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

Bradley Thomas Excerpts

Thursday 5th February 2026 Public Bill Committees

[Kanishka Narayan]

I thank the hon. Member for that thoughtful point. One assurance I will offer her is that the direct definition of data centres in scope here rely on capacity as a proxy for their essential independent nature, but when data centres below the capacity threshold but high on the criticality threshold are suppliers to essential services, they would be covered in part by the critical suppliers framework in the Bill. I take her point into account.

[Bradley Thomas (Bromsgrove) (Con)]

What consideration has been given to the potential conflict between data centres’ contractual obligation regarding customer confidentiality and mandatory rapid reporting? What assurance can the Minister give us that data centres will ensure that the conflict does not impact their future business?

[Kanishka Narayan]

In the course of engaging with firms we have considered what the timeline for reporting ought to be. It is critical that the initial notification requirement, which is a much lower requirement than the full notification requirement, at least gives the NCSC and other enforcement authorities the ability to counter national security and wider-impact risks. I believe that specification to be proportionate in the Bill, but it is of course a matter for implementation that we will keep a close eye on.

An attack on a data centre can have significant impacts beyond the facility itself. As data centres underpin digital services across multiple sectors, disruption or compromise can cascade through essential services, businesses and public services. Incidents may also pose national security and economic risks, given the concentration of sensitive and critical data. Bringing qualifying data centre services into scope of the NIS framework helps ensure these risks are managed proportionately and incidents are reported promptly. 

As per Government amendments 11 and 12, we propose that Ofcom is the regulator.   Medium and large third party data centres and very large enterprise centres will be required to manage risks and report to Ofcom. Their thresholds have been carefully calibrated to capture data centres whose disruption could have the greatest impact, while avoiding unnecessary burdens on smaller operators. This will strengthen the cyber-security and resilience of data centres, align with international regulations, and introduce structured oversight, notification, and incident reporting to strengthen national security and economic stability.

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[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.

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[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.

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[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.

[Bradley Thomas]

Will the Minister give way?

[Kanishka Narayan]

I might just make a slight bit of progress. As I mentioned in a previous session, the programme reached 415,000 students, and it has now been evolved into the wider TechFirst scheme as well.

The shadow Minister, as well as the hon. Member for Bromsgrove, made a very important point about resilience in particular and sovereign capability. Particularly for those reasons, I am really proud of two things. One is that the Bill includes suppliers that may not be resident in the UK but provide essential services in the UK. This is a critical means through which we can secure our capabilities here. The second, which is close to my particular interests in the data centre and compute world, is that, through our initiatives on sovereign AI, and having launched a very innovative advance market commitment in the chips part of the stack, which ends up crowding in wider demand—not least through companies such as Nscale, a fundamental part of our AI growth zone in the north-east—this Government are finally rectifying the errors and omissions of the last Government, in making sure that Britain does not do what it did in the last commercial cloud context, but instead, in this AI compute world, has some actual chips on the table.

Thirdly, I will not try to settle the thrilling debate between the shadow Minister and my hon. Friend the Member for Lichfield on the philosophy of regulation. I will simply make the humble suggestion that in this context we have arrived at, not a full-fat compendium, as the shadow Minister described it, but a very targeted Bill, which has been the result of extensive industry engagement—indeed, some of it was carried out by the prior Government—that aligned on the sectors in question and the inclusion of critical suppliers in scope.

On the shadow Minister’s question about the thresholds and definitional specificity of large load controllers in the Bill, I will of course remain very open to ensuring that the secondary powers, which are intended precisely to enable us to move flexibly as the clean power industry moves, give us the flexibility to move with it. At the same time, the threshold of 300 MW reflected the point at which a large load controller could pose an unacceptable risk to the electricity system and our CNI. This threshold was set very clearly in partnership with technical experts, including the National Energy System Operator. Of course, as the market grows, the potential for cyber-incidents will grow, and we will keep that under close review.

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Amendment 25, in the name of the hon. Member for Brecon, Radnor and Cwm Tawe, would amend the NIS Regulations 2018 to include fraud as one of the risks to the security of network and information systems that relevant digital service providers must identify and manage. Many fraudulent sites, including those posing as legitimate Government resources, often remain accessible via search engines, even after platforms have been alerted to the risk by service users. A fraudulent site could have been flagged to some sort of provider yet still be accessible even after the risk has been identified. Wherever online platforms and search engines can do more to protect users from fraud, they should be doing so. What analysis has the Minister made of that risk and of whether the Bill is the appropriate vehicle for introducing further measures to tackle it?

[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?