Telecommunications Infrastructure (Leasehold Property) Bill

Iain Duncan Smith Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Tuesday 10th March 2020 Commons Chamber

[Chi Onwurah]

In that case, I am sure that the Government will adopt this amendment, which means that the infrastructure that is put in place under the Bill has to be open to other competitors so that one operator cannot capture a building. That is the intention of the amendment; it is not the intention of the Bill. The amendment ensures that tenants are not locked into services provided by a single operator, requiring that the infrastructure can easily be shared.

Amendment 6 recognises the distressing recent reports of hacked baby monitors and suchlike, and poor cyber-security practices that leave many residential users open to cyber-attacks. The amendment is aimed at supporting customers and bedding in best practice for the era of the internet of things, which will increase citizens’ data trails exponentially, and therefore the opportunity for cyber-threats, digital surveillance and data exploitation. People, not technology and things, must be at the heart of the internet of things. Through this amendment, we want to ensure the distribution of materials on cyber-security education for new customers getting a telecommunications service as a result of the powers exercised under the Bill.

I started by saying that this is a mediocre Bill. On a scale of zero to 10, in terms of impact on our telecommunications infrastructure, it is about 0.5—with a good wind behind it. It does no harm, but it does very little good. Our amendments seek to change that, delivering for tenants, for competition and for national security.

[Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I rise to speak to the amendment standing in my name and in those of my colleagues.

The reason we have tabled this amendment is that we are genuinely concerned, like the hon. Member for Newcastle upon Tyne Central (Chi Onwurah), that this country has got itself far too bound into a process in which we are reliant on untrusted vendors—in this particular case, Huawei. We recently heard a Government Minister express the view that Huawei is a private company. Let us be absolutely clear at the outset: this company is not a private company. Ultimately, it is essentially almost completely owned by Chinese trade unions, and they, of course, are completely locked into the Chinese Government. This an organisation wholly owned by China.

It is often bandied around, including by some of the security guys the other day, that this is somehow all to do with market failure, as if out of nowhere companies from the west in the free markets—the free world—no longer wanted to get involved in this process. That is completely and utterly without foundation. The single biggest problem we have faced is that, nearly two decades ago, the Chinese Government set out to ensure that they dominated the market. As this organisation has access to nigh-on unlimited funds, it has spent that period underbidding every single time in these processes, from 2G through to 4G and now, as we understand it, 5G.

[Mr Ellwood]

I commend my right hon. Friend and the others who have put their name to amendment 1 for raising the profile of this difficult and complex issue. I think the Government should be on warning that while the amendment may not be pressed to a Division because of what the Minister says later, this House believes that we need to wean ourselves off Huawei. Does my right hon. Friend agree that there is an easy way out of this? There are six global vendors when it comes to 5G: ZTE, Huawei, Ericsson, Nokia, NEC and, of course, Samsung. The last two are not allowed to operate outside Japan and Korea. If they were invited to do so, that would enable us to push away Huawei and ensure that our national infrastructure is protected.

[Sir Iain Duncan Smith]

I agree with my right hon. Friend, and I was going to come to those points.

As I saying, if we look at this strategy, we see that when this all began, there were something like 12 companies in this marketplace. One by one, they have disappeared. Why have they disappeared? They simply cannot compete with Huawei’s pricing. These telecoms companies—telcos, as we call them—have bit by bit found themselves going to the cheapest bidder, providing the technology is as good as the others. By the way, it is certainly not an argument that Huawei has better technology; there is no evidence of that whatsoever. In fact, I think Dr Ian Levy said a year ago that he thought Huawei’s security issues were a shambles, and that is correct. Huawei does not somehow have extra brilliant technology. What it does have, however, is money, which allows it to bid down.

The hon. Member for Newcastle upon Tyne Central said that she is a believer in free markets. She will know that the free market relies on companies being able, when they sell their goods, to make enough money to reinvest and improve the quality of their goods. That is how a proper rules-based market works, but not with a company like this, which is able to strip that away. One by one, these companies have gone, not because of market failure but because it has been a policy position of the Chinese Government using Huawei to dominate this market over nearly two decades.

[Sir Mark Hendrick]

Will the right hon. Gentleman give way?

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[Sir Iain Duncan Smith]

I will give way to the hon. Gentleman, but not for long.

[Sir Mark Hendrick]

I thank the right hon. Gentleman for giving way. In America, the break-up of the Bell Telephone Company led to the creation of the “Baby Bells”. Companies are changing all the time. Telecommunications companies across Europe are changing and restructuring all the time. This is no different.

[Sir Iain Duncan Smith]

With respect to the hon. Gentleman, I have no idea what he was intervening over. There is a free market, and when a free market operates we have competition because companies are set up to solve problems and sell their goods. When a company has unlimited funds and can undercut the others, there is no money for them, they cannot operate and they will go out of business. It is fairly logical for anybody who understands the free market.

[Mr David Davis]

It is not just subsidy that supports Huawei and undermines its competition. At least some members of the Canadian Security Intelligence Service believe that Huawei started by stealing Nortel’s technology, which ended up destroying Nortel and putting Huawei in a dominant position.

[Sir Iain Duncan Smith]

My right hon. Friend is absolutely right. I was going to come to that, but now that he has mentioned it, let us kill this one completely. The reality is that there has been a whole series of attempts—successful ones—to steal technology from other companies in the field, thus driving them out, by finding the edge they have on technology and selling it at a cheaper price. The bidding that took place under the previous Labour Government was raised earlier. I am not blaming the Labour Government for that; that just happens to be the way it was. But the amount paid by those companies was astonishing—about £24 billion to £25 billion—and it left them bereft of cash and desperate for cheap product.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Has my right hon. Friend given consideration to financial/non-financial tariffs that could be applied to Huawei on our exit from the EU, after the transition period, to try to level the playing field? Does he think that the 2022 deadline is realistic?

[Sir Iain Duncan Smith]

I am always flexible on the date, providing there is an intent and commitment to eradicate the involvement of high-risk vendors in our system across the board, full stop. I think that is a reasonable position, and I will wait to hear what the Government have to say; they will expect me to intervene to ensure that that is as clear as possible.

[Tom Tugendhat]

The position that my right hon. Friend is arguing for is one that many Government Members and many people in this country agree with—namely, that we should be supporting domestic industry and looking to partner with countries and companies that share not just the technology but the values that underpin that technology. The Government are right to be looking at investing in infrastructure, and we all welcome their investment in broadband, but should some of that investment not perhaps be in UK infrastructure?

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[Sir Iain Duncan Smith]

I agree with my hon. Friend. This is the other sad part of what has been going on for over a decade. We have watched quietly—it does not matter which party has been in power—as all that ability has been stripped out of the UK. Our last provider was some years ago, and it has gone, so we now rely on the Huaweis of this world. Furthermore, all the microprocessors and the chips are not produced here; they are mostly produced in the far east. My point is simple: if this was of strategic importance to us, surely we should have all got together and decided that we need to have these facilities here, so that we can control future development.

The National Cyber Security Centre has produced its security analysis for the UK telecoms sector. Despite all the talk about how it can control things, it is quite clear in paragraph 5.5.2 on page 13 when it says:

“Without government intervention, the NCSC considers there to be a realistic likelihood that due to commercial factors the UK would become ‘nationally dependent’ on Huawei within three years.”

I say to my right hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke): I put down a date two years from now in my amendment, but the NCSC refers to three years. I want to know what the Government think the risk is and how they will eradicate that.

[Anthony Mangnall (Totnes) (Con)]

Will my right hon. Friend give way?

[Sir Iain Duncan Smith]

I am conscious that Madam Deputy Speaker does not want me to speak for too long, so I will give way briefly.

[Anthony Mangnall]

Is my right hon. Friend aware of the Made in China 2025 strategy, which aims to see China extend its influence in telecommunications networks across the world? I find that extremely worrying, and it makes me think that Huawei is not only a high-risk vendor but will become an increasingly risky vendor for our networks.

[Sir Iain Duncan Smith]

We have looked at the past, we are where we are and now we look to the future. That suggests that we will become completely and utterly in thrall to providers that we cannot possibly trust. That is a big security risk, and it is a statement of absence of thought by any Government. If defence of the realm is our No. 1 priority, this becomes demi-defence of the realm, and I am simply not prepared to put up with that.

[John Redwood]

I thank my right hon. Friend for highlighting and leading on this crucial issue; I fully support him. Will he confirm that there is technology outside China that would do this job perfectly well?

[Sir Iain Duncan Smith]

I am glad that my right hon. Friend raises that point, which I was going to come to. He is right. There has been a whispered suggestion to many of my colleagues and, I am sure, others—I do not mean that anyone has set out with malicious intent, but with practical intent, I suspect, to head off any would-be vote in the wrong direction—that we have to use Huawei because there is no other way of doing this, but that is simply untrue. Yes, there were 12 companies once upon a time and they are much reduced in number now, but I am aware of at least three that have been involved in 5G development or are capable of doing 5G development in what I call the free market world, with all of us, and they are Nokia, Ericsson and Samsung. In fact, Samsung has been involved in the South Korean 5G network anyway, and every one of them says, “We can do this.” The question then is that this will add cost, but I am sorry to say that, in reality, when it comes to security versus cost, my view is that security wins every single time.

[Several hon. Members rose—]

[Sir Iain Duncan Smith]

I will give way in a second, but I am conscious that you want me to make some progress, Madam Deputy Speaker.

I worry when we start compromising security. I worry—and this is the point I want to make—that we have no friends out there any more on this issue. The Canadians, the Americans, the Australians and the New Zealanders all disagree with us. I know there is sometimes a habit in this country of people quietly and smugly saying, “Well, we’re better than they are”, and I understand that. It may be the suggestion of the Security Council—[Interruption.] Well, you know what it is like. I learn a lot from my nationalist colleagues. [Interruption.] I do; I used to live there.

The point is that when people say that smugly, the answer is, “No, we’re not.” The Australians are adamant that they do not believe it is possible to manage this process, and everyone else from the Americans onwards says the same. The Japanese are absolutely seething with us over this because it undermines them, and they are of course very close to what they consider to be a threat. Then we get others, people whom we are not necessarily close to, such as the Vietnamese, who do not even want to do this because they recognise that there is a real threat. My point is that, once we add this all up, there is simply nobody out there who agrees.

I therefore very simply say this: no matter how intelligent, brilliant and great our security and cyber-security services are, how is it that they are right and everybody else is wrong? In fact, at a briefing the other day, I saw them trashing the Australian view of this. I simply say, fine, but the reality is that we are alone on this matter, and I think that that is a very bad place to be in relation to our closest allies when it comes to security.

[Damian Green]

My right hon. Friend is being generous in giving way. Is not the point that Britain’s reputation in this area is very high, and if Britain takes the wrong step and allows Huawei to dominate our telecoms infrastructure for decades, other countries will think that it is the right thing to do? In particular, smaller countries around the world will think, “If the British think it’s okay, then we’ll do it as well”, and this could be the route by which China dominates telecoms infrastructure in many countries around the world for decades to come.

[Sir Iain Duncan Smith]

You know what, I think that is almost the most powerful point. We have a leadership role in this, and many countries look to us. The reason why it is so important, I believe, that Huawei captures this market is very simply that it knows it will be able to go around to all these other countries that have lesser security than us and say, “Well, you know, the British have got a brilliant reputation, and they’ve said it’s okay, therefore what are you worried about? You don’t even begin to know half of what they know, so now we’ll just sell our goods over here.” The eventual aim of this is to capture most of these networks, and when it has done that, as the National Cyber Security Centre peculiarly said, we may be completely in hock to it because all the other companies will have fallen away, and we will be left with the invidious choice of not doing 6G because we cannot risk it and do not have anybody else to go to. Now is the time to restore our faith in those companies, and give them a chance to compete and to produce the product. They are less risky—I accept there are always risks, but they are far less risky—than the high-risk vendors.

[Mr Owen Paterson (North Shropshire) (Con)]

Does my right hon. Friend agree that there is a compelling urgency now? There are significant customers for this equipment that are looking to see what the Government decide. If we fudge it today and we do not have a very clear target date to end the involvement of high-risk vendors, they will be compelled by commercial imperatives to buy from the cheapest vendor, which is Huawei. It is really urgent now to have a clear end date by which we will get to zero.

[Sir Iain Duncan Smith]

My right hon. Friend is correct. I will quote what happened in the debate we held in Westminster Hall, because we heard a really significant final statement. The Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the hon. Member for Boston and Skegness (Matt Warman) said—quite rightly, by the way, as I think this is a very good starting point—that

“we will work to move towards no involvement of high-risk vendors.”—[Official Report, 4 March 2020; Vol. 672, c. 299WH.]

I want to conclude—and allow others to get into this debate—by simply saying that three things need to happen today. I recognise fully, and I say this to the Secretary of State, having done much the same kind of stuff as him, that it is not easy. I recognise that, strictly speaking, this is not the correct Bill to try to force through the whole change, but my view is any port in a storm. This amendment is a boat in a different port, but perhaps if he so wants, we can move it into the correct port when he brings through the relevant Bill.

I need some absolute clarity from the Secretary of State, as I think do my colleagues. First, we must plan and we need to know that it is the Government’s intention to move to essentially rid ourselves of high-risk vendors from our system. There also needs to be a concept of timescale in this. I want the Government to recognise and to accept that we have to set ourselves the task to do this. I accept that the Government have already said they want to do it with their Five Eyes colleagues—that is a start, because they have not said that before—but we need to work with our real allies to get ourselves into the position where we can actually go on to rid ourselves of these high-risk vendors. I accept that that is not without difficulty, so the Government need to make that pledge very clearly, and they need to give the timescale by which they will have achieved it and commenced the process of winding out those high-risk vendors.

Lastly, if the Government do not want us to try to create trouble on this Bill, they must give an absolutely lock-tight commitment that the Bill relevant to this will return before the summer—categorically before that, and an early as possible, perhaps in May—so that we can properly see these commitments plus others written into that Bill, and we can understand that those are the Government’s intentions. It is absolutely critical for me—I will make my mind up on this only when I have heard the words of the Secretary of State—and we need to know, that it is the Government’s intention to rid ourselves of high-risk vendors such as Huawei; that it is the Government’s intention to do that in the Bill that will come before us; that they will now work aggressively and at speed with our Five Eyes colleagues, inviting them in immediately to create, with all of us, a system that allows us to do that at the earliest opportunity; and that they will commence the absolute beginnings of that retraction before the end of this Parliament. I give way a little bit on those timescales, but I think I am being fairly reasonable.

It is not normally given to me to make any demands, and I am not doing so. I am simply urging my right hon. Friend, his colleagues and anybody else from the Government who is watching—I genuinely understand the difficulties they are in—to please stop lecturing us and saying that there is no other provider and to stop lecturing us about this somehow killing broadband roll-out—it does not. Most importantly, they must remember that the security of the realm is the No. 1 priority, and that is why I have tabled the amendment.

[Ronnie Cowan (Inverclyde) (SNP)]

I will not take up too much of the House’s time—I have no intention of grandstanding on this issue—but it is always a pleasure to speak on behalf of the Scottish National party and to ensure that Scotland’s voice is heard in this debate about a key part of the UK’s infrastructure. It goes without saying that digital connectivity is absolutely vital as we seek to grow and evolve our economy. Indeed, full fibre roll-out and the 5G network underpin our progress towards the fourth industrial revolution.

The UK Government, who have responsibility for telecommunications, have a responsibility to ensure that this key driver of our future economic prosperity is appropriately protected and managed. I am pleased that, at a devolved level, the Scottish Government have taken strong action to support digital connectivity. Last month, the Scottish Finance Secretary announced that spending on digital connectivity projects is to double—up to £63.4 million in 2020-21. I want this investment to succeed in providing Scotland with world-class digital infrastructure.

With that in mind, the SNP welcomes the Bill before us today. The SNP acknowledges that the proposals will unlock opportunities for telecoms operators in Scotland that are being prevented from fulfilling consumer demands due to access issues.

The SNP also supports the introduction of laws that would benefit contractors by reducing the costs associated with the delivery of digital infrastructure to multi-dwelling units. The UK Government are entirely right to address any barriers to commercial deployment, and this will complement the Scottish Government’s ambitious plans for digital roll-out, particularly through the R100 programme.

I caveat my support by adding that the SNP will continue to monitor developments relating to this Bill. However, I am aware that Scottish Ministers stand ready to engage with their UK counterparts and I believe it would prove beneficial in making this legislation a success in Scotland.

On the amendments, I want to draw particular attention to those addressing high-risk vendors. We cannot ignore the National Cyber Security Centre’s determinations on Huawei, which it considers to be a high-risk vendor. We cannot ignore the fact that as a Chinese company Huawei could be ordered to harm UK interests under China’s national intelligence law of 2017. Once a virus is placed into our digital system, it cannot be contained by the Government washing their hands of the problem while singing “God save the Queen.”

We now find ourselves in the strange and contradictory position of admitting that Huawei is a potential threat to our national security yet granting it an important role in the development of our digital infrastructure. The UK Government can play around with the semantics of the situation by saying that Huawei will be limited to the periphery or to being a minority presence, but it is deeply irresponsible to dismiss the expert advice.

Sir Richard Dearlove, who led MI6 from 1999 until 2004, said

“we must conclude the engagement of Huawei presents a potential security risk to the UK.”

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[Oliver Dowden]

It would be fair to give way to my right hon. Friend the Member for Chingford and Woodford Green first.

[Sir Iain Duncan Smith]

I am grateful to my right hon. Friend. Let me bring him back to the Government’s position. Is it correct, and does he agree, that the position of Her Majesty’s Government is now to move towards no involvement—I repeat: no involvement—of high-risk vendors in our system and that that, in the five-year period that he is talking about, will be the purpose of what they engage in?

[Oliver Dowden]

I think we are all in agreement—certainly on the Government side of the House, and I believe that many Opposition Members also agree—that in an ideal world, there will be no need for any high-risk vendors at all. However, what we have to do, as a first step to getting to that point and within this Parliament, is ensure that we have developed the supply chain capacity. The point has been made by many right hon. and hon. Members that there is a lack of capacity on the supply side at the moment. That is why we are making this very strong commitment—by the way, this relates to the point made by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis)—which will involve considerable expenditure by the Government to ensure that we work with our Five Eyes and other partners to develop new supply chain capacity in our political and national infrastructure in this Parliament, so that we can then commence the process of ensuring that we move away from high-risk vendors.

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[Oliver Dowden]

The rationale, as decided by the National Security Council, on advice from the agencies, was that that was a sustainable point—a cap from which we could start to work down. As my hon. Friend well knows, of course, there is a degree of arbitrariness in any number, but on balance it was decided that 35% was the appropriate place for us to land.

[Sir Iain Duncan Smith]

Will my right hon. Friend give way?

[Oliver Dowden]

I will give way one more time, but then I must proceed.

[Sir Iain Duncan Smith]

I am trying to help my right hon. Friend, believe it or not. I understood from the discussions that our position was clear. I accept that the engagement of the Five Eyes is a new position. I congratulate them on that. But critical to that is that the point of our engagement will start with, as the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Boston and Skegness (Matt Warman), said, moving towards no involvement of high-risk vendors. If we start by having diversification, we have no position for our Five Eyes partners. But if our purpose is to get this right for no involvement—I want the Secretary of State to say that now. If I do not get that—others can do as they like here—it will be my purpose to press the amendment to a vote.

[Oliver Dowden]

When the telecoms security Bill comes forward, we will have the opportunity to have exactly this kind of debate. This is an amendment to a Bill that is about ensuring that we get broadband into blocks of flats. I completely appreciate why my right hon. Friend and others have chosen to table the amendment. The concerns of hon. and right hon. Members have been clearly heard and understand. This can be dealt with in the telecoms security Bill, but ahead of that, in recognition of those concerns, we already setting set out a pathway. First, we have made clear our intention to reduce our reliance on high-risk vendors as that diversification takes place. That gives further clarity to the House about the diversification process set out in the announcement from the National Security Council. Further, we have said we want to get to the position where we do not have to use them at all, which gives a sense of the clear endpoint and trajectory. But we are saying that in order to get from point A to point B we need to develop capacity, which is why we have said we will work with Five Eyes and other partners to develop this new supply chain capacity in our critical national infrastructure. Beyond all that, I recognise that this gives rise to tremendous questions about the basis on which the National Cyber Security Centre reached its decision. That is why for the first time we are saying that other than the ISC other Committees will have a chance to scrutinise and hold it to account for that decision.