National Security and Investment Bill

(Consideration of Commons amendments)
Wednesday 28th April 2021

(1 week, 6 days ago)

Lords Chamber

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Department for Business, Energy and Industrial Strategy

Commons Reason

Motion A

Moved by

Lord Callanan Portrait Lord Callanan
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That this House do not insist on its Amendments 11 and 15, to which the Commons have disagreed for their Reason 11A.

11A: Because it is appropriate and sufficient for oversight and scrutiny of decisions made by the Secretary of State for BEIS to be conducted by their departmental select committee.

Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
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My Lords, with the leave of the House, I will speak also to Motion A1. I will, of course, address any further comments at the end of the debate.

It goes without saying that I am delighted to be back in the Chamber after a short respite while the other place has considered our amendments to this Bill. I am pleased to advise noble Lords that there was resounding support for all the amendments made by this House, with the mere exception of two. The other place has resolved against amendments which, in effect, would have introduced a reporting requirement to the Intelligence and Security Committee in relation to the NSI regime.

Amendments 11B and 11C in lieu, tabled by the noble Lord, Lord West, draw on his earlier amendments. They would require the Secretary of State to include in the annual report provided for in Clause 61 a summary of his decisions in respect of final notifications given and final orders made, varied or revoked, as well as a summary of any national security risk assessment provided by the security services in relation to those decisions. Where publication of any of that additional information would be contrary to the interests of national security, the Secretary of State may instead place that information in a confidential annexe provided to the ISC. The amendments before us would end those requirements should the memorandum of understanding that governs the remit of the ISC be amended to bring the Secretary of State’s activities under Clause 26 in scope of ISC scrutiny.

I merely echo the words of my colleague, the Minister for Small Business, Consumers and Labour Markets, on Monday, when he welcomed the “passionate and expert debate” this issue has seen in both Houses. In particular, I repeat the praise offered in this House for those who previously spoke in favour of this amendment. Rugby analogies aside, it is a particularly serious, knowledgeable and experienced group of Peers, and I of course acknowledge the weight and credibility that they undoubtedly bring to these issues.

However, the other place resolved by a significant majority of 106 to restore the Bill to its previous form in this regard. The elected Chamber has given this issue its due consideration, and a majority of 106 elected Members has made the position of the other place very clear. This includes four of the seven members of the ISC, who, similarly, sit in the other place voting with the Government, with only one Conservative Member in the entire House voting against.

I do not intend to try the patience of the House and repeat the arguments that we have heard many times before which the Government have already made on this issue, but I will address the specific changes in this amendment from the original which this House has previously considered.

The Government do not consider that the addition of an endpoint for the effective requirement on the Secretary of State to provide confidential information to the ISC makes the approach any more necessary or appropriate. It is our view that the BEIS Select Committee remains the most appropriate committee for scrutiny. It is capable, it is interested and it stands ready. The Secretary of State for BEIS has written to the chair of the BEIS Select Committee to confirm this, and this was acknowledged by the chair of the committee in the other place, also on Monday. The BEIS Select Committee will be ably supported by the Science and Technology Committee, where that is appropriate.

The Government hugely value the Intelligence and Security Committee, but we also hugely value the BEIS Select Committee and the clear and appropriate scrutiny that it provides. We do not need to conflate the two through amending this Bill, the memorandum of understanding or, indeed, anything else in this field.

The Government’s position, and that of the elected Chamber, is clear, and I can tell your Lordships that the Government have no plans to concede on this issue. I therefore ask that noble Lords respect the clear wishes of the other place and, while I am of course grateful for noble Lords’ insight and passion on this matter, I hope that this House does not insist on these amendments. Therefore, I beg to move.

Motion A1 (as an amendment to Motion A)

Moved by

Lord West of Spithead Portrait Lord West of Spithead
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At end insert “and do propose Amendments 11B and 11C in lieu—

11B: Page 36, line 15, at end insert “, except for any confidential annex prepared under subsection (2B) while that subsection is in force”

11C Page 36, line 33, at end insert—

“(2A) Until the condition in subsection (2C) is met, each report must also provide, in respect of final notifications given, and final orders made, varied or revoked—

(a) a summary of the decision of the Secretary of State under section 26(1), and

(b) a summary provided by the Security Services of any national security risk assessment provided under section 26(3)(a)(ii) relating to each decision under section 26(1).

(2B) Until the condition in subsection (2C) is met, where the Secretary of State considers that publication of any information listed in subsection (2A) would be contrary to the interests of national security, those details may be excluded from publication and instead must be included in a confidential annex to the report provided to the Intelligence and Security Committee of Parliament on the same day that the rest of the report is laid before each House of Parliament.

(2C) Subsections (2A) and (2B) have effect only until a revised memorandum of understanding between the Prime Minister and the Intelligence and Security Committee of Parliament under section 2 of the Justice and security Act 2013 has been laid before Parliament which provides for oversight by the Intelligence and Security Committee of the activities of the Secretary of State under section 26 of this Act.””

Lord West of Spithead Portrait Lord West of Spithead (Lab)
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My Lords, the question put back to this House is not whether the Government should take national security risks into account when considering investment but whether Parliament should have oversight of that process—that careful balancing of our national security against our prosperity. This House delivered a very clear message to the Government on Report that if the Bill is to provide the Secretary of State for BEIS with wide-ranging new powers, it must also provide for meaningful oversight of those powers. That meaningful oversight of high-level intelligence can be conducted only by the ISC, as the body which Parliament established for that express purpose.

I thought the strength of feeling in this House on the matter had been very clear, and, indeed, the rugby scrum to which the Minister alluded which I gathered in support had unbelievable knowledge and background in this whole area of intelligence, security and the ISC. It is therefore very disappointing that my amendment was rejected in the other place yesterday. I remain of the view that, without that amendment, the Bill does not provide for meaningful oversight by Parliament. Nevertheless, I have sought yet again to offer the Government an opportunity to see common sense on this and, therefore, rather than insisting on the original amendment, I have tabled this amendment in lieu. It requests the same substantive material—a summary of the decisions by the Secretary of State and a summary by the security services of any national security risk assessment in respect of final notifications given and final orders made, varied or revoked, which can be provided to the ISC in a confidential annexe—but it now provides that that material need not be provided if and when those activities are formally added to the memorandum of understanding, at which point ISC oversight is provided for through that route.

I have already set out why the ISC must have oversight and why it can only be the ISC, so I have no wish to try your Lordships’ patience by repeating those arguments, or indeed those made by noble Lords from across the House who spoke in support of my amendment. The substantive point has been made, and I have to say that the argument has been won—I know that from having talked to people in the other place.

I wish to examine more closely the assertions made more recently by the Government in the other place, as I would not wish any of them to muddy the water on this issue. The Government’s starting point was that the ISC can already scrutinise the information provided to the ISU by the security services. That is indeed the case—we can require the security services to provide us the information which they provide to the ISU on the national security risks—but that is missing the point. What the ISC must be able to scrutinise is the balancing of those security risks against the business elements. It is that crucial balancing which is at the heart of the Bill. There is little point in seeing what the national security risks are if you cannot see what decision has been reached regarding those risks. That is precisely why my amendment makes reference to the decision of the Secretary of State.

Moving on to that decision, the Government’s next argument is that the ISC cannot oversee decisions made by the Secretary of State for BEIS because BEIS is not listed in the ISC’s memorandum of understanding. That is indeed the case but again that is, I am afraid, missing the point, deliberately or otherwise. As I have already explained to noble Lords, the Government gave a commitment to Parliament that the ISC would, through its MoU, oversee all security and intelligence matters across all of government. The seven bodies currently listed on the MoU are those that were carrying out security and intelligence matters in 2013. That list of bodies should be kept and updated, as the Government told Parliament was their intention. It would be very simple to add something such as BEIS to the list.

With that argument dispatched, the Government move on to their next line of defence—that decisions by the Secretary of State for BEIS must be for the BEIS Committee to scrutinise, and that the ISC should not encroach on that remit. That is, I am afraid, a direct contradiction of the Government’s own MoU. The Government have already expressly said that the ISC’s scrutiny will not affect the wider scrutiny of departments such as, for example, the Home Office, FCDO and MoD by parliamentary committees. The same would be true for BEIS. If the decisions by the Secretary of State for Defence or the Home Secretary can be scrutinised by the ISC, why are the decisions by the Secretary of State for BEIS any different? I am curious as to what it is about BEIS that sets it apart and means that the ISC should not oversee it?

At this point, the Government resort to their final argument. I have to say here that I find it rather tenuous to argue that the ISC does not need to provide oversight because the BEIS Select Committee can do it. The Secretary of State for BEIS has written to the chair of the BEIS Select Committee talking about confidential briefings in a most reasonable manner. However, we need to examine what that does not say, which is, “The Government will hand over our top secret information to you, your committee and your staff for you to hold, scrutinise, take notes on, discuss, question us about and report on”. That is because the Government cannot do that. The words being used belie the practicalities of the Government’s own security procedures—unless, of course, the Minister is going to tell us that the Government are prepared to breach their own security procedures.

The proposals do not amount to meaningful scrutiny. I say this with the greatest respect to the BEIS Select Committee, whose chairman, in a most thoughtful and measured speech in the other place yesterday, supported the ISC’s oversight of this area. The BEIS Select Committee does excellent work and should rightfully be the primary oversight body for the work of BEIS and the business elements of the work of the ISU. However, the ISC is the only body that can provide oversight of the intelligence elements and balance them with the business elements. The ISC is the only committee of Parliament that has regular access to protectively marked information that is sensitive for national security reasons. This means that only the ISC is in a position to scrutinise effectively the work of those parts of departments whose work is directly concerned with intelligence and security matters, as the Government have said repeatedly until now.

The Intelligence and Security Committee was created by Parliament to handle classified information where Select Committees could not. The Government committed to using the ISC to scrutinise all their intelligence and security functions. Now we are told that the BEIS Committee is able to do exactly that. In this instance, apparently, the ISC is no longer needed. Let me be clear: the ISC currently does oversee this area of work, so the Government’s proposal is deliberately removing it from ISC oversight. Is that what is going to happen in the future? Will security work be hived off successively to departments that will be told that the ISC cannot oversee them because it is not listed in a nine year-old MoU that the Government have failed to keep up to date?

I see the longer-term consequences of rejecting our amendments and wonder whether more areas of government are destined to follow suit. This could become a very slippery slope, denying Parliament and, indeed, the nation proper scrutiny of intelligence decisions if we do not take action now. For this reason, I have sought to offer the Government yet another opportunity. Rather than simply retabling my original amendment, I have offered them an alternative. Either the Government can provide the ISC with a classified annexe covering security and the Secretary of State’s decision, or they can add those decisions to the existing MoU.

My amendment is a reasonable attempt to provide the Government with a way forward and a way out. I know that the Minister opposite has been put in a very difficult position on this issue. While recognising the strength of feeling across this House, there must be meaningful oversight of these new powers, and that can only mean the ISC. I am not looking for more work for myself, I can tell noble Lords, but only the ISC can do it. I beg to move.

Lord Campbell of Pittenweem Portrait Lord Campbell of Pittenweem (LD)
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My Lords, as I have done throughout this process, I support the noble Lord, Lord West, and, having had the advantage of hearing him today and earlier, I endorse without qualification his remarks and powerful arguments in support of Motion A1.

I am encouraged in that because the Government are yet to produce any reason against these proposals that could be regarded as substantive. I am further encouraged by the fact that the chair of the BEIS Committee supports the proposition and the principle that the amendment embraces. It has been suggested, although not perhaps so strongly today, that confidential information will be made available to the BEIS Committee. There is a difference between confidential and classified. What is confidential as between one Minister and another can easily not be classified. In that respect, the Government have simply not proved their case.

What will that confidential information amount to? It will amount to what the Secretary of State thinks the committee can see. One could describe that, rather pejoratively, as being spoon-fed, but it will certainly come not with its interest in objectivity but with its interest in the subjective opinion of the Secretary of State. In that respect, it is quite different—I repeat, quite different—from the role, powers and the exercise of those powers of the Intelligence and Security Committee. I am further encouraged in my position because I read that the Commons Reason for Motion A is that it is “appropriate and sufficient”—which is probably what Oliver Twist was told when he asked for some more. The words mean what people want them to mean and that, yet again, exposes the poverty of the argument offered by the Government.

I shall finish by reminding the House that members of the Intelligence and Security Committee are chosen for experience and a reputation for balanced judgment. As I have said previously, there have been occasions when nominations made to the committee have been turned down because a particular individual was not thought to have the necessary experience or qualities for the discharge of a quite remarkable responsibility. Members sign the Official Secrets Act and the procedure attached to that is a solemn moment. They form an intimate relationship with the security services—one of trust, which cannot be replicated in any circumstances, in my respectful view, by the relationship between the BEIS Committee and the Secretary of State.

The truth is that the Government do not have a good argument here and that is why they would be wise, even at this late stage, to adopt this amendment.

Lord Butler of Brockwell Portrait Lord Butler of Brockwell (CB)
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My Lords, I too believe that the noble Lord, Lord West, is right in insisting that the Government and the other place look again at another way of giving the ISC an explicit role in scrutinising highly classified intelligence underlying the Secretary of State’s use of the powers in this Bill. The Government’s position is, frankly, indefensible. On Report, the noble Lord, Lord West, reminded the House that at the time of the passing of Justice and Security Act 2013, the then Minister for security announced

“the intention of the Government that the ISC should have oversight of substantively all of central Government’s intelligence and security activities to be realised now and in the future.”—[Official Report, Justice and Security Bill Committee, 31/1/13; col. 98.]

The Minister in the other place confirmed on Monday that the Government stand by that statement, yet they refuse to amend the memorandum of understanding under the Act, to bring the Investment Security Unit in BEIS within the purview of the ISC. Frankly, I cannot understand why. In his amendment, the noble Lord, Lord West, has offered the Government an easy way out. If they will amend the memorandum of understanding to bring the Investment Security Unit explicitly within the purview of the ISC, as it would have been had it remained within the Cabinet Office, the problem will be solved at a stroke. There will be no need for this amendment, and if the Minister will give that assurance today, I hope that the noble Lord, Lord West, would be prepared not to press his amendment.

In the other place, a Conservative Member, Steve Baker, said that the chairman of the ISC, Dr Julian Lewis—another Conservative Member—had made an open-and-shut case for amending the MoU, and yet Mr Baker, under the constraint of his Whips still voted against the amendment. If the Minister’s reply is that the ISC can cover the Investment Security Unit without amending the MoU, I am bound to ask: what is the point of having the MoU at all? The Minister has only to say that the Government will make this amendment to the MoU and he will save the Government and all the rest of us, a good deal of trouble. Will he do so? I suspect that the Government’s position is a result of the arrogance of a Government who have a large majority in the other place. They have taken a position and refuse to change it, however strong the arguments on the other side.

Lord Duncan of Springbank Portrait The Deputy Speaker (Lord Duncan of Springbank) (Con)
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The noble Lord, Lord Lansley, has indicated his desire to speak.

Lord Lansley Portrait Lord Lansley (Con)
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My Lords, I am very pleased to follow the noble Lord, Lord Butler of Brockwell. I agree entirely with what he had to say and with the noble Lords, Lord Campbell and Lord West of Spithead, too. It comes down to a very simple proposition: throughout, we have been very clear that if the Government would simply amend the memorandum of understanding with the Intelligence and Security Committee to include reference to the Investment Security Unit, there would be no need for any amendment to the Bill. That remains the case now. The question why the Government are not doing this.

The Minister in the other place said on Monday night:

“The work of the security services on investment security in support of the ISU clearly falls within the remit of the ISC.”—[Official Report, Commons, 26/4/21; col. 154]

If that is the case, what is the impediment to adding the ISU into the memorandum? I think it is that the Government do not interpret the ISC as having a remit that extends beyond what the intelligence services themselves have offered by way of information to the Investment Security Unit in BEIS, to the point where —as the noble Lord, Lord West, quite accurately summarised—the scrutiny of how national security is being maintained in the decisions that become part of the interim or final orders made under this Bill.

The Government’s problem may be that they think that if they were to include the ISU in the memorandum of understanding, they would effectively create some duplication between the scrutiny of the order-making power by the BEIS Select Committee and the Intelligence and Security Committee’s scrutiny. That need not be the case. It is perfectly clear already, within the memorandum of understanding that was quoted by Dr Lewis in the debate on Monday night, that the ISC’s work in looking at the intelligence services

“‘will not affect the wider scrutiny of departments…by other parliamentary committees. The ISC will aim to avoid any unnecessary duplication with the work of those Committees.’”—[Official Report, Commons, 26/4/21; col. 160]

It seems to me that the resolution is very simple—the Government should simply add the Investment Security Unit into the memorandum of understanding. It is clear from what the ISC’s chair and members have said that they would not expect to duplicate the work of BEIS —the primary scrutiny of BEIS’s work—in implementing this legislation, but there are specific questions that relate to the use of intelligence and highly sensitive intelligence materials.

I was not comforted by reading that the chair of that committee in the other place has been told by the Secretary of State that he will brief him on privy counsellor terms. That tells us that the chair of the committee may know something, but the BEIS Select Committee in the other place will not generally know it. Its members will not be able to discuss that information and they will not be able to report on that basis. There is clearly a deficiency, as Dr Lewis quite rightly said—a scrutiny gap—in relation to the use of top-secret material on a routine basis in informing decisions made under this legislation. The inclusion of the ISU in the remit of the Intelligence and Security Committee will close that scrutiny gap.

Lord Fox Portrait Lord Fox (LD)
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My Lords, the Minister used the word heavyweight; I would use the word authoritative about the speeches we have heard from the noble Lords, Lords West, Lord Butler, Lord Lansley, and my noble friend Lord Campbell. I do not have the same authority, but I have an eye for process and an eye for a discontinuity. At the heart of this is a central contradiction. This Bill is called the National Security and Investment Bill, and its central premise is that the world of security has changed. It is not about armies and air forces; it is about technology—the spread of technology and access to that technology. The Bill is built on the idea that we need an approach to the commercial use, sale and protection of this technology for the security of this country.

The speeches that the Minister has heard were characterised in his preceding speech as somehow decrying the abilities of the BEIS Select Committee. The BEIS Select Committee was not put in place to assess the security issues that these companies are facing. That is not its job; its job is to do what BEIS was there to do. This Bill, by its nature, by its very name, is a hybrid of two very important issues: investment and security. The BEIS Select Committee is there and is an expert on the first of those. The ISC is there to protect the country and to offer scrutiny on security issues. There is no problem in asking both of those committees to do what they are good at in order to fulfil the very important task that Bill seeks to undertake.

We can only conclude that, because the Government decided not to do this and because, as the noble Lord, Lord Butler of Brockwell, put it, they have a large majority in the other place, they will continue down this road. There is another opportunity for the Government to think again and do the most sensible thing, which is to amend the MoU. It does not require primary legislation, in my understanding, and would be done very quickly with the consent of this House. For that reason, if the noble Lord, Lord West, decides to put this to a vote, these Benches would like to ask that question of the people across the way, at least one more time.

Baroness Hayter of Kentish Town Portrait Baroness Hayter of Kentish Town (Lab)
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My Lords, it is clear that the Government have no good reason for refusing to accord the ISC its proper role in overseeing the intelligence input into a decision by the BEIS Secretary of State to forbid an otherwise bona fide investment in an enterprise—the sort of investment that the noble Lord, Lord Fox, has just described. I am sad to say that the Minister cited only the size of the House of Commons majority and gave no argument against proper parliamentary scrutiny. Frankly, if we are to say that this House should never question what the majority in the House of Commons does, you would wonder whether there is any role for this House. The size of the majority down there is not important; what is important to the security of this country is the correctness of the views that we take.

At one point, I think in this House, it was suggested that the Government did not want to amend the MoU case by case, but why not? As the noble Lord, Lord Fox, has said, if a new law comes in that has “national security” in its title and gives powers to a Secretary of State that depend wholly on intelligence, why not scrutinise that intelligence in respect of the use to which it is put? As we have head, neither the BEIS Select Committee nor its highly respected chair—who I assume will now be made a privy counsellor, since he is about to be briefed on Privy Council terms; I will be there to congratulate him if that happens—have the security clearance or experience to question the intelligence in the sorts of ways that we have been hearing from around the House. So why not let our experts carry out that work, on behalf of Parliament? What my noble friend is asking for is simple: an amendment to a memorandum of understanding. Is that too much to ask of the Government?

Lord Callanan Portrait Lord Callanan (Con)
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I thank all noble Lords who have contributed; it has again been a good demonstration of the quality of contributions from this House. I have listened very carefully to the points that have been made, in particular by the noble Lords, Lord West, Lord Campbell and Lord Butler, and by my noble friend Lord Lansley.

I will address the primary issue head on. This was raised by the noble Lords, Lord West and Lord Campbell, and the noble Baroness, Lady Hayter. It is the issue of whether the BEIS Select Committee will have access to “top secret” information. We will make sure that the BEIS Select Committee has the information that it needs to fulfil its remit and scrutinise the work of the ISU under the NSI regime. Much of this is unlikely to be highly classified and, where the Select Committee’s questioning touches on areas of high classification, it is likely that the relevant information could be given in a way that does not require as high a classification and provided to the committee confidentially. If, however, the BEIS Select Committee requires access to highly classified information, we will carefully consider how best to provide it, while maintaining information security in close collaboration with the committee’s chair.

Another point made by the noble Lord, Lord West, was that the current system for scrutiny is run out of the Cabinet Office and therefore comes under the ISC’s unit, so the Bill reduces the ISC’s remit. The Government’s main powers to scrutinise and intervene in mergers and acquisitions for national security reasons in fact come from the Enterprise Act 2002; the powers under that Act sit with the Secretaries of State for BEIS and DCMS, not in the Cabinet Office. Giving the BEIS Select Committee oversight of the new NSI regime is entirely in keeping with this and does not represent a reduction of the ISC’s remit.

A point made particularly by my noble friend Lord Lansley was about changing the memorandum of understanding, but the question here is not whether the MoU allows for the role proposed by noble Lords, but whether that role is appropriate. Our answer—and I appreciate that noble Lords will disagree—is no. The Government have made their case, which comes off the back of a resounding vote by the elected Chamber, that no change should be made to the Bill in relation to reporting to the Intelligence and Security Committee. We maintain our view that the BEIS Select Committee remains the place for scrutiny of the investment security unit and that the Intelligence and Security Committee remains the appropriate committee for scrutiny of the intelligence services, in accordance with the memorandum of understanding and the Justice and Security Act 2013. With acknowledgement to all who have spoken and with regard to the points that I have made, I appreciate the difference of opinion on this, but ask once again that the House does not insist on these amendments.

Lord West of Spithead Portrait Lord West of Spithead (Lab)
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My Lords, first, I thank those who spoke in support of my Motion. They have an incredible amount of knowledge about this issue. I find the Government’s position extraordinary and I feel sorry for the Minister opposite—for whom I have great respect—who has to parrot arrant nonsense. As an admiral and a captain who had defaulters in front of me, I have had people spouting arrant nonsense at me and I know how to spot it. This is arrant nonsense and I find that rather sad. It is unfortunate that he has to do this as I am sure that, deep down, he does not believe it, because he is an intelligent chap. I am appalled that the Government are not willing to give ground on this and I cannot understand why—I really cannot. This is not a great party-political issue or anything like that. It is quite extraordinary, so I am afraid that I will test the opinion of the House.

Sitting suspended.