The Minister for Digital Government and Data (Ian Murray)

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I beg to move, That the Bill be now read a Second time.

A happy new year to you, Mr Speaker, and to all the House staff. This is the first opportunity I have had to say that to you.

On 3 June 2024, a busy Monday morning in south-east London, criminals attacked Synnovis, an organisation that processes blood tests on behalf of our national health service. They did not turn up physically, but logged on to computers thousands of miles away and set off ransomware—malicious software that encrypts files from afar, making them unusable. The attack had a ripple effect across London hospitals. It delayed 11,000 appointments, blood transfusions had to be suspended and the company lost tens of millions of pounds.

This was not an isolated case. In the year leading up to September 2025, the National Cyber Security Centre dealt with 204 “nationally significant” incidents, meaning that they seriously disrupted central Government or our critical public services. That is more than double the 89 incidents in 2024. No one disputes that we must do everything we can to protect the UK from these attacks. The UK is the most targeted country by cyber-attacks in Europe, and it was the fifth most targeted nation in 2024 by nation state-affiliated threat actors. In 2024, it is estimated that UK businesses experienced over 8.5 million cyber-crimes in the 12 months preceding the survey, and that in that year more than four in 10, or 43%, of UK businesses were subject to a cyber-attack, affecting more than 600,000 businesses in total.

Significantly, cyber-attacks are estimated to cost UK businesses almost £15 billion each year, equivalent to 0.5% of the UK’s annual GDP, notwithstanding the wider economic effects of intellectual property theft or the experience of patients, as in the first example. The average cost of a significant cyber-attack for an individual business in the United Kingdom is estimated to be just over £190,000. There has been a 200% increase in global cyber-attacks on rail systems in the past five years, increasing the likelihood of severe disruption to the economy and to people’s daily lives.

Ian Murray

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I could not agree more. I gave the example of the Synnovis incident that brought blood transfusions in London to a halt, affecting thousands of patients. Our everyday lives are affected by this. As we modernise and digitise our economy and our Government, we have to ensure that our systems are as secure as possible, and cyber-security is right at the heart of that. This is not just a defensive issue; it is very much an economic growth issue as well, as we can see from the impact it has on our economy, our public services and the day-to-day lives of people, as in the example of our train systems that I just mentioned.

Ian Murray

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The Bill builds on the 2018 regulations, which were a hangover from the EU when we adopted them in this country. The Bill expands on those. As my hon. Friend the Member for Harlow (Chris Vince) just suggested, this is about economic growth as well as protecting our systems, so we have to find a balance between ensuring that our regulators have the powers and tools to regulate properly and giving businesses and our public services the confidence to use digital technology knowing that we have the most secure cyber-security in Europe, if not the world. We are very good at this stuff, and that is the balance to be sought. This Bill is about economic growth rather than about the over-regulation of businesses. I do not say this flippantly, but cyber-security is one of those areas where if everything is working, nobody notices, but when it is not working, suddenly everyone notices and it is everyone’s problem. That is why we are bringing the Bill forward and extending the scope of the powers.

Ian Murray

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Indeed it does. It is one of a number of provisions that the Government are bringing forward to create growth across the country, not just in Northern Ireland. The Secretary of State’s passion is to make sure that those jobs are everywhere, right across the United Kingdom, including in Northern Ireland. The Under-Secretary of State for Science, Innovation and Technology, my hon. Friend the Member for Vale of Glamorgan (Kanishka Narayan), has been in Belfast recently discussing this legislation and wider cyber-security issues with the industry in Northern Ireland, so I can assure the hon. Member for Strangford (Jim Shannon) that that is indeed the case.

Ian Murray

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This is about making sure that we extend the scope of the 2018 regulations into other parts of the economy, and I will come on to that later in my contribution. It is about reporting things more quickly to ensure that the attacks can be seen and action can be taken more quickly. It is also about reporting to the regulators to give the regulators confidence and powers across a wider scope of sectors in the economy, and to give businesses the confidence that those sectors have to report to the regulators when things are going wrong so that swifter action can be taken. We can see from the host of recent high-profile issues, including at Hackney council, that it is important to ensure that this legislation goes through quickly and does the job that it is intended to do.

Ian Murray

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While physical security and national security are issues for all of us, so is cyber-security. The Bill builds on the 2018 regulations to widen the scope into other areas of the economy where such issues have become much more prevalent—for example, data centres. I hope that doing so will give industries and sectors, including their employees, the confidence to report things to the regulators. Giving powers to the regulators will give businesses the confidence that they can report stuff; it is not a regulatory heavy hand dampening businesses. I hope that I can assure my hon. Friend and the rest of the House on that.

Before that significant number of interventions, I was talking about why this issue matters and gave statistics for recent cyber-security activity in the United Kingdom. As a result of all that, one of the very first things we did as a new Government after the election was announce this new cyber-security Bill, just 10 working days in. Since then, the Department has been talking to cyber experts, businesses and regulators to turn these proposals into the comprehensive, serious and proportionate piece of legislation that we present for Second Reading today—one that protects the public and strengthens national security without placing undue burdens on businesses. I appreciate that that is a fine balance, but I think that this Bill finds that balance, so I am confident that the whole House will support it.

Ian Murray

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The hon. Gentleman is ingenious in the way in which he uses interventions on pieces of legislation. I know AI copyright is close to his heart as a former, or perhaps current, professional musician and, indeed, one of the key musicians in MP4—let’s not push that to a Division! AI copyright is, of course, a key issue that the Government are looking at. The Secretary of State for Science, Innovation and Technology and the Secretary of State for Culture, Media and Sport are working closely together on this issue. I think the legislation means that there has to be a report to Parliament in March—I am sure the hon. Gentleman will be very interested in that. We are bringing together the industry and tech companies to try to find a way through that particular issue. We know that it is a huge issue. It is not in the scope of this Bill, which has been kept very tight to deal with these specific and serious cyber-security issues.

As we know, the first duty of Government is to keep people safe. The question is how precisely the Bill will achieve that goal. The answer is simple. The UK’s main cyber-rules—the Network and Information Systems Regulations 2018, or the NIS regime—were first introduced seven years ago and have not been updated since. Those rules require operators of essential services such as energy, water and hospitals, as well as some digital service providers such as online search engines, to take steps to protect the services they provide and the data they hold from cyber-threats.

As Members might expect, a lot has changed in the cyber-landscape in the past eight years. We have had the rise of AI, which cyber-criminals are using to their advantage. Data centres have become a firm fixture of modern life, and we want to see more of them. Since the rules were introduced, criminals tactics have evolved to exploit loopholes in the regulations, as they did in the attack on the NHS supplier that I mentioned, which revealed how hackers can target third parties, such as IT companies, or supply chains as a back-door way to bringing down a wider system. As always, the story is one of technology and cyber-threats moving faster than policymakers can possibly keep up with.

Ian Murray

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I thank my hon. Friend for all he did on the issues facing Jaguar Land Rover. I know that the matter is close to his heart and, indeed, it was a really big issue across the country, showing how a cyber-attack can affect not just one company, but has a ripple effect throughout the economy. Of course, the Government stepped in to unlock a £1.5 billion bolster to Jaguar Land Rover’s cash reserves to help it through that problem.

I should say to my hon. Friend, and I will come to it later, that Jaguar Land Rover and other private organisations are not in the scope of this Bill. The reason is that individual private companies should take their own cyber-security seriously and ensure that the risks of such incidents and threats are minimised as much as possible. The Bill widens the scope of the existing regulations, which do not include that, but of course the Government are working closely with Jaguar Land Rover, Marks & Spencer and other high-profile cases, because we know the impact they can have on our economy. Indeed, had the Government not stepped in and resolved that issue, the impact on Jaguar Land Rover, and the tens of thousands of employees at the plants and in the supply chain, would have been catastrophic and is not worth thinking about. I thank my hon. Friend for raising that issue.

As I said, as always, the story is one of technology and cyber-threats moving faster than policymakers can possibly keep up with, but today we are fixing that. The first change in the Bill is to widen the scope of the 2018 regulations. To keep up with the changes of the past eight years, we are adding a few new things to that list, starting with large-load controllers. That includes any organisation that manages a significant flow of electricity to or from a smart appliance. It might be a company that supports electric car charging, for example. Bringing these entities into scope will safeguard our power supply and give consumers confidence in using energy-smart appliances, all of which are critical as we advance towards our clean power 2030 mission and net zero.

The second change is that we are adding large data centres in recognition of their growing importance to our day-to-day lives and to the economy. These are vast digital warehouses for the United Kingdom, home to servers that host everything from patient records to their bank details. This is the data that underpins modern life and all our lives and communities, and it must be protected.

We are expanding the scope of the regulations to include managed service providers as well. Those are organisations that provide ongoing functions, such as an IT help desk, to an outside client. Their access makes them an attractive target for cyber-attacks as criminals can find one weak spot and bring countless organisations down. For example, in 2014, an attack on a service provider for the Ministry of Defence compromised the personal data of around 270,000 people—military personnel, reservists and veterans. As organisations rely more and more on outsourced tech, we have to close this gap. In fact, weaknesses in the supply chain have become such a risk that we will go even further by allowing regulators to designate certain organisations as critical suppliers. That includes certain suppliers to essential services that could have a significant impact on the economy or society as a whole—for example, key suppliers to water companies, grid operators or air traffic control. These critical suppliers will be subject to cyber-security duties, which we will set out in secondary legislation.

Ian Murray

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The banking sector is obviously in the regulators’ scope for cyber-security, and there have been a number of outages, as my hon. Friend mentions. The general principle is that cyber-attacks no longer come in through the front door, but through third parties and suppliers. We have seen that, for example, in the recent incidents at Heathrow and in cloud outages with Amazon Web Services and other such companies. They are covered by their own regulations. As I said in answer to my hon. Friend the Member for Lichfield (Dave Robertson) about Jaguar Land Rover, those companies will not be in the scope of the Bill, but we hope that the financial services sector, which is a leader in cyber-security for a whole host of fairly obvious reasons, will take that forward.

The recent attacks on British icons such as Marks & Spencer and Jaguar Land Rover will loom large in people’s minds. Many Members across the Chamber have already mentioned them. Supply chains were thrown into chaos, with small businesses paying the price, which clearly shows the ripple effect across the economy—on other businesses, smaller businesses and patients, such as in the public service examples mentioned earlier—when one part of the system is attacked.

We are clear that all businesses—that covers financial services, Jaguar Land Rover, Marks & Spencer and others—must take immediate steps to protect themselves. That is why, in October, members of the Cabinet wrote to the FTSE 350 companies urging them to strengthen their defences by doing three things: first, to make cyber risk a board priority; secondly, to require suppliers to have a cyber essentials certificate; and thirdly to sign up to the early warning service. That was followed by a similar letter to entrepreneurs and small businesses in November with bespoke advice for smaller teams. We know that those actions work. Organisations with cyber essentials are 92% less likely to claim on cyber insurance than those that do not. Businesses know best how to protect themselves; we are not here to regulate for the sake of regulating.

Government are taking action too. As I announced this morning, the Government cyber action plan sets a radically new model for how Government will strengthen their cyber-resilience and is backed by over £210 million of investment. Government Departments will be held to standards equivalent to those set out in the Bill. That is why the public sector and the Government are not included in the scope of the Bill. The Government should not need to legislate for themselves; we should just get on with making sure that we are leading the charge and that the cyber action plan strengthens the Government’s cyber-resilience. [Interruption.] I do not know if that was an attempt at an intervention from the Opposition Front Bench, but I am happy to take it.

Ian Murray

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The right hon. Gentleman would have had some involvement in this when he was in government; indeed, the 2018 regulations came from the previous Government. We are all trying to make sure that we are catching up with the technology as quickly as it moves. He makes a very interesting point that I am very conscious of and happy to take away. We are determined to deliver the cyber-security action plan, which is backed by £210 million.

The actions that the previous Government took did not come to fruition in terms of their 2030 target, which is why we have refreshed the action plan and brought it forward with some significant cash. It is important for Ministers to take that forward. I hope that the right hon. Gentleman will hold us to account to ensure that we are fulfilling that promise in the cyber-security action plan. Public services, and indeed central Government, must take the leading role to show businesses that the approach to take is to ensure that all our systems are as secure as possible, not just on economic grounds, but for the people that we all seek to represent.

Ian Murray

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There are some key dates to monitor progress in the action plan itself. I wrote to my hon. Friend, the Chair of the Science, Innovation and Technology Committee, this morning on the publication of the action plan to lay out some of those issues; the letter will be landing soon. I would be happy to discuss that in front of the Committee in more detail. I hope that the Committee, and indeed the Opposition and our own Labour Members, hold us to account for delivering on this, because it is fundamentally important to Government, whether it be digitisation, modernising Government or winning the case with the public about why digitisation is so important and why Government should be as secure as possible and lead the charge on that across the whole economy. I hope that we and the Committee can take that forward in the weeks and months ahead.

As I said, the Government cyber action plan launched this morning is backed by over £210 million of investment and Government Departments will be held to standards equivalent to those set out in the Bill. I hope that that partially answers the question from my hon. Friend the Chair of the Science, Innovation and Technology Committee. Although the focus of the Bill is on essential services, it will also indirectly help businesses, including those damaged by the recent attacks, and Government. Almost all organisations today rely on data centres, outsourced IT or some kind of external supplier. By extending the Bill’s oversight, we are preventing attacks that could, in theory, reach thousands of organisations.

The Bill also gives new powers to regulators responsible for enforcing the NIS framework. Effective compliance is crucial to the success of any regime. These reforms could be world-leading on paper, but without proper enforcement they are meaningless.

Ian Murray

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Cyber-security is the responsibility of the Department for Science, Innovation and Technology, but the Cabinet Office has a clear resilience issue as well, as we heard from the right hon. Member for Hertsmere (Sir Oliver Dowden), who was in the Cabinet Office previously. The DSIT Secretary of State will make those regulations, but a plethora of regulators are involved in this process—energy, water and data centres all have different regulators. The regulators that regulate those sectors are being empowered through the expanded number of sectors being brought into the legislation to take the responsibility.

Ian Murray

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We have to pass the legislation first. It may be amended during its passage through both Houses. Therefore, the regulators will not know what they are regulating until the Bill has passed. However, as I mentioned at the start of my contribution, we have been working with regulators, businesses, organisations and cyber-security experts in the run-up to producing the Bill to make sure that it is in the right place—that it is proportionate on businesses and regulators—and that it is effective, which is the most important thing. I am sure that we will have debates on those kinds of issues as we go through Committee and on to Third Reading, but I very much acknowledge what the right hon. Gentleman said.

The Bill will strengthen the powers of the NIS regulators, ranging from Ofgem to the Civil Aviation Authority, which work together to uphold the UK’s cyber rules across those different sectors—I may have taken the previous intervention 10 seconds too early! We are raising the maximum fine that they can impose, for example, while simplifying the penalty bands to make them clearer. The key driving force for this measure is not to punish rulebreakers or raise revenue, but to incentivise firms to be vigilant. Our goal is 100% compliance and zero fines.

We will also ask regulated organisations to change the way they report attacks and expand both the types of instance they have to report and the timeframe in which they have to report them. This is a small but crucial change. Under the current rules, regulators get notified about a breach only once it has already caused significant disruption—when traffic lights have failed or the heating has shut off. The system does not include cases with the potential to cause a crisis much later, like a hospital’s computer system quietly being spied on as hackers wait for their moment to strike. Under the Bill, if an organisation is within scope, it will have to tell its regulator and the National Cyber Security Centre about these types of breaches within 24 hours and provide a full report within three days. Pace and speed are of the essence. This will not only give us better information, but help agencies to warn others, should they need to, before they become the next targets.

The Bill will also allow the Government to set clear and consistent outcomes for regulations to work towards. One of the virtues of having a regime enforced by different agencies is that each has sector-specific expertise—Ofgem understands the complex digital systems that underpin the national grid, and the Civil Aviation Authority knows the precise threats to air traffic control, for example—but that approach has sometimes led to inconsistencies in how the regime is applied. Some bodies interpret the rules differently from others. The Bill aims to fix that with a single set of objectives issued by central Government and applied across the board. That will send the message that no sector is an easy target in the UK.

We will also improve the way in which regulators, intelligence agencies and law enforcement share information with each other by providing greater clarity on what regulators can share and receive. It is important that regulators have the resources to do their job, as the right hon. Member for New Forest East (Sir Julian Lewis) said. The Bill will also give them new powers to cover the full costs associated with their regulatory duties. To ensure transparency, regulators will consult on how fees are calculated and publish a statement each year to show how the funds are being used. Together, the measures add up to a much more consistent and effective regime with better reporting and much clearer guidance for all involved.

The Bill ensures that the UK’s cyber-security regime is not only fit for today but flexible enough to head off future threats as well. I have mentioned a few things that have changed in the past eight years—shifts in technology and the nature of cyber-attacks, artificial intelligence, data centres and the economy—but one of the biggest changes was, of course, Brexit. Since our exit from the European Union in January 2020, we have been unable to amend the NIS regulations without primary legislation, because the rules were originally part of European Union law. That has slowed the process and made it difficult for us to keep pace with new emerging threats and technology. Meanwhile, Brussels is pressing ahead with NIS2—its forward-looking update—while we lag behind.

That procedural quirk has left essential UK services more exposed, which perhaps tells us something about why the UK has such appalling figures compared with some of our EU counterparts, as hackers and cyber criminals exploit gaps in our dated laws. That is an unacceptable risk, so the Bill includes new powers for the Government to update the NIS regime via secondary legislation, to make it quicker and more agile for dealing with evolving technologies—we might need to respond quickly to a new type of cyber-threat, for example. That is not in order to override Parliament; in almost all cases, the Government will still be required to consult on any changes, and Parliament will have the final say on any legislation made under the power. However, delegated powers are essential for keeping us as responsive as possible. When national security is on the line, we need the ability to act fast and decisively.

In fact, in extreme cases some threats emerge so rapidly that even secondary legislation is too slow; if an ally were to be invaded by a hostile state, for example, the cyber risk to the UK would suddenly escalate. The Government will therefore also be given powers to direct regulators or regulated entities where national security is threatened—to issue specific cyber-security guidance in a crisis, for example. Those powers are intended as a last resort to protect our national security, and safeguards will go into the Bill to ensure that they are used accordingly.

The UK’s cyber sector is the third largest in the world, as we heard from our friend from Northern Ireland, the hon. Member for Strangford (Jim Shannon). It achieves double-digit growth year on year. We have fast-growing clusters of expertise in Cheltenham and Manchester. This legislation will supercharge that success, doubling down on one of our nation’s greatest assets. At its core, the Bill is about protecting the essential services that we all rely on, so that the lights always stay switched on, clean water always runs in our taps, and hospitals are always safe and secure. Those are the real life community issues that we and our constituents all encounter every single day.

This is more than a technical upgrade; it is a bold commitment from the Government to protect one of our biggest economic strengths and keep the UK safe in a rapidly evolving digital world. Together, we are working towards a future in which security is not a hope but a guarantee. I commend the Bill to the House.

Ian Murray

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It is worth clarifying for the House that we brought forward the Government cyber-security strategy this morning because the 2022 consultation undertaken by the previous Conservative Government was not acted upon. This Government are acting on those threats, bringing forward a plan that we will subsequently see through, and I think the hon. Lady should acknowledge that.

Anneliese Dodds (Oxford East) (Lab/Co-op)

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I wish you, Madam Deputy Speaker, all parliamentary staff and all Members in this Chamber a very happy new year.

It is a real pleasure to rise to speak in favour of this crucial Bill, which I am pleased to see having its Second Reading. It is also a pleasure to follow the hon. Member for Exmouth and Exeter East (David Reed), who set out many of the stakes that are so critical here. We also heard that in the opening speech by my right hon. Friend the Minister for Digital Government and Data, who described a number of disturbing cases, as others have done during the debate. He also set out the scale of the impact of cyber-attacks with some concerning figures, as did my hon. Friend the Member for Warwick and Leamington (Matt Western). I was particularly struck by the 0.5% hit to GDP from cyber-attacks and the fact that our country has been the third most severely impacted worldwide by cyber-attacks. It is therefore welcome that the Bill focuses on a faster and more joined-up approach to deter and deal with cyber-attacks.

I believe that that approach has gone alongside a really strong grip from the new Government on the need for a sectoral approach to dealing with cyber-attacks. Of course, we unfortunately had to see that, given the attack on JLR. I was pleased to see the previous Secretary of State really engaging with the automotive sector—work that has been continued by the current Secretary of State—on the challenges and lessons that need to come out of that attack, which has been particularly important in my constituency given the significance of BMW Cowley for employment in Oxford East.

I believe it is critical that we assess cyber-security alongside other forms of cyber-criminality, as the head of MI5 has argued for us to do. Cyber-attacks are increasingly being carried out by quasi-non-state actors that operate in the grey zone that the right hon. Member for Hertsmere (Sir Oliver Dowden) talked about, often implicitly backed by Russia or other adversaries. Those attacks are taking place at the same time as a rise in cryptocurrency laundering and disinformation operations.

I am sadly forced to share the assessment of GLOBSEC, the security-focused think-tank, that the pattern of Russia’s hybrid war

“has persisted without an effective Western response”.

There has been an escalation in cyber-attacks, sabotage, disinformation and political interference, but we have not seen the kind of joined-up approach across like-minded democracies that is needed. I was assured recently by my right hon. Friend the Paymaster General that the Government are working with the EU on combating foreign interference. That work clearly needs to be intensified, especially when we see what is happening to other democracies not so very far away from us.

I saw the threat for myself directly in Moldova, where cyber-criminals’ methods are often being used in combination: a cyber-attack on the election regulator coincided with a disinformation campaign sponsored by Russia and disruptions like bomb hoaxes in real life. So while I welcome this legislation, it must be co-ordinated with broader work to protect our country’s resilience and digital sovereignty, and to secure transparency on foreign interference.

In that regard, I will end by mentioning a concerning development: the sanctioning of two British citizens by the United States over the Christmas period, both of whom have worked to deliver transparency, including on foreign interference—clearly relevant to this Bill. Imran Ahmed is from the Centre for Countering Digital Hate, whose dispassionate, evidence-based analysis has uncovered the spread of disinformation, violent racism and material that poses harms to children. Clare Melford is from the Global Disinformation Index, which provides information about the extent of polarisation and disinformation so that companies can make informed choices about where to advertise—a free market approach to providing transparency.

The Minister stated at the beginning of this debate that when national security is on the line, we must be ready to act, and I strongly agree. A number of Members in the Chamber have said how important it is that we have a cross-economy and cross-society approach to these issues. I believe that the sanctioning of these individuals risks chilling transparency, including potentially transparency that can uncover foreign interference. I hope the Government will resist all attempts to reduce transparency. The welcome efforts in this Bill on cyber-resilience must be accompanied by work to counter other cyber and information-related threats to our national digital sovereignty and, more broadly, threats to our national security and interest.

Kit Malthouse (North West Hampshire) (Con)

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The hon. Gentleman is making a very interesting and pertinent speech. I hope he will welcome the fact that the Bill strengthens the requirement on companies to not only look at prevention but have an adequate recovery plan. Does he think that there is adequate sanction in the Bill for those companies that are deemed not to have an adequate recovery plan? My reading is that regulators cannot necessarily fine for a negligent recovery. As the hon. Gentleman said, the human factor so often matters, but surely that matters as much in recovery as it does in prevention.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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First and foremost, I thank all Members for their contributions to the debate. I am glad that the House has welcomed the Bill, with deep expertise shown by Members on both sides of the House. Of course, Members have asked questions and I will try to share the Government’s approach. Before that, let me set out what is at stake.

The UK is the most cyber-attacked country in Europe. In 2024, more than 600,000 businesses were subject to a cyber-attack, the average cost of which was just over £190,000. The cost of cyber-attacks to UK businesses in aggregate is estimated to be £14.7 billion a year. The personal experience of my hon. Friend the Member for Northampton South (Mike Reader) is on my mind, as well the facts that my hon. Friend the Member for Warwick and Leamington (Matt Western) shared, such as the most common password in this country being “password”, and, indeed, the comments of my hon. Friend the Member for Mid Cheshire (Andrew Cooper) about Buffy the Vampire Slayer being an effective name deployed in some contexts. The combination of aggregate impacts and such personal experiences is the motivation for the Bill.

National security is the first responsibility of any Government. Cyber-threats have grown and the previous Government failed to move fast enough in the light of that. This Government are acting robustly to ensure that the British public are secure. The big message is, “Let’s ditch legacy systems and platforms and move to a more secure future.” We have done that by ditching the Conservative party; it is time to do it across our economy.

Let me deal with some of the themes that hon. Members raised, especially threats from AI that will emerge in future. The right hon. Member for Hertsmere (Sir Oliver Dowden) and my hon. Friend the Member for Congleton (Sarah Russell) mentioned those threats. AI will almost certainly continue to make elements of cyber-intrusion operations more effective and efficient, and cyber-threats more frequent and intense. That is why it is important that organisations take steps to bolster their cyber-defences. Under the Bill, organisations must have regard to the state of the art when maintaining the security of their network and information systems. That applies not only to cyber-defences, but to cyber-threats.

The right hon. Member for Hertsmere mentioned agentic AI, and I am conscious that it will be a particular risk. A significant source of mitigation must be the quality of our capability in the private sector, but also in the public sector. I pay tribute to the work of the AI Security Institute, which is right at the frontier of understanding the risk of agentic AI.

Several Members asked questions about scope. Of course, there is a significant risk across our economy, but we have chosen to focus, as NIS regulations have historically done, on essential services, the failure of whose network and information systems poses imminent threat to life to the British public. For that reason, the scope of the Bill is tight. That is not to say that other businesses should not do a great deal to protect themselves against cyber-attacks. However, the Government need assurances that the resilience to cyber-attack of essential services, the disruption of which would have the most profound consequences for public safety, national security and economic stability, is prioritised. Of course, businesses outside the scope of the Bill should make it a critical business priority to gain the same assurance without the need for as much Government intervention.

I am aware of the points made by my hon. Friends the Members for Lichfield (Dave Robertson) and for Warwick and Leamington, the Chair of the Joint Committee on the National Security Strategy, as well as by my hon. Friend the Member for Newcastle upon Tyne Central and West (Dame Chi Onwurah), the Chair of the Science, Innovation and Technology Committee, on Jaguar Land Rover. In that instance, the Government acted swiftly in exceptional circumstances by providing a £1.5 billion loan guarantee to protect jobs, support businesses in the supply chain, and preserve this vital part of British industry. However, as the hon. Member for Exmouth and Exeter East (David Reed) noted, that should not be the expectation on Government; businesses must look to their own defences as a matter of corporate responsibility.

Kanishka Narayan

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I might just make a bit of progress.

My hon. Friend the Member for Warwick and Leamington mentioned the food sector and food retailers, given recent attacks. Following the attacks on Marks & Spencer and Harrods, my hon. Friend the Minister for Food Security and Rural Affairs has written to and engaged deeply with the chief executive officers of major food retailers to advise on how the food sector can best protect itself from cyber-threats.

There is a broader question about sectors that are not regulated by this Bill, which has been raised by numerous Members from across the House. The fact that a sector is not regulated under the Bill does not mean that organisations in it cannot protect themselves against cyber-attacks. As I said, the Bill is not designed to cover every sector. Where sectors are covered by existing regulations, and where the Government do not consider it essential to regulate a sector through the Bill, we have taken a proportionate approach. Introducing blanket coverage for whole new sectors would create extensive regulatory burdens for more of our economy, stifling economic growth. At the same time, this Bill will enable the Government to bring more sectors into scope in the future, and to take swift action if national security is at risk.

The Bill sits alongside a series of actions that the Government have taken. I highlight in particular the fact that the Government have written to UK businesses and trade bodies across sectors to make sure that they are embedding cyber essentials across their supply chains, that they are making cyber-resilience a board-level priority, and that the NCSC’s early warning system and advice is heeded.

Both Conservative Front Benchers, the Liberal Democrat spokesperson, the hon. Member for Harpenden and Berkhamsted (Victoria Collins), and my hon. Friend the Member for Congleton spoke about coverage of the public sector. The public sector requires a significant step change in cyber and digital resilience. As has been mentioned numerous times, today we have published the Government’s cyber action plan, backed by £210 million of investment. The plan takes decisive action and holds Government Departments accountable for their cyber-security and resilience, as well as providing them with more direct support and services, and co-ordinating responses to fast-moving incidents.

I will take up the point made by the right hon. Member for New Forest East (Sir Julian Lewis) about the juiciness of local government digital provision. I share his enthusiasm. The Government’s cyber action plan takes into account wider Government and public sector coverage. In fact, it strengthens, clarifies and joins up how lead Government Departments hold the wider public sector, including local government, to account for improved and equivalent cyber-resilience.

I will make an observation about the points raised about not just reporting and assessment, but recovery and resilience. I flag to hon. Members from right across the House that our proposals for security and resilience requirements are being prepared for secondary legislation. They will align with the NCSC’s cyber assessment framework, which relates to effective response and recovery. A consultation is likely in the year ahead.

There were a series of questions and comments about regulators, and proportionate and effective regulation. The Bill allows regulators to make sure that they are well resourced to carry out their duties, and can charge reasonable fees to cover more of the cost of their activities under the regime. It will enhance the regulators’ impact by ensuring clearer information gateways and increased incident reporting, and establishes a unified set of objectives. The shadow Secretary of State talked about regulators not finding enough incidents, and about them finding too many, but I will let her work out the obvious contradiction in her position.

I say in response to the right hon. Member for Hertsmere that there is clear scope for AI capability to be used in triage. I very much hope that the reviews that the Secretary of State must undertake—they are embedded in the Bill’s requirements—will ensure that we look at efficient ways that regulators can do that.

The Chair of the Science, Innovation and Technology Committee, my hon. Friend the Member for Newcastle upon Tyne Central and West, made a point about the frequency and quality of the reviews of the regime in this Bill. The Department for Science, Innovation and Technology will monitor and evaluate the new framework in reviewing the effectiveness of the regime. The Bill requires the Secretary of State to lay before Parliament a report on the operation of certain NIS legislation, and to publish one at least every five years. It will be an extensive review, so we want to make sure that it is proportionate, rather than overly frequent. The commitments made by the Secretary of State to the Chair relate primarily to the Bill.

In response to the points made by my hon. Friends the Members for Warwick and Leamington, and for Mid Cheshire, about the possibility of a cross-sectoral cyber regulation approach, I flag that 12 regulators are responsible for enforcing this regime, because different sectors rely on different technologies, and have very different risk attitudes and responses to vulnerabilities. It is right that we use sector expertise to address sector-specific issues.

The hon. Member for Bognor Regis and Littlehampton (Alison Griffiths) made an appropriate point about enterprise IT and operational technology being differentiated. That is why we have used a sectoral lens; it is a very tractable way of differentiating the risk factors. We have set out a sectoral approach, but that does not preclude the Secretary of State from setting out, in a statement of strategic priorities, the possibility of co-ordination and information sharing across regulators.

In response to the points made by the Liberal Democrat spokesperson, the hon. Member for Harpenden and Berkhamsted, as well as the hon. Member for Exmouth and Exeter East, about making sure that incident thresholds are clear and proportionate, the 24-hour light-touch notification requirement is proportionate. All that is needed is information alerting the regulator and the National Cyber Security Centre to the nature of the incident; the system does not rely on over-regulation. With the exception of data centres, reportable incidents that affect operators of essential services would need to have affected the operation of significant network and information systems right across the entity, and to have a significant national security impact. That is extremely unlikely to include minor matters, such as the receipt of a phishing email.

The Chair of the Treasury Committee, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier), made a point about financial services organisations, and I respond simply by flagging that UK financial services are resilient against cyber-threats. The threats are of course growing, but the regulatory approach taken by the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England were some of the sources for the approach we have taken in this Bill. Regulatory overlap was mentioned; this Government will make sure that businesses that have to navigate multiple regulatory frameworks with multiple services will face minimal burdens. We will work with our regulators and international authorities, including those in the EU, on the implementation of the Bill.

Turning to the impact on business, and the Bill ensuring a proportional approach to security, the Government will regulate only when that is necessary to protect our economy and our country from serious harm. A single attack can disrupt hospitals, transport and vital services, putting lives at risk, and we will not gamble with our economy or our people’s safety. The cost of doing nothing is, of course, too great. As I have mentioned, cyber-attacks drain almost £15 billion a year from UK businesses. At the same time, this Bill takes a proportionate approach to ensuring the safety of British people.

Board-level responsibility was brought up by a number of Members from across the House. I simply say that all business leaders need to take responsibility for their organisation’s cyber-resilience. On 13 October last year, the Government wrote to chief executives, requesting that they make cyber-security a board-level responsibility. The Government’s new cyber governance code of practice focuses on the governance of cyber risk specifically, and we will consider using secondary legislation to require companies to clarify their cyber-security responsibilities at board level.

A number of Members raised the issue of the effect on small and medium-sized businesses. Growth is the Government’s No. 1 mission, and small businesses are the engine room of that growth. They provide many of our most important services. That is exactly why small and, particularly, micro-sized managed or digital services are exempt from regulation under this Bill. They can be regulated only if they are designated as critical suppliers, and there will be an extremely high bar for designation. That should answer the question from my hon. Friend the Member for Mid Cheshire about companies meeting the bar for designation. A point was made about the ability of small businesses to tell quickly whether they are in scope. The regulator will complete an investigation process, which will include giving notices and having consultations with relevant businesses, prior to confirming whether an organisation meets the criteria for being in scope. That process needs to be robust, but we hope to make sure that those regulatory processes are proportionate, too.

I turn to a critical question from my hon. Friend the Member for Milton Keynes Central (Emily Darlington), my right hon. Friend the Member for Oxford East (Anneliese Dodds) and the hon. Member for Ceredigion Preseli (Ben Lake) on long-term sovereignty and capability in this country. Over the last decade and a half, the Conservative party in government sold this country’s strategic leverage over the primary sector, software and digital infrastructure. We will not repeat that mistake. We have already committed, right across the board, to extremely robust digital sovereignty measures. We have committed £500 million to a sovereign AI fund. We have made sure that there are tens of billions of pounds pouring into this country as capital infrastructure for AI, and British firms like Nscale are right at the heart of that. There is an advanced market commitment to cloud compute, to make sure that British companies are right at the heart of the provision of core infrastructure in future. Through the British Business Bank, we are committing tens of billions.

Kanishka Narayan

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I point the hon. Member to a thriving compound semiconductor cluster in south Wales, as well as chip manufacturing companies. If he doubts how advanced Arm is—the primary chip design company in the world—I would advise him to read a primer on the chip company supply chain.

The Government are pursuing a clear sense of digital sovereignty. On China, I flag that we are taking stronger action to protect our national security, including our critical national infrastructure, as well as making sure that, where appropriate, we look for opportunities for co-operation. The national security strategy, the independent review of state threat legislation and our new powers on counter-terrorism will make sure that we do that.

I am conscious that I am testing your patience, Madam Deputy Speaker, so I will simply flag a final point. The “whole society” approach was mentioned by a number of right hon. and hon. Members. We are making a series of investments in skills to ensure that young people are inspired to pursue careers in cyber-security. On the points made by my hon. Friends the Members for South East Cornwall (Anna Gelderd), and for Portsmouth North (Amanda Martin), I am deeply passionate about ensuring that young people—young women and girls, in particular—in their areas, Wales and across the country pursue thriving careers in cyber-security.

National security is the first responsibility of this Government. The Bill could not be more necessary for confronting developments in global cyber-threat. I thank all right hon. and hon. Members for their engagement with the Bill as it progresses. I encourage them to engage deeply. To all rogue organisations with hackers at the helm—I do not just mean the Conservative party—I say this: your time is up. With this Bill, we will make sure that the British public are secure.

Question put and agreed to.

Bill accordingly read a Second time.

Cyber Security and Resilience (Network and Information Systems) Bill: Programme

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Cyber Security and Resilience (Network and Information Systems) Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 5 March 2026.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill may be programmed.—(Jade Botterill.)

Question agreed to.

Cyber Security and Resilience (Network and Information Systems) Bill (Money)

King’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Cyber Security and Resilience (Network and Information Systems) Bill, it is expedient to authorise the payment out of money provided by Parliament of:

(1) any expenditure incurred under or by virtue of the Act by the Secretary of State or another public authority, and

2) any increase attributable to the Act in the sums payable under or by virtue of any other Act out of money so provided.—(Jade Botterill.)

Question agreed to.

Cyber Security and Resilience (Network and Information Systems) Bill (Ways and Means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Cyber Security and Resilience (Network and Information Systems) Bill, it is expedient to authorise:

(1) the imposition of charges under or by virtue of the Act; and

(2) the payment of sums into the Consolidated Fund.—(Jade Botterill.)

Question agreed to.

Cyber Security and Resilience (Network and Information Systems) Bill (Carry-over)

Motion made, and Question put forthwith (Standing Order No. 80A(1)(a)),

That if, at the conclusion of this Session of Parliament, proceedings on the Cyber Security and Resilience (Network and Information Systems) Bill have not been completed, they shall be resumed in the next Session.—(Jade Botterill.)

Question agreed to.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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Q Thank you very much to both of you for your insights today. The question on my mind is related, in part, to the point that Jen raised. There are a range of levers at the Government’s disposal in thinking about and acting on cyber-security. I am interested in your thoughts on which parts of the economy ought to be in the scope of regulation and legislative measures, and where effective measures that sit outside of regulation and legislation—guidance being one from a range of non-regulatory measures—would be better suited.

Jen Ellis: Again, that is a hugely complex question to cover in a short amount of the time. One of the challenges that we face in UK is that we are a 99% small and mediums economy. It is hard to think about how to place more burdens on small and medium businesses, what they can reasonably get done and what resources are available. That said, that is the problem that we have to deal with; we have to figure out how to make progress.

There is also a challenge here, in that we tend to focus a lot on the behaviour of the victim. It is understandable why—that is the side that we can control—but we are missing the middle piece. There are the bad guys, who we cannot control but who we can try to prosecute and bring to task; and there are the victims, who we can control, and we focus a lot on that—CSRB focuses on that side. Then there is the middle ground of enablers. They are not intending to be enablers, but they are the people who are creating the platforms, mediums and technology. I am not sure that we are where we could be in thinking about how to set a baseline for them. We have a lot of voluntary codes, which is fantastic—that is a really good starting point—but it is about the value of the voluntary and how much it requires behavioural change. What you see is that the organisations that are already doing well and taking security seriously are following the voluntary codes because they were already investing, but there is a really long tail of organisations that are not.

Any policy approach, legislation or otherwise, comes down to the fact that you can build the best thing in the world, but you need a plan for adoption or the engagement piece—what it looks like to go into communities and see how people are wrestling with this stuff and the challenges that are blocking adoption. You also need to think about how to address and remove those challenges, and, where necessary, how to ensure appropriate enforcement, accountability and transparency. That is critical, and I am not sure that we see a huge amount of that at the moment. That is an area where there is potential for growth.

With CSRB, the piece around enforcement is going to be critical, and not just for the covered entities. We are also giving new authorities to the regulators, so what are we doing to say to them, “We expect you to use them, to be accountable for using them and to demonstrate that your sector is improving”? There needs to be stronger conversations about what it looks like to not meet the requirements. We should be looking more broadly, beyond just telling small companies to do more. If we are going to tell small companies to do more, how do we make it something that they can prioritise, care about and take seriously, in the same way that health and safety is taken seriously?

David Cook: To achieve the outcome in question, which is about the practicalities of a supply chain where smaller entities are relying on it, I can see the benefit of bringing those small entities in scope, but there could be something rather more forthright in the legislation on how the supply chain is dealt with on a contractual basis. In reality, we see that when a smaller entity tries to contract with a much larger entity—an IT outsourced provider, for example—it may find pushback if the contractual terms that it asks for would help it but are not required under legislation.

Where an organisation can rely on the GDPR, which has very specific requirements as to what contracts should contain, or the Digital Operational Resilience Act, which is a European financial services law and is very prescriptive as to what a contract must contain, any kind of entity doing deals and entering into a contract cannot really push back, because the requirements are set out in stone. The Bill does not have a similar requirement as to what a contract with providers might look like.

Pushing that requirement into the negotiation between, for example, a massive global IT outsourced provider and a much smaller entity means either that we will see piecemeal clauses that do not always achieve the outcomes you are after, or that we will not see those clauses in place at all because of the commercial reality. Having a similarly prescriptive set of requirements for what that contract would contain means that anybody negotiating could point to the law and say, “We have to have this in place, and there’s no wriggle room.” That would achieve the outcome you are after: those small entities would all have identical contracts, at least as a baseline.

Kanishka Narayan

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Q Thank you all very much for making time. I have an implementation-focused question, perhaps directed at Stuart, but open to all. In practice, it would be helpful to understand how frequent is the case that a single company might provide multiple of the possible services in scope: MSP services, cloud hosting, data centre support and cyber-security services. What ability might we have to identify parts of an organisation that are in scope for particular bits and those that are not?

Stuart McKean: You are going to hear the word “complex” a lot in this session. It is hugely complex. I would almost say that everyone likes to dabble. Everyone has little bits of expertise. Certain companies might be cloud-focused, or focused on toolsets; there are a whole range of skillsets. Of course, the larger organisations have multiple teams, multiple scopes and much more credibility in operating in different areas. As that flows down the supply chain, in many cases it becomes more difficult to really unpick the supply chain.

For example, if I am a managed service provider delivering a cloud service from a US hyperscaler, who is responsible? Am I, as the managed service provider, ultimately on the hook, even though I might be using a US-based hyperscaler? That is not just to pick on the hyperscalers, by the way—it could be a US software-based system or a set of tools that I am using. There are a whole range of parts that need to become clearer, because otherwise the managed service community will be saying, “Well, is that my responsibility? Do I have to deliver that?”.

You are then into the legislation side with procurement, because procurement will flow down. Although I might not be in scope directly as a small business, the reality is that the primes and Government Departments that are funding work will flow those requirements down on to the smaller MSPs. Although we might not be in scope directly, when it comes to implementing and meeting the legislation, we will have to follow those rules.

Kanishka Narayan

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Q One of the themes already emerging in the conversation and in the wider public debate is that, on one line of thought, the right framework is that the law should focus on outcomes, principles and responsibilities, and then delegate specificity to both agile definition over time and specific expertise in sectors. An alternative view says that in looseness there is uncertainty, and we in Parliament should prescribe activity and impact thresholds and what companies should be doing. I am interested in areas across the board where you think prescription is a helpful way to go, as well as in your general experience of the core way and framework through which we have regulated a number of these activities, which is to rely on the agility and expertise in particular sectors, rather than the prescription of activity in primary legislation.

Chris Anley: By our calculation, as you say, the number of organisations that fall under the scope of the Bill in terms of the Government’s impact assessment is 0.1% of the private sector, which is one one-hundredth of the tip of the iceberg. We are going to have to adopt a whole-of-economy approach if we are going to secure the UK—we have already talked about the public sector issues.

On the Bill itself, we have three main comments. First, the secondary legislation forms the bulk of the technical measures, so we are calling for early consultation on that. Secondly, the Bill imposes additional reporting obligations, adding to an already complicated situation for reporting cyber-incidents in the UK. The reporting obligations trigger at a time of great complexity for an organisation, so we are calling for a single point of contact for reporting all cyber-security incidents in the UK and a single timeline. That may sound like a big ask—an impossible dream. Australia has already done it, and the EU is in the process of doing it in its digital omnibus streamlining package.

Finally, in terms of cyber professionals, the passage of a cyber-security Bill through Parliament is a golden opportunity to address the serious problems with the Computer Misuse Act 1990. Cyber professionals who are defending the UK cannot currently do so without risking criminal prosecution. We cannot carry out basic identification and verification actions without potentially committing the offence of unauthorised access to computer material, because a ransomware gang, for example, is unlikely to give us authorisation to identify the command and control system they are using to attack the UK.

We support the CyberUp campaign, which is proposing an amendment to the Computer Misuse Act to provide a statutory defence, resting on four strong safeguarding principles. We believe that that would help to protect our defenders while maintaining the integrity of the law. Based on the campaign’s research into the size of the cyber-security industry in the UK, the amendment would not only help to prevent incidents and mitigate incidents in progress, but add 9,500 highly skilled jobs and over £2.5 billion in revenue to the UK economy. Other nations are already benefiting from this type of safeguard, including our oldest ally, Portugal, which has implemented them in its recent amendments to NIS2, which is the exact legislative equivalent of the process we are in today. In summary, please help us to defend the UK by protecting our defenders.

Dr Ian Levy: To follow up on what Chris says, we strongly agree on early consultation on the technical detail of the secondary legislation. Somebody said in the previous session that, in security, the devil is always in the detail. Well-meaning text can be massively misinterpreted. We need to be very careful about that, so wide, early consultation is key.

On incident reporting, I will make two points. Chris made the point that when you are being asked to report, you are at your most desperate, because you have just found out that you have been attacked and you do not know what is going to happen. A lot of legislation accidentally ignores the victim. When we set up the NCSC, one of the primary things was that we were there to support the victims. I urge you not to lose sight of that. Absolutely, go after and find the culprits later, but in the moment, the victims are absolutely key to this.

The second part of that, about a single reporting timeline and a single reporting route, is that it is not just good for the victims but the only way that we generate strategic intelligence. That is one of the things that is missing in the UK—and has been for decades. We have five, six or seven different reporting portals that all characterise things differently and take different types of information, and bringing them together to have a single picture about the actual threat to the UK is incredibly difficult. A single reporting forum could fix that.

Ben Lyons: I might distinguish between what organisations need to do and whether organisations are in scope. In terms of what they need to do, the outcomes-based approach is sensible. If you think about when the Johnson Government were consulting on the measures that would go on to form this Bill, that was a time when ChatGPT had not been invented and the geopolitical environment was very different. The world is moving fast, and I think that the cyber assessment framework is a good starting place for what a code of practice could look like, because it is already understood by industry and is outcomes-driven.

I agree with the previous comments about incident reporting. I think that there is a lot of merit in the suggestion around a shared portal so that it is easier to report incidents in that moment of dealing with a cyber-attack. Within the regime as envisaged, probably the most important bit with reference to reporting is about improving that early clarity and visibility for the NCSC so that they can help. That is probably where I would place the emphasis, more than on regulators having that information within 24 hours. In that context, an approach that recognises best efforts in that first 24 hours but is focused on tackling the problem will be important for dealing with the issue.

On the supply chain, I would say—and we have heard about this before—that there could be more clarity there in terms of who would be in scope for designated suppliers. Thinking a bit around both systemic dependency and the potential for wider disruption would be important factors to give it more clarity.

Matt Houlihan: To round off the responses, on the question about finding the balance between specificity and agility, the Bill does a reasonable job at that. We can totally see the need to keep some of the doors open, because not only is the nature of the threat changing rapidly but the nature of technology—and of our capabilities to defend—is changing as well. We have already talked about AI, and we have lots of quantum research taking place as well that will have a big bearing on cyber-security.

It is right that the Bill has some agility in it, but it is clear from the responses today that there is a need to tighten it up in certain places. We talked about incident reporting, and having a simpler, more co-ordinated system for regulated entities to work with so that that reporting process is easier. The definition of “incident” itself needs to be looked at, we believe. The idea of an instance not only having, but being capable of having, an adverse effect on information systems opens the door very widely to lots of potential incidents that may need to be reported on. Having a tighter definition there would be very useful.

To touch on the point about Secretary of State powers, we feel that the door is a little bit too wide. If you look at legislation such as Australia’s cyber-security legislation from 2018, the Security of Critical Infrastructure Act, that also has some good Secretary of State powers, but there are lots of guardrails contained in it that make it clear that it is a power of last resort, where the entity is unwilling or unable to carry out the remedial action itself. There are also other guardrails contained in that legislation. We urge the Committee and the Government to look at that Act and take inspiration from it to think about where those guardrails could be worked into the UK law.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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Q One of the things that we have heard over the course of the day is that the Bill is just one of a range of different ways in which public authorities engage with companies on cyber-security and resilience. I am interested in hearing about the impact the Police CyberAlarm programme has had on the cyber-security and resilience of organisations. What would you like to see going forward?

DCS Andrew Gould: I love the fact that you have heard of it. One of the things that we struggle with is promoting a lot of these initiatives. Successive Governments actually deserve a lot of credit for the range of services that are provided. We aspire to be a global cyber-power, and in many ways we are. When you look at the range of services, tools, advice and guidance that organisations or the public can get, there is quite a positive story to tell there. I think we struggle to bring that into one single narrative and promote it, which is a real challenge. People just do not know that those services are there.

For those who are not familiar with Police CyberAlarm, it is a Home Office-funded policing tool focused on small and medium-sized organisations that probably do not have the skills or understanding to protect themselves as effectively. They can download that piece of software, and it will sit on their external networks and monitor for attacks. For the first time, it helps us in policing to build a domestic threat picture for small and medium-sized organisations, because everybody has a different piece of the puzzle. GCHQ has great insight into what is coming into the UK infrastructure, but it obviously cannot monitor domestically. Big organisations that provide cyber-security services and monitoring know what is impacting their clients or their organisation, but not everybody else. At policing, we get what is reported, which is a tiny piece of the puzzle. So everyone has a different bit of the jigsaw, and none of it fits together, and, even if it did, there would still be gaps. For SMEs, that is a particular gap.

For us, we get the threat intelligence to drive our operational activity, which has been quite successful for us. The benefit for member organisations—we are up to about 12,000 organisations at the moment, which are mostly schools, because we know that they are the most vulnerable to attack for a variety of reasons—is that, having the free tool available, it can do the monthly vulnerability scans and assessments. So they are getting a report from the police that tells them what they need to fix and what they need to patch.

We do not publicly offer a lifetime monitoring service, because we would not want the liability and responsibility, and we do not have the infrastructure to run that scale of security operation centre. But, in effect, that is actually what we have been doing for a long time—maybe not 24/7, but most of the time—because we have been able to identify precursor activity to ransomware attacks on schools or other organisations, and have been able to step in and prevent it from happening. There have been instances where officers have literally got in cars and gone on a blue light to organisations to say, “You need to shut some stuff off now, because you are about to lose control of your whole organisation.”

To that extent, it has been really impactful, but the challenge for us is how to scale. How do you scale so that people understand that it is there? How do you make it easier for organisations to install? That is one of the things that we are working on at the moment, so that everybody can benefit from the scans and the threat reporting, and we can benefit from a bigger understanding of what is going on.

The flip side of the SME offer from our point of view is our cyber-resilience centres. By working with some of the top student talent in the country, we can scale to offer our member organisations across the country the latest advice and guidance, help them understand what the NCSC advice and guidance is, and then help them to get the right level of security policies, patch their systems and all that kind of thing. It helps them to take the first steps on their cyber-resilience journey, and hopefully be more mature consumers of cyber-security industry services going forward. We are helping to create a market for growth, but also helping those organisations to understand their specific vulnerabilities and improve from a very base level.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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It is a pleasure to see you in the Chair, Mr Stringer. The Bill will make crucial updates that build on the NIS regulations, which are the UK’s only cross-sector cyber-security regulations. As clause 1 sets out, “NIS regulations” refers to the Network and Information Systems Regulations 2018 (S.I., 2018, No. 506).

Clause 2 gives an overview of the Bill’s parts and what they include. It sets out that part 2 amends the NIS regulations by expanding the scope of the regulations to cover data centres, large load controllers and managed service providers. It also introduces powers for regulators to designate suppliers as being critical for their sector. Part 2 also updates the existing incident-reporting regime and includes provisions relating to the recovery of regulators’ costs, information-gathering and sharing powers, and enforcement powers. Part 3 gives new powers to the Secretary of State to specify other sectors as in scope of the regulations in future, to create new regulations relating to the security and resilience of regulated services, and to issue a code of practice and a statement of strategic priorities. It also requires the Secretary of State to report on this legislation and its implementation. Finally, part 4 gives new national security powers for the Secretary of State to issue directions. I commend the clauses to the Committee.

Kanishka Narayan

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I welcome some of the Opposition spokesperson’s comments. Let me briefly address his questions about definitions and public sector inclusion. It is customary for the Opposition to oppose for the sake of opposition, at times, and I am afraid that this is one of those times; I have so far set out only two clauses, which are effectively an index to the Bill. Notwithstanding that, I will address his two particular points.

I was delighted that in our evidence sessions we heard from witness after witness who appreciated the flexibility of the Bill. For the Government to prescribe activities or incident thresholds in the finest detail in primary legislation is not how businesses, Government and regulators ought to engage. I hope that the Opposition will come to appreciate that in due course.

On critical suppliers, which no doubt we will come on to, I thought that in response to Opposition comments at our second sitting, I set out a very clear, precise set of tests. I found no opposition to that claim, but I look forward to hearing any original thoughts on that question.

On incident reporting, I was delighted that there was a witness who noticed that the extension of the definition of incident reporting, to include incidents capable of having an impact, was appropriate and exactly in the right place.

On the question about the public sector’s inclusion, we are here not to prescribe and wait for a law to tell us what we ought to do in the public sector, but instead to move fast and fix things. In that spirit, the Bill focuses on essential services.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Clause 3

Identification of Operators of Essential Services

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 3 makes important distinctions as to which organisations can and cannot be considered operators of essential services for the purposes of the NIS regulations. It clarifies that a person—in practice, an organisation or business—can be an operator of an essential service regardless of whether that person is established in the UK, as long as they are providing essential services in the UK. That means that organisations established outside the UK can be regulated under the NIS regulations.

Clause 3 also makes it clear that the NIS regulations do not apply to public electronic communications networks or to public electronic communications services. Those are telecoms operators, which are regulated separately under the Communications Act 2003. The amendments in clause 3 will prevent telecoms companies from being subject to duplicate regulations; they will also ensure that all essential services in the UK are protected, even if the company operating them is based outside the UK. I commend the clause to the Committee.

Kanishka Narayan

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On the question about cross-border compliance and making sure that we have a proportionate and effective regime, we have had a series of engagements at ministerial and official level with representatives of techUK, the industry body. The NCSC has convened a series of organisations—not least managed service providers, but others as well—and there has been a pretty extensive period of consultation on that and every other matter in the Bill.

I feel satisfied that the Bill strikes a good balance in ensuring proportionality in what businesses experience. Critically, as supply chains in this context become increasingly cross-border, it is vital that bodies that may not be resident in the UK but which provide essential services here are included in the scope of the Bill.

Question put and agreed to.

Clause 3 accordingly ordered to stand part of the Bill.

Clause 4

Data centres to be regulated as essential services

Kanishka Narayan

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I beg to move amendment 11, in clause 4, page 3, line 5, column 3, leave out from beginning to “the” in line 6.

This amendment and Amendment 12 would remove the Secretary of State for Science, Innovation and Technology as a joint regulator for the data infrastructure subsector, leaving the Office of Communications acting as the sole regulator for that subsector.

Kanishka Narayan

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Clause 4 of the Bill amends the NIS regulations by creating a new regulated sector, data infrastructure, and designating the Secretary of State for Science, Innovation and Technology and Ofcom as joint regulators. We have received clear feedback from the data infrastructure sector expressing concerns that a dual regulator model could create unnecessary complexity and limit accountability. Amendments 11 and 12 will remove the Secretary of State for Science, Innovation and Technology as a regulator, leaving Ofcom as the sole regulator, which will streamline the regulatory model for data infrastructure and resolve the concerns raised by stakeholders.

Ofcom already has proven regulatory expertise and is well placed to oversee the new data infrastructure sector effectively. By adopting a single regulator for data infrastructure, the amendments will reduce administrative burden, simplify engagement, and strengthen accountability. This will ensure a clearer, more effective regulatory framework for this rapidly growing sector. 

Clause 4 brings qualifying data centre services into the scope of the NIS regulations, recognising both their vital role in underpinning our economy and public services, and that disruption to them can significantly impact productivity, service delivery, and revenue.

Kanishka Narayan

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I thank the hon. Member for that thoughtful point. One assurance I will offer her is that the direct definition of data centres in scope here rely on capacity as a proxy for their essential independent nature, but when data centres below the capacity threshold but high on the criticality threshold are suppliers to essential services, they would be covered in part by the critical suppliers framework in the Bill. I take her point into account.

Kanishka Narayan

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In the course of engaging with firms we have considered what the timeline for reporting ought to be. It is critical that the initial notification requirement, which is a much lower requirement than the full notification requirement, at least gives the NCSC and other enforcement authorities the ability to counter national security and wider-impact risks. I believe that specification to be proportionate in the Bill, but it is of course a matter for implementation that we will keep a close eye on.

An attack on a data centre can have significant impacts beyond the facility itself. As data centres underpin digital services across multiple sectors, disruption or compromise can cascade through essential services, businesses and public services. Incidents may also pose national security and economic risks, given the concentration of sensitive and critical data. Bringing qualifying data centre services into scope of the NIS framework helps ensure these risks are managed proportionately and incidents are reported promptly. 

As per Government amendments 11 and 12, we propose that Ofcom is the regulator.   Medium and large third party data centres and very large enterprise centres will be required to manage risks and report to Ofcom. Their thresholds have been carefully calibrated to capture data centres whose disruption could have the greatest impact, while avoiding unnecessary burdens on smaller operators. This will strengthen the cyber-security and resilience of data centres, align with international regulations, and introduce structured oversight, notification, and incident reporting to strengthen national security and economic stability.

Kanishka Narayan

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With your permission, Mr Stringer, I will restrict my comments to clauses in question—in particular, clauses 5 and 6—and the relevant Government amendments. The shadow Minister has auditioned for roles at the Department for Business and Trade in talking about the philosophy of regulation, at the Department of Health and Social Care in talking about his medical background, and at the Treasury in talking about taxation. I will try to restrict myself to none of those and simply speak to the clauses and address three points in response to his comments.

The first relates to the skills and resourcing of our regulators. On that, I welcome the shadow Minister’s prior engagement with me directly and his questions now. The last Government completely gutted our regulators. Having done so, they achieved neither growth nor regulatory quality, which Opposition Members now talk about. As a consequence, it falls to us to make sure that our regulators are fit for purpose and resourced in the way they need to be. This Bill gives them the powers to secure initial and full notifications in a timely way, the powers to share information in an appropriate way and, fundamentally, the ability of cost recovery, to resource themselves in an appropriate way. Alongside that, our wider initiatives on skills in the cyber-sector and technology more broadly are fundamental to achieving our aspirations, not least through the CyberFirst programme, which I mentioned in a witness session.

Kanishka Narayan

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I might just make a slight bit of progress. As I mentioned in a previous session, the programme reached 415,000 students, and it has now been evolved into the wider TechFirst scheme as well.

The shadow Minister, as well as the hon. Member for Bromsgrove, made a very important point about resilience in particular and sovereign capability. Particularly for those reasons, I am really proud of two things. One is that the Bill includes suppliers that may not be resident in the UK but provide essential services in the UK. This is a critical means through which we can secure our capabilities here. The second, which is close to my particular interests in the data centre and compute world, is that, through our initiatives on sovereign AI, and having launched a very innovative advance market commitment in the chips part of the stack, which ends up crowding in wider demand—not least through companies such as Nscale, a fundamental part of our AI growth zone in the north-east—this Government are finally rectifying the errors and omissions of the last Government, in making sure that Britain does not do what it did in the last commercial cloud context, but instead, in this AI compute world, has some actual chips on the table.

Thirdly, I will not try to settle the thrilling debate between the shadow Minister and my hon. Friend the Member for Lichfield on the philosophy of regulation. I will simply make the humble suggestion that in this context we have arrived at, not a full-fat compendium, as the shadow Minister described it, but a very targeted Bill, which has been the result of extensive industry engagement—indeed, some of it was carried out by the prior Government—that aligned on the sectors in question and the inclusion of critical suppliers in scope.

On the shadow Minister’s question about the thresholds and definitional specificity of large load controllers in the Bill, I will of course remain very open to ensuring that the secondary powers, which are intended precisely to enable us to move flexibly as the clean power industry moves, give us the flexibility to move with it. At the same time, the threshold of 300 MW reflected the point at which a large load controller could pose an unacceptable risk to the electricity system and our CNI. This threshold was set very clearly in partnership with technical experts, including the National Energy System Operator. Of course, as the market grows, the potential for cyber-incidents will grow, and we will keep that under close review.

Kanishka Narayan

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I thank my hon. Friend for that point. The reality is that neither he nor I am placed to judge exactly where the thresholds should be set on a permanent basis. That is exactly why we have secured the flexibilities that we have in the Bill.

Clause 5 brings Crown-operated data centres into scope of the NIS regulations, ensuring that Government data centres meet robust standards comparable to those in the private sector.  Bringing Crown data centres within scope closes a critical gap and guarantees that public sector infrastructure is protected against evolving threats.  Exemptions will apply only in defined cases in which a data centre service is provided by an intelligence agency or a facility handling highly classified—“Secret” or “Top Secret”—information. These data centre services are already governed separately, and applying the NIS regime could cause conflict. I urge that clause 5 stand part of the Bill. 

Finally, clause 6, on large load controllers, introduces the essential new service of load control under the energy subsector of the NIS regulations. This will capture organisations—

Kanishka Narayan

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Loudly and slowly: this will capture organisations remotely managing significant amounts of electrical load via energy-smart appliances, both in a domestic and non-domestic setting. These organisations play an increasingly important role in the management of the electricity system, but are not currently regulated for cyber-security. A cyber-attack could therefore create major disruptions to the national grid, shutting down public services and critical national infrastructure. Capturing load control as an essential service will safeguard the public from these disruptions. It will also reflect the need to bring in new safeguards to manage a more digitalised and dynamic energy landscape in the transition towards net zero.

Kanishka Narayan

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I am happy to write to the shadow Minister on that point. My understanding is that a Crown data centre will be in scope if it is providing, as in that particular example, to both the public and the private sector, but I am happy to write to him to clarify that point.

The load control market is growing exponentially and we need to make it cyber-secure. For that reason, I propose that clause 6 stands part of the Bill.

Amendment 11 agreed to.

Amendment made: 12, in clause 4, page 3, line 7, leave out “(acting jointly)”.—(Kanishka Narayan.)

See the explanatory statement for Amendment 11.

Clause 4, as amended, ordered to stand part of the Bill.

Clauses 5 and 6 ordered to stand part of the Bill.

Clause 7

Digital services

Kanishka Narayan

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I beg to move amendment 13, in clause 7, page 7, line 7, leave out paragraph (b) and insert—

“(b) a pool of computing resources is ‘scalable’ if the resources are flexibly allocated by the provider of the service, irrespective of the geographical location of the resources, in order to handle fluctuations in demand;

(c) a pool of computing resources is ‘elastic’ if the resources are provided and released according to demand, in order to rapidly increase and decrease available resources depending on workload;

(d) computing resources are ‘shareable’ if—

(i) multiple users share a common access to the service, which is provided from the same electronic equipment, and

(ii) processing is carried out separately for each user.”

This amendment would refine and make further provision about certain aspects of the definition of “cloud computing service”.

Kanishka Narayan

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Clause 7 amends the definitions of “relevant digital service provider” and “cloud computing service” in the existing NIS regulations. As in the original NIS regulations, an RDSP is a cloud computing service, online search engine or online marketplace. To be in scope, they must provide a service in the UK and not be a small or microbusiness. That prevents disproportionate business burden, focusing on those larger businesses whose compromise could have a significant impact on the UK’s economy or society. The changes to the definition in the clause clarify that to be in scope, providers cannot be designated as a critical supplier or be subject to public authority oversight, as defined by clause 11. That maintains consistency with the approach to managed services, and minimises dual regulation and unnecessary burden.

Government amendment 13 strengthens the definition of a cloud computing service in clause 7. It introduces precise, clarified and separate definitions of the three core characteristics of cloud computing resources, which is that they are scalable, elastic and shareable.

Kanishka Narayan

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I very much welcome that point. In talking about broad architecture characteristics—being able to scale compute and to be elastic to multi-tenants by being shareable—rather than setting out the specific nature of resources, we capture both commercial cloud and AI deployments. However, I am keen to ensure that we keep this under review and, where possible, use the flexibilities provided by the Bill to adapt it to changes in technology.

Although the policy intention behind the definition has not changed, amendment 13 will provide certainty for industry, support effective regulatory oversight and ensure that services whose disruption could significantly impact the UK economy and society are properly captured. In addition, the drafting is more aligned with that of our international partners, which will improve efficiency for providers operating across borders.

This targeted, technical improvement will bring greater clarity, consistency and fairness to the NIS regulations. I urge Members to support both the clause and this important amendment.

Kanishka Narayan

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On that important point, which the hon. Member for Bognor Regis and Littlehampton also raised, the changes to the definition came about in part through extensive engagement, and in particular by ensuring that the attributes of “elastic” and “scalable” were treated individually rather than jointly and that “shareable”—the ability to have multi-tenants and therefore be a genuine cloud computing service for multiple clients—was considered in scope. As I mentioned to the hon. Member for Bognor Regis and Littlehampton, it is important that we keep this under review, and part of the reason for the secondary powers in the Bill is to make sure it remains both specific, giving clarity and certainty, and flexible at the same time.

Kanishka Narayan

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I thank the hon. Member for Brecon, Radnor and Cwm Tawe for tabling amendment 25, which would amend the duties for RDSPs in the NIS regulations. I empathise with the source of his concern about fraud; I think many of us in the House know and feel that concern, through either our personal experience or that of our constituents.

That said, the security duties within NIS require RDSPs to identify and take steps to manage the full spectrum of risks posed to the security of their systems. They must prevent and mitigate relevant incidents, regardless of what the threats are or where they emanate from. That includes taking an all-hazards risk-based approach. Entities must manage risks to cyber-security, physical security and broader operational resilience. “Security” includes the ability to resist any action that may compromise the availability, authenticity, integrity or confidentiality of those systems, including risks that may arise from fraud. I caution against highlighting only one particular vector of risk in the clause; that is unnecessary and would not reflect the full range of risks each RDSP faces.

Further, while the Bill clarifies the high-level duty to manage risks, secondary legislation will give further detail on the security and resilience requirements. Guidance and the code of practice will give further detail still on the types of risks to consider. For that reason, I kindly ask the hon. Gentleman to consider withdrawing the amendment.

The shadow Minister asked about the Government’s treatment of fraud, particularly when it has been found on a platform and the authorities have asked that platform to take it down. The Government made a clear commitment in our manifesto to introduce a new fraud strategy, and the Home Office, as the lead Department, has been working at pace to engage deeply in making that an effective reality.

Alongside that, in my wider role in online safety, I am conscious that fraud is a fundamental area of content in which platforms have to look at where it crosses the border into illegality, as it may well do in the instance the shadow Minister described. That has been a central focus since the illegal content duties came into play last year. I believe that such instances are well covered by the pieces of legislation that I have just mentioned. The Bill is clearly more focused on critical national infrastructure and its exposure to network and information systems.

Kanishka Narayan

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Although I will not rule a particular provider in or out of scope, if the provider in question met the threshold for RDSP coverage, it would be covered, but the locus of that coverage would be limited to the provider rather than to the end-customer entity. I hope that clarifies that sufficiently.

Let me explain how clause 8 was designed to tackle the risks that Committee members have set out. The clause updates the existing duties for RDSPs in the NIS regulations to ensure that they remain resilient against evolving cyber-threats. It clarifies the requirement for those services, making it clearer that they must secure themselves not just to keep the services they provide running and available but to contribute to wider systems security as a whole.

Kanishka Narayan

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I appreciate the hon. Gentleman’s question, and I have two comments to make on that front. First, the relevant digital service provider will have a range of different customers, and my expectation would be that the regulators and the NCSC would seek a deep understanding of the risk exposure across the full breadth of that portfolio, rather than for each particular customer. Of course, that would form part of some analysis.

Secondly—the shadow Minister asked a related question —I am happy to write about the interaction between prompt notification responsibilities and commercial confidentiality duties, on the basis of the engagement we have conducted so far. Especially when questions of major risk exposure are concerned, I would hope there are provisions that allow the relevant digital service provider to notify the NCSC, but I am happy to write to the hon. Member for Spelthorne and the shadow Minister to clarify that point.

Clause 8 also removes a reference to the RDSP’s own network and information system to clarify that the duty is intended to cover all network and information systems that the relevant digital service relies on.

The cyber-risk landscape is diffuse and multifaceted. Hostile actors can use a range of routes and techniques to attempt to take services offline, as well as to extort, steal and surveil. These changes to the NIS regulations support a holistic approach to tackling cyber-risk. They ensure that important dependencies are covered and that facets of security such as the confidentiality of data and integrity of systems are not set aside.

The clause also requires RDSPs to have regard to any relevant guidance issued by the Information Commission when carrying out its duties. Finally, it removes a requirement for relevant digital service providers to consider specific duties referenced in EU regulations. I urge the Committee to support the clause unamended.

Question put, That the amendment be made.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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I welcome you, Ms McVey, to the most exciting event in Parliament this week.

Kanishka Narayan

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What a pleasure it is to serve with you in the Chair. Clause 9 brings large and medium-sized managed service providers—MSPs—into the scope of the Network and Information Systems Regulations 2018. MSPs are organisations that provide an ongoing IT function, such as an IT help desk or cyber-security support, to an outside client. In doing so, MSPs often have widespread and trusted access to clients’ networks and systems. A single targeted attack can ripple outward, disrupting thousands of other systems. That makes MSPs attractive targets for cyber-attacks. Last year an attack on Collins Aerospace halted check-in and boarding systems at major European airports, causing international disruption. Such attacks highlight what can happen if a single point of failure is compromised, and the importance of managed service providers implementing robust cyber-protections. Despite that, MSPs are not currently regulated for their cyber-security in the UK. As organisations rely more and more on outsourced technology, we must close that gap. The clause provides essential definitions of a “managed service” and of a “relevant managed service provider” to clearly set out which organisations are in scope of the regulations.

Clause 10 imposes new duties on MSPs that have been brought into scope by clause 9. For the first time, such businesses must identify and manage risks posed to the network and information systems that they rely on to provide their managed services. As part of that duty, MSPs must have

“regard to the start of the art”,

meaning that they must consider new tools, technologies, techniques and methods that threat actors may employ. That includes artificial intelligence, and means that providers must deploy the right tools to mitigate the risks and take action to minimise the impact of incidents if they occur. By bringing MSPs into scope of the regulations and imposing such security duties on them, we will strengthen cyber-security and resilience across supply chains, reduce vulnerabilities in outsourced IT services and better protect businesses and services across the UK.

Kanishka Narayan

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I agree very much with the hon. Member’s point, and a similar sentiment is expressed elsewhere in the Bill, in that it ensures that the focus is primarily on large and medium-sized MSPs, and that small businesses and microbusinesses are dealt with in a deeply proportionate way. That is an important point to take into account.

Clause 11 defines what it means for a digital or managed service provider to be

“subject to public authority oversight”

under the NIS regulations. Public authority oversight is defined as “management or control” by “UK public authorities” or by a board where the majority of members are appointed by those authorities. Such MSPs are already subject to requirements in the Government cyber-security strategy, which is mandatory for Government organisations. That ensures that cyber-resilience standards remain strong for services linked to public functions, while preventing disproportionate burdens on providers already subject to public authority governance.

In response to points raised by hon. Members in prior Committee sittings, I flag the engagement that we have conducted in coming to the definition of MSPs in question. In particular, beyond the provisions of the 2022 consultation, prior to the introduction of the Bill, we conducted a range of bilateral meetings. We have had multiple conversations with the industry body techUK, roundtables with digital firms, and we engaged through the National Cyber Security Centre-led MSP information exchange with 40 providers in this context, and undertook market research mapping the MSP market. As a consequence, adjustments to the definitions at the heart of this provision have been agreed with incredibly deep and broad engagement across the industry to arrive at a widely-welcomed definition.

Kanishka Narayan

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The hon. Member raises an important point about the operating leverage of technology businesses. The Bill directly focuses on size as one proxy for risk, but it is not a complete or perfect proxy. That is why, through the critical supplier provisions, it ensures that any smaller providers can be caught in scope as essential services.

The Lord Commissioner of His Majesty’s Treasury (Taiwo Owatemi)

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I am sorry, but this is not in scope.

Kanishka Narayan

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Once again, the shadow Minister is auditioning for roles in the Treasury, by talking about general taxation, and in the Department for Business and Trade, by talking about general philosophies of regulatory reform. I will focus on matters within the scope of our debate, and on four aspects in particular.

First, Opposition Members have raised questions about definition. They have been answered frequently, but I am happy to repeat the answer. The scope of MSP coverage, which focuses on large and medium-sized MSPs, means that something in the order of 11% of MSPs are covered, by number, but 97.6% of the UK’s MSP revenue is covered. I hope that that gives sufficient assurance as to the coverage of the Bill. Of course, the critical supplier provisions cover any others.

Kanishka Narayan

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I am happy to proceed and to focus on Crown ownership of data centre provision to others. For those reasons, I continue to commend clauses 9 to 11 to the Committee.

Kanishka Narayan

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I simply point out to the hon. Member that the pricing for law varies materially. I hope that, with the benefit of technology, it continues to be very accessible to all relevant providers.

Kanishka Narayan

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Having closed the debate, I am happy to conclude.

Question put and agreed to.

Clause 9 accordingly ordered to stand part of the Bill.

Kanishka Narayan

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Clause 12 will introduce a new power for regulators to designate critical suppliers to organisations as in scope of the NIS regulations. These are suppliers that are so pivotal to the provision of essential digital or managed services that a compromise or outage in their systems can cause a disruption that would have serious cascading impacts for our society and economy; I am thinking in particular of the Synnovis incident in 2024, when 11,000 medical appointments were cancelled across London hospitals as a result of an attack on a pathology service provider.

The clause will ensure that the power to designate can be exercised only where suppliers pose a credible risk of systemic disruption and when the regulator has considered whether the risks to the supplier cannot be managed via other means. In other words, it is a very high bar indeed. 

The clause provides safeguards for suppliers, which must be consulted and notified during the designation process. It also requires regulators to consult other relevant NIS regulators when they are considering whether to designate, or decide to do so, ensuring that they have an accurate understanding of how suppliers are already regulated. 

Finally, the clause provides for designations to be revoked when risks no longer apply or when a supplier has met the thresholds for regulation as a relevant digital service provider or relevant managed service provider. It should be noted that the clause does not set out the security duties on critical suppliers; these will be defined in secondary legislation following an appropriate period of consultation.

By addressing supply chain vulnerabilities, this measure will strengthen the resilience of the UK’s essential and digital services on which the public rely every day. I commend the clause to the Committee.

Kanishka Narayan

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First, I will respond to the apt and thoughtful points from the hon. Member for Bognor Regis and Littlehampton on operational technology. I can confirm to her that both vendors and providers of operational technologies will be covered by the provision of the five-step test for critical supplier designation. That is an important aspect when thinking about supply chains and the presence of operational technology where it is of critical interest.

The hon. Member for Spelthorne raised a very accurate point about proportionality in the provisions of the Bill, and in particular the impact assessments, statements, or limited statements on critical supplier impacts. As he will know very well, the Bill takes a very nuanced position on proportionality. When a sector is designated, there will be total clarity on the number of suppliers affected and on the ultimate impact. We will have sight of that.

The provision on critical suppliers was asked for by industry. The reason why the Bill does not specify critical suppliers is that it is simply not for the Government to specify how a business can or cannot continue. It is for businesses and regulators to work that through by understanding the depth of expertise that businesses have. We have started to do that, but that is precisely why the critical suppliers provisions have been delegated to secondary legislation and subsequent guidance.

Kanishka Narayan

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I commit to giving way to the hon. Gentleman at the end of my speech. He asked about schools. I am happy to confirm that schools are not in the scope of the Bill.

In response to the shadow Minister, I highlight that the five-step test is cumulative: a business must meet all the conditions to be designated as critical, not just one. I think that answers the series of logical puzzles that he tied himself up in.

I am very happy to confirm to the Committee that it is expected that regulators will use information gathered from their oversight of operators of essential services, relevant managed service providers and relevant digital service providers to identify potential critical suppliers for designation. They can also ask organisations for more information to support their assessments. Future supply chain duties will also require organisations to share supply chain risk assessments with regulators. A supplier can be designated only after the regulator has completed an investigation process, including serving notices and holding a consultation, and confirmed that the criteria are met. Designated suppliers will also have the right to challenge decisions through an independent appeals process.

Kanishka Narayan

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I commit to giving way at the end of my speech to the shadow Minister and the hon. Member for Spelthorne.

On the question of consultation, I am happy to confirm that the team in question has set up an implementation-focused effort. We have started to engage with regulators already, and there will be an extensive process of engagement on the Bill with business, as has been conducted historically.

The shadow Minister highlighted a number of logical puzzles. I have worked in a range of businesses and public sector organisations, and most have business continuity services. His hypothetical idea that businesses do not understand alternative provision, and whether they are or are not in a position of exposure, is well solved in the real world. I would give more credit to our expert witnesses from NHS Scotland than he did in recognising that they said that they frequently deal with the question of critical suppliers in co-ordination with competent authorities.

Kanishka Narayan

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On the first point, I am afraid that I do not think that was an appropriate characterisation, because where the sectoral scope is clear and where there is a clear risk of critical national infrastructure and essential services being directly exposed, we have specified that in the Bill. We have looked at the impacts set out in the impact assessment. For the critical suppliers in those sectors—I would expect them to be very limited in number—we have made sure that regulators and businesses have the flexibility to set the requirements directly, rather than them being set here in Parliament.

Kanishka Narayan

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I thank my hon. Friend for that point. This issue has not come out of nowhere. Industry and a number of organisations asked that we introduce the measures in the clause.

Beyond the very clear five-step test for critical supplier designation, the Bill provides that the requirements on critical suppliers are proportionate. The reason why we have both the five-step test and the provisions in the Bill is that, in most cases, if the risk assessment suggests so, the security requirements set out in the Bill will be less onerous in most cases. They will be specified in secondary legislation and guidance.

On the question of schools, and more broadly the question of public sector authorities, I entirely accept that the handling of pupil data in schools is a critical aspect of our public service operations. The reason why public service authorities have largely been left out of the Bill’s scope is because we do not need to wait for the legislative process to act. We have been working, not least closely with the Government’s cyber-security strategy and the cyber action plan, to ensure that pupil data is kept securely and robustly.

Kanishka Narayan

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I believe that where the shadow Minister laid out any specific concerns, I was able to set out answers, not least on the process for the designation of critical suppliers and the availability of an appeals process. Where his points were more in the realm of specific hypothetical puzzles, I have stayed clear for precisely the reasons that he highlights. This is serious stuff that can form the basis of how businesses and others plan, rather than specific judgments that we ought not to speculate about in this House.

Question put and agreed to.

Clause 12 accordingly ordered to stand part of the Bill.

Clause 13

Provision of information by operators of data centre services

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 13 ensures that operators of data centres provide essential information to regulators, enabling them to properly monitor their sector and its cyber-resilience. The clause requires operators to submit key details, such as names, addresses and contact information, within three months of designation, and to update regulators within seven days if anything changes. Regulators are required to maintain a list of designated entities. By keeping regulatory records current, the clause strengthens our ability to monitor and protect essential services and respond to incidents that could affect businesses, public services and national security. The clause plays a key foundational role in the Bill’s wider framework for cyber-security and resilience.

Like clause 13, clause 14 places legal duties on digital and managed services providers to provide essential information to their regulator—in this case, the information commission. Like operators of data centre services, RDSPs and MSPs will be required to register with the information commission within three months, submitting key details, such as names and contact information, and to update regulators within seven days if anything changes. Organisations based outside the UK will be required to nominate a UK representative and provide contact details. To strengthen cross-agency support and recognise the key role that these businesses play in the UK economy and society, the information commission will be required to share its registers of relevant digital and managed service providers with GCHQ. Those proportionate steps will enable authorities to do their job and respond when it matters.

Kanishka Narayan

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I appreciate the intent behind the amendments and the shadow Minister’s position of understanding but not supporting them, which I share. I share his concerns about the potential for emerging risks posed by AI systems, not least in the realm of cyber-security. At the same time, I am conscious that we have not specified any risk factors in the Bill from a reporting point of view for the National Cyber Security Centre or the regulators. To do so in this context would place an undue priority on one category or source of risk.

For those reasons, although I understand the motivation behind the amendments and I am conscious of the risks posed by AI systems, I urge the hon. Member not to press them. The Bill is technology-agnostic rather than focused on particular areas of risk. The Government continue to work on mitigating AI risks, primarily at the point of use, but also through extensive Government capability, not least in the AI Security Institute.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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I will begin by discussing clauses 15 and 16. Clause 15 updates the incident reporting provisions in the Network and Information Systems Regulations 2018. Under the current regulations, organisations are required to report incidents only once they have had a significant impact on service continuity. It is widely recognised that this is too narrow, and results in a range of concerning incidents going unreported and a distorted picture of how secure and resilient the UK’s essential services actually are.

To take two examples: a ransomware attack where confidential data has been exfiltrated from an organisation without an immediate impact on service would not be reportable; nor would a pre-positioning attack, where a hostile actor has hacked into a network and is in a position to cause significant disruption down the line, such as to the provision of drinking water. That cannot be right, and does not reflect the cyber-threats that critical services face.

To ensure such incidents are caught, the clause sets a new, wider definition of incidents that must be reported. The focus is now on incidents that have successfully affected the security or operation of an organisation’s network and are likely to have a significant UK impact, which will ensure that regulators and the National Cyber Security Centre are fully aware of the range of cyber-threats affecting the UK’s essential services.

The Bill sets out the factors that should be considered when assessing whether an incident has had, or is likely to have, a significant impact in the UK—including, crucially, whether the confidentiality, authenticity, integrity and availability of data has been compromised. The Government will provide further clarity in secondary legislation, setting out thresholds for each sector for when an incident is considered to have had, or be likely to have, a significant impact. That will be consulted on before it is introduced. Taken together, it means that only meaningful incidents are reported. Over-reporting has been a concern raised by hon. Members throughout the Bill’s progress, so I stress this point: things such as unsuccessful phishing emails will clearly not be reportable, as they would not be likely to have a significant impact.

Given our economy’s systemic dependence on data centre facilities, for that sector alone we will also ensure that Ofcom and the NCSC receive reports on a wider range of potential incidents and near misses. That ensures that not only immediate disruptions but incidents posing future risks are reported.

Clause 15 also streamlines the reporting process for all NIS sectors. It ensures that incident notifications and reports go to the NCSC at the same time as the regulator. It also sets out what those organisations can do with the information they receive, including how the information can be shared to manage the wider impacts of an incident or prevent future incidents. Finally, the clause introduces faster reporting, so that the NCSC and regulators are informed within 24 hours of entities becoming aware that a reportable incident is taking place.

The 24-hour notification will be light touch, but will enable the NCSC and regulators to offer faster support to minimise the negative impacts of the incident. Fuller details will need to be reported within 72 hours of the entity becoming aware that a reportable incident is happening. The changes will protect the UK’s essential services, ensuring that the NCSC and regulators are able to provide the best support that they can.

Clause 16 sets out requirements for managed service providers, relevant digital service providers, and operators of data centres to inform customers who are likely to have been adversely affected by a reportable incident. Under the current regulations, there is no requirement for any regulated entity to inform its customers if it has been impacted by a reportable incident. That may have made sense when the NIS regulations were more heavily focused on operators of essential services and the primary concern was service disruption, but it would be an inexcusable omission now that the Bill is expanding to include managed service providers and operators of data centres, in addition to the digital service providers already in scope.

These are organisations that, if compromised, could leave their customers’ systems, data or services exposed or inaccessible. In such circumstances, it is vital that their customers are notified, so that they can take whatever steps they need to in order to mitigate those risks.

Kanishka Narayan

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I thank the hon. Member for those two thoughtful points. On the first, in terms of retrospective regulatory action on the adequacy of notification, I expect that the regulators will set out—in their guidance and by working closely with the entities in scope—their expectations about the nature and timeliness of the notification. That will be one input into a regulator’s broader assessment of entities’ compliance with the regime. I expect that timely notification will be assessed on an ongoing basis by the regulator, but I would not expect it to be an exclusive or primary aspect.

On the question of customer notifications being proportionate, I share the hon. Member’s concern about ensuring that it is timely and efficient and at the same time meaningful for the relevant customers. I hope that exactly those principles are embodied in the guidance that regulators share about notification requirements.

Customers being notified is all the more important given that in many cases, those customers will themselves be operators of essential services and other critical national infrastructure. The Bill therefore places new transparency requirements on managed service providers, relevant digital service providers and operators of data centres. Similar requirements were introduced under the NIS2 regulations in the European Union.

Clause 16 requires those regulated entities to take steps to establish which of their customers, if any, are likely to be adversely affected by a reported incident. It then sets out the information that the entity must share with those identified customers. These new requirements will support the overall resilience of the UK’s essential services and economy, which depend so heavily on these services, and reduce the overall impact of disruptive cyber-attacks.

Kanishka Narayan

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Having been promoted from a position of mere confidence to faith, I will tackle questions from the hon. Member for Runnymede and Weybridge first and foremost. On the question of thresholds of incident, the Bill sets out the severity of the sorts of incidents that we expect reporting obligations to apply to, and at the same time it ensures that it is proportionate in understanding that sector-specific thresholds ought to be precisely that—sector specific, set closely with relevant entities in that sector, and working with the expertise of the relevant regulators. For that reason, it has not been specified more fully on the face of the Bill.

On information sharing, not only is there provision for the specific sets of purposes for which information sharing ought to take place between regulators, but there is a further check on the proportionality of that, through a particular requirement, to ensure that information that is shared in incident contexts is done precisely for the purposes set out in the Bill, and in a way that is proportionate.

My hon. Friend the Member for Milton Keynes Central raised the question of hardware impacts. While the focus of the Bill is primarily on network and information systems, the test, as I think of it, would look at whether any compromise in network and information systems related to a piece of hardware triggers the severity of the impact, or potential impact, to be reportable. In the event that it is reportable, in its severity and potential impact, it will require notification—to the regulator and, when customers are directly impacted in the way that is set out in the Bill, also to the customers. The test is focused on whether network and information systems are engaged, and whether the impact of any incident is likely to be severe enough, in light of the thresholds set out in the Bill.

Kanishka Narayan

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I hope this does offer the clarity that the hon. Member seeks. While I will not refer to specific businesses, broadly speaking the sector of food supply is not within the scope of the Bill; the obligations on operators of essential services or direct entities that are within the scope of the Bill will not apply.

However, if—in a hypothetical situation—a managed service provider within the scope of the Bill supplies to that business, the managed service provider would be within the scope of the Bill’s requirements. The customer—in this case, the food supply business—may, if the severity applies, be in receipt of reports from the relevant MSP, in this particular context. They will not be caught up in the full set of obligations in the Bill, but we would expect customers to be notified of incidents where the severity thresholds are met. I hope that gives the hon. Member some clarity.

Kanishka Narayan

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Under the provisions of this Bill alone, only the entities specified as critical suppliers or operators of essential services—the relevant digital providers and so on—would be caught up in obligations if an event occurred. Assuming neither of those is true of a food supply business, the Bill’s provisions would not apply.

At the same time, in the sort of incident that the hon. Member describes, we would expect the NCSC to be deeply engaged, assuming severity thresholds and wider risks are applied. We would work closely on that operationally and I am sure we would look at how that business could be supported more widely. But the Bill’s provisions are really focused on the sectors, and entities within those sectors, that have an immediate threat to day-to-day operations such as a potential threat to life. There are reasons, which we can get into later, as we have done previously, why we set the sectoral scope in that way.

New clause 6 seeks to clarify that a ransomware attack falls under the definition of “incident” within the NIS regulations. I share the concerns of the shadow Minister and the hon. Member for Bognor Regis and Littlehampton about the significant disruption that ransomware attacks can cause. Indeed, last year we saw the impact of the ransomware attack on Synnovis, a supplier to the NHS, which resulted in the delay of 11,000 out-patient and elective procedure appointments. The hon. Member for Bognor Regis and Littlehampton and the shadow Minister are quite right that this kind of attack should be considered an incident under the NIS regime. Because of the changes to incident reporting introduced by the Bill, I can confirm to the Committee that ransomware attacks will be in scope.

The Bill updates the definition of “incident” so that it applies to any event that has, or is capable of having, an adverse effect on the operation or security of network and information systems. Ransomware attacks already fall well within that definition. Although I welcome the principle and intent behind the new clause, its content is already addressed by the Bill. I hope that assures hon. Members across the Committee.

New clause 7 would require the Government to publish a review of the new incident reporting regime within a year of the Bill’s receiving Royal Assent. It is important that the effectiveness of the NIS regulations, including the reforms to incident reporting introduced by the Bill, should be reviewed periodically. That is why the Bill requires the Government to conduct a review and lay it before Parliament once every five years. That timeframe will enable the new regime to bed in and allow a meaningful period of time to measure change before the Government report on its effectiveness. As my hon. Friend the Member for Stoke-on-Trent South said, notwithstanding her and the shadow Minister’s confidence in me and the Government, to publish a review after only one year would risk giving an incomplete picture, as regulators and regulated entities may still be transitioning to the new processes.

The new clause would also require the Government to publish proposals for a single reporting platform for cyber-incidents, again within a year of the Bill’s passing. We have heard the clear ask from businesses to minimise the time they spend filling in different reporting templates following an attack, to ensure they can prioritise the technical response. I share the concerns of the hon. Member for Bognor Regis and Littlehampton, and we are exploring all options to enable a proportionate and efficient reporting system. That said, setting a fixed time limit of one year to develop proposals does not reflect the inherent complexity of the task and the need to get it absolutely right for the businesses in scope of the Bill, not least because the proposals will need to be rigorously evidenced, consulted on and tested. For those reasons, I am unable to accept the new clause.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill.

Clause 16 ordered to stand part of the Bill.

Clause 17

Powers to impose charges

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 17 introduces new charging powers for NIS regulators, enabling them to recover the full costs of their regulatory functions under the NIS regime. This is an important reform that will help to ensure that regulators are effectively funded as they take on their expanded responsibilities under the Bill. It will allow them to move away from a funding model that relies on ad hoc invoicing or Government grants, and to approach their duties with greater confidence and certainty.

The clause sets out detailed procedural requirements that determine how and when the charging powers can be used. These will ensure that regulated organisations know what to expect from regulators; fees will be set proportionately and regulators will provide satisfactory accounting for the sums they have charged.

The first requirement is that regulators consult and publish a charging scheme. It must specify what functions the fees are covering, the amount of fees being charged or how those fees will be calculated, and the charging period they cover. Crucially, regulators will be able to set different levels of fee for different types of organisations—for example, varying charges according to size or turnover, or excluding organisations from the charging scheme if it would be disproportionate or counter-productive to include them.

Kanishka Narayan

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I thank the hon. Member for those thoughtful points. On the first question, the charging scheme applies to relevant costs, which are costs that regulators incur precisely when they carry out functions under the NIS regulations relating to cyber-security specifically. Those can include the cost of audits, inspections, handling incident reports or enforcement action, as well as other aspects, such as assessments of cyber-security and the provision of advice. It is important to acknowledge that regulators can decide to recover costs in relation to specific functions or their costs relating in particular to the Bill’s provisions. I hope to have assured the hon. Member that the charging scheme has a clear, tight scope that is related to cyber-security functions.

On the second question, regulators probably ought to look at turnover in a way that is sector-specific, in part because there are already a range of ways in which other regulatory regimes define turnover in particular sectors, so the appropriate definitions for their sectors will be familiar to both regulators and regulated entities. At a later date, secondary legislation may be used if it is found necessary to set out factors that regulators ought to consider in setting up charging schemes, including the possibility of nuanced definitions of turnover. Any future regulations for this purpose will be subject to consultation requirements and the affirmative procedure. I would very much expect, at a sector level, a clear and proportionate definition and charging structure in relation to turnover.

The second requirement is to set out, transparently and clearly, what fees have been paid, what fees are still due, and what costs have been incurred in a given charging period. On Second Reading, many hon. Members discussed the need for properly resourced regulators to successfully implement the Bill. I share that concern, and this clause seeks to achieve exactly that, in a way that is fair and proportionate to regulated organisations.

I commend the clause to the Committee.

Kanishka Narayan

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The shadow Minister raised two main points that I am keen to address. The first was about ensuring that I committed to next steps on potential guidance for the charging scheme. I can confirm that the Government will issue guidance for competent authorities. That will include general directions on how the fee regime ought to be implemented. At the same time, we do not intend to be prescriptive as to how competent authorities should recover costs to benefit from their experience and practice in setting up these regimes. It is important that each regulator is able to tailor their fee regime in a way that is consistent with and complementary to the state of their sector.

Kanishka Narayan

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I am reminded of the hon. Member’s point last week. I am happy to write to him on the basis of the precise figure in the impact assessment, which I understand to be based on not just an extensive survey but the application of subsequent uplifts. I am more than happy to continue that conversation in correspondence.

On factors that ought to be considered in setting up charging schemes, I mentioned some, such as size and turnover, but I will flag that those are suggestive and indicative rather than exhaustive factors that regulators may consider. Regulators ought to be able to set different levels of fee for different types of organisations. There is also provision to exclude organisations from a charging scheme altogether if it would be disproportionate or counterproductive to include them. It is appropriate that regulators and competent authorities can vary their charging schemes in the light of that.

On current regulatory performance and its correlation with charging schemes, I have not observed any direct correlation. What I have seen, simply, is that some regulators are clearly doing well. We heard in evidence from a range of participants that in some cases things are working particularly well and that, in others, there is more scope for improvement. That is precisely why the Bill sets no fundamental lowest common denominator for how regulators ought to approach either charging or their enforcement duties; instead, it ensures that we are conducting oversight of each regulator as robustly as possible. I assure hon. Members that the question of regulatory enforcement is central and that the motivation behind the charging scheme is precisely to ensure that regulators are well resourced to implement the Bill.

Question put and agreed to.

Clause 17 accordingly ordered to stand part of the Bill.

Clause 18

Sharing and use of information under the NIS regulations etc

Kanishka Narayan

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I beg to move amendment 14, in clause 18, page 38, line 31, at end insert—

“(aa) otherwise in connection with—

(i) the security and resilience of network and information systems, or

(ii) any other matter relating to cyber security and resilience,”.

This amendment would allow NIS enforcement authorities to share information with persons listed in regulation 6(2) (inserted by clause 18), and such persons to share information with NIS enforcement authorities, for purposes relating to the security and resilience of network and information systems or cyber security and resilience.

Kanishka Narayan

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The clause introduces vital reforms to how information can be shared in the context of the NIS framework. Right now, as we have heard again and again from both hon. Members across the Committee and witnesses, the NIS regulations have limitations that restrict how and with whom information can be shared. That has serious implications for the effectiveness and efficiency of the regime including business burdens as well as the ability of the UK’s authorities to act on national security or criminal intelligence.

One important limitation in the current regulations is the inability of regulators to share information with many public authorities in the UK and vice versa. For example, NIS regulators currently cannot share information to support the evaluation of the NIS framework or policy development relating to cyber-resilience and national security. The clause addresses those concerns by enabling information to be shared between NIS regulators and UK public authorities, including the Government. That will be done for the purposes of supporting the NIS regulations as well as wider objectives alike, reducing business burdens and for national security and crime purposes.

The clause also imposes strict requirements and safeguards on how the information can be further shared. The net effect of the changes will be fewer burdens on business, better and more informed regulatory decision making, joined-up incident response and improved security for the United Kingdom.

Government amendment 14 makes targeted but important changes to the clause. It proposes a further ground for sharing information focused on wider cyber-security and resilience outside the context of the NIS regulations and NIS sectors. In practice, it means that NIS regulators will be able to share information with regulators who are responsible for overseeing the cyber-security and resilience of other vital sectors under different regulatory frameworks and vice versa.

The amendment is a crucial addition to the Bill. It means that the UK’s regulators can think holistically about the risks that their sectors are facing, the interventions they propose to take and the obligations they are placing on business. That in turn will mean better outcomes, more effective and informed incident response, more co-ordinated oversight and lower business burdens.

The amendment will be particularly important in supporting co-ordination with the financial regulators responsible for the critical third parties regime, which could be used to designate organisations already in scope of the NIS regulations such as cloud service providers. It also anticipates the need for co-ordination for other sectors, such as civil nuclear and space, in the future. In short, the amendment is necessary to ensure that UK regulators can take a more co-ordinated approach to protecting the UK’s most essential services.

Government amendments 15 to 18 are consequential on amendment 14. I urge the Committee to support the amendments, and I commend clause 18 to the Committee.

Kanishka Narayan

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In response to the shadow Minister’s first question about ensuring sensitive handling of shared information and proportionality, all information handled by regulators ought to be treated carefully and with awareness of its importance. The regulators have to act reasonably, and the NIS regulations specifically require information obtained from inspections to be held securely. Of course, data protection laws apply to regulators as well. Alongside that, regulators will be required to consider the relevance and proportionality of sharing their information to the purposes set out in the Bill; as I have mentioned, the Bill includes specific purposes for why information might be shared.

Kanishka Narayan

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Clause 19 sets out that regulators must provide guidance on specific issues, including security requirements and incident reporting notifications. Guidance already plays an important role in supporting the implementation of the NIS regime. We have, however, identified some areas where regulated entities would benefit from additional clarity. The clause ensures that every regulated sector has the guidance they need from their sectoral regulators to help them to comply. To ensure consistency across regulators, the clause also requires regulators to co-ordinate with each other when preparing guidance relating to designating critical suppliers. The clause also requires regulators to consider guidance published by the Secretary of State such as the code of practice when preparing guidance on the security and resilience requirements. That will ensure that regulators consider good practice recommendations and take more consistent approaches to preparing guidance.

Kanishka Narayan

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As I have mentioned to the shadow Minister, the Minister for Digital Economy, the Secretary of State and I have engaged with a number of the regulators in scope here. Both those conversations, and the broader framework of this Bill, are intended to drive consistency across sectors through common security requirements, clear guidance and a statement of strategic priorities, which will set objectives that regulators must seek to achieve. I hope that is sufficient assurance not only that those conversations have started, but that they will be a fundamental focus as we ensure consistent regulation across the board.

Question put and agreed to.

Clause 19 accordingly ordered to stand part of the Bill.

Clause 20

Powers to require information

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 20 introduces important updates to the information-gathering powers that regulators have under the NIS regime. It ensures that regulators are able to collect any information that they might reasonably require to exercise, or to decide whether to exercise, their functions under the regulations.

While the clause sets out some of the purposes for which a regulator might particularly wish to collect information—for example, to determine whether an organisation should be designated as a critical supplier—this is an explicitly non-exhaustive list. The clause also allows regulators to collect information through the issuing of an information notice. It sets out the details that must be included in such a notice, and the form that it may take. An information notice must, for example, explain why the information is being sought and the form in which it must be provided.

New regulation 15A, as introduced by the clause, makes clear that an information notice can be given to an organisation based outside the UK and can apply to information held outside the UK. An information notice may require the obtaining, generating, collecting or retaining of information or documents. Those changes are critical in ensuring that regulators can access the information they need properly to enforce the NIS regulations. I commend this clause to the Committee.

Kanishka Narayan

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I will take each of those three questions in order. The hon. Member for Bromsgrove raised a very important point—shared, I think, in sentiment across the House—about ensuring that regulators have the capacity to deal with the volume and quality of information they might receive under the provisions of this clause. Precisely for that reason, we have set out a charging scheme possibility here that allows regulators to equip themselves. Of course, that is initially a question of resourcing, rather than the quality or capability of that resourcing. We will therefore continue to ensure, through our oversight of regulators in appropriate ways, that we are pressing home the importance of enforcement quality and regulatory capability.

To the shadow Minister’s point on proportionality, I share the focus on ensuring that designation and information requirements are proportionate, not least for critical suppliers. Like him, I will avoid repeating the previous debate, but the five-step test for the designation of critical suppliers, combined with the fact that the Bill allows for secondary legislation and guidance to specify more proportionate burdens on them, rather than on key regulated entities, alongside the fact that information notices ought to be proportionate and focus primarily on the purposes of the Bill, gives me—and, I hope, him—assurance about the proportionality embedded in the Bill.

Kanishka Narayan

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Although I will not specify prescriptively what the activity and flow ought to be, I can share from my experience that many large-scale businesses—and indeed many medium and small-sized businesses—have a very clear business continuity plan mapping their critical suppliers. In this case, I would expect the regulator and the regulated entities to engage. Who sends the email first is an open question, and I would not want to specify it in the Bill, but I would expect each regulator and their regulated entities to work very closely to understand the critical suppliers that meet the tests specified in the Bill, and to engage with those critical suppliers as a consequence.

Kanishka Narayan

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I would not want to imply that every organisation has a business continuity plan, but the simple point is that the framework for assessing critical third-party suppliers is established in business and other regulatory regimes, as I have mentioned. The novelty or ambiguity that the shadow Minister suggests simply does not apply. That is not to say that there will not be cases in which new critical third-party suppliers will be designated—that is the point of the provisions of the Bill. The practice will of course need rigour, efficiency and proportionality, but it will be grounded in existing, widely understood frameworks.

I need the hon. Member for Spelthorne to remind me of his question, if I might ask him to do that.

Kanishka Narayan

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I thank the hon. Member for asking and repeating the question. The purposes of the provisions on information requirements are focused on ensuring that regulators can conduct their duties as provided by the Bill. I would not expect information notices to require an exhaustive list in every instance, but instead to primarily focus on a more proportionate set of asks relating to risk vectors to the security of the regulated entities and to wider national security and cyber-security.

Question put and agreed to.

Clause 20 accordingly ordered to stand part of the Bill.

Clause 21

Financial penalties

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 21 reforms the enforcement regime for the NIS regulations. It seeks to ensure that providers of the UK’s most essential services are complying with their obligations under those regulations. Where they are not, it will allow for more meaningful penalties that reflect the risks they introduce to our society and economy as a whole. To do that, the clause makes a number of critical changes.

First, the clause introduces a new penalty maximum based on turnover. The current maximum penalty is £17 million, which can appear disproportionately large for smaller organisations, but could also easily be absorbed by larger ones as the “cost of doing business.” The clause therefore increases the penalty limits from £17 million to a maximum of £17 million or 4% of annual turnover, whichever is higher. I am confident that that strikes the right balance within the UK regulatory context. It brings the regime in line with other UK legislation that regulates cyber-security, such as part 1 of the Product Security and Telecommunications Infrastructure Act 2022, without rushing uncritically to the more severe penalties we see in other CNI regulation.

The second change is to create a simple two-band penalty structure that will provide much-needed clarity to regulators and industry about the penalty tiers for specific acts of non-compliance.

Kanishka Narayan

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I thank the hon. Member on both fronts. On the penalty bands, clearly defined parameters are set out in the Bill, and my hope is that that increases the effectiveness, the clarity and—at the heart of it, to his question—the consistency of application we expect across regulatory regimes.

As I mentioned, the 4% figure for the maximum penalty in part referenced existing UK regulatory regimes and legislation that were felt to be the most comparable. In part, it was judged to be an appropriate, proportionate maximum, based on relevant concerns around the appropriate level of deterrent effect, the proportionate level of fine, the regulatory precedent and the broader impact on investment and the economy as a whole, notwithstanding the significant cyber-security costs businesses already experience.

The second change in the clause is intended to eliminate the confusion surrounding the definition of a “material contravention” in the current regulations. Finally, the clause ensures that regulators can consider a wider range of factors when determining what constitutes an appropriate penalty. Where mitigating steps have been taken to address a breach, that should be acknowledged, but so too should the impacts of the breach and any history of compliance or non-compliance.

To conclude, an effective regulatory regime must be backed by fair but effective penalties to ensure that it is followed.

Kanishka Narayan

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Just so that I am clear, not least for future records, I think the case described is one where the client is not in the Bill’s scope but is provided to by an MSP that is in the Bill’s scope, and where the relevant responsible individual is in the client business as an employee or agent of that business. The hon. Gentleman raises an important point. Both the obligations and the defined focus of the Bill are on regulated entities. In this instance, if the individual is not in the regulated entity and the regulated entity has complied with the entirety of the wider cyber-security reporting obligations in the Bill, we would look to other venues of legal action against the individual in question. It would be challenging for a Bill that does not regulate the entire economy to ensure that every individual and firm unregulated by it are brought into its scope as well. But that is not to diminish the significance of requiring other pieces of law to act on individuals elsewhere.

Kanishka Narayan

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I can see the shadow Minister’s hypothetical point, but I assure him that if there is some universal, consistent practice on the part of an MSP to avoid liability, where liability should reside with them, that should be in scope of how the regulator assesses the performance of that MSP. Secondly, I assure him that there remains a degree of competition in the MSP market, given the attractiveness of the UK customer and end user market for MSPs. I would therefore very much expect any MSP that adopts a falsely defensive posture of the sort that the shadow Minister describes not only to be assessed as doing so by the regulator, but to fall foul of the competitive market context that we have and want in the UK.

To conclude, an effective regulatory regime must be backed by fair but effective penalties to ensure that it is followed. The clause ensures that that is the case for NIS regulations, and for that reason I commend it to the Bill.

Kanishka Narayan

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The shadow Minister makes a really important point: cyber-security must be taken seriously at the highest level—at board level. It is part of the cyber assessment framework, which the Government have put at the heart of how we think about assessing cyber-security in firms as well as public sector organisations. It is also part of the guidance we are looking at in the cyber action plan and our wider cyber-security strategy. I take those very seriously. In terms of making sure that businesses have a razor sharp focus, the intent of the fine regime is to ensure that there is a deterrent effect and that it is felt at decision-making levels, which must include boards.

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Clause 22

Enforcement and appeals

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 22 sets out, through schedule 1, consequential changes to the regulations in relation to enforcement and appeals. That is to ensure that the regulations work effectively in relation to the new entities brought into scope, such as managed service providers, data centres and large load controllers, so that the enforcement and appeal systems work as intended. Government amendment 19 makes a minor drafting correction. I commend clause 22 and schedule 1 to the Committee.

Question put and agreed to.

Clause 22 accordingly ordered to stand part of the Bill.

Schedule 1

Enforcement and appeals

Amendment made: 19, in schedule 1, page 86, line 33, at end insert—

“(ea) in sub-paragraph (da), after ‘14A;’ insert ‘or’;”.—(Kanishka Narayan.)

This amendment would make a minor drafting correction.

Schedule 1, as amended, agreed to.

Clause 23

Minor and consequential amendments etc

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 23, through schedule 2, introduces a number of minor and consequential amendments to the NIS regulations, necessitated by the more substantive changes introduced by the Bill. Among other technical changes, the schedule revokes assimilated EU legislation, removes the requirement for an NIS national strategy to be published once a statement of strategic priorities has been designed in its place, and updates references in the regulations to reflect the new clause numbering. Government amendments 20 and 21 make minor drafting corrections.

Government amendment 22 aligns the process for issuing documents, notices and directions under the NIS regulations with the Bill. As it stands, regulators will be required to follow two different procedures for issuing documents, notices and directions under the NIS regulations and under the national security powers in part 4 of the Bill, which is unnecessarily confusing for regulators and regulated entities. Amendment 22 resolves the issue by aligning regulation 24 with clause 57, as amended by Government amendments 23 and 24. I commend amendments 20 to 22, clause 23 and schedule 2 to the Committee.

Question put and agreed to.

Clause 23 accordingly ordered to stand part of the Bill.

Schedule 2

Minor and consequential amendments etc

Amendments made: 20, in schedule 2, page 89, line 35, at end insert—

“(ia) omit the ‘and’ at the end of the definition of ‘relevant law-enforcement authority’;”.

This amendment would make a minor drafting correction to regulation 1(2) of the Network and Information Systems Regulations 2018.

Amendment 21, in schedule 2, page 89, line 37, at end insert—

“(iia) omit the ‘and’ at the end of the definition of ‘representative’;”.

This amendment would make a minor drafting correction to regulation 1(2) of the Network and Information Systems Regulations 2018.

Amendment 22, in schedule 2, page 91, line 4, at end insert—

“11A (1) Regulation 24 (service of documents) is amended as follows.

(2) In paragraph (1)—

(a) in the words before sub-paragraph (a)—

(i) for ‘or notice’ substitute ‘, notice or direction’;

(ii) after ‘served on’ insert ‘or given to’;

(iii) after ‘served’, in the second place it occurs, insert ‘or given’;

(b) omit the ‘or’ at the end of sub-paragraph (b);

(c) for sub-paragraph (c) substitute—

‘(c) sending it by post to the person’s proper address or by email to the person’s email address.’

(3) In each of paragraphs (2) and (3)—

(a) after ‘document’ insert ‘, notice or direction’;

(b) after ‘served on’ insert ‘or given to’.

(4) In paragraph (4), for ‘service’ substitute ‘documents, notices and directions’.

(5) For paragraph (5) substitute—

‘(5) For the purposes of this regulation, a person’s “proper address” is—

(a) in a case where the person is a body corporate with a registered office in the United Kingdom, that office;

(b) in a case where paragraph (a) does not apply and the person is a body corporate, partnership or unincorporated body with a principal office in the United Kingdom, that office;

(c) in any other case, an address in the United Kingdom at which the person serving or giving the document, notice or direction believes, on reasonable grounds, that it will come to the attention of the person on whom it is to be served or to whom it is to be given.

(5A) For the purposes of this regulation, a person’s email address is—

(a) an email address provided to a NIS enforcement authority as an address for contacting that person,

(b) an email address published for the time being by that person as an address for contacting that person, or

(c) if no email address has been so provided or published, an email address by means of which the person serving or giving the document, notice or direction believes, on reasonable grounds, that it will come to the attention of that person.’

(6) After paragraph (5A) (inserted by sub-paragraph (5)) insert—

‘(5B) A document, notice or direction sent to a person by email is, unless the contrary is proved, to be treated as having been served or given at 9am on the working day immediately following the day on which it was sent.

(5C) In paragraph (5B) “working day” means a day other than a Saturday, a Sunday, Christmas Day, Good Friday or a bank holiday under the Banking and Financial Dealings Act 1971 in any part of the United Kingdom.’”—(Kanishka Narayan.)

This amendment would align regulation 24 of the NIS Regulations with the provisions about giving of directions and notices in clause 57 of the Bill, as amended by Amendments 23 and 24.

Schedule 2, as amended, agreed to.

Clause 24

Key definitions in Part 3

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 24 defines key terms for this part of the Bill, and in doing so introduces two delegated powers. Those powers enable the Government to bring new sectors into the scope of the NIS regime and to designate regulators to oversee them. The power will be used only in relation to activities that are truly essential to our society and economy—in other words, where disruption could pose risks to life or the economic stability of the UK.

The powers are essential in the rapidly changing world we occupy. As we have seen with data centres and managed service providers, our society and economy can quickly become reliant on new services that are acutely vulnerable to cyber-attacks and system outages. Our legislation must be able to keep up with those changes and protect the services that matter most to our country.

The Parliamentary Under-Secretary of State for Science, Innovation and Technology (Kanishka Narayan)

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I will start by addressing the questions raised by hon. Members, including the hon. Member for Spelthorne, who concluded by setting out a general philosophy of how we thought about what is in and out of scope, and then I will address some of the more specific concerns in the new clauses.

The overarching philosophy has not at all been to deny, as the hon. Members for Spelthorne and for Brecon, Radnor and Cwm Tawe argued, that there are a series of services that are absolutely essential. There is a category of critical national infrastructure, and there is a category of essential sectors and services that we identified in the pandemic. Although there is some overlap, a distinct segment for the Bill is operators of essential services such as digital services and managed service providers. The assessment there has been more about the immediacy and severity of the impact, and the availability of alternative provision in a very short time, which has meant that those sectors have been ruled in. I will lay out the logic of our position on the new clauses, which might help clarify this question, although I would be happy to engage further with hon. Members on it.

I am conscious that the hon. Member for Bognor Regis and Littlehampton and the shadow Minister raised very appropriate points about robustness and proportionality in relation to the Secretary of State exercising the powers in the Bill, so I will lay out the process and the role of Parliament.

In terms of the process for bringing new sectors or activities in scope, something must meet a specific, rigorous test to be defined as a new essential activity for the purposes of the Bill. The Secretary of State must be satisfied that the activity is essential to our economy or society. As I have mentioned, that is reserved for the most vital activities to our nation and acts as a high bar for inclusion, on the terms I mentioned to the hon. Member for Spelthorne.

In reaching a decision, the relevant Departments will need to carry out risk assessments and impact assessments and consider whether inclusion of those sectors and activities is proportionate. That is part of the normal policy development process. After that, the proposals will be subject to consultations and the affirmative procedure, ensuring the necessary scrutiny. Parliament will have the final say on the use of any expansive powers, as the vast majority of the changes I mentioned will be made through delegated powers and subject to the affirmative procedure. If a new sector is then brought into scope, we will undertake a phased implementation wherever possible, and organisations will be given adequate time to comply. Alongside that, regulations will be made in a controlled way and include consultations with relevant stakeholders before secondary legislation is laid before Parliament.

I make one final observation on the points that have been made, not least about Jaguar Land Rover. The UK Export Finance export development guarantee is not a bailout. UKEF receives payments for providing its guarantees, ensuring that the Government are appropriately compensated for the risk taken. In that context, a different assessment was made, as I hope to come to shortly.

More broadly, the Committee heard from expert witnesses that although the purpose of the Bill is clear, and its impact is a significant help for our national cyber-security and essential services, it or any other singular move is no silver bullet when it comes to our cyber-security. Different levers are effective in different parts of the economy and must be applied appropriately.

The most stringent lever the Government have at their disposal is legislation. As we have discussed in this and prior sittings, proportionality is key to the exercise of that lever. Regulation creates obligations and requires resources, so the pros of regulating must outweigh the costs. In the context of the Bill, that means protecting our society and economy from unacceptable risks with an immediacy of threat to our day-to-day life, not least our national security. That means things like keeping the lights on, the taps running and the NHS going, where there is little or no alterative provision of such services. We must also avoid creating unnecessary burdens where other measures are available.

In that context, I turn first to new clauses 1 and 9. The Government and the National Cyber Security Centre are clear that all organisations, whether a food supplier, an automotive giant, a supermarket or any other business operating in the UK, should take steps to protect their cyber-security and increase their resilience. That is why in October the Government wrote to FTSE 350 companies urging them to take three actions to strengthen their defences. First, they should make cyber-risk a board-level priority, and I know that that sentiment is shared across the Committee. Secondly, they should require suppliers to have baseline cyber-security through Cyber Essentials. Thirdly, they should sign up to the NCSC’s early-warning service.

The response has been encouraging already. A significant proportion of organisations have responded, with many of those responses coming directly from chief executive officers and chairs, showing the seriousness accorded to this by boards. Following the letter, we have seen increased interest in the Cyber Essentials website, uptake in early-warning registrations, and uptake in registrations for the IASME supplier check tool, which organisations can use to identify suppliers with Cyber Essentials certificates.

Beyond that, Departments and the NCSC deliver sector-specific support for key parts of the economy. On food specifically, the Department for Environment, Food and Rural Affairs and the wider Government have worked with the food and retail sector on cyber-resilience for many years, and we always stand ready to protect the UK food supply chain. During last year’s incidents involving Marks & Spencer and the Co-op, the NCSC and DEFRA worked closely with the affected retailers to support their response, to communicate advice and guidance and to assess the risk to food security. Following the attack, DEFRA Ministers wrote to major retailers to invite further collaboration on cyber-matters. Officials from both the NCSC and DEFRA are working with retailers to understand how we can best support them and the resilience of our food supply chain in the future.

Crucially, the food sector is unique among critical sectors for its high levels of industrial and geographic diversity. There are approximately 20,000 small and medium-sized food manufacturers alone spread across the UK, and many more farms, distribution centres, retailers and other types of businesses that form the UK’s food supply chain. As a result, it is a sector with few single points of failure. Its resilience is further strengthened by the steps that individual operators and suppliers are taking.

Finally, it is worth mentioning that the cyber-attack on Marks & Spencer last year, which hon. Members have raised, specifically involved the social engineering of a third party managed service provider. As the Committee is aware, the Bill brings large and medium-sized managed service providers into scope. That important change delivers downstream benefits across the wider economy, including for food retailers.

I will move on to new clause 8. The Government recognise that a step change in cyber and digital resilience is required across the public sector, including in local authorities. The Government’s cyber action plan is the overarching strategy to improve the cyber-resilience of Government. It will hold the public sector, including local government, to equivalent requirements to organisations regulated by the Bill. At the outset, the hon. Member for Spelthorne raised a question about schools and pupil data; where local authorities are the lead affected departments in that context, they would be expected to maintain very close oversight and compliance with the requirements and asks of the cyber plan, including in schools and the maintenance of pupil data.

Local authorities in England are accountable for their own cyber-security and resilience. The Ministry of Housing, Communities and Local Government, as the lead Government Department, is accountable for the sector-wide resilience of English local government, and is already taking a range of steps to support the sector, strengthen its cyber-resilience and manage its risks more effectively. For example, MHCLG has already provided £23 million of cyber grant funding and technical support to local government. That includes the delivery of clear cyber-security standards through the adoption of the cyber assessment framework—CAF—for local government. It is also aligned with the wider approach taken by organisations already in scope of the network and information systems regulations.

On social care specifically, as the lead Government Department for adult social care, the Department of Health and Social Care is working to ensure that the standards applied by adult social care providers are consistent with those used across Government and the wider public sector. The DHSC is investing a further £21 million over this Parliament to give care providers the support and guidance they need to improve their cyber-resilience and to enhance cyber-security standards to align with the cyber assessment framework. The MHCLG has also launched a local government cyber-incident response service to support English local authorities to respond to severe cyber-incidents, helping to limit the impact these have on data and services.

I now move on to new clauses 11 and 12, tabled by the hon. Member for Brecon, Radnor and Cwm Tawe. The joint election security and preparedness unit—JESP—sits jointly between the MHCLG and the Cabinet Office. It was created by the defending democracy taskforce, a cross-Government unit, and works to protect UK elections and referendums by co-ordinating work across Government to respond to threats, including on cyber-security.

I know that the shadow Minister takes a keen interest in these questions on the run-up to elections, and he raised some important points. JESP works closely with the NCSC, which produces guidance for organisations involved in delivering elections, including local authorities. That includes advice to help IT practitioners implement security measures that will help prevent common cyber-attacks, as well as offers for direct NCSC support, including the NCSC’s active cyber-defence services.

The MHCLG as a whole is responsible for centrally managed digital electoral services covering voter registration, a postal or proxy vote, or a voter authority certificate. All systems and suppliers involved in developing and maintaining digital electoral services must meet strict cyber-security requirements, not least the MHCLG cyber-security assurance framework.

I will move on to political parties. JESP and the NCSC regularly engage with political party representatives to understand their requirements, monitor any cyber-infrastructure vulnerabilities and raise awareness about Government cyber-defence services. The NCSC’s active cyber-defence programme provides free security tools to help UK organisations, including political parties and local authorities, reduce exposure to common cyber- threats. The NCSC encourages all political parties to sign up to these, and offers individual candidate briefings to parties that wish to take them up.

Everything I have said reflects the Government’s current assessment of where regulation is needed to protect the core of our society and economy. Of course, we have seen that what is considered an essential service can change, and we also know that cyber-threats are constantly evolving. That is why the Bill will enable the Government to bring more essential activities and services into scope in future, and to take swift action if UK national security is at risk, in scenarios where the evidence suggests the pros outweigh the costs. However, at this stage we do not think that that is the case for new sectors. I therefore ask hon. Members not to press their new clauses.

Question put and agreed to.

Clause 24 accordingly ordered to stand part of the Bill.

Clause 25

Statement of strategic priorities etc

Question proposed, That the clause stand part of the Bill.

Kanishka Narayan

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Clause 25 introduces a power for the Secretary of State to designate a statement of strategic priorities for the implementation of the NIS regulations. The NIS regulations are enforced by 12 different sectoral regulators. Although that allows each regulator to apply its sectoral expertise, it also means that at times they have taken divergent approaches to their regulatory responsibilities. Clause 25 addresses that by allowing the Secretary of State to set overarching objectives for regulators in the wider context of a statement of strategic priorities. The statement will replace the NIS national strategy, which the Government were previously required to produce under the NIS regulations. It will set out the Government’s priorities for the security and resilience of essential services.

To ensure that the objectives remain stable enough to enable regulators to plan their work, the clause will prevent a statement from being withdrawn or amended within three years of its designation. However, that three-year rule will not apply if there has been a general election, or a significant change in the threat landscape or in Government policy. That will allow for flexibility where appropriate. In sum, clause 25 empowers the Government to drive a more effective and consistent application of the NIS regulations.

Clause 26 establishes the process through which a statement of strategic priorities can be designated. It requires that there must be consultation with regulators, and that the statement be laid before Parliament, where it will be subject to the negative procedure. It establishes that the Government must share a draft of a proposed statement with the NIS regulators, and that the regulators must be given at least 40 days to provide comments to the Government on that draft statement. The Government must consider whether it is appropriate to make any changes to the draft statement in the light of that consultation. Once any changes have been made, they must lay the statement before Parliament, where it will be subject to the negative procedure. Following that, the Secretary of State may designate the statement.

Clause 27 establishes the legal duties that regulators will have in relation to a statement of strategic priorities. It sets out that regulators must

“have regard to the statement”

when carrying out their NIS functions, as introduced by parts 3 and 4 of the Bill. It also introduces a requirement for regulators to “seek to achieve” the objectives included in the statement.

Kanishka Narayan

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I thank the hon. Member for her point. Perhaps I can give a flavour of the objectives I might expect in a statement and assure her of the independence of sector regulators. Subject to consultation, which we would expect in the build-up to any such statement, a statement might include objectives such as encouraging regulators to seek to ensure that their sectors have plans in place to increase security, or focusing on regulatory activity in areas of greatest horizontal risk. To the hon. Member’s point about sector-specific expertise and the independence of regulators, the statement is intended to set objectives to be achieved within the parameters of regulators’ existing statutory duties, and what the overarching risks are. Of course, regulators will be free to do that in the ways they think most appropriate for their sectors, in the light of their own expertise and experience. I hope that gives the hon. Member some assurance.

Clause 28 requires the Secretary of State to publish an annual report setting out, in general terms, how NIS regulators have complied with their duties in relation to a statement of strategic priorities over the previous 12 months, and how they intend to meet their duties in the following 12 months.