Intelligence and Security Committee: Annual Report 2011-12

Marquess of Lothian Excerpts

Monday 21st January 2013 Grand Committee

Moved by

[The Marquess of Lothian]

That the Grand Committee takes note of the Intelligence and Security Committee Annual Report 2011–12.

[The Deputy Chairman of Committees (Baroness McIntosh of Hudnall)]

My Lords, we are hoping that the annunciator will be changed shortly so that we are not distracted by proceedings in the Chamber. I remind noble Lords that in the event of a Division in the Chamber, the Committee will adjourn for 10 minutes from the sound of the Division Bell.

[The Marquess of Lothian]

My Lords, the core work of the committee upon which the noble Lord, Lord Butler of Brockwell, and I have the honour to represent your Lordships’ House covers an important area of national interest, not least because of the amount of public money that the agencies consume each year, something over £2 billion. The nature of the work they do, and what they spend the money on, must, of course, for the large part, remain secret. However, the Intelligence and Security Committee ensures that there is parliamentary oversight of this work, and it is right that we have, as we have today, the opportunity to debate our findings.

The committee has had another busy year under the firm leadership of our chairman, Sir Malcolm Rifkind MP, to whom I readily pay tribute, as I do to the immensely hard-working staff of the committee, without whom our detailed and often complex scrutiny would not be possible. I would also like, at this early stage, to record my continuing admiration, gratitude and respect for the almost always unsung dedication and professionalism of those who serve our country in our intelligence and security agencies—SIS, MI5 and GCHQ. We owe them much as a country, and I am glad to pay tribute to them.

This annual report covers a wide range of issues, and we have made a number of recommendations. I shall, in the time available, concentrate on a few of those. First, resourcing—the agencies received a relatively generous settlement in the last spending review of 2010, with what is known as a flat cash budget, which nevertheless represented a significant real-terms cut over the four-year period. With a combination of pay freezes and concerted efforts to control other costs, the agencies are currently coping with this while apparently preserving front-line capabilities. All the same, the settlement commits the agencies, both individually and collectively, to achieve significant savings before 2015. The committee agrees that the efficiency savings need to be made, wherever possible, in administration and related areas. However, we are not convinced, as we say in our report, that sufficient progress is being made towards making them, and the Government have yet to convince us that the agencies will meet the targets that they have been set. If they do not, the agencies could be forced to cut front-line capabilities, and that, as I am sure your Lordships agree, would be extremely worrying. I hope that the Minister can assure us that the axe will not end up falling on the front-line capabilities that are so badly needed to protect our national interests.

The second area, also related to resources, is the ability of the agencies to respond to unexpected events. We have seen—here I include Defence Intelligence, whose role was, and continues to be, crucial—how the agencies had to divert resources to the events of the Arab uprising, which is a subject to which I will shortly and briefly return.

The committee is concerned that, inevitably, these resources will have to be switched from other areas. In these straitened times, particularly for Defence Intelligence which has suffered round after round of cuts, our ability to maintain sufficient coverage of all the areas of the globe—the importance of which has been graphically and painfully illustrated in Algeria over these past few days—is becoming increasingly fragile. Yet our agencies need to be able to respond to events anywhere and at any time. We may be able in the short term to plug the gap but only by robbing Peter to pay Paul. If we do not examine this more closely, sooner or later we will be caught out—if that has not already happened.

More generally, we welcome the fact the central intelligence structures are now aligned beneath the National Security Council. However, from past experience, we are concerned to ensure that analytical judgments and policy recommendations remain separate when advice is presented to Ministers. As we have seen in the past, it has been easy for this distinction to become blurred and it is crucial that it does not do so in the future.

Earlier I referred to the agencies’ swift and commendable response to the Arab spring—or, as I prefer to call it, the Arab awakening. That presented a real challenge to the intelligence community which had to reprioritise quickly and redirect its resources towards the region. Of course, it is often impossible to predict such events. However, the question remains as to whether, once events began to unfold, the agencies should have anticipated the possibility that the unrest would quickly spread across the region and should have recognised the Islamist nature of much of it and the crucial distinction between national and universal Islamism, which is of such importance to our security. We are seeing this clearly in what is happening in the Maghreb and the Sahel and potentially even more dangerously, in Syria.

Although the capability of al-Qaeda and its affiliates has been weakened in Afghanistan, in the tribal regions of Pakistan and increasingly in the Arabian Peninsula and Somalia, it has demonstrated that it is still resilient, capable of regrouping and recruiting elsewhere, of mounting an attack on western interests and of posing a serious terrorist threat to the United Kingdom and its citizens. This danger needs to be further and urgently pursued. Above all, this demonstrates the risks inherent in drawing down effort on lower priority areas, and of the importance of the agencies, working with allies where necessary, maintaining global intelligence coverage.

In Northern Ireland we welcome the intention of the Security Service to maintain its resources at current levels. From my own experience, this is a ball we can never afford to take our eye completely off.

Finally, there is cybersecurity which remains the most rapidly growing threat that we face. Every day citizens and businesses in this country face attacks on their computers and networks from criminals, hacktivist groups—that is spelt with an “h”—and state actors, ranging from actions which cause mere irritation to the compromise of financial details and, at the most extreme end, the theft of intellectual property and sensitive national security material. This is a threat to the security and prosperity of the United Kingdom and, in its report, the committee has welcomed the seriousness with which the Government have addressed this. The additional resource—£650 million over four years—is a significant sum in these straitened financial times.

While the committee’s interest has been primarily in the 20% of more sophisticated attacks where national security has been affected, the wider issues remain the same. We have noted the work of the Communications-Electronics Security Groups and the Centre for the Protection of the National Infrastructure, which are increasing their efforts to educate government and business about the vulnerabilities and weaknesses of their systems and how improving behaviour will strengthen defences and benefit the entire country at the least cost. However, it is more than two years since the Government announced increased funding for work against cybercrime. While there has been some progress in developing new capabilities, this does not appear to have been as swift as might have been expected. In a fast paced field, where new technologies are emerging all the time, we cannot afford delays in our national response. The committee will keep this issue under close review.

There are many other important matters mentioned in our annual report, including counterterrorism work, staffing and diversity in the agencies, and access to communications data—to name but a few—which other noble Lords may wish to raise. I will now turn to broader issues. When we held this debate last year, the Government had just published a Green Paper covering reform of the Intelligence and Security Committee and increased protection for intelligence material involved in civil cases. Since then, this House has debated the Justice and Security Bill, which is currently being considered in another place. I will not repeat the arguments that were deployed in Committee and on Report in your Lordships’ House, but there are one or two areas that I wish to raise briefly.

As noble Lords will be aware, Part 1 of the Bill concerns reforms to the Intelligence and Security Committee itself. It is intended to formalise many of its practices, which have evolved beyond the limitations of the statute under which the committee was originally established in 1994, and gives the committee greater powers to access information held by the agencies. It will also make clear the committee’s responsibilities to Parliament as well as to the Prime Minister, which have not always been clear in the past, and underline that it is an independent committee, which has also not always been clear in the past to outside observers. These are important changes that originated from within the committee and we are pleased that the Government and others, both in your Lordships’ House and, I understand, in another place as well, have in principle accepted them as being necessary.

However, there is more work to be done to bridge the final remaining gaps between the committee and the Government and I hope the Minister can reassure me that agreement on these issues is near. I think we are all agreed on the need to strengthen the committee’s link to Parliament but there are implications from formalising this relationship. While I understand the Government’s nervousness around such issues as parliamentary privilege, can the Minister confirm today that the work of the committee will be adequately protected in future?

Secondly, for the first time the committee is being given explicit powers to investigate operational matters, subject to certain clear provisions. These are that the matters are agreed between the Prime Minister and the committee as being retrospective—that is, not part of any ongoing operation—and of significant national interest. These principles are not controversial and the committee has no intention of becoming involved in the day-to-day operations of the agencies.

However, we must ensure that the legislation does not inadvertently tie the committee’s hands. After all, the committee often investigates matters relating to operations, sometimes even at the Prime Minister’s request; its report into the 7/7 bombings is a case in point. It would be a significant step backwards if the legislation did not allow for such inquiries in future.

My final point relates to the resources available to the committee. Our admirable staff provide all our research, analysis, briefing and drafting in-house. If the committee is to be able to continue its work, let alone take on the increased role that the Bill envisages, the Government must ensure that we have adequate support to do so. Our resources are meagre compared to those of our overseas counterparts, as noble Lords who have been on the committee and have visited other countries will readily agree, I am sure. They are also meagre in comparison with inquiries such as that on the detainees or the Iraq inquiry, the report of which we still await, or indeed of the Committee on Climate Change, to name just a few. If the Government are serious about supporting the measures in the Bill, this committee must be funded correctly and adequately so as to be able to carry out its responsibilities properly in the future.

My very last point on the Justice and Security Bill is about the necessity of introducing closed proceedings in civil cases where the protection of national security material is involved. This was debated at length in your Lordships’ House and I am pleased that the core of the Government’s proposals has survived that consideration. The reputational damage to our agencies of legally unjustified financial settlement with those questionably claiming mistreatment cannot be allowed to continue. The public perception is that the agencies have something to hide and we should not allow the situation to continue where a judge is unable to rule on such allegations. In addition, our relations with allies will suffer if we are unable to guarantee that we can protect their secrets, especially as we expect the same when we share our intelligence with partners overseas.

It is been an extremely busy year for the intelligence agencies, primarily due to the burdens placed on them by the Olympic and Paralympic Games. That these events not only passed off without incident but were such a widely acknowledged success was in no small measure due to the enormous behind-the-scenes efforts of the agencies to ensure that terrorists did not take advantage of the situation. This took a significant effort on the part of the Security Service in particular, and we have noted the disruption that staff had to endure with long or unsocial working hours and bans on leave—and this was all in addition to the range of their other work that continued as normal.

The agencies do not often get the public recognition they deserve, so it is important to put this on the record when the opportunity arises. They are a credit to this country and we owe them all a debt of gratitude. I commend the report to the Committee and I beg to move.

--- Later in debate ---

[The Marquess of Lothian]

My Lords, I can and will be brief. I just want to make a number of comments in relation to what I thought was a very sensible and insightful debate. The remarks made today have reflected the essentially non-partisan nature of the ISC, which is one of its great strengths. I start by thanking the Minister for his remarks. I will not go into them in detail. He has given a number of indications of amendments in another place and assurances as to adequate funding, and we look forward to seeing those amendments and hearing the outcome of those discussions on funding. It has been helpful to have those remarks.

With regard to what has happened recently in Algeria and the lessons that can be learned—we have missed the Statement so I do not know what was said—it strikes me that something we should be looking to for the future is a proper analysis of what happens to arms when they disappear. We know that in Libya Gaddafi’s arms disappeared, and we have indications that some may have reappeared in Algeria this week. I have a great concern at the moment that some of the arms that have been provided to the rebels in Syria, vicariously or directly, may end up in the hands of al-Nusra and other Islamist organisations, which would not be in the interests of this Government in the future. I hope that area will be looked at.

I mentioned retention last year and made a very strong point about it. One of the reasons for talking about the retention of staff within the agencies generally, but specifically within GCHQ, is that the nature of GCHQ’s work means that the people who operate there are highly skilled in IT. They are recruited because they are what the director-general described in our report last year as “whizzes”. He said, “How do I hold on to my whizzes when the outside world is trying to recruit them at far greater expense than I could ever meet in order to keep them?”. It is an unresolved problem that I hope the Government will go on wrestling with. I am glad it was raised by a number of noble Lords here today.

The noble Baroness, Lady Hamwee, raised the issue of redactions. This is something that comes up every year. Redactions irritate us all. When I was the shadow Foreign Secretary in another place, I used to enjoy the debates because I would read out pages of redactions and it always got a laugh. It was only when I joined the committee that I realised how essential they are. The committee does not write its own redactions. The committee writes its report as it sees things and that report is to be seen by the Prime Minister. It is the Prime Minister who will come back and say, “We feel there are certain areas here that should not be in the report that is published”. In my experience—and I may be wrong—I do not think there has ever been a redaction, which can only be allowed on grounds of national security, that has not eventually been agreed between the committee and the Prime Minister, because if it is a matter of national security there is no question in the committee’s mind that that should not be redacted. We could write reports without redactions, but they would not be as valuable to the Prime Minister or, indeed, the general public.

My final point is in relation to the speech of the noble Lord, Lord Hennessy. Once again, we have heard an interesting and thought-provoking speech. I cannot undertake that the committee will look at everything he has raised but I can undertake to personally ensure that his remarks are brought to the attention of the committee and that copies of his speech are made available to the members of the committee so that they can consider some of the very relevant remarks he made.

We have had an important debate. I am grateful to the noble Lord, Lord Butler, whose speech I totally endorse. I think he and I feel that we are part of a committee that works very closely and proactively together. I am grateful, too, as I said earlier, to those who serve us on that committee. I thank this Committee for this debate.

Motion agreed.