National Security and Investment Bill

Lord Butler of Brockwell Excerpts

Committee stage
Tuesday 16th March 2021 Lords Chamber

Moved by

[Lord Butler of Brockwell]

70: Clause 26, page 17, line 40, at end insert—
“( ) Before a final order is made, the Secretary of State must share with the Intelligence and Security Committee of Parliament any intelligence relevant to such an order, and a final order shall not be made before the Intelligence and Security Committee has made a report to Parliament on the order.”

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[Lord Butler of Brockwell (CB)]

My Lords, the noble Lord, Lord Rooker, has added his name to this amendment, although he is not able to speak today. I shall also speak to other amendments in this group.

Something strange is happening here. The Bill gives the Government extraordinary powers to intervene in, and possibly prevent, private sector commercial transactions. I accept that there may be occasions on which the Government need to protect British industries against incursions from foreign companies, particularly if those companies are under the control of unfriendly states, but these powers are extraordinary and their exercise, and the justification for that exercise, will often depend on intelligence information that the Government cannot, naturally, make public. How then is Parliament going to scrutinise and the Government to justify the use of these powers in those circumstances?

In the Intelligence Services Act 1994, the Conservative Government established a parliamentary mechanism precisely for this purpose, by setting up the Intelligence and Security Committee of Parliament. The coalition Government reinforced the committee’s powers in the Justice and Security Act 2013. That committee comprises Members of both Houses of Parliament with experience of intelligence who are admitted within the ring of secrecy so that they can have access to highly classified information and advise the Government and Parliament on its use. I declare an interest, having served on the committee for five years. Yet the Government have refused to provide, in the Bill, for the ISC to have a role in scrutinising the use of the powers in it. It is as if the Government have acquired a watchdog, yet are unwilling to let it bark just when it is needed.

This point was raised by the Opposition parties in the other place, and the Minister produced repeated excuses for denying the ISC an explicit role. Ultimately, the Minister said that the ISC could review the annual report which the investment security unit established by the Bill is required to make to Parliament. That made it necessary for the chairman of the ISC, Dr Julian Lewis, to intervene and say that the annual report would be a public document, which could not, by definition, contain classified information. The Minister’s reply to that was that the ISC could subsequently ask the Secretary of State for such classified information.

The noble Baroness, Lady Hayter, with the support of the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, has tabled Amendment 82, requiring that the Secretary of State should publish a separate annual report to the ISC which can include classified information. The noble Lord, Lord West, who is your Lordships’ current representative on the ISC, has put down an amendment, with the support of the noble Lords, Lord Rooker and Lord Campbell of Pittenweem, requiring classified information to be contained in a confidential annexe to the annual report of the investment security unit, to be made available only to the ISC. I will support these amendments if my own amendment is not acceptable, but if I may respectfully say so, an annual report after the event involves examining the operation of the stable door after several horses may have bolted.

My own amendment requires that, when a transaction is called in, any relevant intelligence should be made available to the ISC, and the ISC should make a report to Parliament before the Secretary of State makes a final order. The assessment period of 30 days under the Bill, extendable to 45 days, provides adequate time for the ISC to assess the intelligence provided to it, take evidence and give its opinion to Parliament. It seems to me unlikely that there will be so large a volume of transactions actually called in as to make this an unsustainable burden. In this House, we are used to Select Committees such as the Delegated Powers Committee and the Constitution Committee scrutinising Bills in short order and reporting on them to the House before the Bills go forward. If Parliament is to have any effective scrutiny of the use of the powers in the Bill, this seems preferable—if it is practicable—to an annual report after final orders have been made.

It is a matter for speculation why the Government have been so coy about giving the ISC an explicit role in the Bill. Paragraph 8 of the memorandum of understanding agreed between the Government and the ISC after the 2013 Act, says that

“only the ISC is in a position to scrutinise effectively the work of the Agencies and of those parts of Departments whose work is directly concerned with intelligence and security matters.”

Those were the words agreed between the Government and the ISC. The irony is that the ISC’s role is potentially helpful to the Government. Only the ISC can have access to the intelligence information justifying the Government’s intention to intervene. To give an example, I recall that, when I was a member of the ISC, there was a press story that GCHQ was piggybacking on the American NSA to obtain intelligence that it could not obtain under its own powers. The ISC examined the records and was able to reassure Parliament and the public that the reports were false.

Is the reluctance on the part of the Government a hangover from their embarrassment over publication of the ISC’s report on Russian interference before the 2017 election, or is it a result of government pique about the committee’s appointment of its own chairman in place of the Government’s nominee? Whatever it is, it is difficult to understand what the Intelligence and Security Committee is there for if not to have a role on behalf of Parliament and the public in sensitive matters of this sort. I beg to move.

[Lord West of Spithead (Lab)]

My Lords, I am speaking to my Amendment 78 and will touch on Amendment 70 in the name of the noble Lord, Lord Butler, to which he has just spoken, as well as Amendment 82 in the name of my noble friend Lady Hayter and Amendment 86 in the name of the noble Lord, Lord Lansley. All relate to the same concern and try to resolve it in slightly different ways. I also thank the noble Lords, Lord Campbell of Pittenweem and Lord Rooker, for their support, and the noble Lords, Lord King and Lord Janvrin, for having expressed support for the measure in broad terms. It is rather good that this is the first amendment this afternoon being raised from this side rather than from the Government; that is quite interesting I think.

Noble Lords will be aware it was the Intelligence and Security Committee of Parliament which first raised the fact—and the alarm—that when the Government were considering major investment decisions, national security concerns were not being taken into account. There are those in this House who served on the committee at that time and should be thanked for their work bringing this issue to light. This was some seven years ago, and noble Lords will know from my previous interventions on this topic that I strongly support the need for this Bill, as I think all of us do in this Chamber.

However, there is a glaring hole in the legislation which the Government have not yet resolved: namely, there is no meaningful oversight. This Bill has national security at its heart, yet the Government will not let anyone oversee this secretive heart. The Minister has said that the ISC—the one body Parliament expressly established to oversee secret matters on its behalf—will not be given proper oversight of this secret activity. The offer that the ISC can scrutinise the public report and ask for any further information it wants is not good enough. The public annual report is just that, as the noble Lord, Lord Butler, said—it is public. Parliament itself can therefore scrutinise it, so there is no role for the ISC, which is designed to look at secret reports, not public ones. The Minister says that the ISC can request further information. But there is no obligation for that information to be provided. The ISC can only require information from those bodies that fall within its remit, and the investment security unit is not one of those bodies.

Without specific provision, there is a possibility that, even if this Government are well intentioned—which I am sure they are—future Governments may refuse to provide such information to the ISC. Consequently, I am afraid the Minister’s proposals do not meet the requirement for proper oversight. Worse than that, they represent a step backwards from the current oversight provisions. The unit that currently takes these decisions—the investment security group in the Cabinet Office—is overseen by the ISC. By moving this activity to the investment security unit in BEIS, the Government are actively removing it from ISC oversight. I am sure that this cannot be what the Government intend. This is the glaring hole in the Bill that we must fix, and my amendment does that. I thank the noble Lords, Lord Rooker and Lord Campbell of Pittenweem, for putting their names to this amendment.

Clause 61 mandates the Secretary of State to produce an annual report to Parliament. The information in that report is limited and obviously will not include any sensitive security information. My amendment to Clause 61 will add to that annual report further categories of information: details about the jurisdiction of acquirers; the nature of national security concerns raised; the particular technological or sectoral expertise being targeted; and any other information that the Secretary of State deems instructive on the nature of national security threats uncovered in the new regime.

The amendment then provides a mechanism for the Secretary of State to redact any of this information from the public report, should it be deemed damaging to national security. That information must be moved into a classified annexe, ensuring that, if Parliament cannot scrutinise it, the ISC can, on behalf of Parliament. This is an approach already used by organisations such as the Investigatory Powers Commissioner’s Office under the Investigatory Powers Act 2016.

The amendment proposed by the noble Baroness, Lady Hayter, and the noble Lord, Lord Fox, provides for a second separate annual report to the ISC. It seeks to achieve the same outcome as mine—namely, oversight of the security matters at the heart of the Bill. My understanding was that Ministers in the other place had found the annexe solution more palatable, in that it would minimise the reporting burden on the new unit. However, the ISC itself is ambivalent as to whether there is a secret annexe or a separate report; the key is that there is reporting on the security aspects, in whatever form that takes.

This is not a power grab by the ISC—far from it; we have more than enough work to do as it is, and nor do we have any interest in the wider work of BEIS. It is only the intelligence and security work of the new unit, which is, after all, our job. The ISC was expressly established to scrutinise the intelligence and security activities of government—as the noble Lord, Lord Butler, said—initially, within the three intelligence agencies, and then from 2013, throughout the full national security apparatus. That change in 2013 was a result of the Justice and Security Act. The long title of that Act refers to

“activities relating to intelligence or security matters”,

and these are set out in a memorandum of understanding under the Act, which was then deemed to be a practical vehicle for listing those bodies overseen by the committee, since it could be easily kept up to date. This was best explained by the then Security Minister, who, during the passage of the Act, said:

“Things change over time. Departments reorganise. The functions undertaken by a Department one year may be undertaken by another the following year.”—[Official Report, Commons, Justice and Security Bill Committee, 31/1/13; col. 98.]


And that is exactly what has happened.

Under this Bill, intelligence and security activity is moving from the Cabinet Office to BEIS, yet the Government have not updated the MoU to include it. They have not honoured their clearly stated intention that the ISC should have oversight of all government intelligence and security activities, and it is not just this unit; other units have been set up in other departments to carry out national security and they have not yet been added to the ISC’s MoU. This is not good enough.

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[Lord Grimstone of Boscobel (Con)]

I thank the noble Lord for these comments and in no way want to second-guess the deep experience that he has on these matters. But I repeat yet again: there seems to be a worry that BEIS Select Committee members will not have sufficient security clearance to be able to do the work required of them. I repeat from this Dispatch Box that there is no barrier to BEIS Select Committee members handling top-secret and other classified material, subject to agreement between the department and the chair of the committee on appropriate handling. I am not sure that I can say more than that, but they will be able to have the information they need to carry out their functions.

[Lord Butler of Brockwell (CB)]

My Lords, I am grateful for this debate. I am afraid that I have to say to the Minister that, while he may have used his own words in answer to the debate, he used the brief that would have been used by the noble Lord, Lord Callanan. I do not want to decry the work of the BEIS Select Committee at all, but the Minister gave the game away when he said that access to highly classified intelligence for the Select Committee would be based on an agreement between the chair and the Secretary of State. The Secretary of State would control it. In that case, Parliament would be in the position of Glendower in “Henry IV”, who says:

“I can call spirits from the vasty deep.”


So you can, is the reply:

“But will they come when you do call for them?”.


Under the memorandum of understanding, the Intelligence and Security Committee has a right to get the intelligence that it needs. A Select Committee of the House of Commons does not have that similar right.

What has run through this debate, from everybody who has spoken apart from the Minister, is that we want one simple thing. We want to make proper use of a tool that is there for Parliament and has been created for this purpose: the Intelligence and Security Committee. There are various ways of doing it, as has been made clear. It could be by annual reports; it could be by changing the terms of reference, which can be done so easily; it could be a transfer to the Cabinet Office, which would bring it within the terms of the ISC.

I suggested that this should be a real-time operation. If I may say so, the Minister misrepresented that. There is no reason why that should extend the time necessary for the assessment. The Intelligence and Security Committee will be looking at one thing—the highly classified intelligence on which the Secretary of State is acting—and reporting on that. That is not a huge job. The ISC could say quite shortly that it was satisfied, and 99 times out of 100, I think, it would say that there were good grounds for the order that the Secretary of State was proposing to be make. I think that could quite easily be done within the 30 days allowed under the Bill for the assessment. It would not even need to make use of the 15-day extension.