Business and Trade Committee

Emma Lewell Excerpts

Thursday 27th November 2025 Westminster Hall

[Emma Lewell (in the Chair)]

We begin with the Select Committee statement. Liam Byrne will speak on the publication of the 11th report of the Business and Trade Committee, “Toward a new doctrine for economic security”, HC835, for up to 10 minutes, during which no interventions may be taken. At the conclusion of his statement, I will call Members to put questions on the subject of the statement and then call Liam Byrne to respond to those in turn. Questions should be brief and Members may ask only one question each.

[Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)]

It is a privilege to serve with you in the Chair, Ms Lewell. Let me record my thanks to the Backbench Business Committee for making time for this debate; to a brilliant team of Select Committee members—it is a privilege to serve alongside them—and to a first-class team who help to ensure that the Select Committee does its work so expertly. The report we present today sounds a note of agreement, but is also designed to sound a warning. The note of agreement is this: we agree that national security is economic security. But the note of warning is stark: we do not find that our economic security regime is fit for the future.

If we think about the risks we faced this summer, with the Jaguar Land Rover cyber-attack, which ended up costing a £1.5 billion state guarantee; the struggles that our Dutch allies went through with Nexperia; and the struggles that our American allies went through in the spat with China over rare earth technology exports, we can now see that the question of economic security is front and centre for businesses and policymakers, each and every day. The warning that we sound is that the risks are going to multiply significantly over the years to come.

The threat surface that most businesses now operate is much bigger than in the past. Artificial intelligence is going to transform cyber-aggression. We now have states and state-backed actors operating in this space. This is all at a time when our country is going to seek to entice around £100 billion extra in inward investment, much of it from abroad and much of it in our energy infrastructure. What Ciaran Martin calls the private ownership of public risk is about to expand exponentially. Yet, right now, we simply do not have the defences in place that we need.

The core argument of our report is that just as we need a whole-of-society approach to defence, so we now need a whole-of-society approach to our economic security, but we do not have the systems in place to deliver that today. That is why change is needed over the years to come. In order to help understand precisely the gaps, we worked together with experts at the Royal United Services Institute, gathered lots of evidence, took lots of witness testimony and heard from Ministers. What that basically revealed is that many of our allies, such as Japan, but also in a way the European Union, have legislative backing for many of the regimes that they have in place.

Our allies in Japan in particular, who have had to think about this for a lot longer than we have, have a very sophisticated set of defences and state machinery. Equally, we could find very durable institutions in the United States and real policy innovation in the European Union today. In this country, we have a number of strategies, which are growing in number, but frankly do not really add up to a comprehensive regime for economic security.

There have been welcome advances, not least the critical mineral strategy that was published this week, but the risk is that ad hoc papers become strategy by stapler, where we have policy papers published that are not durable for the long term. That is a problem, because only the public sector and the private sector working together can mobilise the kind of investment that is needed to transform the country’s resilience for the threats we will face in the future. We argue therefore that, just as we comprehensively overhauled the doctrine to tackle counter-terrorism after 7/7 with the publication of CONTEST, we now need a new doctrine of economic security in order to ensure that there is a whole-of-Government and whole-of-society approach, all pointing in a similar direction.

We conclude that it does not make a great deal of sense for policy to be guided by a hard definition of economic security, because things are going to change: this is a dynamic environment, and a hard definition might entail more risks than it solves. However, we believe that this doctrine should be shaped by a set of strategic principles in the years to come. Colleagues across the House will have many ideas about what should go into that. We conclude that our approach should be guided by six Ds: diagnose, develop, diversify, defend, deter and dovetail.

On diagnosis, we think there should be a long-term technology forecasting centre in Government that supplies not just Government but the private sector with, if not intelligence, then certainly insight, to shape their understanding of risk in the future. We need to build on the work of the National Cyber Security Centre to create a proper platform where public and private sectors can work together in new ways to understand the risks that the country confronts.

We need to specify the sovereign capabilities that we need to develop as a country. Two or three are defined in the strategic defence review, but that is about it, and the defence industrial policy promised some further definitions. We cannot understand what we are going to decouple from allies—or in some cases from enemies—unless we have a more sophisticated understanding of the sovereign capabilities that we need as a country. We then need to line up the national wealth fund and other resources behind this understanding. We also need to modernise the “Managing Public Money” framework so that Ministers, like the excellent Minister in his place today, are not hidebound and forced to issue ministerial directions every time a strategic investment is needed, as was the case with Jaguar Land Rover and the nationalisation of British Steel.

Our third D is diversify, which is well understood. We need to diversify supplies of critical minerals and diversify our critical supply chains, too. The targets for critical minerals published on Monday were important, but there was no investment plan to go with them. We cannot do this alone; we can only do it by acting with allies.

We then need to better defend our infrastructure, including our critical national infrastructure and our cyber-infrastructure, in both the public and private sectors. That is why we think that the mandatory reporting of ransomware attacks is a good idea, and why we think we should be radically expanding the work of Pool Re so there is a backstop to the cyber insurance market, which there currently is not. We need capital allowances to be modernised, so there are real incentives for small and medium-sized enterprises to invest in cyber-security. Critical SMEs should probably enjoy access to Government support too.

In the field of deterrence, we need to ensure that we can fast-track investment into our country from trusted sources. That is why a trusted investor scheme would make a lot of sense. We need to explore anti-coercion instruments in the way that the European Union has. We need to name and shame those involved in sanction breaches much more aggressively than we are today. Crucially, we need to make sure we have the right skills in both Companies House and the National Crime Agency. It is ridiculous that there is something like a £28,000 gap between the pay that someone in the National Crime Agency can get and the pay that someone in an equivalent police force can get. That is not the way to ensure that we have the right people on the frontline. We note with concern that Companies House has a 20% vacancy rate in its digital workforce. That is a real risk.

Finally, we need to dovetail what the Government are doing with what the private sector is doing. That is why we need new spaces in which they can work together. We also need to dovetail what we are doing with what our allies are doing: we call for an alliance of free-trading democracies to work together, like the work of the UK and the comprehensive and progressive agreement for trans-Pacific partnership—the Minister has just returned from a CPTPP meeting. The work that we are pioneering in the South Korean trade deal is a good example of the kind of thing that we should be doing more generally. We need almost to be driving forward an economic security union with our closest neighbour, and of course our allies in the United States need to be drawn into this work too.

We need to make sure that the blueprint has a backbone. That is why we call for a cross-Government Minister and an office of economic security to bring everything together, the restoration of the sub-committee on economic security in the National Security Council, and parliamentary oversight through the reform of section 54 of the National Security and investment Act 2021. We think that much of that should be enshrined in a Bill.

We have done this before. After world war one, we comprehensively modernised the state to combat the world of economic warfare. That is a wise lesson and a wise experience to guide us in new times.

--- Later in debate ---

[Andrew George (St Ives) (LD)]

I congratulate the right hon. Member on the report. As I am sure he knows, I responded to his request for comment. My question is about the security of financial services. He says that diversification is one of the solutions to the risk of cyber- attack. My worry is that, if we put all our eggs into the basket of an increasingly electronic-based financial services market where high street banks retreat behind electronic walls, that does not just result in vulnerable and digitally-excluded customers struggling to access financial services, but creates a big national risk. It is a problem for our communities where banks are retreating—in Cornwall, there will be only one Lloyds bank left next year—and for the security of the nation as well.

[Emma Lewell (in the Chair)]

Order. This is just a reminder that the debate must end at 10 minutes to 2.

[Liam Byrne]

I was very grateful to receive the hon. Member’s email. He is absolutely right. The shutdown of branches all over our country is a really serious problem that creates real risks. One answer is to ensure that we lean in behind the Post Office plans to create banking hubs, not just in a couple of hundred high streets, which is the proposal of the main banks, but in thousands of locations across the country. The Post Office has in place an agreement with the banks until about 2030, but the future thereafter is not clear, so I hope that Ministers can take up this point in the Department for Business and Trade to ensure that we lean into the plans that the Post Office has developed to transform the availability of banking services on thousands of high streets up and down the country.