China Espionage: Government Security Response

Statement

My Lords, I shall now repeat a Statement made in another place. The Statement is as follows:

“With your permission, Mr Speaker, I would like to make a Statement on Chinese espionage targeting UK democratic institutions, and the Government’s actions to counter the breadth of threats posed by China and wider state actors.

Before I begin, let me first pay tribute to the crew member of the Royal Fleet Auxiliary ‘Tidesurge’ who is missing off the coast of the Republic of Ireland. I know that the whole House will join me in sending our very best wishes to the ship’s company, and to their families back at home. This tragic incident is a reminder of the sacrifice that members of the Armed Forces make in the service of our country.

Earlier today, MI5 issued an espionage alert to Members of this House, Members of the other place and parliamentary staff to warn them about ongoing targeting of our democratic institutions by Chinese actors. Before I set out the threat and what we are doing to meet it, let me thank you, Mr Speaker, for your support in issuing the alert, and for your tireless efforts to safeguard the security of this place and the people who serve within it. I encourage all parliamentary colleagues to read the alert, and to get in touch with the Parliamentary Security Department if they have any immediate concerns.

Our intelligence agencies have warned that China is attempting to recruit and cultivate individuals with access to sensitive information about Parliament and the UK Government. MI5 has stated that this activity is being carried out by a group of Chinese intelligence officers—often masked through the use of cover companies or external headhunters. It is not just parliamentarians who should be concerned by this; parliamentary staff, economists, think tank employees, geopolitical consultants and government officials have all been targeted for their networks and access to politicians. I urge all parliamentarians and their staff to be wary that China has a low threshold for what information is considered to be of value, and will gather individual pieces of information to build a wider picture.

Let me speak plainly: this activity involves a covert and calculated attempt by a foreign power to interfere with our sovereign affairs in favour of its own interests, and this Government will not tolerate it. It builds on a pattern of activity that we have seen from China, with cyber operations by Chinese state-affiliated actors targeting parliamentary emails in 2021, attempted foreign interference activity by Christine Lee in 2022, and other more recent cases. We will take all necessary measures to protect our national interests, our citizens and our democratic way of life, including by working with our allies and partners.

The world has changed a great deal since I first stepped forward to serve our country almost 30 years ago, and while some things have changed, some things remain the same. In the various roles I have held since then, I have always believed in the importance of being clear-eyed about the nature of the threats that we face and the need to ensure that the tools we use to respond to those threats are kept up to date. This Government’s first duty is to protect our national security, and we will not hesitate to hold all state actors to account.

On 6 November, my right honourable friend the Foreign Secretary spoke with her Chinese counterpart, Director Wang Yi. She was clear with the Foreign Minister that any activity that threatens UK national security, particularly relating to the UK’s Parliament and democracy, will not be tolerated. Today, I am setting out a comprehensive package of measures that we are taking to disrupt and deter the threats posed by China, as well as by state actors more widely. Supported by Ministers from across government and co-ordinated by myself, we are launching a counter political interference and espionage action plan. I will set out in detail to the House what that plan will entail.

First, we will strengthen the legislative tools available to the Government to disrupt the threat. We will introduce the elections Bill, which will include proposed measures to safeguard against covert political funding. This will include tougher risk assessment rules for donor recipients and enhanced enforcement powers for the Electoral Commission. I can confirm that we are also working on new powers to counter foreign interference, including a proscription-type tool to disrupt proxy organisations undermining our security, and an extension to the maximum penalties for election interference offences.

Secondly, we are launching a series of protective security campaigns, co-ordinated through the defending democracy task force and working with the parliamentary security authorities. These will help all those who work in politics to recognise, resist and report suspicious state threat activity, building on the guidance that was launched by the National Protective Security Authority in October. This will include tailored security briefings for the devolved Governments and for political parties via the parliamentary parties panel by the end of this year, as well as new security guidance in January for all candidates taking part in devolved and local elections in May.

Thirdly, we are building a campaign that uses all levers at this Government’s disposal to degrade the ecosystem of proxy cover companies, organisations and individuals being used by foreign states to facilitate interference and espionage targeting our democratic institutions. The National Protective Security Authority, building on its ‘Think Before You Link’ campaign, will strengthen its engagement with professional networking sites to make them a more hostile operating environment for foreign agents.

As Security Minister, I am privileged to see the diligence of the security services, law enforcement and civil servants who work tirelessly to keep the UK safe day and night. Noting China’s low threshold for information gathering, this Government are providing the resources needed to protect our national interests. I can announce that the Government have committed to investing £170 million to renew the sovereign encrypted technology that our officials use to do their vital work. This programme of work will help to ensure that sensitive diplomatic, economic, trade, security, law enforcement and policy development arrangements are safeguarded from espionage by any state threat actor.

I can also announce that this Government have completed the removal of surveillance equipment manufactured by companies subject to the national intelligence law of the People’s Republic of China from all sensitive sites we maintain in the UK and around the world. Moreover, we will invest £130 million next year through the integrated security fund to build the UK’s resilience against threats posed by states such as China. Among other projects, this investment will build Counter Terrorism Policing’s ability to enforce the National Security Act and fund the National Cyber Security Centre and the National Protective Security Authority’s work supporting our most critical businesses to protect their intellectual property. Indeed, the National Protective Security Authority’s work is an important reminder that China poses threats not just to our democratic institutions, but to other sectors. Let me talk briefly about two other sectors in particular.

The first sector is education, which is one of the UK’s most important global assets, in part due to the UK’s steadfast commitment to academic freedom and excellence. There is value for the UK in engagement with China on education. However, operating in today’s uncertain international context presents many challenges for our great universities. It is because of their excellence that states such as China are attempting to influence their independent research and interfere with activity on campus. Ministers have already raised our concerns about this activity with their counterparts in Beijing, and the Office for Students recently issued new guidance to help universities protect the freedoms that their staff and students enjoy. As part of our ongoing commitment to work collectively to address these risks, I can announce that Ministers will host a closed event with vice-chancellors to discuss the risks posed by foreign interference and signpost our plans to further increase the sector’s resilience.

Secondly, on advanced manufacturing, the Department for Business and Trade is working to strengthen and scale our new economic security advisory service to help businesses navigate economic security issues, such as espionage and intellectual property theft. The service is already engaging with businesses in the advanced manufacturing sector and, as it matures to support other sectors of the economy, it will provide a new digital offer and assist businesses with complex economic security cases in navigating His Majesty’s Government’s support.

In October, I told the House that this Government remain steadfast in our commitment to disrupting and holding state actors accountable for wide-scale cyberespionage operations. We stand ready to go further to disrupt, degrade and protect against the dangerous and unrestrained offensive cyber ecosystem that China has allowed to take hold. Earlier this year, the NCSC, with international allies, called out three technology companies based in China for their global malicious cybercampaign targeting critical networks. Just last week, we introduced the Cyber Security and Resilience (Network and Information Systems) Bill, which will help make critical sectors of the economy and the public sector a harder target for cyberattacks, including malicious cyberactivity emanating from China’s territory. The Government will continue to take further action against China-based actors involved in malicious cyberactivity against the UK and our allies. This will form part of a broader campaign that the UK is delivering to disrupt and degrade the dangerous cyber ecosystem that China has allowed to take hold within its territory. Let me assure honourable Members that we will not shy away from using all the tools at our disposal, including sanctions, as necessary.

Our country has a long and proud history as a seafaring nation, trading around the world with countries that share our way of life, and with those that do not. China is the world’s second-largest economy and, together with Hong Kong, is the UK’s third-largest trading partner. It is in our long-term strategic interests to continue to engage with China. We must co-operate on areas where our interests align—climate, global health, trade, scientific research, illegal migration, and serious and organised crime, to name just a few—but we will always challenge any country, including China, that attempts to interfere with, influence or undermine the integrity of our democratic institutions, and we will take all measures necessary to protect UK national security. That is why we have taken action today. I am clear that further steps can and absolutely will be taken: disrupting and deterring China’s espionage activity, wherever it takes place, updating our security powers to keep pace with the threat, helping those who work in politics to recognise, resist and report the threat, and working with partners across the economy to strengthen their security against the threat.

Our strategy is not just to co-operate. We will engage China where necessary, but we will always act to defend our interests, and challenge where our values are threatened. I commend this Statement to the House”.

I thank the Minister for repeating the Statement made earlier today in the other place, with her own tone and emphasis.

Recent political and media attention has focused on the failed prosecution of two British men accused of spying for China—one of whom worked in the Houses of Parliament. The circumstances of that case remain opaque and the consequences unresolved.

Looking beyond that case, it is clear China presents a substantial threat to this country and our interests on multiple fronts. The Government’s own 2025 national security strategy recognises that China has

“the ability to undermine our security”

and that,

“instances of China’s espionage, interference in our democracy and the undermining of our economic security have increased in recent years”.

Publicly documented cases of the intimidation of UK-based Hong Kong activists, attempts to meddle in the United Kingdom Parliament and cyberattacks are just some of the threats that China poses to us; the Government need to be clear and robust in response. We also need to be proactive in order to prevent such malign actions from taking place in the first place.

Chatham House has made it clear that:

“China presents an intelligence challenge of unprecedented scale and ambition. It is not only the world’s largest authoritarian regime but an economic and technological superpower”,

with the ability to undertake substantial operations in many theatres across the world.

The Government have spoken in their Statement today about a response to Chinese espionage and the removal of Chinese equipment from sensitive sites, but what about a response to the risks posed by the development of a Chinese embassy—or more particularly, a Chinese intelligence facility—in the immediate vicinity of some of the most sensitive communications channels in the country? That also requires to be addressed.

My Lords, I start by joining the Minister in paying tribute to the crew member of the Royal Fleet Auxiliary Tidesurge lost off the coast of Ireland.

This is my first opportunity to welcome the noble Lord, Lord Alton, back to his place—he has been missed.

I thank the Minister for repeating this Statement, which we broadly welcome. It seems to represent a change of gear, certainly from the approach of the previous Government. The ISC report on China in 2023 concluded that China had been able to

“penetrate every sector of the UK’s economy”.

At last, this seems to be being taken seriously. However, clearly, with such a deep threat, there is an awful lot that needs to be done, and some of that is reflected in this Statement.

Any Statement like this begs questions that cannot be answered, so I am going to try to ask questions that can be publicly asked. I start with the point raised by the noble and learned Lord, Lord Keen, around the failed prosecution of the two spies. There are many questions on this. Will the Government launch an independent inquiry into the collapse of that case and ensure that there are lessons learned from this appalling failure of national security?

In the other place, the Minister fully recognised that the Government know that China

“poses a series of threats to UK national security”,

yet when it comes to putting China in the enhanced tier of the foreign influence registration scheme, yet again the Minister said that “no decision” on China has been made. What more has to be done for China to qualify to be put on this register? Given the reluctance to enact FIRS, what guidance is now being given to MPs, Select Committees and researchers on contacts with representatives of the Chinese Government and other Governments?

The Statement also specifically calls for co-operation with China on scientific research. Such engagement is extremely fraught. A huge amount of guidance and focus needs to be brought to this so that universities can safely engage in any co-operation. Clearly, they have raised the flag on this and there is an awful lot of work to do.

My Lords, I thank both noble Lords for their points and questions on this very serious matter, and the tone in which they participated. As noble Lords have rightly acknowledged, matters of espionage, particularly those that relate to Parliament, are of the utmost importance to us in both Houses and to the whole nation. They merit careful consideration by government, decisive action by Ministers and appropriate scrutiny by Parliament.

When it comes to China, we have been clear that we will co-operate where we can but always challenge when we must, which is why today’s message to all noble Lords from the Lord Speaker was so important. Our action today is about challenging behaviour by China that this Government will simply not tolerate. We know the high cost of inaction when it comes to national security measures. This comprehensive package will help us tackle economic, academic, cyber and espionage threats that China presents. Its impact will be immediate and we will not hesitate to further strengthen our protections as the threat evolves.

I will now seek to address a number of the specific questions raised. I will also reflect on Hansard should there be any points that I miss. Noble Lords will appreciate that a number of points I will talk about concern national security, so if I do not necessarily respond I will speak to both noble Lords outside the Chamber about some of those issues. Before that, I also add my genuine joy at seeing the noble Lord, Lord Alton, back in his place. When I discussed with him the issues that we are about to discuss, I did not really think we would be discussing them in your Lordships’ House so quickly, but I am delighted he is here—probably to give me a hard time.

I am going to answer the specifics that have been raised broadly in order, but I think it would be helpful to detail some more of our plans. Regarding the Chinese embassy, which both noble Lords raised, it will not surprise your Lordships’ House that I will repeat the same statement that was made in the other place today and that I have made before. A final decision on the Chinese application for a new embassy will be made in due course by the Secretary of State for Housing, Communities and Local Government. This is a quasi-judicial decision so I cannot comment on it in more detail. To reassure noble Lords, though, national security is the first duty of government and it has been the core priority throughout this process.

My Lords, I will try not to outlive the welcome that the Minister extended to me and the nice words expressed by so many colleagues from all sides of the House. I hope that she will forgive me if I press her further on the enhanced tier of the foreign influence registration scheme and the point about academics that was raised earlier.

It comes as no surprise to those seven parliamentarians —of whom I am one—who have been sanctioned by the Chinese Communist Party to hear warnings about CCP operatives spying and laying the groundwork for subversive long-term relationships with parliamentarians. But those sanctions are nothing compared with the imprisonment of hundreds of pro-democracy advocates, such as Jimmy Lai in Hong Kong, or the atrocities committed against Uyghur Muslims. They are nothing compared with the evidence that the Joint Committee on Human Rights, which I have the privilege to chair, received during our inquiry into transnational repression and published in our report of 30 July. For instance, we cited the bounties of 1 million Hong Kong dollars on the heads of UK residents, including the courageous 20 year-old Chloe Cheung.

I have raised the intimidation of academics, such as Professor Michelle Shipworth, who was referred to by the noble and learned Lord, Lord Keen, as well as the case of Professor Laura Murphy, which was in the newspapers recently. Laura Murphy works at Sheffield Hallam University, and she gave evidence to our Joint Committee on Human Rights in our inquiry on supply chain transparency and modern-day slavery. Both of those academics have experienced intimidation as a consequence. When the Minister has her meeting with university vice-chancellors, I hope she will emphasise the dangers of becoming far too dependent on money pouring into our universities, which then starts to call the tune.

During our hearings, we received a large amount of evidence recommending the designation of China under the enhanced tier of the foreign influence registration scheme. We found:

To reassure the noble Lord, I am still delighted that he is back. He raised some very important points. I cannot go any further at this point on the enhanced tier of the FIRS, but the noble Lord will be very aware that, before I joined the Government, I ran Index on Censorship, so the issues related to Jimmy Lai—I have met Sebastien Lai—and the issues about Xinjiang and transnational repression are ones that I campaigned on for many years.

I will be clear on some of the specifics that have been raised. I have to be very careful when discussing Sheffield Hallam, because ongoing legal processes are happening there. I recognise the admirable and tireless work of my noble friend Lady Kennedy of The Shaws, whose name is on the centre at the heart of this. Her work to progress social justice and human rights, including as a patron of the Centre for International Justice at Sheffield Hallam University, is at the heart of the allegations. Any attempt by a foreign state to intimidate and coerce universities to limit free speech and academic freedoms in the UK will not be tolerated. The Government have made this clear to Beijing after learning of the case of Sheffield Hallam and other recent cases. The new Office for Students guidance makes it explicitly clear that universities should not tolerate attempts by foreign states to suppress academic freedom.

The noble Lord knows better than I about some of the actions we have taken in tackling transnational aggression in the UK and the ongoing support that we are giving to Jimmy Lai and the Lai family. We will continue to do so. The genuine anguish that that family is currently experiencing because of this case is simply unacceptable. I reassure the noble Lord that even while he was off, we continued to do our work, and my right honourable friend Foreign Secretary raised the case of Jimmy Lai with her counterpart on 6 November. I will write to him on the other points he raised.

My Lords, as chair of the ISC, I welcome the Statement. As the noble Lord, Lord Fox, said, most of it, if not more, was covered in our 2023 report on China. The reason China has got a foothold here has to be looked back on very clearly, including whether the golden era for UK-China relations during the coalition Government allowed it to get a foothold in a whole host of areas.

Obviously, my main concern is academia, where universities—because of the decisions on the funding of universities—have now become dependent on the drug that is Chinese student finance. I urge the Minister that, if we are going to tackle that—not just the reliance of individual university institutions on Chinese finance but the intimidation of individuals who attend them—we need to take a very robust approach to it.

I thank my noble friend Lord Beamish for all the work he has been doing on this, both through the ISC and beforehand. He has talked to me a great deal on this issue, and I am grateful for it. I completely agree with some of his assessments regarding the importance of academia and making sure that universities both understand their responsibilities to academic freedom and have the tools to combat some of the challenges that they currently face. It is one of the reasons we are arranging a closed meeting for all vice-chancellors, which will be led by the DfE but will have the relevant officials in the room to make sure that they know what is happening and what support they can get, as well as the expectations that we have of them as the caretakers of our academic freedom values.

My Lords, like most speakers so far, I welcome the Minister’s tone in this matter. It is a change of tone, because in the past, so often, the Government have used word “co-operate” followed by the word “challenge”, and “co-operate” has been used as a way of degrading the level of challenge. I hope that this will be sorted out.

I very much support what has been said about universities. Having pursued Cambridge University—Jesus College, Cambridge, in particular—I found an absolute reluctance to publicly or even privately admit any error at all in this, after years of struggle about this, which goes on. I still do not hear any serious public statements on these matters by the governors, the vice- chancellors and so on. It is very cautious. I am glad that the closed meeting will take place, but it needs to be publicly discussed.

On the threat to individuals, Chloe Cheung has been mentioned, quite rightly, by the noble and learned Lord and the noble Lord, Lord Alton, whom I too welcome back. I know Chloe Cheung, and I have spoken to her. She has shown me photographs of the goons who follow her in this country. I strongly ask—and she is just one example—how much protection is the British state able to afford to these people? They are in real danger in this country—physical danger and, of course, psychological threat.

In the Statement, the Government express their desire to

“degrade the ecosystem of proxy cover companies”.

I am not quite accusing the bank I am going to mention of being a proxy cover company, but I would point out the enormous level of vested interest in China in this way, which leads to weakness. Britain’s biggest bank, HSBC, is a major sinner in this respect. HSBC famously closed down three accounts of the League of Social Democrats in Hong Kong. Without wishing to be too personal, it is not wildly encouraging to hear that George Osborne, he of the golden era, is a candidate to be the new chairman of HSBC. If he was chairman, I do not imagine that we would get a very rigorous attempt to clamp down on Chinese illegitimate activity. I ask the Government whether even huge organisations, such as HSBC, should be more carefully monitored.

I thank the noble Lord. I am not sure I will be able to answer all his questions, but I will reflect on Hansard and come back to him. He may appreciate which ones I might not want to answer. With regard to the fundamental question, which is about totalitarianism—that is, authoritarian versus democratic systems—which is at the heart of this, the national security strategy sets out the intent of:

“Authoritarian states … to out-compete liberal democracies”,

including “competition from China” and its

“assertion of state power that encompasses economic, industrial, science and technology policy”.

We firmly recognise that the UK and China have significant differences, including on economic values and freedoms, Hong Kong, support for Russia’s illegal war in Ukraine and matters of national security. We engage confidently and pragmatically with China, including robustly raising these differences.

The noble Lord highlighted my language earlier. We are clear that we will co-operate with China where we can but will challenge where we must. That will continue to be the case, including on transnational repression. I want to be very clear. The UK Government will not tolerate any attempts by foreign Governments to coerce, intimidate, harass or harm their critics overseas, especially in the UK. We continually assess potential threats in the UK and take protection of individual rights, freedoms and safety very seriously. Counter- terrorism police will continue to offer training to all police forces where they believe that this will be happening. On the other points, I revert to the noble Lord.

My Lords, referring to the failed case of activity by China, my understanding is that the timing of the alleged offences came under the ambit, if that is the right term, of the 1911 Act. That Act has been broadly disapproved of by all parties. The Law Commission drafted a better Bill. All Governments were slow to find time to enact this Bill, but it was enacted under the last Government in, I think, 2022.

In the present threat situation, is the new Act considered to be satisfactory for this area of crime, which is not about stealing plans labelled “Top Secret” but about picking up attitudes, distancing, influencing and so on? Can the Minister assure us that this piece of legislation is satisfactorily in place? Can she expand a little on what new legislation is expected to be enacted in the light of today’s Statement?

I thank my noble friend for his question. He is absolutely right. The Official Secrets Act is considered to be somewhat out of date: 1911 suggests that maybe the world has moved on slightly. The National Security Act came into force in 2023. It strengthens our legal powers and makes the UK a harder target for those states which seek to conduct hostile acts. It also provides the security services and law enforcement agencies with the tools that they need to deter, detect and disrupt modern-day state threats. The Act passed with cross-party support in your Lordships’ House and it is important that on matters of national security we embrace cross-party. There is a responsibility on all of us to make sure that national security remains at the heart of what we do.

With regard to future legislation, there are two pieces of legislation coming before your Lordships’ House that will touch on these issues. The elections Bill is forthcoming and the new cyber resilience Bill was introduced in the other place last week and will be in front of your Lordships’ House in due course. Having said that, these are matters of national security. We will continue to monitor and to reflect on current legislation to make sure that our security services and everybody within this space has the legal framework in which they need to operate to ensure that we can do what we need to do when we need to do it.