauses.

Clause 7 provides Ofcom with enforcement powers in relation to providers’ security duties. The Bill gives Ofcom new powers to impose tough financial penalties on providers who breach their security duties. The penalties range to a maximum fine of 10% of a provider’s annual turnover, which is in line with the maximum fines available for breaching other regulatory requirements. For continuing contraventions, Ofcom can levy a daily penalty of up to £100,000. Penalties that are generally lower than that but still significant will also apply for contravening information requirements, which are subject to a maximum penalty of £10 million or, for a continuing contravention, a penalty of up to £50,000 per day. These penalties ensure that there will be a real financial deterrent to poor security practices. I should also say that, in the most serious cases, or in cases where a provider repeatedly contravenes its security duties, Ofcom would be able to use existing powers to suspend or restrict the provider’s entitlements to provide a network or service. Clearly, that is a step that we hope the regulator will never need to take.

The clause also gives Ofcom an important new power to take action where security is being compromised or is at imminent risk of being compromised. Proposed new sections 105U and 105V of the Communications Act 2003 would enable Ofcom to direct a provider to take interim steps to secure its network or service while Ofcom investigates or pursues further action. This power recognises that contravention of a security duty could result in a security compromise that causes real damage to users of that network or service. Where Ofcom uses that power, it will be required to commence and complete the enforcement process as soon as is reasonably practicable. The clause gives Ofcom the tools it needs to effectively enforce compliance with the new security framework.

Clause 8 sets out the position for bringing civil claims against providers who breach their security duties, which is a matter we touched on in earlier debates. It enables providers to be held accountable not just by Ofcom but by service users, such as members of the public, in cases where loss or damage is sustained by those users as the result of a breach of a duty. Providers owe a duty to any person who may be affected by a contravention of their security duties to take security measures, to comply with specific security duties in any regulations and to inform users of security compromises.

This clause allows any affected person to take legal action should providers breach those security duties. However, any affected person can bring legal proceedings against a provider only with the consent of Ofcom, which may be subject to conditions relating to the conduct of the legal action. This reflects the existing position in the Communications Act 2003 and ensures that providers face legal action only in appropriate circumstances. The clause also makes providers responsible to their users, providing another source of accountability. It allows users to bring legal claims for any losses they have suffered, which is only fair and reasonable.

Clause 9 addresses the interaction between provisions in the Bill and other legislation, specifically national security, law enforcement and prisons legislation. The security duties created by the Bill do not conflict with duties imposed on communications providers by other legislation via these clauses. Equally, we do not want the Bill to affect adversely the important work carried out by our law enforcement agencies, criminal justice authorities and intelligence agencies. The clause gives that clarity to providers about their responsibilities.

Finally, clause 10 requires that Ofcom publish a statement of policy about how it will fulfil its general duty and use specific powers to ensure that providers comply with their security duties. This will provide welcome clarity to industry about the expected use of important new powers. I beg to move that these clauses stand part of the Bill.

Matt Warman

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I welcome the spirit of the amendment. I think that the hon. Lady and I share the same ambition. I know that she wants to have the proper debate later, so we look forward to that.

Clause 11 inserts into the Communications Act 2003 proposed new section 105Z, which deals with Ofcom’s reports on security. It requires Ofcom to produce such reports within two years of the Bill receiving Royal Assent and every 12 months thereafter. As the hon. Lady said, amendment 14 is similar to the amendment to clause 6 that we discussed previously. Ultimately, when considering Ofcom’s role and specifically its reporting function, we should note that proposed new section 105Z(2) requires Ofcom security reports to include such information and advice as Ofcom considers may best assist the Secretary of State in the formulation of policy on telecoms security. That could go beyond the list in proposed new subsection (4) to include other relevant information, such as that related to diversification. The Secretary of State can also direct Ofcom to include information that goes beyond that list.

As the Committee and, indeed, Ofcom will be well aware, the Government have recently published a targeted diversification strategy, which will deliver lasting and meaningful change in the 5G supply chain and pave the way for a vibrant, innovative and dynamic supply market. We heard widespread support for the strategy from witnesses during the oral evidence sessions. The strategy demonstrates our commitment to building a healthy supply market and is backed by a £250 million initial investment.

We have publicly announced that the Government will be funding the creation of a UK telecoms lab to research and test new ways of increasing security and interoperability, and we are already partnering with Ofcom and Digital Catapult to fund the industry-facing test facility SONIC—the SmartRAN Open Network Interoperability Centre. Both of those will play a key part in our investment in diversification and demonstrate Ofcom’s existing part in it.

As already mentioned, amendment 14 would require Ofcom to include in its security reports

“an assessment of the impact on security of”

any

“changes to the diversity of the supply chain for network equipment”.

As that requirement is already essentially covered by Ofcom’s existing powers, the amendment is not necessary. The inclusion of any such information is already within Ofcom’s discretion, but I am sure that we will discuss it more later on, as the hon. Lady said.

Clause 12 expands Ofcom’s information-gathering powers for the purposes of its security functions and enhances its ability to share the information with the Government. It enables Ofcom to require a provider to produce, generate, collect or retain security information, and then to analyse that information. Any information sought using this power must always be proportionate to how Ofcom will use it.

Clause 13 makes provision in connection with the standard of review applied by the Competition Appeal Tribunal in appeals against certain of Ofcom’s security-related decisions. Ofcom’s regulatory decisions are subject to a right of appeal to the tribunal, and that will also be the case for most of Ofcom’s decisions relating to the exercise of its regulatory powers conferred by the Bill. This clause makes provision to ensure that the tribunal is not required to modify its approach in appeals against relevant security decisions, and should instead apply ordinary judicial review principles.

I hope that I have sufficiently explained to the Committee why amendment 14 is unnecessary and why clauses 11 to 13 as drafted should stand part of the Bill.

Matt Warman

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I listen with interest to the points that the hon. Lady makes, and to the assertion that she is a member of the party of national security. I welcome her to this side of the House, if that is the case. [Interruption.] Thank you, but no.

As the hon. Lady says, clause 14 is a review clause requiring the impact and effectiveness of clauses 1 to 13 to be reviewed at least every five years by the Secretary of State. The review report must be published and laid before Parliament, but it is by no means the only source of parliament scrutiny, as she knows. Her amendment would increase the frequency of these reports to every year for the first five years after the Bill is passed and then every five years thereafter.

Increasing the frequency of the reports would bring its own challenges for a number of reasons. First, the framework is considerably different from the previous security regime in the Communications Act 2003. It seems to me that we will not be able fully to assess the impact and effectiveness of the new security regime instituted by clauses 1 to 13 until all parts of the framework, including secondary legislation, codes of practice and other things, have been in place for a reasonable period of time. The code of practice that will provide guidance on the detailed security measures that telecoms could take is intended to set clear implementation timelines. Some measures may require significant operational change, as we heard in the evidence sessions for telecoms providers, and we are aware that that may be costly. For that reason, we cannot reasonably expect all changes to be implemented instantly or, indeed, all necessarily at the same time.

There is a further practical difficulty with the amendment. If the first report is to be produced 12 months after Royal Assent, it will require the review to be undertaken well in advance of that deadline. That means that the report will represent an incomplete picture of the Bill’s impact, even at its very first production. Some measures will not even have been implemented by telecoms providers.

My hon. Friend the Member for Hyndburn was exactly right that the current requirement for publishing reports is at least—rather than at most—every five years. We have been deliberate in our choice of this timeframe because five years is the reasonable point by which we expect the majority of telecoms providers to have implemented most, if not all, changes. It is therefore considered appropriate to require a report on the impact and effectiveness of the framework by that time. I recognise that five years is a long time. That does not mean that the framework will be free from scrutiny in the intervening period. As clause 11(3) sets out, the Bill amends section 134B of the Communications Act so that Ofcom’s regular infrastructure reports will include information on public telecoms providers’ compliance with the new security framework. Ofcom publishes the reports annually, rendering the amendment unnecessary.

Matt Warman

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No is the short answer, because while this is a progress report, five years from 2021 is 2026—the deadline is 2027, even at the most extreme end, which is not where we anticipate it will end up—and it would be before the point that she identifies.

The infrastructure reports from Ofcom will help to provide Parliament and the public with a view on how telecoms providers are progressing with compliance with the new framework. As I alluded to earlier, they are not the only means of parliamentary scrutiny. We have the Intelligence and Security Committee and we have Select Committees. I suspect that there might be one or two debates on this matter over the next five years as well. To pretend that this is the only method of parliamentary scrutiny is not accurate.

Matt Warman

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The hon. Lady asks me to predict what is in a report that has not been written yet by an organisation that is not a Government Department. I agree with the principle of what she is saying. This is an important aspect and one would reasonably expect it to be reflected in the reports that we have talked about. It is, however, important overall to say that Ofcom’s own regular infrastructure reports will, as I have said, include information on public telecoms providers’ compliance with the new security framework, which is the broadest interpretation and gives a huge amount of latitude for the sorts of information that she seeks. I hope that those infrastructure reports will help to provide Parliament with the kind of scrutiny that she seeks, and the public with the kind of scrutiny that we all seek. [Interruption.] For those reasons I hope that she will withdraw the amendment.

Matt Warman

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I thank the right hon. Gentleman for his contribution to the debate. He has talked so much about my impermanence that I felt lucky to come back today, never mind any time in the future. He makes a reasonable point, with which I broadly sympathise. As this is a broad grouping that covers clauses 15 and 16 and the amendments to clauses 15, 16 and 17, I will discuss the policy intention behind the clauses in sequence, and address the amendments.

As the right hon. Gentleman said, it is obviously an opportune moment to pay tribute to the heroic work of our national security services. The Bill emphasises the importance of their advice, and it empowers the Government to manage the presence of high-risk vendors in our networks. The report to which he refers is important, but it is also important to say that it was published, as he said, in 2013. It related almost entirely to events that took place under Labour, and it predates the existence of the National Cyber Security Centre, so we are dealing to some extent with a different world. I will go into a bit of detail on that.

As the right hon. Gentleman knows, the Government announced in January last year that new restrictions should be placed on the use of high-risk vendors in the UK’s 5G and full-fibre networks. In July 2020, the Government worked with the NCSC to update the guidance following action taken by the US Government in relation to Huawei. Clauses 15 to 17 provide the principal powers that the Government need to manage the risks posed by high-risk vendors. Without such powers, the guidance issued to industry will remain unenforceable and therefore present a risk to national security.

Matt Warman

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In short, the right hon. Gentleman is challenging the fundamental effectiveness of Government and the judgments that were made by officials at the time. I simply say that it is the duty of Government to ensure that such errors are not made in future. That cannot be done solely by legislative means; it must be done by custom and practice. The right hon. Gentleman understands, through his work on the ISC, that the role of those close working relationships is in some ways far more important in the day-to-day security issues that we are dealing with. Perhaps we can return to that point later.

The Bill will allow the Secretary of State to issue designated vendor directions, imposing controls on the use of goods, services or facilities that are supplied, provided or made available by designated vendors. The Secretary of State may issue such directions only where it is necessary to do so in the interests of national security and proportionate to the aims sought to be achieved.

Amendment 16, which would amend clause 15, seeks to place a statutory requirement on the Secretary of State to take into account advice from our intelligence services when considering whether to issue a designated vendor direction. Amendment 17, which would amend clause 16, seeks to place a similar requirement when considering a designation notice.

I should reassure hon. Members that the Secretary of State, as the right hon. Member for North Durham knows, has every intention of seeking the advice of our security and intelligence services, as would any Secretary of State, in particular the NCSC, when considering whether to issue a designated vendor direction or designation notice.

It is also worth saying, from a scrutiny point of view, that the Department for Digital, Culture, Media and Sport maintains an excellent relationship with the NCSC. We are scrutinised by the Select Committee on Digital, Culture, Media and Sport and I have appeared before the Intelligence and Security Committee, as the right hon. Gentleman knows. There are many examples in the Bill where the NCSC’s expert advice has been taken into account.

The UK telecoms supply chain review, on which the Bill is based, was the product of the close working relationship between the Department for Digital, Culture, Media and Sport and the NCSC. In a sense, that close working relationship demonstrates that matters have moved on substantively since 2013.

I draw hon. Members’ attention to the illustrative notices that we published in November last year. The NCSC was closely involved in the drafting of those illustrative notices. It will also be involved in the drafting of direction and designation notices once the Bill has been enacted . Given the demonstrable success of our collaboration with the NCSC thus far, I hope that the right hon. Gentleman will be satisfied with that explanation, although I appreciate that he introduced a probing amendment.

Clause 15 would create the new power for the Secretary of State to issue designated vendor directions to public communications providers, in the interests of national security. Although clauses 15 and 16 are distinct, they are complementary. Directions cannot be issued without identification of a designated vendor and designations have no effect unless directions are given to public communications providers. Clause 15 inserts new sections 105Z1 to 105Z7 into the Communications Act 2003 and amends section 151 for that purpose.

The clause will enable the Government’s announcements in 2020 on the use of high-risk vendors to be given legal effect. Those announcements include advice that require a public telecoms provider to exclude Huawei from their 5G networks by 2027, and stop installing new Huawei goods, services or facilities in 5G networks from September 2021. It will also enable the Government to address risks that might be posed by future high-risk vendors, helping to ensure our telecoms networks are safe and secure.

Proposed new section 105Z1 sets out the direction power. It would allow the Secretary of State to give a designated vendor direction to a provider, imposing requirements on their use of goods, services or facilities supplied by a specified designated vendor. Proposed new section 105Z2 provides further details on the types of requirements that may be imposed in a designated vendor direction. Proposed new section 105Z3 sets out the consultation requirements and expectations for public communications providers. Proposed new section 105Z4 sets out a requirement for the Secretary of State to provide a copy of a direction to the designated vendor or vendors, specified in a direction and, hence, affected by it. Proposed new sections 105Z5 and 105Z6 set out when and how the Secretary of State may vary or revoke a direction. Lastly, 105Z7 enables the Secretary of State to require a public communications provider to provide a plan setting out the steps that it intends to take to comply with any requirements set out in a direction and the timings of those steps.

Although the Government have made specific announcements on Huawei, the high-risk vendor policy has not been designed around one company, country or threat. The designated vendor direction power, as set out in these provisions, is intended to be an enduring and flexible power, enabling the Government to manage the risks posed to telecoms networks both now and in the future.

Clause 16 includes a non-exhaustive list of matters to which the Secretary of State may have regard when considering whether to issue a designation notice. Amendment 18 seeks to amend that clause by adding a person’s control of data flows to the list of matters to which the Secretary of State may have regard. However, nothing in the clause prevents the Secretary of State from considering control of data flows before issuing a designation notice already, if the matter were deemed relevant to the assessment of national security. It is already covered and so is not required as a stand-alone measure.

The clause creates a power for the Secretary of State to issue a designation notice, which designates a vendor for the purposes of issuing a designated vendor direction. Proposed new section 105Z8 is the principal measure of the clause, and sets out the power for the Secretary of State to designate specific vendors where necessary in the interests of national security. A designation notice must specify the reasons for designation unless the Secretary of State considers that doing so would be contrary to the interests of national security. The proposed new section also lists the primary factors that may be taken into account by the Secretary of State when considering whether to designate a vendor on national security grounds.

Finally in this group, amendment 19 would require the Secretary of State, when laying a designation noticed before Parliament, also to lay before Parliament a report detailing the impact that the designation notice might have on the diversity of the UK’s telecoms supply chain. The effect of the amendment would be to require the Secretary of State to lay a report purely on the impact of the designation notice, but a designation notice simply notifies vendors that the Government consider them a risk to national security.

Only when the designation notice is issued alongside a designated vendor direction are controls placed on the use of a designated vendor’s goods, services and facilities by public communication providers, so it is those controls that might have an impact on the diversity of the supply chain. I can reassure the Committee that the Government will consider the diversity of the supply chain before issuing designation notices and designated vendor directions. A lack of diversity is in itself a risk to the security of a network. I hope that answers the question that the hon. Member for Newcastle upon Tyne Central asked in regard to an earlier amendment. It is right that the Government consider that risk before deciding whether to issue designation notices and designated vendor directions.

To conclude, clauses 15 and 16 provide us with the ability to improve the security of our telecommunications networks and to manage the risks relating to high-risk vendors, both now and in the future.

Matt Warman

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I pre-emptively covered a lot of the hon. Lady’s questions, but I will say two brief things. She talked about consolidation in the cloud sector. While the Bill is very much a national security Bill, the National Security and Investment Bill would cover consolidation in that sort of sector, rather than this one. Obviously they do work together.

Matt Warman

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The hon. Lady is not wrong, obviously, in the sense that there is a potential conversation to be had about when a cloud provider is a telecoms provider and vice versa, if I can put it like that, although it is not the most elegant way of doing so. However, the point is that the reason we have comprehensive coverage of the landscape is because we have both the National Security and Investment Bill, which she debated recently, and this Bill. The broad powers that she described are intended to provide precisely that sort of coverage.

Similarly, the hon. Lady referred to the length of the list in clause 16 of matters that can be taken into consideration. That relates to the point I made previously, namely that the sorts of issues that she is talking about, such as data flows, are already covered in the long list. The list is as long as it is because it is intended to look to the future. Therefore, being prescriptive in the way that she describes is fundamentally unnecessary. We are not excluding what she wants to be on the list. A matter is already very much there if it is pertinent to national security. For that reason, I do not think there is a compelling case to add that single topic to the list, both because it is already there and because if we start going down that route, we could make the case for adding a host of other things that are already covered but that people might want to be mentioned specifically.

As I said earlier on the convergence of the two sectors, the point is that we have comprehensive coverage through both Bills. It will be for the NCSC, Ofcom and the Government to make a judgment as to whether any consolidation in a sector poses a national security risk.

Matt Warman

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I welcome the second salvo in the campaign to address this matter by the right hon. Member for North Durham. He said it would be an ongoing campaign.

This group of amendments would require the Secretary of State to provide information relating to a designated vendor direction or designation notice to the ISC. The amendments would require the Secretary of State to do this only where directions and designation notices had not been laid before Parliament, whether in full or in part, as a result of the national security exemptions in clause 17. It will not surprise the right hon. Member for North Durham or other Opposition Members that some of these short remarks will overlap with the conversation that we had earlier on a similar matter.

Amendment 20 would require designated vendor directions or designation notices to be provided to the ISC. Amendments 22 to 25 would require the Secretary of State also to provide the ISC with copies of any notifications of contraventions, confirmation decisions and so on. Although I recognise some Members’ desire for the ISC to play a greater role in the oversight of national security decision making across government, including in relation to this Bill, the amendments would, as the right hon. Member for North Durham knows, extend the ISC’s role in an unprecedented way. None the less, I thank his welcome for my unprecedented appearance.

As I said in the debate on amendment 9, the ISC’s primary focus is to oversee the work of the security and intelligence agencies. Its remit is clearly defined in the Justice and Security Act 2013, and the accompanying statutory memorandum of understanding, to which the right hon. Gentleman referred. I do not think he thinks it is my place to take a view on that role, and I do not think this Bill is the place to have that debate.

Matt Warman

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I will come on to that. Accepting any of these unilateral amendments to this Bill is not the appropriate place to achieve an overall enhanced role for the ISC—

Matt Warman

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Absolutely. Members of the Committee should note that in exercising the powers created by this Bill, the Secretary of State will be advised by the NCSC on relevant technical and national security matters. The NCSC’s work already falls within the Intelligence and Security Committee’s remit, so the right hon. Gentleman has found his own salvation.

In that context, the amendment seems to duplicate that existing power, while also seeking to do something that is better done in reform of a different Act, if that is what the right hon. Gentleman seeks. I am sorry to disappoint him again. I think he knew already that I would do that, but I look forward to his third, fourth and fifth salvos in his ongoing campaign.

The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)

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It is a pleasure to be back under your chairmanship, Mr McCabe.

I will try to rattle through these as quickly as I can. Clauses 18 to 23 cover monitoring and enforcement, and further provisions relating to non-disclosure and information requirements. Clause 18 gives the Secretary of State the power to give Ofcom a monitoring direction, requiring the regulator to obtain information relating to a public telecoms provider’s compliance with a designated vendor direction and to provide that information in a report to the Secretary of State.

The clause also includes requirements about the form of such reports and the procedures around their provision, but it does not create any new powers for Ofcom, which already has them under section 135 of the Communications Act 2003. The provisions in the clause are an integral part of the compliance regime. The power to give a monitoring direction to Ofcom is necessary to ensure that the Secretary of State has the ability to require it to provide the information needed to assess compliance with designated vendor directions.

Clause 19 provides Ofcom with the power to give inspection notices to public communications providers. The provisions will apply only where the Secretary of State has given Ofcom a monitoring direction. Inspection notices enable Ofcom to gather information from communications providers in relation to their compliance with a direction. The notices are a tool for Ofcom to give effect to its obligations under a monitoring direction.

Clause 19 also sets out the new duties that inspection notices can impose, the types of information that they can be used to obtain and how the duties in an inspection notice will be enforced. Ofcom may only give inspection notices in order to obtain information relating to whether a provider has complied or is complying with a direction. The notice power cannot be used to obtain information relating to whether a provider has complied or is complying with a direction. The notice power cannot be used to obtain information relating to how a provider is preparing to comply with a direction. Ofcom can instead use its other information-gathering powers under section 135 of the Communications Act 2003 to obtain such information.

Clause 20 provides the Secretary of State with the powers necessary to enforce compliance with designated vendor directions, as well as with any requirement for a public communications provider to prepare a plan setting out the steps it intends to take to comply. It is the Secretary of State’s responsibility to issue directions where necessary in the interest of national security. Clause 20 is essential to ensure that the Secretary of State can carry out this role effectively and enforce compliance with any directions issued. New sections 105Z18 to 105Z21 will be inserted into the Communications Act 2003 for this purpose. The provisions set out the process that the Secretary of State will follow in instances where an assessment is made that a public communications provider is not acting in compliance with the direction or with the requirement to provide a plan. The process encompasses giving a contravention notice, enforcing it and imposing penalties for non-compliance. The clause is essential in ensuring that the Secretary of State can carry out the role effectively and deters and penalises instances of non-compliance.

Clause 21 provides the Secretary of State with the power to give urgent enforcement directions. Provisions to enable urgent enforcement are needed in cases where the Secretary of State considers that urgent action is necessary to protect national security or to prevent significant harm to the security of a public electronic communications network, service or facility.

Clause 22 creates a power for the Secretary of State to impose a requirement on public communications providers or vendors not to disclose certain types of information without permission. The provisions are necessary to prevent the unauthorised disclosure of information, which would be contrary to the interest of national security.

Finally, clause 23 creates a power for the Secretary of State to require information from a public communications provider or any other person who may have information relevant to the exercise of the Secretary of State’s functions under clauses 18 to 21. For example, the Secretary of State can require information on a provider’s planned use of such goods or information relating to how a network is provided. It can also include information about the proposed supply of goods or services. The ability to gather such information would ensure that the Secretary of State is able to make well-informed decisions when considering whether to issue designation notices and designated vendor directions. Information obtained through the use of this power can also be used to support the monitoring of compliance, with directions supplementing information gathered by Ofcom through its information-gathering and inspection notice powers.

To summarise, new sections 105Z18 to 105Z21 together establish the power and processes that outline how the designated vendor regime will be monitored and enforced. The provisions in clause 22 are needed to manage the disclosure of information, the unauthorised disclosure of which may be contrary to national security, and clause 23 will ensure that the Secretary of State is able to obtain the information necessary to make assessments to determine whether to give a notice or direction and to assess compliance.

Matt Warman

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Clause 24 enables higher penalties than those currently set out in the Communications Act 2003 to be issued by Ofcom, and clause 25 makes two necessary consequential amendments to that Act. The penalties under clause 24 can be imposed for contraventions of requirements to provide information to Ofcom for the purpose of its security-related functions. That includes when providers do not provide information requested by Ofcom for the purpose of providing a report to the Secretary of State.

Penalties can be set at a maximum of £10 million or, in the case of a continuing contravention, up to £50,000 a day. These maximum penalties are a marked increase on the existing ones, which are capped at £2 million, or £500 a day. This clause ensures that the maximum penalties are the same as those in clause 23. The size of these penalties is appropriate given the potential impact of the situation described. Proposed new section 139ZA(5) of the 2003 Act, inserted by this clause, gives the Secretary of State the power to change, by regulations subject to the affirmative procedure, the maximum amount of the fixed and daily penalties. That will help to future-proof the framework by ensuring that penalties can be adjusted over time—for example, because of inflation.

In summary, clause 24 enables Ofcom to issue the financial penalties necessary to ensure that providers supply it with the information that it needs. Clause 25 contains the consequential amendments to that, which are necessary because the Bill creates a number of powers to make regulations and some of those regulations will amend primary legislation.

Matt Warman

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I will be brief, but it is important to cover the Government amendments. The clause provides that any increase in expenditure attributable to the Bill is paid out by Parliament. Clause 27 covers the extent of the Bill and clause 28 provides for the commencement of the Bill’s provisions.

I turn to the small set of amendments that the Government deem necessary, given that the Bill will be carried over to the second Session. The Bill creates new national security powers for the Secretary of State to address the risks posed by high-risk vendors through the issuing and enforcement of designated vendor directions in clauses 15 to 23 and 24. Amendment 1 enables clauses 15 to 23 to come into force on the day on which the Bill receives Royal Assent. Amendment 2 ensures that the higher penalties also come into force. Amendment 3 removes the subsection of clause 28 providing for sections to come into force at the end of the two-month period. Finally, amendment 4 ensures that the provisions of clause 24 that are not commenced early come into force via commencement regulations on a day determined by the Secretary of State. Without the amendments, the provisions relating to those powers would come into force two months after the Bill receives Royal Assent, which could put at risk the timely implementation of this important policy.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Clause 27 ordered to stand part of the Bill.

Clause 28

Commencement

Amendments made: 1, in clause 28, page 46, line 19, leave out “section 14” and insert “sections 14 to 23”.

This amendment would cause clauses 15 to 23 to come into force on Royal Assent.

Amendment 2, in clause 28, page 46, line 19, at end insert—

“(ca) section24, so far as it relates to section18;”.

This amendment is consequential upon Amendment 1. Clause 24 provides for higher penalties to be available for certain contraventions of information requirements, including contraventions associated with section 105Z12 of the Communications Act 2003, which is inserted by clause 18.

Amendment 3, in clause 28, page 46, line 25, leave out subsection (2).

This amendment is consequential upon Amendments 1 and 2.

Amendment 4, in clause 28, page 46, line 30, at end insert—

“(ba) section 24 (so far as not already in force by virtue of subsection (1));”.—(Matt Warman.)

This amendment is consequential upon Amendments 1 and 2.

Clause 28, as amended, ordered to stand part of the Bill.

Clause 29 ordered to stand part of the Bill.

New Clause 3

Duty of Ofcom to report on its resources

‘(1) Ofcom must publish an annual report on the effect on its resources of fulfilling its duties under this Act.

(2) The report required by subsection (1) must include an assessment of—

(a) the adequacy of Ofcom’s budget and funding;

(b) the adequacy of staffing levels in Ofcom; and

(c) any skills shortages faced by Ofcom.’.—(Christian Matheson.)

This new clause introduces an obligation on Ofcom to report on the adequacy of their existing budget following the implementation of new responsibilities.

Brought up, and read the First time.

Matt Warman

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I thank the hon. Lady for her contributions. To address her central point, it would not be possible for Ofcom to meet the duties Government have tasked it with without addressing the foundational issue of security. It is important that we bear in mind that that is not an exhaustive list, but security will always be a foundational point.

The new clauses would require the Secretary of State to lay a report before Parliament within 12 months of Royal Assent. New clause 3 would require Ofcom to publish an annual report on the adequacy of its budget, resourcing and staffing levels in particular.

As the Committee is aware, the Bill gives Ofcom significant new responsibilities. Ofcom’s budget is approved by its independent board and must be within a limit set by the Government. Clearly, given the enhanced security role that Ofcom will undertake, it will need to increase its resources and skills to meet these new demands. As such, the budget limit set by the Government will be adjusted to allow Ofcom to carry out its new functions effectively. This is of a piece with the direction of travel we are going in. In 2012, Ofcom had 735 employees. Last year, it had 937 employees, so as its remit has expanded, so has its headcount. That will continue to be reflected in the level of resourcing that it will be given.

Matt Warman

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Ultimately, a mechanism already exists by which Parliament is able to scrutinise Ofcom’s resourcing. Ofcom is required under the Office of Communications Act 2002 to publish an annual report on its financial position and other relevant matters. That report, which is published every March—I am sure the hon. Gentleman is waiting with bated breath for the next one—includes detail on Ofcom’s strategic priorities as well as its finances, and details about issues such as its hiring policies.

Matt Warman

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The right hon. Gentleman asks me a question that I may be able to answer in a moment, depending on a number of factors. As for the thrust of his question, Ofcom is ultimately a serious regulator that has the resourcing to do a serious job. The right hon. Gentleman would be criticising us if it had fewer people, so he cannot have his cake and eat it by criticising the fact it has enough to do the job—but I think he is going to have a go.

Matt Warman

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The reality is that the relationship between Government Departments and regulators is very often incredibly close, but independence is an important part of regulation. Although the right hon. Gentleman makes a reasonable point about the optimal size for in-house expertise versus external expertise, it is getting the balance right between Ofcom, the National Cyber Security Centre and DCMS that this Government and the reporting measures we already have are fundamentally committed to providing.

The right hon. Gentleman talked about Ofcom’s resourcing. Ofcom will not be making decisions on national security matters, as we have said repeatedly, but it will to be responsible for the regulation around these issues. As the right hon. Gentleman said, the Intelligence and Security Committee has shown great interest in how Ofcom is preparing for its new role.

As for the point about disclosure and resources, I would be happy to write to the ISC to provide further details in the appropriate forum about Ofcom resourcing and security arrangements. This could include information that cannot be provided publicly, including information about staffing, IT arrangements and security clearances of the sort that we have discussed. I hope that Opposition Members understand that that is the appropriate forum to provide reassurance and to satisfy the legitimate requirements of public scrutiny on this issue.

Matt Warman

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How to choose?

Matt Warman

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I give way to the hon. Lady.

Matt Warman

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I would say that there is a sensible place to put some of that information, which is the communication to the ISC that I have offered, and there is a sensible place to put other information, which is the annual reporting that already exists. Hopefully the hon. Lady can find some comfort in the fact that both the information that cannot be shared publicly and the information that can will be subject to an appropriate level of parliamentary and public scrutiny.

Matt Warman

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I thank the hon. Gentleman for that intervention. I hope that now that I have given those various reassurances, hon. Members are appropriately comforted.

Everyone is waiting for the headcount of DCMS; I am assured that it is 1,304 people, some 300 more than that of Ofcom. I do not know whether that makes the right hon. Member for North Durham happier or more sad.

Matt Warman

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We can discuss the optimal sizes of quangos and Departments outside this room. However, the right hon. Gentleman is obviously right that Government Departments and regulators need the resources they require to do their job properly. I hope that by describing the various mechanisms I have provided hon. Members with the reassurances they need to withdraw the new clause.

Matt Warman

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As the hon. Lady said, we have addressed various issues relating to the new clause in previous debates. It is important to stress that Ofcom has the resources that it needs. She talked about its ability to face the future, but in our evidence sessions, we talked to Simon Saunders, the director of emerging technology. I know she does not wish to suggest that Ofcom does not do this already, but demonstrably it is already proactively engaged in horizon scanning.

Matt Warman

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It is important to say that we have amended section 3 of the Communications Act 2003, to which the hon. Lady alluded, so that Ofcom must have regard to the desirability of ensuring the security and availability of networks and services, so that should be incorporated into the horizon scanning work.

Matt Warman

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The hon. Lady is right, but as of 31 December 2020, section 3(4) states:

“OFCOM must also have regard, in performing those duties, to such of the following as appear to them to be relevant in the circumstances…the desirability of ensuring the security and availability of public electronic communications networks and public electronic communication services”.

It is absolutely there, but I fear we are getting into a somewhat semantic argument.

Matt Warman

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I think an organisation of 937 people can cope with 13 priorities. On one level, however the hon. Lady makes a reasonable point, and it is not one that we disagree with. Security has to be absolutely central to the work that Ofcom will do.

I will not restate the points I have made about how seriously we take the Intelligence and Security Committee and how seriously we will continue to take it. We will continue to write to the Committee on topics of interest as they arise and we are happy to continue to co-operate in the way that I have done; however, as I said in the debate on amendment 9, the primary focus of the ISC is to oversee the work of the security and intelligence agencies, and its remit is defined in the Justice and Security Act 2013. Amending the Bill to require regular reporting to the ISC, as proposed by the new clause, would risk the statutory basis of the ISC being set out across a range of different pieces of legislation.

Matt Warman

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Earlier, the right hon. Gentleman was suggesting that it was the memorandum of understanding that he would like to see amended. Now he seems to be suggesting that we should insert the new clause, which will not change the memorandum of understanding.

Matt Warman

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That may well be the case, but the right hon. Gentleman is not going to win it here—that is the important point to make. It is right not to try to address this issue in the new clause, but the Government will continue to take very seriously the work of the ISC, as he would expect.

Additionally, the new clause is designed to require Ofcom to provide annual reports to the ISC, which would, as the right hon. Gentleman knows, be particularly unusual in the context of the work of the Committee, as Ofcom will not be making judgments about the interests of national security under the Bill, or as part of its wider function. Ofcom’s role as regulator seems not to be something that comes under the purview of the ISC, even if I understand the broader point. As I said earlier, however, the NCSC is very much under the purview of the ISC, and there are plenty of opportunities for the Committee to interrogate the work of that excellent agency. I am sure the Committee will continue to take up such opportunities with vigour, but as I have said before, it would not be right to seek to reframe the remit of the ISC through the new clause. I ask the Opposition to withdraw it.