National Security Act 2023 (Foreign Activities and Foreign Influence Registration Scheme: Exemptions for Certain Foreign Power Investment Funds, Education, Government Administration and Public Bodies) Regulations 2025
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Lord Hanson of Flint
That the Grand Committee do consider the National Security Act 2023 (Foreign Activities and Foreign Influence Registration Scheme: Exemptions for Certain Foreign Power Investment Funds, Education, Government Administration and Public Bodies) Regulations 2025.
Relevant document: 23rd Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
My Lords, I am grateful to the Committee for allowing us to debate the four regulations relating to the foreign influence registration scheme as a single unit, but if noble Lords wish to discuss individual matters relating to them then we can do so. I know that, before I came to this House, noble Lords were instrumental in scrutinising and improving the foreign influence registration scheme during the passage of the National Security Act, and I am grateful for their consideration to date. There are four instruments to cover; I hope I can speak to them for possibly a little bit longer than I might normally have done just to outline where we are.
Noble Lords will know that, on 1 April, the Government announced the foreign influence registration scheme—FIRS, as I will call it—which I can confirm will go live on 1 July 2025. The Government also announced recently that Russia would join Iran on the enhanced tier of the scheme. FIRS, as set out in Part 4 of the National Security Act 2023, will serve as a critical tool in our efforts to deter and disrupt hostile state activity. It will also enhance transparency around the influence exerted by foreign powers in our democratic process.
As noble Lords will know, the scheme is underpinned by three principal objectives. The first is transparency. The scheme will require individuals who undertake certain activities on behalf of foreign powers to declare them. Where such activities constitute political influence, the relevant details will be published on a public register, ensuring openness and accountability.
The second objective is deterrence. The scheme requires those engaged in malign activities for foreign powers either to cease such contact or to register it formally with the Government.
The final objective is disruption. Failure to disclose relevant associations with foreign powers is an offence. This will be enforced by law enforcement, which can take decisive action against those who seek to conceal foreign state involvement. I hope that that broad principle is welcomed by the Committee; I know that it is.
I turn to the four instruments before us. First, on Russia and Iran, the first two sets of regulations specify the entirety of the Iranian and Russian states on the enhanced tier of the scheme. This means, for Iran, the Supreme Leader; the whole of the Government, including the Islamic Revolutionary Guard Corps; the Islamic Consultative Assembly of Iran; and the judiciary of Iran. For Russia, this includes the President of Russia; Cabinet Ministers; government ministries; regional Governments; the judiciary; and the legislature.
As my colleague, Dan Jarvis, the Minister for Security, set out in a Statement to the House of Commons:
“The Iranian regime is targeting dissidents, and media organisations and journalists reporting on the regime’s violent oppression. It is also no secret that there is a long-standing pattern of the Iranian intelligence services targeting Jewish and Israeli people internationally”.—[Official Report, Commons, 4/3/25; col. 195.]
As noble Lords will know, Russia poses an acute threat to UK security. In recent years, its hostile acts have included the deadly nerve agent attack that we witnessed in Salisbury, espionage, arson, and cyberattacks, including the targeting of UK parliamentarians through spear phishing campaigns.
Specifying Russia and Iran on the enhanced tier will mean that anyone acting at their direction in the United Kingdom will face a choice: either they declare their activities to the UK Government or they risk five years’ imprisonment. That choice is down to them from the beginning of the scheme on 1 July. Both sets of regulations include a statutory five-year review period and a grace period for those who are in ongoing arrangements at the point of the scheme coming into force in order to allow them to register arrangements without there being a need to impact on legitimate activities.
We have also set a number of exemptions in the scheme. This set of regulations introduces four new exemptions to the scheme. These exemptions, which sit alongside those already set out in primary legislation, are designed to uphold the principle of proportionality. They reduce the burden of registering routine or already transparent activities while ensuring that the scheme remains focused on addressing genuine risks. For example, these regulations include an exemption from the political influence tier of the scheme for a foreign power investment fund; this is intended to cover sovereign wealth funds and certain public pension funds.
Then there are three exemptions from the enhanced tier. First, there is an exemption for funded study arrangements, such as scholarships awarded by foreign Governments. Secondly, there is an exemption for activities related to government administrative and technical services, such as those concerning nationality, immigration and tax-related services. Thirdly, there is an exemption for public bodies and arrangements to which they are party.
Each of these exemptions has been carefully and narrowly defined to prevent the creation of loopholes that could be exploited for malign purposes. For example, a student from Russia or Iran on a government-funded scholarship would be exempt only in relation to activities directly connected to their course of study. Any other activity undertaken on behalf of those states would still require registration.
The final set of regulations concerns the operation of the public register, and I will talk a little now about publication. In my view, that is central to delivering the scheme’s transparency objectives. The regulations set out the categories of information that will be published on the register. They are carefully limited to what is necessary to fulfil the scheme’s transparency aims, while ensuring appropriate safeguards for individual privacy. By default, registrations relating to political influence activities will appear on the public register. Where activities extend beyond political influence, they are registered on the enhanced tier and will not be published. It is important to emphasise that individuals and organisations that register under the scheme, and whose details appear on the public register, are acting responsibly and in support of transparency.
The regulations also set out the information that may not appear on the register where it has been demonstrated that publication would be prejudicial to the safety or interests of the UK, or to the prevention of crime, a criminal investigation or criminal proceedings; where it would put an individual’s safety at risk; or where it could result in the disclosure of commercially sensitive information.
Lastly, the regulations also provide for information to remain on the public register for a period of 10 years following the conclusion of the relevant activity. This retention period is particularly important for identifying long-term trends and patterns in foreign influence.
There is legitimate activity, of course, and I want to be clear that the scheme does not seek to deter that legitimate activity. Registering with the scheme does not mean that an individual is doing anything wrong, nor that they must cease their activities. We are also taking steps to ensure that registration remains as straightforward and simple as possible, and that those affected by the scheme are aware of what they need to do to comply.
To conclude—I apologise for giving great detail on the four instruments before the Committee—self-evidently, the first duty of the Government is to keep our country safe; I know that view is shared across the Committee. That is why the Prime Minister placed national security at the heart of his plan for change. It is also why we are supporting the police and intelligence services to confront and combat the threats we face, including those from foreign states. The measures before us are among our decisive steps to bring into force the foreign influence registration scheme. I look forward to comments and questions from noble Lords, and I commend the regulations to the Committee.
Lord Davies of Gower (Con)
Indeed—I think I will cover that point as I go along.
Although we support the intent and scope of these measures, scrutiny must not end there. These regulations are not purely technical instruments; they go to the heart of how the UK responds to evolving and increasingly sophisticated state threats. It is in that spirit that I raise three points.
First, the omission of China from the enhanced tier is quite simply a glaring absence. There is now consistent cross-party consensus, reflected in previous debates in both Houses and across the intelligence community, that China poses a systemic and strategic challenge to the United Kingdom. China has targeted Members of this Parliament, launched cyberattacks on UK institutions and engaged in covert activity on British soil. In 2021, it sanctioned two Members of this House and, in 2024, the Government publicly attributed malicious cyber campaigns against MPs and the Electoral Commission to the Chinese state. These are not isolated incidents; they are part of a wider sustained pattern. Given this record, it is difficult to understand why China has not yet been put under the enhanced tier of this scheme.
The Government have stated that they do not comment on individual countries, and that designations are made on a case-by-case basis. However, this is not about speculation but about providing clarity and strategic coherence in our approach to national security. The public and Parliament are entitled to understand the rationale behind such decisions, particularly when the state in question has been repeatedly named by the intelligence community as a principal source of hostile activity. Indeed, the Home Office’s own professional guidance lists Russia, Iran and China as the foremost state-based threats. The director-general of MI5 has echoed this view, as has already been said this afternoon. So why the inconsistency? What message does it send, either to those carrying out covert activities or to our international partners, when a state widely recognised as a threat is excluded from a scheme specifically designed to counter exactly this kind of behaviour? I therefore urge the Government to reconsider this decision, or at the very least to provide a clearer public explanation of their current position.
On enforcement and oversight, effective implementation is vital and registration requirements must be communicated clearly. Guidance must be accessible, and enforcement must be proportionate and consistent across sectors and regions. Can the Minister confirm that the necessary resources are in place to support enforcement, and that compliance will be monitored in a structured and transparent manner? We note that Section 82 of the National Security Act 2023 requires the Secretary of State to publish an annual report on the scheme’s operation, which is welcome, but can the Minister confirm whether that report will include an assessment of the effectiveness of the current exemptions, and whether further exemptions or additional country designations are under active consideration?
Finally, although this scheme is a welcome development, we must acknowledge that it is only one part of a much broader challenge. Hostile states are adapting constantly. Disinformation, cyber interference, economic coercion and influence operations now span multiple domains. Responding effectively demands not just new legal frameworks but a whole of government approach, with sustained investment in resilience, cross-sectoral co-ordination and continued international alignment.
In conclusion, we support these measures, which are necessary, appropriate and overdue, but they must be implemented in a manner that is robust, proportionate and responsive to the evolving nature of state threats—not just today but in the years ahead. We remain concerned about the exclusion of China from the enhanced tier. We urge the Government to keep this matter under close and continuous review, and to act with greater transparency about the strategic direction of our national security posture.
Lord Hanson of Flint (Lab)
My Lords, I am grateful both to the contributors to this short debate and for the broad support that has been given for the regulations before the Committee. I will try to answer each noble Lord in turn. There might be a bit of overlap, because some of the issues that have been raised do overlap, but I will try to cover the points raised by each noble Lord in turn.
I shall start with my noble friend Lord Stansgate, who mentioned cyber and cyberattacks. I assure him that the security services, the agencies, the Home Office and the UK Government are acutely aware of hostile states potentially undertaking attacks, and of criminal gangs doing the same. Significant work, which my noble friend would not expect me to talk about in public, is ongoing to ensure the safety and security of our citizens. I give him that assurance as a whole.
My noble friend asked in particular about the exemptions for students and the impact on small businesses or small organisations. I will take the latter first. The registration process is designed to be as simple as possible—this touches on a point mentioned by the noble Lord, Lord Davies. The Home Office anticipates that the process should take a maximum of 30 minutes. We are not expecting small businesses or micro-businesses to register in large numbers if they are in direct relationships with foreign powers, but—again, this goes to a point made by a number of noble Lords—there is comprehensive guidance online to support the registrant and their process, and to support individuals and larger organisations. The proof of the pudding will be in the eating, self-evidently, but we are confident that that will be a relatively simple process from 1 July onwards. Again, I put out the hand of friendship to all noble Lords: if there is feedback downstream on how the scheme operates, from any perspective that is brought to their attention, we would welcome it.
My noble friend Lord Stansgate also asked for clarification on the education exemption. Where someone is in an arrangement with a foreign power and is completing a course in further study, they do not necessarily need to register activities, but it is reasonable to complete the course of education; to uphold the reputation of the provider; to meet the standards of conduct expected by the providers of financial assistance; and to notify any person of personal information. Again, I hope that that is helpful.
My noble friend Lord Stansgate and the noble Lords, Lord Purvis of Tweed and Lord Davies of Gower, mentioned China. I may as well hit that point and discuss it at this time. I think that they all know the answer to the question they asked, but I will give it in the phraseology I have to use. Each country is considered on its merits and no decisions have been made. Countries are considered separately for specification and decisions are made on evidence.
On China more broadly, we have been clear as a Government that we are going to take a consistent, long-term, strategic approach to managing the UK’s relations with China. This means co-operating where we can, competing where we need to and challenging robustly where we must, including on areas of national security. However, each country is considered on its merits and no decisions have been made. The regulations before the Committee highlight two specific nations where we believe there is a significant threat—Russia and Iran—which is why we have brought them forward. I hope that helps my noble friend Lord Stansgate on his points.
I am pleased to see my noble friend Lord Cryer continuing his long interest in issues related to Iran. I know that he has raised this in the Chamber on a number of occasions. He asked what happens if there is a failure to register. That will be a criminal offence in the event of an individual’s activities coming to light linked to a registered nation under the regulations before us today and will carry a potential penalty of five years’ imprisonment. That is not for me to judge. That is for the courts to judge and the police to prosecute, but that is certainly part of this issue today.
My noble friend mentioned in particular the impact on parliamentarians. There is no requirement for parliamentarians who are being lobbied to register with the scheme, and that allows the democratic process to continue. He commented on proscription and mentioned Hamas. Hamas is not specified. The regulations would cover anyone in a relationship with the IRGC in Iran but, as ever, for any organisation, at any time, the Government keep under review the question of proscription. At the moment, this is where we are, but we keep everything under review at all times accordingly. As my noble friend will know, the arrests on 17 May of three Iranian nationals who have been charged with offences under the National Security Act show that the Government are consistent. That matter will go before the courts and be determined by the judiciary in due course.
My noble friend also mentioned proxies. Although I have touched on this, I think it is important that I say that it is the person who is in a relationship with the foreign power who has to register. Therefore, those who are proxies are within the scheme, for example, companies acting under the direction of the Russians or the Iranians. If the proxy is not registered, then the person in the UK acting on their behalf could well be committing an offence. Again, it is our intention to ensure that we act in the interests of national security and of the United Kingdom as a whole.
The noble Lord, Lord Purvis, raised a number of points. Again, I am grateful for his broad support and thank him for that support to date and in getting the legislation in this House in the past. He mentioned commercial interests and asked whether this is a high bar. Let me, I hope, reassure him that the Government’s intention is that it should be a high bar. UK companies providing services to bodies listed will have to register. The exemptions are carefully crafted to ensure that what is out of scope is as narrow as possible, while still fulfilling the scheme’s aim. We have put in place exemptions on sovereign wealth funds, which he talked about. The exemption for sovereign wealth funds is not about prioritising growth over national security as national security remains the first priority of Government, but about ensuring that the scheme remains proportionate. The link between a sovereign wealth fund and a foreign power is inherently transparent, so requiring them to register with the scheme would bring very limited benefits. I hope that answers his point.
Lord Purvis of Tweed (LD)
I am grateful to the Minister. On one hand I can understand it, on the other hand, I just disagree with him, respectfully. Sovereign wealth funds are not just one thing that is obvious to see. Sovereign wealth funds can be extraordinarily broad in their scope, their legal complexity and their financial instruments, which can be spread across a number of different jurisdictions. That is why they are used by state entities. We seek to have good relationships with some, because we want them to invest in the UK, but others are used for the very reason of their complexities. I just do not understand the rationale of the Government to have a blanket exemption for any fund that is principally owned by a sovereign Government. That is notwithstanding the further dilution of the share capital that the Government are now proposing, from 25% to 100%. I do not understand the rationale for this.
Lord Hanson of Flint (Lab)
Well, we may end up having an honest disagreement, and that is fair. That is what politics is about; sometimes we do not necessarily agree. The exemptions that the Government have brought forward today match the exemptions contained in the primary legislation. They include routine diplomatic activity, recognised news publishers and legal activities carried out by lawyers. These were the exemptions introduced through the regulations being debated today. They ensure, we think, that the scheme’s requirements remain proportionate to the threats that we face. We have been very public about those threats in this debate, in the House of Commons and in the regulations.
Viscount Stansgate (Lab)
On the subject of exceptions, in Regulation 6 of the statutory instrument on publication, for example, how is Parliament going to know the extent of the exemptions that have been granted? On the face of it, we will not know.
Lord Hanson of Flint (Lab)
If my noble friend allows me a moment’s reflection on that detail, I will respond to him with a fuller, meaningful reply. I believe that we are going to be transparent in all of this. The whole purpose of these regulations is to provide transparency and ensure that we tackle national security and give proportionate responses. Colleagues and I will reflect on the point he has made and I will respond to him in detail if I can.
Lord Purvis of Tweed (LD)
This is our only opportunity to debate this in detail—by the way, I do not detract from the Minister’s intent at all. I have two questions. First, forgive my ignorance, but do the exemptions also apply—
Lord Hanson of Flint (Lab)
I have not quite finished my responses to the noble Lord yet.
Lord Purvis of Tweed (LD)
Well, does he wish to do that now? I will then be able to ask him the question about it. Do the exemptions apply to the enhanced-tier activities too? The policy rationale in the Explanatory Memorandum cites academia and economic activity, and the Government are proposing to exempt those. My second point was that, if he wanted to write to the noble Viscount and myself in advance of us being asked to approve these in the Chamber, that would be of benefit.
Lord Hanson of Flint (Lab)
I am trying to explain to my noble friend and to the noble Lord, Lord Purvis of Tweed, that we have put exemptions in. I have explained in my opening speech what those exemptions are and have indicated that they are meant to be designed to be proportionate. If there are points that the noble Lord and my noble friend wish to press further, I will try to answer those today, but I have just indicated that I will reflect on those to see whether I can give further guidance prior to the end of this contribution. If we are not able to do that, then I will ensure that, before this is brought before the House on Monday or Tuesday next week—whichever day the final regulations are presented—we will have clarification on those points in the hands of my noble friend and the noble Lord, Lord Purvis. I am trying, as ever, to be helpful.
The noble Lord also asked the question about how accessible public registration will be. Information on only the political tier will be published. It will be accessible via an online register, which will be linked to the registration portal. It will be on GOV.UK, and there will be filters to support those searching.
Again, I say to the noble Lord that the purpose of that transparency, and the whole purpose of these regulations, is to ensure that the Government register concerns on areas of international security, look at where that registration and influence is and flush out that influence in terms of individuals who are currently operating potentially in a covert way but will, in future, have to register, with the details published online. If they are not registered and are subsequently found to be operating, they will have to face the force of the law in the courts on those issues.
The noble Lord also asked who decides and who polices the exemptions. That is a broad area of concern for him, I think. The exemptions have been set out in the regulations that we have laid. If an individual does not meet the exemption criteria, they must register their arrangement with Iran or Russia. If they do not register that arrangement, they will commit a criminal offence. There are existing measures to address risks associated with international students as a whole.
On the question from the noble Lord, Lord Purvis, about the exemptions applying to the enhanced tier, there will be an annual report that will set out the exemptions under regulation. There will be different exemptions according to each tier. When I look later today at Hansard—which is always helpful to Ministers—I will reflect on what has been said by my noble friend and the noble Lord, Lord Purvis of Tweed, on that issue. If my response today has not met their concerns, I will ensure that they have a letter in their hand by Monday morning. I will hold myself to that over the weekend.
I think I have covered most of the points that have been made by the noble Lord, Lord Davies, in our discussion today. Although I did not refer directly to him and the points that he raised, I think that I have covered elsewhere the issues that he raised on exemptions, China and so on. I hope that I have satisfied him.
In summary, I thank my noble friends Lord Cryer and Lord Stansgate and the noble Lords, Lord Purvis of Tweed and Lord Davies of Gower, for their contributions. I hope that they have clarity that the purpose of these regulations is to provide protections on national security for UK citizens from malign foreign influences of countries that are undertaking activity in the United Kingdom that is causing disruption to indigenous citizens of those countries who live here and to the United Kingdom as a whole. The purpose is to provide openness and transparency around the links between the Iranian regime or the Russian regime and individuals who are operating on their behalf. The regulations are an improvement on where we are now and give clarity. They provide exemptions, but we believe that those exemptions are proportionate. I commend these regulations to the Committee.