National Security (State Threats) Bill

Lord Docherty of Milngavie Excerpts

2nd reading
Tuesday 23rd June 2026 Lords Chamber

[Lord Docherty of Milngavie (Non-Afl)]

My Lords, it is a pleasure to follow the noble Lord, Lord Shinkwin, and other noble Lords. I thank the Minister for the measured and thoughtful way in which he introduced Second Reading. As many have said, there is no more important issue facing our country than our national security and, more broadly, our defence.

We are living in the most dangerous period in Europe since the 1930s. That is not hyperbole or geographic sophistry. I studied at the Rostov technical institute in 1990, during the collapse of the Soviet Union. In Rostov, on the bank of the River Don, our hosts would proudly point to the other bank and tell us, “That is where Europe starts”. We might have said that it is where Europe ends. But that is where a war in Europe between Ukraine and Russia has now lasted longer, for each country, than in both world wars.

That Russia is a hostile state with few if any sympathies for western democratic norms or our liberal institutions is beyond doubt. That we live in a dangerous world that is getting more dangerous is also beyond doubt. As has been mentioned many times, the director-general of MI5 has openly reported a substantial increase in the number of investigations of state threat activities. As the noble Baroness, Lady Tyler, and others, have mentioned, the convictions just last week of a Romanian and a Ukrainian national for arson on property connected to our Prime Minister shows how emboldened bad actors have become.

I know that the Minister will not wish to name individual organisations which may fall within the remit of the Bill. However, we also know that Iran and its proxies are increasingly active. That state actors and their proxies are attempting to commission surveillance, sabotage, arson, theft or physical violence is manifest and self-evident. The review of counter- terrorism legislation carried out by Jonathan Hall KC has set out the need for a Bill such as this clearly, as so many noble Lords have said.

There are several areas in the Bill which describe the critical issue of finance in relation to potential offences. An offence can be made when financial assistance is provided by a designated body or where financial assistance is provided to a designated body, either directly or indirectly. That financial benefit will, as has been mentioned, almost always take the form of cryptocurrency. Cryptocurrency is now the payment method of choice for criminal gangs, hostile state actors and it appears, for reasons known only to itself, for the Reform party. With payments made to wallet addresses and not individuals, without the involvement of banks, these payments are, as we know, far harder to subject to anti-money laundering rules or sanctions compliance. Some cryptocurrency products are specifically designed to avoid detection. In my view, the legitimate use of crypto is becoming increasingly difficult to defend.

A parallel can be drawn between social media and cryptocurrencies. The first smartphone was launched in 2007, and you could argue that social media, as we understand it today, came into being a year later with the launch of the App Store. Only now, 18 years later, are we seeing a concerted effort across jurisdictions to try to address the harmful effects of social media on children using smartphones, relying less on the professed good faith of big tech and other providers—rather, through comprehensive regulation and even prohibition. Future generations will look back on our handing over smartphones unregulated to children in the same way today we look at photos of Victorian children smoking a pipe. They will ask, “What were they thinking?”

The year 2008 was also when a seminal and anonymous paper was published, setting out the rationale for cryptocurrency. The first cryptocurrency was created the following year. Social media and cryptocurrencies are essentially the same age. Is it not also time for a similar concerted approach to regulate crypto more effectively and make it less obviously useful to criminals and bad actors, or will future generations ask, “What were they thinking?” What steps are the Government taking to ensure that the individuals responsible for cryptocurrencies used by any organisation or person designated under the Bill will be held accountable? Are there any more general plans on crypto regulation being made much more effective?

No one should be above the law or beyond its reach. The security and defence of the country is our first priority, as many noble Lords have said. For that reason, I strongly welcome the Bill and the provisions contained within it.

Commercial Payments Bill [HL]

Lord Docherty of Milngavie Excerpts

2nd reading
Tuesday 9th June 2026 Lords Chamber

[Lord Docherty of Milngavie (Non-Afl)]

My Lords, I too thank the Minister for the passion and eloquence with which he introduced this Bill. It is a pleasure to follow my noble friend Lady Thornton and other noble Lords.

When I began my career in banking, I had to work out cash flows and balance sheet ratios for businesses manually. To anyone under the age of 40, that is pretty neanderthal—and it seemed it at the time. But I remember being told early in my training that debt never killed a company; it was always a lack of cash. You might say that a banker would say that, and there is of course a relationship between debt and cash, but it was a simple lesson because it is true. So I welcome the thrust of this Bill and the provisions within it.

The latest British Chambers of Commerce survey shows that three-quarters of all businesses report late payments and one-quarter of all businesses report that late payments are having a direct impact on their operations or ability to grow. So the proposal in this Bill to set a cap on payments at 60 days can only be welcomed. It will of course be important for business to clarify the scope of any exemptions, as the Minister has said, and we will have to be mindful of how enforcement might impact on commercial relationships, especially between small suppliers and much larger customers. I also welcome the provisions in the Bill to strengthen the role of the Small Business Commissioner beyond guidance to more effective enforcement of prompt payment practices. Increased transparency backed by enforcement powers can only be welcomed.

It was the provision in the Bill to abolish retention payments in construction contracts that I found especially interesting. Here, I must declare my interests. I am a director of Hellens Residential—a for-profit registered social landlord that is part of a larger property group—and I am a shareholder in a small regional housebuilder based in the north-east of England.

The construction business model is not an enviable one. As my noble friend Lady Alexander said, it is a low-margin business. Last year, margins in the largest 100 construction firms were just 2.4%, up from 1.9% the previous year. You are paid in arrears, have a negative cash flow, and therefore have to have ready access to working capital. Your clients are sometimes debt-funded and illiquid in nature themselves. When building anything from scratch, you can take on all the risk of what is under the ground, which is the riskiest part of construction. Construction inflation over the last five years has been almost 40%, with inflation in key materials such as steel, timber and concrete hitting 60% over the same period. In short, it is not an easy sector of the economy in which to make money.

I am reminded of Warren Buffett’s remark that when a chief executive with a great reputation joins a company in a sector with a poor reputation, it is the sector’s reputation that will prevail. Construction in the UK represents about 4% of the economy and employs just under 1.5 million people. It is one of the diminishing number of areas of the economy where school leavers can learn a trade that can provide them with an adequate standard of living and, if they wish, career progression. Yet, as has been mentioned, despite accounting for just 4% of GDP, construction accounts for nearly 17% of all insolvencies in England, and current levels of insolvency are around 20% higher than pre-pandemic levels. Any changes to the business model must be considered carefully, but anything that improves cash flow in construction companies, as a number of noble Lords have said, should be welcomed in principle.

Retention payments—money held back by the customer until work is completed—are typically around 3% of large contracts and up to 5% for smaller contracts, so the sum held back is usually larger than the profit margin in the business. Half the sum, however, is paid when practical completion has been certified by an architect or a QS. That means the job is finished, so half the retention is paid over at that point. However, the other half of the retention payment is held by the customer until the defect period ends. That is the period during which the contractor has to return and fix any faults; it is typically 12 to 24 months. Often defects can take time to emerge—for example, with building work completed in spring, it might not become apparent until winter that there is a problem—but, in essence, around 2.5% of the contract sum is retained during the defect period.

If a window falls out, a heating system fails or an elevator malfunctions, the contractor is called back to rectify the fault at their own cost. This means that they have to pull people off another contract, which delays that contract, and get them to site, which could be miles away. Frankly, it is very inconvenient for them, and it can be quite expensive. They will turn up, sometimes reluctantly, and for smaller developments it is often the fact that the customer retains half of the retention payment that incentivises them to show up at all. If you have ever tried to get a plumber back to your house three months after you thought they fixed your boiler, you will get the picture. Although the industry is known for its disputes and resorting to contract arbitration, in practice companies usually try to take a commercial view on disputes. The fact that some money is retained incentivises a pragmatic approach to resolving disputes.

I have one question for the Minister, and it relates to behaviours. The noble Lords, Lord Hunt and Lord Lansley, touched on this. How, in the absence of retention payments, will a contractor be incentivised to return to a site and correct defects at their own expense, short of a customer resorting to legal or other contract enforcement action? I think the Minister said that the transition period will give time for alternative mechanisms to be given. I very much look forward to hearing more from the Minister, if not today, in the Bill’s later stages. That notwithstanding, I very much support the principles of these changes. I am pleased to note that both the British Chambers of Commerce and the Federation of Small Businesses broadly welcome the Bill. The provisions in the Bill are practical and sensible and show a real commitment from this Government to support UK business, and I welcome them.