National Security Bill (Twelfth sitting)

Debate between Lord Beamish and Stewart Hosie

Committee stage
Thursday 8th September 2022 Public Bill Committees

[Stewart Hosie]

I thank the Minister for his remarks on clause 61 and schedule 10. He said that these were about concern for the future. I think we are all concerned about the future. He said that they were designed to tackle something that might happen in the future. I think we all are concerned about ensuring that nothing bad happens in future, but it appears from what the Minister has said that we are measuring risk on a very subjective basis—"real risk” is not a commonly used term.

Let me speak to amendment 58 to schedule 10. The schedule relates to civil proceedings where a Minister can apply to the court to freeze a possible award of damages if the Court is satisfied that there is a real risk of those damages being used for terrorist purposes. That, of course, is lower than the ordinary standard of proof and does not require the claimant to have even been convicted of a criminal offence. It requires only that there is a possibility that they might. Therefore, they will be deprived of any compensation for other matters that they are due. That is a very challenging provision. We clearly understand the policy intent, but what about other moneys than compensatory payments: earnings, pensions, savings, a lottery win or an inheritance? If this is about freezing cash because of a real risk that it may be used for terrorism, why do we need a specific provision for damages legally and properly awarded by a court after full consideration?

[Mr Jones]

Also, if the money was used to support terrorism there is existing legislation about finance of terrorism, so it would fall under that legislation that exists already, rather than this provision.

[Stewart Hosie]

My right hon. Friend is right that there is already legislation on terrorist financing. As the Minister pointed out in his opening remarks, there is already a way of freezing terrorist assets, but he said that it was complicated. If we are not just to do things properly and legally but to be seen to be doing them properly, legally and fairly, it may be worth going through those processes to do that.

Schedule 10 proposes, as the Minister said, a freezing order for two years under paragraph (1). Then, an extension is possible for four years under paragraph (2) and, even more drastically, the funds can be forfeited altogether. But the standard of proof in the Bill—the real risk—means no criminal conviction for anything. Even if the court were to think that damages would probably be used for legitimate purposes, but there was a real possibility that they might be used for something else, the damages could be frozen or forfeited entirely.

I can just about live with a general scheme—none of us is naive and none of us wants to see money from any source used to finance terrorism—but, surely, such a drastic step requires actual proof, at least on the balance of probability, that there is a risk of the funds being used for terrorism. That is precisely what the amendment, which removes reference to “real risk”, would achieve.

National Security Bill (Eleventh sitting)

Debate between Lord Beamish and Stewart Hosie

Committee stage
Thursday 8th September 2022 Public Bill Committees

[Stewart Hosie]

Clause 45 includes the important power to appeal to the court against the decision to review or revive a part 2 notice; against variations, or the refusal of them; against unlimited revocation applications; and in relation to permission applications. As the Minister said, the function is to review the decision, and the court must apply the principles applicable on an application for judicial review.

That sounds fine—so far, so good—but why is there no right to appeal against a clause 35 permission to impose STPIM decisions, as made clear in clause 47? Is it because it is expected that other procedures will have the same effect, for example an application to revoke, or is this an attempt to limit in statute the ability of those subject to STPIMs having access to court to appeal in those circumstances?

[Mr Jones]

I warmly welcome the Minister to his position. He and I go back a long way: when I was a Minister in the Ministry of Defence, he was a bright, fresh young officer, and I think we both have fond memories of our time working together. One of the dangers he faces is being appointed to a position that he knows a lot about. That is always a downer for any Minister and strikes fear into the civil service. I wish him well, and he will do a good job.

Throughout the entire Bill, there should be an ability for the individual to have recourse to appeal. That is not because I am somehow soft on terrorism or on the individuals we are dealing with. It is because we must have a system whereby, when the state takes hard measures to limit someone’s freedom, they need the counterbalance of the ability to appeal. That is why I welcome the measures. My problem with the Bill is that, although this measure is present in this part of the Bill, there are no safeguards in other parts of the Bill. Those types of appeal mechanisms balance state power and the individual.

I have two specific points on the process, which I support. How will the appeals be done in the court? Some of the information that the Secretary of State will rely on will be highly classified, so how will the process work? It will mean the disclosure of some information that we would not want disclosed in open court. I shall not rehearse the arguments on part 3, but it is clear that, if part 3 is retained, the individual will not have recourse to legal aid for an appeal. I am opposed to that. That is not because I am on the side of individuals who wish us harm, but we must ensure that we have a system that is robust in ensuring that justice is done, and people must not be arbitrarily detained or subject to those restrictions if they clearly have legitimate arguments against what the state is trying to apply.

--- Later in debate ---

[Stewart Hosie]

Schedule 7 empowers the court to make rules in relation to reviewing proceedings and onward appearance, and the rules of court must secure not only a proper review of decisions, but

“that disclosures of information are not made where they would be contrary to the public interest.”

We can have determinations without a hearing, without full reasons being given for a decision—the Minister described that—and, when sensitive information is to be laid, hearings without the accused. There is a duty of disclosure on the Secretary of State, but he or she can apply not to disclose certain information on the grounds that disclosure would be

“contrary to the public interest.”

That rule means that the Secretary of State might be able to ignore other requirements to disclose information. That is Kafkaesque.

The Minister, rightly, prayed in aid national security; he was absolutely right to do that. We can all understand that there could be circumstances where such rules would be necessary, but does the legislation describe those circumstances appropriately? The watchwords appear to be “public interest”, but is that not far too wide or far too vague? Given he prayed in aid national security, why do we not only allow the avoidance of disclosure on genuine national security crimes?

[Mr Jones]

I think the Minister has explained that. I take the point made by the right hon. Member for Dundee East, but as I said earlier on, I think the rules are a sensible safeguard in terms of what we need. Frankly, with no access to legal aid they are for the birds, because no one will be able to use them. We will come on to that debate later.

I want to ask the Minister about the issue of juveniles, which is an increasing problem for our security services. For example, the “Extreme Right-Wing Terrorism” report that we just produced in the Intelligence and Security Committee found that, increasingly, those individuals are young people—some as young as 15. If we are going to apply the rules in some possible circumstances to those individuals, what are the protections for them? If the Minister does not know the answer, I am quite happy for him to write to explain the situation. We are perhaps fixated on thinking that this is about Islamic terrorists and grown-ups, but certainly according to the ISC report, very sadly, in many cases those who are now coming before the courts are minors.

--- Later in debate ---

[Stewart Hosie]

Clause 48 requires quarterly reports by the Secretary of State on the exercise of powers to impose, extend, vary, revoke or revive part 2 notices. Clause 49 requires an independent reviewer of this part—that is, the STPIMs. Annual reports are to be prepared and laid, and that is all good and well. The only issue we have is the scope of the clause 48 report, in that its requirement is

“the exercise of the powers”,

while the scope of the clause 49 review is about

“the operation of this Part”.

It is important that the review includes information about the workings of what I described as potentially Kafkaesque rules for reviews and appeals in schedule 7. I will be very brief, but new clause 2, in the name of the hon. Member for Halifax, which calls for a broader review requirement to cover parts 1, 3 and 4 of the Bill, does seem rather sensible.

[Mr Jones]

The amendment from my hon. Friend the Member for Halifax is, as I said earlier, part of a broader piece about ensuring that we get the balance right between giving our security services, agencies and people the powers that I personally support, and providing proper scrutiny for the individual and for the operation of the Bill. That is the thing that has been missing from the Bill. Knowing Sir Brian Leveson, the Investigatory Powers Commissioner, I know that system works well in terms of warrantry and so on. If we are going to give powers to our agencies to do their job rightly, we have to ensure that they are robust and reviewed as things change.

I know the Minister is only a day or a bit into his job, so he might not be able to accept an amendment today, but I think this aspect needs to be looked at throughout the Bill. It was certainly raised with his predecessor, though I cannot remember if it was his immediate predecessor or the one before that.

My other point is to do with this issue of laying before Parliament. I support that, but the report will be very anodyne in terms of what it can provide in public, so I might look to the Intelligence and Security Committee. I am not looking for work for that Committee, but it has the ability to access material that cannot, for obvious reasons, be put in the public domain. The Minister will soon learn about the battles going on at the moment with parts of the Cabinet Office, Home Office and various other agencies about our role and access to material. We already get, for example, the independent commissioner’s report, but we have an ongoing row about our access to the annex, which we had in the past but for some reason are now not allowed to have. Given the role of Parliament and for its reassurance, will the Minister consider the ISC having access to the information that cannot be put in the public domain? That would be helpful. I accept that some people think the ISC just agrees with everything the agencies do, but it is another review body that can give assurance to the public and Parliament that the powers are proportionate.

We know that once we implement the Bill, we will learn and powers will change. I am not against Brian Leveson, the independent tribunals and the Investigatory Powers Commissioner—they do a fantastic job. They have helpfully pointed to some of the lessons that need to be learned, for example, from the terrorist attacks in London and Manchester. The ability of parliamentarians at least to ask the questions and have access to the information that cannot be put in the public domain would be an added layer of scrutiny, allowing the public to know at least that we have a full spectrum to ensure that such things are done proportionately and are working effectively.

National Security Bill (Seventh sitting)

Debate between Lord Beamish and Stewart Hosie

Committee stage
Tuesday 19th July 2022 Public Bill Committees

[Mr Jones]

I support the measures because they are an extra weapon in the armoury to fight against hostile state intervention in this country. Clearly, the arguments about the level to which the restrictions will be imposed are very complex. There will be cases in which the prosecution test will not be met but we still have evidence about individuals.

My only problem with the measures is in relation to how they will be used practically. As we all know, TPIMs have not exactly been uncontroversial in their prosecution. Will the Minister give us an understanding of how they will be used and in what circumstances? If the evidence is there—and I accept that sometimes that will be difficult, in the sense that a lot of evidence against individuals will be unable to be put in the public domain—when will the measures be used, and for what duration? That would give people some assurance that they will not be used for lengthy periods against individuals. I accept that in a number of cases the evidential test for prosecution will not be met, and therefore the measures may well be a useful tool in the armoury, but we need some oversight of how they will be used and their effectiveness.

On polygraphs, I have some sympathy with the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. Interestingly, the hon. Member for Hastings and Rye seems to be answering for the Minister; I do not know whether she is auditioning for the job, but I thought it was the Minister who replied to such things.

I think the jury is out, not just in this country but internationally, on the effectiveness of polygraphs. If we are to ensure that they will not be challenged legally, we could put something in the Bill. I am not suggesting for one minute that polygraphs be used on every occasion, but if one is used in a case that is then thrown out because of the unsafeness of the test, that would unfortunately weaken the tool. The Minister has to justify it. As I say, I would be interested to know about the oversight, and how long he envisages their being used.

[Stewart Hosie (Dundee East) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Gray. I have a question on paragraph 8 to schedule 4, entitled “Electronic communication device measure”. It is eminently sensible, when one is considering how an STPIM might be constructed, that one looks at all the restrictions that that may involve. However, when we get to sub-paragraph (6)(c), which refers not to computers or telephones but to other equipment

“designed or adapted, or capable of being adapted, for the purpose of connecting to the internet,”

I want to ensure that there is clarity, and that the provision will be defined in a cogent way.

As we move further into the internet of things, one’s fridge or toaster will be designed for the purpose of connecting to the internet. That might sound glib or flippant, but we may get to the point when half the white goods in any individual’s home are internet enabled. Given that there could be huge sensitivities in the deployment of STPIMs, the last thing that we want to see is a police constable or bailiff removing half the items from someone’s house, when that clearly is not the intention but those items nevertheless fit the category in paragraph 8(6)(c).

National Security and Investment Bill

Debate between Lord Beamish and Stewart Hosie

2nd reading & 2nd reading: House of Commons
Tuesday 17th November 2020 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I start with my ISC hat on because it was the ISC that first investigated UK Government powers and processes for scrutinising foreign investment in sensitive areas of UK industry, found them lacking and called for more powers. In its 2013 report, “Foreign involvement in the critical national infrastructure”, the Committee looked into the issue of

“foreign investment in the Critical National Infrastructure (CNI)”

and concluded:

“The difficulty of balancing economic competitiveness and national security seems to have resulted in stalemate.”

That is not a criticism and it is not meant to be contentious. This issue has arisen over the past few years and most, if not all, advanced economies are now grappling with it. I therefore welcome the Bill, in principle, or certainly a measure like it.

While on the subject of the ISC, I offer the apologies of its Chair, the right hon. Member for New Forest East (Dr Lewis), who is self-isolating having been contacted by the English version of Trace and Protect, and is sadly missing this debate.

The Bill is designed to bring additional scrutiny of foreign investment that may have an impact on national security. I say from the outset that not only is there nothing wrong with having a national security eye on investments in critical areas—it is in fact absolutely vital.

Currently, as we have heard, the ability of the Government to scrutinise investments on national security grounds contained within part 3 of the Enterprise Act—that is, the mergers provisions—is rather limited. In practice, it means that the UK Government are unable to scrutinise on the grounds of national security without the investment first meeting competition concerns or, in very limited circumstances, a public interest test. We know this concern and similar concerns are shared globally. A number of other countries have been tightening up their investment security regimes in response to changing national security-related threats, enabling technology, the loss of intellectual property and the increasing crossover between sectors, which I may touch on later. The Committee on Foreign Investment in the United States is largely seen as setting the standard. We have also seen tightening in Japan, Canada, Sweden, Germany and France at least, with the Japanese regime extraordinarily strict, in some cases limiting ownership to barely 1% of active management or, more accurately, to barely 1% of a company in certain circumstances.

In the UK Government’s proposals, if both the trigger and the threshold are met, the individual investment can be called in by the Secretary of State for approval. The powers can be retrospective; it can be called in after it has occurred. However, the time to conduct the national security assessment—30 days, with potentially an extra 45—might be deemed to be a little short, given how shrewd, or clever, certain institutions, organisations and individuals are at hiding genuine beneficial ownership. One thinks how long it took to find where beneficial ownership existed for some entities in the UK. Were it not for the Panama papers, we would probably still never know. I therefore question whether that maximum of 75 days is actually sufficient.

The Bill adds a mandatory notification scheme whereby investment interests in certain sectors and asset types—which I do not demur with—must be pre-emptively or retrospectively declared, but it removes notification of call-ins from the competition authority to a direct serve from the involved parties. In the interests of transparency, I seek clarity from the Government on the reasons why notification via the CMA is being removed.

The Bill also introduces new powers to increase screening in respect of health and preventing hostile acquisition through strategic buying of health supplies, for example. I welcome that, but the scope of activities that might be caught is very wide. There may be a good reason for that, but it is worth exploring. The statement of policy intent describes the core areas as including things such as advanced technology, which is perfectly reasonable, but it also contains a much wider definition of national infrastructure. The impact assessment for the Bill estimates that the new regime would result in between 1,000 and 1,830 transactions being notified per year. That is very specific and it is also an eye-watering number, given that only 12 transactions were reviewed on national security grounds since the current regime was introduced 17 years ago. The necessary resources, as the right hon. Member for Doncaster North (Edward Miliband) said, and access to intelligence agency assessments, as the right hon. Member for North Durham (Mr Jones) said, must be available in the proper manner in order to carry out the work.

[Mr Kevan Jones]

Does the hon. Gentleman share my concern that the Bill sets out a voluntary reporting and a notification system, but it is not clear how the security services enact any concerns they may come across into this system? I shall be making the point that I do not think this should sit within the Department for Business, Energy and Industrial Strategy. Does he have concerns on that issue?

[Stewart Hosie]

I absolutely agree that these services should not sit within another Department. I am not sure whether it would be appropriate for them to be able to request call-ins directly, not least because where the information came from would then become abundantly clear, but there must be a mechanism whereby information that an agency comes across can be fed in to the proper people in order for this call-in to happen.

It is also self-evident that Members considering this legislation need to have far more information to understand the reasons for the Bill and the changing nature of the threat it is designed to counter. We also need carefully to assess the impact the Bill will have on sectors and infrastructure, not just in the UK as a whole, but in the devolved Administrations and in the English regions, in the light of the future economic opportunities they see and the plans they are already putting in place. It is far too soon to seek assurances, but I hope the Minister will wish to take a little time just to convince himself that there are no unintended consequences, either for the UK or for the Scottish Government’s inward investment plans, when Government agencies of all sorts are out actively seeking investment in some of the areas that may be deemed to be critical national infrastructure. As an example, let me cite the whole of Scotland’s tech sector, but that of Dundee in particular. It now has a digital ecosystem that spreads out across academia and through gaming, software design and development, and data centres. Many of the component parts of that have cross-sectoral application, some of which, depending on who owns them and who wishes to use them, could certainly raise a national security concern, depending on how bits of tech are deployed. How do we ensure collectively that the Bill does not impede growth or investment in such areas?

I also briefly wish to raise, at this early stage, some issues about implementation. The Bill is set to radically overhaul the UK’s approach to foreign investment, at a time of significant economic uncertainty. On leaving the EU, the UK Government cannot afford to get their global Britain approach wrong and suffer what has been described as the “chilling effect” on investment if this appears heavy-handed. So let me turn briefly to some of the possible implications and costs of these measures.

First, the impact assessment suggests a net cost to business of £43 million. Can the Government confirm whether that is the direct cost, or whether the figure includes the cost of lost investment? I suspect that it is the former because the latter is incalculable, but if the Government get this wrong, the true figure in lost investment, and the concomitant loss of output and productivity, could be substantial.

Secondly, the impact assessment suggests that microbusinesses are in scope. As the Secretary of State will know, some of those businesses develop high-tech, cutting-edge intellectual property, and their business models include selling tranches of shares to raise cash throughout the development and life of the business. What assessment has been made of how these measures might stifle that investment and growth?

The third point is specifically on universities and academia. Throughout the whole UK, universities all have incubators, start-ups, spin-outs and commercialisable research. What assessment has been made of their ability to continue to thrive if the measures in the Bill inhibit investment by proposed sales being called in—because word will get out—or even investment being put off because of the potential additional risk of those sales being called in? We do not yet quite know what the impact on academia would be. There are some wider concerns about the possible impact on essential investment in energy, particularly renewable energy, and the possibility of retaliatory action against UK investors overseas, but I think they can be explored later in the Bill’s progress.

Let me return to one particular issue. I said earlier that the impact assessment suggested notifications of up to 1,800 transactions a year. In clause 7(4)(c), the Bill describes a qualifying asset as

“ideas, information or techniques which have industrial, commercial or other economic value.”

I know that this is not the Government’s intention, but wielding a hammer or welding a pipe are techniques that have economic value, and my concern is that companies erring on the side of caution will refer or notify themselves when they need not.

I have three brief questions that were sent to me by the Photonics Leadership Group. I intend to ask these questions now because they will be typical of what many industrial and new tech sectors are asking. First, there will be a huge number of research groups and businesses for which this Bill is relevant. Has the Department for Business, Energy and Industrial Strategy considered the number involved, and is it ready for the volume of submissions? Secondly, the information that has been sent out to relevant groups includes a flow chart, which suggests that businesses currently engaged in relevant business have from 12 November until this Bill is passed to register. This would suggest that the process is live already, but there appears not to be a template to allow businesses to contact BEIS and ask the question. Thirdly, since many in the sector cannot rely on foreign investment, how are the Government planning to replace this should there be the chill on investment that some fear?

I am pleased the Secretary of State said that the assessments would be based on information gathered from around and throughout Government, because I think we need to make our own geopolitical assessments. But the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) quoted the Henry Jackson Society. It would be unfortunate if we found that our assessments of which investments may or may not be aligned were being driven, pushed or prodded by someone else’s geopolitical assessment. I say gently to the Secretary of State that we need to guard against that to ensure that national security is protected, but that we do not have the chill on investment that is possible if we get it wrong.