Cyber Security and Resilience (Network and Information Systems) Bill (Fourth sitting)

Ben Spencer Excerpts

Committee stage
Thursday 5th February 2026 Public Bill Committees

[Kanishka Narayan]

The hon. Member raises an important point about the operating leverage of technology businesses. The Bill directly focuses on size as one proxy for risk, but it is not a complete or perfect proxy. That is why, through the critical supplier provisions, it ensures that any smaller providers can be caught in scope as essential services.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

It is a pleasure to serve under your chairmanship, Ms McVey.

Clause 9 brings within scope of the NIS regulations a new category of technology service providers, known as relevant managed service providers. MSPs play a critical role in the UK economy. Research conducted by the Department for Science, Innovation and Technology under the last Government suggests that 11,000 MSPs were active in the UK in 2023, of which 1,500 to 1,700 were medium or large organisations that would be in scope of the Bill. Micro and small enterprises that offer managed services are excluded from the scope of regulation but have the potential to be designated as critical suppliers under other provisions, which we will come to shortly.

MSPs are critical to the functioning of the multiple businesses that they serve, offering contracted IT services such as helpdesk and technical support, server and network maintenance, and data back-up. In many cases, they also provide managed cyber-security solutions to their customer bases. Consequently, these businesses often have significant access to their clients’ IT networks, infrastructure and data, which makes them attractive and valuable targets.

[Chris Vince (Harlow) (Lab/Co-op)]

I seek some clarification on the shadow Minister’s statistics about the number of MSPs that are in scope, and what they are as a proportion of the MSPs in the country. Could he clarify that he is talking about individual organisations rather than what they do? For example, if there is one large organisation and nine small ones, but the large one takes up 80% of the market, the proportions are slightly different.

[Dr Spencer]

The scope and breadth of the organisations regulated by these provisions is one of the most important parts of the debate. If the hon. Member can wait a moment, that point will form the bulk of my speech. It was also mentioned by my constituency neighbour, my hon. Friend the Member for Spelthorne.

The previous Government consulted on bringing MSPs within scope of regulation. Feedback on that consultation indicated strong support, with 86% of respondents in favour. As such, there is a sound policy rationale for imposing cyber-security and instant reporting regulations on MSPs over a certain threshold. Those MSPs will need to take appropriate and proportionate measures to manage risks to the security of the networks and information systems on which they rely to provide managed services in the UK.

However, as I said at the outset and as many people said during evidence, the devil really is in the detail as to whether the Bill is effective in protecting the sectors it seeks to regulate. Several industry stakeholders, including officers of MSPs and industry representation bodies, have raised concerns about the broad definition of MSPs in clause 9. As drafted, that definition has the potential to cause confusion among businesses as to whether they are in scope or not. These relevant provisions will be brought into force with secondary legislation before Royal Assent, allowing time for consultation with industry and specific duties. Could the Minister clarify whether his Department will respond to concerns by consulting on a refined definition of what constitutes an MSP, to provide much-needed certainty to businesses operating in the sector?

I will also take this opportunity to speak to amendment 10, which was tabled in the names of many Members, including the right hon. Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson), who I know has a keen interest in this area. He represents an area in the west midlands, which, like many parts of the country, has suffered massively from the impact of the problems with Jaguar Land Rover. The amendment relates to legitimate concerns about the compound risk that could occur when MSP systems are accessed by malicious actors, and those MSPs are providing services to a large number of entities within a regulated sector. Clearly, there are many reservations about the desirability of this particular amendment, including its potential to interfere with customer choice and the inconsistency with the approach to freedom of enterprise in other regulated sectors in the Bill.

It is noteworthy that several witnesses who gave evidence to the Committee pointed out the lack of skilled cyber-security professionals available in the UK employment market to help regulated entities with the effective implementation of the Bill. It is conceivable that many regulated businesses, particularly smaller ones, will be forced to look for external expertise to comply with their obligations, and we would not want to artificially restrict access to expertise, even when done with the best of intentions. The point is rightly made that large MSPs and those providing services to the most critical sectors should observe the highest cyber-security standards. A relevant MSP must have regard to any relevant guidance issued by the Information Commissioner when carrying out the duties imposed on it, so will the Minister confirm whether and to what extent the important issues raised by the amendment will be covered in consultation and industry guidance?

The amendment, and some of the debate that we have had, goes to the heart of some of the thresholds and metrics that are being used as gatekeepers in the Bill when an entity is or is not being regulated. As I mentioned this morning, at least 70% of Government cloud procurement goes to the three big US tech actors. Those are clearly huge operators, but when it comes to the criticality of an MSP, as my hon. Friend the Member for Spelthorne mentioned, size does not in itself necessarily indicate its essentialness in the system.

One can imagine that if a particular unique type of service was being offered, such as a cyber-security service, by a big company—Cloudflare and Salesforce, for example, had a substantial impact on the sector—not merely the size of an organisation, but what they provide, could be relevant in terms of producing systemic risks to our economy as a whole.

[Lincoln Jopp]

Having read the Bill, does my hon. Friend understand that if a managed service provider provides services to, say, a hospital—so it would be covered by the regulations—and a reportable event happens to the managed service provider, there is any obligation for the hospital trust to report it as well, or is it just the managed service provider that has the responsibility? If he is not clear on that, would he ask the Minister?

[Dr Spencer]

I thank my hon. Friend for the “get out of jail free” card that he gave me at the end of his question; indeed, I pass that question on to the Minister. The point is well made in terms of trying to dissect the interacting and relevant duties in the Bill. The Bill tries to chop up different actors in the digital ecosystem, as well as public an non-public organisations, although a commercial threshold is being used. The Bill also introduces confusion: it rightly tries to make a carve-out for Crown data centres, but what exactly is a Crown data centre? One could argue that a Crown service is something provided by the state. Is a data centre serving a hospital therefore a Crown data centre?

There are so many different components within the Bill. Not only are there 14 regulators, or however many are operating—earlier this week, Amazon told us in evidence that it is regulated by four regulators—there is also confidential information going through, as my hon. Friend the Member for Spelthorne pointed out. It gets even worse in the clause on critical supply networks. It is just incredibly confusing. The Committee—and, dare I say, the Government—should not ignore the evidence we have received from managed service providers time and again saying that although MSPs should be in scope and these regulations help, we need clarity on what exactly that means.

[Alison Griffiths]

I think my hon. Friend is about to reference the commercial impacts on MSPs. We have already referenced the fact that they are of many different sizes. One of the concerns the Committee will need to consider is whether new contracts will need to be written. The level of uncertainty being created may render the existing frameworks within which they operate redundant.

[Dr Spencer]

I thank my hon. Friend for that pertinent intervention. The burden she talks about is not just financial; companies could also find themselves in legal jeopardy should they become subject to overlapping and competing duties without realising when the Bill becomes an Act. More than anything else—perhaps even more than a low taxation regime—businesses want certainty about the regulatory environment they operate in. This is made even more complicated by the fact that many organisations operate in different jurisdictions and have to contend with different, competing regulatory frameworks. My understanding is that the majority try to take an approach in one jurisdiction that will also cover them in the other so that they have an overlap, but those are the big companies. They have more capacity and resource to do that. The problem will be for the companies on the margins that are struggling.

[Chris Vince]

The shadow Minister is always very generous with his time. This is not meant to be a controversial intervention, but does he recognise that micro and small enterprises have been omitted from this legislation because we recognise the challenges they have with the guidance? I appreciate that small can mean mighty when it comes to businesses. The hon. Member for Spelthorne made the point that businesses may have only a small headcount, but a very important role in the cyber-security make-up of this country.

[Dr Spencer]

Irrespective of their size, whatever definition or metric we use, businesses operate on fine margins for the majority of the time. Regulatory burdens not only impact their ability to operate; they are yet another cost, which means that the cost of services increases. That has a deleterious effect on our economy more generally. Burdens on businesses are passed on to consumers. That makes it more expensive to do business unless there are customers to receive it.

Global business competitiveness, which we have not spoken about yet, is critical. I am very concerned about UK competitiveness in the digital and tech sector. It saddens me to say that we are dwarfed by US big tech in many areas. I want our digital and IT sector to be bigger and better than that of our competitors, but we need a framework to support it. Even for bigger businesses, the regulatory burden is critical, especially as they can choose, to a certain extent, where they incorporate and focus on doing business. We want to ensure that the UK has the best regulations, but the best regulations are often the ones that are least burdensome but that still provide certainty to allow businesses to operate. This is a highly competitive market.

[Lincoln Jopp]

I thank the shadow Minister for his reply to my hon. Friend the Member for Bognor Regis and Littlehampton. Is he as surprised as I am to read in the impact assessment that the hourly rate for a contract lawyer is to be £34 an hour rather than £300 to £500 an hour, which in my experience is the market rate?

[Dr Spencer]

I thank my hon. Friend for pointing out that discrepancy in the costings. It goes back to the key principle that business and business modelling are best left to businesspeople, not to Government. The Government have a facilitatory role, but fundamentally their role is to get out of the way of business so that it can succeed and our economy can thrive. We need to ensure, for the good of our economy as a whole, that the critical elements of it are regulated in that way.

Given the interconnected operation of MSPs in our digital sector, any burden that we put on business will limit the growth that we all need and will limit competitiveness. In this footloose market especially, that could result in organisations and companies operating in other sectors, notwithstanding the fact that they will have to comply with UK jurisdictional rules. As a general point, regulations will cause footloose industries to move and operate in different sectors, which will mean less taxation revenue and more costs for clients, making it more difficult to do business.

We need to make sure that our economy is as nimble and free as possible, both for those trading as an MSP and more generally. I cannot labour the point enough: the costs that we impose on businesses under the Bill, in particular in the cyber-security and tech sector, will be felt by our economy as a whole. We will have to pay for that through increased inflation in food, energy or anything else that our critical suppliers provide. Even our NHS provision costs will increase as a consequence of the regulatory burden on businesses as disparate and distant from the NHS as those that we see in the Bill.

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

The hon. Member is quite right to say that American companies have captured most of the market that he is talking about, particularly the cloud providers. What does he think is stopping British cloud providers from getting a larger share of the market?

[Dr Spencer]

The cloud providers I have spoken to talk about several things. They talk about the crippling cost of energy in the UK, something that we need to drive down—

[The Lord Commissioner of His Majesty’s Treasury (Taiwo Owatemi)]

I am sorry, but this is not in scope.

[The Chair]

Order. You are telling me that you do not think it is in scope, but we consider that it is.

[Dr Spencer]

The cloud providers tell me that the energy costs are crippling, which is highly problematic, and that is why we need to drive those costs down. They talk about the challenges of getting data centres built and about planning considerations, which are a concern across the country. They talk about the taxation environment and costs on businesses more generally, particularly when they are footloose, and they talk about the regulatory framework. Pretty much all of those things are not specifically in the Bill, with the exception of the regulatory framework, so there is a lot that is suppressing the opportunities for cloud providers and others in the sector and hindering them from doing business and succeeding.

There is a broader point to make about the Bill and the philosophy behind it, because there is something that we have to avoid. There is a sense in the UK that we are getting gummed up by regulation and obsessing more and more about limitations and restrictions to businesses. In that environment, people and organisations that do well financially, succeed and grow are seen as either targets or cheats—as something that we can go for, tax and punish. We have lost or diminished our can-do attitude when it comes to supporting the risk takers and the entrepreneurs, who are the people and organisations building the MSPs and data centres on which our economy relies.

Over and above that, there is a cultural issue that is impacting our IT and tech sector. As legislators we should ensure that the thing we have direct control over, which is the legislation in front of us, imposes as small a regulatory burden as possible while still ensuring that it is sufficient to meet our aims. We must listen to businesses and hear their concerns. We hear time and again that the lack of clarity, particularly in this part of the Bill, is putting them at financial and legal risk. That is a very substantial concern.

[Alison Griffiths]

On my hon. Friend’s point about the lack of clarity in the Bill, there is a real possibility that firms will find that an MSP has one view of an issue while their client has another. Unless there is sufficient clarity in the wording of the Bill, we will have issues.

[Dr Spencer]

I thank my hon. Friend for her intervention. Legal clarity is important. I have absolutely no issue with lawyers, but we do not want to make a load of money for lawyers as a consequence of the definitional challenges around the Bill’s implementation. That is not good for businesses, which need certainty as to how to apply the regulatory framework under which they operate. Regulatory uncertainty will not help a business to make decisions. My assumption is that the default position will be for businesses to assume that they are not regulated entities, which means that they will not take actions that we would like them to take as a result of the Bill. Again, we will be making laws under which everybody loses out.

My final point is about the carve-out in respect of public authority oversight. It is all well and good for the Government to say, “We have an action plan and we’re going to sort out Government IT and the cyber-security risk for Government services,” but it is not playing out that way. Our biggest risks, and the most vulnerable components of our digital IT infrastructure, are those that are linked to Government services. Change is needed. My sense is that when a company interacts and shares data with Government and public sector services, the biggest-cyber security risk is likely to be in the aspects that are provided by Government services. We are making legislation that puts a host of burdens on the private sector, yet we are largely silent about what is happening in the public sector. Putting people at risk in that way is really not good enough. We need to support our overall cyber-security.

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[Dr Spencer]

On a point of order, Ms McVey. What mechanism is available to Members who are concerned that there is a factual error in the impact assessment? How can that be corrected?

[The Chair]

The point has been made clearly on the record. We can take it beyond this room, and perhaps you can write to the Minister afterwards for clarification.

Clauses 10 and 11 ordered to stand part of the Bill.

Clause 12

Critical suppliers

Question put, That the clause stand part of the Bill.

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[Lincoln Jopp]

To understand the impact of what we are discussing, we obviously look at the impact assessment. We in this place are often accused of simply making rules and passing laws with no real sense of the impact downstream, particularly on small businesses. Having worked in the tech sector for 10 years, with data centres and managed service providers, and worked to try to grow many small and medium-sized enterprises, I am acutely conscious of the need not to overburden them. It is clearly hugely important that the Government take account of the impact of the measures they are taking and the burdens they are imposing on small and medium-sized enterprises.

To understand the impact of this measure, it is important to know two things: first, how many companies will be impacted and, secondly, how much it is going to cost. While I am sure that the Minister will say that this provision on critical suppliers is great, and all very clear, it cannot really be that clear. Page 110 of the impact assessment states:

“DSIT is not able to estimate at this stage the number of SMEs or SME DSPs that will be designated as critical suppliers”;

so we cannot tell how many there are. The same page also states:

“Specific duties will be set through secondary legislation so the exact cost of security measures is not possible to estimate.”

We do not know how many there are or how much the measure is going to cost, but Government Members will be whipped to say, “That’s okay—that can be done by someone else at another time.” We do not really have a strong sense of the impact on real-world businesses of what we are doing here. We also talked about the legal costs in an earlier sitting. I look forward to hearing the Minister’s reassuring words about how very clear the clause is and how it is not just a blank cheque, even though we do not know how many people it will affect or how much it will cost them.

[Dr Spencer]

This clause is one of the provisions that has given rise to widespread industry concern regarding its scope and implications. Business supply chains, particularly for large operators of essential services and multinational companies, are becoming ever more complex. The increased digitisation of service provision across the board means that the delivery of essential services can be vulnerable to severe disruption when the systems of critical supply chain entities are interrupted by cyber-attacks.

The Government have pointed to the 2024 cyber-attack on Synnovis, a pathology lab provider serving several London hospitals, as an example of the severe consequences that can flow from a cyber-attack on a key supply chain provider. In that case, the suspension of Synnovis services caused disruption to more than 11,000 appointments and operations. The attack caused at least two cases of serious harm to patients and, tragically, one patient’s death was attributed to the long wait for blood test results. Estimated financial losses from the attack exceeded £30 million.

The previous Government were conscious of intensifying supply chain risk, and consulted on measures to enable regulators to designate individual suppliers as critical if they provided an IT service on which an OES or RDSP was dependent for the provision of its essential service. The response to that consultation showed overwhelming support for the proposal, but stakeholders argued that the designation process would need to be transparent and based on engagement with industry. It is those vital elements of transparency and engagement, or rather the current lack of them, that are causing high levels of concern among supply chain entities that stand to be brought within scope of regulation when these provisions come into effect.

To break that down, preserving agility for the Secretary of State and regulators to respond to emerging risks has been recognised as both a strength and a weakness of the Bill. However, lack of certainty is a particular concern in a context of critical supplier designation, especially as this part of the Bill has the potential to bring in large numbers of small and even microbusinesses within the scope of regulation, potentially by multiple regulators. That is a daunting prospect for smaller companies, even taking into account the caveated duty on competent authorities to co-ordinate in the approach to regulation of critical suppliers in the proposed new paragraph 14L of the NIS regulations.

Several witnesses in oral evidence, including techUK and ISC2, made strong arguments that SMEs often lack the financial and human resources to develop cyber-security expertise and comply with regulation. Those organisations will need additional time to prepare, and a better indication of the criteria that might be used by regulators to determine which supply chain providers are critical. Industry bodies have called on the Government to ensure meaningful consultation on secondary legislation and guidance, to ensure that the measures are fit for purpose and capable of practical implementation. As part of the planned consultation, will the Minister commit to considering whether there are alternative approaches to regulation for increasing cyber-resilience in companies below a certain size?

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[Alison Griffiths]

The clause is drafted broadly, which is understandable, but in practice many of the supply chains, as my hon. Friend has ably demonstrated, involve several layers of providers and sub-providers. I would welcome clarity on how regulators are expected to approach designation in these cases, so that responsibility is clear and preparation can happen upstream, rather than only after an incident.

[Dr Spencer]

My hon. Friend has figured out what I am going to say in a moment, when it comes to the scoping of the regulator and that communication process. Such is the depth of the rabbit hole that the provision creates that, even though my hon. Friend’s intervention did not go where I thought she was going, another problem has just come to mind.

What happens in the circumstance where a critical supplier that acts as a proxy for multiple critical suppliers? How does designation operate in that fashion? There are suppliers that essentially operate as a marketplace to a certain provision of services. Is it the marketplace that is regulated, or is it each supplier within the marketplace? A locum agency could hypothetically be an umbrella company for multiple different smaller locum agencies, each of which would share the corporate risk as part of that.

Going back to my first point, the idea that access to the IT network or system will somehow be discriminatory, or dichotomise between people who are in scope of this measure and people who are not, seems to me complete nonsense. It is difficult to see what organisations, if they provide a service to a modern OES, will be in scope of it.

Secondly, there is systemic or significant disruption. I often say that, if someone wanted to cripple a hospital, the best way to do that would be to stop the cleaners cleaning rooms, and to stop the porters pushing people around the hospital to get them to their appointments and moving beds. There is often a focus on doctors and on the rest of the core medical and nursing staff— I myself often focus perhaps a bit too much on doctors—but it really is a whole-team effort. In fact, the most critical people are often the people who might not be the subject of the most focus, such as the cleaners and porters.

If the cleaners stop work or do not turn up to work, the hospital grinds to a halt. If taxis are not taking people to and from hospital out of hours, or if the patient transport is not taking people to hospital, out-patient departments grind to a halt. If the locum companies that fill gaps in staff rotas are not available to do that, and there are substantial rota gaps that make the provision of services unsafe, the hospital also grinds to a halt. If it is not possible to get access to critical medicines, if staff cannot maintain the blood gas machine or the blood pressure machine, or if the boiler breaks down, the hospital grinds to a halt.

It is not just something as obvious as the tragic situation with blood and pathology testing that causes a hospital to grind to a halt. Indeed, I cannot think of many private sector provisions that would not have a substantial impact on a hospital if they were to be removed; if any other Member can, I will be very happy to stand corrected. However, just skimming through them, I can see that the removal of most of them would cause the hospital to grind to a halt. The idea that the significant impact definition will be a discriminatory factor regarding suppliers just does not work. Someone might say: “Ben, you’re completely wrong. We found some providers.”, but, if that situation arises, how will the arbitration occur in terms of the threshold?

[Chris Vince]

I am not going to tell the hon. Gentleman that he is completely wrong—he should not worry about that. I will make another point. I wonder whether the distinction might be how time-sensitive losing a particular service would be. That is just a suggestion.

[Dr Spencer]

I thank the hon. Member so much for that intervention about the time it would take to find an alternative supplier, because it will bring me on nicely to my point about alternative suppliers.

However, before I move on to that point, the hon. Gentleman made a very good point in his intervention, which I will address. To be subject to these provisions will create a regulatory burden, and therefore a cost burden, for an organisation that is designated to be a national critical supplier. If I was a supplier of services, I would want to have the best provision possible. I would want to be cyber-secure; I would want to have a gold-standard service. However, I might also be nervous of being designated as a critical supplier because of the regulatory burden that would impose on me, which would make me potentially less competitive in getting contracts because of the costs that would ensue. There would need to be an arbitration system where a company that is under threat of being designated a critical supplier could have a discussion or debate about whether that designation was relevant or not.

I will now move on to the point that the hon. Gentleman made about alternative services. I really have no idea at all how we can expect a regulator to delve into the complexities and the minutiae of what is available in a local economy to provide these services that the OES is receiving. Do we expect the relevant regulator to check what taxi services are available—actually available, rather than some sort of fantasy availability where they are available on paper, but not in reality—in the local ecosystem that could supply to that hospital, which is the operator of essential services? What is the scope of research that the regulator would have to do? What considerations would they need to take regarding how much the taxis cost and how effective they are? What about the procurement decisions and processes that have already been gone through?

Most public sector organisations have complex procurement rules when setting up their contracts—and that is before we even begin to consider health and safety concerns that are subject to regulatory provisions. For example, if the regulator decided that taxi services are under threat of becoming a critical supplier, then does the taxi service have the ability to deal with someone who has a cardiac arrest, needs oxygen or has a behavioural disturbance? Can it manage people with physical or mental disabilities? What is the scope of that particular service provision? The experts will be the people who commissioned it in the first place; yet on the face of the Bill there is no objective requirement for the regulator to speak to the OES in the first place about how this provision and service was procured.

In terms of the service being available—as per the point made by the hon. Member for Harlow about the time to shift through—how will that be evidenced and investigated? What resource is going into this? That is just for a taxi company. What about when we expand it—and this is just for the NHS—to cleaners, porters, locum agencies or medicines provision? Is the provision of services geographically circumscribed or will this be across the country? I am sure that one can find alternative services to provide taxis to St Thomas’ in Birkenhead, but that does not necessarily mean that it is available in a reasonable timeframe or sense, in terms of the designation of supplier.

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[Lincoln Jopp]

I do not want to add spurious hypotheticals, so I will talk about the real world. I visited the Maypole special school in my constituency the other day. It has 20 members of staff and 18 pupils. It has people coming from as far away as Wandsworth. It books the transport, and the transport is paid for by the local education authority in which the pupil lives. It is clearly critical that children get to the school—just as it would be for a hospital. Would it be up to members of staff at the Maypole school to find out whether Addison Lee used a managed service provider or a data centre? That seems quite a tricky thing to know about and then to fulfil.

[Dr Spencer]

I really appreciate my hon. Friend’s intervention. It goes incisively to the heart of the concern about how these provisions are currently drafted. I really struggle to see how an OES that is providing a service to another OES could effectively argue that it is not within the full scope of these regulations. We have a lot of OESs in this country. It may be the Minister’s and the Government’s intention to essentially have a proxy regulatory framework for suppliers to OESs going forward—it is being kept very loose, because there is some flexibility in that, but that in itself will be a problem.

I worry that a lot of providers are going to think to themselves, “Why should we provide to an OES when we might be at risk of being designated as a national critical supplier?” Surely that is a concern that will have a chilling effect on organisations supplying to OESs, because of the risk of being found within the scope of this additional regulatory burden.

Don’t get me wrong; as I have said, companies should be taking cyber-security seriously, as should everyone. However, not everyone should be subject to the various regulations and data-sharing requirements that this Bill provides for. I suspect that many organisations will be very concerned. If there is a risk of designation as a critical supplier, companies will already be instructing lawyers and other organisations to manage that corporate risk.

If an organisation starts supplying to a hospital trust, or to whoever it may be, it might think, “Actually, we’re likely at risk of being designated, so we need to start doing some work and investment, either to challenge that designation or begin doing the preparatory work.” Maybe that is the intention: to effectively regulate the entire sector providing to OESs without actually lifting a finger in terms of regulation through this Bill. If that is the case, I am sort of sad, because I think it is better to be clear-cut about it. I would be grateful if the Minister answered that point directly.

Finally, in terms of OESs, we have already mentioned the fact that Government and local authority IT infrastructure and services are among the biggest risks in our system. I was really struck by the evidence from the NHS on Tuesday, in which our witnesses described data-sharing operations with adult social care, which is of course provided by local authorities.

It seems quite perverse, if I may say so, that a GP surgery, which is a private organisation, could be deemed a critical supplier to a hospital in terms of patient information sharing. Quite frankly, I would like the Minister to answer the question specifically: does he envisage primary care GPs being in scope because of data sharing of hospital records with NHS trusts? GPs could fall within scope as critical suppliers, while social care records, which are provided by local authorities, would not. There are all these weird situations that could emerge because of the scope and the looseness of these provisions, with all the consequent harms and problems. I look forward to hearing the Minister’s responses to my points.

[Kanishka Narayan]

First, I will respond to the apt and thoughtful points from the hon. Member for Bognor Regis and Littlehampton on operational technology. I can confirm to her that both vendors and providers of operational technologies will be covered by the provision of the five-step test for critical supplier designation. That is an important aspect when thinking about supply chains and the presence of operational technology where it is of critical interest.

The hon. Member for Spelthorne raised a very accurate point about proportionality in the provisions of the Bill, and in particular the impact assessments, statements, or limited statements on critical supplier impacts. As he will know very well, the Bill takes a very nuanced position on proportionality. When a sector is designated, there will be total clarity on the number of suppliers affected and on the ultimate impact. We will have sight of that.

The provision on critical suppliers was asked for by industry. The reason why the Bill does not specify critical suppliers is that it is simply not for the Government to specify how a business can or cannot continue. It is for businesses and regulators to work that through by understanding the depth of expertise that businesses have. We have started to do that, but that is precisely why the critical suppliers provisions have been delegated to secondary legislation and subsequent guidance.

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[Dr Spencer]

Will the Minister give way?

[Kanishka Narayan]

I commit to giving way at the end of my speech to the shadow Minister and the hon. Member for Spelthorne.

On the question of consultation, I am happy to confirm that the team in question has set up an implementation-focused effort. We have started to engage with regulators already, and there will be an extensive process of engagement on the Bill with business, as has been conducted historically.

The shadow Minister highlighted a number of logical puzzles. I have worked in a range of businesses and public sector organisations, and most have business continuity services. His hypothetical idea that businesses do not understand alternative provision, and whether they are or are not in a position of exposure, is well solved in the real world. I would give more credit to our expert witnesses from NHS Scotland than he did in recognising that they said that they frequently deal with the question of critical suppliers in co-ordination with competent authorities.

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[Dr Spencer]

The Minister is, of course, within his rights to snarkily dismiss the questions that I have raised, but I should point out that the stuff that is debated in Parliament, whether in Committee or on the Floor of the Chamber, is relevant when it comes to future legal disputes after a Bill is passed. The questions I have asked about the application of the Bill’s provisions will be important parts of the legal disputes that I expect will arise after its implementation. When people look back through the Minister’s dismissive comments, I hope they have other resources that they can go to for settling legal arguments. However, he may choose to respond fully now, or in writing if he cannot provide me with an answer.

[Kanishka Narayan]

I believe that where the shadow Minister laid out any specific concerns, I was able to set out answers, not least on the process for the designation of critical suppliers and the availability of an appeals process. Where his points were more in the realm of specific hypothetical puzzles, I have stayed clear for precisely the reasons that he highlights. This is serious stuff that can form the basis of how businesses and others plan, rather than specific judgments that we ought not to speculate about in this House.

Question put and agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

Clause 13

Provision of information by operators of data centre services

Question proposed, That the clause stand part of the Bill.

[Kanishka Narayan]

Clause 13 ensures that operators of data centres provide essential information to regulators, enabling them to properly monitor their sector and its cyber-resilience. The clause requires operators to submit key details, such as names, addresses and contact information, within three months of designation, and to update regulators within seven days if anything changes. Regulators are required to maintain a list of designated entities. By keeping regulatory records current, the clause strengthens our ability to monitor and protect essential services and respond to incidents that could affect businesses, public services and national security. The clause plays a key foundational role in the Bill’s wider framework for cyber-security and resilience.

Like clause 13, clause 14 places legal duties on digital and managed services providers to provide essential information to their regulator—in this case, the information commission. Like operators of data centre services, RDSPs and MSPs will be required to register with the information commission within three months, submitting key details, such as names and contact information, and to update regulators within seven days if anything changes. Organisations based outside the UK will be required to nominate a UK representative and provide contact details. To strengthen cross-agency support and recognise the key role that these businesses play in the UK economy and society, the information commission will be required to share its registers of relevant digital and managed service providers with GCHQ. Those proportionate steps will enable authorities to do their job and respond when it matters.

[Dr Spencer]

Clause 13 requires in-scope data centre operators to provide certain information to their designated competent authorities, which—subject to Government amendment 11, which we passed earlier—will now be solely Ofcom, and to keep that information up to date. The information includes the data centre operator’s address and the names of directors. It must be provided within three months of the data centre operator’s designation. For data centres that meet the threshold criteria, that would be three months after clause 4 comes into force. Other OESs are not subject to an equivalent requirement to provide information to their sector regulator. That reflects the fact that the Government currently have limited information about the data centre sector.

RDSPs are already required, under regulation 14 of the NIS regulations 2018, to provide their contact details to the information commission, as their sector regulator. Clause 14(2) amends regulation 14 to require RDSPs to provide more information, including about their directors and the digital services they provide. It would also require the information commission to share a copy of its register of RDSPs with GCHQ. Clause 14(9) requires RMSPs to register with the information commission and to submit the same contact details as RDSPs. RMSPs must nominate a UK representative if they are based outside the UK. The information commission will be required to maintain a register of RMSPs and to share it with GCHQ. Clauses 13 and 14 give Ofcom and the information commission access to more detailed information about regulated entities and facilitate regulatory oversight of the data centre RDSP and RMSP industries in the UK.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Clause 14 ordered to stand part of the Bill.

Clause 15

Reporting of Incidents by Regulated Persons

[Dr Spencer]

I beg to move amendment 1, in clause 15, page 22, line 15, at end insert—

“(f) whether the incident involves failure modes not previously observed in the relevant sector materially involving autonomous or adaptive systems based on machine learning, including where the potential impact of such failure modes was mitigated or prevented.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 2, in clause 15, page 22, line 25, at end insert—

“(ea) where the incident was associated with one or more autonomous or adaptive systems based on machine learning, details of those systems and their involvement in the incident;”

Amendment 4, in clause 15, page 23, line 32, at end insert—

“(ea) where the incident involved one or more autonomous or adaptive systems based on machine learning, details of those systems and their involvement in the incident;”

Amendment 5, in clause 15, page 26, line 37, at end insert—

“(h) whether the incident involves failure modes not previously observed in the relevant sector materially involving autonomous or adaptive systems based on machine learning, including where the potential impact of such failure modes was mitigated or prevented.”

Amendment 6, in clause 15, page 27, line 7, at end insert—

“(ea) where the incident was associated with one or more autonomous or adaptive systems based on machine learning, details of those systems and their involvement in the incident;”

Amendment 7, in clause 15, page 30, line 8, at end insert—

“(fa) whether the incident involves failure modes not previously observed in the relevant sector materially involving autonomous or adaptive systems based on machine learning, including where the potential impact of such failure modes was mitigated or prevented;”

Amendment 8, in clause 15, page 30, line 21, at end insert—

“(ea) where the incident was associated with one or more autonomous or adaptive systems based on machine learning, details of those systems and their involvement in the incident;”

Amendment 9, in clause 18, page 40, line 10, at end insert—

“(8A) Where the CSIRT receives notification of an incident under regulation 11, 11A, 12A, or 14E that materially involves autonomous or adaptive systems based on machine learning, the CSIRT must share relevant technical information with the relevant body within 72 hours.

(8B) For the purposes of this regulation, a “relevant body” means the AI Security Institute or any successor or replacement body designated by the Secretary of State.”

[Dr Spencer]

I will speak to the amendments tabled by the hon. Member for Dewsbury and Batley (Iqbal Mohamed), but wait for the next group to speak to clauses 15 and 16 and the amendments to them in the name of the official Opposition.

From the outset, it is important for me to say that while I have spoken to the hon. Member more generally and responded to a debate he secured on AI, I have not spoken to him specifically regarding these amendments and their precise purpose. However, given his concerns about the AI sector and his background, we can see where he is going with them. Broadly speaking, the amendments would ensure that as part of the reporting requirements under these clauses, there is an ability to measure whether adaptive AI or large language models have been responsible for a cyber-security breach or an incident within the systems themselves.

That derives from what we see happening more generally in the cyber-security sector. We heard evidence that, online, people can essentially purchase a cyber-security hack suite of software. It is possible to pay for people to do hacking and one can get training in it. A lot of hacking and cyber-security breaches are now expanding because of large language models and the use of AI to probe systems. I do not know if we have a sense of scope regarding how much this is a problem specifically in the UK, whether for the individual businesses or organisations that will be regulated under the Bill. I understand, as I interpret them, that the point of the amendments is to get a dataset on where AI or automated decision making has been used to pose a particular cyber-security risk.

The amendments also speak to a more general point. There has been a lot of debate in this place over the years about what we as a country, and equivalent democracies, are doing on the regulation of AI and large language models, building on the Bletchley conferences, innovative work and what guardrails we need to think about in terms of imposing LLMs and AI in the UK, and how we approach AI being used by hostile state actors, such as through bot accounts. I understand that the use of deepfakes, bots and so on is an emerging risk as a method of cyber-attack. There are broader issues with regard to transparency when bots on the internet and social media networks can get into various IT systems and accounts, and effectively pretend to be somebody else to get around the cyber-security system. As with all things, we do not know what we do not know. I understand that the amendments were tabled to increase reporting requirements and give us more evidence of the scope of the problem and the threat posed.

I will be grateful if the Minister gives his sense of how much of a problem this is, particularly with regard to whether reporting requirements are necessary. I believe that the Government’s original plan was to introduce an AI Bill. That would have pros and cons, and I remain agnostic on that, but, speaking for His Majesty’s Opposition, I would like to know the Minister’s plans for the AI landscape and whether, in the upcoming King’s Speech, there is an idea of revisiting an AI Bill, which might make such amendments obsolete.

[The Chair]

Order. That is not relevant now.

[Kanishka Narayan]

I appreciate the intent behind the amendments and the shadow Minister’s position of understanding but not supporting them, which I share. I share his concerns about the potential for emerging risks posed by AI systems, not least in the realm of cyber-security. At the same time, I am conscious that we have not specified any risk factors in the Bill from a reporting point of view for the National Cyber Security Centre or the regulators. To do so in this context would place an undue priority on one category or source of risk.

For those reasons, although I understand the motivation behind the amendments and I am conscious of the risks posed by AI systems, I urge the hon. Member not to press them. The Bill is technology-agnostic rather than focused on particular areas of risk. The Government continue to work on mitigating AI risks, primarily at the point of use, but also through extensive Government capability, not least in the AI Security Institute.

[Dr Spencer]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Taiwo Owatemi.)

Cyber Security and Resilience (Network and Information Systems) Bill (Third sitting)

Ben Spencer Excerpts

Committee stage
Thursday 5th February 2026 Public Bill Committees

[The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)]

It is a pleasure to see you in the Chair, Mr Stringer. The Bill will make crucial updates that build on the NIS regulations, which are the UK’s only cross-sector cyber-security regulations. As clause 1 sets out, “NIS regulations” refers to the Network and Information Systems Regulations 2018 (S.I., 2018, No. 506).

Clause 2 gives an overview of the Bill’s parts and what they include. It sets out that part 2 amends the NIS regulations by expanding the scope of the regulations to cover data centres, large load controllers and managed service providers. It also introduces powers for regulators to designate suppliers as being critical for their sector. Part 2 also updates the existing incident-reporting regime and includes provisions relating to the recovery of regulators’ costs, information-gathering and sharing powers, and enforcement powers. Part 3 gives new powers to the Secretary of State to specify other sectors as in scope of the regulations in future, to create new regulations relating to the security and resilience of regulated services, and to issue a code of practice and a statement of strategic priorities. It also requires the Secretary of State to report on this legislation and its implementation. Finally, part 4 gives new national security powers for the Secretary of State to issue directions. I commend the clauses to the Committee.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

It is a pleasure to serve under your chairmanship, Mr Stringer. I thank all hon. Members on both sides of the Committee for taking part, and the officials for their work on the Committee stage of this important Bill.

The Bill will significantly update and expand the Network and Information Systems Regulations 2018 by bringing new services within scope of regulation, giving sector regulators the power to designate critical suppliers, updating and expanding the reporting regime for cyber-security incidents and making significant changes to the regulatory funding model and regulators’ information-gathering and sharing powers. The Bill will also grant extensive powers to the Secretary of State to respond to emerging cyber-threats, including the power to bring further sectors within the scope of regulation, giving directions to regulated entities and issuing a code of practice that sets out measures for compliance with duties under the NIS regulations. Recognising the increasing role of malicious cyber-activity as a threat to our national security, part 4 will give the Secretary of State far-reaching powers to issue directions to regulated entities for reasons of national security.

Covid turbocharged the digitalisation of all aspects of the economy and our daily lives, bringing new opportunities but at the same time heightening the exposure of digital systems to exploitation by malicious actors. The previous Government recognised that in their post-implementation reviews of the NIS regulations and in a subsequent series of consultations on proposals to improve the cyber-resilience of the entities that are most important to the UK economy. Those consultations included a review of information security risks relating to outsourced IT provision, data centres and organisations controlling large amounts of electrical load. The last Government’s work assessing those threats has informed this Government’s decision to bring data centres, managed service providers and large load controllers within the scope of the NIS regulations.

Industry stakeholders have welcomed the Bill as essential for bringing the cyber rules governing critical infrastructure in line with modern threats, economic realities and technological developments, and for moving our cyber-security regulatory framework into closer alignment with international partners to ease cross-border operations for businesses that provide services overseas.

In some respects, at least, the Bill identifies the right problems, but, crucially, it falls short of providing workable solutions. In embarking on our scrutiny of the Bill, the Committee should be acutely aware of the raft of digital legislation with which businesses and regulators have been asked to grapple in recent years. Many of those new regulations are necessary, but as lawmakers we should be conscious of the burden that we are placing on industries and particularly on small and medium-sized enterprises, which are the lifeblood of the UK economy and which have fewer resources to navigate complex layers of regulation. It is therefore incumbent on all of us to enact laws that are clear and capable of practical implementation.

[Alison Griffiths (Bognor Regis and Littlehampton) (Con)]

Does my hon. Friend agree that, although we support the intent behind the Bill, clause 2 does a lot of framing work but does not necessarily consider the extensive perimeter that is coming through and how proportionality will be applied in practice? I suggest that the Committee keep that in mind as we move through the detail.

[Dr Spencer]

I thank my hon. Friend for her intervention. I am reminded of the Committee’s evidence session earlier this week, in which expert after expert lined up to raise concerns around the scope of the definition. Although they acknowledged the importance of and appreciated the reasons for leaving some things to secondary legislation in a climate as fast-moving as the IT and digital sector’s, they raised concerns about the uncertainty that is coming for business and the need for extensive consultation so that businesses can feed into and have some degree of influence over the regulations that they will have to abide by.

[Chris Vince]

The hon. Gentleman is making an interesting speech. I recognise his desire to be constructive on the issue. Will he recognise that this is about finding a balance? We want to include some flexibility in the legislation, because of the ever-changing threat that he mentioned. Equally, we recognise the challenge that SMEs may face in complying with the legislation on data sharing, but it is important that they do so, because not complying will have an impact on their business.

[Dr Spencer]

I thank the hon. Member for his point about balance. I am confident that this is an area to which the Committee will return quite a few times in our line-by-line scrutiny of the Bill, particularly clause 12, which relates to the designation of critical suppliers. Clearly the regulations need to be proportionate, but to make that judgment we will need to know exactly what the regulations are. A lot of the detail is not in the Bill and has instead been left to secondary legislation. As we heard from the experts, it is very difficult to scrutinise legislation that is mostly being left to future regulations rather than being set out in the Bill.

These definitions will be critical if businesses are to have clarity as to whether they will fall within scope. I do not want to go too deeply into clause 12 now, but I see it as an exemplar. How are businesses that could fall within the critical supplier designation to know what they need to do? How is the operator of an essential service to know what information it needs to pass to the regulator on businesses that it may end up regulating? It would be very helpful if the Minister could comment, even at this introductory stage, on how he envisages that balance playing out in the Bill, particularly given that so much of the detail has been left to secondary legislation. Anyway, I digress—I will get back on topic.

Businesses are struggling with legal uncertainty and the increased costs of regulatory burden. Regulators in the sector lack the resources, the teeth and sometimes even the will to carry out effective oversight and enforcement of existing cyber regulation. Uncertainty about which incidents should be reported will dramatically increase the burden on regulated entities and on regulators. All the while, institutional barriers to effective oversight and enforcement remain.

The Bill fails to give the legal certainty and the proportionate framework that businesses need if we are to achieve widespread adoption and hardened cyber-resilience across the sectors that are most critical to the economy and our society. Perhaps most critically, there is little point in granting the Secretary of State extensive powers to make directions to regulated entities for national security purposes if the Government remain wilfully blind to the greatest threats to our national security. In the past few weeks, reports have circulated that a Chinese state-affiliated group hacked the communications of top Downing Street officials between 2021 and 2024, yet the vital organs of our state, central Government Departments and agencies carrying out the most critical functions, are left unprotected and unaccountable for their cyber-resilience under the Bill.

If we do not address these problems, we risk the Bill becoming yet another missed opportunity for the Government. These are opportunities that we can ill afford to miss if we are to safeguard our economy and our national security.

[Kanishka Narayan]

I welcome some of the Opposition spokesperson’s comments. Let me briefly address his questions about definitions and public sector inclusion. It is customary for the Opposition to oppose for the sake of opposition, at times, and I am afraid that this is one of those times; I have so far set out only two clauses, which are effectively an index to the Bill. Notwithstanding that, I will address his two particular points.

I was delighted that in our evidence sessions we heard from witness after witness who appreciated the flexibility of the Bill. For the Government to prescribe activities or incident thresholds in the finest detail in primary legislation is not how businesses, Government and regulators ought to engage. I hope that the Opposition will come to appreciate that in due course.

On critical suppliers, which no doubt we will come on to, I thought that in response to Opposition comments at our second sitting, I set out a very clear, precise set of tests. I found no opposition to that claim, but I look forward to hearing any original thoughts on that question.

On incident reporting, I was delighted that there was a witness who noticed that the extension of the definition of incident reporting, to include incidents capable of having an impact, was appropriate and exactly in the right place.

On the question about the public sector’s inclusion, we are here not to prescribe and wait for a law to tell us what we ought to do in the public sector, but instead to move fast and fix things. In that spirit, the Bill focuses on essential services.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

Identification of Operators of Essential Services

Question proposed, That the clause stand part of the Bill.

[Kanishka Narayan]

Clause 3 makes important distinctions as to which organisations can and cannot be considered operators of essential services for the purposes of the NIS regulations. It clarifies that a person—in practice, an organisation or business—can be an operator of an essential service regardless of whether that person is established in the UK, as long as they are providing essential services in the UK. That means that organisations established outside the UK can be regulated under the NIS regulations.

Clause 3 also makes it clear that the NIS regulations do not apply to public electronic communications networks or to public electronic communications services. Those are telecoms operators, which are regulated separately under the Communications Act 2003. The amendments in clause 3 will prevent telecoms companies from being subject to duplicate regulations; they will also ensure that all essential services in the UK are protected, even if the company operating them is based outside the UK. I commend the clause to the Committee.

[Dr Spencer]

Clause 3 will amend the relevant provisions of the NIS regulations, stipulating that operators of essential services are within scope of the regulations whether or not they are operating an essential service in the UK, and regardless of jurisdiction in which they are established. Providers of public electronic communications networks and public electronic communications services are excluded from characterisation as operators of essential services, as the Minister says, to avoid duplication with their sector-specific cyber-security regime.

The clause is an important provision to ensure that entities providing essential services in the UK are compliant with domestic standards. Perhaps the most important aspect of the change is ensuring that serious cyber-security risks that appear within the systems of those entities are reported to the UK authorities for action. That is vital for the National Cyber Security Centre to keep abreast of emerging risks and be able to respond to them.

Nevertheless, the complex maze of compliance and regulatory standards across jurisdictions is a growing challenge for businesses of all sizes and particularly for small and medium-sized enterprises. This is also a complicating factor facing UK companies when providing services abroad, particularly in the digital domain. Will the Minister lay out what discussions he has had with industry representatives about easing the complexity of cross-border digital service provision to ensure that the UK is a competitive and attractive place to do business?

[Kanishka Narayan]

On the question about cross-border compliance and making sure that we have a proportionate and effective regime, we have had a series of engagements at ministerial and official level with representatives of techUK, the industry body. The NCSC has convened a series of organisations—not least managed service providers, but others as well—and there has been a pretty extensive period of consultation on that and every other matter in the Bill.

I feel satisfied that the Bill strikes a good balance in ensuring proportionality in what businesses experience. Critically, as supply chains in this context become increasingly cross-border, it is vital that bodies that may not be resident in the UK but which provide essential services here are included in the scope of the Bill.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Data centres to be regulated as essential services

--- Later in debate ---

[Dr Spencer]

Clause 4 amends the NIS regulations to bring data centres that meet certain thresholds within scope of the regs as operators of essential services. As drafted, these data centres will be regulated by DSIT and Ofcom, but the amendments moved by the Minister propose that Ofcom will be the sole regulator for the subsector. I thank him for his explanation of why he has tabled these amendments.

Given the oral evidence from Ofcom and other sector regulators earlier this week regarding the challenges of recruiting skilled cyber-security staff to regulate effectively, what assessment has the Minister made of the additional regulatory burden on Ofcom of this decision and its capacity to secure adequate resources to meet it? Clause 5 extends the scope of the regulations to data centres operated by the Government, with the exception of services provided by or on behalf of intelligence services handling classified information.

Data centre infrastructure is increasingly vital to the UK’s society, economy and security. Data centres underpin nearly all aspects of our digital lives, from sending emails to booking GP appointments or ordering shopping online. Businesses of all sizes routinely process their workloads in the cloud, supported by data centres. For those reasons, data centres were designated as critical national infrastructure—CNI—in 2024.

The UK digital sector, which is heavily reliant on data centres, contributed more than 7% of the UK’s total gross value added in mid-2024, growing almost three times faster than the rest of the economy. Data centres are also critical to the UK’s ambition to become an AI superpower. Training artificial intelligence models relies on access to an abundance of processing capacity, or compute, located in secure data centres.

In October last year, Amazon Web Services experienced a glitch in one of its US data centres, which set off a chain reaction that took down online services across the globe.

[Bradley Thomas]

On the growth of this industry, and with 78% of UK enterprises relying on cloud-based services, 96% of companies expected to use public cloud services, 35% of UK businesses outsourcing IT support and, as of last year, 63% of organisations planning to continue or increase their IT outsourcing over the next 12 months, does my hon. Friend the shadow Minister agree that greater consideration—or at least elaboration—must be given to the vulnerability of the supply chain of large load data centres?

[Dr Spencer]

My hon. Friend will be aware that the issue regarding the bottleneck in the supply of cloud computing, in which I put data centres, compute more generally and access to large language models, in our country is very much on my mind, and we have been raising it with the Government. At the moment, I understand that around 70% of cloud services directly procured by the Government are coming from the three big US providers. I hear from UK SMEs—not just cloud providers, but SMEs of all types—all the time about the challenge that they face with Government procurement contracts to procure domestic UK-company services, whether that is central Government or otherwise.

We are getting ourselves into a very difficult situation from a resilience perspective: not only are we currently heavily reliant on US big tech, but we are not doing the work we need to do right now to support a burgeoning UK tech industry. In the UK, we have fantastic universities and businesses. We really are a centre of innovation, but the problem is that companies can really struggle to take the next step forwards.

Of course, Government procurement is not the be-all and end-all—although, depending what sort of sector the company is operating in, it might be—but we are certainly not focusing enough on supporting our SME sector. The sector is really good and strong, and it has the potential to be great, but we still have not had a hyperscaler. We have not seen the expansion in the UK digital and tech sector that, all things considered, given our background and where we stand in terms of our academic and business resources, we really should have seen.

--- Later in debate ---

[The Chair]

Order. Interventions should be short and to the point. If any hon. Member wishes to catch my eye, they should not have any difficulty in doing that, but it is important to keep a distinction between interventions and contributions to the debate.

[Dr Spencer]

The hon. Member for Lichfield may be aware that my background is in medicine; I used to be a doctor before I came to this place. One of the skills and challenges in medicine is that any medical intervention—apart from a small handful—always has a risk of harm or side effects to the patient. It is always a balancing act between the harm and the benefit. My bread and butter before I came to this place was balancing harms and risks in the best interests of the person in front of me.

Although I have never been a businessperson, and I have certainly never owned or run a data centre, my approach to business burdens is to see the extra things that the Government make businesses do—which are not necessarily what businesses would normally do or see as in their direct interests—as a prima facie harm. I will expand my words a bit if that helps in explaining the logic. The starting point is that it is an extra burden and a harm, but then benefits from other angles can outweigh that harm. It is getting businesses to do something more; if they were doing it anyway, we would not need regulations. It is an additional thing that business is being asked to do. It might be that we have decided that overall it is in the best interests of the sector. Individual businesses cannot regulate and change the sector themselves, so we have decided, “For the good of society, we think businesses should do this.”

I am always a little careful when we politicians say that we know what is better for business in terms of what they are doing. I take the point about how regulatory certainty can be helpful in itself. I also take the point about the overall benefit to society and the business network of having confidence that there are secure and working data centres and that the large load controllers—which we will talk about presently—have control. This Bill is a full-fat compendium of cross-regulations and links. I feel for any business looking through the later chapters and finding themselves subject to those requirements. We have to keep that in mind: all of us in this Committee want our businesses to succeed and do well, and we also want stable and flourishing infrastructure.

Going back to my medical roots, the starting point should be, “Primum non nocere”. That is often misinterpreted as, “First, do no harm”; actually, not doing harm is the main thing that we should do. As a legislator, you should have quite a high threshold before you start saying, “The solution is putting in another law. Let’s create another regulation,” or, “Let’s put another burden on business.”

One of the challenges I had when looking at the Bill when it was first published was understanding why we need it in the first place. What is its starting point? That is something that I have been exploring and thinking about as we have been preparing for this Committee stage. Why is our industry not doing it itself and sorting this out? Why is the Minister here today bringing forward these regulations on business and why is that necessary in the first place as opposed to business sorting it out?

I am sure that this is something that the Committee are going to come back to and explore in more detail when we discuss some of the more high-profile cyber-security impacts, particularly on Jaguar Land Rover and M&S. The hon. Member for Lichfield makes a very good point, and I do not think that this debate is settled in some ways—and I am sure we are going to come back to it quite a few times during the passing of this Bill.

[Dave Robertson]

I think your crystal ball is working today.

[Dr Spencer]

I am certainly going to come back to it a few times—if not other Members—and I will invite the Minister to come back to it a few times.

Returning to the point about the dependency on particular sectors, I mentioned the impact that Amazon Web Services had on our society and systems; interestingly, the AWS outage was caused not by a cyber-attack, but it demonstrates the disruption to our lives and businesses that could occur in the event of such an attack. The last Government recognised the vital and growing importance of data centres to the UK economy and people’s lives, as well as the risks of serious interruption to these services. That led to a public consultation on enhancing the security and resilience of UK data infrastructure.

The Conservatives therefore welcome that this vital element of our national infrastructure will be subject to cyber-security regulation. However, for regulation to be robust for cyber-resilience and regulator data centres it is essential that there are high rates of industry compliance. The Government stated in their impact assessment for this Bill that there is an ongoing engagement with the data centre sector. Could the Minister lay out what feedback he has received on the sector’s preparedness to meet the cyber-resilience standards set by the NIS regulations?

Likewise, in terms of ensuring effective regulation, Ofcom will have a dramatically increased role in terms of cyber-security regulation when these provisions come into effect. In view of Ofcom’s current regulatory workload and the challenges with recruitment, which I mentioned earlier and highlighted in the evidence session this week, what ongoing engagement is the Minister having with Ofcom more broadly to make sure that it is sufficiently resourced to play its role?

Before I move on to clause 6, on large load controllers, I feel I need to go back to the discussion about proportionality and the purpose and need for these regulations in the Bill. One of the biggest criticisms of the NIS regulations is that they have not really been enforced. I am not saying that a certain rate of enforcement is a marker of efficacy or compliance, but it is curious, and it has been raised to me, that the level of enforcement indicates that the NIS regulations have not really had teeth or changed anything.

In one bad world, we have regulations that are completely disproportionate and place a huge and unnecessary burden on industry. But in some ways the worst of all worlds, or rather another problem that we would need to deal with, would be for us to legislate, produce this wonderful cyber-security Act, and go away happy as legislators—“Hey-ho, it’s all sorted and finished; we can sleep well in our beds about the cyber-security of the UK.” But if the companies cannot follow the legislation, will not follow it or do not have the resources to do so, then all we will have done is waste our time. Worse, we will have given ourselves a false sense of security, rather than delving into some of the real challenges and problems in the sector, which include overall education, encouraging businesses to take the issue more seriously and encouraging people to do Cyber Essentials.

[Alison Griffiths]

My hon. Friend is making a very good point, which also applies to improving board awareness and ensuring that the enforcement of the regulations incentivises boards to take the issue seriously and make sure that they are equipped to understand the commercial reality of cyber-security for their businesses. Enforcement is an important part of that.

[Dr Spencer]

That is something that I know will come up in debate as we go through the Bill. It is curious that we are receiving consistent feedback that some boards are not taking the issue of cyber-security seriously, in terms of allocating resource to it, especially in the light of the very high-profile cyber-attacks on businesses. Obviously, I am all over this issue, given my role as shadow Minister, but I think it is completely insane, certainly for larger companies, not to focus on the challenge of cyber-security. It is a challenge for businesses of all sizes, but I am mindful that implementation is particularly problematic for very small businesses.

[Bradley Thomas]

Does the shadow Minister agree that the Government should heed the message of Chris Dimitriadis, the chief global strategy officer at the Information Systems Audit and Control Association? He said:

“The era when cyber regulation could focus solely on critical national infrastructure is over. Today, every major employer is part of the digital economy—and therefore part of the threat landscape.”

Surely the Government should heed that message.

[Dr Spencer]

That is a stark message. Going back to my previous point, I struggle to think how many small businesses can really put in the necessary resource to take these sorts of steps on cyber-security.

There is a broader point here, which goes back to my opening remarks. A chunk of this involves hostile state actors that are attacking our companies, Parliament and the Government, whether directly or through their intermediaries. I find it quite ironic that it was announced earlier this week that our security services are going to work with China’s security services to deal with cyber-security threats. I thought, “Well, hang on a sec. What are they going to say, given that the Chinese Communist party is one of the main drivers of cyber-security threats in the UK?”

Legislating in this area and deciding how to approach it as a society is a particular challenge, given that it is not merely criminals or hacktivists doing this stuff to our companies and institutions; there is also full-fat hostile state inference from Russia, Iran or the Chinese Communist party.

[Bradley Thomas]

The risk and the threat from hostile states is plain to see. Does my hon. Friend have any sympathy for the ten-minute rule Bill that I introduced a few months ago on the Floor of the House? We need to strike a balance between the risk that bureaucratic administration poses to small businesses and the very real risk that cyber-attacks pose to the economy in general. The Government should have the private sector in scope and look at setting a threshold that does not become burdensome on smaller businesses. My proposal was for any company that turns over £25 million or more to be scope, in order to not bear down too heavily on small companies that would otherwise find the process, the risk and the burden of reporting too onerous.

[Dr Spencer]

I thank my hon. Friend for his interesting proposal, which attempts to crack the nut of one of the problems subsumed in the Bill.

The Bill cherry-picks certain sectors that need to be regulated entities, and there is a whole host of definitions. Then the Secretary of State can allocate some of the bits that they want to tag on through secondary legislation or the designation of a critical supplier. Then we have the MSP component. But there is something the Bill does not deal with. If I were to ask to the man in the street to identify the biggest cyber-security attack they have heard of in the past year or so, their answer would probably depend on where they live. If they live in the west midlands, they would talk about JLR, which has had a catastrophic effect on the local economy. In other parts of the country, the focus might be on Marks & Spencer or the Co-op. The Bill does not fix that, so what needs to be done? Should there be a threshold based on turnover, so that the process is not so onerous on certain companies, or something to support the insurance industry?

The Bill is silent on this issue, and the Government need to come up with some answers. I totally understand what they are trying to do with the Bill and how it is taking us forward—of course the NIS regulations need updating—but it does not fix the big stuff that has had a huge impact on people’s lives and required a massive bail-out of several billions of pounds-worth of taxpayers’ money. How many more JLRs can the Government afford to bail out until they have to do something to resolve the issue? I suspect we will come back to that, but I am glad that my hon. Friend introduced his ten-minute rule Bill.

We need to have a solution, but at the same time, we should not put onerous burdens on companies that are already struggling because of the Government’s anti-growth agenda and the punitive taxes being imposed on them to pay for profligate spending. This goes back to the discussion about prima facie harms. Taxation is the best example of a prima facie harm.

[Dave Robertson]

Will the hon. Member give way?

[Dr Spencer]

I am very happy to give way on taxation.

[Dave Robertson]

I fear I am about to repeat what I said a moment ago. I am aware that nobody gets up in the morning and is excited to pay tax, but tax pays for our roads, for our infrastructure, for our hospitals, which keep our workforce in good health, for the education of the next round of employees, for our security services, and for the police, who help to prevent crime. It pays for a whole variety of things that are essential for business to succeed, so taking an evangelical view that tax is bad is just not—

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[The Chair]

Order. I want to take this opportunity to again remind the hon. Gentleman and the shadow Minister that this Bill is not about tax. It is relatively narrowly drawn, so I would be grateful if hon. Members can come back to what is on the face of the Bill.

[Dr Spencer]

As I risk getting into trouble with Mr Stringer, I will not respond to the hon. Member for Lichfield. I look forward to the opportunity to debate this issue again, perhaps in the emergency Budget in the next couple of weeks.

Clause 6 brings large load controllers, which provide the flow of electricity in and out of smart appliances, within scope of the NIS regulations if the load is above 300 MW. I understand that the threshold has been decided through consultation, given that that pressure could have a substantial impact on the grid. There is a challenge in managing peak demand and supply in the grid and big changes in it, so I entirely understand why the Government are introducing this provision. Smart EV devices—I have a smart charging electric vehicle device myself—used system-wide could cause big grid disruptions, particularly as we integrate infrastructure into our homes such as solar panels, batteries and other energy-related smart devices.

In fact, we need the grid to become more smart device-integrated over the next 10, 15 or 20 years. When we look at projections of energy consumption, we see that we will need to enable people to use the grid by expanding technology such as vehicle-to-grid energy supply, so that we can manage peak load. That is part of expanding our energy, reducing energy costs and supporting renewable energy and the transition to net zero. If anything, this issue will become more important and expansive over the years.

On that basis, I have some questions for the Minister about the clause. Why are data centres and large load controllers the two sectors that he has decided to put on the face of the Bill? I say that with particular reference to the NIS2 regulations, which are expanded a bit more. How does he envisage this area expanding in the future? Is he confident that the scope of the clause is sufficient to cover future technologies that are coming down the track? I am thinking of EV charging apps. The list is prescriptive, but does it have sufficient flexibility? Is the Minister able to come back with secondary legislation if he needs to expand the list in the future, given that it is in the Bill in that form? Would it not be better to put that on the face of the Bill and to use secondary legislation to lay it out, in order to have flexibility? The Minister has been trying to ensure flexibility elsewhere, and understandably so—let us not go back into those debates. I just want to understand his reasoning behind that a bit better. That is certainly not a criticism, but I want to know why those particular sectors have been pulled out, and why it has not been left for secondary legislation.

[Kanishka Narayan]

With your permission, Mr Stringer, I will restrict my comments to clauses in question—in particular, clauses 5 and 6—and the relevant Government amendments. The shadow Minister has auditioned for roles at the Department for Business and Trade in talking about the philosophy of regulation, at the Department of Health and Social Care in talking about his medical background, and at the Treasury in talking about taxation. I will try to restrict myself to none of those and simply speak to the clauses and address three points in response to his comments.

The first relates to the skills and resourcing of our regulators. On that, I welcome the shadow Minister’s prior engagement with me directly and his questions now. The last Government completely gutted our regulators. Having done so, they achieved neither growth nor regulatory quality, which Opposition Members now talk about. As a consequence, it falls to us to make sure that our regulators are fit for purpose and resourced in the way they need to be. This Bill gives them the powers to secure initial and full notifications in a timely way, the powers to share information in an appropriate way and, fundamentally, the ability of cost recovery, to resource themselves in an appropriate way. Alongside that, our wider initiatives on skills in the cyber-sector and technology more broadly are fundamental to achieving our aspirations, not least through the CyberFirst programme, which I mentioned in a witness session.

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[Kanishka Narayan]

Loudly and slowly: this will capture organisations remotely managing significant amounts of electrical load via energy-smart appliances, both in a domestic and non-domestic setting. These organisations play an increasingly important role in the management of the electricity system, but are not currently regulated for cyber-security. A cyber-attack could therefore create major disruptions to the national grid, shutting down public services and critical national infrastructure. Capturing load control as an essential service will safeguard the public from these disruptions. It will also reflect the need to bring in new safeguards to manage a more digitalised and dynamic energy landscape in the transition towards net zero.

[Dr Spencer]

Before the Minister moves on—I was a bit nervous that he was going to finish—I have an additional question about the Crown data centre. What happens if a data centre is providing services commercially to both the public and the Crown? How is that operated within the scope of the Bill?

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[Kanishka Narayan]

I very much welcome that point. In talking about broad architecture characteristics—being able to scale compute and to be elastic to multi-tenants by being shareable—rather than setting out the specific nature of resources, we capture both commercial cloud and AI deployments. However, I am keen to ensure that we keep this under review and, where possible, use the flexibilities provided by the Bill to adapt it to changes in technology.

Although the policy intention behind the definition has not changed, amendment 13 will provide certainty for industry, support effective regulatory oversight and ensure that services whose disruption could significantly impact the UK economy and society are properly captured. In addition, the drafting is more aligned with that of our international partners, which will improve efficiency for providers operating across borders.

This targeted, technical improvement will bring greater clarity, consistency and fairness to the NIS regulations. I urge Members to support both the clause and this important amendment.

[Dr Spencer]

Clause 7 amends the definition of cloud services, which have been within the scope of regulation since the NIS regulations came into force. The expanded definition emphasises remote accessibility and the “on demand” nature of cloud services, and that services may be delivered from multiple locations. It also excludes managed services from the scope of cloud services to avoid duplication of regulatory requirements and oversight.

The Minister proposes changes to this provision in Government amendment 13, which sets out further details regarding the features of in-scope cloud service provision, including common access by multiple users, with each having access to separate processing functions. My question to the Minister builds on the one raised by my hon. Friend the Member for Bognor Regis and Littlehampton. It is obviously difficult—if it is possible at all—to predict how the tech sector will evolve, but what powers will the Government have to adjust these provisions as the cloud ecosystem changes, and what consultation has the Minister done on that within the scope of the Bill?

[Kanishka Narayan]

On that important point, which the hon. Member for Bognor Regis and Littlehampton also raised, the changes to the definition came about in part through extensive engagement, and in particular by ensuring that the attributes of “elastic” and “scalable” were treated individually rather than jointly and that “shareable”—the ability to have multi-tenants and therefore be a genuine cloud computing service for multiple clients—was considered in scope. As I mentioned to the hon. Member for Bognor Regis and Littlehampton, it is important that we keep this under review, and part of the reason for the secondary powers in the Bill is to make sure it remains both specific, giving clarity and certainty, and flexible at the same time.

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[David Chadwick]

Apologies for the preview.

[Dr Spencer]

If I might just help a colleague, I think the grouping and selection of amendments has changed, so the hon. Member for Brecon, Radnor and Cwm Tawe may have the previous iteration.

[The Chair]

That is very helpful. Thank you.

Amendment 13 agreed to.

Clause 7, as amended, ordered to stand part of the Bill.

Clause 8

Duties of relevant digital service providers

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[David Chadwick]

Surely, we cannot pass a cyber-security and resilience Bill that ignores a crime that affects thousands of people. We know that cyber-security criminals across the world attack individuals to enable themselves to get into systems. Families are losing life savings, and small businesses are shutting down because of this epidemic.

The Government often treat fraud as a policing issue, but the amendment would establish that it should be regarded as a cyber-security issue that needs action at the national security level. By amending regulation 12(1) of the NIS regulations, we place a legal duty on digital providers to identify these vulnerabilities proactively. If we mandate that providers manage fraud risks before an incident occurs, we will reduce the number of victims and the devastation caused to livelihoods. We cannot claim to protect our digital economy while ignoring the billions of pounds lost to scams.

[Dr Spencer]

Clause 8 provides a new definition of “relevant digital service” and makes it clear that this category includes online marketplaces, online search engines and cloud computing services. The definition of “relevant digital service provider” is updated to encompass all entities providing a relevant digital service in the UK, regardless of whether they are established here. Entities designated as critical suppliers are excluded from the definition to avoid duplication of duties and regulatory oversight from sector-specific competent authorities.

However, the definition excludes from scope of regulation relevant digital service providers subject to public authority oversight, unless they derive over half their income from commercial activities. The exclusion of organisations overseen by public authorities also applies in relation to relevant managed service providers.

In many respects, clauses 7 and 8 provide necessary updates to reflect the changing nature and use of vital digital services. Once again, including within the scope of regulation companies that deliver services to the UK but are established or headquartered elsewhere helps to ensure that those companies report cyber-security incidents to UK authorities, rather than just authorities in their home states. That means that UK regulators and law enforcement are equipped with the most comprehensive knowledge of emerging threats.

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[Bradley Thomas]

Given the blurring of boundary lines between cyber-attacks and financial crime, I can see the compelling reasons why the amendment has been tabled, but does the shadow Minister agree and acknowledge that fraud detection often requires a different skillset from standard network security, so it is important to strike the right balance?

[Dr Spencer]

I broadly agree. This is one of those difficult areas where there can be overlap. I have sympathy with the argument that it is important to use any opportunity, and in particular this Bill, to raise fraud.

We focus on financial fraud, but this area is not limited to that, especially when we think about other malicious operators, and about ransomware and hacktivism, where the boundaries are particularly blurred. In a situation where a fraudulent operator, service, provider or organisation has material, whether on social media or subject to search engines, and the police or other competent authorities have flagged it to the provider as fraudulent—as illegal criminal activity—what duties does that provider have to remove it or take it down? Is that something that the Minister is aware of? Has he looked into it, and what is the Government’s plan to crack down on that activity?

[Kanishka Narayan]

I thank the hon. Member for Brecon, Radnor and Cwm Tawe for tabling amendment 25, which would amend the duties for RDSPs in the NIS regulations. I empathise with the source of his concern about fraud; I think many of us in the House know and feel that concern, through either our personal experience or that of our constituents.

That said, the security duties within NIS require RDSPs to identify and take steps to manage the full spectrum of risks posed to the security of their systems. They must prevent and mitigate relevant incidents, regardless of what the threats are or where they emanate from. That includes taking an all-hazards risk-based approach. Entities must manage risks to cyber-security, physical security and broader operational resilience. “Security” includes the ability to resist any action that may compromise the availability, authenticity, integrity or confidentiality of those systems, including risks that may arise from fraud. I caution against highlighting only one particular vector of risk in the clause; that is unnecessary and would not reflect the full range of risks each RDSP faces.

Further, while the Bill clarifies the high-level duty to manage risks, secondary legislation will give further detail on the security and resilience requirements. Guidance and the code of practice will give further detail still on the types of risks to consider. For that reason, I kindly ask the hon. Gentleman to consider withdrawing the amendment.

The shadow Minister asked about the Government’s treatment of fraud, particularly when it has been found on a platform and the authorities have asked that platform to take it down. The Government made a clear commitment in our manifesto to introduce a new fraud strategy, and the Home Office, as the lead Department, has been working at pace to engage deeply in making that an effective reality.

Alongside that, in my wider role in online safety, I am conscious that fraud is a fundamental area of content in which platforms have to look at where it crosses the border into illegality, as it may well do in the instance the shadow Minister described. That has been a central focus since the illegal content duties came into play last year. I believe that such instances are well covered by the pieces of legislation that I have just mentioned. The Bill is clearly more focused on critical national infrastructure and its exposure to network and information systems.

Cyber Security and Resilience (Network and Information Systems) Bill (Second sitting)

Ben Spencer Excerpts

Committee stage
Tuesday 3rd February 2026 Public Bill Committees

[The Chair]

Good afternoon. We will now hear oral evidence from Ian Hulme, the interim executive director of regulatory supervision and director of regulatory assurance for the Information Commissioner’s Office; Natalie Black, group director for infrastructure and connectivity for Ofcom; and Stuart Okin, director of cyber regulation and artificial intelligence for Ofgem. We need to stick to the timings in our programme order, so we have until 2.40 pm for this session. Could the witnesses please introduce themselves briefly before we hand over for questions?

Ian Hulme: Good afternoon. My name is Ian Hulme, and I am interim executive director of regulatory supervision at the ICO.

Natalie Black: Good afternoon. I am Natalie Black, and I am group director for infrastructure and connectivity at Ofcom.

Stuart Okin: My name is Stuart Okin; good afternoon. I am the director for cyber regulation and artificial intelligence at Ofgem.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Q38 Thank you for giving your time this afternoon. I have a couple of questions, which I will deal with in one go. The first is for Natalie. Ofcom’s role in cyber-security regulations will be expanded significantly under the Bill. What preparation has Ofcom undertaken to ensure it has sufficient capacity for effective oversight and, where necessary, enforcement in relation to its new regulatory obligations?

My second question is jointly for Ian and Stuart, from the ICO and Ofgem. Some industry stakeholders have expressed concern about low levels of incident reporting and enforcement under the NIS1—network and information systems—regs. How will your respective approaches to regulation change as a result of this Bill, to ensure that it is implemented and that cyber-resilience is improved across the sectors you are responsible for regulating?

Natalie Black: I will kick off. We have some additional responsibilities, building on the NIS requirements, but the data centre aspect of the Bill is quite a substantial increase in responsibilities for us. It is worth emphasising that we see that as a natural evolution of our responsibilities in the sector. Communications infrastructure is evolving incredibly quickly, as you will be well aware, and data centres are the next big focus. In terms of preparations, we are spending this time getting to know the sector and making sure we have the right relationships in place, so that we do not have a standing start. I have done a number of visits, for example, to hear at first hand from industry representatives about their concerns and how they want to work with us.

We are also focusing on skills and recruitment. We already have substantial cyber-security responsibilities in the communications infrastructure sector. We are building on the credibility of the team, but we are focused on making sure we continue to invest in them. About 60% of the team already come from the private sector. We want that to continue going forward, but we are not naive to how challenging it is to recruit in the cyber-security sector. For example, we are working with colleagues from the National Cyber Security Centre, and looking at universities it is accrediting, to see how we can recruit directly using those kinds of opportunities.

Ian Hulme: On incident reporting, the thresholds in the existing regulations mean that levels are very low. Certainly, the reports we see from identity service providers do not meet those thresholds. I anticipate that we will see more incidents reported to us. With our enhanced regulatory powers and the expanded scope of organisations we will be responsible for, I anticipate that our oversight will deepen and we will have more ability to undertake enforcement activity. Certainly from our perspective, we welcome the enhanced reporting requirements.

Stuart Okin: To pick up on the incident side of things, I agree with Ian. The thresholds will change. With the new legislation, any type of incident that could potentially cause an issue will obviously be reported, whereas that does not happen today under the NIS requirements.

On enforcement, in seven years we have used all the enforcement regimes available to us, including penalties, and we will continue to do so. We absolutely welcome the changes in the Bill to simplify the levels and to bring them up, similar to the sectorial powers that we have today.

[Chris Vince (Harlow) (Lab/Co-op)]

Q I declare an interest. My father-in-law is Professor Robin Bloomfield, a professor of software and system dependability at City St George’s, University of London, and I have a large data centre in my constituency. My question is probably shorter than that. Why is it important to give regulators flexibility to implement guidance for the sectors they cover?

Stuart Okin: In the energy sector, we tend to use operational technology rather than IT systems. That might mean technology without a screen, so an embedded system. It is therefore important to be able to customise our guidance. We do that today. We use the cyber assessment framework as a baseline, and we have a 335-page overlay on our website to explain how that applies to operational technology in our particular space. It is important to be able to customise accordingly; indeed, we have added physical elements to the cyber assessment framework, which is incredibly important. We welcome that flexibility being maintained in the Bill.

Ian Hulme: Just to contrast with colleagues from Ofcom and Ofgem, ICO’s sector is the whole economy, so it is important that we are able to produce guidance that speaks to all the operators in that sector. Because our sector is much bigger, we currently have something like 550 trust service providers registered, and that will grow significantly with the inclusion of managed service providers. So guidance will be really important to set expectations from a regulatory perspective.

Natalie Black: To round this off, at the end of the day we always have to come back to the problem we are trying to solve, which is ensuring cyber-security and resilience. As you will have heard from many others today, cyber is a threat that is always evolving. The idea that we can have a stagnant approach is for the birds. We need to be flexible as regulators. We need to evolve and adapt to the threat, and to the different operators we will engage with over the next couple of years. Collectively, we all appreciate that flexibility.

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[Tim Roca]

Q Is there anything that you would have preferred to see in the primary legislation, or do you think secondary legislation affords industry and Government flexibility?

Ian Hulme: There is a balance to be struck. When something is written on the face of the Bill and things change—and we know that this is a fast-moving sector—it makes it incredibly difficult to change things. There is a balance to be struck between primary and secondary, but what we are hearing and saying is that more precision around some of the definitions will be critical.

Natalie Black: I strongly agree with Ian. A regulator is only as good as the rules that it enforces. If you want us to hold the companies to account, we need to be absolutely clear on what you are asking us to do. The balance is just about right in terms of primary and secondary, particularly because the secondary vehicle gives us the opportunity to ensure that there is a lot of consultation. The Committee will have heard throughout the day—as we do all the time from industry—that that is what industry is looking for. They are looking for periods of business adjustment—we hear that loud and clear—and they really want to be involved in the consultation period. We also want to be involved in looking at what we need to take from the secondary legislation into codes of practice and guidance.

[Dr Spencer]

Q Natalie, I am going single out Ofcom, which has a lot on its plate at the moment, particularly when it comes to the implementation of the Online Safety Act 2023 and all its other duties. Are you set up to administer your duties under the Bill? Are your resources siloed, given Ofcom’s competing considerations, particularly over the next few years?

Natalie Black: That is a great question, and I am not at all surprised that you have asked it, given everything that is going on at the moment. As well as being group director for infrastructure and connectivity, I am also the executive member of the board, sitting alongside our chief executive officer, so from first-hand experience I can say that Ofcom really recognises how fast technology is changing. I do not think there is another sector that is really at the forefront of change in this way, apart from the communications sector. There are a lot of benefits to being able to sit across all that, because many of the stakeholders and issues are the same, and our organisation is learning to evolve and adapt very quickly with the pace of change. That is why the Bill feels very much like a natural evolution of our responsibility in the security and resilience space.

We already have substantial responsibilities under NIS and the Telecommunications (Security) Act 2021. We are taking on these additional responsibilities, particularly over data centres, but we already know some of the actors and issues. We are using our international team to understand the dynamics that are affecting the Online Safety Act, which will potentially materialise in the security and resilience world. As a collective leadership team, we look across these issues together. The real value comes from joining the dots. In the current environment, that is where you can make a real difference.

[Dr Spencer]

Q That sounds slightly like an argument for having a single regulator, as opposed to multiple sector regulators. I apologise if I am putting words into your mouth.

Natalie Black: That is definitely not what I am saying. You can cut the cake in many different ways. From where I sit—from my experience to date—you need specific sector regulators because you need regulators that understand the business dynamics, the commercial dynamics, the people dynamics and the issues on a day-to-day basis.

We have many people who have worked at Ofcom for a very long time, and who know the history and have seen these issues before. When it comes to threats, which is ultimately what we are dealing with—cyber-security is a threat—it is cross-cutting. It adapts, evolves and impacts in different ways. The knack is having a sector regulator that really understands what is going on. That means that when you are dealing with cyber-incidents, you understand the impact on real people and businesses, and ultimately you can do something more quickly about it.

[Dr Spencer]

Q From all three of your perspectives, are you quite clear about where your individual institutional responsibilities lie? Is there clear water between the organisations? When Ian Levy from Amazon gave evidence this morning, I was struck when he said that Amazon is regulated in the cyber-security space by four regulators. Is the separation of duties and responsibilities clear? Is there a risk that the Secretary of State’s ability to designate critical security risks will muddy the water a bit?

Stuart Okin: We have a clear understanding of the responsibilities within Ofgem. We are the joint competent authority with the Department for Energy Security and Net Zero. The Department does the designation and instant handling, and we do all the rest of the operations, including monitoring, enforcement and inspections. We understand our remit with NCSC. GCHQ is part of the cyber-security incident response team; it is ultimately responsible there.

Going back to your main concern, we are part of an ecosystem. We have to understand where our lines are drawn, where NCSC’s responsibilities are and what the jobs are. To go back to us specifically, we can talk about engineering aspects, electrical engineering, gas engineering and the cyber elements that affect that, including technology resilience—not cyber. As long as we have clear gateways and communication between each other—and I think that the Bill provides those gateways—that will also assist, but there are clear lines of responsibilities.

Natalie Black: It is clear that there is work to do to get in the same place for the Bill. Exactly as Stuart said, the information gateways will make a massive difference. It is too hard, at the moment, to share information between us and with the National Cyber Security Centre. The fact that companies will have to report within 24 hours not only to us but to the NCSC is very welcome.

To return to my earlier point, we think that there is a bit of work for DSIT to do to help to co-ordinate this quite complicated landscape, and I think that industry would really welcome that.

Ian Hulme: I agree with colleagues. From an ICO perspective, we see our responsibilities as a NIS competent authority as complementary to our role as a data protection regulator. If you want secure data, you have to have secure and resilient networks, which are obviously used to process data. We see it as a complementary set of regulations to our function as a data protection regulator.

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

Q I would like to continue the line of questioning on the importance of having a single regulator. Other countries, such as the Netherlands, have recently merged their cyber-security organisations. The Bill introduces expanded but sector-specific reporting requirements, to apply to regulators across different sectors. Do you believe that this fragmented reporting landscape risks preventing Government and regulators from forming a coherent a cross-sector picture of emerging threats—particularly when foreign actors may be probing multiple systems simultaneously? If so, what measures could be taken to mitigate that risk?

It strikes me that, if one of the things that this legislation is to guard against is pre-positioning, and there are 14 parallel reporting systems in place, it could be the case that those pre-positioning attacks are not picked up as co-ordinated attacks from another nation state or organisation, because they are not pulled together in time.

Natalie Black: I point to my earlier remarks about information sharing. You are right: that is one of the great benefits of the Bill. To be able to do more, particularly when it comes to pre-positioning attacks, is really important. You will have heard from the NCSC, among others, that that is certainly a threat that we are seeing more and more of.

At the moment, it is too difficult to share information between us. The requirement to have an annual report to the NCSC is a good mechanism for consolidating what we are all seeing, and then for the NCSC to play the role of drawing conclusions. It is worth emphasising that Ofcom is not an operational organisation; we are a regulator. We look to the NCSC to provide threat leadership for what is going on across the piece. I think that that answers your question about where it all comes together.

Stuart Okin: I fully support that. The NSCS will be the hub for that type of threat intel and communications, in terms of risks such as pre-positioning and other areas. The gateways will help us to communicate.

Ian Hulme: Bringing it back to the practicalities of instant reporting, you said that there are potentially 14 lines of incident reporting because there are 14 competent authorities. How that can be consolidated is something to be explored. Put yourself in a position of an organisation that is having to make a report: there needs to be clarity on where it has to make it to and what it needs to report.

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[Dr Spencer]

Q Thank you for coming to give evidence this afternoon. I have two questions. First, what more could the Government be doing to make regulated sectors aware of the risks you have just laid out and what they can do to address them?

Secondly, it has been reported recently that communications of senior Government aides were hacked by Chinese state affiliates between 2021 and 2024. In view of that threat to telecoms networks, what are the potential cyber-risks to communications infrastructure that you see arising from the intended location of China’s super-embassy in the City of London?

Chung Ching Kwong: On the first question, about what can be done to help sectors understand the risks, education is paramount. At this point, we do not have a comprehensive understanding of what kind of risks state actors like China pose. We are very used to the idea that private entities are private entities, because that is how the UK system works; we do not see that organisations, entities or companies associated with China or the Chinese state are not independent actors as we would expect, or want to expect.

There is a lot of awareness-raising to be done and guidance to be issued around how to deal with these actors. There is a lot of scholarly work that says that every part of Chinese society—overseas companies and so on—is a node of intelligence collection within the system of the CCP. Those things are very important when it comes to educating.

Also, the burden of identifying what is a national security risk and what is not should not be put on small and medium-sized businesses, or even big companies, because they are not trained to understand what the risks are. If you are not someone specialising in the PLA and a lot of other things academically, it would be very difficult to have to deal with those things on a day-to-day basis and identify, “That’s a threat, and that’s a threat.”

Sorry, what was the second question?

[Dr Spencer]

Q It was about China’s super-embassy in London. What cyber-security risks do you think that poses, given your experience and background?

Chung Ching Kwong: There is not a lot of publicly available information on the sensitive cabling that is around the area, so I cannot confidently say what is really going to happen if they start to build the embassy and have such close contact with those cables. The limit of this Bill when it comes to the Chinese embassy is that it cannot mitigate the risks that are posed by this mega-embassy in the centre of London, because it regulates operators and not neighbours or any random building in the City. If the embassy uses passive interception technology to harvest data from local wi-fi or cellular networks, no UK water or energy company is breached. There is no breach if they are only pre-positioning there to collect information, instead of actually cutting off the cables, so when they do cut off the cables, it will be too late. There will be no report filed under the Bill, even if it is under the scope of the Bill when it comes to regulation. The threat in this case is environmental and really bypasses the Bill’s regulatory scope.

[Dave Robertson (Lichfield) (Lab)]

Q Thank you for coming in to talk to us this afternoon. The Bill includes a couple of backstop powers for the Government to compel information and things like that. Are those powers sufficient to guarantee national security?

Chung Ching Kwong: I think that to a certain extent they will. For hackers or malicious actors aiming for financial gain with more traditional hacking methods, it will definitely do a job in protecting our national security. But the Bill currently views resilience through an IT lens. It is viewing this kind of regulatory framework as a market regulatory tool, instead of something designed to address threats posed by state-sponsored actors. It works for cyber-criminals, but it does not work for state actors such as China, which possess structural leverage over our infrastructure.

As I said before, we have to understand that Chinese vendors are legally obliged to compromise once they are required to. The fine under the Bill is scary, but not as scary as having your existence threatened in China—whether you still have access to that market or you can still exist as a business there. It is not doing the job to address state-sponsored hackers, but it really does help when it comes to traditional hacking, such as phishing attempts, malware and those kinds of things.

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[The Chair]

We will now hear evidence from Professor John Child, professor of criminal law at the University of Birmingham and co-founding director of the Criminal Law Reform Now Network. For this session, we have until 3.20 pm.

[Dr Spencer]

Q Thank you for coming to give evidence this afternoon. I have a couple of questions. First, how can industry and cyber-security researchers collaborate more effectively to increase cyber-resilience in the network and information systems of regulated sectors? Secondly, and building on that, are there any model schemes or arrangements for reporting risks to affected companies that could incentivise legitimate research activities?

Professor John Child: My specialism is in criminal law, so this is a bit of a side-step from a number of the pieces of evidence you have heard so far. Indeed, when it comes to the Bill, I will focus on—and the group I work for focuses on—the potential in complementary pieces of legislation, and particularly the Computer Misuse Act 1990, for criminalisation and the role of criminalisation in this field.

I think that speaks directly to the first question, on effective collaboration. It is important to recognise in this field, where you have hostile actors and threats, that you have a process of potential criminalisation, which is obviously designed to be effective as a barrier. But the reality is that, where you have threats that are difficult to identify and mostly originating overseas, the actual potential for criminalisation and criminal prosecution is slight, and that is borne out in the statistics. The best way of protecting against threats is therefore very much through the use of our cyber-security expertise within the jurisdiction.

When we think about pure numbers, and the 70,000-odd cyber-security private experts, compared with a matter of hundreds in the public sector, police and others, better collaboration is absolutely vital for effective resilience in the system. Yet what you have at the moment is a piece of legislation, the Computer Misuse Act, that—perfectly sensibly for 1990—went with a protective criminalisation across-the-board approach, whereby any unauthorised access becomes a criminal offence, without mechanisms to recognise a role for a private sector, because essentially there was not a private sector doing this kind of work at the time.

When we think about potential collaboration, first and foremost for me—from a criminal law perspective—we should make sure we are not criminalising effective cyber-security. The reality is that, when we look at the current system, if any authorised access of any kind becomes a criminal offence, you are routinely criminalising engagement in legitimate cyber-security, which is a matter of course across the board. If you are encouraging those cyber-security experts to step back from those kinds of practices—which may make good sense—you are also lessening that level of protection and/or outsourcing to other jurisdictions or other cyber-security firms, with which you do not necessarily have that effective co-operation, reporting and so on. That is my perspective. Yes, you are absolutely right, but we now have mechanisms in place that actively disincentivise that close collaboration and professionalisation.

[Sarah Russell]

Q Professor Child, I note that you are very supportive of legal reform in quite a number of areas. With emphasis on the Computer Misuse Act, surely the reality is that the Crown Prosecution Service will never conclude that it is in the best interests of the country to prosecute any of the behaviours that people are concerned about, which we recognise as positive and helpful. Is there a need for legal reform?

Professor John Child: Yes. It is not the easiest criminal law tale, if you like. If there were a problem of overcriminalisation in the sense of prosecutions, penalisation, high sentences and so on, the solution would be to look at a whole range of options, including prosecutorial discretion, sentencing or whatever it might be, to try to solve that problem. That is not the problem under the status quo. The current problem is purely the original point of criminalisation. Think of an industry carrying out potentially criminalised activity. Even if no one is going to be prosecuted, the chilling effect is that either the work is not done or it is done under the veil of potential criminalisation, which leads to pretty obvious problems in terms of insurance for that kind of industry, the professionalisation of the industry and making sure that reporting mechanisms are accurate.

We have sat through many meetings with the CPS and those within the cyber-security industry who say that the channels of communication—that back and forth of reporting—is vital. However, a necessary step before that communication can happen is the decriminalisation of basic practices. No industry can effectively be told on the one hand, “What you are doing is vital,” but on the other, “It is a criminal offence, and we would like you to document it and report it to us in an itemised fashion over a period of time.” It is just not a realistic relationship to engender.

The cyber-security industry has evolved in a fragmented way both nationally and internationally, and the only way to get those professionalisation and cyber-resilience pay-offs is by recognising that the criminal law is a barrier—not because it is prosecuting or sentencing, but because of its very existence. It does not allow individuals to say, “If, heaven forbid, I were prosecuted, I can explain that what I was doing was nationally important. That is the basis on which I should not be convicted, not because of the good will of a prosecutor.”

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[Dave Robertson]

Q That is a really helpful international comparator on where others are with the criminal law. Is there any correlation between that and the ability of people within those jurisdictions to act and work in this space? In the UK, we have seen a significant increase in the number of people working in this area since 1990. That is the real thing for me: whether we can prove that, internationally, there is a significant difference between jurisdictions that are minimalist or maximalist. If one of them is encouraging more people to work in this area, and therefore has a wider pool of talent, are they able to protect critical infrastructure better? Does that correlation exist?

Professor John Child: Yes. As I understand it, it does. This is part of the reason, incidentally, why my organisation, which focuses very much on criminal law aspects, ended up doing some collaborative work with the CyberUp campaign. That is because, from the industry perspective, they can do that kind of business modelling in a way that we do not. Whereas we can make the case for sensible criminal law reform, they can talk about how that reform translates into both the security environment and the commercial environment. Their perspective on this is, first, that we can see that there is already outsourcing of these kinds of services, particularly to the US, Israel and other more permissive jurisdictions. That is simply because, if you are a cyber-security expert in one of those jurisdictions, you are freer to do the work companies would like you to do to make sure their systems are safe here.

There are also the sectoral surveys and so on, and the predictions about what it is likely to do to the profession if you allow it to do these kinds of services in this jurisdiction. That is about the security benefits, but they are also talking about something like a 10% increase in the likely projection of what cyber-security looks like in this jurisdiction—personnel, GDP and so on.

[Dr Spencer]

Q What are the arguments against amending the CMA, and how would you deal with them?

Professor John Child: There are obviously a number. It is always more comfortable when you have a beginning point of criminalisation. The argument to decriminalise in an environment where you want to protect against threats is sometimes a slightly unintuitive sell. Is the criminalisation that we have doing the necessary work in terms of actually fighting the threats? To some extent, yes, but it is limited. Is it doing harms? There is an argument to say that it is doing harms.

This comes back to the point that was made earlier, which was perfectly sensible. When you speak to the CPS and others, their position as prosecutors is to say, “Very few people are being prosecuted, and we certainly don’t want to be prosecuting legitimate cyber-security experts, so there is no problem.” Admittedly, that means there is no problem in terms of actual criminalisation and prosecution, but that is the wrong problem. If you focus on the problem being the chilling effect of the existence of the criminalisation in the first place, you simply cannot solve that through prosecutorial discretion, and nor should you, when it comes to identifying what a wrong is that deserves to be criminalised. You certainly cannot resolve it through sentencing provisions.

The only way that you can sensibly resolve this is either by changing the offence—that is very difficult, not least because, from a position of criminalisation, it might be where other civil jurisdictions begin—or by way of defence, which realistically is the best solve from the point we are at now. If you have a defence that can be specifically tailored for cyber-security and legitimate actors, you can build in reverse burdens of proof. You can build in objective standards of what is required in terms of public interest.

The point here is that the worry is one of bad actors taking advantage. The reality is that that is very unlikely. The idea that the bad actors we identify within the system would be able to demonstrate how they are acting in the public best interest is almost ridiculous. Indeed, the prospect of better threat intelligence, better securities and so on provides more information and better information-sharing to the NCSC and others and actually leads to more potential for prosecution of nefarious actors rather than less.

It is a more complicated story than we might like in terms of a standard case for changing the criminal law, but it is nevertheless an important one.

[The Chair]

That brings us to the end of the time allotted to ask questions. On behalf of the Committee, I thank our witness for his evidence. We move on to our next panel.

Examination of witness

Detective Chief Superintendent Andrew Gould gave evidence.

[The Chair]

We will now hear oral evidence from Detective Chief Superintendent Andrew Gould, programme lead for the National Police Chiefs’ Council cyber-crime programme. For this session, we have until 3.40 pm. I call Dr Ben Spencer.

[Dr Spencer]

Q Thank you very much for coming in to give us evidence this afternoon, and thank you for your service. I have two questions. Who are the main threat actors in cyber-attacks on UK networks and information systems—what do they break down into, in terms of state actors, affiliates and criminal gangs?

Secondly, on ransomware attacks, you will know that the Government review states that ransomware is

“the greatest of all serious and organised cybercrime threats”.

In your view, what is the scale of that threat and what sectors and businesses are the primary targets?

DCS Andrew Gould: To take the actors first, they are probably quite well known, in terms of the general groupings. Yes, we have our state actors—the traditional adversaries that we regularly talk about—and they generally offer very much a higher-end capability, as you will all be aware.

The next biggest threat group is organised crime groups. You see a real diversity of capability within that. You will see some that are highly capable, often from foreign jurisdictions—Russian jurisdictions or Russian-speaking. The malware developers are often the more sophisticated as service-type offerings. We see more and more ransomware and other crime types almost operating as franchises—“Here is the capability, off you go, give us a cut.” Then they have less control over how those capabilities are used, so we are seeing a real diversification of the threat, particularly when it comes to ransomware.

Then, where you have that proximity to state-directed, if not quite state-controlled—that crossover between some of those high-end crime groups and the state; I am thinking primarily of Russia—it is a lot harder to attribute the intent behind an attack. There is a blurring of who was it and for what purpose was it done, and there is that element of deniability because it is that one further step away.

Moving back down the levels of the organised crime groups, you have a real profusion of less capable actors within that space, from all around the world, driving huge volumes, often using quite sophisticated tools but not really understanding how they work.

What we have seen is almost like a fragmentation in the criminal marketplace. The barrier to criminal entry is probably lower than it has ever been. You can download these capabilities quite readily—you can watch a tutorial on YouTube or anywhere else on how to use them, and off you go, even if you do not necessarily understand the impact. We certainly saw a real shift post pandemic from traditional criminals and crime groups into more online crime, because it was easier and less risky.

You look more broadly at hacktivists, terrorists—who are probably a lot less capable; they might have the intent but not so much the capability—and then the group that are sometimes slightly patronisingly described as script kiddies. These are young individuals with a real interest in developing their skills. They have an understanding that what they are doing is wrong, but they are probably not financially or criminally motivated. If they were not engaging in that kind of cyber-crime, they probably would not be engaging in other forms of criminality, but they can still do a lot of damage with the tools they can get their hands on, given that so many organisations seem to struggle to deliver even a basic level of cyber-resilience and cyber-security.

One of the things that we really noticed changing over the last 18 months is the diversification of UK threats. Your traditional UK cyber-criminal, if there is such a thing, is primarily focused on hacking for personal benefit, ransomware and other activity. Now we are seeing a diversification, and more of a hybrid, cross-organised crime threat. There are often two factors to that. We often hear it described in the media or by us within law enforcement publicly as the common threat—this emerging community online—otherwise known as Scattered Spider.

There, we are seeing two elements to those sorts of groups. You see an element of maybe more traditional cyber-skills engaged in hacking or using those skills for fraud, but we also see those skills being used for Computer Misuse Act offences, in order to enable other offences. One of the big areas for that at the moment that we see is around intimate image abuse. We see more and more UK-based criminals hacking individuals’ devices to access, they hope, intimate images. They then identify the subject of those intimate images, most predominantly women, and then engage in acts of extortion, bullying or harassment. We have seen some instances of real-world contact away from that online contact.

Think of the scale of that and the challenge that presents to policing. I can think of cases in cyber-crime unit investigations across the country where you have got a handful of individuals who have victimised thousands of women in the UK and abroad. You have got these small cyber-crime units of a handful of people trying to manage 4,000 or 10,000 victims.

It is very difficult and very challenging, but the flipside of that is that, if they are UK-based, we have a much better chance of getting hold of them, so we are seeing a lot more arrests for those cross-hybrid threats, which is a positive. There is definitely an emerging cohort that then starts to blend in with threats like Southport and violence-fixated individuals. There seems to be a real mishmash of online threat coming together and then separating apart in a way that we have never seen historically. That is a real change in the UK threat that is driving a lot of policing activity.

Turning to your ransomware question, what is interesting, in terms of the kinds of organisations that are impacted by ransomware, a lot of the ransomware actors do not want to come to notice for hitting critical national infrastructure. They do not want to do the cloning of pipelines. They do not want to be taking out hospitals and the NHS. They know they will not get paid if they hit UK critical national infrastructure, for starters, so there is a disincentive, but they also do not want that level of Government or law enforcement attention.

Think of the disruptive effect that the UK NCA and policing had on LockBit the year before last. LockBit went from being the No. 1 ransomware strain globally to being out of the top 10 and struggling to come back. We saw a real fragmentation of the ransomware market post that. There is no dominant strain or group within that that has emerged to cover that. A lot of those groups that are coming into that space may be a bit less skilled, sophisticated and successful.

The overall threat to organisations is pretty much the same. The volume is the volume, but it is probably less CNI and more smaller organisations because they are more vulnerable and it is less likely to play out very publicly than if there is a big impact on the economy or critical national infrastructure. As such, there is probably not the level of impact in the areas that people would expect, notwithstanding some of the really high-profile incidents we had last year.

[David Chadwick]

Q Thank you for joining us. You mentioned frauds. It is a fact that criminals across the world are targeting British citizens every day. In Dyfed-Powys, over £500,000 was lost to online fraud in 2023-24, and elderly victims are losing £7,900 a day to fraud. Clearly, these attacks are coming from all over the world. Interpol recently arrested over 800 members of a global criminal network based in Nigeria. From your perspective, how effectively are UK police forces currently able to work with international partners to investigate and prosecute overseas criminals? What additional support from the Government would most improve your ability to mitigate online fraud from overseas?

DCS Andrew Gould: That is a really good question. The international jurisdiction challenge for us is huge. We know that is where most of the volumes are driven from, and obviously we do not have the powers to just go over and get hold of the people we would necessarily want to. You will not be surprised to hear that it really varies between jurisdictions. Some are a lot more keen to address some of the threats emanating from their countries than others. More countries are starting to treat this as more of a priority, but it can take years to investigate an organised crime group or a network, and it takes them seconds to commit the crime. It is a huge challenge.

There are two things that we could do more of better—these are things that are in train already. If you think about the wealth of cyber-crime, online fraud and so on, all the data, and a lot of the skills and expertise to tackle that sit within the private sector, whereas in law enforcement, we have the law enforcement powers to take action to address some of it.

With a recent pilot in the City funded by the Home Office, we have started to move beyond our traditional private sector partnerships. We are working with key existing partners—blockchain analytic companies or open-source intelligence companies—and we are effectively in an openly commercial relationship; we are paying them to undertake operational activity on our behalf. We are saying, “Company a, b or c, we want you to identify UK-based cyber-criminals, online fraudsters, money-laundering and opportunities for crypto-seizure under the Proceeds of Crime Act 2002”. They have the global datasets and the bigger picture; we have only a small piece of the puzzle. By working with them jointly on operations, they might bring a number of targets for us, and we can then develop that into operational activity using some of the other tools and techniques that we have.

It is quite early days with that pilot, but the first investigation we did down in the south-east resulted in a seizure of about £40 million-worth of cryptocurrency. That is off a commercial contract that cost us a couple of hundred grand. There is potential for return on investment and impact as we scale it up. It is a capability that you can point at any area of online threat, not just cyber-crime and fraud, so there are some huge opportunities for it to really start to impact at scale.

One of the other things we do in a much more automated and technical way—again funded by the Home Office—is the replacement of the Action Fraud system with the new Report Fraud system. That will, over the next year or so, start to ingest a lot of private sector datasets from financial institutions, open-source intelligence companies and the like, so we will have a much broader understanding of all those threats and we will also be able to engage in takedowns and disruptions in an automated way at scale, working with a lot of the communication service providers, banks and others.

Instead of the traditional manual way we have always been doing a lot of that protection, we can, through partnerships, start doing it in a much more automated and effective way at scale. Over time, we will be able to design out and remove a lot of the volume you see impacting the UK public now. That is certainly the plan.

--- Later in debate ---

[The Chair]

We will now hear oral evidence from Richard Starnes, chair of the information security panel for the Worshipful Company of Information Technologists. We have until 4 pm for this session.

[Dr Spencer]

Q Thank you, Richard, for giving evidence this afternoon. I have a couple of questions. First, in your view, was the regulatory enforcement regime under NIS1 effective, and does the Bill, as drafted, tackle those challenges? Secondly, could you explain how information sharing and analysis centres improve cyber-resilience in the sectors in which they currently operate?

Richard Starnes: The question about effectiveness is difficult to answer. There is the apparent effectiveness and the actual effectiveness. The reason I answer in that way is that you have regulators that are operating in environments where they may choose to not publicly disclose how they are regulating; it may be classified due to the nature of the company that was compromised, or who compromised the company. There may not necessarily be a public view of how much of that regulation is actually going on. That is understandable, but it has the natural downside of creating instances where somebody is being taken to task for not doing it correctly, but that is not exposed to the rest of the world. You do not know that it is happening, so the deterrent effect is not there.

Information sharing and analysis centres started in the United States 20 or 25 years ago, when different companies were in the same boat. The first one that I was aware of was the Financial Services ISAC, which comprises large entities—banks, clearing houses and so on—that share intelligence about the types of attacks that they are receiving internationally. They may be competing with one another in their chosen businesses, but they are all in the same boat with regard to being attacked by whatever entities are attacking them. Those have been relatively good at helping develop defences for those industries.

[Dr Spencer]

Q Do you think that would be helpful in this context?

Richard Starnes: Yes. We have FS-ISAC operating in the United Kingdom and in Europe, with all the major banks, but if you took this and replicated it on an industry-by-industry basis, particularly ones in CNI, that would be helpful. It would also help with information sharing with entities like NCSC and GCHQ.

[David Chadwick]

Q Thank you for joining us. Reporting of several recent cyber-attacks has one thing in common: there were often insufficient security measures in place. British Airways in 2018 is just one example. Reportedly, the average tenure of a chief information security officer is 18 months. From your perspective, what do CISOs need from the Bill to help strengthen their hand when they are saying to a board, “This is what I need to do to keep our organisation secure”?

Richard Starnes: On what you say about the 18-month tenure, one of the problems is stress. A lot of CISOs are burning out and moving to companies that they consider to have boards that are more receptive to what they do for a living. Some companies get it. Some companies support the CISOs, and maybe have them reporting to a parallel to the CIO, or chief information officer. A big discussion among CISOs is that having a CISO reporting to a CIO is a conflict of interest. A CISO is essentially a governance position, so you wind up having to govern your boss, which I would submit is a bit of a challenge.

How do we help CISOs? First, with stringent application of regulatory instruments. We should also look at or discuss the idea of having C-level or board-level executives specifically liable for not doing proper risk governance of cyber-security—that is something that I think needs to be discussed. Section 172 of the Companies Act 2006 states that you must act in the best interests of your company. In this day and age, I would submit that not addressing cyber-risk is a direct attack on your bottom line.

--- Later in debate ---

[The Chair]

We will now hear oral evidence from Brian Miller, head of IT security and compliance, and Stewart Whyte, data protection officer, both from NHS Greater Glasgow and Clyde and joining us online. For this session we have until 4.20 pm. Will the witnesses please introduce themselves for the record?

Brian Miller: Good afternoon, Chair. It is nice to see you all. I am Brian Miller and I head up IT security and compliance at NHS Greater Glasgow and Clyde. It is a privilege to be here, albeit remotely. I have worked at NHS Greater Glasgow and Clyde for four years. Prior to that, I was infrastructure manager at a local authority for 16 years and I spent 10 years at the Ministry of Defence in infrastructure management. I look at the Bill not only through the lens of working with a large health board, but from a personal perspective with a philosophy of “defenders win” across the entire public sector.

Stewart Whyte: Good afternoon, Chair, and everyone. My name is Stewart Whyte and I am the data protection officer at NHS Greater Glasgow and Clyde. I am by no means a cyber-security expert, but hopefully I can provide some insight into the data protection side and how things fit together.

[Dr Spencer]

Q Thank you for giving evidence to us. I want your help to get my head around what could fall under the Bill’s discretionary power on the designation of critical supply chain entities. Synnovis is used as the exemplar of why such a power is needed. From your perspective in the NHS, what do you think would come into scope? For example, would patient transport or taxis come under scope as critical for the delivery of your services? Would a hospital cleaner come under the scope of a critical supplier if the service was outsourced to a private sector organisation? Would food provision in your hospital come under scope? Would the provision of materials, medicines or medical devices provided by private companies come under scope? Would the provision of IT services—physical computers, not cloud services—come under scope? Would locum agencies come under scope? In fact, would any private provider not come under the scope as critical for the provision of services linked to your organisation’s IT system?

Brian Miller: That is a good question. Some of our colleagues mentioned the follow-up secondary legislation that will help us to identify those kinds of things. I suppose there is no difference from where we are at now. We would look at any provision of services from a risk management perspective and say what security controls apply. For example, would they be critical suppliers in terms of infrastructure and cyber-security? Does a cleaning service hold identifiable data? What are the links? Is it intrinsically linked from a technological perspective?

I mentioned looking at this through a “defenders win” lens. Yes, some of these technologies are covered. I saw some of the conversations earlier about local authorities not being in scope, but services are so intrinsically linked that they can well come into scope. It might well be that some of the suppliers you mentioned fall under the category of critical suppliers, but that might be the case just now. There might be provision of a new service for medical devices, which are a good example because they are unique and different compliance standards apply to them. For anything like that, where we stand just now—outside the Bill—we risk assess it. There is such an intrinsic link. A colleague on another panel mentioned data across the services; that is why Stewart is here alongside me. I look after the IT security element and Stewart looks after the data protection element.

[Dr Spencer]

Q Presumably, all suppliers are in some way linked to your IT systems to some degree. I know the NHS sometimes uses faxes still, but we do not live in a world where things are done by paper and pen—it is all integrated into IT systems.

Brian Miller: Sometimes, but sometimes not. I do not think we had any physical links with Synnovis, but it did work on our behalf. Emails might have been going back and forward, so although there were no physical connections, it was still important in terms of business email compromise and stuff like that—there was a kind of ancillary risk. Again, when things like that come up, we would look at it: do we have connections with a third party, a trusted partner or a local authority? If we do, what information do we send them and what information do we receive?

[Chris Vince]

Q Thank you for joining us remotely from Scotland. I have a question for Stewart about data protection. In my Harlow constituency we have just got a new electronic patient registration scheme; what risks do you see in the increased use of technology like that in the NHS? Does the Bill help to address some of the risks?

Stewart Whyte: Anything that increases or improves our processes in the NHS for a lot of the procured services that we take in, and anything that is going to strengthen the framework between the health board or health service and the suppliers, is welcome for me. One of our problems in the NHS is that the systems we put in are becoming more and more complex. Being able to risk assess them against a particular framework would certainly help from our perspective. A lot of our suppliers, and a lot of our systems and processes, are procured from elsewhere, so we are looking for anything at all within the health service that will improve the process and the links with third party service providers.

--- Later in debate ---

[Lincoln Jopp]

Q I want to make sure I have understood exactly. Is the regulator going to tell you who your operators of essential services are, or are you going to tell the regulator?

Brian Miller: I think we would work with the regulator, but we are looking for more detail in any secondary legislation that comes along. We have read what the designation of critical suppliers would be. I would look to work with the Scottish Health Competent Authority and colleagues in National Services Scotland on what that would look like.

Stewart Whyte: On how we would make that decision, from our perspective we are looking at what the supplier is providing and what sort of data they are processing on our behalf. From the NHS perspective, 90% of the data that we process will be special category, very sensitive information. It could be that, from our side, a lot of the people in the supply chain would fall into that designation, but for some other sectors it might not be so critical. We have a unique challenge in the NHS because of the service we provide, the effect that cyber-crime would have on our organisations, and the sensitivity of the data we process.

[Dr Spencer]

Q Your evidence is really helpful. To help with my understanding, if you look across all the suppliers in your service, are there any that you would not consider to be critical, such that if you clicked your fingers now and one of them disappeared, it would not have a material impact on your ability to maintain patient safety and deliver healthcare? Irrespective of the debate about size, what suppliers do you not determine to be critical?

Stewart Whyte: For me, it would be a slightly different assessment from Brian’s. We would be looking at anything where there is no processing of personal data. For me, that would not be a critical supplier from a data protection perspective. But there might be some other integration with NHS board systems that Brian might have concerns about. There is a crossover in terms of what we do, but my role is to look at how we manage data within the NHS. If there are suppliers where there is no involvement with identifiable data of either staff or patients, I would not see them as a critical supplier under this piece of legislation.

[Lincoln Jopp]

Q Brian, from your side, what about, say, PPE, gloves or blood? There must be other things that are non-data that are, nevertheless, essential services.

Brian Miller: I do not want to step out of my lane. There will be clinical stuff that absolutely would be essential. I would not be able to speak in any depth on that part of it; I purely look at the cyber element of it. As an organisation, we would be identifying those kinds of aspects.

In terms of suppliers, you are absolutely right. We have suppliers that supply some sort of IT services to us. If we are procuring anything, we will do a risk assessment—that might be a basic risk assessment because it is relatively low risk, it might be a rapid risk assessment, or it may be a really in-depth assessment for someone that would be a critical supplier or we could deem essential—but there are absolutely suppliers that would not fall under any of that criteria for the board. The board is large in scale, with 40,000 users. It is the largest health board in the country.

[Dr Spencer]

Q Do you have integration with your local primary care IT systems? For example, GPs have the old EMIS system and so on; is that integrated into your network? From your perspective, would that be a critical supplier that would need to be regulated?

Stewart Whyte: Yes. There is a lot of information sharing between acute services and primary care via integrated systems. We send discharge letters and information directly to GP practices that then goes straight into the patient record with the GP. There is a lot of integration there, yes.

[Dr Spencer]

Q Does that also exist for local government? Does adult social care and so on have that integration too?

Stewart Whyte: Yes, there is integration between ourselves and the local authorities.

[The Chair]

If there are no further questions from Members, I thank witnesses for their evidence. We will move on to the next panel.

Examination of Witnesses

Chris Parker MBE and Carla Baker gave evidence.

[The Chair]

We will now hear oral evidence from Chris Parker, director of government strategy at Fortinet and co-chair of the UK cyber resilience committee at techUK, and Carla Baker, senior director of government affairs in the UK and Ireland at Palo Alto Networks. For this session, we have until 4.50 pm.

[Dr Spencer]

Q Thanks for coming to give evidence this afternoon. I have two questions—one for each of you. Chris, from Fortinet’s perspective, what more do you think the Government can do to support SMEs to improve their cyber-resilience, while at the same time ensuring that the burden of regulation remains proportionate, particularly on smaller companies?

Carla, from the Palo Alto Networks perspective, what are your views on the changes to the incident reporting regime under the Bill? Will the approach help or hinder regulators in identifying and responding to the most serious threats quickly?

Chris Parker: I should point out that Carla is also co-chair of the cyber resilience committee, so you have both co-chairs here today.

As large cyber companies, we are very proud of one thing that is pertinent to the sector that may not be clear to everybody outside. I have worked in many sectors, and this is the most collaborative—most of it unseen—and sharing sector in the world. It has to be, because cyber does not respect borders. When we go to the most vulnerable organisations, which one would expect cannot afford things and therefore there must be a function of price, such as SMEs—I was an SME owner in a previous life—that is very dear to us. With the technology that is available, what is really good news is that when people buy cyber-security for their small business—in the UK or anywhere in the world—they are actually buying the same technology; it is effectively just a different engine size in most cases. There are different phases of technology. There is the latest stuff that is coming in, which they may not be getting into yet. However, the first thing to say is that it is a very fair system, and pricing-wise, it is a very fair system indeed for SMEs.

The second point is about making sure we are aware of the amount of free training going on across the world, and most of the vendors—the manufacturers—do that. Fortinet has a huge system of free training available for all people. What does that give? It is not just technical training for cyber-security staff; it is for ordinary people, including administrative workers and the people who are sometimes the ones who let the bad actor in. There are a lot of efforts. There is a human factor, as well as technological and commercial factors.

The other thing I would like to mention is that the cyber resilience committee, which Carla and I are lucky to co-chair, is elected. We have elected quite a large proportion of SME members. There is also a separate committee run by techUK. You heard from Stuart McKean earlier today, and he is one of the co-chairs, or the vice chair, of that committee.

Carla Baker: On incident reporting, as I am sure you are aware, the Bill states that organisations must report an incident if it is

“likely to have an impact”.

Our view, and I think that of techUK, is that the definition is far too broad. Anything that is likely to cause an impact could be a phishing email that an organisation has received. Organisations receive lots and lots of spoof emails.

I will give an example. Palo Alto Networks is one of the largest pure-play cyber-security companies. Our security operations centre—the hub of our organisation—processes something like 90 billion alerts a day. That is just our organisation. Through analysis and automation, the number is whittled down to just over 20,000. Then, through technology and capabilities, it is further whittled down, so that we are analysing about 75 alerts.

You can equate it to a car, for example. If you are driving and see a flashing yellow light, something is wrong. That is like 20,000 alerts. It is then whittled down to about 75, so we would potentially have to report up to 75 incidents per day, and that is just one organisation. There are a lot more. The burden on the regulator would be massive because there would be a lot of noise. It would struggle to ascertain what is the real problem—the high-risk incidents that impact the UK as a whole—and the noise would get in the way of that.

We have come up with a suggestion, an amendment to the legislation, that would involve a more tiered approach. There would be a more measurable and proportionate reporting threshold, with three tiers. The first is an incident that causes material service disruption, affecting a core service, a critical customer or a significant portion of users. The second is unauthorised, persistent access to a system. The third is an incident that has compromised core security controls—that is, security systems. Having a threshold that is measurable and proportionate is easier for organisations to understand than referring to an incident that is

“likely to have an impact”,

because, as I said, a phishing email is likely to cause an impact if an organisation does not have the right security measures in place.

[David Chadwick]

Q Thank you both for joining us. I have a very broad, open question: what other measures, both legislative and non-legislative, could the UK Government take to enhance the cyber-resilience of the UK’s critical national infrastructure?

Chris Parker: That is an excellent question. The good news is that a lot is happening already. An enormous amount of collaborative effort is going on at the moment. We must also give grace to the fact that it is a very new sector and a new problem, so everybody is going at it. That leads me on to the fact that the UK has a critical role in this, but it is a global problem, and therefore the amount of international collaboration is significant—not only from law enforcement and cyber-security agencies, but from businesses. Of course, our footprints, as big businesses, mean that we are always collaborating and talking to our teams around the world.

In terms of what the UK can do more of, a lot of the things that have to change are a function of two words: culture and harmonisation—harmonisation of standards. It is about trying not to be too concerned about getting everything absolutely right scientifically, which is quite tempting, but to make sure we can harmonise examples of international cyber-standards. It is about going after some commonality and those sorts of things.

I think the UK could have a unique role in driving that, as we have done with other organisations based out of London, such as the International Maritime Organisation for shipping standards. That is an aspiration, but we should all drive towards it. I think it is something the UK could definitely do because of our unique position in looking at multiple jurisdictions. We also have our own responsibilities, not only with the Commonwealth but with other bodies that we are part of, such as the United Nations.

It is not all good news. The challenge is that, as much as we know that harmonisation is okay, unfortunately everyone is moving. Things have started, and everyone is running hot. An important point to make is that it is one of the busiest sectors in the world right now, and everybody is very busy. This comes back to the UK having a particular eye on regulatory load, versus the important part that other elements of our society want, which is growth and economic prosperity. We talked earlier about SMEs. They do not have the capability to cover compliance and regulatory load easily, and we would probably all accept that. We have to be careful when talking about things such as designating critical suppliers.

All of this wraps up into increasing collaboration through public-private partnerships and building trust, so that when the Government and hard-working civil servants want to see which boundaries are right to push and which are not, bodies such as the UK cyber resilience committee, which Carla and I are on, can use those collaborative examples as much as possible.

There is quite a lot there, but something the UK certainly should be pushing to do is culture change, which we know has to be part of it—things have been talked about today by various speakers—as well as the harmonisation of standards.

Carla Baker: I think we are in a really interesting and exciting part of policy development: we have the Bill, and we have recently had the Government cyber action plan, which you may have heard about; and the national cyber action plan is coming in a few months’ time. The Government cyber action plan is internally facing, looking at what the Government need to do to address their resilience. The national cyber action plan is wider and looks at what the UK must do. We are at a really exciting point, with lots of focus and attention on cyber-security.

To address your point, I think there are three overarching things that we should be looking at. First is incentivising organisations, which is part of the Bill and will hopefully be a big part of the national cyber action plan. We must incentivise organisations to do more around cyber-security to improve their security posture. We heard from previous panellists about the threats that are arising, so organisations have to take a step forward.

Secondly, I think the Government should use their purchasing power and their position to start supporting organisations that are doing the right thing and are championing good cyber-security. There is more that the Government can do there. They could use procurement processes to mandate certain security requirements. We know that Cyber Essentials is nearly always on procurement tenders and all those types of things, but more can be done here to embed the need for enhanced security requirements.

Thirdly, I think a previous witness talked about information sharing. There is a bit of a void at the moment around information sharing. The cyber security information sharing partnership was set up, I think, 10 years ago—

Chris Parker: Yes, 10 years ago.

Carla Baker: It was disbanded a couple of months ago, and that has left a massive void. How does industry share intelligence and information about the threats they are seeing? Likewise, how can they receive information about the threat landscape? We have sector-specific things, but there isn’t a global pool, and there is a slight void at the moment.

--- Later in debate ---

[Andrew Cooper (Mid Cheshire) (Lab)]

Q Carla, I want to come back on the potential for unnecessary over-reporting of incidents. I cannot speak for the Minister, but I am sure it is not his intention that every phishing email is reported. I was listening carefully to what you said about your proposed tiered approach, and I can imagine, say, a situation where you are United Utilities and you intercept somebody trying to put a pre-emptive virus on to one of your industrial control systems. There has been no impact on customers or your infrastructure, because you have caught it. However, I would argue that it is quite important that United Utilities share that information with the regulator and that that information is disseminated to Severn Trent, Thames Water and whoever else needs to know, so they can patch their systems, look out for the virus or find out whether they have been infected already.

I can imagine that the legislation has been worded as it is to try to capture that situation where activity might occur, but not have an impact. Would you accept that that is important, and how would that fit in with the tiered approach that you described?

Carla Baker: I completely get your point. We have looked at that; my legal colleagues have looked at things such as spyware, where you have malware in the system that is not doing anything but is living there, for example, or pre-emptive, where they are waiting to launch an attack, and we think this amendment would still cover those scenarios. It is not necessarily cause and impact: the lights have not gone out, but if there is, for example, a nation state actor in your network, we think the amendment would still cover that.

[Dr Spencer]

Q I would also like to ask some questions on this definition of critical supplier. I know you will have heard the questions I had for the other panel. Is there a danger, in the way this Bill is approaching definitions of critical suppliers, that a supplier may end up being deemed critical solely by virtue of supplying to a critical industry, rather than the criticality of that particular supplier in the ecosystem?

Chris Parker: Yes, absolutely.

Carla Baker: Yes, completely. That is similar to my point, which was probably not explained well enough: how you are deemed critical should be more about your criticality to the entire ecosystem, not just to one organisation.

[Dr Spencer]

Q Notwithstanding other components to the criteria one may seek to use or will use, is there a danger that—although this is clearly not the intention in the drafting—through the back door, our entire economy ends up being in scope of this Bill?

Carla Baker: I think that is part of the issue about not having clear criteria about how regulators will designate. That also means that different regulators will take different approaches, so we would welcome more clarity and early consultation around the criteria that will be used for the regulators to designate a critical dependency, which prevents having different regulatory approaches across the 12 different regulators, which we obviously do not want, and gives greater harmonisation and greater clarity for organisations to know, “Okay, I might be brought in, because those are the clear criteria the Government will be using.”

[David Chadwick]

Q This feels like quite a big issue to be flagging up quite late in the day. In terms of the legislative process, do you think there has been a good enough consultation process between Government and business?

Chris Parker: The consultation has been a best effort and I think it is a best effort as a function of three things. First, we have a new sector, a new Bill—something very new, it is not repeating something. Secondly, we are doing something at pace, it is a moving target, we have to get on with this, and so there is some compulsion involved. Thirdly, there are already some collaborative areas set up, such as techUK, that have been used. Would I personally have liked to have seen more? Yes—but I am realistic about how much time is needed; when you only have a certain resource, some people have got to do some writing and crafting as well as discussing.

One thing that we could look at, if we did the process again, would be more modelling, exercising and testing the Bill until it shakes a bit more—that is something that perhaps we could do, if we were to do this again. With the Telecommunications (Security) Act 2021, that was done at length and collaboratively with industry, on a nearly fortnightly basis, for some time. Beyond that, I think that we are realistic in industry because we understand the pressures on the people trying to bring legislation in. A second point to remember is that we are all volunteers. Carla and I, and all those on the Cyber Resilience Committee, volunteer away from our day jobs—which are busy—to do all this. There is a realistic expectation, if you like—but I would say there has been a best effort.

Carla Baker: I would like to look to the future. We have all the secondary legislation that is coming—and there will be lot—so we recommend early insights, and time to review and consult, in order to provide that industry insight that we are happy to provide. Let us look to the secondary legislation and hope that there is good consultation there.

--- Later in debate ---

[The Chair]

We will now hear oral evidence from the Minister for AI and Online Safety, Kanishka Narayan. For this session, we have until 5.10 pm.

[Dr Spencer]

Q Thank you, Minister, for giving evidence this afternoon. I have a couple of questions. The first is about the definitions in the Bill, whether of MSPs or otherwise. All day long we have heard from representatives of different sectors of the industry, and pretty much everyone has talked about the importance of consultation on the definitions and when they are applied in secondary legislation. A certain amount of that stuff will be in primary legislation, so what consultation have you had with industry in setting up the definitions in the Bill in the first place?

Kanishka Narayan: Thank you for the question on definitions. I have two things to say on that. First, observing the evidence today, it is interesting that there are views in both directions on pretty much every definitional question. For example, on the definition of “incident thresholds”, I heard an expert witness at the outset of the day say that it is in exactly the right place, precisely because it adds incidents that have the capability to have an impact, even if not a directness of impact, to cover pre-positioning threats. A subsequent witness said that they felt that that precise definitional point made it not a fitting definition. The starting point is that there is a particular intent behind the definitions used in the Bill, and I am looking forward to going through it clause by clause, but I am glad that some of those tensions have been surfaced.

Secondly, in answer to your question on consultation, a number of the particular priority measures in the Bill were also consulted on under the previous Government. We have been engaging with industry and, in the course of implementation, the team has started setting up engagement with regulators and a whole programme of engagement with industry as well.

[Dr Spencer]

Q Thank you, Minister, but I am not sure that you answered my question. What engagement have you had in terms of consulting with industry in setting those definitions?

Kanishka Narayan: I have met a number of companies, but the relevant Minister has also had extensive engagement with both companies and regulators, including on the question of definitions. I do not have a record of her meetings, but if that is of interest, I would be very happy to follow up on it.

[Dr Spencer]

Q I assume that you are referring to the previous Minister, who you took over from?

Kanishka Narayan: I am referring to the Minister for Digital Economy, who is in the other place.

[Dr Spencer]

Q Do you not think that, as the Minister taking this through the Commons, you should have also had some of those meetings and consultations?

Kanishka Narayan: I have had some meetings but, as the Minister in charge of this Bill, she has been very engaged with businesses, so I think that is fitting. We have obviously worked very closely together, as we normally do, in the course of co-ordinating across the two Chambers.

[Dr Spencer]

Q What conversations have you had with the Secretary of State regarding guardrails on the extensive powers in this Bill that were referred to earlier?

Kanishka Narayan: I have spoken to the Secretary of State about the Bill, including the reserve powers, and we have agreed that the policy objective is very clear. I do not think I am in a position to divulge particular details of policy discussions that we have had; I do not think that would be either appropriate or a fitting test of my memory.

[Dr Spencer]

Q Do you think there is a potential need for guardrails?

Kanishka Narayan: I think the guardrails in the Bill are very important, absolutely. The Bill provides that, where there is an impact on organisations or regulators, there is an appropriate requirement for both deep consultation and an affirmative motion of the House. I think that is exactly where it ought to be, and I do not think anything short of that would be acceptable.

[Chris Vince]

Q Thank you for your time, Minister. Listening to the evidence and looking at the Bill, what strikes me is that this is about a balance between the importance of flexibility—particularly given the increase in threat and the complexity of the issues we face—and businesses wanting certainty. Do you feel confident that the Bill strikes that balance, and how have you sought to ensure that it does?

Kanishka Narayan: The primary thing to say is that the range of organisations—commercial ones as well as those from the cyber-security world more generally—coming out to welcome the Bill is testament to the fact that it is deeply needed. I pay tribute to the fact that some of the provisions were engaged on and consulted on by the prior Government, and there is widespread consensus across industry and in the regulatory and enforcement contexts about the necessity and the quality of the Bill. On that front, I feel we are in a good place.

On specific questions, of course, there is debate—we have heard some of that today—but I am very much looking forward to going through clause by clause to explain why the intent of the Bill is reflected in the particular definitions.

Cyber Security and Resilience (Network and Information Systems) Bill (First sitting)

Ben Spencer Excerpts

Committee stage
Tuesday 3rd February 2026 Public Bill Committees

[The Chair]

We are now sitting in public again. We have heard declarations of interest. If there are any other others, please say. We will now hear oral evidence from Jen Ellis, associate fellow for cyber and tech at the Royal United Services Institute, who is joining us online, and David Cook, who is a partner at DLA Piper. Thank you for coming.

Before calling the first Member to ask a question, I remind Members that questions should be limited to matters within the scope of the Bill. We must stick to the timings in the programme order that the Committee has agreed to. For this session, we have until 10 am. I call the shadow Minister.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Q Thank you, Jen and David, for coming to give evidence to us morning. Two questions. First, one to you, Jen. Lots of UK corporations have been the subject of recent major cyber-attacks, such as Jaguar Land Rover and M&S. Under the Bill as drafted, these remain outside the scope of the regulation. In your view, what is the best way to mitigate the risk to the economy, jobs and supply chains of further cyber-attacks of that scale to these important out-of-scope businesses? Secondly, and linked to that: Mr Cook, what lessons have you learnt from assisting clients with the implementation of NIS2—the second network and information systems directive—on the need for certainty in legislation? What do you think will be the most challenging areas of business to implement this Bill?

Jen Ellis: There is a thing that you always hear people say in the cyber-security industry which is, “There are no silver bullets”. There is no quick fix or one easy thing, and that definitely applies when looking at policy as well. I cannot give you a nice, easy, pat answer to how we solve the problem of attacks like the ones we saw last year. What I can say is that, looking at the Cyber Security and Resilience Bill specifically, I think it could include companies above a certain size or impact to the UK economy. The Bill currently goes sector by sector— which makes lots of sense, to focus on essential services—but I think we could say there is another bucket where organisations beyond a certain level of impact on the economy would also be covered. That could be something like the FTSE350. Including those might be one way to go about it, but it is worth noting that it would not simply solve the problem because the problem is complex and multi-faceted, and this is just one piece of legislation.

David Cook: With respect to NIS2, that is an example of a whole suite of laws that have come in across the European Union—the Digital Decade law; I think there is something like 10 or 15 of these new laws. They do all sorts of different things, and NIS2 sits within that. NIS2 is the reform of the NIS directive, which is the current state of play in UK law. NIS2 gives certainty and definition, by way of the legislation itself and then the implementing legislation, which means that organisations have had a run-up at the issue and a wholesale governance programme, which takes a number of years, but they know where they are headed, because it is a fixed point in the distance, on the horizon.

The Bill we are talking about today has the same framework as a base. The plan then is that secondary legislation can be used in a much more agile way to introduce changes quickly, in the light of the moving parts within the geopolitical ecosystem outside the walls. For global organisations with governance that spans jurisdictions, a lack of certainty is unhelpful. Understanding where they need to get to often requires a multi-year programme of reform. I can see the benefits of having an agile, flexible system, but organisations—especially global ones, which are the sort within the scope of this Bill—need time to prepare, recruit people, get the skillset in place, and understand where they need to get to. That fixed future point needs to be defined.

[Chris Vince (Harlow) (Lab/Co-op)]

Q I feel that I should declare an interest as the MP for Harlow, which has a large data centre within it. My question is about international alignment. Is this legislation in keeping with developments that you are seeing globally?

David Cook: There is reform all over the world. At its core, we have got a European law that is transposed in UK national legislation, the General Data Protection Regulation. That talks about personal data and has been seen as the gold standard all over the world. Different jurisdictions have implemented, not quite a copycat law, but one that looks a lot like the GDPR, so organisations have something that they can target, and then within their territory they are often going to hit a compliance threshold as well. Because of changes in the geopolitical environment, we are seeing—for example in Europe, but also in Australia and the United States—specific laws coming in that look at the supply chain in different sectors and provide for more onerous obligations. We are seeing that in the environment. NIS2 is being transposed into national laws. Organisations take a long time to get to the point of compliance. We are probably behind the curve, but this is not a new concept. Adapting to change within tech and change within how organisations themselves are relying on a supply chain that is more vulnerable and fragile is common.

--- Later in debate ---

[The Chair]

Good morning, everyone, and welcome. We will now hear oral evidence from Jill Broom, head of cyber-resilience at techUK, from Stuart McKean, chairman of Nine23, and from Dr Sanjana Mehta, senior director for advocacy at ISC2. We must stick to the timings in the programme motion that the Committee has agreed for this session; we have until 10.40 am. Will the witnesses please briefly introduce themselves for the record?

Dr Sanjana Mehta: Good morning. My name is Sanjana; I work as senior director, advocacy, at ISC2.

Jill Broom: Good morning. My name is Jill Broom; I am head of cyber-resilience at techUK, the trade association for the technology industry in the UK.

Stuart McKean: Good morning. I am Stuart McKean; I am the founder and chairman of Nine23. We are a small MSP, based in the UK.

[Dr Spencer]

Q Thank you for giving evidence this morning. The Bill would not have prevented recent attacks on high-profile parts of UK industry such as Co-op, Marks and Sparks, and Jaguar Land Rover. What more do you think can be done to mitigate the risk to jobs, supply chains and the UK economy from further large-scale cyber-attacks against out-of-scope companies?

My second question is a bit more technical. Do you consider that the definition in the Bill of a managed service provider is sufficiently clear and certain for businesses to understand whether they are in scope or out of scope of the Bill?

Dr Sanjana Mehta: I appear before the Committee today on behalf of ISC2, which is the world’s largest not-for-profit membership association for cyber-security professionals. We have 265,000 members around the world and 10,000-plus members in the UK.

On your question about sectoral scope, our central message is that we welcome the introduction of the Bill and we believe that it will go a long way towards improving the cyber-resilience of UK plc. Yes, there are certain sectors that are outside the scope of the Bill, and we believe that there are a number of non-legislative measures that could be used to enhance the cyber-security of other industries and parts of the sector. In particular, the forthcoming national cyber action plan should be used as a delivery vehicle for improving the resilience of UK plc as a whole.

On the previous panel, I think Jen mentioned that there are voluntary codes of practice. As an organisation, we have piloted the code of practice for cyber governance, and we have signed up to the ambassadors scheme for the code of practice for secure software development. We think that the upcoming national cyber action plan can further encourage the uptake of such schemes and frameworks. Most importantly, we call upon Government to focus on skills development as a non-legislative measure, because ultimately that will be the key enabler of success, whether it is for organisations that are within or outside the scope of the Bill.

[The Chair]

The witnesses need not feel obliged to answer every question; if colleagues could direct their questions to individual witnesses, we will get through quicker.

Stuart McKean: I think that the MSP definition is quite broad at the moment, so adding some clarity to it will help. At the moment, the key definition of an MSP is based on size, and whether you are a small, medium, large or even microenterprise. The reality is that only11%, I think, of MSPs are the large and medium-sized enterprises that are going to fall in scope of the Bill as a managed service provider. Although the definition might be quite broad, the clarity on the size of MSP is actually quite particular, and you will lose a lot of MSPs that will not be in scope.

Jill Broom: Although some of our members are content with the definition of managed service provider, others feel that, as Stuart said, it is too broad. It continues to cause a little bit of confusion, since it is likely to encompass virtually any IT service. Probably some further work needs to be done and further consultation. There will be some further detail in the secondary legislation around that definition. I wanted to highlight that a lot of detail is coming in secondary legislation, which can make it quite difficult to scrutinise the primary legislation. A broad call-out for ensuring mandatory and meaningful consultation on that secondary legislation and associated guidance would be really welcome.

We are already working with the Bill team to put some of the pre-consultation engagement sessions in place, but we would call for the consultation to be brought forward to help us to understand some of the detail. The consultation period on the secondary legislation is currently estimated to happen towards the end of the summer, but we would like that to be brought forward, where possible. That consultation is going to cover a lot of detail, so it needs to be a substantial amount of time to allow us to comment. We are keen to be involved in that process as much as possible.

--- Later in debate ---

[Bradley Thomas]

Q How might we glean some clarity on that?

Stuart McKean: It needs more detail, even if that is about providing some boundaries so that we have something to say, “If it is going to do the following, what is a ‘significant economic impact’?”. I would like to think that none of our services would have a significant economic impact, but they may well affect a person, so I would bring it more on to the citizen and the impact on people. We heard this a number of times in relation to the JLR incident: the impact on the supply chain was huge, it was economically very costly and directly impacted people’s lives. Anything that can provide more clarity in the definition of an impact at that level can only help.

Jill Broom: I agree. More clarity is needed. The Bill should be tighter in terms of defining that sort of systemic risk.

Dr Sanjana Mehta: The Bill as it stands requires competent authorities and regulators to designate an organisation as a critical supplier rather than the regulated entity. Organisations work with complex multi-tier supply chains, and the concern is that competent authorities that are one step further removed from those complex supply chains, and have even less visibility, transparency and control over those supply chains, might find it difficult to determine true criticality and risk within the supply chains. We ask for greater collaboration and co-ordination between the regulated entities and the competent authorities in designating an organisation as a critical supplier.

[Dr Spencer]

Q The issues about complexity and how loosely the Bill is drafted have come up quite a few times, and you have given good evidence regarding your concerns. What cost to business do you anticipate if the Bill stays so loose, with so much left to secondary legislation?

Jill Broom: There is probably a broader point around legal certainty, which is not given on the face of the Bill. Some of our members have highlighted language that could create some pretty significant legal jeopardy for regulated entities. The Bill needs to go a bit further. It could and should do more to provide some legal certainty, because the cost to companies could be quite significant. To the point on consistency across regulators and things like that, we need more frameworks around how that is going to work. Leaving all the detail to secondary legislation is what makes it slightly difficult to examine what is on the face of the Bill, so making sure that everything is consulted on in a mandatory and meaningful way will be important.

--- Later in debate ---

[The Chair]

Q We will now hear oral evidence from Matt Houlihan, vice-president for government affairs in Europe for Cisco UK and Ireland, Ben Lyons, senior director of policy and public affairs for Darktrace, Chris Anley, chief scientist for NCC Group, and Dr Ian Levy, vice-president of security at Amazon. We must stick to the timings in the programme order; for this session we have until 11.25 am. Could the witnesses please introduce themselves briefly for the record, starting with Dr Levy?

Dr Ian Levy: Good morning. I am Ian Levy, and I am a vice-president and distinguished engineer at Amazon. That job allows me to look across everything that Amazon does, including Amazon Web Services, the bookshop, our new satellite system and everything in between. Prior to that, I spent 23 years in GCHQ, and I was the founding technical director and designer of the National Cyber Security Centre.

Chris Anley: I am Chris Anley, chief scientist at NCC Group. We are a multinational cyber-security company, listed on the London Stock Exchange and headquartered in Manchester.

Matt Houlihan: Hi everyone. I am Matt Houlihan, and I am the vice-president for government affairs in Europe for Cisco, which is a technology company specialising in networking, security and collaboration technologies.

Ben Lyons: Good morning. I am Ben Lyons, and I am senior director for policy and public affairs at Darktrace. We are a company that uses AI for cyber-security, headquartered up in Cambridge.

[Dr Spencer]

Q Thank you for coming to speak to us this morning. I have a different question for each of you, so I will rattle them off and ask you to go through them.

Starting with Ben from Darktrace, how are developing and emerging technologies such as AI and post-quantum crypto changing the nature of cyber-security threats? Do you think the Bill responds adequately to that changing threat landscape?

Moving on to Matt from Cisco, what further guidance and consultation from the Government and the Information Commissioner is needed for MSPs to comply effectively with their obligations under the Bill?

Chris from NCC Group, the National Audit Office report last year highlighted lots of serious deficiencies in Government cyber-resilience. Do you think the cyber action plan goes far enough? How can Government Departments be overseen and held to account in a way that will deliver meaningful improvements in cyber-resilience?

Finally, Ian from Amazon, a core feature of your business model is extensive exposure to supply chain partners. Do you think that the designation of critical suppliers by regulators under the Bill is the correct approach? What further consultation is needed to make sure that that is proportionate, prioritises the most critical suppliers and, crucially, gives a degree of certainty, whether legal or financial?

Ben Lyons: AI is significantly changing cyber-security. You can think about it at three levels: first, the way in which attackers are using AI to mount cyber-attacks; secondly, the need to secure AI systems and AI within companies and organisations; and thirdly, the question of how AI is changing cyber-security on the defensive side.

In brief, we see significant use of AI by attackers. Today, we are releasing the results of a survey in which 73% of surveyed security professionals say that AI-powered threats are having a significant impact on their organisation. These are things like phishing, reconnaissance, and lowering the barriers to being able to launch attacks and review more targets more effectively. Last month, the chief executive officer of Anthropic, which is one of the main frontier AI labs, warned that he sees AI-led cyber-attacks as potentially being the main way in which cyber-attacks are conducted in the future.

At the level of the enterprise, you have a challenge of how you secure the enterprise, in terms of not only developing and deploying AI, but visibility of AI used in an organisation. We are certainly seeing AI transform how cyber-security vendors and organisations manage the threat: they have greater visibility, can detect threats more quickly and the like. On how the Bill responds to that, one positive in its approach is that it is setting out an agile, outcomes-based approach that means that the regulatory regime can be capable of evolving as the threat evolves. It is sensible not to talk about AI in depth on the face of the Bill, but through mechanisms such as the code of practice, it will be possible for expectations to evolve over time as the threat and the technology mature.

[The Chair]

I should say to the witnesses: do not feel obliged to answer each question if you do not feel that you have anything material to add.

Matt Houlihan: It is very tempting to answer the question on AI, but thank you for the question on managed service providers. It is right that managed service providers are looked at in this Bill. An increasing amount of the work of managing IT services is clearly now outsourced to managed service providers. There needs to be some scrutiny and some baseline of cyber-security with those. I would say a couple of things on what guidance is needed. We broadly support the definition in the Bill. I appreciate the comments in the previous session that suggested that the definition was a little too broad and could be refined, which I think is fair, but when you compare the definition in the CSRB with the definition of managed service providers used in the NIS2 legislation, a couple of bits of clarity are provided in the CSRB. First, the managed service provider needs to provide an

“ongoing management of information technology systems”.

We feel that word “ongoing” is quite important. Secondly, it has to involve

“connecting to or…obtaining access to network and information systems relied on by the customer”.

We feel that

“connecting to or…obtaining access to”

the network is an important part of the definition that should be put forward. One area where more tightness can be provided is where, in the Bill, there is a non-exhaustive list of activities that an MSP could be involved in, such as

“support and maintenance, monitoring, active administration”.

The Bill then says, “or other activities”, which adds quite a bit of uncertainty on what is and is not an MSP.

The other area I would like to highlight and link to Ben’s answer on AI is that the “active administration” activity raises a question about the extent to which AI-enabled managed services would come under that definition. I am sure that lots of managed service providers will use AI more and more in the services that they provide to their end customers; to what extent does “active administration” involve an AI-related service?

To end on that specific question, the Information Commissioner’s Office will, I believe, issue guidance for managed service providers once the Bill is passed. That guidance will be the critical thing to get right, so there should be consultation on it, as my colleague from techUK suggested earlier. I would also suggest that that guidance cannot be a simple check-box list of things that have to be done. We should shift our thinking to have more of an ongoing appreciation of what cyber-security involves in practice for MSP or other regulated entities under the Bill. Making sure there is an ongoing process and that there is effective enforcement will be important.

Chris Anley: On the NAO report , the cyber action plan and public sector cyber-security, you are absolutely right to point out that the NAO report identifies serious issues. The Government recently acknowledged that they are likely to miss their 2030 cyber-resilience targets. It is also important to point out that the cyber action plan lays out an approach with many very positive elements such as an additional £210 million in central funding. There are many benefits to that, including a centralised provision of services at scale, a concentration of expertise and a reduction of costs.

Then there are other broader initiatives in the cyber action plan. The UK software security code of practice, which has been mentioned several times in these sessions, is a voluntary code that organisations can use as a tool to secure their supply chain. Cisco and NCC Group are ambassadors for that scheme and voluntarily comply with it, and it improves our own resilience.

Whether the cyber action plan goes far enough is a very difficult question. The NAO report also points out the extreme complexity of the situation. Within the budgetary constraints, I think it is fair to say that the steps in the plan seem reasonable, but there is a broader budgetary conversation to be had in this area. Two of the most significant issues identified in the report are the skills shortage, which has come up in these sessions—almost a third of cyber-security posts in Government are presently unfilled, which is dangerous—and the fact that Departments rely on vulnerable, outdated legacy IT systems, which may be the cause of an incident in their own right and would certainly make an incident much more severe were one to occur. The problem is that those are both largely budgetary issues. Successive Governments have obviously focused on delivering taxpayer value, as they should—we are all taxpayers—but over a period of a decade or more, that has led to a position where Departments find it difficult to replace legacy IT systems and fill these high-skill, high-cost cyber-security positions. There is very much a broader discussion to be had, as has been raised in these sessions, about where we should be in terms of the budget. You are absolutely right to raise the public sector issues. Although the Bill focuses on the private sector, the public sector obviously must lead by example.

Dr Ian Levy: We think the current definitions of critical suppliers are probably overly broad and risk bringing in SMEs, when you really do not want to do that. That said, we need to think about the transitive nature of supply chains. With previous regulations that talk about cyber-security, we have seen a flow-down of requirements through contracting chains. There is a question about how far it is reasonable to go down those contracting chains. In my experience, the value of the contract and the potential impact are not necessarily correlated. We certainly saw that when we were giving evidence for the Telecommunications (Security) Act 2021.

There is a real question about how you define what supply chain you mean. You mentioned that AWS has a complex supply chain. We certainly do—it is astoundingly complex—but the important thing is that we control the really important parts of that. For example, we build our own central processing units, graphics processing units, servers, data centres and so on. The question then becomes: how does that translate out to customers? If a customer is using a partner’s service running on AWS, where does the liability accrue? I do not think that is adequately covered in the Bill.

In terms of certainty and foreseeability, the Bill as it stands admits a single entity being regulated multiple times in multiple different ways. We are subject today to at least four different sets of regulations and regulators. Some of them conflict, and some of them are ambiguous. As this expands out, a single reporting regime—a lead regulator model—would take some of that ambiguity away so that you have more foreseeability and certainty about what you are trying to do.

There are things in the current drafting of the Bill that we think need some consultation. There are things in primary legislation, such as the Secretary of State’s powers, that seem to be unbounded—that is probably the best way to describe it—and that seems dangerous. We understand the necessity for powers around national security, but we think there need to be some sort of safeguards and consultation about how they are used in practice. For any multinational company, something that is effected in the UK is likely to affect all our customers, so some real constraint is needed around that.

AI Safety

Ben Spencer Excerpts

Wednesday 10th December 2025 Westminster Hall

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

It is a pleasure to serve under your chairmanship, Ms Butler. I am very grateful to the hon. Member for Dewsbury and Batley (Iqbal Mohamed) for bringing this important debate to the House today. He gave a very thoughtful speech, which reflected his clearly very strongly held beliefs about the risks that AI poses. It was quite a broad and wide-ranging debate, and a very interesting one. I will try to be quite brief because I am really keen to hear the hon. Member’s response, along with that of the Minister.

We heard some great points about biased data, shadow banning, the impact on BSL, large language models producing, in effect, regulated advice, and the need for AI in the curriculum—and, of course, copyright came up. What happens when AI is used to mimic MPs’ output—something I suspect our AI Prime Minister also uses?

As hon. Members have observed, the advent of artificial intelligence entails risks but is also a once-in-a-generation opportunity. The previous Government were acutely aware of putting the UK at the forefront of both intergovernmental and industry discussions regarding the development of AI. They convened the world’s first AI safety summit, which took place at Bletchley Park in late 2023 and which many Members have referenced, and established the AI Safety Institute—now renamed the AI Security Institute—in the same year.

Reports about the risks to children’s safety posed by tools such as one-to-one and personal agent chatbots promoting suicide and self-harm content are of great concern. It is right that policymakers act quickly to address serious and specific threats when they emerge, and we welcome the Government’s recent action on measures to tackle AI-generated child sexual abuse images.

Recently, other hon. Members and I have pressed the Government to clarify the application of the Online Safety Act to one-to-one and personal agent AI chatbots. The Minister has confirmed that the Government have commissioned work to look at whether there are any loopholes in the Act that would mean that some AI chatbot services are unregulated. The recent report of the Science, Innovation and Technology Committee has also highlighted the risks to democratic integrity posed by cyber-bots pushing out AI-generated deepfake material purporting to represent authentic political content to distort public narratives, particularly during elections. We clearly need to go further to address those important and growing risks, so I would be grateful if the Minister could provide an update on those two points.

Despite much rhetoric, the Government have been completely inconsistent regarding their intentions on AI legislation. Having stated in their manifesto that they would bring in “binding regulation” for the “most powerful AI models”, the can has been repeatedly kicked down the road, with the Secretary of State suggesting during a SIT Committee evidence session earlier this month that there would be no generally applicable AI legislation in this Parliament. The uncertainty caused by the Government’s failure to be clear about their plans for AI regulation damages public confidence in this developing technology. Crucially, it also undermines business confidence, with a chilling knock-on effect on investment and innovation.

We appreciate that AI regulation is far from straightforward, given the rapidly evolving innovations, challenges and developments, and we caution against going down the route that the EU has taken for AI regulation. However, it is clear that we need a plan that ensures that our education system equips children with the skills necessary for the jobs of the future, and a strategy to prepare and, where necessary, retrain the parts of our workforce that stand to be the most affected by changes to the employment market brought about by AI.

We need to be alert to the risks and changes that AI development brings—AI must always be the agent and never the principal—but we must not lose sight of the tremendous opportunities that it offers. The UK should be at the forefront of developing artificial intelligence and reap the benefits of a substantial home-grown AI industry. AI has the potential to revolutionise service delivery and improve productivity on an unprecedented scale, and those productivity gains can drive much-needed improvements in our overstretched public services, hospitals, local authorities, court services and prisons, to name but a few. The rapid processing of routine tasks will lead to better and quicker service provision across the board.

Perhaps the most pressing issue is the role that AI will play in the defence of our country. Some hon. Members have spoken about the existential risk posed to humanity by the most powerful AI models, but in an era of regional conflict and intensifying global competition, the notion that hostile state actors will observe international protocols on AI development are naive at best and dangerous at worst. AI has become indispensable to our defence capacity and security. The ability of AI to detect and neutralise cyber and biosecurity threats will become increasingly vital. High-tech AI drone warfare has drastically changed the nature of conflict, as we see in Ukraine. Put simply, the UK, working wherever possible with its international allies and partners, must be in a position to counter the deployment of AI systems that disregard the norms and ethics that the UK seeks to uphold.

We cannot afford to be left behind. We must develop our capabilities at speed, by tackling the barriers to the development of the UK AI industry, including the high costs of energy and the availability of investment. We must ensure that we are alive to, and safeguard against, the most serious emerging risks. With that in mind, will the Minister provide an update on the Government’s plans to support growth in the UK AI industry, including in relation to securing lawful access to reliable datasets for training?

Draft Online Safety Act 2023 (Priority Offences) (Amendment) Regulations 2025

Ben Spencer Excerpts

Tuesday 18th November 2025 General Committees

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

It is a pleasure to serve under your chairmanship, Mr Vickers.

This statutory instrument represents an important development in the obligations on platforms regulated under the Online Safety Act to protect people from encountering illegal content online. The OSA was enacted by the last Government with the primary aim of safeguarding children and removing serious illegal material from the internet. Tackling the most harmful content, such as that which is the subject of today’s discussion, goes to the heart of the Online Safety Act’s aims. His Majesty’s Opposition therefore welcome and support the draft regulations.

The experiences and opportunities offered by the online world change rapidly. It is right that legislators are responsive when new risks emerge or when certain types of unlawful content proliferate on the internet. Under the last Government, the OSA amended the Sexual Offences Act 2003 to criminalise several forms of sexual misconduct and abusive behaviour online. The new offences included cyber-flashing and the sharing of or threatening to share intimate images without consent. The amendments were made to keep pace with novel threats and forms of abuse, the victims of which are too often women and girls.

Baroness Bertin’s independent review of pornography, which was published in February this year, highlighted the damaging impact on victims of intimate image abuse, ranging from physical illness to mental health effects such as anxiety, depression, post-traumatic stress disorder and suicidal thoughts. The effects of cyber-flashing and intimate image abuse on victims is severe. It is therefore right that this statutory instrument brings cyber-flashing within the scope of the priority offences in schedule 7 to the Online Safety Act, while retaining as a priority offence the sharing of or threatening to share intimate images.

We also strongly support the addition as a priority offence of encouraging or assisting serious self-harm, which is the other important component of this statutory instrument. Desperate people who contemplate self-harm need early intervention and support, not encouragement to self-harm. Under this SI, regulated services will be obliged to proactively remove the material when they become aware of it on their platforms and take measures to prevent it from appearing in the first place. One can only wonder why it has taken so long to get to this position. I am sure we will have a unanimous view not only in the House but in society of the importance of removing such material.

The regulations will work only if they are adopted by the industry and subject to rigorous oversight, coupled with enforcement when platforms fail in their obligations. That is a necessity, and why we had to introduce the Online Safety Act in the first place. It is right that Government regulators should look to identify obstacles to the implementation of the OSA and take action where necessary. Since the introduction of Ofcom’s protection of children codes in the summer, important questions have arisen around the use of virtual private networks to circumvent age verification, as well as data security and privacy in the age-verification process.

[Peter Fortune (Bromley and Biggin Hill) (Con)]

On that point, does my hon. Friend the shadow Minister agree that we need to give some thought to the rise of chatbots and their nefarious activity, especially where they encourage self-harm or encourage children to do worse?

[Dr Spencer]

I thank my hon. Friend for his question on a very important point, which was raised just last week in Department for Science, Innovation and Technology questions by my hon. Friend the Member for Harrow East (Bob Blackman) and others. The Lib Dem spokesperson, the hon. Member for Harpenden and Berkhamsted, also raised questions about the importance of the scope of regulations for chatbots.

The Government seem all over the place as to whether the large language models, as we understand them, regulate the content that comes into scope. Given the response we received last week, it would be helpful to have some clarity from the Minister. Does he believe that LLMs are covered by the OSA when it comes to encouraging self-harm material? If there is a gap, what is he going to do about it? I recognise that he is commissioning Ofcom to look at the issue, but in his view, right now, is there a gap that will need someone to fix it? What are his reflections on that? This is increasingly becoming a priority area that we need to resolve. If there is a gap in legislation, we need to get on and sort it.

--- Later in debate ---

[Kanishka Narayan]

I thank Committee members for their valuable contributions to the debate. The update in the regulations will bring us closer to achieving the Government’s commitments to improve online safety and strengthen protection for women and girls online. We believe that updating the priority offences list with the new cyber-flashing and self-harm content offences is the correct, proportionate and evidence-led approach to tackling this type of content, and it will provide stronger protections for online users.

I will now respond to the questions asked in the debate; I thank Members for the tone and substance of their contributions. The shadow Minister, the hon. Member for Runnymede and Weybridge, raised the use of VPNs. As I mentioned previously in the House, apart from an initial spike we have seen a significant levelling-off in the usage of VPNs, which points to the likely effectiveness of the age-assurance measures. We have commissioned further evidence on that front, and I hope to bring that to the House’s attention at the earliest opportunity.

The question of chatbots was raised by the shadow Minister, by the hon. Member for Bromley and Biggin Hill, and by the Liberal Democrat spokesperson, the hon. Member for Harpenden and Berkhamsted. Let me first clarify what I previously mentioned in the House: the legislation covers not only chatbots that allow user-to-user engagement but those that involve one-to-AI engagement and live search. That is extensive coverage of chatbots—both those types are within scope of the Online Safety Act.

There may be further gaps in the Act that pertain to aspects of the risks that Members have raised, and the Secretary of State has commissioned further work to ensure that we keep up with fast-changing technology. A number of the LLMs in question are covered by the Act, given the parameters that I have just defined. Of course, we will continue to review the situation, as both scope and risk need to evolve together.

[Dr Spencer]

I hope the Minister takes this in a constructive spirit. Concerns have been raised across the House as to the scope of the OSA when it comes to LLMs and the different types and variations of chatbots, which are being used by many people right now. Is he not concerned that he as the Minister, and his Department, are not able to say at the Dispatch Box whether they believe LLMs are completely covered in the scope of the OSA? Has he received legal advice or other advice? How quickly will he be able to give a definitive response? Clearly, if there is a gap, we need to know about it and we need to take action. It surely puts the regulator and the people who are generating this technology in an invidious position if even Her Majesty’s Government think there is a lack of clarity, as he put it, on the scope of the applicability of the OSA to new technologies.

[Kanishka Narayan]

Let me be clear: there is no lack of clarity in the scope of the Bill. It is extremely clear to a provider whether they are in scope or not. If they have user-to-user engagement on the platform, they are in scope. If they have live search, which is the primary basis in respect of many LLMs at the moment, they are in scope. There is no lack of clarity from a provider point of view. The question at stake is whether the further aspects of LLMs, which do not involve any of those areas of scope, pose a particular risk.

A number of incidents have been reported publicly, and I will obviously not comment on individual instances. The Online Safety Act does not focus on individual content-takedown instances and instead looks at a system. Ofcom has engaged firms that are very much in scope of the Act already. If there are further instances of new risks posed by platforms that are not currently within the scope of the Online Safety Act, we will of course review its scope and make sure we are moving fast in the light of that information.

The hon. Member for Harpenden and Berkhamsted asked about child sexual abuse material. I was very proud that we introduced amendments last week to the Crime and Policing Bill to make sure that organisations such as the Internet Watch Foundation are engaged, alongside targeted experts, particularly the police, in spotting CSAM content and risk way before AI models are released. In that context, we are ensuring that the particular risks posed by AI to children’s safety are countered before they escalate.

On the question about Ofcom’s spending and capacity more generally to counter the nature of the risk, the spending cap at Ofcom allows it to enforce against the offences that we deem to be priority offences. In part, when we make the judgment about designating offences as a priority, we make a proportionate assessment about whether we believe there is both severity and the capacity context for robust enforcement. I will continue to review that situation as the nature of the offences changes.

Finally, I am glad that the Government have committed throughout to ensure that sexually explicit non-consensual images, particularly deepfakes, are robustly enforced against. That remains the position. I hope the Committee agrees with me on the importance of updating the priority offences in the Online Safety Act as swiftly as possible. I commend the regulations to the Committee.

Question put and agreed to.

Draft Product Security and Telecommunications Infrastructure (Security Requirements for Relevant Connectable Products) (Amendment) (No. 2) Regulations 2025

Ben Spencer Excerpts

Tuesday 4th November 2025 General Committees

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

As always, Dr Murrison, it is a pleasure to serve under your chairmanship. His Majesty’s official Opposition welcome this statutory instrument, which establishes alternative routes to achieve cyber-security compliance for manufacturers of products within the scope of the product security and telecommunications infrastructure regime. It serves to remove non-tariff barriers to trade in digital products and devices with our strategic partners in Asia—Singapore and Japan.

I recently visited Japan with the British-Japanese all-party parliamentary group, supported by the Japan Society, to strengthen UK-Japanese relations. It was a fantastic visit. It is not yet declared in the Register of Members’ Financial Interests, but it will be in due course and Members should refer to my entry if interested.

Regulations such as these build on and complement the strong free-trade foundation established by the last Government through their negotiation of UK accession to the comprehensive and progressive agreement for trans-Pacific partnership trade bloc and other bespoke bilateral trade agreements with Japan. I am glad the Minister welcomed the Product Security and Telecommunications Infrastructure Act 2022. I think he said it was a world-leading piece of legislation. Given that it was put together by the previous Government, I am glad that he has demonstrated today the same wisdom as his predecessor. I very much welcome him to his place.

Several significant cyber-attacks recently have demonstrated the need for Government and industry alike to increase their cyber-resilience without delay. It is becoming increasingly evident that our cyber-security is a vital component of our national security. We are yet to have sight of the Government’s cyber-security and resilience Bill, which we understand will be targeted at supply chains and providers of digital services to our critical industries. We also eagerly await the Government’s national cyber-security strategy, which they have said will be published by the end of this year.

However, what attracts significantly less public attention is the routine and widespread cyber-risk to consumers of internet-connectable devices in their homes and pockets, such as smartphones, wearable health devices and home sound systems. The last Government recognised that risk and the UK’s consumer connectable product security regime was brought into effect in April 2024. The changes were intended to reduce consumer exposure to cyber-threats and raise the baseline of product security.

Diversifying the supply chain and the market for internet-connectable products has benefits for price competition, product choice and consumer confidence. It also reduces over-reliance on exports from individual states in an era of increasing geopolitical tensions. Charles Parton, senior research fellow in international security at the Royal United Services Institute, has highlighted the multifaceted risks of over-reliance on Chinese cellular internet of things modules, or CIMs. Those are hardware components that enable internet of things devices to connect to the internet via cellular networks, and they are essential for devices that need remote connectivity without relying on wi-fi or wired networks. Chinese products already have more than 50% of the international market for those components. While the use of CIMs is widespread, the option of purchasing products from strategic partners with common security concerns and goals is likely to assist in improving consumers’ ability to choose the most secure products.

For the reasons that I have stated, we are supportive of the regulations. Nevertheless, I would be grateful if the Minister could answer a couple of questions. What assessment was undertaken to determine the equivalence of the Japanese and Singaporean regimes? Can the Government quantify, either in value or in volume, the trade that the regulations are expected to deliver in the first year, if not in coming years?

--- Later in debate ---

[Kanishka Narayan]

I thank hon. Members for their contributions. I will address first the questions that were asked.

I thank the hon. Member for Runnymede and Weybridge for his warm welcome. On the question of how assurances were sought about the equivalence of the Japanese and Singaporean standards, the maturity of those standards and the time for which the countries have been implementing them have been particularly material assurances. Japan and Singapore have aligned their security requirements and labelling schemes to the globally accepted ETSI EN 303 645 standard, which happens to be the same standard that underpins the UK’s PSTI regime. Therefore, products that have a valid label issued by Japan or Singapore will meet the security requirements specified in our regime. The Office for Product Safety and Standards, as the regulator of the regime as a whole, is equipped with a comprehensive set of enforcement powers and will continue to keep under review any mutual recognition agreements.

Of course the Government recognise the strategic importance of the European Union as the UK’s largest trading partner, and we will explore opportunities to reduce technical barriers to trade in the security space in that context, too.

On the question of benefits, my understanding is that we have had representations from a number of small and medium-sized businesses, in particular, about how this measure will open up export markets in Japan and Singapore, allow Japanese and Singaporean firms to trade, and ensure that British consumers can benefit. I do not have a number to give, but I hope very much that we will see the benefits of that freer flow of trade in connected devices very soon.

On the cyber-security context, more everyday products than ever before are connected to the internet, ranging from smart TVs to fitness trackers and voice assistants. From April 2024 to March 2025, we surveyed the participation of consumers and found that 96% of folks personally owned and used a smartphone, 76% a smart TV, and 68% a laptop computer. It is now very rare to find a UK household that does not own a connected device in the scope of these regulations; less than 1% of people reported that they did not own a smartphone, laptop, desktop PC, tablet, games console, smart printer or smart TV.

This growing connectivity brings convenience but also new risks. The Government have taken action to ensure that UK consumers and businesses purchasing consumer connectable products are better protected from the risk of cyber-attacks, fraud or even, in the most serious cases, physical danger. The cyber-security regulatory landscape is evolving, with countries around the world, including Japan and Singapore, introducing similar regimes. The UK must remain agile and forward-looking to maintain its leadership in this space. The draft regulations will ensure that the UK remains a global leader in product cyber-security, while strengthening our position as an attractive destination for digital innovation and trade.

By recognising Japanese and Singaporean IOT labelling schemes, we are reducing unnecessary regulatory burdens, supporting UK businesses to expand internationally and enabling Japanese and Singaporean manufacturers to bring compliant products to our market more efficiently. This measure is a practical step forward in delivering the Government’s mission to drive economic growth and build a more resilient digital economy. It also complements our efforts to harmonise security standards across major economies, in partnership with Brunei, the United Arab Emirates, Australia, Germany, Finland, South Korea, Canada, Japan, Singapore and Hungary, via the global cyber-security labelling initiative. With forecasts suggesting that the global IOT market will grow to 24.1 billion devices by 2030, generating more than £1.1 trillion in annual revenue, it is more essential than ever that we enhance the security of connected products on a global scale.

[Dr Spencer]

The Minister has referred a few times to cyber-security strategy. Can he update us on when we will see the Government’s cyber-security and resilience Bill?

[Kanishka Narayan]

I am afraid that I cannot commit to a legislative timeline, but we want to move very fast on the Bill and are looking for the right opportunity in Parliament to introduce it.

The draft regulations are a significant step in achieving our goal for cyber-security. I look forward to continuing this work and building on the momentum we have established.

Question put and agreed to.

Draft Online Safety Act 2023 (Qualifying Worldwide Revenue) Regulations 2025

Ben Spencer Excerpts

Tuesday 2nd September 2025 General Committees

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

It is a pleasure to serve under your chairmanship, Dr Murrison. Thank you for your guidance at the start of the debate. Given the narrow scope of this SI, I will make some very brief introductory remarks about the Online Safety Act before going into the detail of the SI.

Nearly two years ago, under the last Government, the groundbreaking Online Safety Act was enacted with the purpose of protecting people online. Rightly, the strongest protections in the Act were designed for children. Every day, children are subjected to harmful content affecting their views of society, relationships and themselves. The Online Safety Act is an essential tool to address that. It has faced much opposition and still faces challenges today, but it provides the template for the most robust online safety framework in the world. It is a measure that I am very proud of, but we must now work to ensure that the provisions are implemented and enforced effectively.

Realising the essential protections built into the Online Safety Act is dependent on high levels of industry compliance. I hope that we will have future opportunities to debate the wider provisions of the Act, including the effectiveness of age verification and the definition of “harmful content”, but today we rightly focus on fees and enforcement. The draft regulations set the parameters for how we define and calculate companies’ turnover in order then to then calculate both fees and maximum penalties, should they be incurred. The SI is therefore very technical in scope, but important.

The Act requires that Ofcom’s operating costs for the online safety regime are covered by providers of regulated services through a fees regime, and it is vital that that is apportioned fairly. Fines are powerful sanctions available to Ofcom, but they must be proportionate to the company and the scale and breadth of the infringement, so that companies in breach of their duties under the Act can be held to account in a way that will not only penalise non-compliance but encourage a material change in operation.

Oral Answers to Questions

Ben Spencer Excerpts

Wednesday 25th June 2025 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

Why are the Government ignoring the advice of the AI opportunities action plan to encourage the start-up and scaling of tech businesses in the UK and instead favouring market-dominant corporations from abroad over our own domestic businesses when awarding Government contracts?

[Chris Bryant]

We are not.

Pride Month

Ben Spencer Excerpts

Monday 23rd June 2025 Commons Chamber

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

I am proud to speak in today’s debate on Pride Month; it is the first time I have done so. I also enjoy the distinction of being the first straight man to become a member of LGBT Conservatives, which involved a special resolution to approve my membership. Hopefully that will be the first and last constitutional conundrum for which I am responsible in my political career.

Today, I want to speak of my incredible pride that, more than 10 years ago, a Conservative coalition Government passed legislation to legalise same-sex marriage. Today, around 167,000 people are living in same-sex marriages, with all the happiness, challenges and life-enriching complexity that involves. I am proud of that because the Conservative party is the party of family, and the party of rights and duties, freedoms and responsibilities—the freedom for people to love whoever they choose, and the freedom to honour that love by making a lifelong commitment to another person, with all the responsibilities for mutual care, support and home building that entails.

Children enjoy the best outcomes when they are raised in stable, loving homes. While marriage is not always a guarantee of stability, it is a good indicator and supporter of it. Data from the UK longitudinal household survey shows that cohabiting parents were 3.4 times more likely to split up during any given one-year period compared with married parents, across income groups. The benefits of making a commitment and raising a family are not just for the children of those families. Taking on family responsibilities gives people meaning and purpose, making them more productive as they work to put the people they have taken responsibility for ahead of themselves.

In saying this, I want to acknowledge and pay tribute to the single parents and cohabiting couples, both same sex and heterosexual, who do a heroic job every day for their families. Quite frankly, as a married parent myself, I do not know how single parents manage it and I pay tribute to them. All parents should be acknowledged and appreciated for the daily acts of care and sacrifice that they make for their children—our future. Just because other models can and do work, we should not stop striving to support the institution of marriage as the foundational building block of our society. Society benefits from stable families where children can be supported to thrive and become citizens who contribute to not only their family lives, but their communities.

I am pleased and proud to belong to a party that championed the rights of same-sex marriage and brought it into law. Our laws and policies should incentivise commitment to family life for all couples, regardless of sexuality. I am proud that because of decisions in this place, so many people can marry the person they love today.