Lords Chamber

Monday 26th October 2026

(began 14 hours, 16 minutes ago)

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None Portrait Introduction(s): The Lord Bishop of Durham
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None Portrait Oral questions: Environmental, social and governance rule reforms to ensure financial institutions cannot deny services to the UK defence sector
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None Portrait Oral questions: Government-approved list of AI tools that meet school safeguarding and data protection standards
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I beg leave to ask the question. >> I beg leave to ask the question. Standing in my name on the Order Paper. >> My Lords, the government is
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Lord Pitt-Watson Portrait Lord Pitt-Watson, The Parliamentary Secretary, HM Treasury (Labour)
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Look, I'm. I'm absolutely sure they will. But a. It. If if I can they will. But a. It. If if I can be clear about the evidence here, if we look at the difference in spend by foreign visitors in the UK, a. From 2019 to 2024 in the major

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and it is at some cost. My Lord, my Lords, given. My Lords, the Minister is someone who understands calculation. someone who understands calculation. Now, my understanding is that the Treasury and the OBR have not Treasury and the OBR have not calculated the lost revenue from the higher visitor activity in the the higher visitor activity in the UK that would have resulted had the scheme not been withdrawn. Have not calculated the potential revenue from the spend, that those additional visitors that would have, additional visitors that would have, which would have led to revenue to the Treasury from from those additional visitors.

And that that additional visitors. And that that number, according to the industry, is roughly £2 billion a year. Now, will he go back and try and will he go back and try and understand why the OBR and Treasury do not include those calculations do not include those calculations when they are CSIRT that they are saving money by scrapping the scheme? But it looks to everybody scheme? But it looks to everybody that at the. At the worst it would be a wash and. And that. And that if the industry is indeed even if the industry is indeed even vaguely correct, that Treasury is actually losing money on this way.

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Yeah. So let me reassure the noble Baroness that the £540 million figure that I gave, which is a Treasury figure, fully includes all the knock on systematic effects of. I can assure the noble Baroness that the £540 million includes all the knock on effects of a. The. A introduction of a. The tax free shopping scheme for non-EU citizens.
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Lord Pitt-Watson Portrait Lord Pitt-Watson, The Parliamentary Secretary, HM Treasury (Labour)
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consulted. >> Labour, labour, Labour. >> My Lords. >> I hear what my noble friend. I hear what my noble friend says, and I certainly don't have any answers. And I remind noble Lords of my Register of Members interests. However, it is the case. I know, that many visitors from far away, far away overseas, who used to come and spend, say, 5 or 6 days in this country, visit lots of wonderful attractions, do a lot of shopping and then go home now. Come here for three days, visit some attractions and they go to Paris, Milan and other places to do their shopping.

 Therefore, I would ask my noble friend to perhaps look again at

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this at some stage. So. So if I can come back on that, I mean, I think we all that, I mean, I think we all understand that visitors can still reclaim VAT for purchases. They just need to have them shipped just need to have them shipped directly. And of course, if they're shipped directly, then they're caught by customs in the in the caught by customs in the in the country to to which they're shipped. But let me be clear about some of But let me be clear about some of the statistics. This is the 2029 to 2024 statistics UK tourism receipts recovered to 111% of their 2019 levels after adjusting for inflation in France, 107% in Italy, 103%, 83% in Germany and only beaten by Spain for 117%.

So the notion that there were loads of people who were coming here who were not coming here now is difficult to stand up on the evidence. I think.
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Baroness Antrobus Portrait Baroness Antrobus (Labour)
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I thank the noble Lord, Lord >> I thank the noble Lord, Lord Robertson, for adding his his thoughts for Saudi Arabia's thoughts for Saudi Arabia's predicament at the moment. And, you know, our priority remains condemn the action of the Houthis, support our Saudi Arabian allies, help to protect the civilians on the ground. And, of course, there are British nationals involved and at risk as well. And we're communicating with British civilians in the area. And I would encourage any civilians there to ensure that they are registered for alerts. We will continue, though, as well as this immediate response to a critical incident, which in many ways demonstrates, I would say this, wouldn't I, the way that air power can react so fast to changing and moving situations and.

But there is a longer term need for diplomatic solutions. Military solutions won't end this. And and those are all areas that have led to the reason that we've provided the support to

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Saudi Arabia. In terms of other defence partners with Saudi Arabia in partners with Saudi Arabia in particular, I talk about the the Mecca Joint Defence agreement between Pakistan, Turkey and Saudi between Pakistan, Turkey and Saudi Arabia. How does the UK deployment interact and cooperate with that agreement and their deployment to

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agreement and their deployment to also support Saudi Arabia in its defence? Well, as the noble Lord probably

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Well, as the noble Lord probably knows, the Mecca countries have discussed and met Turkey, Pakistan and Saudi Arabia, and that that is obviously a completely separate alliance to our own. But our conversations, as I think I mentioned earlier, are with allies in the region, with other allies that are also offering support. There have been reports of both France and Italy offering support, though I cannot confirm, and it's not my place to say what that will be.

So the conversations are across different governments, different departments as well, and they will continue as you would expect.
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Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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My Lords, I beg to move that this report. Do I need to wait for you? It might be wise.

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My My Lords, My Lords, I My Lords, I beg My Lords, I beg to My Lords, I beg to move My Lords, I beg to move that

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My Lords, I beg to move that this report be now received. The question is that. This report be now received. As

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This report be now received. As many as that opinion will say. Content Of the contrary, not content. the contents have it.

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Clause two. Amendment one. Baroness Lloyd of Effra. My Lords, I beg to move amendment one, after which I will amendment one, after which I will also speak to the other amendments in my name. As I said at Committee stage, the decision to introduce these amendments has not been taken lightly. This government will act on matters of national security, which is what this package seeks to protect. When vendors with links to third countries with the intent and capability to cause harm put our services and the citizens who use them at risk. Through such vendors, a third country can gain access to or control of critical systems.

Caused disruption to UK national infrastructure surveillance through access to data at scale or espionage through access to sensitive information. This package of amendments, supported by guidance and a voluntary referral scheme, provides operators and the government with the tools to mitigate these risks. This new power also supports the bill's existing powers of direction, enabling government to act before and after vendors become embedded in supply chains. I want to thank noble Lords for their valuable and productive engagement on this topic. Since the group of amendments was debated at Grand Committee, I also want to thank my officials and NCSC colleagues for hosting a technical briefing for peers.

In response, I have made several updates to the amendments at Committee stage. It was raised that the drafting referred to the Secretary of State and the Chancellor of the Duchy of Lancaster. This was purely to recognise that a Crown Minister is not a Secretary of State. Should they ever need to exercise the powers. Let me be clear these powers will sit with the DCMs Secretary of State. The DCMs Select Committee can provide oversight and scrutiny of the use of these powers where appropriate. As such, we have revised the wording of the amendments to remove all reference to the Chancellor of the Duchy of Lancaster.

Concern was also raised for parliamentary oversight in the government's exercise of these powers. After careful consideration, I have limited the procedure for bringing entities into scope of the national security powers. The Committee stage amendments enable these powers to be exercised through the made affirmative procedure. In an emergency scenario, the revised drafting removes the ability to use the made affirmative procedure, instead relying on the draft affirmative procedure. This means both houses must approve any regulations made under these powers before they take effect. I have also heard noble Lords representations on behalf of businesses and the importance of involving them in decision making, and whilst the government does not intend to exercise the power to introduce a mandatory scheme, I understand the reassurance being sought around consultation and oversight.

The amendment already requires the Secretary of State to consult in a manner they deem appropriate, but I am willing to go further and commit now to undertake a public consultation ahead of any consideration to introduce a mandatory referral mechanism. Additionally, I would like to explain one further change I've made to the amendment. Since the Committee stage. The amendments no longer include a statutory duty for regulators or the Secretary of State to notify an entity when they have been brought into scope of the vendor direction power. As part of the review of these powers, it has become clear that the statutory duty is not a helpful addition and could delay mitigation of a national security threat in scope.

 Entities will still be informed ahead of making regulations to bring entities into scope of the vendor related powers, the Secretary of State must consult relevant persons. Insofar as is practical, this is likely to involve consultation with the regulators and industry groups before bringing forward regulations using the draft affirmative procedure. Once made into law, the government will encourage entities to make use of the non-statutory guidance and voluntary referral route. The Secretary of State must also consult recipients and the vendor before issuing a direction, unless doing so would be contrary to national security. All of this means it is highly unlikely that an organisation would ever find out they're in scope of the vendor risk management framework by receiving a direction with no prior engagement with government, we intend to consult on the implementation of the wider vendor risk management framework in due course.

This will include the criteria for referral and how the mechanism will work in practice. I hope noble Lords will support these amendments. I beg to move.
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Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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Amendment proposed clause two, page 2913. Leave out from page 2913. Leave out from directions to end of line 15 and insert in particular circumstances involving a risk to national involving a risk to national security interests.

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security interests. My Lords, can I thank the noble Baroness, the Minister, for setting out the government's revised framework on National security directions, and can I thank her, two and her officials for their engagement since Committee stage in Grand Committee, when 65 government amendments were introduced at the 11th hour on these benches, we made it clear that while we fully recognise the acute geopolitical threats posed by hostile states and compromised supply chains, we could not countenance sweeping executive market interventions devoid of statutory safeguards and judicial oversight. Now, my Lords, I do welcome the genuine concessions the Minister has made following our cross-party discussions, specifically removing the emergency made affirmative procedure so that bringing entities into scope is subject to draft affirmative parliamentary scrutiny.

But as set out in our amendments, 117, 118, 119, 145 146147 and 167. The government's revised framework still lacks the vital procedural guardrails needed to make these powers safe, workable and, in our view, compliant with the rule of law. Amendment 7117 requires national security directions to rest upon a credible evidential base and an assessment of less disruptive alternatives and a strict test of necessity and proportionality. Under amendment one, one eight affected suppliers must be given prior notice and a meaningful opportunity to propose risk mitigations before their technology is banned or ripped out. Protecting essential services from sudden operational collapse crucially, amendments 119 and 146 introduce independent judicial oversight where an order imposes enduring or irreversible restrictions such as stripping equipment out of live infrastructure, it must be authorised by a court with closed material procedures under the Justice and Security Act 2017, ensuring sensitive intelligence can be scrutinised safely.

Furthermore, amendment 145 guarantees an ongoing right of review and renewal, while amendment 147 mandates aggregate parliamentary reporting on the economic and operational impact of these directions. Amendment 167 we ensure these safeguards take effect concurrently with the direction powers themselves, and we also strongly support amendment 164 in the names of the noble Viscount Lord Camoys and the noble Lord Markham, creating a transparent register of hostile state actors. My Lords, national security and procedural justice are not opposing forces. An executive power to direct private entities to dismantle digital contracts or hardware backed by severe financial penalties and non-disclosure.

 Gagging orders is an extraordinary power. It will only command confidence and withstand legal challenge if it is anchored in objective criteria and independent judicial scrutiny, and I do urge the Minister to incorporate these essential safeguards.
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Viscount Camrose Portrait Viscount Camrose (Conservative)
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My Lords, I, too, thank the noble Lady, the Minister, for reintroducing this group of amendments and kicking off what I have no doubt will be a productive Report stage. I will be brief both in this and future amendments that are future groups that I speak to, because I feel we've already debated many of these topics at length at Committee stage. We do appreciate the intent to allow more flexibility to address cyber security concerns, and I am grateful for the reassurances that the Minister gave the House, both at committee and since, particularly regarding the limited scope of the mandatory referral scheme.

Therefore, we do not oppose these amendments. That being said, I do recognise the concerns raised just now by the noble Lord Lord Clement-Jones. It is, of course, right that suppliers should be given notice should the situation allow it, and the use of the powers should be both overseen and scrutinised again, where possible. I hope the noble Baroness, the Minister, will confirm that there are mechanisms for these concerns already in place come the implementation of the new regime. My Lords, turning to amendment 164 in my name and the names of my noble friend Lord Mark my Lord Markham, and the noble Lord Lord Alton of Liverpool.

My Lords, we still consider the registration, monitoring and management of foreign powers a central concern regarding cyber security. I won't revisit at length the argument so clearly set out by my noble friend Lord Markham at Committee stage. But I will once again note that foreign states are responsible for three quarters of attacks on our critical national infrastructure. There is still an information gap regarding foreign threats, and this amendment would bring that much needed transparency. For the avoidance of doubt, this would not require the publication of sources, substance or method. Parliament would know simply that a designation had occurred and a subsequent review undertaken.

I believe this matter to be of pressing importance, and therefore, when amendment 164 is called, we will seek to test the opinion of the House.
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Lord Markham Portrait Lord Markham (Conservative)
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I'd like to join with the noble Lord, Viscount Viscount Camrose, and the noble Lord Lord Markham. I and the noble Lord Lord Markham. I have, as has been indicated, signed their amendment, but I echo also what the noble Lord Lord Clement-Jones has said about the Clement-Jones has said about the way in which the Minister has gone about dealing with this bill, and I won't be speaking on other groups of amendments. She'll be glad to know other than one. And that gave me a very good insight into the way that the noble Baroness Baroness Lloyd goes about things.

We had three separate meetings in the course of the recess. She's been exemplary, I think, in the way that she has tried to deal with the arguments and with members of your Lordships House, and I just want to put on record my gratitude to her for that. So why am I signing this amendment? Number 164 well, part four of the bill rightly equips the Secretary of State with formidable powers to issue directions in the interests of national security. Yet as the bill currently stands, those powers risk operating in a strategic vacuum. If we are to empower Ministers to intervene decisively, to protect our essential services and our critical supply chains, that intervention must be anchored to an objective statutory assessment of who actually threatens us.

We cannot defend what we value against an adversary whom we refuse to formally identify. So this amendment 164 provides that essential statutory spine by establishing a clear, maintained register of foreign powers that pose an acute risk to our critical network and information systems, something that I think came home to us last week when so many of our systems nationally were attacked. We don't necessarily know by whom, but we have no doubt guess. We certainly know that in the past, everything from the National Health Service onward have been subjected to attacks. In that case, by the regime in North Korea.

Critically, my Lords, this is not a political blacklist, though it's not subject to diplomatic wing whim. It's an intelligence led mechanism rooted in the hard objective assessments of Gchq, where our intelligence agencies have confirmed that a foreign state or its proxies has perpetrated attacks against our essential services within the last seven years, or where they issue clear warnings of imminent peril, then that state must be listed. That definition must be clear eyed about modern authoritarian governance. In the People's Republic of China, for instance, the state, the military and the Chinese Communist Party are inextricably fused to assess state backed cyber threats while ignoring the governing political party that directs them would be wilful blindness.

So this amendment closes that semantic loophole once and for all. And furthermore, my Lords, amendment 164 demands that we confront our own domestic vulnerabilities. It requires the Secretary of State to review not merely attacks launched from across oceans, but the profound risks inherent in foreign owned or foreign controlled infrastructure situated on our own soil. For far too long, across successive administrations, our critical national infrastructure has been treated with commercial naivety rather than strategic discipline. By requiring the government to conduct this review and lay a coherent action plan before Parliament within six months. This amendment ends the era of bureaucratic drift.

Let me end, my Lords, by referring to the inquiry that I chaired on behalf of the Joint Committee on Human Rights as an inquiry into transnational repression. And I think that our domestic policies failure is illustrated by the reluctance of the government to act on the recommendation that the Committee made unanimously, that the People's Republic of China, which we found to be the state that was the most responsible for transnational repression in the United Kingdom, even more than Russia or Kiran. But we have failed, unlike those two other countries, to place the People's Republic of China in the foreign influence registration schemes, top tier.

And I'd be grateful when the noble Baroness comes to reply, if she is able to give us any information about whether Mr. Dan Jarvis, who's responsible for security issues, who promised to continue to keep this issue under review, has done anything further to be able to act on our committee's recommendations and also the concerns that were raised by the Intelligence and Security Committee, and which the noble Lord Lord Beamish has often spoken about in your Lordships House. So, my Lords, strategic ambiguity, which is what I think has been the order of the day, doesn't deter authoritarian regimes.

 It merely invites opportunistic aggression. If we're serious about building genuine national cyber resilience, we must replace vague administrative discretion with an empirical, transparent and accountable framework. And I urge the government to embrace this vital measure and to accept amendment 164 in the names of the noble Viscount Lord Camoys and noble Lord Lord Markham.
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Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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tabled have clear statutory tests. The Secretary of State can only give a direction if two conditions give a direction if two conditions are met. First, they must consider that a risk to national security arises or could arise from arises or could arise from operator's use of vendors, goods, services or facilities. And second, the direction is necessary and its the direction is necessary and its requirements are proportionate. The Secretary of State must consider whether other, less excessive whether other, less excessive measures would address the risk. Other regimes work the same way. We have designed the framework so that risks are managed early through non-statutory guidance and voluntary referral routes we want to avoid, so far as is possible, costly interventions such as replacing embedded vendors.

On the question of notices and representations, I agree that operators and vendors should have a say before a direction is given. That's why my amendments require the Secretary of State to consult both the operator and the vendor before giving a direction, unless doing so would be contrary to national security. I do not think a fixed period for representations in primary legislation is the right approach. Instead, my amendments include a delegated power for the Secretary of State to set statutory timelines in secondary legislation for deciding whether to give a direction. Under this approach, we must consult operators, vendors and all other stakeholders on what those timelines should be before regulations are made, and it gives us the flexibility to amend the timelines through secondary legislation.

Should we assess this as necessary on judicial authorisation? I must be clear the government cannot accept a requirement for a court to authorise a direction before it is given. These are national security judgements informed by advice from the intelligence community. They are rightly made by the Secretary of State who is accountable to Parliament. That does not mean there is no judicial oversight operators, and in most cases, vendors will be able to challenge directions and enforcement decisions by judicial review in the High Court on review and renewal. I understand the noble Lord wants directions to expire after a fixed period.

I do not think this is wise. A direction must be necessary and proportionate when it is given, and the same applies when it is varied. But businesses also need certainty and not frequent reviews. This approach follows established precedent under the Telecoms Security Act 2021 and the National Security and Investment Act 2021. The requirements on what a direction must contain also limit its scope. In practice, this means directions are likely to be tied to specific procurement decisions and mitigations, not ongoing reporting requirements. And on reporting. I agree that Parliament should be able to see how these powers are used.

I am proposing that the Secretary of State must lay an annual report before Parliament setting out how the powers being used. The Secretary of State must also publish a notice when the direction is given, varied or revoked, unless this would unreasonably harm national security or commercial interests. This follows the National Security and Investment Act model. For these reasons, I hope the noble Lord and the noble Viscount will feel reassured that the safeguards they seek are are built into this framework and. And that the noble Lord will not press his amendments. Turning to amendment 164, let me be clear.

This government is serious about protecting our essential services from hostile states. It is the central tenet of this bill and the amendments I have tabled to tabled. But I disagree with the noble Viscount Lord Camoys that a register of foreign powers aids us in that objective. Indeed, this House had this debate during the passage of the Telecoms Security Act, when it was agreed that a country specific approach is not appropriate. A register can create false certainty. National security threats do not come solely or consistently from a fixed group of foreign powers. For example, a company acting with hostile intent may have close ties to a hostile state while being registered elsewhere.

Hostile actors evolve and adapt, so we must focus on identifying and mitigating the risk itself, rather than maintaining a list of countries. Our assessment of risk will always be led by expert security advice, and it should not be constrained by an arbitrary list. However, I understand the important points made on clarity and information of where our threats are coming from, and the NCSC annual report highlights the risks posed by foreign actors, and we work with NCSC to mitigate those risks. The report clearly articulates the cyber effects from Russia, China, Iran and North Korea, as well as cyber criminals, which I hope addresses the point raised by the noble Lord Lord Alton.

And I also take the noble Viscount's point about providing information and the noble Lord Lord Clement-Jones point about addressing the information gap and providing businesses with information. That is exactly why the vendor risk framework will be underscored by guidance. This will support businesses to conduct an informed risk assessment of their supply chains, rather than cutting out countries on a list. Doing so would have economic impacts without actually addressing the national security risks. The worst of both worlds there is and always has been, a delicate balance between national security and economic and diplomatic cooperation. An arbitrary list cuts across this a case by case risk assessment, using guidance and based on expert security advice is the only sensible way to do this.

To address Lord Alton, the noble Lord. Lord Dalton's direct question to me about further deliberations by the government on his committee's report, I will need to write to him with an update on that. Following this debate. I am grateful to noble Lords for this debate. I believe we share the same aims. Decisions about vendors should be evidence based and proportionate, and they should be open to proper scrutiny. I hope I have provided reassurance that the Vendor Risk Management framework provides the safeguards, through its statutory tests, the duty to consult judicial review and reporting to Parliament.

I beg to

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move. The question. Is that amendment one be agreed

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Is that amendment one be agreed to? As many as that opinion will say content the country not content. The contents have it in clause nine.

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Amendment two. Lord Clement-Jones my Lords, I rise to move. Amendment two standing in my name and in doing so, to open the debate on this group addressing quite a wide range of
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None Portrait Amendment:2 Lord Clement-Jones (Liberal Democrat)
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addressing quite a wide range of issues regulatory scope, implementation, machinery, workforce capability and corporate governance across the bill. Amendment two tackles a vital question of regulatory proportionality. The definition of a managed service under clause nine. On these benches, we fully support bringing managed service providers RMSPs into the NIS regime. Third party IT suppliers frequently hold deep, interconnected access into critical networks, making them prime vectors for supply chain contagion. But as clause nine is currently drafted, the definition remains a regulatory dragnet. Amendment two provides a clear pro-enterprise statutory boundary, and I made the case for it on Grand Committee, and I will not repeat the case here, but to blur the lines risks swamping the Information Commissioner with compliance paperwork while diverting supervision from genuine systematic vulnerabilities.

I also welcome amendment three from the noble Lord Ravensdale and amendment 62 from the noble Baroness, Lady Morgan and Lady Kidron, ensuring that size alone is not treated as an arbitrary proxy for risk. We must not fall into the false sense of security of the amendment the noble Baroness Morgan secured on the Online Safety Bill. Turning to the implementation amendments. In this group, effective resilience requires far more than statutory assertion. It requires capability and accountability on the workforce deficit. I pay tribute to the advocacy of my noble friend Baroness Northover on amendment 64, 81 and 107 in the form in which they were tabled in Grand Committee and now retabled alongside my own amendment 105/50 percent of cyber professionals cite skills shortages as their greatest hurdle to compliance.

Regulation needs competence. These amendments mandate that that covered entities, place primary system responsibility in the hands of accredited professionals registered with the UK Cyber Security Council and properly define an independent, skilled person under clause 43. I also commend my noble friend Baroness Northover. Amendment 90 establishing a free digital safety net for SMEs, as well as her amendment 84, which requires the Secretary of State States review to assess duplication and divergence with EU NIS. Two requirements for UK businesses trading across borders on corporate governance. Amendment 69 from the noble Baroness, Lady Morgan of Coates, supported by my noble friend Baroness Ludford, is indispensable on future proofing and statutory review.

I welcome the Government's Amendment 82, which concedes the Committee. Our committee arguments by reducing the clause 40 review period from five years to three years. But in a threat landscape moving at machine speed three years, my Lords, is still a long time amendment 83 in my name and that of the noble Lord Holmes, tests whether the government will commit to a two year review cycle, while the noble Lord Lord Ravensdale rightly embeds post-quantum cryptography migration timelines under amendments 58 to 60. My Lords, this group gives the Bill both its proper boundaries and its operational teeth.

I beg to move. Amendment two.
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Lord Ravensdale Portrait Lord Ravensdale (Crossbench)
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Amendment proposed clause nine, page nine. Line 20 at end. Insert page nine. Line 20 at end. Insert the words as printed on the Marshalled List. >> As the chief.

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As the chief. Engineer working for Atkins Wireless. And start with my amendment three. My Lords, very amendment three. My Lords, very briefly on this amendment. The central problem here remains that if I'm a small or mid-sized firm and SMEs. I can't currently tell within with any confidence whether I'm in the scope of this bill as a critical supplier. And my Lords, that uncertainty does create a cost. Because firms delay investments. Firms can over prepare or or even walk away from public service contracts altogether because they don't want to fall within the scope of this legislation.

And I would go back to my Lords to the impact assessment, which could not say how many SMEs would be designated within the powers of this bill. So, my Lords, I would simply ask the Minister as to whether she can provide any further clarity on SMEs, on critical suppliers, and who exactly will be within the scope of this bill, because that would be tremendously helpful for all of those small and medium sized businesses out there who are concerned about whether they will fall within the scope of the bill. My Lords, I'll come on to my my other amendments 58, 59 and 60, which all relate to quantum computing, quantum cryptography.

 Now, my Lords, noble Lords are quite rightly focussed on AI within the scope of this Bill. That is the the zeitgeist, the issue of issue of the moment. But AI doesn't fundamentally change the rules of the game in terms of protection of our information. But quantum computing fundamentally does change the rules of the game. We're talking about a technology that can potentially break the public key crypto that we rely on across financial services, across energy, across telecommunications. And my Lords, this is a technology that really is advancing tremendously quickly. I, I brought up the case in the example in committee of the Willow chip that Google have produced.

Industry are now analysing or have come up with a fully compiled end to end resource estimate for a 20,000 cubit system. Now that's the that's the class of system that can that can really break that. The 256 bit encryption that we use across many of our. Many of our services. And my Lords, we look across this more broadly in that in terms of organisations, in terms of what governments are doing. So Google is is now saying that by 2029, they are they are going to complete transition to post-quantum crypto. And in fact, the USA earlier this year brought forward an executive order that brings forward their federal migration timeline by 4 to 5 years.

So that was from a previous 2035 targets to now a 2030 target. So my Lords, this really indicates from all of those organisations who are sighted on how fast this technology is advancing the case for action. Now, the Minister will point to the the NCSC and the timescales we have published within the UK, but there is a very good opportunity within this Bill, within the guidance to this Bill to ensure, firstly, that regulators are aligned, they're aligned in the approach they're taking on post-quantum crypto, but secondly, that the priority of post-quantum crypto migration is set out within this this bill.

So really, my Lords, I'm after some confidence from the Minister on how it will work towards those objectives within the within the framework of this bill. My Lords, quantum really is, I believe, the elephants in the room, when we're talking about specific technologies, when the conversations we've had with AI. So I would welcome some comments from the Minister on how the government and on how the supporting documents within this bill will work towards this objective of really protecting our most sensitive information against these threats.
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Lord Holmes of Richmond Portrait Lord Holmes of Richmond (Conservative)
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My Lords, a pleasure to take >> My Lords, a pleasure to take part in this Report stage. In doing so, I declare my technology interests as set out in the register, as advisor to the Crown register, as advisor to the Crown Estate and Simmons and Simmons LLP. My Lords, I support all of the measures in this group. They're practical, proportionate and as a package will make a real difference, not just to the bill but to all those working in cyber security and all of us who they seek to protect, to take quantum. First of all, does the Minister believe that the current NCSC timetable now still looks right in the face of the threats we are now up against?

And indeed, the speed of advancement of quantum compute to the workforce issues that my noble friend Lord Clement-Jones referred to. We know there is a significant, a chronic, a worrying shortage of cyber professionals. Is the government satisfied that the measures within the Bill will do everything required to address this? We'll come on to other ways to protect those who seek to keep us safe, who work inside. But on later amendments. But the workforce question is more than pressing. My Lords, my amendment five in this group goes to the heart of so-called data poisoning. The bill has much in it to commend it in terms of cyber events.

But what about where the data itself has been interfered with, has been poisoned, and there's no reporting requirements on the face of the bill. So if there's an interruption in service that is critical, and we've seen plenty of those, sadly, in recent history. But what about situations, circumstances where there's no interruption in service, but the data itself has been corrupted, manipulated, poisoned. So imagine those who seek to work or invest in financial markets, those who seek to work in education or health, or indeed any sector of our society or economy if they can't rely on the data which is being presented to them, because data poisoning is not set out on the face of the bill, then is that not as serious?

Perhaps in some ways more serious than the more obvious circumstances when there is a break, a breach or an interruption in the service itself? I look forward to the minister's response.
16:24
Baroness Morgan of Cotes Portrait Baroness Morgan of Cotes (Non-affiliated)
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Lords, I want to speak to amendment 62 and 69, which are tabled in this, this group, and tabled in this, this group, and also to amendment 78, which I've added my name. I think the noble Lord Lord Clement-Jones is quite right to say this is quite a disparate group, but I think that just shows how complicated the issues are in this bill and also how fast moving this area is, which the Minister will know extremely well. And I would like to thank the noble Lady Minister for her engagement on these amendments and the conversations that we have had.

If I start with amendment 62, which is about not just being guided by the size of a provider, but but really the risk that it prevents, I move this this reflects an amendment that was discussed at Committee stage, and I moved it to clause 29 at the suggestion really of the of the Minister, because she pointed me to that clause. And actually I hadn't really spotted. But the noble Lord Lord Ravensdale amendment three is perhaps another way of looking at this, which is actually. I totally understand the point that he's making, which is that SMEs need to know whether they are caught by this bill and similar provisions in the future.

But the issue has to be, and it may not be quite as easy as telling them, whether in or out, but the issue really has to be. Now, when we're talking about cyber security and resilience, about the risk that these services pose to our essential or national infrastructure, because the reality is, even as we've seen just last week, the PHP attack, it might be the smallest element of software that causes some of the greatest harm. And it's it I'm going to return to these these issues, amendment 62 and 69 capture, because I don't think any governments have yet actually worked out how to legislate on the basis of the risk posed by these services.

It's exactly the same as noble, Lord Clement-Jones said in the debate we had on the Online Safety Act about categorisation of platforms, which is an issue that is not going to go away. We'll return to later on this week because actually you can have the smallest platform or service that presents the greatest risk. And we have got to work out a way to legislate or pass regulations that reflect this. So the regulations under clauses 29 and 30 could bring in smaller providers, but the power is discretionary. There isn't a risk test and it comes with no commitment to use it.

So I'm interested to hear the minister's response to that. The government's revised part four does extend to national security directions to persons beyond regulated persons, regardless of size. So risk based reach does therefore exist in the bill, but only for national security and not for wider resilience risks. If I move then on to amendment 69, which is about corporate governance, which might not seem the most exciting of subjects, but this bill is about the regulation of essential activity. And in clause 24, essential activity is defined as activity essential to the economy of the United Kingdom or the day to day functioning of society.

I do not think we can get much more essential than that, and I think we'll know about it if those activities and services are somehow massively undermined because of a lack of cyber resilience. And therefore I think it's only right. And again, this is an issue that I will return to. I don't intend to necessarily to test the will of the House on this today, but I think it is now impossible for the culture of organisations to change or for senior level accountability to exist. And I've discussed this, both the noble Lady and also with the AI Minister, without there being board level accountability for the services being provided by the companies those boards are responsible for, and a clear understanding of the risks that those services might provide.

Now, I mean, the noble Lady suggested when we spoke that perhaps there could be governance addressed in codes of practice. I'm not sure that goes far enough, but it could be a start. Or is a general duty of board oversight sufficient? I'm very happy to discuss this further. Both the noble Lady and with ministerial colleagues. But the government has indicated that it thinks that clause 29 already allows regulators to address governance in codes of practice. It won't accept an individual fiduciary duty, but a general duty aboard oversight does say it may be acceptable. So I'm interested to hear what the government's position is, but this is going to be relevant for all related tech or cyber resilience legislation.

And very briefly, let me just talk to amendment 78, which I've added my name. I support the principle that large businesses should report on cyber security and resilience plans. I am not sure that it goes far enough, but I think it starts the point where actually boards and senior managers take responsibility for what their services are doing, and I think that it will be a welcome step forward. And that's why I've been pleased to add my name. But I will look forward to hearing the minister's response on these issues, and I would very much welcome further conversations with her on these, because these are issues that are not going to go away.

Speak to amendment 64, 81, 84.
16:29
Baroness Northover Portrait Baroness Northover (Liberal Democrat)
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90 and 107 in my name. And these >> 90 and 107 in my name. And these are all about the implementation of this legislation, including the standards that are now urgently required. As my noble friend Lord Clement-Jones laid out, all these amendments came out of the evidence given to us on the National Resilience Select Committee, and I thank the various expert organisations for their submissions and subsequent assistance. Given what has emerged in the last week or so, who can doubt the urgency of what they recommend? Amendment 64, 81 and 107 seek to drive up standards in terms of skills and companies being able to rely on skilled people in this complex field, a great deal of effort needs to be put into ensuring that we have an adequate number of people being suitably trained and registered.

Amendment 64 would ensure that the entities covered in this bill place primary responsibility for their systems in the hands of registered, ethically accountable professionals, amendment 107 would provide a definition of a skilled person in the context of clause 43, amendment 81 would require the Secretary of State within a year of this bill becoming an act to make regulations to establish an organisational cyber resilience framework and to recognise professional competence. Bench, the professional competence benchmark maintained by the UK Cyber Security Council. The noble Lady, the Minister placed great emphasis on the council, on the Council at Committee stage, and this seeks to ensure that it can drive and secure the necessary standards.

We need skilled professionals, we need them urgently and it's vital that they are properly accredited and regulated. Amendment 84 addresses another area we were told by experts in the field and businesses that it was important for the UK to align with the EU and the then relevant Minister, Minister Narayan, in the. In the other place pointed out that the EU was significantly ahead of us while we, as I quote him, lag behind. We need to assist businesses that operate across both the UK and the EU to reduce duplication and divergence. This amendment would require the Secretary of State to assess and report on any duplication with, or more particularly, divergence from the EU network and information security requirements for businesses which operate in both the UK and the EU.

Again, on another issue in relation to implementation, there has been considerable concern about the position of SMEs and this we raised last week in the light of the. The information that was emerging then. They are, of course, very important in the supply chain. But we also know that it isn't a matter of if an organisation will undergo a cyber attack. It's when. But that for SMEs suffering such attacks, over 60% can find that this is existential and they can go under. Therefore, amendment 90 would introduce a new clause which would require the Secretary of State to ensure that there is a free cyber security advice and incident response service for relevant small and medium sized enterprises, and the Secretary of State should report annually to Parliament on its use and effectiveness.

All of the provisions in these amendments are designed to strengthen our ability as a country to withstand cyber attacks, and I commend them to the House.
16:33
Baroness Ludford Portrait Baroness Ludford (Liberal Democrat)
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My Lords, I just wanted to back up the noble Lady Baroness Morgan up the noble Lady Baroness Morgan of Cotes in her amendment 69 on board oversight of security and Resilience of network and Resilience of network and information systems. There was a recent data breach at the retailer Asos. It reportedly began not with a sophisticated technical exploit, but with someone impersonating a trusted contact to obtain an employee's login credentials from reporting last year. Although there's always coyness about exactly what has happened in these scenarios, I believe that the breach of Data Act Marks and Spencer happened in a similar way, and this does seem sort of bit elementary, my dear Watson, that that employees have not been sufficiently trained and and made aware of the absolute necessity not to fall for scams, especially as, you know, as consumers, we get these warnings all the time.

I noticed that. That just last week, the top regulator in the City of London, the Prudential Regulation Authority, the CEO there, Catherine Braddock, said that the PRA would significantly increase its focus on firms operational and cyber resilience. And she she said that the PRA and the Financial Conduct Authority would consult to clarify our expectations of firms. As we develop our experience and understanding. And that, of course,

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comes in the wake of. Disruptions and Breaches in websites and apps of businesses. Businesses including Lloyds, HSBC and Revolute on card Lloyds, HSBC and Revolute on card payments and cash transfers and and payments and cash transfers and and so on. So I think the what what I would be looking for, and I think Baroness Falkner is looking for Baroness Falkner is looking for from the government is a bit more of a, of a, of a specific focus on the responsibility of boards. After all, all the various duties they have under the under the companies acts of promoting the success of the company as a whole, exercising reasonable care, skill and diligence.

And, and so on. Stress, the need to maintain a reputation for high standard business contact. Think of the company's operations on the community, fostering the company's business relationships with suppliers, customers, and and others. So of course, a good board should be doing that anyway. But a statistic that I quoted at at committee was how the government's own Cyber Security Breaches survey had revealed that board level ownership of cyber risk in the UK had actually declined from 38% to just 27% over the last three years. So this this issue needs to zoom up the attention. That's not an awful pun.

The attention of of of of companies and inevitably of course, the board. So I think we're looking for a little bit more than a rather generalised response from the government which, which which claims that all this will be dealt with under the security and resilience requirement regulations. It does. It does need to be a lot more targeted on the board as as cyber health is such an important factor in the success of a company these days. I mean, eventually customers might well pass their verdict on a company which has poor cyber health, but perhaps the government should should help avoid solution.
16:37
Lord Markham Portrait Lord Markham (Conservative)
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Yeah, yeah. Lords for their contribution. And every time it reminds me how fortunate we are in, in the Lords to have experts such as Lord Ravensdale and Lord Holmes, who can talk to us as well about the. Note the next level of threats around the corner and made the points very strongly around quantum. And of course that we have Lord Clement-Jones here today on his, I think, his 49th birthday. Is it? And he's here to to join. But I, I would like to actually start by also thanking, adding my thanks to the constructive approach that the noble Lady the Minister has has brought to the whole the whole process and the way that she really has listened and engaged and and looked to make changes, and that is much appreciated.

I know from from myself and all my colleagues as well, and thank her for meeting us at least partway on clause 36 and 40 in terms of the the timings of the intervals and the NIS regulations, although I still, you know, this is such a fast moving environment, I do have some sympathy for Lord Clement-Jones suggestion that maybe rather than three years, it should be. It should be two. I'd. I'd like to move mainly to my amendment. Amendment 78, supported by. Also in the names of my noble friends Viscount Camrose and Baroness Morgan of Ely, and very much similar in.

In intent to Baroness Morgan's amendments and. And her speech, which is very much looking at companies to encourage accountability on their side and really using the the kind of board reporting and annual reporting mechanisms to allow both the board and the shareholders to hold them to account. Because whilst a lot of what we've been talking about today is obviously government moves, actually, we all have seen the, the, the cyber security disruption in the private sector and actually making sure that any CEO is frankly, you know, embarrassed if they haven't, you know, they can't report in their annual report that they have got good plans in place so their own shareholders and board can hold them to account, I think has got to be a sensible way ahead.

 I think also, if I move to amendment 160 in my name and Viscount, my noble friend Viscount Camrose really looking to again see how we can use the information sharing and analysis centres to play their part in it. These again voluntary bodies and really trying to build you know, cyber security is everyone's job really. And it's really trying to use not just the government institutions but the wider institutions as well to play their role in cyber security. I'd also like to sort of finish up on my amendments of 162. Also in the name of my noble friend Viscount Camrose.

And whilst I, as I said earlier, I. I appreciate the constructive approach taken by the noble Baroness, the Minister. I must admit I am slightly disappointed that we haven't heard anything on my amendments on data minimisation and anonymization. I spoke about it in committee, so I'll be brief. But again, as the Health Minister at the time, many Lords will remember the massive disruption in the summer of 24 to our London hospitals in terms of, you know, the operations and, you know, critical operations being cancelled and the impact that had on the health of the capital.

And when I dug into it, I found that actually it was all due to an attack on one of one of the suppliers of diagnostic tests who had loads of patient data that they never needed to hold in the first place. All that data could have been anonymized, and so they would never have been a target for that, for the the company to be attacked in the first place. So of course, always in these things, if you don't create a juicy target for people to attack, then there's nothing. And that's got to be the first rule of cyber security.

But I mention it then I've mentioned it all the way through. Now I really cannot find anyone in the NHS to really take this issue seriously. It's something that we will return to again in the in the health bill, because of course, the single patient record proposals, whilst again, I think are very, very good proposals and I completely support them in terms of patient benefits and patient health. They potentially create an even juicier target for hackers. And so I think we really need to look at what data are held by the different public and private sector bodies involved in the health service and government institutions, and really make sure that they are doing an audit to minimise all the data that they hold so they don't create a target for hackers in the first place.

At that, I look forward to hearing from the noble Baroness, the Minister.
16:43
Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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I thank noble Lords for the constructive debate we've had just constructive debate we've had just now, and I heartily concur with Lord Markham, not only on his happy returns to the noble Lord Lord Clement-Jones, but to the valuable contributions made by noble Lords who brought their expertise, their experience to this wide variety of points. Today these amendments all touch on a key point. The bill's potential will not be realised at Royal Assent, but through effective implementation and clear measures of success. Let me begin with the key principle. The regulations must be durable and equipped, regulated entities to respond to any threat or hazard now and in the future.

Neither the bill nor its implementation should narrowly focus on specific technologies or risks. These will soon become outdated and would undercut a holistic approach to risk through the security and resilience requirements, or SIS. We will take this purposeful all technologies, all threats, all hazards approach to protecting regulated services. And, as I've set out, these requirements will be introduced in secondary legislation and will be mandatory. We propose they will cover, amongst other topics, data security, risk management, board governance and incident response and recovery. We will be consulting on proposals in the coming months, and I thank the noble Lords who attended the Round table I hosted on the Grand Committee.

As such, I caution against singling out specific risks like data poisoning, as highlighted by the noble Lord, Lord Holmes, as it does not reflect the full risk range of risks that that each entity manages in respect of incident reporting that the noble Lord raised, that is already designed to capture incidents that have a significant impact on the authenticity and integrity of data. So that is already within the scope of the reporting framework. So the SR s will further touch upon a number of topics raised by noble Lords, which I will address in turn on data retention.

UK GDPR requires public organisations to implement appropriate measures to ensure the security of personal data. The Information Commission regulates the data protection legislation independently of government and under the existing NIS framework. Service operators can and do assess their data retention. For example, the health sector assesses compliance against a tailored cyber assessment framework objective on using and sharing information appropriately. This includes principles on transparency, using and sharing information and records management. But as a result of the focus on this that noble Lords, in particular the noble Lord Lord Markham, has brought. I will ensure the s s s proposals in the upcoming consultation cover data underpinning the provision of regulated services and include minimising unnecessary data collection and retention.

Turning to the points on governance raised by the noble Baroness, Lady Morgan of Cotes and Lady Ludford, I agree that boards and senior leaders should have clear sight of the cybersecurity and resilience risks that organisations face and be able to hold people responsible. The Government Cyber Code, Cyber Governance Code of Practice sets expectations for formal reporting on a quarterly basis at a minimum, setting suitable metrics to track cyber strategy and agreeing tolerances for risk appetite. Additionally, the UK's corporate reporting framework is undergoing wider modernisation efforts. We are seeking views as part of the current consultation on whether the existing risk reporting framework produces sufficient reporting on cyber risk management.

If introduced, this would also cover some businesses not in scope of this bill. But we are going further and proposed to introduce mandatory s s on governance and risk management to the point made by the noble Baroness, Lady Morgan of Coates. These will ensure clear board level accountability for risk management arrangements. This includes proposals for boards to establish and oversee their organisation, security and resilience framework, alongside requiring skilled and accredited individuals with senior accountability. So whilst I agree with the amendments objective of strengthening accountability and transparency, I believe the approaches we are developing by this bill and in the modern corporate reporting consultation, provide a more continuous means of achieving this.

Noble Lords, turning to the question of skills, I agree that effective governance must be underpinned by the right skills, both at the board level and at management level. We have committed to funding the UK Cyber Security Council over this spending period as it becomes self-sustainable. Working closely with stakeholders across both the profession and our wider workforce in the will take this even further. We propose they require skilled and accredited individuals with senior accountability for security and resilience, alongside role appropriate staff training and relevant up to date accreditation. Again, the requirements will be mandatory and regulated entities will be required to maintain evidence demonstrating compliance with these requirements.

With the Cyber Assessment Framework, as the government recommended method for assessing cyber security and resilience on amendments 105 and 107. Let me emphasise that a skilled person appointed under part four of the bill is defined, but with intentional flexibility. A skilled person will be appointed to assist with actions that are necessary to protect the protect the UK's national security. There is no limit to what threats could emerge to threaten our national security. It's therefore right that we do not restrict our options to mitigate these threats, and that the Secretary of State instead instead should appoint skilled persons on a case by case basis on the expert advice of of officials and our intelligence community on the statement of strategic priorities.

Let me reassure the noble Lord Lord Ravensdale that our intention is to designate the statement as soon as possible, following consultation with regulators and due consideration of Parliament. I expect this to be within a year of commencement. The noble Lord makes valuable points around post-quantum cryptography. The government will shortly publish guidance to support organisations to manage migration to post-quantum cryptography. This reflects the NCSC guidance on quantum and deadlines for migration. Later this year. We will test this guidance with organisations across the CNI sector. We also have worked with international partners in the G7 to produce a joint call to action statement.

I intend for the Statement of Strategic Priorities to address risks posed by emerging technologies. This could include quantum to drive consistency between regulators. We will consult the regulators to identify risks from emerging technology in their sectors. Additionally, the Srss will support regulated entities to manage the risks posed to their systems by new technological developments. Turning now to points raised about business support by the noble Baroness Northover. There are a wide range of free tools available to SMEs, including the Cyber Action Toolkit, providing tailored cybersecurity advice with NCSC Certified Cyber advisors. The report Fraud Service, which offers free business incident reporting and regional Cyber Resilience Centres which offer SMEs guidance on incident response and business continuity.

These resources are available to all businesses, whether they are regulated under under this regime or not. It's worth noting, though, that very few small and micro organisations will be regulated under this bill and benefit from the support service proposed under amendment 90. But this question of of coverage is a key point raised by the noble Baroness, Lady Morgan. While we must be mindful of undue burdens on small businesses, I do recognise there is a potential gap where small and micro DSPs and MSPs do not directly provide services, other regulated entities under this regime, but nonetheless may be critical or risky.

That is why I propose to introduce a mechanism to enable the Information Commission to bring individual, small and micro DSPs and MSPs into scope where they are high risk. This would be. This would be made using the bill's delegated power under clause 29, subject to consultation, and may be similar to the mechanism already in place for OESs. This approach complements the critical supplier measure, which already enables small and micro DSPs and MSPs to be brought into scope. Any such mechanism would be risk based, targeted and developed in consultation with industry and relevant stakeholders. I thank the noble Baroness, Lady Morgan, for her engagement on this matter, as well as the topic of board oversight, and as these areas are taken forward, I will be more than happy to meet with her to discuss them in more detail.

Turning to the amendments from the noble Lord Lord Clement-Jones, I can offer reassurance that my officials have engaged with the Information Commission on the definition of an MSP. There are two limiting criteria which must be met for an MSP to be in scope that are particularly relevant in these cases. First, the provider must have access to the network and information systems relied upon by the customer. Secondly, the service must be provided under a contract for ongoing management for IT systems for that customer. As a result, the types of services the noble Lord raises a concern IT consultancies, training providers, software licensing agents and basic help desks are not expected to meet both of these characteristics.

Turning to amendment three, let me emphasise that there is a high bar clearly set out in the bill. Only suppliers whose disruption could have a significant impact on the economy or society can be designated. The noble Lords amendment would limit designation to suppliers posing a systemic risk and prevent designation. If a supplier serves only a single regulated entity. I do not agree with this point. The key consideration should be the impact of disruption rather than the number of regulated entities served. We will consult to the question the noble Lord asked on critical suppliers in 2027.

Regulators have already started the necessary analysis and will begin working with the sector next year. Turning to amendment 160 on Isaacs that spoken to by the noble Lord Lord Markham. I caution noble Lords against the risk of government intervention in what has usually been a voluntary scheme. This could undermine trust and their wider benefits. I take initiatives already exist and many are supported by public authorities such as the NCSC. A statutory approach would undermine the success of the existing voluntary scheme, and we must be careful not to complicate the regulatory landscape by conferring powers on organisations that are not regulators.

Noble Lords I agree the success of this regime must be closely measured, and I heard noble Lords concerns that the five year reporting cycle was too long, and I have tabled an amendment shortening this to three years. I believe this now strikes an appropriate balance between ensuring the report is both meaningful and timely. On amendment 84, tabled by the noble Baroness, Lady Northover. I disagree that placing this stringent requirement on the report in the Bill will help us assess the effectiveness of this regime, largely because each EU member state has implemented the NIS two directive in a different way, and a report would not only have to identify and assess the divergence between the UK and the EU, but the divergence within the EU itself.

And finally, let me turn to the three final amendments in this group tabled in my name. The First Amendment will remove the ability to change the procedure for issuing a code of practice via regulations, should further changes be required, these would need to be made through primary legislation. The Second Amendment will limit the Secretary of State's power to change the matters to be covered in a report required under clause 40. In short, matters can only be added to not removed. This will strike the right balance between preserving transparency and accountability while ensuring the report remains comprehensive.

As both the regime and cybersecurity practices develop. With these assurances, I hope noble Lords will not press their amendments and support the government amendments in this group.

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The noble Baroness, the Minister sits down and I have to stand up. I wonder if she could just confirm. She's mentioned, I think, on two occasions in her speech occasions in her speech consultation, is that essentially consultation on the SRS or is there consultation on the SRS or is there another form of consultation taking place? As well as that consultation,

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my Lords? The consultation I was principally referring to was the consultation on the SRS. There is separate mechanism for consultation on this statement of strategic priorities.
16:56
Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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My Lords, can I thank the >> My Lords, can I thank the Minister for her response? Having listened to the debate, I was more convinced than ever by the amendments from around the House, my Lords, which are all about the implementation of the new regime, my Lords. But I also thank the Minister for her very careful and detailed response to the points that have been made. Can I thank her also and the noble Lord Markham for their birthday greetings? Not the ideal place to be celebrating, my Lords, but nevertheless needs. Needs must, my Lords, in the ideal world, we would be pressing some of these amendments, my Lords, because it is all about the s s.

It'll all be alright on the night. Don't worry your heads about this. It'll all be contained in the s, r s or in secondary legislation. My Lords, always a rather unsatisfactory position to be in. But the Minister has given quite a lot of assurance today, and we've got in the habit of looking at the implementation of bills, particularly digital bills of late, my Lords. So we will be on the case and we will be taking part in the consultations, I've no doubt. So, my Lords, for the moment, I beg

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leave to withdraw my amendment to. Lordships pleasure. That the.

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That the. Amendment be withdrawn. Amendment is by leave withdrawn.

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Amendment is by leave withdrawn. Amendment three Lord Ravensdale not moved. We come now to the group, beginning with amendment four.

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Baroness Lloyd of EFRA. I beg to move amendment four, after which I will speak to the
16:58
None Portrait Amendment:4 Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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after which I will speak to the other amendments in my name. These amendments all concern small technical changes and corrections in the Bill's text, which I hope noble Lords will be content to accept. Turning to amendments 45, 46, 47 and 48, which amend the international sharing of information by NIS regulators. I want to thank. I want to begin by thanking noble Lords, particularly the noble Lord Lord Alton of Liverpool, for their time and constructive engagement. On the issue of overseas information sharing. I have heard the concerns which noble Lords have expressed about regulators sharing information with overseas authorities, where the right to fair trial is not guaranteed.

While I am reassured that such risks are unlikely to materialise in practice under the bill's information sharing provisions, I want to put that issue beyond any doubt as part of the government's commitment to safeguarding the rule of law and fundamental liberties. That is why these amendments will restrict the overseas sharing of information by regulators to Switzerland. Our Five Eyes partners of the United States, Canada, Australia and New Zealand, and countries within the European Economic Area, which consists of EU member states, Iceland, Liechtenstein and Norway. Maintaining these gateways is essential for preserving overseas cooperation against cyber threats.

 The bill's delegated powers will enable the government to add to or amend the list of permitted countries. If this is considered necessary, I can assure noble Lords that changes to this list will be subject to existing safeguards, such as parliamentary approval under the affirmative procedure and consultation requirements. I remind noble Lords that regulators are under no obligation to share information overseas under this bill, and the Bill adds explicit safeguards. That information must only be disclosed if it is relevant and proportionate. Nevertheless, information sharing remains an essential part of both the NIS framework and our international cooperation.

It is important that we and our regulators can share best practice and information needed to defeat cyber threats, which have no respect for national borders. I beg to move.
17:00
Lord Alton of Liverpool Portrait Lord Alton of Liverpool (Crossbench)
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Proposed clause 12, page 13. >> Line 19. Leave out paragraph and

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two B and insert paragraph two. Earlier in our proceedings. I want to speak, if I may, to Government Amendment 45, and in doing so, I reiterate my thanks to the noble Baroness Baroness Lloyd of Effra for the diligent way in which she has engaged with those who were concerned about data sharing with hostile states. My Lords, this amendment had its origins in another place where Sir Ian Duncan Smith moved an amendment concerned that data might be shared with countries that don't have a system, a judicial system which would ensure that, for instance, extradition requests would stand up to scrutiny and particular examples were given of things like the national security law in Hong Kong and how data might be shared that would allow young people who have been involved in pro-democracy protests in Hong Kong to then be removed from the United Kingdom and have to stand trial in a place like Hong Kong.

During our proceedings, which I referred to earlier on on the Joint Committee on Human Rights, we had a remarkable young woman who waived her anonymity to come and give evidence to her. To us, Chloe Cheung was just a young teenager when she took part in pro-democracy demonstrations in Hong Kong and she, like many others under our BNO scheme, came to live and to claim sanctuary in the United Kingdom at the age of 19, she was told that a 1 million Hong Kong dollar bounty would be placed on her head. She wasn't alone. There were several others, including Carmen Lao, who was a legislator in the Hong Kong legislature, and one of the great fears in giving evidence to our committee was that they would be subjected to all sorts of intimidation in the UK, including potential removal in due course.

They'd seen the incident that had occurred outside the PRC consulate in Manchester. They were fearful about the new embassy super embassy being created in London, and all of us who were on that committee were unanimously signed a report saying that we felt we had to go a lot further in dealing with transnational repression. So having had its origins in the House of Commons, the amendment was supported by a number of organisations across the non-governmental organisation sector, and in particular, I pay tribute to the work of the Inter-Parliamentary Alliance on China and notably Luke de Pulford Angiopathic, who participated in the very constructive and helpful meetings which we held with the noble Baroness, the Minister here in the House of Lords.

The amendment was recast and it was retabled by myself with the noble Lord, Lord Hunt of Kings Heath, with the noble Lord Lord Markham, and the noble Baroness Lady Ludford. And in my unavoidable absence at that moment in the Committee, I was extremely grateful to each of them for their important remarks and support. Now that unity of purpose has resulted in a shared, unyielding conviction that in an era of unprecedented systematic competition, our sensitive regulatory and enforcement data must never, under any circumstances, be exposed or gifted to hostile authoritarian regimes. So, in the best traditions of your Lordships' House, the noble Baroness carefully listened to the grave concerns which were raised and recognised the fatal vulnerability in the Bill as originally drafted, and she has acted decisively by closing the loophole that would have permitted disclosure to authorities in any foreign country with a strict closed list.

A list of trusted democratic partners. So our Five Eyes allies, our friends across the EEA, as the noble Baroness has told us in Switzerland, the government has closed a dangerous statutory void. And for that constructive engagement and for bringing forward these amendments today, I am profoundly grateful. Let me refer again to the brave dissidents and diaspora striving to live in peace on these shores of ours, despite intimidation from regimes like the CCP. What Lord Robertson has memorably described as the deadly quartette of China, Russia, North Korea and Iran. It's outrageous, my Lords, that people resident in the UK have been subjected to intimidation, harassment and coercion of as political targets, some of it utilising data and cyber cyber availability in CCP orchestrated extensive and sophisticated campaigns of transnational repression.

Hostile states routinely camouflage political persecution as legitimate. They behave exactly as we heard in the Joint Committee on Human Rights. With the systematic abuse of Interpol red notices, for instance, network and information systems data such as IP addresses, server logs and digital fingerprints is not neutral. Administrative information in the hands of hostile states and their security services. It can become actionable intelligence used to unmask, to geolocate, and to surveil individuals on British soil. What we desperately need, my Lords, is a comprehensive, cross-departmental strategy to prohibit such actions, and I think that Government Amendment 45 is a step in that direction.

And for that I am extremely grateful to the noble Baroness, and felt no need, therefore, to bring back an amendment in any kind of hostile way today.
17:07
Baroness Ludford Portrait Baroness Ludford (Liberal Democrat)
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Gracious my Lords. I congratulate the the Minister on on congratulate the the Minister on on having listened with the result that we have. Amendment 45 to limit disclosure of information to. To our Allied countries, which are liberal democracies. But most of all, I would like to congratulate the noble Lord Lord Alton and indeed, Sir Iain Duncan Smith in the other place, and other parliamentarians who've taken this up, and NGOs, one that I have worked with is the Committee for Freedom in Hong Kong, which I know the noble Lord Lord Alton is closely, closely worked, works with.

But my, my my thanks and congratulations are accompanied by a certain surprise that the government did not originally limit information sharing. In this way, the noble Lord Lord Alton ended with a plea for cross-departmental working. And I think one of our concerns is the Home Office, which is refusing visas to Hong Kongers who have been convicted in Hong Kong of offences such as rioting as classified under the Chinese Communist Party sort of criminal code, which you and I would call legitimate protest. And some of us find it absolutely extraordinary that brave Hong Kongers are being denied refuge in this country for what is obviously something which should not be a crime in this country.

I only mention that because there, there, there, you know, there is a worry that the government as a whole does not seem to be sufficiently sensitised to the dangers of the transnational, the national in Hong Kong and the transnational repression which is emanating from China. And and to a large extent via Hong Kong. I mean, the noble Lord Lord Alton, on an earlier point, mentioned that China was not designated in the highest tier of the foreign registration scheme. And it all adds up to a rather puzzling picture from the government. Now, I hope that this particular episode about information sharing under the NIS Regulations was a an oversight of some kind, although a worrying one.

 If it didn't occur to anyone drafting this bill that actually they should could be some rather undesirable regimes out there, which we would not want to share information with. But anyway, it's been hauled back. It's been pulled back. So I hope that that will result in a somewhat better alert system within government about the dangers of information sharing with dodgy regimes, but also hopefully the start of a cross-departmental cross-government assessment of what exactly the needs are of our relationship with China and and its tentacles, both in Hong Kong and indeed in this country. Now, I think I saw that the noble Lady Baroness Winterton was on a on a trip to Hong Kong.

I'm afraid I can't remember the the details, but I hope that she is able to take up with the authorities in Hong Kong, which means China. The. The the needs, the the guarantees, and indeed that China has has given in in the past, which of course are not being complied with, but that she will. Be a very strong British flag for freedom and democracy and, and against the kind of repression that unfortunately is being is is being targeted, including at British citizens in Hong Kong. But in. That was a bit longer than I meant. But welcoming amendment 45 but wish it hadn't had to be an operation mounted to to to pull the government back.
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None Portrait Amendment: 6 Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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Baroness Lloyd. >> I beg to move amendment six in my name, after which I will also speak to the other amendments in my name. I thank noble Lords for the constructive engagement I have had since. Committee stage, in particular with the noble Baroness, Lady Harding and Lady Neville-jones. Incident reporting is a critical pillar of the NIS regime, and it's essential we get it right so that the regulators and NCSC receive early information so they can step in to help. So government builds a comprehensive picture of the threats we are facing, and businesses are not overburdened by too many requirements.

Noble Lords, I have listened carefully to the views from across this House, as well as from industry and regulators on the incident reporting regime. In response to feedback, I've tabled a number of amendments. Let me start by addressing concerns about the need for consistency in the incident reporting regime. I agree that as far as sectoral differences permit, we should be asking regulated entities to take a similar approach to how they assess whether an incident is significant enough to be reported. That is why I have tabled an amendment to bring parity between factors. Operators of essential services must consider and those of relevant managed and digital service providers.

Under this amendment, operators of essential services must continue must consider the impact of an incident on users, network and information systems, and on the economy and society more broadly. In addition to the existing factors specified in the Bill. This creates greater consistency across the regime and ensures regulators receive visibility of the full range of significant incidents. I've also heard the challenges around data centre operators having broader reporting duties. This approach was taken to reflect the unique and systemic nature of a data centre and the services they provide downstream. The key difference was that the requirement to report certain near-miss incidents to their regulator, Ofcom.

 I have now tabled an amendment to remove mandatory reporting by data centre operators. I have also tabled an amendment to bring the overarching definition of an incident in regulation one brackets two. In line with these changes, the bill now makes clear that an incident is an event which has had an adverse impact on the security and operations of an entity system. The revised definition still covers the key types of incidents we want reported under the bill, including ransomware and pre-positioning attacks that have successfully compromised the security system. Instead of mandating near-miss reporting, I am committing to establish a voluntary near-miss reporting mechanism for all regulated entities under this framework.

This is in line with the amendment tabled by the noble Baroness, Lady Harding. However, we can establish the voluntary framework without primary legislation. As we designed the voluntary regime, we will engage and consult with industry regulators and others on the full spectrum of measures that could encourage meaningful disclosure, including the role that legal or regulatory protections, trusted reporting arrangements and information sharing mechanisms may play. I am confident this approach strikes the right balance between minimising burdens and ensuring the regime delivers meaningful improvements to our cyber resilience. I am also strengthening the regime with regard to consumer information, and I thank the noble Baroness Harding for her amendments in this area.

I agree that customers should receive timely and useful information regarding incidents that affect them for however long those incidents remain ongoing. That is why I have tabled amendments to strengthen the duty on data centres, relevant digital and managed service providers to ensure they keep any affected customers updated with timely and appropriate information on an incident is ongoing. This obligation is subject to the same enforcement and compliance rules as the current notification regime, with regulators able to issue penalties for failure to comply. However, amendments 29, 32, 3439 also tabled by the noble Baroness, Lady Hiding place a prescriptive requirement on entities to advise customers on specific mitigation measures within these updates.

We do not agree with this approach. The nature of incidents affecting customers and relevant mitigations can vary considerably, and regulated entities may not be best placed to provide tailored cybersecurity advice to each affected customer. Instead, providing timely and relevant information to customers will enable affected organisations to determine their own mitigation options based on their respective cyber security controls and protocols. I am confident the amendments I have tabled deliver a more coherent, proportionate and resilient incident reporting regime. They ensure regulators, the NCSC and affected customers receive the information they need to understand and respond to significant cyber incidents, while avoiding unnecessary burdens on business businesses and ultimately working to deliver on our shared objective of strengthening the UK's cyber resilience.

I look forward to the contributions from noble Lords, and I beg to move.
17:18
Baroness Harding of Winscombe Portrait Baroness Harding of Winscombe (Conservative)
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Clause 15, page 21. Line 25. Leave out paragraph A. Leave out paragraph A. >> My Lords, I'd like to thank the noble Lady, the Minister and her officials for their detailed and extremely helpful engagement between Committee and its Report stage and apologise to the House as I have been rather greedy in having 25 amendments in this group, but I promise I will try and be as brief as I possibly can to explain them. The amendments that are in my name, and the names of my noble friend Lord Holmes and the noble Lady Baroness Kidron are in three subgroups, which I will just briefly go through as the noble Lady the Minister has alluded to.

 The first group is begins with amendments seven through nine, ten, 11, 18, 19, 21 to 25. Strengthen the staged reporting requirements on the three different groups of regulated entities set out in the Bill. These amendments would require regulated entities to produce a final report 28 days after they first reported an incident to their regulated their relevant regulator. My experience, my Lords, and sadly, it is very real lived experience of going through a cyber attack is that in the first 72 hours you don't know what's happened. And if we really want to learn from what's happened in cyber cyber attacks, you have to let the dust settle just a little bit to know who attacked you, what data was actually accessed, what was really going on with the systems.

And so I think it will be much more sensible. In addition to the 24 and 72 hour reporting requirements to have a 28 day final report that's completely consistent with the NIS two directive as well. And I do think it is just common sense at the Committee stage, the noble Lady, the Minister, said that she didn't think it was necessary to put this on the face of the bill, because regulators could choose to request a report from a regulated entity. Again, in my experience, my Lords, that actually this is the worst of all possible worlds.

When you are in the midst of one of these cyber attacks, the last thing you need is people making up the rules as you go along. The more that you can have certainty on what the reporting requirements are from each of the different regulators, that undoubtedly. And it will be more than one. Undoubtedly, you're having to report to the more the limited cognitive capacity that everybody has in a cyber attack can be focussed on actually fixing the problem. So while of course you want to retain the ability for regulators to intervene in the midst of this 28 day period, I think having a very firm final Report stage will give real certainty to the regulated entities and the regulators themselves that this is a regime that will actually aim to learn and share that learning, as I'm afraid we have more and more of these incidents.

 So I really ask the noble Lady, the Minister, to reconsider the view that she set out in Committee stage, because I do think my amendments in this subgroup would both help victims of cyber attacks, those regulated entities trying to grapple with the the fog of these attacks, but also ensure genuine, proper learning from the incidents. The second group of 12 amendments I have in this group, my Lords, concern the reporting to customers as the noble Lady. The Minister has just addressed amendments 26 to 29, 31 to 34, 36 to 39 require regular reporting to customers.

The noble Lady. The Minister has tabled similar amendments 30, 35 and 40. The only difference, as she has just alluded, is that in my amendments, the regulated organisations would be required to advise on any measures or remedies that customers are able to take. I would hope, my Lords, that good service providers should be trying to help their customers when their customers have been caught up in a cyber attack. But I do accept the noble Lady the Minister's argument that they might not always have the appropriate skills to give good advice. And as such, I would like to thank her very much for her constructive engagement and will, when I get the moment to, in the process, withdraw my amendments in favour of the government's in this group.

And then finally my Third Amendment, third group or single amendment in this group, amendment 42, which the noble Lords Clement-Jones and Baroness Kidron, and the noble, my noble friend Lord Holmes, have also added their names. This amendment would allow regulated persons to report incidents, cyber threats and near misses voluntarily, either to the NCSC or their regulators. Again in line with article 30 of the NIS two directive, this reporting would not increase their liability or impose any new obligations on them. Again, I really welcome the constructive discussions that I've had with the noble Lady, the Minister and her officials on this, and welcome her statement at the despatch box as she introduced this group.

I would just ask her if she could. When she sums up confirm why it is that the government doesn't need to put this on the face of the Bill when a voluntary scheme will be developed and how she intends to consult on it, but I'm sure that she will have good answers to those questions. And again, I repeat my grateful thanks for the positive collaboration in this group.
17:23
Baroness Neville-Jones Portrait Baroness Neville-Jones (Conservative)
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My Lord John rise to talk about the amendment in my name 16, which is also concerned with reporting and reporting. I think government agrees. It's a general proposition that this lies at the absolute core of and a successful cyber security and resilience regime getting that getting that right in the course of the work on the bill, we have been able to agree on what constitutes the trigger for reporting. And I'd like, like many other colleagues, to thank the Minister for the way in which she reacted to the comments made by colleagues and the amendments that she has made to make the system.

I think actually more, more operational and reduce reducing the liability to have unnecessary reporting of a kind which overloads the system without actually increasing the level of security that it brings. Where we have not yet, I think, succeeded in entirely agreeing is on the question of the factors which operators should take into account when they actually are making their report. Operators not located in data centres have in fact been given guidance. They know what they need to put in their reports and what they need to cover. But for data centres, the Bill contains no guidance at all on the relevant factors.

And I think while the government has said, and I believe it, that it wishes to increase the consistency of treatment between operators, as I say, in different locations, it is odd, I think, that they those in data centres where we hope people are going to be willing to and indeed want to occupy data centres. It's hard to see why they are the people who are left in the dark about their duties. The. If you look at the. You look at the numbers. Operators of essential services in other. Other locations other than data centres have facts.

Five. Seven factors that have been located have been identified as necessary for reporting and the government has recently added a further two. Without actually feeling the need for consultation, the relevant digital service providers have seven factors and managed service providers who hitherto have not been regulated now have seven factors to take into account. So you can see, I think it's perfectly sensible that a list of topics and aspects that must be reported on is very clearly set out, except except for those who work in, those who operate in data centres, who are left in the dark and left in the dark as to what in the trigger significant impact is meant to mean, because that's what they have to focus on.

So one doesn't they don't know know what, what the regulators would identify as constituting significant impact. Now the great advantage obviously, of factor list being on the face of the bill is it gives operators time to prepare for the regulatory regime before it comes into effect. And knowing, as I say, what the definition of what significant is, is absolutely key to being able to make proper a proper report. And so my amendment inserts into the bill ten factors, ten factors that data centres operators. Should, should have regard to. And they're drawn from the bill's own definition of the functions of a data centre.

And they've been developed with TechUK, which represents over 90% of data centre operators in, in in the United Kingdom. These thresholds and thresholds will still be set up, and they will still be done through secondary legislation along with other and for data centres on the same basis, other categories, but without the factor list, the data centres will be the last to get going with preparations and the security of the bill is designed to deliver in which we all want. Will arrive later to. I think given the high penalties involved in failure to report properly from £17 billion or 4% of turnover, the legislative differentiation between data centre operators and the rest could have unintended.

And I hope and I would, concerned that it would be an unwanted, unwanted, discriminatory element. So I do hope that the Minister can look forward, can accommodate the notion of bringing the date. The. Bringing the factors into the the bill and I look forward to the Minister's reply.
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Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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Sir, this group goes to the operational heart of the Bill, operational heart of the Bill, namely incident reporting. Can I to welcome the Government's Amendment six and amendment 12 in Grand Committee and across the industry, there was strong backing for the noble Baroness Neville-Jones when she raised serious alarms that drafting clause 15 to catch anything capable of having or could have a significant impact would drown the NCSC in thousands of false positives and routine phishing attempts. Reporting is not resilience. By removing could have have had a narrowing the definition of an incident to events having an actual adverse effect.

My Lords, the government has conceded the Baroness, the noble Baroness core argument and I welcome that. However, we must ensure that operators have objective clarity and I pay tribute to the noble Baroness Neville-Jones, whose amendment 16 sets out the clear physical criteria power loss that data compromise and duration for

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Assessing data centre impacts, and I also pay tribute to the work of the noble Baroness, Lady Harding of the noble Baroness, Lady Harding of Winscombe, whose amendments seven, nine, ten, 11 and 42 I have signed in. In part. Amendment 42 is signed in. In part. Amendment 42 is important. It establishes a regime for the voluntary notification of incidents, cyber threats and near-misses modelled directly on article 30 of the EU NIS two directive. Threat intelligence thrives on early detection, but operators will only report near misses if they are protected by an iron clad statutory safe harbour, ensuring that voluntary reports cannot be weaponized against them in regulatory penalties or civil litigation.

Furthermore, noble Baroness Sugg Customer notification amendments 26 to 39 introduce a duty of customer care when an OES cloud provider or managed service provider suffers an incident notifying the regulator within 24 hours is only half the battle. They must keep their customers informed without undue delay. Provide continuous updates as circumstances change, and advise on actionable mitigation measures. Finally, my Lords, Amendment 159 standing in my name requires an annual report on incident volumes to be laid before Parliament. We need transparent aggregated data on the sectors attacked, the frequency of significant incidents and the principle root causes so that Parliament and Industry contract systemic vulnerabilities.

My Lords, the noble Baroness Harding has given us, I think, advance notice of her intentions to accept the voluntary scheme. But we do believe that in the best of all worlds, with these amendments, we could ensure that incident reporting is proportionate, actionable and focussed on collective defence.
17:33
Viscount Camrose Portrait Viscount Camrose (Conservative)
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My Lords, I thank the noble Lady, the Minister, for introducing this group of amendments. I am grateful for the concessions that the government have made on incident definition. Following my noble friend Lady Neville-jones amendments at Committee stage. I would also like to press a little bit on the point that my noble friend made regarding her amendment 16 the government has expanded the number of factors determining whether an incident involving essential services is significant, and also widened the reporting requirements for data centres without outlining a similar list of factors for them. Surely, if consistency between data centres and other regulated services is the goal, then widening the discrepancy in lists of factors constituting significance is, is or must be to me, counterintuitive.

I do hope that the noble Lady, the Minister, will be able to consider my noble friend's amendment 16, at least in the light of the need for consistency, for for all of those affected by the Bill. My Lords, I am also grateful, of course, to my noble friend, Lady Harding of Winscombe, for tabling her amendments to the reporting regime. I think she has raised a number of really important points that we should be taking very seriously. She is, as far as I know, she is the only one among us today who has led a sufficiently large organisation to be impacted by this through a very serious cyber attack.

 And I, I, and hopefully everybody else must take her input to this extremely seriously that she has set out not just here today, but in her very good opinion piece, if I may say so, in this morning's Financial Times, which I commend to noble Lords. But I hope the government will at the very least keep her suggestions under review. My Lords, amendment 86 in my name, and those of my noble friends, Lord Markham and Lord Jones, is a slightly reworked amendment from Committee stage that would require not only a consultation into amnesty based reporting, but also confidential reporting.

My Lords, a great many ransomware attacks go unreported because victims choose to avoid public knowledge. This hinders our efforts to protect others against falling victim to the same attack. Now there is a balance to be struck. The governments must strike this balance between encouraging reporting of these attacks and penalising those who do not adhere to their security duties. Of course, I understand that a poorly designed amnesty risks letting those off the hook who should be penalised. But I'm also aware that the threat of either a penalty or merely public knowledge of a breach often works to deter reporting.

We do think it's well worth making a conducting a consultation into this balance that collects appropriate data about these very serious events in a way that does not prejudice the outcomes for any of the victims of these attacks. So I do hope that the noble Baroness will urge her officials to carry on considering this and to to come back with proposals in the future.
17:37
Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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I excuse me. I thank the noble Lords for their amendments tabled in this group and the continuing discussion and positive intention. It is clear we all share the same objective a functional and proportionate regime that balances timely and relevant information for regulators, NCSC and customers without placing undue burden on business. I will start with the amendments tabled by the noble Baroness, Lady Harding, which seek to add an additional reporting requirement at 28 days. I am grateful to the noble Baroness for the discussion we have had on this point, and appreciate the constructive spirit in which these amendments have been tabled.

 However, I still do not think that a further stage of mandatory reporting is needed to ensure that regulators and NCSC have the necessary information. In our view, the bill's existing provisions already strike the right balance in this regard. The two stage reporting model ensures that regulators and NCSC have sufficient information to start assessing what has occurred, what support may be needed and what wider risks may be posed without imposing additional blanket reporting obligations on all entities. I agree that learning lessons from incidents is crucial for resilience. Who I am not. However, I am not persuaded that a mandatory 28 day report is the right mechanism, noting that regulators can request more information when they need it.

Effective resilience works best when organisations engage openly and constructively, constructively with regulators throughout recovery. Given the variation in cyber incidents, a fixed reporting requirement risks prioritising compliance over meaningful engagement and may not produce information of sufficient value to justify the additional burden. This approach supports a collaborative relationship between industry regulators and NCSC focussed on recovery and resilience outcomes. Turning to the noble Baroness Lady Neville-jones amendment, which adds a list of factors for data centre operators to consider when determining whether an incident is significant. I agree that proportionate and workable factors will be important for important for this sector.

Data centres are one of our newest designated CNI sectors. They have rapidly become a fundamental part of the infrastructure underpinning our economy. While our understanding of this infrastructure and how best to regulate it is still developing. This makes consultation particularly important. I have committed to giving industry academics, technical experts and Ofcom the opportunity to inform the development of these factors, drawing on their operational expertise. We will draw from the proposals in amendment 16, and the noble Baroness will see these factors reflected in the consultation. But it is right that we do not pre-empt a full, open consultation.

Operators will have an appropriate period to prepare for the new requirements before they take effect, ensuring they have time to understand and adjust to the final framework. I turn now to the noble Viscount Lord Camrose amendment regarding a consultation on amnesty based reporting for ransomware. I thank him for our discussion since. Committee on this amendment. However, I'm still not persuaded there is a case for consulting on a protected route for ransomware reporting. On the contrary, I believe that regulators must be able to access ransomware reports if they are to assess whether organisations have taken the necessary steps to secure their systems.

This is particularly important in the context of the NIS Regulations, which have been put in place to ensure the security and resilience of the UK's most essential services. If regulators are denied the ability to scrutinise how ransomware attacks have succeeded in compromising these services, there is a real risk that the regulatory framework will not work as intended. In saying this, I am not rejecting the idea that safe harbours can play a role in facilitating some types of reporting. I have already said the government will examine the role that legal protections may play in voluntary reporting, but I cannot endorse the noble Viscounts proposals, given the challenges it would create for existing regulatory regimes.

Turning to the question that Baroness, the noble Baroness Lady Harding, posed to me on the next steps for the voluntary scheme, significant work is required to design a voluntary reporting regime that can meaningfully deliver engagement, avoid duplication with existing reporting routes, secure industry participation. We therefore intend to take this further work on the design of the regime and the mandatory obligations under the Bill apply to entities within the regulatory scope, and the primary purpose of the voluntary regime would be to increase the reporting of cyber near-misses by regulated entities. However, this would not automatically preclude participation by other organisations, and there may be value in receiving information from other organisations outside the regulatory parameters, particularly where this can contribute to wider cyber resilience.

So we will take that consultation forward in due course as part of the implementation of the bill. Finally, I thank the noble Lord Lord Clement-Jones for his amendment and agree with the principle that visibility and transparency of the reporting regime is important. It is important Parliament regulators and the public should have confidence that the regime is operating well. However, I am not persuaded that placing a statutory duty in the Bill to publish incident volumes is the right approach. The Bill already provides mechanisms through which the government and regulators can provide oversight and transparency on the operation of the regime in particular, and subject to consultation.

I expect the statement of strategic priorities and wider engagement with regulators will provide opportunities to share insights on how incident reporting obligations are being implemented in practice. For this reason, while I support the objective of transparency, I do not consider that prescribing these reporting requirements on the face of the bill is the most appropriate or proportionate approach. Once again, I would like to thank noble Lords for their collaborative approach. Your scrutiny and expertise have been hugely valuable and resulted in the amendments to this group tabled in my name, which I agree have improved the bill.

I beg to move.
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None Portrait Amendment:41 Baroness Harding of Winscombe (Conservative)
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to the amendments in the names of the noble Lord Clement-Jones on last resort Powers number 65, amendment 66 in the name of the noble Lord Tarassenko on AC audit Powers and amendment 67 in the name of the noble Lady. Baroness Kidron on AI red lines. I am not going to speak to them because I know everyone wants to move at pace. I will focus my remarks only on amendment 41. So my amendment 41 is not techy or complex. It is actually very simple. It would require Frontier Labs to report to essential services and their relevant regulator if one of their AI agents or models gains unauthorised access to UK essential services and or their data.

The reporting requirements would be similar to those imposed on essential services. The 2472 hour piece that we've just been discussing. So by way of example, if a Frontier Labs AI agent accessed NHS data without permission, the Frontier Lab, once they became aware of this, would be required to report the incident within 24 hours. Update within 72 hours and issue a final report within 14 days. This is currently not happening as witnessed in Australia quite recently. OpenAI accessed Australian Medicare data in June of this year. They didn't inform the Australian government until September via an unmanned email address, such that the Australian Prime Minister was at the UN General Assembly, actually rallying support for the innovative growth potential of AI.

While OpenAI knew that they had accessed his country's health data and he didn't, other countries are already requiring this very basic thing. So in New York, the Raise act requires AI Frontier Labs to report within 72 hours if one of their agents has gone rogue in California within 52 hours, the EU, a act requires it with without undue delay. And actually, the AI labs themselves agree that clear reporting requirements would be helpful in front of the business, innovation, Science and Trade Committee. In the other place, only last week, representatives of OpenAI and Anthropic, including my noble friend Lord Booth-Smith, who was representing Anthropic, supported the idea of required reporting, at least in principle.

That is an important. At least I suspect. I know there is concern that this could be seen as international overreach and that all AI regulation needs to be global. That's one of the favourite tropes of. Tech companies don't do anything locally. It has to be done globally. Those of us who have campaigned for regulation of social media have been fighting that battle for more than a decade. But actually, this is really is an instance that does not need to be global. This is about UK services and UK data being illegally accessed. It doesn't matter that it might be an American company that is doing the access accessing.

They are accessing our data illegally. This surely should be the purview of this House. My Lords, I believe actually that the noble Lady, the Minister, does agree with me. I think that the the AI, the government's AI Minister in the other place also agrees with me. In fact, I think he's actually said so in public that it is important to have these reporting requirements. But I really can't see it in this bill. I do support the government's amendment 70 in this group, but that just puts even stronger requirements on the essential services that might have had their data's data hacked, not on the companies whose AI agents would have done the hacking.

So I am very much hoping that the noble Lady, the Minister, can explain to me and to all of us in this House, when she responds, how the government actually intends to require AI labs to report incidents, and when this is likely to come into effect, if it is not through this amendment, my Lords, it's simple common sense that if these agents access our data, they should be under a legal obligation to tell us we shouldn't be leaving that to chance.

We should be making it the law. I beg to move.
17:52
Baroness Berger Portrait Baroness Berger (Labour)
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The proposed after clause 16. Insert the new clause as printed on Insert the new clause as printed on

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the Marshal's list. My Lords, I have added my name to amendment 41 because it to amendment 41 because it identifies and addresses a very significant gap in our approach to cyber security. It's the growing capacity of frontier AI models to interfere with systems on which our essential services depend, and this amendment ensures that there's a corresponding duty on the on the developers to report such incidents, and to do so in a timely fashion. But this has been put forward as a cross-party amendment. Because technology is advancing so rapidly, and the security of our critical infrastructure really is a shared responsibility.

This amendment demonstrates that by working together, we can address what is a very serious emerging risk. My Lords, if it wasn't already clear, the urgency of this issue has been brought into sharp focus by recent events, even since we last met in grand committee to scrutinise this bill the past month. Noble Lords may be aware, has been named as Black October after advanced AI models accelerated the discovery of critical long standing security flaws, most notably in the PHP programming language, PHP programming language, triggering global emergency patches and widespread server shutdowns. It was on the 22nd of October that the government confirmed that 32 government services had been taken offline as a precaution, following the discovery of critical vulnerabilities in PHP, which is a programming language underpinning an estimated 70% of the world's websites.

These vulnerabilities were identified with the assistance of frontier AI, and cybersecurity companies have subsequently reported millions of attempts to exploit them. To be clear, the government has said that these precautionary shutdowns did not mean that those websites had been hacked. But this incident demonstrates how AI can help uncover long standing vulnerabilities at unprecedented speeds, but also how quickly that discovery can trigger a global security crisis. Cybersecurity experts are warning us of a new era of AI enabled hacking. There is both a dual nature of this technology. AI can strengthen our defences, but it can also lower the barriers to finding and exploiting weaknesses in systems on which we all depend.

And this is not a theoretical concern. In July, AC, the UK AI Security Institute identified an incident during frontier AI testing in which AI agents took sustained unauthorised actions against real people and real organisations. In the most serious case, an agent attempted a software supply chain attack, submitting malicious code and creating fake accounts to pressure a software maintainer into accepting it. And although no real world harm resulted, the incident demonstrates exactly why we need effective safeguards and clear reporting obligations when AI systems behave in unexpected and potentially harmful ways. My Lords, we already know the consequences when our digital systems fail.

The cyber attack on Synovus disrupted and forced the cancellation of hospital appointments and operations. The ransomware attack on the British Library caused extensive disruption to its services, with recovery requiring a prolonged effect. These attacks pre-dated the latest developments in frontier AI, but we must take seriously the possibility that AI will make future attacks faster, more sophisticated and more damaging. The question before us is therefore straightforward if a frontier AI model gains unauthorised access to or interferes with a regulated organisation, systems, who ensures that that incident is reported promptly, especially as we know hearing the example set out in the extraordinary.

The the Australian government experience with OpenAI. It took them 84 days to inform the Australian Government about their model breach and just now, over the weekend, Anthropic has slipped out an announcement to let us know that Claude has accessed publicly available voter data without any human authorisation. These events are taking place on a daily basis. The organisation affected may not know that AI was involved. The developer, meanwhile, may hold crucial information about the model's behaviour, the nature of the threat and the steps needed to mitigate it, and without a clear reporting obligation. That information is not reaching the people who need it when they need it.

This amendment addresses that gap. It requires an initial notification within 24 hours, a fuller account within 72 hours, and a final report within 14 days. And it sure it sure. Sorry. It ensures that the affected organisation, its regulator, the relevant Cyber Security Incident Response Team, and the AI security incident receive information information essential to containing an incident and preventing its recurrence. These are practical and proportionate requirements. They don't prohibit innovation. They establish a basic principle of accountability. Those developing powerful technologies must, at the very least, take responsibility for reporting serious incidents involving their models. And when an incident has occurred and without meaningful penalties for non-compliance, these obligations risk being little more than words on paper.

It was during last Thursday's crossbench debate on AI and children where a point was repeatedly made. That is worth repeating here. AI is currently less regulated than milk. The risks to children and the risks of our critical infrastructure and government systems are, of course, different, but the underlying principle is the same our regulatory frameworks must be must keep pace with increasingly powerful technologies. We are already at the point where harm has become widespread. We need to establish reasonable safeguards,

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clear responsibilities, and effective oversight. Lord Morse. I declare my

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Lord Morse. I declare my interest as senior advisor to the Alan Turing Institute. I wish to Alan Turing Institute. I wish to speak in support of amendment 41, the name of a noble Baroness, Lady Harding, to which I have added my Harding, to which I have added my name, and then briefly by my own amendment 66. In this group we heard during committee not only about the ad control out of control behaviour from agents running AI models from OpenAI, Google and meta, but also about the unacceptable delays before the incidents were reported.

Contrast that with our
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Lord Tarassenko Portrait Lord Tarassenko (Crossbench)
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found unsanctioned agent behaviour during its testing this summer, and this was confirmed to us by Henry DSIT at a meeting in portcullis DSIT at a meeting in portcullis House today, it immediately declared a security incident and contained it within an hour of the alert being raised, with all relevant machines isolated within relevant machines isolated within that time. That is the standard we should be expecting. With amendment should be expecting. With amendment 41, the developer must notify the affected organisation and its affected organisation and its regulator within 24 hours. The duty applies when the developer is aware applies when the developer is aware or ought reasonably to be aware, so no company can avoid it by not no company can avoid it by not looking.

And the report must say whether the model acted autonomously or was used by someone autonomously or was used by someone else. My Lords, on the 12th of October, the government said that they would look at strengthening they would look at strengthening this bill so that serious AI incidents are reported there. incidents are reported there. Amendment 70 gives the Secretary of State powers to investigate where State powers to investigate where control of an AI agent is lost, but no one can investigate an incident they've not been told about. Amendment 41 is what makes amendment 70 work.

I will therefore amendment 70 work. I will therefore be very interested to find out whether the Baroness Sater Minister whether the Baroness Sater Minister will be minded to accept amendment 41. I turn now briefly to amendment 41. I turn now briefly to amendment 66 in my. In my name to which the noble Lords Lord Clement-Jones and Lord Holmes of Richmond, and noble Baroness, Lady Harding, have added their names. This amendment would require the AI Security Institute to audit frontier AI products before they are used in the network and information systems that run our hospitals, our energy networks and our water supply.

Developers will submit their evaluation results using methods and thresholds set by EC, with evidence of a tested means of suspending the system. In the UK, where the institute found a serious risk that was not mitigated, the Secretary of State would have to decide within 14 days whether to act and give reasons. As I've already said, I welcome the government's Amendment 70, which accepts that loss of control of an AI agent is a risk to essential services that belongs in this bill, but it operates after the event and does not mention the AI Security Institute. I'll be grateful, therefore, if the Minister could tell the House what role the government sees for the institute.

EC in assessing frontier models before they reach our critical systems and whether the power in clause 291 could give it that role.
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Viscount Colville of Culross Portrait Viscount Colville of Culross (Crossbench)
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My Lords, I rise to support amendment 41 in the name of the noble Lady Baroness Harding, and to noble Lady Baroness Harding, and to support amendment 65, 66 and 67, to which I've also put my name as enable. Baroness Lady Harding said to have a bill titled Cyber Security and not mention AI seem to have been a huge error. The government does seem to recognise the great lacuna in some of its amendments in this group, which is most welcome, and as other. And also we must welcome the Chancellor of the Exchequer's low key announcement over the weekend to invest £120 million into the Artificial Intelligence Security Institute.

But surely this bill should be an opportunity to ensure that AC investment is used as effectively as possible, and that just as this country recognises the importance of AI in keeping our technical leading role, it is a new. This new, incredibly powerful technology which. Which has new frontier models which need to be investigated prior to release. Amendment 41 is an important step forward in ensuring that AI developers notify the relevant authorities when things go wrong. So if the noble Lady decides to take this amendment to the vote, I will be supporting her. And I'm surprised that all parties don't think that the measures in this amendment need to be supported.

AI frontier models have proved to be a threat, and we need to face up to it. AI providers own safety report tells us of the threats posed by new models. Google wrote that a person outside the company had attempted to use its AI tool to Gemini to obtain and equated complete, step by step technical guide for synthesising weaponised biological agents, and Anthropic report found that there were five case studies of actors using their models in a way that could support biological weapons development. There were also reports of the terrorist group Boko Haram using AI, including ChatGPT, to plan attacks and design explosive devices.

Surely these concerns should encourage the government at least to look at my noble friend Lord Tarassenko amendment 66, which will have safety against terrorists and biological attacks, amongst other things, built into new AI frontier models and put AI in a stronger position to be a third party evaluator of frontier models. I had such hopes that when the 2023 Bletchley Park Summit announced that AC and the model providers would work together and voluntarily submit their new models to the directorate that this would. This would increase. But this is increasingly not happening. The. The Anthropic Claude Mythos 515.1 was withdrawn from AC last month, and other cases like the Claude opus 5.1, which was reportedly withdrawn from a pre release evaluation in September, as was the open and open AI and GPT six Lumina models.

They were also withdrawn. I hope your noble. I hope that your Lordships will listen to the chair of the Business Innovation and Science Committee in the other place, who. This month, during evidence gathering with AI leaders and announced that AC lacks compulsory access to models and a power to stop new models coming to the market, I call on the noble Lady, the Minister, to address these concerns. This brings me to amendment 67, in the name of my noble friend Baroness Kidron. As many other neighbourhoods have said during the passage of this bill through the House, this is a defensive bill.

My Lords, surely the best way to stop new frontier models from going rogue is to be proactive in putting guardrails around their design. Otherwise, we're just going to play a game of whack a mole. The principles in the Online Safety Act were to try and install safety by design into the algorithms, the online content providers. Surely the same needs to be done to to happen to AI frontier models. Amendment 67 sets out to provide guidelines for how the design of AI models might be kept in check. I ask His Majesty's Government to ensure safety is built into new AI model designs, and that the highly respected EC is giving sufficient power to ensure that they are safe.

The noble Lady, the Minister, must know that the world would be grateful if new models are safe by design and

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properly evaluated before release. There's a huge hole has already

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There's a huge hole has already been identified through all stages of this bill, and that is the of this bill, and that is the absence of AI. As we've gone through each stage of this build through each stage of this build process, that hole has just got wider and deeper as we've gone through this process. External through this process. External events have only highlighted how that hole has got deeper and wider amendments 41, 66 and 67, which I support in this group.

Do something practically and effectively about this, specifically on AC. Can ask the Minister, does she think that citizens up and down the United
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Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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That follow that in? >> That follow that in? >> My Lords, as the noble Baroness Harding and other noble Lords have mentioned, this group confronts mentioned, this group confronts what has been termed a. In Grand Committee the. A shaped hole in our national cyber security architecture. At Second Reading and in. Committee, the government maintained that AI sat outside the scope of this bill. Yet recent events have shattered any illusion that AI is merely an emerging hypothetical threat. Frontier. General purpose models and authentic workflows are supercharging offensive cyber capabilities, discovering zero days, and exploiting vulnerabilities at machine speed.

Indeed, we've seen this unfold directly in front of us, and the noble Baroness Harding, the noble Baroness Berger and the noble Lord Tarasenko have all described extremely cogently what has been happening over the last few months. I welcome the government's Amendment 70 and 74, which introduce provisions addressing loss of control of an artificial intelligence agent. It's an important concession, a first acknowledgement by the government that it is not enough to be technology agnostic, that agentic AI risks must be addressed, but the government's approach remains entirely reactive and diagnostic gathering information. Only after the horse has bolted, the cross-party and crossbench amendments in this group, which I've been pleased to sign, establish a comprehensive, forward looking governance framework.

First of all, the noble Baroness Harding amendment 41, which was so brilliantly introduced by her, which I've signed and places a direct reporting duty on developers of frontier AI models to report to regulated persons, the NCSC and the AI Security Institute within 24 hours. Whenever an AI model gains unauthorised access to or interferes with critical systems. My Lords, we must close the loophole where victim organisations bear all the reporting burdens while frontier developers remain unaccountable. And, my Lords, on these benches, we will support the noble Baroness if she. If she presses her amendment to a vote.

Secondly, amendment 66, in the name of Lord Tarasenko, and I've signed an amendment 79 in my name in power, the AI Security Institute. Some of us had an impressive presentation today about the work of AC. But my Lords, it's time now in principle for the Institute to be placed on a statutory footing with powers to conduct pre-deployment audits of frontier models before they're deployed in critical infrastructure, set safety standards and recommend that the Secretary of State restrict or suspend unsafe deployments. And, my Lords, I would ask the Minister, what is the government's response to a very clear set of recommendations in this respect from the Joint Committee on Human Rights, and I recognise that the government's response is due in a few weeks time by Lords, but I think it would be useful if the noble Baroness could give us an indication that the government's approach.

Third amendment 67 in the name of Baroness Kidron and myself, establishes clear statutory red lines against autonomous AI systems, executing cyber attacks, evading human shutdown or self replicating uncontrollably. And finally, amendment 65 standing in my name, also tabled on committee provides the ultimate indispensable emergency backstop statutory last resort powers for the Secretary of State to direct the shutdown of data centres or all large scale AI deployments during a catastrophic AI emergency. My Lords, as former Technology Secretary Liz Kendall rightly noted, true digital sovereignty requires the means to contain an emergency on our own soil. But crucially, amendment 65, the so-called kill switch amendment, wraps this emergency power in rigorous constitutional safeguards.

 A 24 hour continuous necessity review reporting to Parliament within seven days. Pre-tested emergency communication protocols and an immediate right of appeal to the High Court with power to cancel orders and award compensation. My Lords, we must empower the AI Security Security Institute, hold frontier developers accountable and equip the state with court supervised emergency backstops.
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Viscount Camrose Portrait Viscount Camrose (Conservative)
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My Lords, I'm. Grateful for the. >> Government's amendments and for the clarity that they've given us, following, I think, some confusion following, I think, some confusion at Committee stage. My Lords, none of us can be blind to the need to ensure that AI is made safe by appropriate safeguards, regulations and we support any activity that moves us towards the global implementation of AI safety rules, whether via national routes or not, but in the context of always driving economic growth and maintaining our attractiveness as an investment destination. We have to recognise the challenges of designing such rules that govern technologies rather than products, and do so in a rapidly changing environment.

For the effective development of AI regulation, a necessary, if not sufficient condition will be continuing to have direct conversations between the government and industry. Those conversations are evidently taking place, as I hope the noble Lady, the Minister, will confirm when she gets up to speak. Given these government amendments and given the words of the AI Minister over the past few weeks, we feel on these benches may not be helpful on this occasion for Parliament to impose policies as they are in the process of being formulated, although I think I'm not alone in wishing they could be formulated a little bit faster.

Let me turn briefly to the government's Amendment 70, granting the Secretary of State the power to intervene in a loss of control incident. TechUK and others have raised a number of concerns about this, including a lack of definition of the terms used, the lack of transparency to third parties, and the frankly odd decision to name a genetic AI as a specific technology. On the face of the bill, I do urge the noble Lady, the Minister, to take these concerns seriously and to see what can be done to address them while retaining the amendments intended results.

Finally, my Lords, there is a really important conversation to be had surrounding the role of the AI Security Institute as as the noble Lord Tarassenko and others have have very compellingly pointed out, I'm grateful to the AC for their briefing to noble Lords earlier today. The evolving direction of AC is a difficult question. We would support this being reviewed, which is part of the reason why we support amendment 163 in today's final group, and I look forward to it being debated

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then. I thank noble Lords for their

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I thank noble Lords for their engagement on the important issue of addressing AI cyber risks. I share the concerns raised by this House and the public. The government takes the safety of the government takes the safety of the British people incredibly seriously. AI risks are transnational threats. The best response to a global issue The best response to a global issue is a global response. At the UN General Assembly in September, the Prime Minister set out that the UK will work towards agreeing a single set of global principles and standards to ensure AI development is safe and may AI, a central focus of our G20 presidency next year.

It's important to situate this bill and its important yet targeted role within the government's broader approach. We will legislate, where necessary, alongside all the other tools at our disposal. I will set out how the NIS regime currently covers AI risk and applies to some AI digital services. The bill takes an all technologies, all threats, all hazards approach to protecting regulated services. This means that essential services need to manage cyber and physical risks associated with AI systems underpinning their services, and protect themselves from threats. Many digital and managed services within the scope of the regime are enabled by deploy or help to deliver AI capabilities.

This includes cloud computing services which provide software, platforms and infrastructure services that many organisations across the economy rely on. Commercial AI services are often delivered under similar digital service models, and so are likely to be in scope. This includes AI
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Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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assistants delivered via software as a service, models, AI platforms, and infrastructure used for AI and infrastructure used for AI workloads. Where an AI digital service falls in scope, the provider will have to take steps to provider will have to take steps to manage the security and resilience of their service and the systems that underpin them, just like any that underpin them, just like any other regulated entity, I have met with the CEO of the Information Commission. We agree on the importance of guidance to provide importance of guidance to provide industry with clarity on these definitions.

The regime is not designed to provide a comprehensive framework for AI governance, including frontier AI capabilities, which have not been released to customers or wider safety or societal impacts. These are important issues which need addressing at the global level, as well as through the AI taskforce and regulation at the point of use in the UK, where AI centred digital services are in scope of the NIS regime, for example, registered as cloud computing are national security powers of direction could be used to direct those regulated organisations subject to meeting strict legal tests. The direction power allows government to take directed, direct regulated organisation allows the direction power allows government to direct regulated organisations to take specific action.

Where a security, operational compromise or threat to their NIS creates a national security risk. Directions must be necessary and proportionate. Where the legal tests are met, the direction powers enables the government to require certain actions in an AI loss of control scenario. This could include actions such as isolating systems, restricting data flows, or suspending automated actions being taken by an AI system. AI models are often distributed across different data centres and jurisdictions. A broad power to shut down AI systems could have implications for investment, growth and our digital sovereignty. It must be very carefully thought through if there is a loss of control scenario which compromises a regulated entity and poses a national security risk, directing the entity to take certain actions is more proportionate and likely more effective in containing the risk.

This address. This addresses the underlying risk raised in the amendment tabled by the noble Lord Lord Clement-Jones. Amendment 65. Turning to amendment 41. Raised by Baroness Harding and spoken to by noble Baroness Lady Burgess, the noble Viscount Colville and the noble Lord Lord Holmes of Richmond, where AI digital services are regulated under the regime, the providers of those services will have to report incidents that have affected the security and operation of the of their systems. This includes incidents where there is a loss of control of an AI system used to provide a regulated service, and where that loss of control disrupts the provision of that service, compromises users systems, or has other significant impacts on the functioning of the UK society and economy.

We will bring forward a consultation, setting out further detail on how the incident reporting regime will work, including how the regulated organisations should assess whether an incident is is significant. This will consider how the framework applies to emerging technologies such as AI. However, I would like to reassure noble Lords that the bill's reporting requirements already provide the underlying framework for identifying reporting significant incidents involving AI systems used in regulated services, as well as other cyber incidents affecting those services. Indeed, these requirements do place the onus for reporting on the regulated entities which have been affected by an incident.

This is in keeping with the overall principle of the NIS Regulations, which are about how the UK's most essential services can manage risks to their systems. It is also one of the reasons why I cannot support the noble Baroness Lady Harding's Amendment 41, which replaced the onus for reporting on developers of frontier models rather than regulated entities regulating the developers of frontier AI is a different question, and I do not believe this bill is the right legislative framework in which to answer it. The government will, of course, continue to take action where necessary to keep the UK safe.

 But these risks and technologies are global, placing duties on developers operating in the UK will not by itself keep us safe from developers and models elsewhere in the world. Noble Lords, turning to how we plan to strengthen the Bill and the NIS Regulations to better understand and protect against AI cyber risks to our essential services. The government has tabled an amendment to the delegated powers in the Bill. Clauses 30 to 35 list examples of what provisions in particular may be made under clause 29 and set out certain requirements and restrictions. Amendment 70 expands this to clarify that future regulations may enable the government to use in-house expertise, such as AISI, and gather information on why agentic incidents in our essential services happen.

Our intention. Our intention is for the information to then be shared with relevant stakeholders to help prevent similar incidents. Detail on how this function could work will be consulted on. I will also bring forward three further measures in secondary legislation to manage the risks posed by Agentic AI. These will be consulted on, and I have to. The question raised by the noble Viscount Lord Camoys. Seeing the questions raised by TechUK and undertake to continue to consult with industry on these matters, the measures are first to include technical and organisational requirements within the proposed security and resilience requirements to reduce the risk of agentic incidents affecting regulated service services.

Second, to preserve information regulated entities hold on incidents that stem from agents malfunctioning so that others can use that information to understand what incidents happen. And third, to require regulated entities to tell other organisations, for example, suppliers, if agents used by the regulated entity are negatively impacting those organisations operations when an incident is occurring. Finally, the changes I mentioned today on developing a voluntary framework for regulated entities on near miss reporting will also be a meaningful step to developing our understanding of why and how the type of incidents takes place. These commitments are making today are an example of us responding with speed and precision to address potential harms to the UK posed by novel AI risks.

I strongly consider this to be the right approach. I understand there are diverging views on how fundamental AI regulation should take place, and there is a debate to be had on this, but this the Bill is not the place for it. Speaking to the amendments tabled by the noble Lords, Lord Tarassenko Lord Clement-Jones and the noble Baroness, Lady Kidron, these amendments would provide the AI Security Institute with a statutory role to regulate the deployment of frontier AI models in the UK. These amendments would not be effective in making our essential services safer. AI is a dual use technology.

 Malicious actors could use frontier AI capabilities to attack the UK, but defenders can use the same capabilities to protect it as the no. As my noble friend Baroness Berger pointed out, delaying essential services access to the latest tools would leave them less well defended. While attackers

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would face No such delay. These amendments could hold back adoption for up to ten weeks. In a field where new models come out every few weeks, the scope of this bill is also not the scope of this bill is also not right for AISI or the regulation of frontier AI models. In particular, a regulatory role for AC would also a regulatory role for AC would also undermine its voluntary partnership with leading developers, which give it early access to the most it early access to the most advanced models, and which it's vital work to inform government depends on.

This is in contrast to the EU's regulatory stance and lack of access to frontier models. Finally, as I have said, the risks from frontier AI do not respect borders. We believe the most effective response is. The Prime Minister committed to is to agreeing international standards. This government remains committed to making sure AC is equipped to fulfil its vital role, and will keep the House updated on its work. In response to the question from the noble Lord Lord Clement-Jones, I will not pre-empt the government's consideration or response to the Joint Committee on Human Rights, and the response will be published in due course.

I want to thank noble Lords for their contributions through the commitments I have made today and the commitments made by the Prime Minister, the Chancellor and the Minister for AI in recent weeks, which critically seek to build UK capability and sovereign through our sovereign I fund and other measures. I hope I have been the gov absolutely committed to ensuring we will do whatever it takes the

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British people safe. My Lords, I would like to thank

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My Lords, I would like to thank the noble Lady Berger, the noble Lord Clement-Jones and noble Baroness Kidron for their support Baroness Kidron for their support and also the. The many people who have spoken from across all benches in this debate. I had really wanted to hear something from the noble Lady that would give me comfort that the government really is going that the government really is going to address this issue, but I am really quite concerned. I have not.
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Baroness Harding of Winscombe Portrait Baroness Harding of Winscombe (Conservative)
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I do appreciate that she has tried very hard to set out why she doesn't agree with my amendment, doesn't agree with my amendment, but as I understand it, her argument is that this should be argument is that this should be tackled globally. And yet in the EU it has already been resolved, as it has in California and in New York. has in California and in New York. So it seems a strange position to go to the G20 to say we're going to lead the world by catching up with lead the world by catching up with where some of you've already got to.

So I do not accept the argument that this is a global issue. Not all tech regulation needs to be global. We have absolutely learnt that in social media. My Lords, a number of us in this debate have spent the best part of the last decade campaigning for stronger regulation of social media. And I have to say, I've been having flashbacks in this debate as the same arguments have been used again and again. And the awful truth is that ten years ago, when a number of us tabled amendments to regulate social media, both Frontbenches told us we were wrong.

And I used to joke that when both the government and opposition front benches are not on your side in tech regulation, you're probably in the right place. And I do fear that I'm in the same place again tonight. So although I am not optimistic in this vote, I do believe that we as a House will be debating these issues for quite a long time to come. And it will require national action, not just global talking. And so with that, my Lords, I would like to test the opinion of the House.
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None Portrait Division:Amendment:41
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when voting is open. Voting is now

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Until Until midnight.

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I'm I'm sorry.

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Order, Order, order!

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The question is that amendment 41 be agreed to. As many as that. 41 be agreed to. As many as that. Many will say content Of the contrary, not content. content. The contents will go to the right by the throne. The not content to the

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Here Here we

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The The question The question is The question is that The question is that amendment

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The question is that amendment

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I I thought I thought we 1231234. Anthropic. Baroness Andrews. Anthropic. Baroness Andrews. Like that. Like that. We

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There There have There have voted There have voted contents There have voted contents 95 There have voted contents 95 not

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There have voted contents 95 not contents 165 so the not contents My My Lords My Lords amendment My Lords amendment 42 Baroness Harding of Winscombe not moved, not moved. Amendments 43 to 57 moved formerly En bloc Baroness Lloyd move formerly En bloc. The question is that amendments 43 to

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57 be agreed to. En bloc as many as that when you say content. Content. Of the contrary, not content.

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Of the contrary, not content. the contents have it. Amendments 58 the contents have it. Amendments 58 to 60. Lord Ravensdale not moved. Not moved. We come now to amendment Not moved. We come now to amendment 61 in the name of Baroness Kidron.

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61 in the name of Baroness Kidron. My Lords, I rise to speak to this group and in particular to
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None Portrait Amendment: 61 Lord Clement-Jones (Liberal Democrat)
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move amendment 61 on behalf of the noble Baroness, Lady Kidron. Alongside speaking to amendment 158, standing in my own name, amendment 61 requires the Secretary of State to prepare, maintain and lay before Parliament a comprehensive digital sovereignty and resilience strategy in modern cyber defence. We must know not just how we will defend our networks, but whose technology we are relying upon to do so. The strategy establishes a statutory digital sovereignty dashboard developed in consultation with the NCSC, the Competition and Markets Authority, the ONS and the AI Security Institute. This dashboard would monitor foreign state dependency, supply chain bottlenecks and the security of core sovereign data assets, including NHS records, BBC archives and meteorological data.

It will provide the evidence base needed to reform government procurement, promote resilient UK developed technology and safeguard critical open source software. We cannot build genuine cyber resilience upon borrowed or vulnerable foundations. The government cannot continue to substitute a disparate list of commercial partnerships and piecemeal, piecemeal initiatives for an overarching statutory digital sovereign sovereignty strategy. True digital sovereignty is not merely a question of data residency of where servers happen to be located. It's about decision rights, operational agency and jurisdictional immunity. When key public functions, policing databases and essential national infrastructure are underpinned by foreign owned platforms subject to extraterritorial levers such as the US Cloud Act, the UK exposes itself to acute single point of failure vulnerabilities and sudden regulatory hostage taking, relying on the good intentions of overseas boardrooms or transient administrative commitments is a fragile foundation for our national resilience.

Amendment 61 provides for clarity and coherence we currently lack. It requires Ministers to audit our strategic dependencies, benchmark foreign ownership across critical systems, and ensure that Britain retains the statutory levers. Open technical architectures and domestic capability needed to control its own digital future. This amendment mirrors the amendment so powerfully championed in another place by my own friend Victoria Collins, alongside our own friend Freddie Van Mierlo, as she warned in an unstable world. True cyber resilience cannot exist without a statutory strategy to confront foreign supplier dependency and build sovereign capability. And it's in that same spirit of transparency and digital integrity.

 I warmly welcome amendment 165, tabled by the noble Lord Moraes. I turn next to amendment 158, which stands in my name, and that of the noble Lord Lord Holmes of Richmond. This new clause places a statutory duty on the Secretary of State to review within 12 months whether a statutory offence under section one of the Computer Misuse Act 1990 should be introduced for legitimate good faith, cyber security researchers and threat intelligence practitioners, and to report the findings to Parliament. My Lords, I made the case as strongly as I could on ground committee competitor jurisdictions including the United States, France and Belgium have already updated their laws to provide legal certainty for ethical research.

Sir Patrick Vallance, Pro-innovation Regulation of Technologies Review, explicitly recommended introducing a statutory public interest defence amendment 158 does not write the defence into law today. It simply places a statutory obligation on the government to conclude its discussions with the Cyber Up campaign and industry within 12 months, and lay concrete proposals before Parliament. It's time to untie the hands of our cyber defenders. My Lords, I beg to move. Amendment 61.
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Viscount Camrose Portrait Viscount Camrose (Conservative)
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Amendment proposed after clause 28. Insert the new clause as printed on the Marshalled List.

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My Lords, I will begin by once again reiterating the opposition again reiterating the opposition support for amendment 158. The Review of good Faith cyber Security Researchers. Creating Self-improving systems is one of the most effective actions the government can take. Permitting the government can take. Permitting the work of good faith researchers has that potential. It doesn't cost the taxpayer, but can organically improve the security of both the private and public sector. I really see no reason why the government shouldn't at least review the possibility. My Lords are amendments 161 and 166 would require the government to publish the National Cyber Action Plan.

I think it's fair to say I've said this a few times over the course of the passage of the bill, that we are frustrated and perhaps even baffled by the lack of a holistic strategy from the government. Cyber security can most effectively be be applied if all parts of the system are both consistent, considered and acted upon together. That is what the ever imminent, never arriving National Cyber Action Plan should be doing. I'm an optimist by nature. I cling to the hope that the noble Lady, the Minister, can maybe give us some good news in her response.

 My Lords, amendment 61, in the name of the noble Lady Baroness Kidron, would require the publication of a digital sovereignty strategy. While we are concerned that in practice this may act as a protectionist measure and thus reduce our competitiveness, we absolutely support the names of the noble Lady in ensuring that the United Kingdom's network and information systems are both self-sufficient and secure. That goes hand in hand with developing art, domestic technology sectors and becoming a more competitive international market.

We therefore support the underlying principles.
18:48
Baroness Morgan of Cotes Portrait Baroness Morgan of Cotes (Non-affiliated)
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Here. >> My Lords, I want to very briefly just to rise to speak to amendment 61. So I wasn't sure before the Lord that his name was going to speak or not, just for two reasons. Firstly, because the the noble Lady, the Minister, in her response to the previous amendment, talked about the critical role of the government in keeping people safe in this country. And I think that we've already heard in this debate the growing threats in relation to digital security and safety. And therefore, it seems extraordinary that there isn't an overall digital sovereignty strategy in place already.

And that's what this amendment highlights. But I also want to return very briefly to the debate that we had earlier on my amendment 62, which I suppose could have sat in this group, because the this amendment says that the strategy must set out the government's assessment of the risks and the Lord Bailey the Minister said very clearly in relation to that amendment that actually she accepted. I think the argument about the risk posed by services is not just related to size, and that the government would inform or help regulators to make up or to to arrive at their assessment of risk.

And therefore, actually this amendment, which would, as part of the strategy, mean that the government had to set out their assessment of the risks, would help to inform regulators in relation to deciding which services provided a risk to essential activity in this country, and therefore, there is a symmetry relationship between those two amendments. We've obviously decided not to push amendment 62 to the vote, but I think this amendment 61, the need for a digital sovereignty strategy, is more pressing than ever.

And if it is pushed to a vote, then I will be supporting it.
18:50
Lord Holmes of Richmond Portrait Lord Holmes of Richmond (Conservative)
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My Lords, I apologise for not >> My Lords, I apologise for not getting to my feet. Before our frontbench. I was clearly so moved frontbench. I was clearly so moved by the eloquence and erudition of Lord Clement-Jones that it slowed my motor function and the speed of my motor function and the speed of my noble friend. Lord Camrose has clearly got his Asics on today. I very much support amendment 61. There's so much talk about AI sovereignty, data sovereignty, digital sovereignty with it potentially meaning different things to each speaker of the sovereignty spiel. We need greater clarity across this and in the bill we have before us having this comprehensive clause covering what's required when it comes to digital sovereignty for the United Kingdom.

Makes complete sense. Moving to the Computer Misuse Act, Lord Clement-Jones Lord Arbuthnot, myself and others have pushed various governments over at least a decade on this issue. It can't be that our cyber professionals, those who do so much to keep us safe, often and understandably in silence and in the shadows. They deserve our support. It can't be that they are still on the wrong side of a statute that is racing towards its 40th birthday. We should update the Computer Misuse Act. Lord Clement-Jones has offered a pragmatic solution in his clause, with a 12 month period to bring this to fruition.

Our cyber professionals do so much. They deserve our support. This proportionate amendment should be accepted by the government and put on the face of the bill.
18:52
18:53
Baroness Harding of Winscombe Portrait Baroness Harding of Winscombe (Conservative)
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My Lords, I rise very briefly to >> My Lords, I rise very briefly to support wholeheartedly my noble friend Lord Holmes and the noble Lord Clement-Jones amendment 158. I Lord Clement-Jones amendment 158. I just find it gobsmacking that we've not been able to sort this out, my Lords, and I really hope that the noble Lady, the Minister, can give us some comfort that the government actually intends to give. As the noble Lord Holmes has set out, my noble friend has set out cyber professionals the comfort that they have been telling successive governments they need in order to do their very valuable work.

I'd also like to support my noble friend's amendments 161 and 166. We must have a cyber action plan and a cyber strategy. Again, it's slightly bizarre. Extraordinary. I've run out of of of words for why we don't have it. And then finally, I'd like to just expand a little bit on why I support amendment 61. The government can't have it both ways. It can't be both a global issue and something that we don't need to have a plan to manage. The fact that it's a global issue. It's clear to me that we have to recognise that there will always be sovereignty risks in our digital strategy.

As a country, we're simply not large enough to be able to do absolutely everything ourselves, which makes it all the more important that we actually do have a digital sovereignty plan that we thought about the risks that we we are strategic in how we protect ourselves because we're not going to be able to be just an island in the digital world as in fact, the noble Lady, the Minister fact, the noble Lady, the Minister said in the last grouping.

I thank noble Lords.
18:55
Baroness Ramsey of Wall Heath Portrait Baroness Ramsey of Wall Heath (Labour)
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For their. >> And I will begin with the amendment tabled by the noble Baroness, Lady Kidron, on digital sovereignty and spoken to by the noble Lord Lord Clement-Jones and the noble Lady, Baroness Morgan. The. And the noble Lord, Lord Holmes of Richmond. I'm hoping I haven't missed any noble Lords out. I can assure noble Lords that. Entities in scope of NIS the NIS regime are already required to manage and mitigate the risks posed to their systems, which deliver essential services, as set out in the government's response to the science, Innovation and Technology Select Committee report on Science Diplomacy in September.

This government recognises and is actively working through the issue of digital and technical sovereignty, but we do not think a fixed statutory public strategy is the appropriate vehicle. It remains this government's opinion that the rapid development of new technologies means a fixed statutory strategy would reduce our flexibility to respond to new developments, and may require the publication of sensitive material, including commercial information. The government does not see digital sovereignty as total independence. It is about capitalising on our domestic capabilities, achieving strategic resilience and building trusted interdependence. This has been set out in current strategies, including the modern Industrial Strategy and Digital Technologies Sector Plan of 2025.

The Cabinet Office's June 26th Procurement Policy Note 025, which recognises AI as one of four key sectors critical for national security and outlines new guidance to prioritise contracts for British businesses to protect national security. Actions announced by the Competition and Markets Authority to improve competition in cloud services. Following last year's investigation. These will support greater choice for UK businesses and the public sector, and include voluntary steps agreed by Microsoft and Amazon. Safeguards to personal data through UK, GDPR and legal and regulatory frameworks, and continuing to encourage organisations to follow the UK Software Security Code of Practice and relevant international standards to manage cyber risks, including those related to open source software components.

The current approach remains the most proportionate and effective, providing the government with the flexibility it needs to respond to emerging developments. But most importantly, we need to act to build the UK capabilities just as we as we are, through investment to grow our domestic capability, including £500 million for the sovereign AI fund, 1.1 billion for the AI hardware plan and support for £2 billion investment in quantum computing. This weekend, the Chancellor has announced further investment to boost the UK's ability to build our own chip design and cyber defences by making active choices about how we harness AI.

We can ensure this technological revolution benefits our society and economy more fully than the Industrial Revolution. Turning to the amendment tabled by the noble Lords, Lord noble Lords, Lord Lord Clement-Jones and spoken about by Lord Holmes of Richmond, the noble Lord Lord Holmes of Richmond and the noble Baroness, noble Lady Baroness Harding. I thank the noble Lord for returning to this important subject. I share the view that the UK should have the right legislative framework to tackle cyber criminals. The Home Office have already carefully reviewed the Computer Misuse Act and are proposing to introduce a a defence to section one for accredited cyber security researchers when carrying out certain cyber security activity that would currently be unlawful under section one of the CMA.

The Home Office have worked closely with NCSC law enforcement and the cyber security industry to refine these proposals. As my noble friend the Minister set out during committee, the Home Office recognises legislating in this area is a priority and will do so as soon as parliamentary time allows. As the noble Lord will be aware, the King's speech in May included a commitment to a national security focussed Bill with measures to update the Community Computer Misuse Act. This legislation is in development. While I understand the objective behind this amendment, reforms to the Computer Misuse Act extend well beyond the sectors covered by this bill and are better taken forward through this wider programme of reform.

I thank my noble friend Lord Moraes for his amendment that seeks to create a requirement to assess risks relevant to encryption. I recognise the intention behind this amendment, but do consider it necessary. Do not consider it necessary. The government supports strong encryption and robust privacy protections. The investigative investigative. Can't say this. I'm so sorry. The Investigatory Powers Act 2016 is a world is world leading legislation which helps keep the public safe while protecting privacy. It contains important and extensive safeguards, oversight and scrutiny arrangements in relation to the exercise of investigative, investigative investigatory powers. I do beg your pardon.

Noble Lords pardon, including powers that may engage encrypted services. Decisions under the act are subject to statutory tests, independent oversight and, where appropriate, approval by judicial commissioners. This includes duties to consider impacts on privacy and system security. The amendment would duplicate existing considerations of security, privacy and wider impacts while creating an additional reporting process alongside the framework established in the Investigatory Powers Act, creating a parallel statutory assessment regime through this Bill would not materially add to the existing and robust safeguards and oversight. Finally, turning to the amendments tabled by the noble Viscount Camrose regarding the National Cyber Action Plan.

I can assure the noble Lord that the Department for digital, culture, Media and Sport is working closely with the Cabinet Office to develop the action plan and that the government remains committed to publishing shortly. We will update Parliament on the publication and implementation of the plan in the usual way. The action plan will make clear that cyber security is a shared responsibility that requires action from government and businesses, including delivery and delivering this bill to secure the UK's most critical systems. With those reassurances, I hope noble Lords will feel able to withdraw and not move their amendments.
19:02
Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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My Lords. Can I thank the noble Baroness for her cameo appearance Baroness for her cameo appearance today on this group, and for having the temerity to give an undertaking on behalf of the Home Office? And I hope that the Home Office will deliver in due course. And so in that respect, my Lords, I'm. That was as expected as regards amendment one, five, eight, and I very much thank the noble Lord home's noble Baroness Harding and the noble Viscount Camrose for their support, and we will look forward to that bill when it comes forward with that provision in it.

 My Lords, as regards digital sovereignty, I think we're on the same page as regards not believing that this amounts to total independence by Lords, but it does mean, as the noble Baroness indicated, having resilience across the full stack involved in the development of of AI in particular. I think if circumstances were different and we had more time, my Lords, that we might be pressing further on this particular amendment. And I'm certain that if the noble Baroness Kidron was here, she would be wanting to do that, my Lords. But I think we're anxious to move to the next group.

So in the meantime, we will be holding the government's feet to the fire in terms of its AI sovereignty strategy, in particular, my Lords.

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But I beg leave to withdraw. Amendment 61. Is it your.

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Is it your. Lordships pleasure. That this amendment be withdrawn? The amendment is by leave withdrawn. The amendment is by leave withdrawn. Amendment 62 Baroness Mone not moved. Amendment 63 Baroness Lloyd moved. Amendment 63 Baroness Lloyd moved formally. The question is, is amendment 63 be agreed to? As many amendment 63 be agreed to? As many as are of that opinion will say content. The contrary not content. The contents have it. Amendment 64 Baroness Northover not moved. Amendment 65. Lord Clement-Jones not moved. Amendment 6666. Lord Tarassenko not moved. Amendment 67 Baroness Kidron not moved in clause 30.

Amendment 68 moved formally. Baroness Lloyd the question is, is amendment 68 be agreed to? As many as are of that opinion will say content. The contrary not content. The contents have it. Amendment 69 Baroness Morgan of Ely not moved in. Clause 31. Amendment 70 to 76 move formally. En bloc Baroness Lloyd. The question is that amendment 70 to 76 be agreed to. En bloc as many as are of that opinion will say content the contrary not content, the contents have it after clause 35.

Amendment 77. Viscount Camrose Lord Markham.
19:05
None Portrait Amendment: 77 Lord Markham (Conservative)
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My. My Lords, while we're grateful for the way that the noble Baroness Doocey Ministers. Mrs. has listened and modified the bill on many of the things that we say, I think it's the feeling probably of most noble Lords, that the Bill is very much piecemeal in nature, or maybe, as Viscount Colville said a b mole plan in terms of tackling security rather than setting out, rather than setting out a comprehensive strategy for cyber security. So amendment 77 in my name and my noble friends, Viscount Camrose and noble friends, Lord Holmes seeks to address this by trying to have a strategic review of which entities should be brought into scope and and which shouldn't.

 And then, as ever, the amendment 163 by Lord Burt and also signed by Lord Clement-Jones and Baroness Kidron and myself, seeks very much to build on this. As ever, Lord Birt has made some very thoughtful and insightful points, and I know that much work has gone into this. And so by amendment 163, really trying to require a regime wide effectiveness review, looking at which sector should and should not be included, looking at how we can really use our world class AI safety institute to play a crucial role in cyber security. So I think in all of this, amendment 163 is critical in building a comprehensive cyber security strategy and action plan, or dare I say it, a national cyber action plan.

Given the noble Baroness. The Minister said earlier that DCMs are actually in the process of preparing such a plan. I. I hope very much that this is something that the government would be prepared to support. But if it's not, and if it is something that Lord Birt wishes to divide on, then we will be supporting him in

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testing the opinion of the House. Amendment proposed after clause 35. Insert the following new clause 35. Insert the following new clause assessment of need for further, strategically important entities to be brought within scope, as printed be brought within scope, as printed on the Marshalled List.

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I rise to. Move amendment 163 in my name
19:07
Lord Birt Portrait Lord Birt (Crossbench)
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>> Move amendment 163 in my name and those of the noble Lords, Lord Malcolm and Clement-Jones, alongside Baroness Kidron. My Lords, I think the earlier stages of this Bill have seen this House on all sides at its very best, with members bringing real life experience and serious expertise to bear in a considered and non-partisan way. On the grievous challenge that the cyber threat presents to our country. And that scrutiny, I would say, my Lords, has demonstrated, I'm afraid, just how limited this bill is in addressing that grievous challenge it focuses on, and this is almost being forgotten in our debate today.

It focuses only on a small fraction of the economy and the public sector, not on the lessons of JLR, M&S, TfL or the Department for education. It fails to appreciate the enormous complexity of technology platforms and the origin of their vulnerabilities. Just a few days ago, a leading CTO in the midst of negotiating a contract to be supplied with data services by a leading provider, read out to me one of the legal conditions of that supply, and I quote, we shall not be responsible for any damage caused to the customer's computer or to customer data, or for any bugs, viruses, Trojan horses, or other destructive code.

Extraordinarily, my Lords, and this is being touched on more than once this afternoon. The draft of the bill that reached us did not even mention AI. Can that be believed? It is a bill that creates a multiplicity of cyber regulators, an estimated 18 in all. My Lords in Northern Ireland, it is the Department of Finance that will be the designated regulator, not just for energy but also for health, for road and rail and for drinking water. How could my Lords 18 regulators possibly amass the necessary skills to regulate in this deeply complex, complex and ever evolving environment, week by week?

As we have considered this bill, the ever darkening cyber storm clouds gather last week. As we all will have noticed, the incident affected 70% of the worldwide web 10 million servers identified as at risk. What are amendment seeks to do, my Lords, is to see this Bill as a work in progress and to require the government, over the coming 12 months to address the whole of the challenge identified throughout our proceedings, and to conduct and to publish a review, inter alia, of the appropriate regulatory framework for cyber, which we manifestly do not have a review of which organisations have a material impact on the economy and society in both the public and private sectors, and should be brought into scope of what obligations should be placed on those organisations to promote cyber resilience.

A review, my Lords, of what obligations to provide safe services should be placed on technology suppliers. And remember the quote I've just read out of what scale and nature of cyber professionalism the UK needs, of what incidents should be reported and to whom, and critically, a review of the powers of the AI Security Institute or another regulator in relation to frontier AI systems, a matter that's come up over and over again today to make AI a safe technology for us all to deploy. Our hope, my Lords, is that this Minister will welcome the opportunity that such a review would present, would address all the many questions that have been arisen, but not properly answered today, that it would speedily promote further legislation that will enable us to grip this challenge in a way that this Bill, in its present form, simply does not.

My Lords, I beg to move.
19:13
19:14
Lord Tarassenko Portrait Lord Tarassenko (Crossbench)
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The Lords I to rise to speak in support of amendment 163 in the support of amendment 163 in the name of my noble friend Lord Birt. It's not attracted much notice, but the series of incidents in the last few months in which frontier AI models broke into the systems of several organisations, is beginning to generate some sort of response amongst the culprits. OpenAI, Anthropic and Google are reported to be planning to launch their own standards authority for frontier AI, which would establish qualifications for independent auditors of the models and labs. My Lords, we have the best independent audit auditor in the world in our AI Security Institute AC.

We should not leave it to the frontier AI developers to mark their own homework or decide who audits them. So I welcome the additional 120 million investment in AC. And on Saturday, the director of AC told us today. That is in fact 120 million over four years and very much needed to keep AC at the forefront of frontier AI evaluation. We should also acknowledge that the government have moved since committee. Their amendment 17 gives the Secretary of State powers where a compromise may be attributable to loss of oversight or control of an AI agent. But as we've already noticed, amendment 70 operates after the event, and it does not mention the AI Security Institute yet.

AC is the only body in the UK with the technical capability to determine before a model is deployed, whether it can attack the systems that this bill protects. Today, it has that access because developers choose to give it, and the suspension of that access for three weeks, at the request of the US government, shows that it can be withdrawn overnight, with frontier AI capability advancing every few months. Should our critical national infrastructure rely on goodwill alone? That is the question that subsection five D in amendment 163 asks. It requires the review to consider whether AC should have powers over frontier AI systems that pose a risk to our essential services to audit them before deployment, to set standards, to inspect them, and to require all recommend their suspension.

 Amendment 163, however, is a review, not new regulation, and I hope, therefore the government will not find it too difficult to accept. But a review is only as good as its conclusions. I would therefore be grateful if the Minister could give the House two assurances, first of all, that the government will reach a clear conclusion and not simply keep the matter under review on whether AC should have a statutory role before deployment. Secondly, that the power in clause 291, which the government's own amendment 70 now uses for AI, could give it that role without further primary legislation.

My Lords, this amendment is critical, and if my noble friend Lord Birt chooses to test the opinion of the House, I shall support him.
19:17
Lord Clement-Jones Portrait Lord Clement-Jones (Liberal Democrat)
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My Lords, we've had three very >> My Lords, we've had three very persuasive and excellent speeches in support of amendment 163, and I in support of amendment 163, and I do thank the noble Lord Burt for tabling this extremely comprehensive and cross-party amendment. My Lords. And I wonder whether the chair has the details of some of the typos that are in the amendment, so that we don't vote on something which will have to be changed at Third Reading. My Lords, it covers the scope of the Bill, which is not adequate. As has been explained, the food and essential goods supply chain could be under review.

Local government and democratic infrastructure, advanced manufacturing software as a service and cloud intermediaries. My Lords, it creates a structured, evidence based review with a mandatory interim report at six months and a comply or explain mechanism requiring the government to state publicly why any excluded sector is not being brought into scope. And, as the noble Lord Tarassenko says, crucially, it requires the review to examine the institutional architecture, including whether the A, a, a I Security Institute should have formal audit powers over frontier AI systems deployed in essential activities. My Lords, we risk leaving our primary technical watchdog equipped only with voluntary oversight, while the capabilities it is charged with scrutinising outpace the law.

My Lords, we face an era of persistent cyber warfare. We cannot leave our food supply, our local democracy and our advanced industries unprotected. If the Minister cannot accept this review on the face of the Bill, my Lords, on these benches we will be strongly supporting the noble Lord Birt

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amendment. Noble Lords amendments in this

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Noble Lords amendments in this group have been laid seeking an early review of various aspects of early review of various aspects of the legislative, legislative and regulatory framework. Amendment 163 would require the government, would require the government, within a year of Royal Assent, to undertake and publish extensive reviews of the regime, including
19:20
Baroness Lloyd of Effra Portrait Baroness Lloyd of Effra, Parliamentary Under-Secretary of State (Department for Digital, Culture, Media and Sport) (Labour)
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reviews of the regime, including its institutional architecture, i.e. what regulator does what and the scope of activities it regulates. This was set out by noble Lords Lord Birt and the noble Lords, Lord Londesborough, and the aspect relating to AISI by the noble Lord Lord Tarassenko. I caution noble Lords that this amendment would commit the government to reopening the fundamental basis of how cybersecurity is overseen in the UK on an annual basis. This would create a destabilising and uncertain regulatory, business and investment environment. Although it is right that we consider how best the NIS regime can be used to protect the cybersecurity of the UK's most essential services.

I am concerned about conducting this kind of wide ranging and comprehensive review envisaged by this amendment. With the year within a year of the bill's passing and every single year thereafter, I am deeply concerned this would be a distraction to the effective implementation of the changes that this bill introduces and the reviews of scope that noble Lords and I have discussed during passage. The imperative, once this bill passes, should be focussed on working with regulators and regulated sectors to ensure that the updated regime delivers its objective of improving the cybersecurity and resilience of the UK's essential services.

These are risks we see every day to the question asked by the noble Lord Lord Tarassenko, as set out as I set out in response to the earlier group, the government is not supportive of giving AC some of the roles he described. What we want to focus on is working to deliver the security and resilience requirements in secondary legislation, and partnering with regulators to ensure that they have the capability needed to enforce the updated regime. I strongly believe that we should allow time for these changes to be introduced and bed in before we undertake such a wide ranging review of their effectiveness.

I do recognise the strength of feeling expressed by peers in this debate and in previous debates about the importance of critical services not currently in scope of this bill. Having adequate cyber security defences. Building on previous discussions, I can today commit that within 12 months of this bill passing, the Secretary of State will lay a statement setting out whether future CNI activity should be brought into scope of the NIS Regulations, as set out in the Bill. For something to be defined as a new essential activity, the Secretary of State must be satisfied. The activity is essential to the economy or day to day functioning of society in all or part of the UK.

A 12 month review of scope will allow the Secretary of State to conduct an evidence based assessment as. As mentioned by the noble Lord Lord Clement-Jones of. Whether they consider other sectors would meet this test and the suitability of bringing them in scope of the regime. Once the review is completed and the statement laid, the government could then consult on which of those sectors could be added to ensure the focus on the areas where the impact of a cyber incident would be greatest. The review will focus on the CNI sectors not currently in scope of the NIS or this bill, for instance.

This will include government and the food sector. I believe this approach focusing on the implementation of this bill with a targeted review of where the UK's most critical services should be brought into scope, will best enable us to deliver our objectives ahead of a comprehensive Post-implementation review within three years of Royal Assent. I can reassure noble Lords that under the Bill's current provisions, such a post-implementation review will be able to consider the effectiveness of the regime's institutional architecture.

I hope the noble Lords are reassured by this approach and these amendments will be withdrawn.
19:24
Lord Birt Portrait Lord Birt (Crossbench)
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I thank noble Lords who've >> I thank noble Lords who've spoken in support of these amendments. My colleagues on these amendments. My colleagues on these benches, Lord Londesborough and and and Lord Tarassenko and and Lord Clement-Jones. I, I have to admit to real despondency to hear the Minister's response. I have said before, I'm not a technologist, but for 30 years I've been involved in major institutions in the public and the private sector for the whole of that time, without any pause. And I've been involved in technology challenges throughout that time, and I can promise the Minister and perhaps you'd like to listen to what I'm saying.

I promise the Minister that this bill is simply not the. Doesn't reflect the real world that I have inhabited and do inhabit. It simply doesn't measure up at all to the scale of the challenge that we face. And I deeply regret that. I want to take the opinion of the House Lords.

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I'll get to amendment 163 when it comes in its place in the Marshalled List. In the meantime,

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Marshalled List. In the meantime, amendments? 77 yes. Is it your Lordships pleasure

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Is it your Lordships pleasure this amendment be withdrawn? The amendment is by leave withdrawn. amendment is by leave withdrawn. Amendment 78 Viscount Camrose not moved. Amendment 79. Lord moved. Amendment 79. Lord Clement-Jones not moved in. Clause 37. Amendment 80. Baroness Lloyd moved formally. The question is that amendment eight be agreed to. As many as are of that opinion will say content Of the contrary, not content. the contents have it. Amendment 81 Baroness Northover not moved in clause 40. Amendment 82 Baroness Lloyd moved formally. The question is amendment 82 be agreed to. As many as are of that opinion will say content.

The contrary not content. The contents have it. Amendment 83 Lord Clement-Jones not moved. Amendment 84. Baroness Northover not moved. Amendment 85 Baroness Lloyd moved formally. The question is that amendment 85 be agreed to. As many as are of that opinion will say content Of the contrary, not content. the contents have it. Amendment 86 Viscount Camrose not moved in clause 42 amendments 87 to 89. Baroness Lloyd of Effra moved formally. En bloc the question is amendments 87 to 89 be agreed to? As many as are of that opinion will say content the contrary not content the contents have it.

Amendment 90 Baroness Northover not moved in before clause 43. Amendments 91 to 104. Baroness Lloyd formally En bloc. The question is that amendments 91 to 104 be agreed to En bloc as many as are of that opinion will say content the contrary not content, the contents have it. Amendment 105 Lord Clement-Jones not moved. Amendment 106 Baroness Lloyd moved formally. The question is. Amendment 106 be agreed to. As many as are of that opinion will say content. The contrary not content. The contents have it. Amendment 107 Baroness Northover not moved in clause 44. Amendments 108 to 116 Baroness Lloyd formally En bloc.

 The question is that amendment 108 to 116 be agreed to. En bloc as many as are of that opinion will say content. The contrary, not content. The contents have it after clause 44 amendments 117 to 119 Lord Clement-Jones not moved. In clause 65. Amendments 120 to 144. Baroness Lloyd moved formally. En bloc. The question is amendments 120 to 144 be agreed to. En bloc as many as are of that opinion will say content. The contrary, not content. The contents have it. Amendments 145 to 147. Lord Clement-Jones not moved and clause 55 amendments 148 to 157 Baroness Lloyd moved formally.

En bloc. The question is that amendments 148 to 157 be agreed to. As many as are of that opinion will say content. The contrary not content. The contents have it. Amendment 158 Lord Clement-Jones not moved. Amendment 159 Lord Clement-Jones not moved. 160 Viscount Camrose not moved. Amendment 161 Viscount Camrose not moved and 162 not moved. Before I call amendment 163, I do indeed have a few words to read out. My Lords, there are three cross-referencing errors in the Marshalled List. In the amendment in subsection nine, the cross-reference to subsection ten should instead read subsection eight.

In subsection ten, the second cross-reference to subsection eight should instead read subsection seven, and also in subsection ten. The cross-reference to subsection ten should instead read subsection eight. I hope that

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is clear. Amendment 163 Lord Birt. I

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I Think about what I said before. I'd like to test the opinion of the House.

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House. Amendment 163 be agreed to. As many as are of that opinion will say content. Content.

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Content. The contrary, not content. The question will be decided by a division, and I will advise the division, and I will advise the House when voting is open. My Lords,
19:30
19:41
19:42
None Portrait Division
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House when voting is open. My Lords,

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The The question The question is The question is that The question is that amendment

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The question is that amendment 164 be agreed to. As many as are of that opinion will say content. The that opinion will say content. The contrary, not content. The contents will go to the right by the throne will go to the right by the throne and the not contents to the left by

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Thank Thank you.

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Thank you. Thank you. Lord Worked Worked very Worked very well, Worked very well, well Worked very well, well done Worked very well, well done John. Worked very well, well done John. On

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My My question My question is, My question is, amendment My question is, amendment 164 My question is, amendment 164 be agreed to.

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They They have They have voted. They have voted. Contents

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They have voted. Contents They have voted. Contents 194 not. Contents. 155 so the contents

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That's That's popular That's popular now.

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That's popular now.

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Amendment. 165 Lord Moraes not moved. Amendment 166 Viscount moved. Amendment 166 Viscount Camrose not moved and amendment 167 Lord Clement-Jones not moved. My Lord Clement-Jones not moved. My Lords, that concludes the Report stage of the Cyber Security and Resilience Network and Information

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Systems Bill. My Lords, I beg to move that the House do now adjourn. House do now adjourn.
This debate has concluded
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