Cyber Security and Resilience (Network and Information Systems) Bill

Public Bill Committee, 10 February 2026.

(Morning)

Andrew Murrison (Conservative, South West Wiltshire)

Good morning, everyone. I remind Members to send their speaking notes via email to Hansard and to switch electronic devices to silent. Beverages are not allowed. I ask people to speak clearly and precisely for the benefit of other colleagues and Hansard. Were they to give an early indication that they wish to speak, that would be much appreciated.

Lincoln Jopp (Conservative, Spelthorne)

On a point of order, Dr Murrison. In Thursday’s session, I asked the Minister why pupil data was not within the remit of this Bill. He said:

“On the question of schools, and more broadly the question of public sector authorities, I entirely accept that the handling of pupil data in schools is a critical aspect of our public service operations. The reason why public service authorities have largely been left out of the Bill’s scope is because we do not need to wait for the legislative process to act. We have been working, not least closely with the Government’s cyber-security strategy and the cyber action plan, to ensure that pupil data is kept securely and robustly.” ––[Official Report, Cyber Security and Resilience (Network and Information Systems) Public Bill Committee, 5 February 2026; c. 137.]

Since then, I have been researching any action taken in respect of the Government’s cyber-security strategy and the cyber action plan, and can find no record of them dealing with the issue of pupil data. I wonder whether, this morning, the Minister could specify what he meant last Thursday or commit to coming back to the Committee with that detail.

Andrew Murrison (Conservative, South West Wiltshire)

I am sure that the Minister will have heard what the hon. Member has said. He may wish to reflect on it, but it is not really a matter for the Chair. Nevertheless, it is on the record.

Lincoln Jopp (Conservative, Spelthorne)

On a point of order, Dr Murrison. Yesterday, I spoke in a petition debate in Westminster Hall. The petition was signed by 114,000 members of the public calling for a public inquiry into Russian influence in British democracy. In researching my response on behalf of His Majesty’s Opposition, I came upon the Government’s statement about this Bill, which said that it would

“require organisations in critical sectors to further protect their IT systems”.

The split infinitive notwithstanding, I do not believe that the Bill requires any organisations in critical sectors to further protect their IT systems. If the Minister thinks that the Government are correct in saying that, would he like to direct us to that requirement in the Bill?

Andrew Murrison (Conservative, South West Wiltshire)

Once again, if the Minister wishes to respond to that, it is open to him to do so. The hon. Member for Spelthorne, who is very adept at these things, will be able to weave any further comments he might have into his contributions during our proceedings.

Clause 15 - Reporting of incidents by regulated persons

Andrew Murrison (Conservative, South West Wiltshire)

With this it will be convenient to discuss:

Clause 16 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

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

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

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

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

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

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

Bradley Thomas (Conservative, Bromsgrove)

I have two points for the Minister to address. First, could he clarify whether an organisation would face repercussions if a regulator believed in retrospect that notification should have been provided sooner? Secondly, on customer notification, can the Minister address the concern around striking the right balance between informing the customer and ensuring that the update that they receive is meaningful and not so vague that it causes further distress or worry?

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

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

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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?

Clause 15 also introduces comprehensive, updated procedures for reporting cyber-security incidents. The timetables for reporting are shorter than existing ones, requiring regulated entities to make an initial report within 24 hours of discovering an incident, and a more comprehensive report within 72 hours. In each case, both the relevant competent authority and the NCSC must receive those notifications. The initial report must include the entity’s name, the essential service affected and brief details of the incident. Full notifications must set out more in-depth information, including timing, duration, whether the incident is ongoing, information on the impact of the incident or the impact that is likely to occur, and whether the incident was caused by a separate incident affecting another regulated entity.

The clause gives the NCSC enhanced information-sharing powers in relation to operators of essential services and data centres, which enable it to inform authorities and other jurisdictions when incidents could have a significant impact on the security of network and information systems in those countries. Given the intensifying nature of cross-border enterprise in supply chains—including in the provision of digital services such as cloud services and data centre capacity—such information sharing is a desirable and increasingly necessary measure.

In the traditional national security domain, cross-border intelligence sharing, subject to appropriate safeguards, is already vital to protecting our daily freedoms and the functioning of society. It is only right that co-operation should be extended—again, subject to appropriate safeguards—to the cyber-security domain, given the broad acknowledgment that cyber-security is vital and a growing element of our national security.

The NCSC has also been granted powers—subject to consultation with the regulators and the reporting entity—to share information about cyber-incidents to manage or prevent further risks, or where the NCSC believes that disclosure of information would be in the public interest. Given the widespread, knock-on effects of attacks such as data breaches on individuals, those powers are clearly necessary and useful. That consideration is reflected in clause 16, which obliges regulated entities to make their customers aware of incidents where their data has been compromised.

Notwithstanding the necessity of the clauses, some industry stakeholders have expressed concerns about the extent of regulator information-sharing powers under the Bill more generally. Can the Minister provide reassurance, beyond the thin information on the face of the Bill, regarding the safeguards that will be in place to prevent the sharing of sensitive information that could impact the businesses of regulated entities?

I move on to new clause 6. The Government have acknowledged through their recent consultations the particular risk presented by ransomware attacks to the UK economy. However, they have not yet brought forward formal legislative proposals for a broader reporting scheme. In the last year, ransomware was deployed in some of the cyber-security attacks that have raised public awareness of cyber-security and caused the greatest disruption to jobs, supply chains and the economy.

We heard in oral evidence from Detective Chief Superintendent Andrew Gould that critical national infrastructure is less likely to be attacked by ransomware groups, but beyond those entities, ransomware is one of the principal security threats to businesses. For so many small and medium-sized enterprises and smaller organisations, those attacks have the potential to be fatal to business models.

Christopher Vince (Labour/Co-operative, Harlow)

Will the shadow Minister give way?

Ben Spencer (Conservative, Runnymede and Weybridge)

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

Christopher Vince (Labour/Co-operative, Harlow)

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?

Ben Spencer (Conservative, Runnymede and Weybridge)

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.

Allison Gardner (Labour, Stoke-on-Trent South)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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.

Allison Gardner (Labour, Stoke-on-Trent South)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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?

Bradley Thomas (Conservative, Bromsgrove)

It is a pleasure to serve under your chairmanship, Dr Murrison.

When introducing new legislation, it is essential that those who fall under its new regulations be clearly identified and given adequate time to prepare for compliance. However, despite the aims of the Bill and the wish to avoid worsening a cyber-attack incident, the Bill still presents far too much ambiguity. It is right to recognise the cyber landscape as continuously evolving. There is no dispute that this terrain becomes increasingly complex each day, requiring a level of flexibility in legislation to ensure that it keeps pace. However, this desire to safeguard such adaptability, and the goal of future-proofing, must not come at the expense of the effectiveness of legislation in the present day.

The powers afforded to the Secretary of State to change the classification of essential activity, and to bring new sectors into scope of the Bill at any time, undoubtedly create uncertainty for many sectors and cast a shadow over long-term compliance. To be clear, we want organisations to comply with this legislation. We want to improve national cyber-resilience, gather vital intelligence and restore public confidence in our security. Why, then, would there not be a significant effort to make these regulations as easy to apply as possible, rather than leaving thousands of businesses second-guessing whether they fall within scope, with the pressure of large financial penalties hanging over their heads?

In addition, many will know that I am a firm supporter of parliamentary process. I support the notion that all legislation should receive the scrutiny it is due by the democratically elected Members of the House of Commons. That is why I believe the Bill must not only set out clearer guidelines for who is in scope, but require an official amendment, debated in the House, to permanently bring any new sectors into scope after the Bill has been passed.

I understand that, in times of emergency, the longer process of House of Commons scrutiny may not always be possible. That is why the Secretary of State should have powers to bring in sectors necessary in an emergency temporarily into scope, with less imposing of non-compliance penalties until their inclusion is made permanent by the House. Such an approach would not only allow for the quick reactions that cyber-security demands, but respect parliamentary processes and safeguard against organisations’ being unaware that they had suddenly been brought into scope until they received a potentially financially ruinous penalty notice for non-compliance.

Looking at the need for more definitive guidelines on who will be regulated under the Bill, we have already heard from numerous industry stakeholders that are unsure whether they, or other organisations in their sector, will fall within the mandatory scope. In addition, industry experts have publicly shared concerns about how far the net may be cast in some sectors, leading to the unintentional inclusion of organisations that are critical only to a single larger organisation, rather than to our national security, while ignoring other essential sectors altogether. Looking at recent cyber-attacks that have had a significant impact on our country, it is concerning that the definition of essential services may not include them within scope.

While it is predicted that many of Jaguar Land Rover’s supply chains will be in scope, it has been publicly questioned whether it will be included. As the largest car manufacturer in the United Kingdom, it directly employs over 30,000 people across the UK and supports around 100,000 jobs indirectly. It is therefore no surprise that the cyber-attack it endured, estimated to have had a financial impact of over £1 billion, was significant to many, including more than 5,000 organisations impacted and many of my constituents, with JLR being one of the largest direct and indirect employers in the west midlands region. How, then, if a key aim of the Bill is to ensure that all essential services whose disruption would profoundly impact our nation in the event of a cyber-attack report all major incidents, can the vagueness of the definition of essential services be allowed to stand—especially when it creates a situation in which previous key victims are excluded?

Of course, JLR is not the only victim where questions of inclusion remain. Also potentially falling outside the regulatory reach is Marks & Spencer, whose recent cyber-attack was another stark reminder of the rapidly advancing cyber-crimes scene and caused significant disruption, with costs estimated to run into the millions of pounds. Having met with M&S representatives recently, I had the opportunity to discuss their experience of enduring such an attack. Archie Norman, M&S chair, gave evidence to the Business and Trade Sub-Committee on Economic Security, Arms and Export Controls, where he said that “a growth economy” is “a cyber-resilient economy”.

Having a cyber-resilient UK, and making the UK the safest place to do business, is a competitive advantage. I agree with that sentiment and firmly believe that increasing our cyber-resilience can only benefit our economy. It is imperative that we get this right. These cyber-threats are not going away; they are only going to get stronger and more technically advanced. We have seen that in the past year, with the National Cyber Security Centre reporting a 50% increase in British cyber-incidents deemed highly significant. Indeed, representatives of M&S told me that, at times, they found it much easier to get updates and information from the United States FBI than they did from our own authorities. We also know that foreign hostile states are becoming bolder in their actions against us.

A few months ago—as a reason for introducing my ten-minute rule Bill, the Cyber Extortion and Ransomware (Reporting) Bill—I stated that research had revealed that 74% of UK IT leaders cited China and 71% cited Russia as their top cyber-security concerns. It is undisputable that last year’s espionage trials threw a harsh spotlight on the threatening scale of state-sponsored cyber-attacks.

Improving our national cyber-resilience, and safeguarding all our infrastructure and essential services, including in the private sector, is vital in order to secure a prosperous economy and reinforce public confidence in our ability to defend ourselves against such threats.

Emily Darlington (Labour, Milton Keynes Central)

I have a few questions for the Minister. I appreciate the clarity that the Bill brings to many of the services in its scope. I would like to understand how the definition of “incidents” will relate to hardware vulnerabilities that are discovered within a company, as we heard from some of the people who gave evidence to the Committee. It is unclear in the Bill. Perhaps it will be further defined in secondary legislation.

I want to understand how an incident in which someone discovers a vulnerability in hardware—such as in a system-in-package—is reported, and how that information is then delivered by the regulator to other companies in the sector that may have similar technology, and to the other regulators, which may also want to flag that technology as a particular vulnerability. Is that defined as an “incident” or is it defined somewhere else in the Bill? I am a bit confused and am looking for some clarity.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

Lincoln Jopp (Conservative, Spelthorne)

My hon. Friend the Member for Bromsgrove raised the case of M&S, which would clearly be out of the scope of the Bill. However, it has a managed service provider, so it is a bit like the JLR case. I am still looking for some certainty as to whether JLR and M&S would come within the scope of the Bill by dint of the fact that they have managed service providers, which are within the scope. I am still not 100% clear on the answer to that question. I would be grateful for greater clarity from the Minister.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

Lincoln Jopp (Conservative, Spelthorne)

I am grateful to the Minister for giving way a second time. I understand his answer, but, to be clear, if an incident that meets the severity threshold is reported to a client who is out of scope, would that bring any obligation to report in the normal way?

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

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

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

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

Clause 17 - Powers to impose charges

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

Bradley Thomas (Conservative, Bromsgrove)

I have two points for the Minister to address. First, can he address concerns around whether funds raised will be directly reinvested into improving cyber-security, rather than covering administrative overheads? Secondly, there is no specific reference to turnover thresholds, so how can the Minister be sure that a one-size-fits-all approach will not be used, causing many similar organisations to suffer financially?

Kanishka Narayan (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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.

Several aspects of the proposed charging regime require further elaboration, including the intention to enable authorities to recover the costs “or expected costs” incurred in connection with their functions. That involves a heavy degree of cost forecasting on the part of the regulators, which is to be expected to a certain extent, but what guidance will the Government provide to ensure that the approach to estimating costs is both transparent for regulated entities and consistent across regulators?

Furthermore, the clause establishes that charges payable by regulated entities under the scheme

“need not relate to the exercise of functions”

in relation to that organisation. That may be common practice on a smaller level in professional regulatory models where the members, such as doctors, lawyers and accountants, pay a fee for oversight functions to the regulator, which may not regulate them personally. On that basis, I should declare an interest: I am registered under the General Medical Council and therefore regulated accordingly. However, in circumstances such as the regulation of cyber-security, regulatory activity may involve protracted, technically complex investigations involving multiple personnel over many months, or even years. The costs associated with that type of activity are substantial.

The Government said that

“cost recovery measures will be brought into force through secondary legislation following Royal Assent. This will ensure that regulators have time to prepare and conduct consultations on fee regimes.”

Can the Minister give any indication now on how cost recovery charging is likely to be distributed among sectoral entities? Will larger organisations be asked to meet a greater proportion of the costs, or will there be a flat regulatory fee across all entities that is topped up by reference to size or risk profile?

Another objection raised by industry stakeholders is that the charging regime effectively acts as an additional operational tax—one that, at present, is not possible for regulated entities to ascertain or plan for as part of their budgeting. Industry representatives have pointed out that funds allocated for regulatory fees are often diverted from operational security measures. For SMEs and mid-sized MSPs in particular, these charges represent a tangible reduction in available capital for technical controls and innovations. Any charges must therefore be transparent, proportionate and justified.

Another concern is that a regulator funded by organisations within the remit of its oversight may have reduced incentives to prioritise efficiency in the exercise of its duties. Which comparable regulatory regimes have the Government looked at for inspiration in planning this funding model? Which regulators are regarded as successful in their approach to oversight and enforcement and is there any correlation between that and their funding models?

Kanishka Narayan (Labour, Vale of Glamorgan)

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

Lincoln Jopp (Conservative, Spelthorne)

On the subject of charging and money, has the Minister had the opportunity to revisit his own impact assessment on the basis that there might be a glitch in the matrix? It says on multiple occasions that the hourly salary for a contract lawyer is £34 an hour. When we discussed it last week, I contended that this was totally unrealistic, probably to a factor of 10.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

Clause 18 - Sharing and use of information under the NIS regulations etc

Kanishka Narayan (Labour, Vale of Glamorgan)

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

“(aa) otherwise in connection with—

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

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

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

Andrew Murrison (Conservative, South West Wiltshire)

With this it will be convenient to discuss the following:

Government amendments 15 to 18

Clause stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Labour, Milton Keynes Central)

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?

Kanishka Narayan (Labour, Vale of Glamorgan)

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

On the broader concern about ensuring that the grounds for further sharing are tightly scoped and, as suggested by the shadow Minister and my hon. Friend the Member for Milton Keynes Central, that they are sufficiently expansive to cater to a range of attack vectors, not least hostile states and associated actors, it is perhaps helpful to set out the motivation for amendment 14. We have been engaging closely with relevant regulators and Departments as we develop the Bill. Feedback from those discussions has demonstrated the need to make changes, so we are acting promptly to ensure that they are reflected in the Bill.

The amendment permits NIS regulators to share information with other public authorities for the purposes of cyber-security and resilience, and only where the information shared is proportionate and relevant to the purpose set out in the Bill. I would not want to specify with prescriptive detail what that is, in the light of the concern raised by my hon. Friend the Member for Milton Keynes Central about the varying nature of attack vectors for cyber-security. I hope that I have provided some assurance that the amendment has been developed closely with relevant regulators.

Clause 19 - Guidance

Kanishka Narayan (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Labour, Vale of Glamorgan)

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.

Clause 20 - Powers to require information

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

Bradley Thomas (Conservative, Bromsgrove)

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

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Conservative, Spelthorne)

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 (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Labour, Vale of Glamorgan)

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.

Lincoln Jopp (Conservative, Spelthorne)

I might have to remind myself. I asked the Minister whether the purpose of this clause is for a regulator to be able to ask a managed service provider what their entire client list is, in order to make various assessments.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

Clause 21 - Financial penalties

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

Bradley Thomas (Conservative, Bromsgrove)

On the point about banding, can the Minister assure us that there will be consistency applied across regulators so that different events are not differentially penalised depending on the regulatory body? On the question of turnover and the financial penalty, can the Minister elaborate on how the figure was derived?

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

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

Lincoln Jopp (Conservative, Spelthorne)

This is really where the regulatory rubber hits the road. Earlier, we described cases involving a client who is not in the Bill’s scope but who employs a managed service provider that is, and that is therefore vulnerable to these charges. What happens when there is an interface between a client employee operating an IT system and what the managed service provider does? For example, someone could bring in a data stick, shove it in the side of a computer and break the rules, eliciting some form of ransomware. How will it work when the regulator goes to the managed service provider and says, “Here’s your £10 million fine,” and the client says, “That is down to you”? It is going to be a lawyer-fest, isn’t it? Even lawyers who get paid more than £34 an hour are going to make quite a lot of money.

Kanishka Narayan (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Labour, Vale of Glamorgan)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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 (Labour, Vale of Glamorgan)

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.

Clause 22 - Enforcement and appeals

Andrew Murrison (Conservative, South West Wiltshire)

With this it will be convenient to discuss the following:

Government amendment 19.

Schedule 1.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

Schedule 1 - Enforcement and appeals

Clause 23 - Minor and consequential amendments etc

Andrew Murrison (Conservative, South West Wiltshire)

With this it will be convenient to discuss the following:

Government amendments 20 to 22.

Schedule 2.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

Schedule 2 - Minor and consequential amendments etc

Clause 24 - Key definitions in Part 3

Andrew Murrison (Conservative, South West Wiltshire)

With this it will be convenient to discuss the following:

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

I want to use new clause 1 as a lens to view a wider question that sits underneath clause 24, rather than as a verdict on the clause itself. That question is how we decide, in a disciplined and credible way, which activities are sufficiently critical to be brought into the scope of the regime, and how that judgment is applied consistently over time.

New clause 1 would bring much of the food supply chain directly into scope through primary legislation. I understand the instinct behind that. Food supply is fundamental to public confidence, and disruption would be felt very quickly. However, if the underlying test for inclusion is systemic impact, food is not the only sector that raises these questions. I am vice-Chair of the Business and Trade Committee, and over the past year we have taken evidence on economic security from major UK firms that have experienced serious cyber-incidents. One example everyone here will be familiar with is Jaguar Land Rover. Evidence to our Committee indicated that the cyber-incident there contributed to UK GDP being around 0.1% lower than expected in the third quarter last year, which was not a marginal effect. That reflected disruption to tightly integrated manufacturing systems, with production lines brought to a halt and knock-on impacts across just-in-time supply chains and regional economies.

I make that point to underline something simple: cyber-risk presents simultaneously as operational, financial and reputational risk, and in combination those effects can be felt economy-wide. If that is the rationale for bringing food into scope early, it inevitably raises questions about other high-value sectors where a single incident can have national economic consequences.

That brings us back to clause 24 and the role of the Secretary of State. The Bill is clearly designed to allow scope for provisions to evolve through secondary legislation as risks change. That flexibility is sensible, but flexibility works only if the criteria for widening scope are clear, predictable and capable of being explained to industry, regulators and Parliament. If decisions appear to be reactive or driven by the most recent or most visible incident, confidence in the regime will suffer rather than strengthen.

That concern is reflected in the written evidence we have received. The Association of British Insurers, for example, supports higher standards of cyber-resilience, but it also emphasises the importance of clear definitions and coherence between regimes, particularly where firms are already subject to overlapping regulatory requirements. Its point is not about resisting regulation, but about avoiding uncertainty and duplication, which do not improve resilience.

My questions are ones of principle rather than position. First, what is the settled test that the Secretary of State will apply when deciding to bring a sector into scope under the clause 24 powers, and how will that judgment be made transparent to Parliament? Secondly, if Parliament were to require rapid expansion of scope, how confident are the Government that regulators would have the capacity to supervise a much larger and more diverse population without diluting oversight elsewhere?

I am not seeking to land a conclusion on new clause 1 today—I understand why it has been tabled and I recognise the seriousness of the issues that it highlights—but if we are going to widen scope, to food or otherwise, the Committee is entitled to press the Government on the discipline and guardrails that will sit behind those decisions. This needs to remain a targeted and credible regime, rather than one that expands without a clear and consistent logic.

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

New clauses 8 and 9 would close a dangerous gap at the heart of the Government’s cyber-security strategy. Right now, the Bill creates a two-tier system. Private companies running critical national infrastructure face strict legal duties, enforcement and oversight, yet the very public institutions that hold our democracy together and protect our most vulnerable citizens are left outside statutory protection. Nowhere is that more alarming than with our local authorities. Indeed, that is where the Government’s approach diverges from some EU member states. For example, the Netherlands is applying its equivalent legislation to local authorities.

When a council suffers a cyber-attack, it is not just an IT inconvenience; it means real life grinding to halt. Members of the Committee who have served on local authorities will be well aware that a cyber-attack hitting a local authority creates problems with welfare payments, housing services, processing benefits payments, accessing social care for the most vulnerable in our society and collecting bins. Those are crucial activities in the day-to-day life of our society and our democracy. A cyber-attack can leave families without support, vulnerable children without protection and elderly residents without care, yet the Minister has suggested that these services are not necessary to the day-to-day functioning of society. I disagree with that.

We have already seen the consequences at Tewkesbury borough council, where a cyber-attack was so severe that it triggered a major incident and crippled core services. Likewise, the attack on Gloucester city council cost the taxpayer more than £1 million and put at risk some of the most sensitive information held on UK residents, particularly if one considers the nature of employment in Gloucestershire. The reporting from those attacks showed that local authorities, which are cash-strapped and struggling to make do as they are, had to divert staffing resources into addressing those incidents.

Bradley Thomas (Conservative, Bromsgrove)

I have much sympathy with the hon. Gentleman’s arguments about the importance of local government, and I believe that it should be within scope of the Bill. Essential services are provided by councils on a day-to-day basis, but local councils are increasingly cash-strapped. Does he share my concern about the burden of compliance falling on councils, many of which differ in size and scale from their adjacent neighbours? They have differing degrees of IT infrastructure capability. We run the risk of increasing the compliance and regulatory burden on councils at a time when they may already have stretched budgets and lack the resource and capacity in the system to accommodate that additional burden.

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

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.

Ben Spencer (Conservative, Runnymede and Weybridge)

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.

As to the question of bringing food retailers into scope, the UK is fortunate to have a diverse and competitive supermarket and smaller food retail sector. Consumers in many areas of the country can find ready alternatives in the event of disruption to supply chains interrupting their ability to access their usual supermarket or grocer. As such, there is an argument about whether supply chain entities in the sector necessarily share the same criticality profile of other sectors regulated by the NIS regulations to warrant the regulatory burden on businesses of bringing them in scope. That is particularly so given the low threshold applied in new clause 1, under which only small and microbusinesses would escape regulation. That approach would place the costs and complexity of complying with regulation on any business exceeding 50 staff members. However, the Government should look more closely at the position of individual supply chain entities in very remote or underserved communities, where consumers have little or no choice.

As for the impact of expanding the sectoral scope of regulation in this way, we have already heard in oral evidence some of the challenges faced by regulators in ensuring they have sufficient, suitably skilled cyber-security professionals to ensure an effective approach to regulation. My understanding is that there is a limited pool of such expertise, and it should clearly be deployed to address risk in the most critical sectors and companies. In that regard, there may be a case for regulation in respect of the very largest out-of-scope companies.

The JLR attack highlighted the threat to the UK economy of gaps in the cyber-resilience of organisations that hold a critical place in the UK’s employment market, either directly or through employment provided by their supply chain entities. The Government justified their £1.5 billion bailout in the form of a loan guarantee based on protecting 34,000 directly employed staff and 120,00 supply chain jobs. The truth is that the Government can ill afford to remain in a position where they are forced to stump up similar guarantees to other out-of-scope companies that are deemed too big to fail in the event of future attacks of this type.

The risk is not receding; it is only intensifying, as we can see from the number and scale of attacks over the last year. That is why, in many ways, it is so surprising that the Bill does not address the biggest and most publicly visible cyber-attacks and incidents that we have seen. A solution needs to be found to mitigate the challenge to the UK economy. The first task is identifying companies that have the potential to cause disruption on the scale of JLR in the event of a serious cyber-attack. The Secretary of State should absolutely be reviewing that.

Then there is the question of the most effective response, whether that is regulation, or looking at what role cyber-security insurance can play in companies taking responsibility for the financial consequences of an attack and, critically, shielding the public finances from those consequences. The danger is that very large companies that are critical in our economy are de facto being insured by the Government in the context of serious cyber-attacks. Clearly, that cannot continue. Surely, that is something the Government have considered, so I would be grateful if the Minister confirmed his Department’s plans for addressing this pressing risk.

New clauses 8, 11 and 12, tabled in the name of the hon. Member for Brecon, Radnor and Cwm Tawe, seek to bring local authorities—in relation to their functions in managing electoral rolls and social care records—the Electoral Commission and political parties within the scope of regulation, as operators of essential services. I totally share the hon. Gentleman’s concerns about the threat to our institutions from foreign interference, which goes to the heart of our amendments relating to electoral infrastructure, which we will debate later. We know that attacks on the vital apparatus of our democracy are a focal point of malicious cyber-activity by hostile state actors. The National Cyber Security Centre confirmed that China state-affiliated actors were responsible for cyber-attacks on the UK Electoral Commission and Parliament in 2021 and 2022. In November last year, MI5 issued an alert to parliamentary staff on the risk of Chinese state espionage.

These institutions form the bedrock of a functioning democracy and the Government must urgently look at how they can better safeguard in a world where emerging technologies are being deployed by malicious actors to undermine the democratic process. NCSC stated in its 2025 report that

“The next UK general election is expected to be the first to rely predominantly on cloud-based Electoral Management Systems”.

To prepare for that transition, the NCSC has said it is

“supporting the Ministry of Communities Housing and Local Government to ensure that security standards and resilience measures are future-proofed.”

Can the Minister update us on that work and his assessment of what further steps are needed to safeguard UK democracy in the face of that growing risk?

(Afternoon)

Clause 24 - Key definitions in Part 3

Graham Stringer (Labour, Blackley and Middleton South)

I remind the Committee that with this it will be convenient to discuss the following:

Lincoln Jopp (Conservative, Spelthorne)

It is a pleasure to serve under your chairship, Mr Stringer. When we left off, we were considering the powers of the Secretary of State to bring new organisations within scope. I am a Conservative, and my view is that the best form of regulation is usually competition, so I am not actually volunteering these sectors for the guards. However, I want to understand the underlying logic as to why certain things have been included and certain things have not.

We have a fairly good guide as to what is essential. The reason we do is that we went through a global pandemic, and the following groups and organisations were designated as absolutely essential for the running of the state: health and social care, which is included; education and childcare, which is not; anything to do with the justice system; religious staff; public service broadcasters; local and national Government, which again is not in the Bill; food and other goods, which, as we discussed, are also not in the Bill, although they are in the new clauses; public safety and national security; transport; utilities; communications; financial services; and postal services.

That is the analogue I am putting to the Minister: we found out which things we really needed, we designated them as essential and we allowed them to continue during the covid pandemic. None of us particularly relishes being reminded of that time, but we owe it to the people who will be subject to the Bill to ask the Minister exactly what has been argued in and what has been argued out of scope, to understand how vulnerable the blank cheque we are issuing to the Secretary of State is to their including more and more in it, come the day of the races.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Clause 25 - Statement of strategic priorities etc

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 26 to 28 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

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

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

“have regard to the statement”

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

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

As we heard in written evidence from the ABI, clarity about roles really matters. Can the Minister confirm that the statement of strategic priorities is not intended to operate as indirect instruction, and that regulators will retain clear discretion where sector evidence points in a different direction?

Kanishka Narayan (Labour, Vale of Glamorgan)

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

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

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

As the Minister is saying, clause 28 is meant to help Parliament understand how regulators are responding to the statement of strategic priorities. Can he say a little about how substantive that reporting will be, and whether it will genuinely allow Parliament to assess how those duties are being exercised in practice?

Kanishka Narayan (Labour, Vale of Glamorgan)

The hon. Member raises a very important point. We want Parliament to play an important role in the scrutiny of the overarching regime as a whole, but particularly in the operation of the statement. Perhaps I can break it into two parts: scrutiny of the statement in the first instance, and scrutiny of regulators’ compliance with the statement. Once a draft statement has been consulted on, the Government will be required to lay it before Parliament, and that will be subject to the negative procedure. Parliament will have 40 days to scrutinise the proposed statement and express disagreement with it, which is very similar to the procedure for statements of strategic priorities in other areas—not least online safety. In terms of confidence in Parliament about actions that regulators have taken, the Secretary of State will be required to publish an annual report setting out, in general terms, the activity undertaken by regulators in the prior 12 months, alongside activity planned for the following 12 months. My expectation is that, very similarly, Parliament will have sight of that, and have the ability to scrutinise it and ask questions of the Secretary of State in the usual way.

Christopher Vince (Labour/Co-operative, Harlow)

indicated assent.

Kanishka Narayan (Labour, Vale of Glamorgan)

I am grateful to my hon. Friend the Member for Harlow for his affirmation of that important point of parliamentary scrutiny.

As I mentioned, the report in question will set out how NIS regulators have sought and will seek to achieve the objectives in the statement through the exercise of their regulatory functions. The clause requires the Secretary of State to lay the annual report before Parliament, as well as to publish it in an appropriate manner. Clause 28 also introduces information-gathering powers for the Secretary of State so that they can collect the necessary information from regulators to draft the report. I commend the clauses to the Committee.

Ben Spencer (Conservative, Runnymede and Weybridge)

It is a pleasure to serve under your chairmanship, Mr Stringer.

Clause 25 introduces a power for the Secretary of State to issue a statement of the Government’s strategic priorities in relation to the security and resilience of network and information systems with regard to essential activities. The statement will set out the responsibilities of regulators and specify objectives to secure the Government’s priorities. Competent authorities must be consulted in the drafting of the statement, and the Secretary of State must issue a report in every 12-month period on regulators’ compliance with meeting the objectives within it.

The changes aim to address important challenges around consistency in the approach to regulation that were identified by the previous Government’s second post-implementation review of the NIS regulations. Importantly, the measures also provide for a regular review of competent authorities’ approach to discharging their regulatory obligations. That measure is necessary given the inconsistent approach to oversight and enforcement of the NIS regulations so far.

We know that there are existing challenges relating to the capacity of competent authorities and there is the ongoing issue of securing sufficient cyber-security professionals to staff the teams. It is all well and good making statements, but they need to be followed. What strategies does the Minister anticipate will be needed and used to support—and, where necessary, drive up—standards of regulatory oversight when competent authorities fall short of the aims set out in the statement?

Kanishka Narayan (Labour, Vale of Glamorgan)

I thank the shadow Minister for raising an important point. His broader question is one of the most important in this context: Bills are only as good as the ultimate enforcement capability, capacity and framework in which regulators enforce them. Particular aspects of the Bill are focused on that question. One ensures that regulators have not just the resource through the cost recovery and charging schemes that the Bill allows for, but the information through the information-gathering powers—and not just the information, but a statement of strategic priorities as new horizontal risks emerge across sectors. So regulators are armed with resource, information and strategic priorities that emerge from time to time.

Alongside all those resources, data and information powers, regulators need also to have accountability, of course. In that context, the statement of strategic priorities is intended to be one vehicle through which regulators’ compliance with overarching objectives of the Bill will be looked at as well, alongside ongoing oversight of each of the regulators through the usual departmental channels.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

Having worked in business, I know that the words we use to ensure that the capabilities are there are easy to say but not always easy to deliver. How will the Minister ensure that when we have a multi-sector issue, which could easily come up—particularly, as we have already discussed, around OT and the use of IEDs across multiple sectors—the National Cyber Security Centre and other regulators will have access to the skills, people and resources necessary to manage what could be a catastrophic incident? We already know that cyber-skills are in short supply as it is, even in the commercial sector.

Kanishka Narayan (Labour, Vale of Glamorgan)

The hon. Member raises an important point. Two or three things are really important channels of impact when it comes to skills. First, the NCSC as a convening body across regulatory areas will be able to make sure that different regulators come together and learn by being able to share information not just between themselves, but through the NCSC itself as the convening body for sharing good and prompt understanding of emerging risks.

Secondly, on broader skills, the cost recovery schemes allowed under the Bill create a way for regulators to ensure they are resourced up and have the ultimate financial firepower to be able to enforce the requirements of the Bill.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

I thank the Minister for his patience. He mentions a specific example of where he will ensure that the NCSC is resourced up. Do we have specific examples that have happened already of those powers having been put in place successfully? From conversations with the NCSC, I understand that it is reliant on its accredited bodies across the country, but we have not yet—I am touching the wood of my desk, as I speak—had to respond to a complex multi-sector issue. I challenge the Minister on whether he is confident about our capability to respond to one.

Kanishka Narayan (Labour, Vale of Glamorgan)

I share the hon. Member’s recognition and her gratitude that we have not experienced the sort of incident that she described. The NCSC has told her, me and other Committee members that it brings regulators together and has done so on a number of occasions in the past to share cross-sectorally an understanding of emerging risks as well as incident-specific impacts. I take no sense of complacency from that precedent, but I do take some confidence from it. As the Minister in charge, I will ensure that the Department keeps a close eye on the ongoing implementation of the co-ordination powers under the Bill.

Ben Spencer (Conservative, Runnymede and Weybridge)

The Minister is being generous with his time during this important debate. I was just thinking through his earlier response to the point made by my hon. Friend the Member for Bognor Regis and Littlehampton about using the cost reclaims to employ cyber-security professionals. That goes to the heart of the concerns about the Bill and its approach to regulation.

We have heard that the industry, including regulators, is struggling to recruit cyber-security professionals. What gives the Minister confidence that, just because some money will be sloshing around in the regulators, there will be the ability to recruit cyber-security professionals, who are going to be essential to the implementation of the Bill?

Kanishka Narayan (Labour, Vale of Glamorgan)

First, I will provide some context for agreement. We want more people to be trained in cyber-security so that they can serve in the public and private sectors. Through the Bill, as well as a range of other initiatives, we are making sure that at every stage of the pipeline, there is resourcing, confidence and a demand signal that so more people can benefit from cyber-skills and serve in the industry.

There is a clear financing path for regulators to at least start to hire. Earlier in the pipeline, we are looking at a series of cyber-skills programmes all the way from schools through CyberFirst—I think about 415,000 students have gone through that programme. Ultimately, we want to create a long-term pipeline so that regulators and private companies can make the most of those skills.

Christopher Vince (Labour/Co-operative, Harlow)

I am going to mention Harlow, because Harlow has young people with amazing potential. The point that the shadow Minister and other Opposition Members have made is really important. We need to make sure that this and the next generation of young people are trained up in these skills, because this is an emerging threat. I encourage the Minister to promote the Bill and what the Government are doing in cyber-security, because it is important that the wider public know that these important skills and jobs are available.

Kanishka Narayan (Labour, Vale of Glamorgan)

I am, of course, very happy to take on my hon. Friend’s recommendation that I be the promoter and ambassador for the Bill across the country. I am only sad not to have been invited to visit his constituency in the act of promoting said Bill, but I take his point seriously.

On the broader point about skills, I entirely agree with both my hon. Friend and the Opposition in recognising that skills are central to the enforcement of the programme. I hope that the funding and the earlier focus on skills across the life cycle give some assurance that the Government are committed to that.

Clause 29 - Regulations relating to security and resilience of network and information systems

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 30 to 35 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

Clause 29 is the key pillar of the Bill’s future-proofing powers. It allows the Secretary of State to update, amend or replace the NIS regulatory framework by creating new regulations. This is a critical provision. Due to the way in which the NIS regulations were transposed into UK law, the Government lack a way of updating the framework other than through primary legislation. As a result, our regulations have remained static amid a rapidly evolving threat landscape, leaving our essential and digital services vulnerable to attack and our resilience falling behind the EU. The clause is an important response to that problem. It will ensure that the Government can take swift action so that our cyber regulations remain relevant. It is a more proportionate and effective approach than always relying on primary legislation.

I know the use of delegated powers can be a source of concern, so I will be clear that the clause is not a carte blanche—or a blank cheque, which the hon. Member for Spelthorne might be worried about—to smuggle in anything and everything under the guise of cyber-security. It is tightly constrained to ensure that any new regulations align with the original purposes of the NIS regulations. New regulations can be made only for the purposes of strengthening the cyber-security and resilience of the UK’s most critical activities, and only where they are genuinely essential to the functioning of the UK’s society and economy. Cyber-criminals will always find ways around regulations, but with this power we can stop them in their tracks.

I have already explained the critical role that clause 29 plays in enabling new regulations to be made for the purposes of cyber-security and resilience. However, I want to be clear about how those regulations will be used and reassure the Committee of their checks and balances. Clauses 30 to 35 set out what the regulations can do.

Clause 30 enables the Secretary of State to use the regulation-making powers to impose requirements on regulated persons. It clarifies who can be made subject to requirements and the types of requirement that can be imposed on them.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

My question relates to clause 29 but also clause 30. As the Minister says, the powers are deliberately wide. The Institution of Engineering and Technology noted in evidence that predictability matters more than compliance. Will the Minister explain exactly how the Government will judge when risks require new statutory duties rather than updated guidance, so that businesses are not left guessing?

Kanishka Narayan (Labour, Vale of Glamorgan)

Any legislation made under clause 29 will need to align with the Bill’s clearly specified purposes to protect the systems that underpin our vital services. In any case, secondary legislation will require deep consultation to ensure that businesses have the sense of clarity that they require. There is a specific bar to pass for the scope of any further provisions, and it is a high bar given the definition of the sectors and the activities covered in the Bill.

Clause 30 has been designed with some clear use cases in mind. It will enable the security duties on regulated organisations to be updated with appropriate technical details. It will also ensure that more detailed thresholds for incident reporting can be set, and it is the mechanism through which we will set out the regulatory requirements for designated critical suppliers. In other words, the clause will help us to operationalise the provisions of the Bill and update the technical details of regulatory requirements in response to new risks or technology.

Clause 31 enables the Secretary of State to confer functions on regulators through the Bill’s regulation-making powers. These may be existing NIS regulators or newly appointed regulators. The types of functions that can be conferred are those concerned with compliance: monitoring and securing compliance, and investigating and managing non-compliance. To carry out such functions effectively, regulators must be able to impose penalties. Clause 31 also provides for that while putting in place important safeguards so that regulated organisations have a means of appealing penalties. The clause is essential for future-proofing the regulatory regime. It ensures that regulators can be equipped with the functions and powers they need to ensure the compliance and security of the UK’s most essential services.

Clause 32 sets out details and safeguards for how the regulation-making powers can be used when they impose or amend financial penalties. Crucially, it establishes upper limits on what the penalties can be—the greater of £17 million or 10% of turnover for an undertaking, or £17 million for a non-undertaking, or £17 million for an undertaking adjusted as needed to account for inflation. The 10% threshold has been chosen as a defensible outer limit for a regulatory regime concerned with national resilience and security. It aligns with penalties for non-compliance in legislation regulating critical national infrastructure and with the Bill’s own national security powers.

The clause further clarifies that regulations can define “turnover” and “undertaking”, where needed, to calculate a penalty. Together, these provisions create important safeguards and flexibility. They establish proportionate and transparent parameters within which penalty amounts can be set. They also enable the Secretary of State to define and consult on terms that are essential for operationalising the Bill’s new turnover-based penalties.

Like clause 31, clause 33 enables the Secretary of State to make regulations conferring functions on regulators. The functions specified in clause 33 complement the core compliance functions outlined in clause 31. They relate to the disclosure of information, issuing of guidance, record-keeping, preparation of reports, undertaking of reviews, and co-operation. The clause also enables the Secretary of State to impose functions on organisations that are not regulators but that play a public role related to the cyber-security and resilience of essential services. GCHQ, in its capacity as the UK’s computer security incident response team and technical authority, is the most important. Like clause 31, this clause is essential for future-proofing NIS regulations. It allows organisations that oversee and facilitate the cyber-security and resilience of essential services to be equipped with the tools and functions they need.

Clause 34 enables the Secretary of State to make provisions for regulators to recover relevant costs using the powers under clause 29(1). These are the costs incurred through their functions under the NIS regulations or other obligations imposed through parts 3 and 4 of the Bill.

In practice, the clause ensures that the Secretary of State can make changes and updates to the way that regulators carry out their cost recovery function under the NIS regime. It could, for example, be used to specify further factors that regulators need to consider when establishing approaches for charging fees in the charging schemes, in addition to those already set out in clause 17. That might be needed to deliver greater consistency in how the cost recovery measures are being applied and is something that the Government will keep under review.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

As the Association of British Insurers has highlighted in its written evidence, the way cost recovery operates will shape behaviour on the ground. Can the Minister reassure the Committee that changes made under clause 34 will be transparent and proportionate and will not inadvertently discourage investment in cyber-resilience, particularly for smaller firms in supply chains?

On a personal point, could I ask him to speak more slowly? I am really struggling to hear him.

Kanishka Narayan (Labour, Vale of Glamorgan)

I apologise for the pace of my speech; I will try to make sure I am speaking more slowly.

On the particular point on transparency and ensuring that any amendments to cost recovery are both transparent and grounded in specific provisions, I can set out the sorts of expectations we have had for circumstances in which amendments might be made. In particular, the Bill’s powers will enable regulators to set up charging schemes, but it is not prescriptive—

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

Could the Minister repeat that?

Kanishka Narayan (Labour, Vale of Glamorgan)

The Bill’s new powers enable regulators to set up charging schemes, but it is not prescriptive about how it should do that beyond certain baseline requirements. More specific requirements, as provided for in the Bill, could become clear, such as if cost recovery mechanisms are not working effectively or if regulators are diverging unhelpfully.

All regulators must consult on charging schemes. In doing so, the industry should have ample opportunity to scrutinise the approach that regulators are taking and, importantly, Parliament should be able to add to that scrutiny as well. Like clause 31, clause 34 is essential for the future-proofing of NIS regulations.

Clause 34 enables the Secretary of State to make provisions for regulators to recover relevant costs; I have mentioned examples of the sorts of factors we might specify in that context. Together with clauses 29 to 33, 35 and 41, clause 34 is necessary to ensure that the Secretary of State can update and amend the functions of regulators as needed in the future, and is an integral part of the Bill’s future-proofing powers.

Clause 35 is the final clause that clarifies the limits and prospective uses of the regulation-making power in clause 29. It confirms that the regulations may confer functions and allow certain functions to be delegated to others—for example, it could enable a regulator to delegate functions to inspectors. It also clarifies that regulations can be made to require a person to have regard to guidance or codes of practice, or that make provision by reference to another document or piece of guidance. In short, the clause provides helpful clarity about how the regulations could be applied.

Sarah Russell (Labour, Congleton)

On a point of order, Mr Stringer. I am not sure whether this strictly meets the criteria for a point of order, but it is clear that some people in the room cannot hear what is happening. I know the convention is that only the Whips and Ministers sit on the front row, but if those who are struggling to hear wish to sit closer, could we abandon that convention? It would be a reasonable adjustment so that everyone can participate properly, because this is discriminatory.

Graham Stringer (Labour, Blackley and Middleton South)

I thank the hon. Lady for her point of order. It is a convention, and if the hon. Lady or any other Member wishes to sit on the Front Bench to make life easier, they certainly have my permission to do so.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

Further to that point of order, Mr Stringer. Genuinely, I simply need the Minister to speak slowly and clearly. Yes, I am wearing hearing aids; I am sure that others wear them too. I am doing my very best to make sure that I can lip-read, but that is almost impossible given the speed the Minister is speaking at. One cannot lip read when he is looking down all the time either.

Graham Stringer (Labour, Blackley and Middleton South)

I thank the hon. Lady for her point of order. I know the Minister is trying very hard; his normal rate of speech is much faster, so he is trying. If you catch my eye, I will interrupt the Minister, or anybody else who is speaking, and remind them. It is important that every Member can hear so that they can participate in the debate.

Ben Spencer (Conservative, Runnymede and Weybridge)

I confess, Mr Stringer, that I suspect I am also guilty of speaking a bit fast in our previous debates. I will do my best to slow down and speak in a lower tone, as I know that can also help, particularly with certain types of hearing impairment.

To continue the theme of agile regulation, clause 29 enables the Secretary of State to update the NIS regulations through secondary legislation. Clause 30 enables the Secretary of State to impose requirements on regulated entities, which may include directions to take specific actions to increase cyber-resilience, to report on certain matters and to appoint a UK representative if the entity is based outside the UK.

Furthermore, clause 31 specifies that the Secretary of State may direct competent authorities to undertake certain activities, including mandating functions in connection with monitoring and securing compliance with relevant requirements, investigating suspected non-compliance and mitigating the effects of non-compliance on the part of regulated entities. Clauses 32 to 35 provide for the Secretary of State to issue ancillary directions to facilitate information-gathering, investigation and enforcement activities on the part of regulators.

Taken together, the clauses give the Secretary of State a strong suite of powers to respond to emerging cyber-security risks. Again, I recognise the necessity of being able to respond quickly in fast-changing circumstances. However, the Government should clearly be reporting on the Secretary of State’s exercise of the powers at regular intervals to ensure transparency. We will discuss that in due course when we come to clause 40, on the report on network and information systems legislation.

Graham Stringer (Labour, Blackley and Middleton South)

Does the Minister wish to respond?

Kanishka Narayan (Labour, Vale of Glamorgan)

No.

Clause 36 - Code of practice

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 37 to 39.

Kanishka Narayan (Labour, Vale of Glamorgan)

Clause 36 sets out that the Secretary of State may issue a code of practice for regulated entities. The code will describe recommended steps to help these entities to comply with their duties and requirements under the NIS regulations and any new regulations made under the Bill. This will make it simpler for regulated persons to understand what is expected of them, thereby driving consistency and complementing sector-specific guidance from regulators.

The clause will also make enforcement clearer and more effective, as regulators must take the code into account when they assess compliance. The code is designed to be flexible: it can be updated as threats and technology change, and can be tailored to different types of organisations, ensuring that guidance is current, relevant and practical for all.

Given the importance of the measure in providing practical recommendations to regulated entities, it must be consulted on before it is prepared or revised, and this process is set out in clause 37. Before the code can be brought into force, a draft must be laid before Parliament, providing ample opportunity to scrutinise and, if necessary, reject it within a 40 day period. If either House objects, the Secretary of State cannot proceed with that version and may prepare a new draft. If the draft is approved by Parliament, the Secretary of State may issue it and must publish it, and it then comes into effect immediately, unless otherwise specified. The clause also clarifies how the 40-day period is calculated, to ensure consistency and transparency in the process.

As we know too well, cyber-threats continue to evolve as new tactics and technologies are deployed, which is why the clause includes a power for the Secretary of State to amend the procedure for issuing the code. The Secretary of State may, for example, wish to add or amend consultation requirements or extend the 40-day period.

Clause 38 establishes how the code of practice will be used and treated in legal and regulatory settings, to ensure it has the intended effect. For regulated persons, the code of practice is intended to be formal guidance, with recommendations on how to comply with their duties, but not to be legally binding itself.

As we know, there can be more than one way for businesses to meet their obligations and ensure that they have in place appropriate and proportionate security and resilience measures. It is therefore important that there is a degree of flexibility in how they do this, to accommodate sector-specific nuances and business needs. None the less, it is crucial that the code has sufficient legal status and that the good practice it contains is not simply ignored. That is why the code can be admissible as evidence in court when deciding whether legal obligations have been met, and why the courts and regulators must consider it as evidence when assessing compliance.

Clause 39 establishes a formal process for the withdrawal of the code of practice, in case that is ever needed.

Ben Spencer (Conservative, Runnymede and Weybridge)

Clause 36 provides that the Secretary of State may issue a code of practice for regulated entities to set out measures that they should take to demonstrate compliance with their duties under the NIS regulations, or any requirements imposed by the Secretary of State under clause 29. If done well, the code could be a repository of best practice, setting proportionate, consistent and effective standards for regulated industries. That will require constructive and open consultation with regulated sectors to identify the challenges facing those sectors and how best to address them.

One issue that came up in oral evidence was the question of the lag between regulation making and industry adoption. David Cook of DLA Piper commented that, after laws come into effect, the process of businesses understanding where they need to get to

“often requires a multi-year programme of reform.”––[Official Report, Cyber Security and Resilience (Network and Information Systems) Public Bill Committee, 3 February 2026; c. 5, Q1.]

The code of practice is not envisaged to be legally binding, in the sense that a failure to comply is not of itself evidence of a failure to meet obligations under the NIS regulations or the Bill. However, clause 38 states that it would be admissible as evidence in legal proceedings so, in that sense, the code is binding in all but name. In view of that, and the fact that codes can be revoked and reissued, can the Minister provide reassurance to regulated industries that a lead-in time will be built into any requirements to allow businesses to prepare to achieve full compliance?

Kanishka Narayan (Labour, Vale of Glamorgan)

First, to ensure that the shadow Minister and I are representing the intent behind the code clearly, in legal terms it is not the case that an organisation that fails to follow the code of practice is automatically a regulated organisation that has broken the law. Clause 38 makes it clear that not following the code does not by itself constitute a breach of duty or mean that an organisation is automatically liable to legal action. Organisations can take different approaches to complying with security duties, but if they adopt an approach that is not within the code, they may need to explain why their approach still meets the required standards set out in the regulations, and regulators will be required to take the code into account when preparing guidance.

On the shadow Minister’s question about ensuring appropriate timing and preparation for companies, I would very much expect that the regulators in question would be closely regulated entities to ensure the proportionate implementation of codes.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

We heard from the Information Systems Audit and Control Association that codes work best when they reflect operational reality. Given their evidential status, can the Minister reassure the Committee that codes will remain practical and iterative and not quietly harden into rigid compliance rules?

Kanishka Narayan (Labour, Vale of Glamorgan)

I am very happy to give the broad assurance that we will keep codes under review from time to time, and that any changes to the code will require deep consultation with regulators and businesses to ensure that the codes keep in touch with moving technology.

Ben Spencer (Conservative, Runnymede and Weybridge)

For the sake of clarity on the legal status of the codes, I entirely agree with the Minister that it is important to get this right, and my understanding of codes of practice in a different area—statutory codes of practice relating to the Mental Health Act—is that case law says that deviation from the code of practice should be done only for cogent reasons. That is a pretty high bar to pass in terms of deviations. I should declare an interest as a former consultant psychiatrist and someone who operated subject to that particular code of practice.

For absolute certainty, will the Minister write to the Committee and make the status very clear, along with reference to relevant case law in terms of other codes of practice? Does the clause override that jurisprudence or not? That would settle the question as the Bill goes through Parliament.

Graham Stringer (Labour, Blackley and Middleton South)

Order. Interventions are getting a bit out of control again. I remind hon. Members that they should be brief.

Kanishka Narayan (Labour, Vale of Glamorgan)

I agree with the shadow Minister. The Bill’s focus is on the assessment of compliance with ultimate security duties. The codes of practice will set out approaches to do so, but they will not be the only approaches. I would be happy to write to the shadow Minister and the Committee on the particular legal interpretation, and any relevant case law that might apply.

Clause 40 - Report on network and information systems legislation

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

I beg to move amendment 26, in clause 40, page 63, line 7, leave out “5” and insert “3”.

This amendment would increase the frequency of the reports that must be published under Clause 40, from every five years to every three years.

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clause stand part.

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

Amendment 26, tabled by my hon. Friend the Member for Henley and Thame, seeks to ensure that the Bill keeps pace with the reality that it seeks to regulate. In the world of cyber-security, five years is a lifetime. In the past five years, the size and scale of cyber-attacks has continued to advance at pace, and we can expect the next five years to be the same. In that context, waiting five years for the first formal parliamentary review of the Bill seems dangerous. It risks leaving us with a regulatory framework designed for the threats of yesterday and not tomorrow. The cyber-threat is real, evolving and urgent.

The NCSC has reported that nationally significant cyber-incidents more than doubled in 2025 alone. That is why the amendment would change the reporting cycle to once every three years. That is a pragmatic timeline, which allows the Government to identify gaps and close them before they are exploited. The EU’s NIS2 directive explicitly mandates a review by the Commission every three years, and it is not clear why the Government have decided to diverge from that standard. Is it because they believe that the cyber-threat here is considerably less than the one facing European member states? It is simply not clear, which adds to the general sense of bewilderment about this provision. If our European neighbours are reviewing their cyber-security approach every three years, why are the UK Government content to wait for five?

Ben Spencer (Conservative, Runnymede and Weybridge)

Clause 40 requires the Secretary of State to publish a report every five years on the operation of the NIS regulations and parts 3 and 4 of the Bill. Reports should include a review of any exercise of powers under parts 3 and 4 by the Secretary of State. Given the wide-ranging powers granted to the Secretary of State under those parts, I have some sympathy for amendment 26, tabled by the hon. Member for Henley and Thame, which seeks to reduce reporting intervals from five years to three.

The shadow Secretary of State, my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez), raised this issue on Second Reading. She suggested that annual or biannual reviews might allow for effective parliamentary scrutiny of the NIS regulations and of the Secretary of State’s exercise of powers to respond to emerging threats. In view of the concerns voiced by the hon. Members for Henley and Thame and for Brecon, Radnor and Cwm Tawe, and by the shadow ministerial team, will the Minister explain why five-year intervals have been selected and whether the Government will look at this important issue again?

Kanishka Narayan (Labour, Vale of Glamorgan)

I thank the hon. Member for Brecon, Radnor and Cwm Tawe for moving amendment 26, in the name of the hon. Member for Henley and Thame. It seeks to reduce the period for publishing a report on the operation of the legislation from at least every five years to at least every three. I reassure him that the Government recognise the importance of regular assessments of the regime to ensure that it is as effective as possible. The legislation sets five years as the minimum period. That is an appropriate and proportionate timeframe in which to meaningfully assess the progress, at a regular frequency, of the entire regime set out in the Bill, following the approach set by existing legislation such as the Online Safety Act 2023.

Mandating a report every three years may not be as effective because of the extensive nature of these reviews, given that this is a cross-sectoral regime, and would produce unnecessary administrative burdens. A report every five years is a minimum baseline, and the Government will be able to conduct more frequent reports on the legislation if that is deemed necessary. I must remind the Committee that this sits alongside the annual report on the statement of strategic priorities, which will also provide frequent monitoring of regulator activities in response to the objectives of the statement. For these reasons, I kindly ask the hon. Member for Brecon, Radnor and Cwm Tawe to withdraw the amendment.

As I have previously set out, it is essential that the framework is effective, properly implemented and keeps pace with the evolving cyber landscape, and we must have a mechanism to assess whether it is doing so. Clause 40 requires the Secretary of State to lay a report in Parliament at least every five years assessing how the Bill has met its objectives. That is an appropriate period for Government to meaningfully measure progress across all of the regulated sectors, but more frequent reports are possible if deemed necessary.

As we know, this is not the only mechanism for monitoring progress. Clause 28 requires more frequent annual reports to Parliament on regulator activities in relation to the objectives in the statement of strategic priorities. While these reports are crucial for effective monitoring, evaluation and long-term, evidence-based decision making, they are only part of the picture. Should urgent intelligence come to light, the Government will be able to act, including through the powers in the Bill. For those reasons, I commend clause 40 to the Committee.

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

I beg to ask leave to withdraw the amendment.

Clause 41 - Regulations under section 24 or Chapter 3

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clause 42 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

Clause 41 gives further detail on the sorts of provisions that can be included in regulations made under clause 24 and chapter 3 as a whole. It confirms that regulations can make different provisions for different purposes, different categories of person or different areas; can make provisions for how those regulations apply to the Crown or UK territorial waters; and can include consequential, supplementary, incidental, transitional or saving provisions. The clause also defines how certain terms used in regulations should be interpreted, such as “relevant UK waters” or “primary legislation”. In summary, the clause provides important points of clarification about how the regulation-making powers in the Bill can operate. I propose that clause 41 stand part of the Bill.

Clause 42 sets out the consultation requirements and parliamentary procedure that apply where regulations are used to designate new essential services or regulators, to impose regulatory requirements or change regulator functions, or to amend requirements for the five-yearly legislative review.

Alison Griffiths (Conservative, Bognor Regis and Littlehampton)

These procedures are standard, but the powers they apply to are significant. Where regulations under part 3 would materially expand duties or bring new actors into scope, have the Government considered whether those should receive deeper scrutiny in practice, even if the formal procedure remains the usual one?

Kanishka Narayan (Labour, Vale of Glamorgan)

I thank the hon. Member for that important point. The expectation is that the powers used here are scrutinised appropriately. If it helps, I can set out which uses of the power, particularly under clause 42, will trigger consultation requirements and the affirmative procedure, which will perhaps give her the assurance she seeks.

In essence, all changes that may have considerable impact on how the NIS regime operates will be subject to consultation and the affirmative procedure. In practice, this means that regulations concerning the designation of essential services, as well as changes to the duties of regulated entities and functions of regulators, will be subject to both consultation and affirmative procedure requirements.

In each of the cases I mentioned, clause 42 requires the Secretary of State to undertake consultation with appropriate persons before any regulations can be made. It also specifies that regulations of this kind can be approved only through the affirmative parliamentary procedure. These provisions ensure that any substantive regulations made through the Bill’s future-proofing powers will be properly tested. They provide the necessary checks and balances that such wide-ranging powers require, and they will ensure the credibility and legitimacy of future regulations made using these powers. For those reasons, I propose that clause 42 stand part of the Bill.

Ben Spencer (Conservative, Runnymede and Weybridge)

I have two questions for the Minister. Given the impact on devolved legislation, can he confirm that the consultation will extend to devolved authorities should it impact on them? My second question is more generally on the theme of devolved authorities. Can he confirm that, as part of the publicised “reset” negotiations with the European Union, bringing Northern Ireland into scope of NIS2 regulations is totally off the table?

Kanishka Narayan (Labour, Vale of Glamorgan)

On the broader point about application to the devolved Administrations, changes in UK legislation may indeed need to be reflected in devolved legislation, such as where it refers to and references the name of UK legislation. In those contexts, it is important that consequential provision can be made to ensure coherence. We will continue to engage with our devolved colleagues on the implementation. I am very happy to write to the hon. Gentleman and the Committee, particularly on the Northern Ireland point.

Clause 43 - Directions to regulated persons

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

I beg to move amendment 27, in clause 43, page 66, line 11, at end insert—

“(fa) a requirement to remove, disable or modify hardware, software or other facilities;”

This amendment would enable the Secretary of State to issue directions to remove, disable or modify hardware, software or other facilities for national security purposes.

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 43 and 44 stand part.

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

Amendment 27, which I move on behalf of my hon. Friend the Member for Henley and Thame, would give the Government the ability to remove, disable or modify hardware and software that could be used to infiltrate British national infrastructure, such as the cables underneath the now approved Chinese mega-embassy in Tower Hamlets.

The Prime Minister’s greenlighting of the Chinese super-embassy in the heart of London is a grave mistake that presents an open door for the ramping up of Chinese espionage in our country. It sends a regrettable and shameful message to Hongkongers—many of whom have already been targeted, intimidated and coerced by the Chinese Communist party—that trade deals are being prioritised over their safety. The Government must take a robust stance with hostile states such as China.

Ben Spencer (Conservative, Runnymede and Weybridge)

Clause 43 grants the Secretary of State powers to issue directions to regulate entities where there is a risk to national security, or where an action must be taken in the interests of national security. Directions can include requirements relating to the management of systems, the yielding of information and the removal or modification of goods and services. The Secretary of State may also require a regulated entity to engage the services of a skilled person to comply with directions issued. The Secretary of State has wide discretion to dispense with providing reasons for directions or consulting with the affected parties on the basis of national security considerations.

Clause 44 clarifies that the Secretary of State’s directions under part 4 prevail if there is a conflict between those directions and another statutory requirement. The exercise of these powers by the Secretary of State could have far-reaching consequences for businesses, which may experience interruption to their commercial activities, as well as the potentially considerable time and expense in adhering to a request made on national security grounds.

I have spoken on several occasions in the House and in this Committee about the critical risks posed to our cyber-security and national security by hostile state actors and their affiliates. It is, of course, right that the Secretary of State should have this power, but it should be used only in extremis. Like other extensive powers granted to the Secretary of State under part 3, it must be subject to oversight and guardrails. A report to Parliament, which may well be redacted, on the exercise of functions under part 4 will not be sufficient to ensure that this power is used proportionately. Has the Department considered introducing an obligation for the Secretary of State to report to the Intelligence and Security Committee when she exercises powers under part 4?

We discussed the Chinese super-embassy earlier. Later in the Committee’s proceedings, I will talk about an Opposition new clause that would deal with that problem effectively.

Emily Darlington (Labour, Milton Keynes Central)

As the Minister will be aware, I have spoken consistently of my concern about our reliance on hardware and tech that comes from potentially non-favourable state actors abroad. That also relates to Government procurement, which I have raised before, as the Minister will know.

The Committee has already discussed how local government and Government Departments are not covered by this legislation, and how there is a separate strategy and document. Can the Minister expand on how protections against a reliance on foreign tech within critical infrastructure, in either the private or the public sector, are being dealt with in the Bill or in the strategy that has been published for the public sector? How will that be continually reviewed as our global geopolitical situation remains unstable?

Kanishka Narayan (Labour, Vale of Glamorgan)

I will start by addressing amendment 27, moved by the hon. Member for Brecon, Radnor and Cwm Tawe, which would add to the non-exhaustive list of requirements that could be included in a national security direction. It specifies that a direction could include requirements to

“remove, disable or modify hardware, software or other facilities”.

I reassure him that the Bill, as currently drafted, allows the Secretary of State to impose those types of requirements. Clause 43(3)(f) specifies that a direction may include

“a requirement relating to removing, disabling or modifying goods or facilities or modifying services”.

That already encompasses the types of requirements specified in amendment 27.

Furthermore, clause 43(3) lists the requirements that may “in particular” be included in a direction. The list is therefore not exhaustive, and for good reason. It is not possible or desirable to specify every action that might be needed to address a national security risk. That would restrict the Government’s potential avenues to address urgent national security threats, and would risk the legislation being too narrow to address novel threats to the UK’s national security.

The Secretary of State may issue a direction if they judge that an NIS-regulated entity’s network and information systems have been compromised, or if there is a threat of such compromise that risks national security, and that a direction would be

“necessary and proportionate in the interests of national security.”

As long as that particular test is met, the Secretary of State may include requirements in a direction that are not specifically listed in clause 43(3). As a result, even if the types of requirements specified in amendment 27 were not already listed, the Secretary of State could still include those types of requirements in a direction. For that reason, I kindly ask the hon. Member for Brecon, Radnor and Cwm Tawe to withdraw the amendment.

More generally, I want to talk about two aspects that have been raised. The shadow Minister raised concerns about the proportionate and accountable use of powers. On that question, I would point out two things. One is that the Secretary of State will be able to issue a direction only when it is “necessary and proportionate” on the grounds of national security. To assess that proportionality, the Secretary of State will likely need to consider, among other things, the impact that a direction may have on a regulated entity, including the economic impact of directing it. They will also need to consider whether there are other means and mechanisms to achieve the same outcome.

Once a direction is issued, it will be laid before Parliament for scrutiny unless that would be contrary to national security interests. In response to the shadow Minister’s particular questions about the mechanisms considered in doing so, I suggest that the current mechanism of more general parliamentary scrutiny was seen as the best way of ensuring widespread accountability in these matters.

Ben Spencer (Conservative, Runnymede and Weybridge)

I really do not understand the Minister’s answer. If it has not been published on national security grounds, how will we know that it has been laid? The whole thing could be entirely secret. Surely it has to go to the ISC as an accountability mechanism.

Kanishka Narayan (Labour, Vale of Glamorgan)

The Bill currently provides for clear parliamentary scrutiny. The Secretary of State is responsible for coming to Parliament, although some information may not be able to be presented in public. I am happy to write to the shadow Minister about the mechanisms that other similar regimes have used to ensure that Parliament’s scrutiny is informed in those cases, whether in Committee or otherwise. The primary mechanism is the one we use for constant parliamentary scrutiny, and it would be unfair for any of us to suggest that most of those channels would not be appropriate for the sort of scrutiny we are looking at.

Ben Spencer (Conservative, Runnymede and Weybridge)

I think the Minister is saying that there will be a parliamentary scrutiny mechanism under these powers. Is that what he is saying?

Kanishka Narayan (Labour, Vale of Glamorgan)

Yes.

Ben Spencer (Conservative, Runnymede and Weybridge)

Okay.

Kanishka Narayan (Labour, Vale of Glamorgan)

To repeat, exactly as I said: once a direction is issued, it will be laid before Parliament for scrutiny. If there is any misunderstanding, I am happy for the shadow Minister to write to me so that I can confirm it.

Ben Spencer (Conservative, Runnymede and Weybridge)

I really think we should be very critical about this. What we are doing now is parliamentary scrutiny. There will be directions in future, which we expect to be laid, and they will also be subject to parliamentary scrutiny. Even where they are redacted because of national security concerns, somebody, or some mechanism of Parliament, will be able to scrutinise them. Can the Minister confirm that?

Kanishka Narayan (Labour, Vale of Glamorgan)

Yes.

Ben Spencer (Conservative, Runnymede and Weybridge)

Okay.

Kanishka Narayan (Labour, Vale of Glamorgan)

To return to the point made by my hon. Friend the Member for Milton Keynes Central about the Bill’s provisions, the Bill looks at particular risks posed by hostile states, related actors and a wide range of other actors. Network and information systems for essential services and the identity of risk sources may be one consideration for organisations and regulators as well as the NCSC. The Bill does not look at specific actors but the outcome of the risk. Of course, hostile actors are an important part of that. I am happy to write to my hon. Friend about wider initiatives outside the Bill, particularly in the public sector, which I know is an important concern for her in relation to hostile state actors. There are a range of initiatives that the Government are taking forward in that context.

Clause 43 grants the Secretary of State the power to direct an NIS-regulated entity to take necessary and proportionate actions in response to national security threats. The power can be used where the entity’s network and information systems have been compromised or there is a threat of such compromise. The clause sets out the sorts of action that a direction could require. A direction could, for example, require an energy provider to take action to remove a hostile actor’s presence from their networks, in response to intelligence that a hostile state actor was pre-positioned for an attack.

Cyber-attacks on NIS sectors represent a serious and growing threat to the UK’s national security. High-capability actors and hostile states can mount increasingly targeted and sophisticated attacks. At present, however, the Government lack powers to require regulated entities to take necessary action in response. That gap could be exploited with increasing frequency and impact. The clause will remedy that, ensuring that the Government have the necessary powers to act quickly to protect our national security.

Lincoln Jopp (Conservative, Spelthorne)

To take this a little bit beyond the theoretical, is the Minister suggesting that, where it is discovered that, for example, a major offshore wind power generation facility was fitted with remotely triggerable kill switches, triggerable by a foreign state or sub-state actor, the Secretary of State could require that energy company to remove whatever piece of hardware or software was producing that threat?

Kanishka Narayan (Labour, Vale of Glamorgan)

I could not judge a specific situation but, broadly speaking, that is the sort of situation, especially if it is an NIS-regulated entity, and in particular where the exercise of the power is focused on the entity’s network and information systems, that I would expect to come in scope of the powers specified here.

Under clause 44, a direction can be issued only when necessary for national security. It is possible that, in some circumstances, what is needed to protect UK national security could conflict with standard regulatory duties. For example, a direction might relate to a particularly sensitive national security risk, where only those involved in addressing the risk should be aware of it. That is to minimise the risk of hostile actors becoming aware of a vulnerability. A direction could therefore require an entity not to report that national security risk for the period in which the risk was being remedied. They may ordinarily have had to report that national security risk to comply with standard reporting requirements. The clause will resolve that conflict and provide certainty to recipients of directions about what they must do to ensure that the national security risks in a direction are addressed.

David Chadwick (Liberal Democrat, Brecon, Radnor and Cwm Tawe)

Given the reassurances from the Minister, I beg to ask leave to withdraw the amendment.

Clause 45 - Monitoring by regulatory authorities

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 46 and 47 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

This group of clauses concerns how compliance with national security directions will be monitored. Clause 45 enables the Secretary of State to delegate the task of monitoring compliance with the direction issued under clause 43 to a NIS regulator. Regulators have valuable sectoral expertise and existing relationships with the entities they regulate. As such, it may be effective to delegate monitoring of compliance to the relevant regulator. The Secretary of State will retain the sole ability to make judgments about whether non-compliance has occurred, or if any penalty is appropriate. The regulator would be required to obtain information relating to compliance, to be shared with the Secretary of State. The Secretary of State would then determine how they would like to receive this information—for example, in reports or at regular intervals.

Clause 46 grants information-gathering powers to the Secretary of State and to regulators that are subject to a monitoring direction or request. In order to determine whether an incident or threat meets the bar for issuing a direction, or whether a regulated entity is complying with the direction, the Secretary of State will need information from that entity and potentially other parties. The clause establishes the power for the Secretary of State to request that information. As the monitoring of compliance with the direction may be delegated to NIS regulators, the clause also equips those regulators with the power to request information needed for their monitoring functions.

Clause 47 grants the Secretary of State the power to carry out or delegate inspections needed to assess compliance with a direction, or with a confirmation decision specifying actions to be taken in the event of non-compliance. The Secretary of State is responsible for judging whether a regulated entity is complying with a direction, and therefore needs access to relevant information that the regulated entity holds. In some cases, this may not be possible to verify without physical attendance. To ensure the effective use of time and resources, the Secretary of State will have the power to appoint a person to carry out an inspection on their behalf, or to direct the recipient of a direction to appoint an approved inspector. The clause also grants these powers to regulators, where the regulator has been directed or requested to monitor compliance on behalf of the Secretary of State. This will ensure that they can provide the Secretary of State with the most accurate information. I commend the clauses to the Committee.

Ben Spencer (Conservative, Runnymede and Weybridge)

Clause 45 gives the Secretary of State powers to require regulatory authorities to monitor and report on regulated entities’ compliance with directions given under clause 43 for reasons of national security. Clause 46 provides the Secretary of State with extensive information-gathering powers through the use of information notices to facilitate the giving of directions and monitoring of compliance with directions under clause 45(4). Clause 47 empowers the Secretary of State to conduct inspections to assess whether a regulated entity is complying with directions issued under clause 45(4). The Secretary of State may appoint a third party to conduct the inspection, and require the regulated entity to meet the costs associated with this.

I reiterate the point that these powers are necessary; however, given the potential for significant cost and administrative burden for businesses, they should be subject to contemporaneous or near-contemporaneous oversight by parliamentary authorities, observing the necessary confidentiality protocols. I also make the point that these information-gathering powers apply extraterritorially and may lead to conflict with regulated entities’ data privacy obligations in other jurisdictions. What discussions has the Secretary of State conducted with industry and law enforcement counterparts in other countries about the approach to information sharing for this purpose, and the implications for companies operating services on a cross-border basis?

Kanishka Narayan (Labour, Vale of Glamorgan)

I am grateful to the hon. Gentleman for his points about proportionality and scrutiny. I want to give him assurances about that, as I did in our earlier conversation.

On cross-border compliance, the hon. Gentleman rightly points out that relevant information can be requested, regardless of whether it is held the UK. I am very happy to write to him with further detail on our ongoing engagement with counterparts elsewhere. During this process, we have engaged more broadly to understand other regulatory regimes and ensure compliance with them.

Clause 48 - Notification of contravention

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 49 to 52 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

This group of clauses concerns the enforcement of directions issued by the Secretary of State. I shall speak to them in turn.

Clause 48 grants the Secretary of State the power to issue a notice of contravention where they believe an entity is failing or has failed to comply with requirements relating to a direction. A regulator that has been tasked with monitoring a regulated entity’s compliance with a direction will also be able to issue a notification of contravention relating to an information notice or inspection issued by the regulator. It would not be appropriate for a regulator to judge compliance with a direction issued under clause 43 or any other requirement imposed by the Secretary of State.

Lincoln Jopp (Conservative, Spelthorne)

What happens when the Secretary of State, via his various proxies—the regulator or whomsoever—gives a direction to a company to do something in the interests of national security, and the entity disagrees and says, “That simply won’t work, and it won’t solve the problem that you are seeking to address”?

Kanishka Narayan (Labour, Vale of Glamorgan)

I am reluctant to engage in the specifics of incidents without knowing the full range, but I would expect there to be an initial period of engagement to get to a position of agreement. Where the Secretary of State’s directions are not complied with in the context of a disagreement of the sort that the hon. Gentleman points out, penalties for non-compliance will be available to the Secretary of State. They will have to be justified both in the moment and subsequently, in the light of the particular provisions of the Bill.

The clause sets out the circumstances in which the Secretary of State and relevant regulators can issue a notice of contravention and the details that such a notice should contain, including the steps that an entity should take to rectify or remedy an act of non-compliance and the penalties that are being considered. The ability to issue a notice of contravention is an important procedural mechanism. It gives directed entities the opportunity to address non-compliance before penalties are imposed through a final confirmation decision, and increases the likelihood that the requirements of a direction will be met. That is vital, given the national security risks that a direction is intended to address.

Clause 49 empowers the Secretary of State to determine appropriate and proportionate penalties for non-compliance with a direction. It sets an upper threshold on what the penalties can be. For non-compliance with a direction, penalties are fixed at the greater of £17 million or 10% of turnover for undertakings, subject to turnover and undertaking being defined in regulations, and £17 million for non-undertakings. For requirements concerning the provision of information or inspections, the maximum penalty for non-compliance is set at £10 million.

Clause 49 also provides for daily penalties to be issued. These are set at £100,000 a day for non-compliance with a direction and £50,000 a day for related requirements. They will continue in force until the entity has complied with the relevant requirement. A regulator that has been tasked with monitoring a regulated entity’s compliance with a direction will be able to issue penalties for non-compliance with an information notice or inspection issued by the regulator.

These provisions have been designed to reflect the gravity of non-compliance with a national security direction and the necessity of ensuring that directed entities comply with the requirements that directions impose. It is also why the maximum penalties have been set at a significantly higher level than they have for the updated NIS enforcement regulations in clause 21. The better comparison in that context is the penalty threshold for national security powers in the Telecommunications (Security) Act 2021, which align with the provisions in clause 49.

Clause 50 grants the Secretary of State and, where relevant, regulators the power to issue a final confirmation notice for non-compliance with a direction or related requirements. The clause specifies that the Secretary of State or regulator can issue a confirmation notice where they have previously notified an entity of suspected non-compliance, and where they are now satisfied that non-compliance has occurred. The notice of confirmation is the mechanism through which the Secretary of State or regulator can issue their final determination about the actions an entity needs to undertake to correct or remedy a contravention, and the penalties it will need to pay, in accordance with the provisions in clause 49.

A confirmation decision can be issued only after a directed entity has had the opportunity to make representations about an earlier notice of contravention. Once it has been issued, the directed entity must comply with it, and this duty can be enforced through civil proceedings. In short, clause 50 ensures that a direction can be enforced effectively and appropriate action taken to penalise non-compliance.

Clause 51 sets out how penalties will be recoverable across the nations of the UK in the event of non-payment. Clause 52 grants the Secretary of State the power to enforce non-disclosure requirements imposed in relation to the issuing of a direction, notice of contravention or final confirmation notice. Failure to respect these requirements could harm national security, for example by exposing vulnerabilities in the UK’s essential services or the security mitigations being put in place to protect their network and information systems. As a result, it is crucial that the Secretary of State has adequate powers to enforce non-disclosure requirements. Clause 52 largely replicates the enforcement process for non-compliance with other requirements of directions issued by the Secretary of State. The maximum penalties will be £10 million or £50,000 per day.

I ask the Committee to support the clauses in order to enable the effective enforcement of directions issued by the Secretary of State to protect the UK’s national security.

Ben Spencer (Conservative, Runnymede and Weybridge)

Clauses 48 to 52 deal with notifications and financial penalties where a regulated entity is deemed not to be compliant with directions issued by the Secretary of State under part 4. In particular, clause 48 would grant enforcement authorities powers to issue a contravention notice if they believe a person has failed to comply with a requirement under part 4. The notice must set out details of remedial steps to address the failure, as well as the financial penalty that the enforcement authority intends to impose.

Clause 49 would require penalties to be set at a level that is appropriate and proportionate, with the maximum penalty being £17 million or 10% of turnover. A maximum daily penalty of £100,000 applies to ongoing breaches. The maximum fines for failing to comply with an information notice or an inspection would be set at £10 million.

Kanishka Narayan (Labour, Vale of Glamorgan)

I have two points to make to the shadow Minister on defining turnover. As he will be well aware, “turnover” is a technical term that is best defined in secondary legislation, to keep up to date with accounting principles that at times vary from sector to sector. He asked for factors that might contribute to definitions. The specific determination of turnover will be set out secondary legislation, but we intend to establish a presumption that only the turnover of the regulated entity that breaches the direction will be considered for determining penalties on this point.

Clause 53 - Power to direct regulatory authorities

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to consider the following:

Clauses 54 to 56 stand part.

Government amendments 23 and 24.

Clauses 57 and 58 stand part.

Kanishka Narayan (Labour, Vale of Glamorgan)

This group concerns the power for the Secretary of State to issue directions to the NIS regulators, as well as general provisions relating to the power and the power to direct regulated entities. That includes the procedure for reviewing, varying or revoking directions, the procedure whereby Parliament can scrutinise these directions, how information concerning directions can be shared, the means by which directions can be issued and the clarifications of key terms concerning part 4 of the Bill. I shall speak to each clause in turn.

Clause 53 grants the Secretary of State the power to direct NIS regulators in the exercise of their NIS functions, where it is necessary and proportionate in the interests of national security. The current system requires regulated entities to undertake “appropriate and proportionate” measures to secure themselves against cyber-threats. Regulators issue guidance to their sectors to help them to interpret that duty. However, geopolitical or technological developments could lead to rapid, unexpected increases in the cyber-threat that quickly leave whole sectors vulnerable and create a national security risk.

In such circumstances, it is essential that the Secretary of State can leverage the expertise and powers of NIS regulators to drive the implementation of enhanced security procedures and practices. For example, they may need to direct a regulator to issue an urgent advisory to its sector regarding new cyber-threats or to update guidance on what measures are “appropriate and proportionate” for them to take. This power will not extend to other Government Departments or devolved Governments, for which any actions to mitigate significant national security threats will be agreed through engagement.

Given the changing nature of national security threats, there may be times at which a national security direction needs to be varied or revoked. Clause 54 introduces powers for the Secretary of State to change the content of a direction, or revoke it altogether, where it is necessary and proportionate to do so in the interests of national security. The Secretary of State will be able to vary a direction to add new requirements, or to simplify directions by removing requirements that are no longer needed. To ensure that regulated entities are able to make representations, the Secretary of State is required to consult them before a direction is varied, where practicable. This requirement does not apply if consultation would be detrimental to the interests of national security.

Moving on, I reiterate that these powers equip the Secretary of State to act in defence of the UK’s national security. While it is important that the Secretary of State can act swiftly and decisively to protect the UK from major cyber-risks, it is right that the Government are held to account in their use of these powers via parliamentary scrutiny.

Clause 55 therefore requires the Secretary of State to lay copies of directions, and any variations of them, before Parliament. However, this requirement does not apply if laying them before Parliament would be contrary to national security. The clause includes caveats that, when laying a direction before Parliament, the Secretary of State can exclude details that could pose a risk to national security or might unreasonably harm an organisation’s commercial interests.

Clause 56 introduces important powers for the Secretary of State and NIS regulators to share information they have collected while overseeing requirements in, or related to, a direction, where this is necessary for national security. The clause enables information to be shared by the Secretary of State and NIS regulators with each other and with other regulators, GCHQ, other UK public authorities and public authorities overseas.

The clause specifies that information can be shared only where this is necessary for national security, and where the information is relevant and proportionate to the purpose of the sharing. It provides reassurance that information disclosed under this clause will not constitute a breach of any obligation of confidence or restriction on disclosure. It also clarifies that information cannot be shared where disclosure is prohibited under the Investigatory Powers Act 2016. Information sharing within these parameters has a vital role to play in enabling greater co-operation between organisations supporting national security in the UK and with allies overseas.

Clause 57 contains important information on how directions and notices issued by the Secretary of State to regulated entities or regulators may be given to the recipient. It explains that a direction or notice can be delivered by hand, left at the appropriate address, posted or emailed. It contains information on which addresses and email addresses notices and directions can be sent to. Government amendments 23 and 24, tabled in my name, are technical amendments to simplify the process for issuing documents under the national security powers in part 4 of the Bill.

Under clause 57, as the Bill currently stands, a regulator may contact a regulated person only using the person’s published email address, even if the regulated person has provided an alternative preferred email address to the regulator. Where those email addresses differ, and the address provided to the regulator is correct, this may cause problems for issuing and enforcing a direction on a regulated entity. Government amendments 23 and 24 resolve this issue by allowing a regulator to contact a regulated person using either their published email address or an email address that the person has provided to the regulator.

Clause 58 clarifies how key terms used in part 4 should be interpreted. It does so by cross-referencing how those terms are defined in earlier parts and clauses of the Bill, ensuring consistency of meaning throughout. In order to ensure that unexpected changes to sectoral risk that impact the UK’s national security can be mitigated, and that the directions regime can operate effectively with appropriate parliamentary scrutiny, I ask the Committee to support these clauses and minor amendments.

Ben Spencer (Conservative, Runnymede and Weybridge)

Clause 53 would grant the Secretary of State powers to issue directions to regulators where this is necessary for national security reasons, and to allow a reasonable period for the regulator to comply with that direction. Clause 54 provides that directions may be amended or revoked by the Secretary of State. Under clause 55, directions to regulated entities or regulators must be laid before Parliament unless that

“would be contrary to the interests of national security.”

I repeat my earlier question about the ISC’s role regarding scrutiny. Clause 56 would permit the Secretary of State and regulatory authorities to share any information obtained under part 4 with each other and the NCSC. The provision also allows for the sharing of information with other UK or overseas public authorities with equivalent cyber-security or national security functions. Government amendments 23 and 24 seek to amend that clause to provide for directions and notices issued under this part to be sent by email to relevant persons who provided those contact details to regulatory authorities.

Some reassurance on the extent of information sharing for businesses is delivered through provisions specifying that disclosures of information should be limited to that which is relevant and proportionate. However, those are high-level and subjective terms, open to interpretation by the authority sharing the information. Can the Minister provide any update on the development of protocols between authorities to ensure that information shared is limited to that which is necessary for effective oversight and enforcement in relation to national security risks?

Kanishka Narayan (Labour, Vale of Glamorgan)

On the shadow Minister’s first point, I repeat what I said earlier and, of course, acknowledge his concern. I assure him that, while a direction can only be issued out of necessity for national security, it does not follow that public knowledge of that direction or its contents would compromise national security. I would expect a pretty extensive scope of such directions and, therefore, an appropriate channel of scrutiny in Parliament.

On his question of protocols to ensure information shared is not just proportionate in general, but specific to the purpose of national security specified, I am happy to give him the assurance that the Bill contains it and that, in the process of working out implementation, we will make sure that regulators are focused on developing those protocols.

Clause 57 - Means of giving directions and notices

Clause 59 - Extent

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss clauses 60 and 61.

Kanishka Narayan (Labour, Vale of Glamorgan)

I will speak to clauses 59, 60 and 61 in turn. Clause 59 clarifies that the Bill’s provisions apply to England and Wales, Scotland and Northern Ireland. That is consistent with the Network and Information Systems Regulations 2018.

Effective implementation is key to a successful regime. Clause 60 outlines the phased commencement timings of the provisions, ensuring that they commence at an appropriate time. Some of the provisions will commence upon Royal Assent, or two months after Royal Assent, allowing the Government to begin implementing the regime without delay. That includes powers for the Secretary of State to lay important secondary legislation required to operationalise some measures in the Bill upon Royal Assent, and the power to publish a statement of strategic priorities at month two. All remaining measures will be brought into force via regulations, allowing the Secretary of State to sequence implementation in a way that is practical and proportionate, allowing for transitional arrangements and business adjustments. That also allows sufficient time for the implementing regulations to be made and scrutinised, and is required to make operational and implement the new, stronger framework.

Clause 61 clarifies that the Bill can be referred to as the Cyber Security and Resilience (Network and Information Systems) Act 2026 once passed.

New Clause 2 - Register of foreign powers for the purposes of Part 4

Ben Spencer (Conservative, Runnymede and Weybridge)

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

Graham Stringer (Labour, Blackley and Middleton South)

With this it will be convenient to discuss the following:

Ben Spencer (Conservative, Runnymede and Weybridge)

New clause 2 contains an obligation for the Secretary of State to establish and maintain by regulation a list of foreign powers presenting a significant cyber-security risk to the UK. The list must include states that have been confirmed by GCHQ as having perpetrated a cyber-attack, whether by a state department, agency or affiliate, on the UK in the preceding seven years. It must also include foreign powers that GCHQ has warned pose a risk to the security or resilience of the network or information systems of one or more operators of an essential service or critical suppliers.

New clause 3 would compel the Secretary of State to review and report to Parliament on the risk to networks and information systems posed by foreign powers appearing on the register under new clause 2, with specific regard to activities undertaken from abroad and the risk posed by locations or premises controlled by those states in the United Kingdom. New clauses 13 and 15, in the name of the hon. Member for Henley and Thame, look as if they have been tabled in the same spirit of genuine concern about the risk of foreign hostile state interference and control in critical systems and supply chains.

There is an established precedent in UK legislation for maintaining registers or lists of hostile state actors and other entities presenting a threat to our national security for use by Government. That includes the foreign influence registration scheme under the National Security Act 2023, which came into effect last year. Russia and Iran were placed on an enhanced tier of the scheme, which applies to foreign powers considered to pose a risk to the UK’s safety or interests. The Government said that that was in response to those countries being identified as presenting an elevated national security risk. China was conspicuous by its absence, despite the director of GCHQ having confirmed in 2024 that her organisation devotes more resource to China than to any other single mission.

New clause 2 would compel the Government formally to recognise what is readily apparent to His Majesty’s loyal Opposition, our security services and so many Members on both sides of the House, who have spoken with urgent concern about the security risk that China poses to the United Kingdom. In 2024, the NCSC confirmed that Chinese state-affiliated actors were responsible for cyber-attacks on the UK Electoral Commission and Parliament in 2021-22. China would therefore clearly meet the criteria to be included on the Secretary of State’s register under this clause.

The NCSC has also issued stark warnings about the cyber-security threat that China poses to critical sectors in the UK in its 2024 and 2025 annual reviews. The NCSC stated that the targeting of energy, transportation and water sectors could be laying the groundwork for future disruptive and destructive cyber-attacks and is a clear warning about China’s intent to threaten essential networks. Yet the Government remain reluctant to name China as a threat to UK national security, including during recent high-profile debates such as those relating to the profoundly regrettable decision to green-light the China super-embassy planning application.

Christopher Vince (Labour/Co-operative, Harlow)

The shadow Minister will forgive me for taking the opportunity to defend the Government and the Prime Minister; I was not expecting to do that in this Committee this week. I reassure Members across the House that this Prime Minister and Government put national security first. The shadow Minister will know that intelligence agencies have been consulted about the relocation of the Chinese embassy. He will also be aware that the proposed new site at Royal Mint Court is actually further away from this place than the current site.

Ben Spencer (Conservative, Runnymede and Weybridge)

Frankly, I find it astounding that, according to my understanding, in response to the planning decision being granted our security services said that they would take measures to start moving sensitive digital cables. It strikes me that a decision about sensitive digital cables should have been pertinent to the planning application in the first place.

The Government remain reluctant to name China as a threat to UK national security, despite the overwhelming and growing portfolio of evidence. In case the Government are still in any doubt, we need look only at the oral testimony given to this Committee by the Inter-Parliamentary Alliance on China for a clear picture of the role of China and its state affiliates at the forefront of the cyber-security threats to our critical sectors.

Given that established and growing threat, new clause 3 would compel the Secretary of State to review, among other matters, the cyber-security risk to surrounding critical networks in the vicinity of the super-embassy site in the City of London. In the Commons debate on the embassy application in June last year, my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) reminded the Minister for Housing and Planning that the Government’s own cyber-security experts, Innovate UK, have warned about the threat to the City of London from the embassy. My hon. Friend made specific reference to the Wapping telephone and internet exchange that would be surrounded on three sides by this new embassy—not to mention the fibre cables I referred to earlier, which carry highly sensitive information and run beneath this site.

Christopher Vince (Labour/Co-operative, Harlow)

I recognise that the shadow Minister cares passionately about the security of this country—as do I, which is why we are discussing the Bill. But does he not recognise that the site was purchased by the Chinese Government in 2018? There is a potential threat whether or not the new embassy is built there.

Ben Spencer (Conservative, Runnymede and Weybridge)

I do not want to repeat the discussion that we had a moment ago. I think it is complete lunacy to permit the building of a super-embassy—one of the biggest in the region—next to highly critical data transmission. I am also concerned by media reports that the Prime Minister’s recent visit to China was greenlighted only following the final approval of the embassy. I am deeply depressed that, following the visit, Jimmy Lai has been effectively sentenced for life. I respect the tone and constructive way in which the hon. Member for Harlow approaches this debate, but it is fair to say that the Government are sadly weak on standing up to hostile state actors such as the Chinese Communist party.

As I said at the start, there is simply no point in granting the Secretary of State powers to issue directions on the basis of national security if the Government are not willing to be clear-eyed about the most critical cyber-security risks to the nation. I therefore submit that the new clauses are a vital addition to the Bill to focus the attentions of the Secretary of State to ensure that her functions under part 4 are carried out in the best interests of our national security. No responsible Government would or should vote against such provisions. Parliament should make it crystal clear that the Chinese Communist party is a threat to the United Kingdom. We must support new clauses 2 and 3.

Written evidence reported to the House