[Relevant document: Oral evidence taken before the Defence Sub-Committee on 14December 2020 on Foreign Involvement in the Defence Supply Chain, HC 699.]
Consideration of Bill, not amended in the Public Bill Committee
New Clause 1
Impact on academic research spin-off enterprises
‘(1) Within one year of this Act being passed, the Secretary of State must lay before Parliament an assessment of the Act’s impact on academic research spin-off enterprises.
(2) The assessment under subsection (1) must be reviewed at least once every five years.’—(Stewart Hosie.)
This new clause would require the Secretary of State to assess the impact of this Bill on academic research spin-off enterprises.
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Stewart Hosie (Dundee East) (SNP) [V]
I beg to move, That the clause be read a Second time.
With this it will be convenient to discuss the following:
New clause 2—Report on impact on Small to Medium Enterprises—
‘Not later than 18 months after the day on which this Act receives Royal Assent, the Secretary of State must lay before Parliament—
(a) a report setting out the impacts the Act has had on Small to Medium Enterprises and early-stage ventures, and
(b) guidance for Small to Medium Enterprises and early-stage ventures on complying with the provisions of this Act.’
This new clause would require the Government to produce a report setting out the impacts of this legislation on Small to Medium Enterprises and early-stage ventures, and to produce relevant guidance.
New clause 3—Grace period for Small and Medium Enterprises—
‘For the purposes of section 32, a person has a reasonable excuse if—
(a) the entity concerned is a Small to Medium Enterprise;
(b) this Act has been in force for less than six months.’
This new clause creates a grace period whereby – for alleged offences committed under Section 32 – Small to Medium Enterprises would have a ‘reasonable excuse’ if the alleged offence was committed within the first six months after the Bill’s passage.
New clause 4—Framework for understanding national security—
‘When assessing a risk to national security for the purposes of this Act, the Secretary of State must have regard to factors including, but not restricted to—
(a) the potential impact of the trigger event on the UK’s defence capabilities and interests;
Stewart Hosie
The new clause is in my name and the names of my hon. Friends, as are new clauses 2 and 3 and amendments 1 to 6.
On Second Reading of this Bill, I described how it was designed to bring additional scrutiny of foreign investment that may have an impact on national security. I agreed that not only was there nothing wrong with having a national security eye on investments in critical areas, but it was in fact absolutely vital. During that debate, the House appeared to acknowledge the concern about the national security implication from investments that are shared globally and that a number of other countries had been tightening up their investment security regimes in response to changing national security-related threats to enabling technology, to intellectual property and so on. The debate also saw descriptions of the tightening of these regulations in Japan, Canada, Sweden, Germany and elsewhere. There was little disagreement on the Government’s proposals where, if the trigger and threshold were both met, an individual investment could be called in by the Secretary of State for approval, the powers could be retrospective, and an investment could be called in after it had occurred. There was some concern about the time to conduct the national security assessments—30 days with potentially an extra 45, which might actually be deemed a little short and it still prompts the question of whether 75 days was actually sufficient. There was, however, broad agreement about the mandatory notification process where investment interests in certain sectors and asset types must be pre-emptively or retrospectively declared. There were real concerns that this may lead to a very large number of notifications from businesses erring on the side of caution.
The Bill also introduced new powers to increase screening in respect of health and preventing hostile acquisition through strategic buying of health supplies, and I welcome that, with the warning that the scope of activities that may be caught is very wide. That is because while the statement of policy intent, which describes the core areas as including such things as advanced technology, is perfectly reasonable, it also contains a much wider definition of national infrastructure.
The Second Reading debate focused on the impact assessment for the Bill, which estimated that the new regime would result in somewhere between 1,000 and 1,800 transactions being notified each year—a very high number given that only 12 transactions were reviewed on national security grounds since the current regime was introduced 17 years ago. It does also remain the case that we still need to carefully assess the impact of the Bill—the impact that it will have on sectors and on infrastructure not just in the UK as a whole, but in the devolved nations and in the English regions. On Second Reading, I asked the Minister to take a little time to convince himself that there were no unintended consequences either for the UK or, indeed, for the Scottish Government’s inward investment plans when Government agencies of all sorts are actively seeking investment in some areas, which may be deemed to be critical national infrastructure. That is an issue that I do hope he will still address today. How do we ensure collectively that this Bill does not impede growth or investment in such areas?
On Second Reading both of this Bill and of the Telecommunications (Security) Bill, it was mentioned that in 2013, the Intelligence and Security Committee first recommended measures to prevent high-risk vendors such as Huawei from penetrating our critical national infrastructure in future. It is always the way: you wait seven years for a Bill to protect against infiltration and takeover, then two come along together.
Given that background, the ISC naturally welcomed the introduction of this legislation, and we greatly appreciated the contact that we have had with the Minister, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi). Not only did he keep his promise to write to us about the points made by Committee members on Second Reading, during my period of self-isolation, but he dealt with ISC concerns at the Committee stage and reached out before today’s debates as well. That is precisely the type of constructive engagement that we should like to have with the Government. If I do not secure the concessions that I want after all of that, I shall be very disappointed!
The issue on which I shall focus is parliamentary oversight. Normally, that would be straightforward. As the future arrangements laid down by the Bill will depend on the input of the new investment security unit, and as that unit will be housed in the Department for Business, Energy and Industrial Strategy, one would normally expect that general scrutiny could be conducted by Parliament as a whole and specialised scrutiny by the Select Committee on Business, Energy and Industrial Strategy. Unfortunately, that does not work in this case: much of the work of the investment security unit will depend on input from intelligence and security agencies and similar sensitive sources that cannot and must not be made public.
Furthermore, on Second Reading, the then Business Secretary, my right hon. Friend the Member for Reading West (Alok Sharma), made crystal clear how central secret material would be to the practical application of the provisions of this legislation. He stated that
It is a great pleasure, as always, to follow the Chair of the Intelligence and Security Committee, the right hon. Member for New Forest East (Dr Lewis), and I support many of his remarks.
Let me start by saying that the Opposition’s approach to this Bill is one of constructive support. That should not surprise the Minister: by the Committee stage we had already tabled nearly 30 targeted amendments and half a dozen new clauses to strengthen protections of our national security, although, regrettably, the Minister did not choose to accept any of them. As the Minister is also responsible for vaccine roll-out, he may have been distracted. I want to thank everybody—all the members of the Committee and the House staff involved in the Committee stage of the Bill—and confirm that we intend to continue that constructive support.
We support the Bill, because it is a Bill demanded by Labour. The problems it tackles are ones that have been highlighted by Labour, and the Government’s action, only after years of delay, seems to be a result of being constantly reminded by Labour. Reminded this Government have been, not least by their failures again and again. They were reminded in 2012, when they let the Centre for Integrated Photonics, a prize British research and development centre, be taken over by Huawei, an event that our recent head of the National Cyber Security Centre said we would not want to happen with hindsight: national security outsourced and British interests relinquished to the market.
The Government were reminded again in 2014 when they let our foremost artificial intelligence firm, DeepMind, be acquired prematurely by Google: national security interests outsourced again on account of blind market faith. They were reminded twice this time when they let our world-leading semiconductor firm Arm be taken over first by SoftBank and now by Nvidia. Again, an intelligence expert told our Committee that the UK had limited freedom of choice in this key strategic technology and that the deal undermined our own ability: our national interest outsourced yet again by Ministers prioritising market zeal over British security.
2:30 pm
Following the Committee stage of the Bill, the Competition and Markets Authority has chosen to investigate that takeover. That is, shall we say, interesting to put it mildly. Photonics-Huawei, DeepMine-Google, Arm-Nvidia, the failed Pfizer-AstraZeneca attempt, Cobham, GKN, Huawei-5G—failure after failure after failure, despite reminder after reminder. Twelve national security screens in 18 years and not one instance of the Government acting decisively to block a takeover and guard our national security.
Of course, it is not only the Labour party that has led the debate. It has been led by every ally of ours abroad, too. The US updated its rules in 2018. Germany did so in 2018. The European Union proposed new rules in 2017 and Labour has called for them persistently. It is not just in politics, I am afraid to say, that the Government have lagged. They have lagged in expert advice, too. We heard in Committee from our recent chief of MI6, who described the Government’s approach till now as “incredibly naïve” and noted that, “It was completely ridiculous” that we were considering handing our 5G network over to Huawei. So, while the Government are years behind our allies, years behind Labour’s calls to protect national security and years behind security expert advice, our approach today on the Bill is one of support—indeed, urgent support. Britain has needed a robust national security and investment regime for many years now, as the world’s post-financial crisis has brought with it rapid geopolitical, technical and economic shifts.
The Bill has come too late for some threats. It is our resolve to not let it be too little in acting against future threats. We will take the Government to task for ongoing omissions, incompetence and neglect of our national security; foremost is the protection of British citizens and British interests. The Government’s impact assessment for the Bill notes the need for change. It regrets that national security is an area of market failure requiring that the Government do something about it. That is an astonishing claim. National security is not a private concern first and a Government afterthought second. National security is the first reason for Government. It is not undersupplied by the market; it is outside the market altogether. Labour’s first principle of constructive support is to stop the outsourcing of our security. We do not want ministerial free market ideology to threaten our national security. Our approach is to bring together legal powers, multi-agency expertise and proper decision making to put British security first.
In implementing the Bill, we want to champion support for the engine of our national growth and our national prosperity, our small and medium-sized enterprises and innovative start-ups. The impact assessment noted that 80% of transactions in the scope of mandatory notification under the Bill will involve SMEs, but it fails to consider the costs faced by the acquired companies, or the overall impact of funding for our start-ups. The Opposition will not turn a blind eye to these costs for our small and medium-sized enterprises, so our new clause 6 and amendment 7 would plug gaps left by the Government’s incoherent policy making to champion British creativity and innovation. It is the least our small and medium-sized enterprises deserve.
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(b) whether the trigger event risks enabling a hostile actor to—
(i) gain control or significant influence of a part of a critical supply chain, critical national infrastructure, or natural resource;
(ii) conduct espionage via or exert undue leverage over the target entity;
(iii) obtain access to sensitive sites or to corrupt processes or systems;
(c) the characteristics of the acquirer, including whether it is effectively directly or indirectly under the control, or subject to the direction, of a foreign government;
(d) whether the trigger event adversely impacts the UK’s capability and capacity to maintain security of supply or strategic capability in sectors critical to the UK’s economy or creates a situation of significant economic dependency;
(e) the potential impact of the trigger event on the transfer of sensitive data, technology or potentially sensitive intellectual property in strategically important sectors, outside of the UK;
(f) the potential impact of the trigger event on the UK’s international interests and obligations, including compliance with UK legislation on modern slavery and compliance with the UN Genocide Convention;
(g) the potential of the trigger event to involve or facilitate significant illicit or subversive activities, including terrorism, organised crime, money laundering and tax evasion; and
(h) whether the trigger event may adversely impact the safety and security of UK citizens or the UK.’
The new clause provides a non-exclusive framework of factors which the Secretary of State is obliged to have regard to when assessing a risk to national security.
New clause 5—National Security Definition—
‘When assessing a risk to national security for the purposes of this Act, the Secretary of State must have regard to factors including, but not restricted to—
(a) the potential impact of the trigger event on the UK’s defence capabilities and interests;
(b) whether the trigger event risks enabling a hostile actor to—
(i) gain control or significant influence of a critical supply chain, critical national infrastructure, or natural resource;
(ii) conduct espionage or exert undue leverage over the target entity;
(iii) obtain access to sensitive sites; or
(iv) to corrupt processes or systems.
(c) the characteristics of the acquirer, including whether it is effectively directly or indirectly under the control, or subject to the direction, of a foreign government;
(d) whether the trigger event adversely impacts the UK’s capability and capacity to maintain security of supply or strategic capability in sectors critical to the UK’s economy or creates a situation of significant economic dependency;
(e) the potential impact of the trigger event on the transfer of sensitive data, technology or potentially sensitive intellectual property in strategically important sectors, outside of the UK;
(f) the potential impact of the trigger event on the UK’s international interests and obligations, including compliance with UK legislation on modern slavery and compliance with the UN Genocide Convention;
(g) the potential of the trigger event to involve or facilitate significant illicit or subversive activities, including terrorism, organised crime, money laundering and tax evasion; and
(h) whether the trigger event may adversely impact the safety and security of UK citizens or the UK.’
This new clause establishes factors which the Secretary of State must have regard to whenassessing a risk to national security.
New clause 6—Dedicated Small to Medium Enterprise support—
‘(1) Within 3 months of this Act receiving Royal Assent the Secretary of State must set up, a specific division focused on engagement with Small to Medium enterprises (SMEs) engaged in any provisions of this Act.
(2) The division must focus on four functions—
(a) providing updated, efficient and accessible guidance specific to SMEs on compliance with the terms of this Act;
(b) engaging with SMEs in advance of formal notification that can allow efficient notice and assessment periods, including through use of regulatory sandboxes where beneficial for innovation and national security;
(c) providing regular engagement with and assistance to SMEs throughout the assessment periods for SMEs;
(d) seeking to deliver prompt, proportionate resolution of complaints by SMEs relating to the provisions of this Bill;
(e) monitor the impact on access to investment for SMEs and report to the Secretary of State.’
This new clause would require the Secretary of State to set up a Small to Medium Enterprise (SME) engagement unit to assist and support SMEs through the national security screening process.
New clause 7—Reports to the Intelligence and Security Committee of Parliament—
‘(1) The Secretary of State must, in relation to each relevant period—
(a) prepare a report in accordance with this section, and
(b) provide a copy of it to the Intelligence and Security Committee of Parliament as soon as is practicable after the end of that period.
(2) Each report must provide, in respect of mandatory and voluntary notifications, call-in notices, and final orders made under this Act, details of—
(a) the jurisdiction of the acquirer and its incorporation;
(b) the number of state-owned entities and details of states of such entities;
(c) the nature of national security risks posed in transactions for which there were final orders;
(d) details of particular technological or sectoral expertise that were being targeted; and
(e) any other information the Secretary of State may deem instructive on the nature of national security threats uncovered through review undertaken under this Act.’
This new clause would require the Government to publish an ‘Annual Security Report’ to the Intelligence and Security Committee of Parliament.
Amendment 3, in clause 3, page 3, line 10, leave out subsection (4) and insert—
‘(4) The Secretary of State must review a statement published under this section within one year after the publication of the first such statement, and thereafter at least once every 5 years.’
This amendment would require the Secretary of State to review the statement about exercise of call-in power to be reviewed one year after they are made, and once every five years thereafter.
Amendment 1, in clause 6, page 5, line 3, at end insert—
‘(10) Notifiable acquisition regulations must be reviewed one year after they are made, and once every five years thereafter.’
This amendment would require notifiable acquisition regulations (including which sectors are covered) to be reviewed one year after they are made, and once every five years thereafter.
Amendment 6, page 5, line 3, at end insert—
‘(10) Notifiable acquisition regulations must bring broadcast, print and social media companies within the scope of the mandatory notification regime.’
Amendment 2, in clause 8, page 6, line 38, at end insert—
‘(8A) The fifth case is where a person becomes a major debt holder and therefore gains influence over the entity’s operation and policy decisions.
(8B) For the purposes of subsection (8A), a major debt holder is a person who holds at least 25% of the entity’s total debt.
(8C) The sixth case is where a person becomes a supplier to the entity of goods, services, infrastructure or resources to such an extent that the withholding of the supply would seriously undermine the entity’s ability to continue its operations.’
This amendment would mean that a person becoming a major debt holder or a major supplier would count as a person gaining control of a qualifying entity.
Amendment 4, in clause 30, page 20, line 3, after ‘period’ insert ‘or any calendar year’
This amendment would make it mandatory for the Government to inform Parliament if financial assistance given in any financial year, or in any calendar year, exceeds £100 million.
Amendment 5, in clause 54, page 33, line 42, at end insert—
‘(aa) whether the law of the country or territory to whose authority the disclosure would be made contains provisions and prohibit any use or disclosure of the information contrary to subsection (4),
(ab) whether the Secretary of State considers that disclosing the information to that authority would in itself pose a threat to national security, and’
This amendment would add to the list of factors the Secretary of State takes into consideration a sub-clause to ensure that a country or territory making a disclosure request has sufficient safeguarding in place to prevent any action that would be considered unlawful in the UK.
Amendment 7, in clause 61, page 36, line 20, at end insert—
‘(m) the average number of days taken to assess a trigger event called in under the Act;
(n) the average number of days taken for acceptance decisions in respect of mandatory and voluntary notices;
(o) the average staff resource allocated to the operation of reviews of notices made under sections 14 and 18 over the relevant period;
(p) the number and proportion of notices and call-in notices concerning the acquisition of a Small to Medium Enterprise; and
(q) in respect of the transactions stated subsection (p), the sectors of the economy in relation to which call-in notices were given.’
This amendment would require the Secretary of State to report on the time taken to process notices, the resource allocated to the new Unit and the extent to which Small to Medium Enterprises are being called-in under the new regime.
The key concern I had was about implementation. The Bill is set to radically overhaul the UK’s approach to foreign investment at a time of significant economic uncertainty. On leaving the EU, the UK Government cannot afford to get their global Britain approach wrong and suffer what has been described as the potentially chilling effect on investment if the measures in the Bill appear to be heavy-handed. That is a concern across the board, given that even microbusinesses are in scope.
I take this brief opportunity to thank my hon. Friends the Members for Glenrothes (Peter Grant) and for Aberdeen South (Stephen Flynn), who served on the Bill Committee. They raised a large number of concerns, including the impact on academic research spin-offs, SMEs and early-stage ventures. They called for a grace period for SMEs falling foul of this new legislation, a review of exercisable call-ins and a review of the notifiable acquisition regulations. They suggested that broadcast, print and social media companies should be in scope. They suggested that major debt holders should be defined as a person gaining control of a qualifying asset and they suggested a requirement to report if financial compensation from Government exceeded £100 million in either a calendar or financial year.
All those amendments and contributions were made for very good reasons. The Scottish National party has long argued that it is right to have this legislation. In some ways it is long overdue, but that does not mean there are no concerns, which is why we have tabled new clauses 1 to 3 and amendments 1 to 6.
New clause 1 would require the Secretary of State to assess the impact of the Bill on academic research spin-off enterprises. New clause 2 would require the Government to produce a report setting out the impacts of the legislation on small and medium enterprises and on early-stage ventures and to produce relevant guidance. New clause 3 would create a grace period whereby for alleged offences committed under clause 32, SMEs would have a reasonable excuse if the alleged offence was committed within the first six months of the Bill being in operation.
I will turn briefly to the amendments. Amendment 1 would require notifiable acquisition regulations, including the sectors to be covered, to be reviewed one year after they are made and five years thereafter. Amendment 2 would mean that a person becoming a major debt holder or a major supplier would count as a person gaining control of a qualifying asset. Amendment 3 would require the Secretary of State to review statements about the exercise of call-in power one year after they are made, and once every five years thereafter. Amendment 4 would make it mandatory for the Government to inform Parliament if financial assistance given in any financial or calendar year exceeded £100 million. Amendment 5 would add to the list of factors the Secretary of State has to take into account. They would have to ensure that a country or territory making a disclosure request had sufficient safeguarding in place to prevent any action that would be considered unlawful in the UK. Amendment 6 would ensure that notifiable acquisition regulations bring broadcast, print and social media companies into the scope of the mandatory notification regime.
All those new clauses and amendments in essence are designed to ensure that the scope of the legislation is appropriate, but that the impact, particularly on investment, is proportionate. I have not determined yet whether to press any of them to a vote. What I would prefer is for the Minister to give a commitment, not simply to have infrequent if regular reviews of parts of this Bill, but to keep the Bill under permanent review to ensure that the scope remains valid—not too wide and not too narrow—and that the impact on investment and risk, particularly in small and medium-sized enterprises, academia and research, is proportionate. Through that, we can ensure that we quite rightly protect national security, but do not suffer from the investment chill that some fear could be the consequence if we get this wrong. With those brief remarks, I commend the new clauses and amendments to the House.
“the whole point of the Bill is for it to be narrow on national security grounds”.
He also said:
“These powers are narrowly defined and will be exclusively used on national security grounds. The Government will not be able to use these powers to intervene in business transactions for broader economic or public interest reasons”.—[Official Report, 1 November 2020; Vol. 684, c. 206-210.]
It follows that the very areas in which the BEIS Committee would be perfectly qualified to scrutinise policy are specifically excluded from the application of the powers conferred by the National Security and Investment Bill.
That scrutiny gap was addressed, also on Second Reading, by the shadow Business Secretary, the right hon. Member for Doncaster North (Edward Miliband), who said:
“Given the sensitive nature of the issues involved in this Bill, I do think there needs to be a way…for this House to monitor how this is working in practice.
I do not speak for it, but we have a special Committee of the House—the Intelligence and Security Committee—that can look at these issues. I would like to raise the question with the Secretary of State whether it could play a role in scrutinising the working of the regime and some of the decisions being made, because there are real restrictions on the kind of transparency there can be on these issues…The ISC is in a sense purpose-built for some of these issues.”—[Official Report, 17 November 2020; Vol. 684, c. 214.]
It is hard to disagree with that, although I hasten to add that the Committee has not the slightest wish gratuitously to add to its workload, overburdened as we are due to our delayed reconstitution and the fact that we cannot operate virtually, where sensitive material is concerned, during periods of lockdown. Nevertheless, Parliament should be enabled to scrutinise the implementation of the powers given to Government by this legislation, which explicitly puts national security material at the heart of future decision making. It is obvious that there will be potential conflicts between encouraging business on the one hand and safeguarding national security on the other. In 1994, the ISC was established specifically for circumstances such as these—namely, to examine matters that Parliament could not because they were too sensitive for public disclosure and debate.
It has been suggested that the ISC cannot undertake this role this time because the organisation concerned, the new investment and security unit, is based in the Department for Business, Energy and Industrial Strategy, rather than Departments like the Home Office or the Cabinet Office, which traditionally handle national security matters. Yet this is fundamentally to misunderstand the legal basis under which the ISC functions.
There are two interlinked documents: the Justice and Security Act 2013 and the memorandum of understanding between the Prime Minister and the ISC for which that Act provides. The long title of the JSA makes it quite clear that it provides not only for scrutiny of MI5, MI6 and GCHQ, but for
“oversight of…other activities relating to intelligence or security matters…and for connected purposes.”
Section 2(1) of the Act refers to those three intelligence agencies specifically, but section 2(2) spells out our Committee’s wider remit:
“The ISC may examine or otherwise oversee such other activities of Her Majesty’s Government in relation to intelligence or security matters as are set out in a memorandum of understanding.”
Section 2(5) explains that that MOU can be altered by agreement between the ISC and the Prime Minister. All that is required, therefore, for a Government activity in relation to intelligence or security matters to be added to the existing list in the memorandum of understanding is a simple exchange of letters between the ISC and the Prime Minister agreeing to do so.
In other words, the 2013 Act and associated memorandum were designed exactly for circumstances such as these, where evolving intelligence and security arrangements create sensitive new functions and/or new units which need Parliamentary scrutiny to be within the same circle of secrecy as the long-established agencies. To put the matter beyond all doubt, consider finally this extract from paragraph 8 of the MOU about our remit:
“The ISC is the only committee of Parliament that has regular access to protectively marked information that is sensitive for national security reasons: this means 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.”
Inserted at the end of this sentence is a notation for the following footnote which explains:
“This will not affect the wider scrutiny of departments such as the Home Office, FCO and MOD by other parliamentary committees. The ISC will aim to avoid any unnecessary duplication with the work of those Committees.”
Indeed, having chaired the Commons Defence Committee in the previous two Parliaments, I can confirm there was never the slightest friction, overlap or intrusion from the then ISC into the work of the Defence Committee. The ISC looked at defence intelligence and offensive cyber, as set out in its MOU, and the Defence Committee continued to scrutinise everything else.
It really should not be necessary, every time a new unit is set up inside a Department not normally associated with national security or intelligence issues, to spell out in black and white, as I have done today, how and why the framers of the 2013 Act deliberately created the flexible memorandum of understanding arrangement that incorporated its role on the face of that legislation. It was, of course, to deal with exactly the sort of situation facing us today, where the intelligence and security battle in what is increasingly known as the grey zone of conflict mutates and moves into areas of responsibility far beyond traditional boundaries, as Deborah Haynes’ admirable new podcast illustrates so convincingly. That is why Business Ministers, rather than Defence or security Ministers, are having to grapple with today’s legislation.
Following a constructive discussion with my hon. Friend the Minister yesterday, I was cautiously optimistic that the Government would recognise that the 2013 arrangements provide the correct basis for scrutiny on which to proceed. Of the 14 amendments tabled for today, there is one—new clause 7—that recognises the scrutiny gap in this legislation and proposes that a special report containing the relevant classified national security material should be prepared for, and provided to, the Intelligence and Security Committee. This Opposition amendment has much to commend it, and, as ISC Chairman, I would be minded to support it if it were the only available option. However, an undertaking by the Minister today that the Government will bring forward their own amendment in the upper House to close the scrutiny gap satisfactorily in a more streamlined way would be even better.
In his appearance before the Public Bill Committee, former chief of MI6 Sir Richard Dearlove had the following exchange with the Minister, who referred to the annual report to be prepared for Parliament as a requirement of this legislation. The Minister asked:
“What is your view on balancing transparency and ensuring Government can take national security decisions sensitively? Where does that balance lie in terms of our ability to be as transparent as we can without harming sensitivities around these decisions?”
Sir Richard replied:
“My view would be that the annual report has as much transparency as possible, but you are probably going to require a secret annexe from time to time.”––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 21.]
Whether we go down that route of a classified unpublished annexe to send to our Committee or follow the model used in the ISC’s own reports, which are prepared in full with subsequent redactions made and marked in the main body of the text, such an approach would be the least burdensome for the Department to prepare and for the ISC to scrutinise. Either method would effectively close the scrutiny gap and get this valuable and necessary legislation off to the best possible start.