National Security and Investment Bill

Lord West of Spithead Excerpts

Report stage
Thursday 15th April 2021 Lords Chamber

Moved by

[Lord West of Spithead]

24: Clause 61, page 36, line 15, at end insert “, except for any confidential annex prepared under subsection (2A)”

[Lord West of Spithead (Lab)]

My Lords, I will also speak to my Amendment 33, which is consequential to Amendment 24 and part of it. Both are supported by the noble Lords, Lord Butler of Brockwell, Lord Campbell of Pittenweem and Lord King of Bridgwater —a pretty impressive front row, I think noble Lords will agree. The amendments have general support across the House—I know this from my ex-CDI hat, having gone around and checked. I should make it clear that if the Government are not able to resolve this issue, I intend to test the opinion of the House on these amendments.

In Committee, the question of oversight of the investment security unit was raised—specifically, that the Bill does not allow for any oversight of the sensitive intelligence of its work, and that that oversight should be provided by the Intelligence and Security Committee of Parliament. There are many in this House who have served on the ISC, and who were therefore very concerned—as I was—by some of the misunderstandings about the operation of the ISC put forward by the Minister in Committee and what appeared effectively to be a reneging by the Government on the very clear commitments made to Parliament during the passage of the Justice and Security Act.

I assume that the Government accept that there should be a process for evaluating the national security implications of investment in British companies. That concern was first raised by the ISC. Indeed, the Government have stated that the Bill puts national security concerns at the very heart of the process—so why are those national security concerns which will be at the very heart of the process not to be properly overseen? It would mean the Government avoiding scrutiny of their decisions, and that is precisely what Parliament is here to ensure does not happen.

The Government have said that they expect the intelligence scrutiny to be undertaken by the BEIS Select Committee. With the greatest respect to the BEIS Select Committee, which is eminently qualified to scrutinise the work of BEIS, it cannot provide scrutiny of intelligence, because it cannot have access to all the national security material concerned.

The Minister has argued that the BEIS Select Committee does have access to sensitive material, and I grant that, in theory, that may be the case. The Osmotherly Rules allow the Minister discretion to give Select Committees top secret information. In practice, however, that is not the case. We know that the BEIS Select Committee has not been given any top secret information—sensitive information perhaps, but not top secret information. The reality is that it cannot be given top secret information. The BEIS Select Committee, with its excellent chairman, members and staff, cannot be given top secret material because it does not have the requisite security apparatus in place to do so. The committee’s staff do not have the security clearance required to see such material, and the committee does not have the facilities to store or discuss top secret information or have a statutory process to safeguard against the publication of top secret material. Therefore, unless the Government are intending to break their own rules on the handling of top secret material—something that would prompt an ISC inquiry in itself— the BEIS Select Committee cannot provide the scrutiny required. It cannot consider the national security material at the heart of the decision, and therefore the decision itself.

Now that we have established that the BEIS Select Committee cannot in practice be given the top secret material in question, and therefore cannot provide oversight, the question is, who can? Fortunately, the Government and Parliament had the foresight to create a body which can be given top secret material on a regular basis because it does have the requisite security apparatus in place. In 1994, the Intelligence and Security Committee was established expressly to scrutinise the intelligence and security activities of Her Majesty’s Government.

The ISC’s remit was extended through the Justice and Security Act 2013. Noble Lords will have heard it said during earlier stages in this House that the JSA provides the ISC with oversight of the three intelligence agencies. That is, perhaps, a little misleading. The ISC does not only oversee the agencies: it was established to oversee all intelligence and security matters across Government—or at least that was what Parliament was told.

The long title of the Justice and Security Act is,

“An Act to provide for oversight of the Security Service, the Secret Intelligence Service, the Government Communications Headquarters and other activities relating to intelligence or security matters”.

The memorandum of understanding which sits underneath the JSA, and which was expressly agreed by the Prime Minister, says that this means,

“those parts of Departments whose work is directly concerned with intelligence and security matters”.

Both Parliament in the JSA, and the Government in the MoU, have already expressly agreed that the ISC has oversight of all intelligence and security matters across Government.

In case there can be any lingering doubt, I draw your attention to the commitment given by the then Security Minister during the passage of the Bill when he said that it was,

“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”.

I trust the Minister has noted the wording there: “now and in the future”.

At the time the MOU was written there were seven such organisations, and these are therefore listed in the MOU. The then Security Minister also made it very clear during the passage of the Bill that the MOU was intended to be updated. He told Parliament:

“Things change over time. Departments reorganise. The functions undertaken by a Department one year may be undertaken by another the following year. The intelligence world is no different from any other part of Government ... An MOU is flexible: it can be changed much more easily than primary legislation”.—[Official Report, Commons, Justice and Security Bill (Lords) Committee 31/1/2013; col. 98.]


Clearly, the Minister’s argument that the ISU is not listed in the MoU is irrelevant. That is what the Minister said. His Government have already committed to changing the MOU when necessary in order to ensure the ISC has oversight of all intelligence and security matters. It really could not be any clearer. It is therefore of very grave concern that, despite Parliament’s clear intent and the Government’s clear commitments, oversight is being expressly denied.

The Minister also said that the ISC does not need to be given oversight expressly because the ISC can scrutinise the public report and can ask for other information about the ISU. Again, I am afraid this misses the point entirely. Of course the ISC can ask for information: we can ask for information from any part of the Government, but that does not mean to say that they will give it to us. By contrast, the organisations listed in the MoU—and therefore within the Committee’s remit—are required to provide information to the ISC. This is quite a different proposition, and demonstrates why the ISC should expressly be given oversight.

One last argument that has been put forward is around demarcation. There is concern that the work of BEIS should be overseen by the BEIS Select Committee, and therefore concern that to give the ISC oversight of the work of the ISU would have the ISC parking its tanks on the BEIS Committee’s lawn. This is simply not the case. The ISC chairman has already discussed this with the chairman of the BEIS Committee and they recognise that this issue cannot be overseen by the BEIS Committee and that some accommodation is required.

The ISC already oversees parts of departments that, for the most part, fall to a departmental Select Committee. The OSCT—I think it is now called Homeland Security—in the Home Office is just one such example, and the ISC and HASC have worked harmoniously for some years. I draw the Minister’s attention yet again to the commitments already given in this respect. The MoU clearly states that:

“Only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments whose work is directly concerned with intelligence and security”.


This will not affect the wider scrutiny of departments such as the Home Office, FCO and MoD—ditto BEIS —by other parliamentary committees. It really could not be any clearer and the Government have already recognised that demarcation is not a problem. So, I hope the Minister does not seek to put it forward today as an argument against ISC oversight.

I trust that I have demonstrated thus far why proper oversight is needed, why that can only fall to the ISC, why there is no reason for it not to fall to the ISC, and how the Government have already given commitments previously to Parliament that the ISC will oversee these matters. Now perhaps I might explain the amendment I have laid, with the support of the noble Lords I have mentioned. It seeks to provide this missing oversight and thereby enable the Government to honour their commitment.

Clause 61 mandates the Secretary of State to provide an annual report to Parliament. The information in that report is limited, and obviously will not include any sensitive security information. My amendment to Clause 61 would add two further categories of information to that annual report and provides a mechanism for the Secretary of State to redact any of this information from the public report, should it be deemed damaging to national security. That information must be moved into a classified annexe, understandably, which must then be provided to the ISC, thereby ensuring that if Parliament as a whole cannot scrutinise it—which clearly it cannot because of its classification—the ISC can.

Noble Lords will have noticed that this amendment simplifies the amendment I laid in Committee. The ISC has consistently tried to engage with the Government on this issue, to understand their concerns about our approach, and to try to chart a course through. Despite this, the committee and I remain wholly ignorant of the real reason for the Government’s intransigence. The arguments put forth by the Minister in this House in Committee were flawed, I am afraid, as I think I have shown. They cannot therefore be the real reason why the Government appear to be seeking to renege on the commitments given to Parliament during the passage of the Justice and Security Act.

The noble Lord, Lord Butler, has questioned whether there is some deep-seated dislike of the ISC at the heart of Government. Certainly, oversight is not comfortable, but it is not meant to be comfortable. I cannot believe that the Government would prioritise a petty squabble regarding the committee’s Russia report or the chairmanship of the committee over the clear commitments that they have given to Parliament. I am sure that cannot be the case, knowing the Minister as I do. We will therefore see the Government, I hope, honour their commitments today.

To show that I am an unusually flexible naval officer, I wish to reiterate the offer I made to the Government in Committee. If our amendment is unacceptable, for some reason that they have not yet told us, then the alternative is to put the Investment Security Unit into the MoU and provide for oversight by the ISC in that way. The MoU was intended to be a living document; it is very simply amended by way of an exchange of letters between the Prime Minister and the committee chairman. Perhaps the Minister was unaware of the simplicity of the mechanism, when he said that putting the Investment Security Unit into the MoU was a “substantial amendment”.

The Minister may be unaware that in the work of the Investment Security Unit, the unit which currently takes these decisions is the Investment Security Group in the Cabinet Office, and that is currently overseen by the ISC. Therefore, adding the Investment Security Unit to the MoU is not some radical step but simply preserves the status quo, rather than actively removing it from ISC oversight.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, perhaps I may start by welcoming back to the Front Bench the noble Lord, Lord Rooker, who is an extremely adequate substitute, if I might say. It is a delight to see him back and fully recovered from injury.

There have been a lot of analogies about rugby and positions in this debate. I did not really play much rugby in my career, which is probably a good thing, but the occasional time that we played at school, I seemed always to be the hooker, which seemed, in the poor quality of rugby that we played, to be the one in the middle of the scrum being kicked by everybody else—somewhat appropriate in this debate.

I thank the noble Lords, Lord West and Lord Butler, for their Amendments 24 and 33, which would require the Secretary of State to provide additional information on regime decisions, either in the annual report, or, where details are too sensitive to publish, in a confidential annexe to the Intelligence and Security Committee. This information would include summaries of decisions to make final orders or to give final notifications, and summaries of the national security assessments provided by the security services in relation to those decisions.

A number of noble Lords have spoken with such passion and knowledge on this important issue, both in this debate and when we previously discussed amendments in this area during Grand Committee. I am particularly grateful—I say this genuinely—to the noble Lords, Lords West and Lord Butler, for their careful consideration of the words used by my colleague my noble friend Lord Grimstone during Grand Committee, and for their continued pursuit of an amendment that attempts to satisfy all parties.

The noble Lords’ amendment would effectively require the Secretary of State to include material provided by the security services in a confidential annexe. Of course, the ISC is already able to request such information from the security services as part of its long-established scrutiny of those organisations, as is set out in the Justice and Security Act 2013 and its accompanying memorandum of understanding.

I will directly address the issue raised by the noble Lord, Lord West, and others, about the BEIS Select Committee and its access to sensitive or classified information. The Government maintain their view that there is no barrier to the committee handling top-secret or other sensitive material, subject to agreement between the department and the chair of the committee on appropriate handling. As part of its role, the BEIS Select Committee can request information, which may include sensitive material, from the Secretary of State for BEIS, including on the investment security unit’s use of information provided by the intelligence and security agencies. The Select Committee already provides scrutiny of a number of sensitive areas and there are mechanisms in place for them to scrutinise top-secret information of this kind on a case-by-case basis.

The amendment would also require sensitive details to be provided to the ISC of the Secretary of State’s decisions in respect of final notifications given and final orders made, varied, or revoked. As we discussed earlier, the Bill already provides that the Secretary of State must publish details of each final order made, varied, or revoked. The Government have also recognised that providing this information at an aggregate level will be helpful, and Amendment 32 in my name would require the Secretary of State to include the number of final orders varied and revoked in the annual report. Even without Amendment 32, Clause 61 already requires the report to include the number of final orders made. The Secretary of State must also include in his annual report a number of other details pertinent to this amendment. I am confident that this will provide a rich and informed picture of the Government’s work to protect our national security from risks arising from qualifying investments and other acquisitions of control.

As I have said before, for further scrutiny, we welcome the fact that we can follow existing appropriate government procedures for reporting back to Parliament, including through responding to the BEIS Select Committee, which does such an excellent job of scrutinising the work of the department. As the Secretary of State for BEIS said on 13 April, during a session of that committee, the NSI Bill “sits within BEIS” and the powers of the Bill sit with the Secretary of State for BEIS.

The chair of the BEIS Select Committee—who, I remind noble Lords, is an Opposition Member of Parliament—supported the view that his committee should scrutinise the investment security unit as part of its oversight of the department. Therefore, it makes sense that, from a governance perspective, the BEIS committee should be the appropriate scrutinising committee.

As this was discussed at length in Grand Committee, I do not wish to try the patience of the House by repeating the assurance that my noble friend Lord Grimstone, the Minister, provided to the House on the ability of the BEIS Select Committee to request and see materials regarding the work of the investment security unit. Therefore, I hope—it is probably more in hope than expectation—that noble Lords will accept my explanation and feel able to withdraw their amendments.

[Lord West of Spithead (Lab)]

My Lords, I thank all those who had an input in this debate, particularly those supporters. We almost got a full scrum, with the noble Lord, Lord Lansley, added as well—we had a bit of weight there. We are more second than front row, to be quite honest, but I have now found that the Government Minister is actually a hooker, so we have a bit of front row around. As he rightly says, the hooker gets punched by everyone—I am afraid that that is the way that it is going tonight.

I have considerable sympathy for the Minister: I was in that position when I had to argue for 90 days pre-trial detention. Because I am not really a politician, I had actually already said on the “Today” programme that I thought that this was a very dodgy thing to do—and then I had to stand at the Dispatch Box and argue for it. Lo and behold, I am in Guinness World Records for the biggest defeat of the Government since the House ceased being entirely hereditary—so I feel for the Minister.

However, I am afraid I question a couple of the things that he said—for example, the chairman of the BEIS Committee has no objection to my amendment at all, so he was given some wrong information there. I also fear that the Minister has failed to provide an explanation for the Government’s intransigence and indeed seems willing to stop Parliament having a mechanism whereby it can scrutinise highly classified intelligence, based on which key decisions are made. To cut it short—I have spoken for far too long—I therefore have no choice but to test the opinion of the House on this key amendment.

--- Later in debate ---

Moved by

[Lord West of Spithead]

33: Clause 61, page 36, line 33, at end insert—
“(m) in respect of final notifications given, and final orders made, varied or revoked— (i) a summary of the decision of the Secretary of State under section 26(1), and(ii) 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).(2A) Where the Secretary of State considers that publication of any information listed in paragraph (2)(m) 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.”