Economy: Productivity Measurement
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Lord Young of Cookham
It is certainly the case that cost per Member is much lower in your Lordships’ House than in another place, although of course there are reasons for this. So far as productivity in your Lordships’ House is concerned, one possible measure would be the number of questions we get through in 30 minutes adjusted for quality.
Lord Fox (LD)
My Lords, without bringing the analysis down, it is a fraction; it comes down to that in the end. The denominator is something that the Government like to talk about a lot. Employment levels are high and that is a good thing. However, the numerator is GDP. Last year, we saw GDP grow at only 1.4%—the worst performance since 2009—and the ONS predicts that the figure this year will be 1.2%. Clearly, the chaos we are seeing is driving down GDP growth. How can we ever have the productivity levels that the Government aspire to when the chaos around us prevents investment and confidence in business?
Lord Young of Cookham
The noble Lord goes back to an issue raised by the noble Lord, Lord Haskel, which is the industrial strategy. Its main thrusts were driving up productivity, backing businesses with high-quality and well-paid jobs, and investing in skills, growth industries and infrastructure. Investment in infrastructure is up 3%. Private sector investment totalled over £358 billion in 2018, combined with public sector investment. We also have long-term partnerships in 10 key sectors, so we are making progress. One reason that productivity has not been as good as it might have been is that, after the downturn, industry tended to keep people on, but at the same time, investment fell. Of course, that had an impact on productivity.
Interserve
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Lord Young of Cookham
On the first point, it is important to understand that Interserve was in two halves. The subsidiary companies provided services to the public and private sectors, looking outwards towards the market, whereas the parent company looked backwards at the shareholders and the banks that were lending it money. What happened over the weekend was that the parent company went into administration and immediately, as the noble Lord said, went into a pre-pack and is now owned, in effect, by the lenders. It is the banks of those lenders, not the trade creditors, which are out of pocket as a result of the transaction.
I will write to the noble Lord on the second question, because it affects another department.
Lord Fox (LD)
My Lords, the Minister shows great calm, as usual, on these issues. In fact, this squabble was played out across the City pages for weeks. The players in that squabble were the banks, the bondholders and the hedge funds. The Government had no part in that. The fact that Interserve lives to continue is nothing to do with the Government, it is the fortune of what happened out there—it was luck.
The Minister talks about a playbook. How does that playbook affect retrospectively all the services that the companies currently carry out? It is all very well looking forward to future services, but it is services today that were let many years ago that are still threatened by this kind of problem.
Lord Young of Cookham
The Government keep all the contracts under review. We have developed arrangements with all the major contractors. We have continuity arrangements known as living wills should there be, by any chance, any corporate failure. As I announced, looking forward, there will be a number of policy changes to ensure that better decisions are taken in future. We believe it is important to have a robust outsourcing market. The fact that Interserve has survived means that we still have a larger number of suppliers in this market than would have been the case had it gone out of business.
Digital Mapping: Restrictions
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Lord Young of Cookham (Con)
My Lords, there are no restrictions on the creation of mapping databases of the UK. The UK has world-leading mapping data and this is an area of competitive advantage, offering significant economic opportunities. In 2018, the Government created the Geospatial Commission to elevate this strength and it is currently developing a UK-wide strategy to realise the opportunities. As part of this, it will consider both risks and opportunities for current arrangements for access to mapping data.
Lord Fox (LD)
I thank the Minister for his Answer. This is privately gathered data. There is at least one major high-definition survey going on, financed by a foreign-owned company that bases its services on Russian mapping software. Every day, data is processed in places such as Nairobi. This is not Google Maps; it is high-definition software pinpointing our civil infra- structure. The Minister seems relatively unconcerned about this. Can he assure your Lordships’ House that a risk analysis will be carried out on the security nature of this data and some sort of strategy provided around how it is controlled within the obviously important commercial interests going on in this country?
Lord Young of Cookham
I understand the noble Lord’s concern. He has tabled a number of Written Questions on the subject. In view of his concern, I have gone back to those responsible for security and received an assurance that those responsible for our critical national infrastructure are not asking for the restrictions on commercial mapping that the noble Lord seeks.
Interserve: Provision of Public Services
Lord Fox Excerpts(5 years, 4 months ago)
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Lord Young of Cookham
As I said, the Government are in regular contact with Interserve to monitor its performance. Not only does the Cabinet Office have overall responsibility for monitoring the health of the company, but individual government departments that have contracts with Interserve have a dialogue with it about those specific contracts. The noble Lord may have seen the statement which the Cabinet Office issued a few days ago:
“The Cabinet Office has expressed full support for the work the company is doing to implement”,
its “long-term recovery plan”. It is worth making the point that Interserve is very different from Carillion. Interserve is now taking the action that Carillion ought to have taken—to restructure its balance sheet and improve its robustness—and, unlike Carillion, it does not need new money. It needs to turn debt into equity. It is not accurate to make a direct comparison between the two companies.
Lord Fox (LD)
My Lords, in a meeting in the Cabinet Office in the spring, I specifically asked David Lidington about Interserve. Since then, there have been a number of warning signals. Ministers may be talking to Interserve, but are they talking to the companies that support Interserve by delivering its services to people? If they did, they would hear from Rudi Klein, the chief executive of the Specialist Engineering Contractors’ Group, who is advising its members not to work for Interserve. The Minister’s response seems very relaxed in the light of what is actually going on. What contingencies are the Government taking in the event that Interserve is unable to deliver services?
Lord Young of Cookham
On the first point, I made inquiries to Interserve about the suppliers: 90% are paid within 60 days or less. The Government have now insisted that, where they place new contracts with suppliers, there is a contingency plan to take effect if and when that contract runs into difficulties. Interserve, along with four other companies, is piloting this new arrangement, which was introduced post the problems with Carillion.
Cyberattacks
Lord Fox Excerpts(5 years, 5 months ago)
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Lord Young of Cookham
The noble Lord will be aware that this is a substantial report published two days ago by the Joint Committee on the National Security Strategy, with 22 senior Members of both Houses. It has 10 major recommendations and the Government will want to respond to those in due course. The noble Lord quoted a little from the report and, just to add some balance, may I also quote from it? It said:
“Many of those who submitted written evidence … welcomed the step change in Government approach in the 2016 NCSS, with some describing the strategy—and the activity it underpins—as world-leading. This appears to be borne out by the notable level of international interest in the UK’s approach to cyber security”.
That gives a somewhat more balanced response than what the noble Lord quoted. There are many recommendations. One is that there should be one Minister; the committee wants what it calls a collective mind—a somewhat Orwellian concept. If we look at the building blocks of national security, we have GCHQ, which is under the Foreign Office; the Home Office, with overall responsibility for protecting the citizen if there is a cyberattack; the Ministry of Defence, which is in charge of offensive cybersecurity; and the Cabinet Office, which is in charge of CNI. It is very difficult to have a collective mind. What is important is having a collective strategy that all the Government agree to, underpinned by substantial resources and supervised by the National Security Council, chaired by the Prime Minister. That is more important than having what the committee calls a collective mind.
Lord Fox (LD)
My Lords, in last month’s debate on cybersecurity, the noble Lord, Lord Ricketts, in an authoritative speech, mentioned that the former Attorney-General, Jeremy Wright, had made clear that existing international law, including the UN charter, covers the cyber activities of states; this was the view not just of British experts but of Chinese and Russian experts in 2015. In his reply, the Minister outlined some activities round the Commonwealth that sought to exploit this international law but was uncharacteristically undefined about which other institutions the Government are working on. Which other international institutions are the Government working with which are seeking to exploit existing international law to combat this state-sponsored cybercrime?
Lord Young of Cookham
The noble Lord cited the noble Lord, Lord Ricketts. In that debate, he said that Britain is very fortunate to have a world-leading centre of excellence in the National Cyber Security Centre. We believe that the existing legislation is adequate. We co-operate with a range of international partners— Five Eyes and others. I hope the noble Lord will understand that the Government want to reflect on the recommendations in the report and will respond in due course, including to the legal issues that the noble Lord has just raised.
Cyber Threats
Lord Fox Excerpts(5 years, 6 months ago)
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Lord Fox (LD)
My Lords, I join other noble Lords in congratulating the noble Viscount, Lord Waverley, on securing this debate, which has been wide-ranging. It has moved from kettles to China, from spying to crime and to botnet threats. I look forward to the Minister encapsulating the debate in his response. For what it is worth, I would characterise its mood as a slightly uneasy sense that we have been doing the right things but may have to do a lot more. The degree of uneasiness has varied from noble Lord to noble Lord but I fear that I sit at the pessimistic end of that spectrum.
As the noble Viscount set out, we sit in a very complex landscape. That complexity has been deepened by the speed of change and the degree of connectivity across our lives. But we should not forget that there is also a huge political dimension to all this. The world is changing, probably faster than many of us have experienced for a long time. The move towards more autocratic leadership in some very important places fosters these kind of threats and that is why a multilateral approach is absolutely central. Many Peers have highlighted that—not least the mover of this Motion—and I will come back to it.
The other game-changer—I do not think this has been alluded to much—is the asymmetry in the possibility for one individual a long way away to take on a Government or a large national corporation, or at least think they can. I do not think we have seen that situation before, and it emboldens individuals or groups of individuals to do things hitherto not considered possible. The Government have clearly demonstrated that they are seeking to commit on this issue. It is hard to tell how successful this has been, because as the noble Lords, Lord West and Lord Ricketts, and others, have highlighted, the NCSC has been active and—we believe—successful, but we do not see its best work. That is the conundrum with those kinds of agencies; it is defending a negative. But looking forward, I would like to hear from the Minister how the Government support the NCSC and how its role will grow.
Of course, as a number of speakers have said, it is not just about government. Businesses and individuals are all involved and we all have to run very fast to keep up with changes. I had two emails today seeking to compromise my bank account—I am sure most speakers did. At a business level, the noble Lord, Lord St John, is right: it comes to the fore from time to time but very rarely flows from the IT team to the C-suite. One suggestion I would have is that if businesses were required to report—at least partially—the amount of cybercrime they were resisting, the C-suite would be confronted with it on a more systematic basis, and would perhaps do something about it by seeing the benefit of investment in that kind of technology.
This takes us to the critical national infrastructure. Again, I would be pleased to hear from the Minister how the Government believe the CNI community is reacting to the threat. Is it stepping up to the plate and actually moving fast enough? Again, it is hard to tell. Organisations such as the NHS—a part of our infrastructure in a different way—clearly were not investing in IT, and, as the noble Lord, Lord Borwick, set out, it suffered the consequences. We have rail, road, the electricity distribution networks and the other utilities. Where do the Government think we are on the road to resilience? Stepping beyond that, the Government have resolved to work with the communications service providers and industry to make the internet more secure, so what is the progress? What are the landmarks on that journey? The physical architecture of our internet providers is clearly very vulnerable; it sits in green boxes on the most of our street corners. Delivery is poorly controlled, as we know. If that is an example of resilience, I am not filled with confidence.
Of course, we have also seen how the private sector has suffered from what I would call self-inflicted problems. That serves as another interesting series of cases. One is the complex and jumbled nature of the technology that many of our largest corporations have. They have layer upon layer, with legacy technology that dates back not just years but decades. Across Britain, some of our most important institutions are built on computer technology that goes back to when I was an undergraduate at university—I have to tell you, that was some time ago.
A further point has arisen around the internet of things and the idea that the boss’s kettle will listen in on important discussions. We can challenge the culture of “Everything always on; everything always in the cloud”. That was not always the case and I do not see why it should always be what we do in the future. As the noble Lord, Lord West, said, the Government have a role in advising individuals where they should put their data and how accessible that data is—24/7 or not at all. We would not stick our entire wealth in a shed at the bottom of our garden, put a bolt on it and expect no one to steal it. So why do we put all our data into the cloud with a flimsy password and expect people not to extract value from it?
However, it is not just about Governments. As I have just alluded to, criminals innovate. International crime is a global free enterprise and an extraordinarily successful innovator. Government is not usually as good an innovator as individuals working in those ways. That innovation then spreads to state actors. We have seen how state actors can take on some of the technology that sits in the dark web and put it to their use. Regulators and government are very slow to react. We have only to look at how Russia sought to disfigure the EU referendum debate to see how slow the authorities have been to respond. We want some sense of how government is seeking to speed up the response to innovation in crime and in state ventures.
The noble Lord, Lord Lucas, highlighted the role of the private sector. The relationship between government and private sector and how technology is adopted are important elements. What do the Government think is the right balance between technology developed in the private sector and technology which government seeks to develop? Who decides what and where the focus should be in what we develop as a government or authority? How do the Government develop meaningful relationships with the private sector? In some cases, companies which have such technology are not those which want to be associated with government. How do we create those relationships?
Once we have the technology, how do we hold on to it? We have seen highly innovative players in our own sphere develop technology which has then been hoovered up by large parts of the internet oligopoly and, frankly, taken out of use for other players. If we need an example, we should look at the three main private sector global companies, which are buying up the patents in blockchain technology. They are taking it out of use for other people for their own uses. I am sure that it is the same for quantum computing as well. How do we hold on to what we have?
Of course innovation is difficult, as many noble Lords have said, but it is about having the right people. The noble Lord, Lord St John, and the noble Earl, Lord Erroll, were right about the need to bring in a broader community of individuals, not least because the sort of people coming out of university and being recruited to the cyber technology sphere are also recruited by a bunch of other people. They are being recruited to be engineers or to be the quants in big banks. They are a sought-after community of people, so we need to broaden our footprint. The noble Lord, Lord St John, talked about drawing in people from the armed services. Something worth looking at is how people are recruited to come in and take engineering degrees. The new university that is starting up in Hereford is changing the approach to recruitment for engineering, which has always been maths dominated—if you do not have a maths A-level, you cannot do it but people develop at different paces and as different sorts. Some of those initiatives are very important, because we have to deploy the full intellectual capability on our side in this country.
On accountability, I do not intend to throw stones at the Department for Digital, Culture, Media and Sport, but is it the right place to co-ordinate the skills, when other ministries hold the education and further education budgets and when we have UK Research and Innovation? Where should the skills portfolio sit? Is the Minister happy that this is the right place for that technology?
The noble Viscount was right to highlight the need for international co-operation post Brexit. The Government are right to try to maintain co-operation, assuming Brexit happens, with the EU 27, but how will it work? Will the EU network and information systems directive be replaced like for like? Will we shadow it? I am sure that the Minister has heard the same questions in respect of lots of other rules and regulations. The question is: how and when? Given that the European Union Agency for Network and Information Security is a legal organisation, how do we subscribe to it when we are not a member of the European Union? It is all very well to say that we have an aspiration for such things; I am more interested in the how and when.
On internationalism, the UK needs to continue to be a key driver in the multilateral approach to these matters. We have mentioned Five Eyes, NATO and the Commonwealth and beyond. We must not let the signals that can be interpreted from the Brexit process be seen as a withdrawing from multilateralism. I believe that the Government are committed to those institutions and working to make them more effective, but an endorsement from the Minister would be helpful.
Today, almost every warp and weft of our national fabric comprises digital communications and digital data. The implications of widespread denial of service have been seen at the very least through what WannaCry achieved in attacking the NHS and what individual businesses have managed to achieve through acts of self-harm. Those are just relatively unsophisticated examples of what can happen; we have heard predictions or worries about much more profound attacks. That is why I welcome this debate and why the contributions that we have heard today are very important. I look forward to the Minister’s response.
Lord Young of Cookham (Con)
My Lords, this has been an excellent debate and I thank all the speakers who have brought a wide range and depth of experience and expertise to it, not least the mover, the noble Viscount, Lord Waverley, who made a thoughtful introduction and crammed 15 helpful suggestions into three minutes at the end of his speech. A number of themes ran through the debate, in particular the need for partnership. I hope I have not misunderstood the tone of the debate when I say there has been no fundamental disagreement about the thrust of government policy, but some severe warnings and some very helpful suggestions about how we might do better. Some of them were on a highly technical front, and some were based on broad common sense.
I say to the noble Viscount that this is a very timely debate, following the second anniversary of the National Cyber Security Centre and the publication of its 2018 annual review this week, which was launched by the Chancellor of the Duchy of Lancaster, the director of GCHQ and the CEO of the NCSC. It is one of the best annual reports I have seen as a Minister, although I have not risen to the challenge on the last page,
“Can you find the secret codeword?”
As this debate has made clear, protecting the British people, the systems that we rely upon and our very democracy itself is a central responsibility of government. As our digitally connected world has rapidly expanded, so too has the scale of vulnerabilities and the frequency of attacks that we face—a point well made by my noble friend Lord Lucas. It is for this reason that cybersecurity remains a top priority for the Government, because it impacts on our national security and our economic prosperity. I was impressed by what the noble Lord, Lord St John of Bletso, said when he outlined the cost to the economy of lax cybersecurity.
We recognised the need for a comprehensive and active response when we launched the National Cyber Security Strategy in 2016, where we defined a cyberattack—this is in response to the request from the noble Viscount, Lord Waverley, for a definition —as a,
“deliberate exploitation of computer systems, digitally-dependent enterprises and networks to cause harm”.
We set out ambitious proposals to defend our people, deter our adversaries and develop the capabilities we need to ensure that the UK remains the safest place to live and do business online. Those proposals will be supported by £1.9 billion of investment over five years, which was mentioned by many noble Lords, to drive transformation. The noble Lord, Lord Kennedy, asked whether I thought that that was enough. He will know that there is a spending review for 2020 onwards, and I am sure that the concerns expressed in this debate will be taken on board as colleagues move to a decision on future spending patterns.
One of the most visible elements of the strategy was the formation of the National Cyber Security Centre to bring together our very best intelligence and technical expertise in a world-leading authority—the noble Lord, Lord Ricketts, described it very aptly—that will be our single centre of excellence to innovate and create, to work in partnership with industry to block attacks on a scale of tens of millions per month, which was mentioned by several noble Lords, and to blend behavioural science with technical expertise to provide the best advice and guidance for people and organisations to protect themselves.
On our response when attacks get through, the NCSC brings everyone together to reduce the harm from significant incidents, whether that is an attack on Parliament, which was referred to by my noble friend Lord Borwick, or disruption to health services. On the attack on Parliament, I understand that it is unlikely to recur. I have had a note from the chief technology and security officer in Parliament that says that the correct people now get the required detail from Parliament’s Apple account manager to make sure that such a delay does not happen again. Our response is calibrated by the severity of the attack, and the National Security Council will consider the full range of security, diplomatic and economic tools at our disposal.
How we set up the National Cyber Security Centre reflects the single, clear message that underpins our strategy, which has been echoed throughout this debate, that we need not a whole of government approach but a whole of society approach, as the noble Lord, Lord Ricketts, described it. The noble Viscount, Lord Waverley, asked how we are delivering it. The national strategy binds all of government into delivering a set of cross-cutting objectives which require a collective response that reaches out to the private sector and beyond—and, indeed, to other countries, because while we can lead the way, we know that we cannot solve these problems alone. This point was made by nearly every noble Lord who took part in this debate.
On the key subject of skills, which was raised by the noble Viscount, Lord Waverley, and the noble Lords, Lord Ricketts and Lord St John of Bletso, we are already developing a pipeline of talent and inspiring and developing cybersecurity experts and entrepreneurs, whether through our programmes in schools and universities, our work with industry to figure out the best way to retrain career changers with aptitude and ambition and by promoting cyberapprentices. On the specific recommendations of the Joint Committee on the National Security Strategy—a question raised by the noble Viscount—the Government have recently submitted their response and we look forward to its publication.
We also are building on our world-class universities and ground-breaking research to establish a pipeline of cutting-edge cybersecurity companies with a range of interventions to incubate and accelerate and to support our innovative companies to export overseas, turning many great ideas into global businesses. This in turn will help other countries to become more secure and will boost the UK cybersecurity industry, which is now generating more than £5 billion for the economy.
Lord Young of Cookham
I was referring to the responsibilities of the Department for Education. The relevant Minister is sitting at my side and will have heard that. We will write to the noble Lord, giving a more detailed reply on the role of that department, if that is what he wants.
The Government actively manage potential risks to UK infrastructure—a point on CNI raised by the noble Lord, Lord Fox. This includes risks related to foreign equipment used in our telecoms industry. This important issue was raised by the noble Lord, Lord West, who expressed concerns about our telecoms structures. I want to make it clear that the Government have not banned ZTE. The NCSC has raised its concerns about the ability to manage the risk of having more Chinese-supplied equipment on UK infrastructure undermining existing mitigations, including those around Huawei. The noble Lord is right that we cannot ban our way out of this, but I can confirm that the Department for Digital, Culture, Media and Sport, with the NCSC, is leading the review into the security and resilience of our telecoms supply chain.
Building Regulations and Fire Safety: Government Response
Lord Fox Excerpts(5 years, 11 months ago)
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Lord Young of Cookham
I am grateful to the noble Baroness. She is quite right about residents’ voices, and in many cases that is already happening. In both the social and the private sectors there are residents’ associations—or rather, tenant forums—whereby there is a good dialogue between the freeholder, the owner and those who live in the building, and Dame Judith’s report has some suggestions as to how to take that forward. I agree that we should do that without waiting for legislation: I entirely endorse the point.
The JCA proposed by Dame Judith would indeed be independent. It would not be dominated by the industry but would be composed of the three components that I mentioned. On the residents’ voice—there is some in-flight refuelling here—the Government agree with the assessment and support the principles behind the report’s recommendations. We will work with partners to consider Dame Judith’s detailed recommendations and, again, we will set out our implementation plan in the autumn.
On resources for local authorities, some local authorities have found it quite difficult to trace the owners of some privately owned high-rise blocks. People are either not answering or they are based overseas. We have therefore made £1 million available to local authorities in order to help them enforce their duties to identify and, where necessary, take action against the owners of buildings with unsuitable cladding. As I mentioned earlier, the increased fees for planning applications should provide more resources for planning departments.
Lord Fox (LD)
My Lords, the Minister mentioned an outcome-based safety regime. My understanding of that process is that, rather than enforce point-by-point compliance with regulations A, B and C, while there has to be compliance, overall the system—the building, that is—has to be safe. The person who is accountable for the building has to underwrite its safety. This is remarkably similar to the outcome of the inquiry conducted by the noble and learned Lord, Lord Cullen, into the Piper Alpha disaster, which talked about the safety case. As noble Lords will remember, it was an appalling tragedy, and the report wisely changed the philosophical approach to safety. The Hackitt review makes the same philosophical proposal.
As someone who worked in and commented on the oil industry, I recognise this as being a positive suggestion. It means that there are lessons that the Government can learn about the rapid implementation of such a philosophical shift. So, as well as consulting the industry, I suggest that the Government should also consult the oil and gas industry, in particular the people who were around when that change was made, because it was a retrospective and ongoing change. Existing facilities had to be brought up to the new standard and new facilities had to be built in the new way. Can the Minister take that advice and talk to some of the people who have already made this philosophical shift?
Lord Young of Cookham
The noble Lord is quite right: what Dame Judith is basically saying is that we should rely less on looking in isolation at individual elements within the construction industry, which she argues leads to fragmentation, silo thinking and gaming the system, and move towards an outcome-based approach, which means standing back and making sure that the system as a whole has integrity. She is worried that at the moment what she describes as a prescriptive approach means relying on people meeting minimum standards and not taking a broader view of what is going on. In a quote that makes the point, Dame Judith says:
“This is most definitely not just a question of the specification of cladding systems but of an industry that has not reflected and learned for itself, nor looked to other sectors”.
She wants to promote what she calls a proactive and holistic view of the system as a whole. So not only should we look at the oil and gas industries, we should look at what is happening overseas where other countries are also moving towards an outcome-based system. I shall certainly take on board his point about a dialogue with other industries which have moved in this direction.
Carillion
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Lord Young of Cookham
I said a few moments ago in response to another question that, of those contracts let since July, six were joint ventures where the exposure to Carillion was substantially reduced by having other contractors underwriting Carillion if it were to withdraw. The Government can take some credit for making those precautions available. On the noble Lord’s general point, which reinforced what my noble friend Lord Lawson said, I indicated in response to an earlier question that if the assessments made of the robustness of Carillion in July ticked all the boxes in the tender document and they had to be adhered to, I agree with my noble friend Lord Lawson that this is something that we should have another look at.
Lord Fox (LD)
My Lords, I do not believe that the role of the auditors has been mentioned. Auditors clearly have an important role in assuring the security of companies such as Carillion. Does the Minister agree that the official receiver, which is one of the small number of companies that conduct audits in this country, may not be entirely dispassionate or capable of making the right sort of assessment of this service?