Telecommunications (Security) Bill

Lord Alton of Liverpool Excerpts

Committee stage
Tuesday 13th July 2021 Grand Committee

Moved by

[Lord Alton of Liverpool]

1: Clause 1, page 1, line 11, at end insert—
“(1A) The duty under subsection (1) includes a duty to review—(a) vendors of goods or services to public telecommunications providers which are prohibited in other jurisdictions on security grounds, and(b) the reasons for such a prohibition.”

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[Lord Alton of Liverpool (CB)]

In moving Amendment 1 and speaking to Amendments 20 and 27, I first thank the noble Lords, Lord Blencathra and Lord Coaker, and the noble Baroness, Lady Northover, who have signed one or all of the amendments. This is a clear signal from across the Committee that the Bill must be strengthened to deal, first, with companies that have been banned in other jurisdictions, secondly, the need to dig deeper into the ownership and investment of companies and, thirdly, the desirability of acting in concert with our allies in Five Eyes.

These amendments sit comfortably alongside the call that we heard at Second Reading for additional parliamentary scrutiny, which the Intelligence and Security Committee has called for. At Second Reading, the noble Baroness, Lady Morgan of Cotes, said that we should focus on what other nations are doing:

“we have allies around the world and will want to be able to work with other companies and countries around the world to make sure we have that diversity of the supply chain.”—[Official Report, 29/06/21; col. 716.]

On 30 November 2020, the Secretary of State told the House of Commons:

“We must never find ourselves in this position again. Over the last few decades, countless countries across the world have become over-reliant on too few vendors”.—[Official Report, Commons, 30/11/20; col. 75.]


During our debate, the noble Lord, Lord Young of Cookham, told us:

“Other countries in the free world face the same challenges as the UK”.—[Official Report, 29/06/21; col. 718.]


The noble Baroness, Lady Stroud, urged us to work

“in close partnership with our Five Eyes allies”,

reminding us that

“We have known that Huawei is a security risk since 2013.”—[Official Report, 29/06/21; cols. 726-7.]


That should enable us to avoid what the noble Baroness, Lady Merron, described as “another costly security debacle”. My noble and gallant friend Lord Stirrup told us that we

“need to develop an approach ... that constantly monitors and rebalances this equation in the context of our complex and dynamic world.”—[Official Report, 29/06/21; col. 715.]

These amendments seek to address many of those points.

At Second Reading, noble Lords referred to companies that have caused security concerns in other jurisdictions, including Huawei, TikTok, ZTE Corporation, which the Government have named a high-risk vendor, Hytera Communications Corporation Ltd, Zhejiang Dahua Technology Company Ltd and Hangzhou Hikvision Digital Technology Company Ltd. I will return to Hikvision later. The noble Lord, Lord Fox, said that the Bill’s headline is

“a ban on the purchase of new Huawei equipment”.—[Official Report, 29/06/21; col. 711.]

Like the noble Baronesses, Lady Northover and Lady Bennett, he referred to the genocide against Uighurs in Xinjiang. I serve as vice-chair of the All-Party Parliamentary Group on Uyghurs and am a patron of the Coalition for Genocide Response. Following the House of Commons’ decision to name a genocide in Xinjiang, only last week the Foreign Affairs Committee published a damning report calling for a much stronger response from the Government. These amendments, like those to the Trade Act, which the House passed with three-figure majorities, are a modest attempt to force that stronger and effective response.

The noble Lord, Lord Blencathra, has frequently pointed to the way Chinese companies can fundamentally compromise our infrastructure and, through subsidies, asphyxiate UK industry. The one billion lateral flow tests that we have bought from the CCP are a glaring example. These amendments specifically address the telecommunications sector, but they provide a road map that could be emulated in other strategic sectors.

Finding ways to protect our strategic industries has never been more important. Last week, we learned that, in a deal estimated to be worth £63 million, the Newport Wafer Fab, the UK’s largest producer of semiconductors, has been acquired by the Chinese-owned manufacturer Nexperia. Nexperia is a Dutch firm but is owned by China’s Wingtech. Newport Wafer Fab is the UK’s largest producer of silicon chips, which are vital in products from TVs and mobile phones to cars and games consoles.

This acquisition is happening during an increasingly severe global shortage of computer chips. Kwasi Kwarteng, the Business Secretary, said that the Government are monitoring the situation closely, but do

“not consider it appropriate to intervene at the current time”.

When she comes to reply, perhaps the Minister could tell us why it is not appropriate, when the right time would be to protect a key national asset, and whether, following the Prime Minister’s subsequent expression of concern, the acquisition is being reviewed under the National Security and Investment Act, which at Second Reading we were all told would protect key national assets from dangerous foreign takeovers.

There is a lamentable lack of strategic coherence or consistency in our approach. On one hand, we have the noble Lord, Lord Grimstone, saying that he wants to deepen trade deals with China, while the Foreign Secretary tells us that slave labour in Xinjiang is “on an industrial scale”. We have the integrated review telling us that China is a threat to the United Kingdom, but the Business Secretary telling us that it is not appropriate to do anything at the present time.

This predatory absorption of our semiconductor industry is inimical to the material interests of our technology companies and to national security. Our Committee should consider carefully what is at stake here and why these amendments are so very relevant. Have the Government examined what is happening within the same sector in other jurisdictions, for instance? What assessment has been made of the dependency of United Kingdom manufacturers on China for imports of critical technologies such as semiconductors and semiconductor devices? The applicability of these amendments, by generating a review of other practices in other regions, is of course self-evident. We are starting with telecoms, but the same lessons apply across the board.

I also want to pursue an issue which the noble Lord, Lord Fox, and I raised at Second Reading. The Minister was asked about companies that operate and own CCTV security networks. UK local authorities are reviewing contracts for CCTV equipment made by Hikvision. This is being used to enforce China’s surveillance state in Xinjiang, but it is also operating CCTV equipment the length and breadth of Britain. Is that wise? Hikvision is banned in the United States but not here. I put a simple question to the noble Baroness at Second Reading, and I put it again: why not?

Last week in its report Never Again: The UK’s Responsibility to Act on Atrocities in Xinjiang and Beyond, the Foreign Affairs Committee said:

“Cameras made by the Chinese firm Hikvision have been deployed throughout Xinjiang, and provide the primary camera technology used in the internment camps.”


The committee heard concerns that facial recognition cameras made by companies such as Hikvision operating in the UK—I repeat: operating in the UK—are collecting facial recognition data, which can then be used by the Chinese Government. Dr Hoffman, who was one of the witnesses giving evidence to the Select Committee, said that Hikvision cameras are operating “all over London”. The committee said:

“Independent reports suggest that Hikvision cameras are operating throughout the UK in areas such as Kensington and Chelsea, Guildford, and Coventry, placed in leisure centres and even schools.”


The committee concluded:

“Equipment manufactured by companies such as Hikvision and Dahua should not be permitted to operate within the UK. We recommend that the Government prohibits organisations and individuals in the UK from doing business with any companies known to be associated with the Xinjiang atrocities through the sanctions regime. The Government should prohibit UK firms and public sector bodies from conducting business with, investing in, or entering into partnerships with such Chinese firms”.


So will we? It would be good to hear from the Minister.

In parenthesis, the committee also registered concerns about

“substantial research connections between the Chinese organisations responsible for these crimes and UK universities”,

and said that,

“the role of advanced technologies in the use of oppression in Xinjiang cannot be ignored.”

At Second Reading, the Minister referred to the report into export licences. The Select Committee complains that

“the Government has not made clear when the urgent export review will be concluded. The crisis in Xinjiang is far too urgent for delay.”

Again, it would be good to hear from the noble Baroness on that specific point about export licences. Can we at least be told what plans the Government have to impose import and export controls on firms linked to China’s military-civil fusion programmes? Are we acting in concert with our allies, as these amendments require, over Hikvision? As in the US, will this Bill be used or amended to enable us to ban it?

The Select Committee also referred to our duties under the Modern Slavery Act 2015. I refer to my interests as a trustee of the Arise Foundation. The committee report says:

“the issue of forced labour in Xinjiang is pervasive, widespread,”

and that

“In the Government’s own words, ‘no business can consider themselves immune from the risks of modern slavery’.”


This, too, is information that has been assessed in other jurisdictions and deemed to raise ethical and security issues of which we should make ourselves aware, as these amendments would require us to do. I can think of no compelling reason, other than vested interests, as to why we would not want to know what other jurisdictions are doing about these issues.

I turn again to telecoms. The argument for more concerted action was put well, in the context of Huawei, by Senator Marco Rubio, who said:

“Rejecting Huawei would not mean the UK going it alone, but joining a coalition of like-minded countries determined to ensure effective, market-based alternatives to Huawei are available.”


He is right. Have we examined this? Are we doing the same?

As long ago as 2018, the US put in place a block on ZTE, China’s second-largest maker of telecommunications equipment, because of violations of sanctions against Iran and North Korea. It has designated ZTE as a “national security threat” with government telecommunications funds banned from buying equipment from ZTE. Are we doing the same? In April, the Department of Commerce added seven Chinese supercomputing entities to the list, with Gina Raimondo, the US Secretary of Commerce, insisting that

“The Department of Commerce will use the full extent of its authorities to prevent China from leveraging U.S. technologies to support these destabilizing military modernization efforts.”


The US has gone further in examining investments, as these amendments do. Proposed new Clause 15 would require us to examine what others are doing in this respect. President Biden has issued an executive order banning US investors from trading shares in China Mobile, China Unicom and China Telecom. The list of firms in which US firms cannot invest comes to more than 60. I will not read out the full list today, but I have sent it to the Minister, who has kindly acknowledged receipt, for which I am grateful. Among those firms listed are a number specifically connected to surveillance technology including China Telecommunications Corporation, China United Network Communications Group, Hangzhou Hikvision Digital Technology, Huawei Technologies, Semiconductor Manufacturing International Corporation, China Mobile Ltd and China Telecom Corporation Ltd.

However, it is not just the US. Australia is another of our closest allies and a core member of Five Eyes, which is specifically mentioned in these amendments. In blocking a A$300 million takeover offer by China State Construction Engineering Corporation, Australia cited national security grounds. As long ago as 2016, Australia forbade a deal on the basis that China’s subsidies rendered it difficult for Australian bidders to make a competitive bid, with the Treasurer saying that it may be

“contrary to the national interest”.

In 2020, the Guardian Australia reported links between companies operating in sensitive sectors including the national science research agency and technology companies and operatives from the Chinese intelligence agencies, with one reported as having ties to the CCP’s United Front Work Department, a foreign-influence body described by President Xi Jinping as an “important magic weapon”.

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[Baroness Barran (Con)]

I may need to write to the noble Lord about the technical details he has set out. I think for the approach to be effective it needs to incorporate all elements of that. An overall system cannot be a capable system if the subsystem is not. There needs to be coherence across the equipment that is supplied and our understanding of how it operates in practice and the component parts to inform the judgment about its security or not. I am happy to follow up in writing if he is agreeable.

[Lord Alton of Liverpool (CB)]

I thank all noble Lords who have participated in the debate and the Minister for her replies. I thought that the intervention just now by the noble Lord, Lord Fox, was important. It drives at one of the issues that we have debated today in the context of Nexperia and what is happening to a British company that has been acquired by a Chinese company through its Dutch affiliate. It is about computer chips. It is about semiconductors. It is about our ability to be able to control what goes into the technology that the Bill is very much about. That is not an on-the-side question; it is a very important central question and I look forward to seeing the response that the Minister gives to the noble Lord, Lord Fox, when she looks at it further.

I turn now to some of the contributions made today. The noble Baroness, Lady Northover, in a typically powerful and thoughtful intervention, invited us to delve more deeply. That is what we have been doing during this afternoon’s proceedings. She emphasised the importance of countries working together. She regretted, with sadness, that we have been forced to make some of these decisions about our own individual ability to acquire intelligence as a result of our decision to leave the European Union.

I thought it was interesting that, earlier today, the European Commission issued new guidance to combat forced labour in supply chains. It rather puts our laggardly and perfunctory efforts to shame. The guidance provides concrete, practical advice on how to identify, mitigate and address the risks. This issue has been referred to and the noble Baroness has said that she is going to write to us further on modern-day slavery and supply chains. High Representative/Vice-President Josep Borell says that the guidance

“will help EU companies to ensure their activities do not contribute to forced labour practices in any sector, region or country.”

It paves the way for future legislation which will have enforcement mechanisms and should introduce a mandatory due diligence duty, requiring European Union companies to identify, prevent, mitigate and account for sustainability impacts in their operations and supply chains.

Our amendments today would gather that kind of information. I simply do not accept that it is impossible for companies, in partnership with government—a point made by the noble Baroness in opposition to these amendments was that this would place too much responsibility on companies—or countries such as our own to collect this information. Like other noble Lords around the table, I have no staff. The information I gave to the Committee today is publicly available and, with a little bit of research, it can be obtained without too much difficulty. It is absurd to suggest that it is beyond the ability of companies or countries to collect information and share knowledge. The example from the European Union underlines what the noble Baroness said to us today.

The noble Lord, Lord Naseby, was, as always, asking all the right questions. From our many years together in another place, as well as here, I am always happy to stand with the noble Lord, not least because of his experience in many parts of the world. It is important to ensure that our people who are in post in many of our embassies are given the ability to ask these searching questions and to ensure that the information comes back to us, to prevent many of the expensive mistakes that have been made around Huawei, and which have been referred to during the debate, happening all over again.

My noble friend Lord Erroll was right to say that there are human rights abuses in many countries. Like him, I become indignant about some of those abuses; I do not argue, though, that we should no longer trade with those countries. I always prefer that we trade with countries that are on a trajectory to reform, that are law-abiding and that believe in human rights and democracy, but I accept that it would be impossible to take out of supply chains any country that carries out any kind of human rights violation.

However, there are certain markers that we can look to. One of them is our legal duty under the 1948 convention on the crime of genocide. This is not a word to be used lightly. The word “genocide” came into our vocabulary thanks to a Polish Jewish lawyer, Raphael Lemkin, who had seen over 40 of his own family murdered in the Holocaust. During the proceedings on the telecoms infrastructure Bill last year, I gave examples from that period of how companies such as Philips had their own forced labour in the camps where people were dying. I gave the example of Corrie ten Boom, a Dutch woman who had given refuge to escaping Jewish people trying to flee the Holocaust. She and her sister were arrested and sent to work in that factory; her sister died there. Corrie ten Boom wrote a deeply moving book called The Hiding Place. That is the comparison I seek to draw.

It is not just me. In April this year, the House of Commons said that what is taking place in Xinjiang is genocide—it is only the second time that it has ever made such a declaration, so this is of a different order. Where there is genocide, we, as signatories to an international treaty—the 1948 convention on the crime of genocide—have a legal obligation to predict the signs of genocide, prevent it from happening, protect those affected and prosecute those responsible. I accept my noble friend’s argument—we are not going to stop trading tomorrow with Gulf states or whomever it may be who is doing fairly odious things—but the crime of genocide is surely in a different league.