Cyber Security and Resilience (Network and Information Systems) Bill (Fifth sitting)

Ben Spencer Excerpts

Committee stage
Tuesday 10th February 2026 Public Bill Committees

[Alison Griffiths (Bognor Regis and Littlehampton) (Con)]

New clauses 6 and 7 sit together and are linked by the same practical concern regarding clarity and workability when an incident is unfolding.

I will start with new clause 6. Ransomware is no longer an occasional or unusual cyber-event; it is now one of the most common and disruptive threats facing essential services, digital providers and their supply chains. Written evidence to this Committee was clear that ransomware incidents are now routine, high-impact events, and that uncertainty at the outset of an attack often makes the consequences worse. The Bill rightly broadens the definition of an incident to capture events that are capable of causing harm, not just those that already have. That is the right direction of travel, but when organisations are under pressure, particularly in the first 24 hours of an incident, uncertainty slows action. Time is lost debating definitions rather than focusing on containment, escalation and reporting.

New clause 6 addresses that problem directly. It makes it explicit that a ransomware attack is an incident for the purposes of the NIS regulations, and sets out clearly what is meant by ransomware attack. It would not create a new duty; it would remove doubt from an existing one. Clear definitions support better behaviour when organisations are operating under real pressure.

New clause 7 follows naturally from that point. If we want faster and clearer reporting, the system into which organisations are reporting has to work in practice, not just on paper. The Bill expands reporting requirements and introduces new notification duties. That is understandable, but UK Finance told the Committee that many firms already support cyber-incidents under multiple regulatory regimes and that additional reporting layers risk duplication rather than resilience. When an incident is live, that duplication causes friction, slows the response and increases costs. It can reduce the quality of information being shared because teams are stretched across parallel processes rather than focused on managing the incident itself.

We do not seek in new clause 7 to reopen the policy intent of the Bill; the new clause would require a review, once these changes are in force, of how the reporting requirements are working in practice. That review would consider costs and interactions with other reporting frameworks. The new clause would also require that proposals for a single cyber-incident reporting channel be published. That is not a bureaucratic exercise; it reflects concerns raised in evidence that resilience is undermined, not strengthened, when reporting becomes fragmented at moments of stress.

Taken together, new clauses 6 and 7 are about making the system clearer at the front end and more usable overall. Clear definitions encourage timely reporting and coherent reporting channels make that reporting effective. I hope that the Committee will give serious consideration to both new clauses.

[Dr Ben Spencer (Runnymede and Weybridge) (Con)]

It is a pleasure to serve under your chairmanship, Dr Murrison, and it is always a pleasure to follow my hon. Friend the Member for Bognor Regis and Littlehampton. I will speak to clauses 15 and 16 and to new clauses 6 and 7, tabled in my name on behalf of His Majesty’s loyal Opposition.

The previous Government stated in their consultation covering the subject of cyber-incident reporting that security breaches that did not result in a successful attack could still leave organisations open to follow-up attacks. It was identified that reporting how the breach took place would also allow regulators and other organisations to prepare for similar attacks in the future. It is therefore a welcome development that clause 15 significantly increases the scope and speed of cyber-incident reporting by regulated entities to competent authorities and the NCSC.

That increase in scope is achieved by broadening the definition of reportable incidents from the current position, where only cyber-attacks having an actual adverse effect are reportable, to a position to where cyber-incidents that are capable of having an adverse effect on the operation or security of network and information systems must also be reported. The Government’s explanatory notes for the Bill state that this change in definition

“is designed to include incidents that have compromised the integrity or security of a system without causing significant disruption yet, but that could have potential significant impacts in the future.”

This has been broadly welcomed by industry stakeholders as a measure that should provide regulators with greater intelligence about emerging threats, leading to improved risk management and hardened resilience in their sectors.

On the importance of intelligence gathering, we heard evidence from David Cook of DLA Piper and Chung Ching Kwong of the Inter-Parliamentary Alliance on China, among others, about the increasing use of prepositioning and “live off the land” technologies deployed by malicious actors. Once systems are infiltrated, attackers remain in systems, sometimes harvesting data, waiting for the moment when they can cause maximum harm and disruption. Those serious risks should be flagged to regulators wherever they are identified.

Dr Sanjana Mehta of ISC2 described problems of underreporting in relation to the existing NIS regulations regime, and welcomed the principle of expanding reporting, as did Jill Broom of techUK. However, both cautioned that while some high-level factors have been provided as to the criteria indicating whether an attack should be reported, such as the number of users, impact, duration of interruption and geographical reach, what is not clear at present are the thresholds that are linked to those criteria. Those details are vital if reporting is to be successful in ensuring that regulators are kept appraised of the most serious threats.

Dr Mehta summarised that concern succinctly in her comment:

“In the absence of those thresholds, our concern is that regulated entities may be tempted to over-report rather than under-report, thereby creating more demand on the efforts of the regulators”. ––[Official Report, Cyber Security and Resilience (Network and Information Systems) Public Bill Committee, 3 February 2026; c. 16, Q14.]

Likewise, techUK has stated in its written briefings on the Bill that

“technically any phishing email is ‘capable of’ having a significant impact if the organisation lacks adequate detection or response capabilities. This will lead to over-reporting of low-level incidents and potentially overwhelm regulators, thereby distracting attention from genuinely significant threats.”

As in many aspects of the Bill, the problem is not on the principle but in the detail. We heard in oral evidence about the concerns of industry and regulators regarding the availability of suitably qualified personnel to build capacity for effective regulatory oversight. We must be alive to that important consideration in ensuring that thresholds are proportionate and risk-based.

The Government have stated in their factsheets on the Bill that they intend

“to introduce thresholds through secondary legislation before this measure is brought into in force”

and after a period of consultation. They have also said that those thresholds will

“clarify the points at which we would consider the impact of an incident to be ‘significant’, and therefore reportable to regulators”.

What discussions has the Minister had to date with regulated entities and regulators about the approach to consultation on these thresholds? What is the feedback on what those organisations consider to be reporting priorities?

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[Chris Vince (Harlow) (Lab/Co-op)]

Will the shadow Minister give way?

[Dr Spencer]

I am more than happy to give way to the hon. Member for Harlow.

[Chris Vince]

I thank the shadow Minister for remembering my consistency—I have not mentioned Harlow. How is the new clause helpful, given the potential confusion it causes with listing a specific kind of incident as well as the generic one?

[Dr Spencer]

The Opposition are trying to make it clear that ransomware needs to be in the scope of the reporting. It is really for the Minister to answer if he thinks there are problems with the new clause, and if so, how the Government will go about taking that forward. The widespread and highly damaging nature of ransomware attacks—which are often perpetrated by criminal groups at scale and speed—means that regulators need to have a detailed oversight of this area to prevent those attacks from being deployed more widely. Therefore, the new clause is intended to ensure that all ransomware attacks on regulated entities are reported, regardless of severity or potential severity, so that the risks are picked up.

In tabling new clause 6, I am acutely aware of the existing reporting burden for regulated entities and regulators. Since tabling it, we have heard impactful evidence from Carla Baker from Palo Alto, who highlighted the number of cyber incidents and false positives that many companies encounter each day. As I said in response to an intervention, in the absence of measures brought forward by the Government to address the widespread and urgent risks presented by ransomware attacks—and as the Government themselves identify as part of the Home Office’s review—it would be proportionate to make specific reference to ransomware in the reporting requirements on regulated entities in the Bill.

New clause 7 reflects the concerns of regulated bodies and industry representatives who have set out many, many times—in oral evidence and beyond—the need to ensure that reporting obligations are clear and, as far as possible, simplified across the many different incident reporting regimes that exist for providers of digital services. The new clause would compel the Secretary of State to publish an assessment of the impact of the new reporting regime on regulated entities in the Bill within 12 months of Royal Assent. Importantly, in line with the clear requests articulated by many stakeholders who gave evidence last Tuesday, it requires the Government to publish proposals for the creation of a single cyber incident reporting channel for relevant bodies.

[Dr Allison Gardner (Stoke-on-Trent South) (Lab)]

I worked for the AI and digital regulations service in the NHS. We were linking with all of the regulators to try to have a one stop, one shop door approach to how we do things. It was incredibly difficult, and three years on we were still ironing out all the glitches. New clause 7 is laudable, but because I know how difficult it is, a 12-month proposal is a very tight timeframe in which to try to get this right.

[Dr Spencer]

I thank the hon. Lady for her intervention. New clause 7 puts forward an assessment of the impact. It is not intended to make definitive changes, but to give time. I have confidence in the Government and the Minister that within 12 months—it is the kiss of death to say that one has confidence at the minute, is it not? [Laughter.] I apologise to the Minister.

[Dr Gardner]

I will defend myself: my point was not a criticism of the Government. I just know how hard it is for regulators to work together and iron out cross-working. They were very confident in their information-sharing skills, but it is more difficult than that. It was just a kindly meant reminder that there is not an easy solution, and that 12 months is a bit of a tight timeframe.

[Dr Spencer]

I very much take the hon. Lady’s point and the constructive spirit in which it was presented. Twelve months is a long time for the operations of Government to function, and I have faith—I will change my words—in the Government and all of their powers if they wanted to put their minds to bringing this forward. If there are concerns about the ability of the Department for Science, Innovation and Technology to take this forward, those concerns would spill over into all of the consultation requirements that have to be met to make sure that this Bill functions in the correct way. The argument on what we are debating today could swing both ways.

Industry stakeholders have expressed strong concerns regarding the diverse incident reporting requirements that exist in several pieces of legislation, including UK GDPR, sector-specific regulation and the Telecommunications (Security) Act 2021. As we have already discussed, the Home Office may also bring forward guidelines for reporting ransomware incidents in future. Additional reporting requirements and procedures included in the Bill are viewed as adding a further layer of complexity to a legislative environment that is already very challenging to navigate. Stakeholders report that the current approach, with multiple different reporting procedures and platforms, increases regulatory compliance costs on businesses and detracts from the resources available to implement effective improvements in cyber-resilience. In view of that, will the Minister support this urgently needed review clause to assure industries that the Government have heard their serious and vital concerns on the matter?

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[Kanishka Narayan]

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

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

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

I commend the clause to the Committee.

[Dr Spencer]

Clause 17 will amend the NIS regulations to provide a framework for regulators to impose charges on regulated entities to recover the costs incurred by them in carrying out their supervision and enforcement functions. The Government’s explanatory factsheet supporting the Bill suggests that those changes are needed to ensure that regulators are

“better resourced to carry out their responsibilities.”

We have heard at length from witnesses in oral evidence sessions that resourcing is a key consideration for regulators in meeting their new and expanded obligations under the Bill. The concept of our regulators’ being better funded is good. However, as with much of the Bill, the lack of detail around the regulator charging model is causing uncertainty among regulated entities that would be liable to meet the associated costs.

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[Kanishka Narayan]

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

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

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

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

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

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

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

[Dr Spencer]

Clause 18, which the Government seek to modify through amendments 14 to 18, creates new pathways for information sharing between regulators, public authorities and Government Departments. It also creates a power for NIS enforcement authorities to share information with relevant overseas authorities for specified purposes. The new regime is intended to remove gaps and ambiguities in the existing framework governing the sharing of information obtained in the course of competent authorities and the oversight role of NCSC, and to create legal certainty in this domain.

In turn, it is anticipated that greater information sharing will assist with the detection of crime, enforcement activity and awareness of emerging cyber-risks and with ascertaining the effectiveness of the NIS regulations in building UK cyber-resilience. In particular, the Bill creates a new gateway to ensure that NIS regulators can share information with UK public authorities, and vice versa, as well as sharing and receiving information from organisations outside of the NIS framework, for example other regulators or bodies such as Companies House.

The Bill strengthens safeguards on how information can be used once it has been shared under the NIS regulations by restricting onward disclosure. More effective information sharing will be vital for competent authorities to keep up to date with emerging risks and building resilience in their sectors, and the new measures were broadly welcomed by regulators in our oral evidence session.

However, industry bodies such as techUK have called for further detail on the new information-sharing regime. What steps are the Government taking to ensure that regulators share responsibility for protecting sensitive data, and that information-sharing processes are coherent, proportionate and secure? Could the Minister elaborate on the discussions he has had with regulators on those matters, and on how secure information sharing will work in practice?

Finally, on the detail of the text in Government amendment 14, proposed new paragraph (aa)(ii) refers to persons

“otherwise in connection with…any other matter relating to cyber security and resilience,”.

Given that this is an information-sharing power, that seems a remarkably broad “any other matter” provision. What disclosures that are not already covered in the Bill does the Minister conceive will come up in that scope? What guidance or consultation will the Minister produce to make sure that such powers are proportionate and not at risk of abuse?

[Emily Darlington]

Again, I welcome the Government amendments and clause 18; they are important to enabling us to share our vulnerabilities in an appropriate way with those people who may be involved. However, some of the aspects of those vulnerabilities that security services—GCHQ, His Majesty’s Government Communications Centre and others—raised with us relate particularly to not only foreign interference, but the potential for interference through technology embedded in our networks. How does the Minister see the measures working within our co-operation with different foreign nations, particularly during these volatile times?

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[Kanishka Narayan]

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

[Dr Spencer]

Clause 19 amends the NIS regulations and will require regulators to publish guidance on the security and instant reporting requirements of regulated sectors. In formulating their guidance, regulators are under a duty to co-ordinate and consult with other regulators to ensure consistency as far as is reasonably possible. Relevant provisions in the code of practice, to be issued by the Secretary of State under clause 36, must also be taken into account. Newly regulated entities will, no doubt, welcome proportionate guidance on meeting obligations, and existing regulated entities will appreciate any streamlining that comes from consultation between regulators and their approach. Can the Minister provide further details about whether consultation between regulators and the Secretary of State is under way on a consistent approach to regulation?

[Kanishka Narayan]

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

Question put and agreed to.

Clause 19 accordingly ordered to stand part of the Bill.

Clause 20

Powers to require information

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

[Bradley Thomas]

Can the Minister elaborate on how he will ensure that regulators have the capacity to cope with large-scale data reports?

[Dr Spencer]

Clause 20 grants regulators wide-ranging information-gathering powers, in relation both to regulated entities and to organisations currently outside the scope of the regulations. These new powers will be important to competent authorities in gaining access to the information necessary to consider which businesses should be designated as critical suppliers for their sectors. The Minister will remember that we had a very extensive discussion about the allocation, or otherwise, of critical suppliers. What assurance can he give that requests for information under this new clause will be exercised proportionately? That is especially relevant for SMEs, which might struggle administratively to meet broad requests for information within short deadlines.

I know I will be told off by the Chair if I try to rehash the previous debate on clause 12, but one of the points I made during that debate was that the scope of what could fall under the definition of a critical supplier could, in my view, include any supplier to an operator of an essential service. Potentially, therefore, a request for information under this provision could be incredibly broad. Can the Minister give some reassurance about how this will work in practice, relating to the proportionality of data collection? The concern is that this could become a fishing or dredging exercise, rather than something that is proportionate and targeted on the most high-risk suppliers.

[Lincoln Jopp]

In terms of scope, could the Minister give us some sense, when it comes to managed service providers, whether the purpose behind this clause is to enable regulators to find out their entire client list? I would be grateful for some clarity on that point.

[Kanishka Narayan]

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

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

[Dr Spencer]

Will the Minister talk through what the data exchange flow chart will look like? How will it work in practice? Will the OES proactively contact the regulator and say, “We have all these suppliers—go play”? Will the regulator contact the OES and say, “Give us a list of all your suppliers, and then we are going to start an investigation programme and decide what data we need”? What is the direction of communication in practice? Or—perhaps even worse—will the burden be on suppliers to an OES to contact the regulator and say, “Could we possibly be in scope?” How will it shake out in practice?

[Kanishka Narayan]

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

[Dr Spencer]

The Minister has mentioned business continuity plans a second time as a justification for not going into detail on this, but the whole reason for the Government bringing in the powers in clause 12, and the designation of critical suppliers, is that there was no business continuity plan in place in the example of Synnovis. I do not see how that argument gets away from the need for clarity, for organisations that could be at risk of being in scope of being assessed and designated as a critical supplier, about what actions they have to take in response to regulation, proactively or otherwise, and the burdens on them. We have just discussed the cost of enforcement, which risks essentially becoming a cyber-security tax.

[Kanishka Narayan]

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

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

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[Kanishka Narayan]

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

[Dr Spencer]

I will come to my speech, but as we are having a debate on this point, but does the Minister’s answer not risk a gilded defensive posture being set up by MSPs? If they list terms and conditions for the use of their services that essentially bar everything, they can say that any liability—if there is ransomware or they get hacked—is completely on the client, as opposed to themselves. Does the Minister’s explanation not risk MSPs taking a very defensive posture to ensure that the client is liable for any problem? Given that the clients are usually not regulated entities, this provision effectively becomes meaningless.

[Kanishka Narayan]

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

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

[Dr Spencer]

I think I will follow up in writing on my intervention to try to dig down into the explanation of how liability will be laid down when the client is not a regulated entity but is receiving services from regulated entities. That is an important point, because these are quite hefty fines. As my hon. Friend the Member for Spelthorne pointed out, even with £34 an hour lawyers, there will be a lot of industry activity to try to avoid liability in the context of a substantial cyber breach, which can be significant.

More generally, the clause makes significant changes to enforcement practices under the NIS regulations, including to increase the financial penalties regulators can impose for infringement of the regulations, and to set out a clearer system of tiered penalties, based on the severity of infringements. The Government’s impact assessment states that these changes have been made because of concerns reported by regulators that

“enforcement under the NIS Regulations has been constrained by unclear band structures and a maximum penalty which is insufficient to deter non-compliance across all NIS sectors”,

which goes back to my previous point. Enforcement activity under the NIS regulations has been sparse, inconsistent and insufficiently effective to increase cyber-resilience to the levels necessary to meet the proliferating cyber-security risks to our most critical sectors.

Fundamentally, the existing approach to enforcement has not achieved the necessary change in attitude to cyber-risk at the highest levels of regulated entities. It is concerning that board level responsibility for cyber-security has steadily declined among businesses since 2021, with 38% of businesses having a board member responsible for cyber-security in 2021, compared with 27% in 2025.

The enforcement model clearly needs to be more effective, and increasing fines is only one part of that. Regulatory capacity to undertake supervision and enforcement remains a concern, as does perceived reticence on the part of regulators to impose fines on critical infrastructure providers, due to the risk of destabilising essential services and increasing costs for consumers. In our oral evidence sessions, many witnesses, including Richard Starnes of the Worshipful Company of Information Technologists, raised the issue of greater responsibility at the highest levels of management for cyber-resilience. What assessment has the Secretary of State undertaken of whether changes to the penalty regime are likely to influence board-level attitudes towards cyber-security?

[Kanishka Narayan]

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

Question put and agreed to.

Clause 21 accordingly ordered to stand part of the Bill.

Clause 22

Enforcement and appeals

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

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[David Chadwick]

The hon. Gentleman makes an important point. We cannot allow these services to be interrupted. He will be well aware of the impact that bins not being collected has on our streets.

Councils are being targeted because they hold sensitive personal data and provide much-needed services to the most vulnerable in society, yet they are being left as soft targets, without statutory requirements and the ringfenced resources that accompany them. We cannot claim to be building a cyber-secure Britain while leaving the frontline of public services unprotected. Resilience must extend beyond councils.

Our new clauses also ask that our political parties and electoral infrastructure are properly protected, because we know that hostile states and non-state actors are actively seeking to undermine democratic systems. An attack does not need to change an electoral result to be devastating; it need only cast doubt on the integrity of the count or prevent legitimate voters from casting their ballots. We know that trust, once lost, is extraordinarily hard to rebuild. The security of our elections is too important to be left to secondary legislation made at some future date.

Finally, our new clauses would require the Government to bring critical manufacturing, food production and large-scale retail distribution into scope. When British companies such as JLR lose billions to cyber-incidents, or when national retailers such as Marks & Spencer are paralysed, it is not just a private commercial issue, but a blow to national economic security, and there is no economic security without cyber-security. The Minister will be aware that the ramifications of the JLR attack were felt across south Wales because of the link to the steel industry supply chain. Our neighbours in the European Union already recognise this issue through the NIS2 framework, which covers food production and transport manufacturing as essential sectors. The new clauses simply ask the Government to match that seriousness.

At their heart, our new clauses are about ending the two-tier approach. We seek the Government’s recognition that councils, political parties, electoral infrastructure and core supply chains are just as critical to national resilience as power stations and data centres. A country is not secure if its public services, at any level, are exposed. Its elections are vulnerable, and its economy can be brought to a standstill by a single cyber-attack. These new clauses hope to close those gaps and make Britain safer.

[Dr Spencer]

Part 3 is a very important part of the Bill. It gives the Secretary of State a range of powers, including ones to bring additional sectors into the scope of regulation, to update the NIS regulations, to publish statements of strategic priorities for regulators and to publish codes of practice that set out cyber-security measures for entities to comply with their regulatory duties.

Clause 24 includes a power enabling the Secretary of State to specify new services that can be brought into the scope of the NIS regulations, and to designate additional regulatory authorities. Those powers are intended to allow the Secretary of State to identify additional critical sectors and respond to emerging threats quickly. That agility introduced by this measure has been broadly welcomed as appropriate, given the fast-evolving nature of malicious cyber-activity.

Given the extent of the Secretary of State’s new powers, however, it is important to put in place guardrails to ensure that the appropriate response to emerging threats is indeed further regulation, rather than market-led or insurance-based mitigations. Can the Minister provide any further information at this stage about the procedure that will be followed in deciding whether to expand the scope of regulation to ensure consistency and transparency?

Hon. Members have tabled several new clauses that would prompt the Secretary of State to use her duties under clause 24. I will speak to new clause 1, tabled by the hon. Member for Warwick and Leamington (Matt Western), and new clause 9, tabled by the hon. Member for Brecon, Radnor and Cwm Tawe, together, as they have some thematic overlap. New clause 1 seeks to bring all entities, other than small businesses and microbusinesses, in the food production, distribution and retail supply chain into the scope of regulation as operators of essential services. New clause 9 also touches on the regulation of food supply chains. It would require the Secretary of State to designate retailers of

“food and essential goods (when part of a large-scale distribution chain)”

and manufacturers of “critical transport equipment” as providers of essential services to be brought into the scope of regulation.

Those new clauses reflect concerns about the cyber-attacks targeting the food retailers M&S and Co-op last year. New clause 9 reflects issues raised by the major attack on JLR, which cause such disruption and threatened the stability of regional jobs and supply chains. Those attacks caused significant public concern, but they would all remain out of scope after the Bill comes into effect.