Cyber Security and Resilience (Network and Information Systems) Bill - Report

House of Lords, 26 October 2026.

Amendment 1

Baroness Lloyd of Effra (Labour)

My Lords, I will also speak to the other amendments in my name. As I said in Committee, the decision to introduce these amendments has not been taken lightly. This Government will act on matters of national security, which is what this package seeks to protect, when vendors with links to third countries, with the intent and capability to cause harm, put our services and the citizens who use them at risk. Through such vendors, a third country can gain access to or control of critical systems, cause disruption to UK national infrastructure and undertake surveillance through access to data at scale or espionage through access to sensitive information.

This package of amendments, supported by guidance and a voluntary referral scheme, provides operators and the Government with the tools to mitigate these risks. The new power also supports the Bill’s existing powers of direction, enabling government to act before and after vendors become embedded in supply chains. I thank noble Lords for their valuable and productive engagement on this topic since this group of amendments was debated in Grand Committee. I also thank my officials and NCSC colleagues for hosting a technical briefing for Peers. In response, I have made several updates to the amendments.

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

Concern was also raised about parliamentary oversight of the Government’s exercise of these powers. After careful consideration, I have limited the procedure for bringing entities into scope of the national security powers. The amendments in Committee enabled these powers to be exercised through the “made affirmative” procedure in an emergency scenario. The revised drafting removes the ability to use the “made affirmative” procedure, relying instead on the draft affirmative procedure. This means both Houses must approve any regulations made under these powers before they take effect.

I have also heard noble Lords’ representations on behalf of businesses and the importance of involving them in decision-making. While the Government do not intend to exercise the power to introduce a mandatory scheme, I understand the reassurance being sought around consultation and oversight. The amendment already requires the Secretary of State to consult in a manner they deem appropriate, but I am willing to go further and commit now to undertake a public consultation ahead of any consideration to introduce a mandatory referral mechanism.

Additionally, I would like to explain one further change that I have made to the amendments since Committee. The amendments no longer include a statutory duty for regulators or the Secretary of State to notify an entity when they have been brought into scope of the vendor direction power. As part of the review of these powers, it has become clear that the statutory duty is not a helpful addition and could delay mitigation of a national security threat. In-scope entities will still be informed. Ahead of making regulations to bring entities into scope of the vendor-related powers, the Secretary of State must consult relevant persons in so far as is practical. This is likely to involve consultation with the regulators and industry groups before bringing forward regulations using the draft affirmative procedure.

The Government will encourage entities to make use of the non-statutory guidance and voluntary referral route once made into law. The Secretary of State must also consult recipients and the vendor before issuing a direction, unless doing so would be contrary to national security. All of this means it is highly unlikely that an organisation would ever find out they are in scope of the vendor risk management framework by receiving a direction, having had no prior engagement with government. We intend to consult on the implementation of the wider vendor risk management framework in due course. This will include the criteria for referral and how the mechanism will work in practice. I hope noble Lords will support these amendments. I beg to move.

Lord Clement-Jones (Liberal Democrat)

My Lords, I thank the Minister for setting out the Government’s revised framework on national security directions, and I thank her and her officials for their engagement since Committee. In Grand Committee, when 65 government amendments were introduced at the 11th hour, we on these Benches made it clear that, while we fully recognise the acute geopolitical threats posed by hostile states and compromised supply chains, we cannot countenance sweeping executive market interventions devoid of statutory safeguards and judicial oversight. I welcome the genuine concessions the Minister has made following our cross-party discussions, specifically removing the emergency “made affirmative” procedure so that bringing entities into scope is subject to draft affirmative parliamentary scrutiny. However, as set out in our Amendments 117, 118, 119, 145, 146, 147 and 167, the Government’s revised framework still lacks the vital procedural guardrails needed to make these powers safe, workable and, in our view, compliant with the rule of law.

Amendment 117 would require national security directions to rest upon a credible evidential base, an assessment of less disruptive alternatives, and a strict test of necessity and proportionality. Amendment 118 would require that affected suppliers be given prior notice and a meaningful opportunity to propose risk mitigations before their technology is banned or ripped out, protecting essential services from sudden operational collapse. Crucially, Amendments 119 and 146 would introduce independent judicial oversight. Where an order imposes enduring or irreversible restrictions, such as stripping equipment out of live infrastructure, it would have to be authorised by a court with closed material procedures under the Justice and Security Act 2013, ensuring that sensitive intelligence can be scrutinised safely.

Further, Amendment 145 would guarantee an ongoing right of review and renewal, while Amendment 147 would mandate aggregate parliamentary reporting on the economic and operational impact of these directions. Amendment 167 would ensure that these safeguards take effect concurrently with the direction powers themselves. We also strongly support Amendment 164, in the names of the noble Viscount, Lord Camrose, and the noble Lord, Lord Markham, which would create a transparent register of hostile state actors.

National security and procedural justice are not opposing forces. An executive power to direct private entities to dismantle digital contracts or hardware, backed by severe financial penalties and non-disclosure gagging orders, is an extraordinary power. It will command confidence and withstand legal challenge only if it is anchored in objective criteria and independent judicial scrutiny. I urge the Minister to incorporate these essential safeguards.

Viscount Camrose (Conservative)

My Lords, I too thank the Minister for reintroducing this group and kicking off what will no doubt be a productive Report. I will be brief, both on this and on future groups, because we have already debated many of these topics at length in Committee. We appreciate the intent to allow more flexibility to address cyber security concerns, and I am grateful for the reassurances the Minister gave in Committee and since, particularly regarding the limited scope of the mandatory referral scheme; therefore, we do not oppose these amendments. That being said, I recognise the concerns raised by the noble Lord, Lord Clement-Jones. It is right that suppliers be given notice, should the situation allow, and that the use of the powers be overseen and scrutinised where possible. I hope the Minister will confirm that there are mechanisms already in place for these concerns come the implementation of the new regime.

Amendment 164 is in my name and the names of my noble friend Lord Markham and the noble Lord, Lord Alton of Liverpool. We still consider the registration, monitoring and management of foreign powers a central concern regarding cyber security. I will not revisit at length the arguments so clearly set out by my noble friend Lord Markham in Committee, but I will once again note that foreign states are responsible for three-quarters of attacks on our critical national infrastructure. There is still an information gap regarding foreign threats, and this amendment would bring that much-needed transparency.

For the avoidance of doubt, this would not require the publication of sources, substance or method. Parliament would know simply that a designation had occurred and a subsequent review had been undertaken. I believe this matter to be of pressing importance and therefore, when Amendment 164 is called, we will seek to test the opinion of the House.

Lord Alton of Liverpool (Crossbench)

My Lords, I would like to join with the noble Viscount, Lord Camrose, and the noble Lord, Lord Markham. I have, as has been indicated, signed their amendment, but I echo also what the noble Lord, Lord Clement-Jones, has said about the way in which the Minister has gone about dealing with the Bill.

Noble Lords will be glad to know that I will not be speaking on other groups of amendments, other than one. That gave me a very good insight into the way that the noble Baroness, Lady Lloyd, goes about things. We had three separate meetings in the Recess; she has been exemplary in the way that she has tried to deal with the arguments and with Members of your Lordships’ House and I want to put on record my gratitude to her for that.

So why have I signed Amendment 164? Part 4 of the Bill rightly equips the Secretary of State with formidable powers to issue directions in the interests of national security. Yet, as the Bill stands, those powers risk operating in a strategic vacuum. If we are to empower Ministers to intervene decisively to protect our essential services and our critical supply chains, that intervention must be anchored to an objective, statutory assessment of who threatens us. We cannot defend what we value against an adversary whom we refuse to formally identify. Amendment 164 provides that essential statutory spine by establishing a clear, maintained register of foreign powers that pose an acute risk to our critical network and information systems—something that came home to us last week when so many of our systems nationally were attacked. We do not necessarily know by whom, but we can no doubt guess.

We certainly know that, in the past, everything from the National Health Service onwards has been subjected to attacks: in that case the NHS was attacked by the regime in North Korea. Critically, this is not a political blacklist, though. It is not subject to diplomatic whim; it is an intelligence-led mechanism rooted in the hard, objective assessments of GCHQ. Where our intelligence agencies have confirmed that a foreign state or its proxies have perpetrated attacks against our essential services within the last seven years, or where they issue clear warnings of imminent peril, that state must be listed.

The definition must be clear-eyed about modern authoritarian governance. In the People’s Republic of China, for instance, the state, the military and the Chinese Communist Party are inextricably fused. To assess state-backed cyber threats while ignoring the governing political party that directs them would be wilful blindness. This amendment closes that semantic loophole once and for all.

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

Let me end by referring to the inquiry that I chaired on behalf of the Joint Committee on Human Rights. It was an inquiry into transnational repression. Our domestic policy’s failure is illustrated by the reluctance of the Government to act on the recommendation that the committee made unanimously to place the People’s Republic of China, which we found to be the state that was the most responsible for transnational repression in the United Kingdom, even more than Russia or Iran, in the foreign influence registration scheme’s top tier. Unlike with those two other countries, we have failed to do so.

I would be grateful when the Minister comes to reply if she is able to give us any information about whether Mr Dan Jarvis, who is responsible for security issues and who promised to continue to keep this issue under review, has done anything further to act on our committee’s recommendations and also the concerns raised by the Intelligence and Security Committee, which the noble Lord, Lord Beamish, has often spoken about in your Lordships’ House.

Strategic ambiguity, which is what I think has been the order of the day, does not deter authoritarian regimes; it merely invites opportunistic aggression. If we are serious about building genuine national cyber resilience, we must replace vague administrative discretion with an empirical, transparent and accountable framework, and I urge the Government to embrace this vital measure and to accept Amendment 164 in the names of the noble Viscount, Lord Camrose, and the noble Lord, Lord Markham.

Baroness Lloyd of Effra (Labour)

I thank noble Lords for their interventions and constructive debate on this group. I will start by addressing the amendments from the noble Lord, Lord Clement-Jones, and the assurances sought by the noble Viscount, Lord Camrose.

On the question of safeguards and guardrails, the noble Lord and I are coming from the same place. The vendor-related amendments I have tabled have clear statutory tests. The Secretary of State can give a direction only if two conditions are met. First, they must consider that a risk to national security arises, or could arise, from an operator’s use of a vendor’s goods, services or facilities, and, secondly, the direction is necessary and its requirements are proportionate.

The Secretary of State must consider whether other, less excessive measures would address the risk. Other regimes work the same way. We have designed the framework so that risks are managed early, through non-statutory guidance and voluntary referral routes. We want to avoid, as far as possible, costly interventions such as replacing embedded vendors.

On the question of notices and representations, I agree that operators and vendors should have a say before a direction is given. That is why my amendments require the Secretary of State to consult both the operator and the vendor before giving a direction, unless doing so would be contrary to national security.

I do not think a fixed period for representations in primary legislation is the right approach. Instead, my amendments include a delegated power for the Secretary of State to set statutory timelines in secondary legislation for deciding whether to give a direction. Under this approach, we must consult operators, vendors and all other stakeholders on what those timelines should be before regulations are made. It gives us the flexibility to amend the timelines through secondary legislation, should we assess that this is necessary.

On judicial authorisation, I must be clear: the Government cannot accept a requirement for a court to authorise a direction before it is given. These are national security judgments, informed by advice from the intelligence community. They are rightly made by the Secretary of State, who is accountable to Parliament. That does not mean there is no judicial oversight. Operators, and in most cases vendors, will be able to challenge directions and enforcement decisions by judicial review in the High Court.

On review and renewal, I understand that the noble Lord wants directions to expire after a fixed period. I do not think this is wise. A direction must be necessary and proportionate when it is given, and the same applies when it is varied. Businesses also need certainty and not frequent reviews. This approach follows established precedent under the Telecommunications (Security) Act 2021 and the National Security and Investment Act 2021. The requirements on what a direction must contain also limit its scope. In practice, this means that directions are likely to be tied to specific procurement decisions and mitigations, not ongoing reporting requirements.

On reporting, I agree that Parliament should be able to see how these powers are used. I am proposing that the Secretary of State must lay an annual report before Parliament setting out how the power has been used. The Secretary of State must also publish a notice when the direction is given, varied or revoked, unless this would unreasonably harm national security or commercial interests. This follows the National Security and Investment Act model. For these reasons, I hope the noble Lord and the noble Viscount will feel reassured that the safeguards they seek are built into the framework and that they will not press their amendments.

Turning to Amendment 164, let me be clear that this Government are serious about protecting our essential services from hostile states; it is a central tenet of the Bill and the amendments I have tabled. However, I disagree with the noble Viscount, Lord Camrose, that a register of foreign powers aids us in that objective. Indeed, this House had that debate during passage of the Telecommunications (Security) Act, where it was agreed that a country-specific approach is not appropriate. A register can create false certainty. National security threats do not come solely or consistently from a fixed group of foreign powers; for example, a company acting with hostile intent may have close ties to a hostile state while being registered elsewhere. Hostile actors evolve and adapt, so we must focus on identifying and mitigating the risk itself, rather than maintaining a list of countries. Our assessment of risk will always be led by expert security advice, and it should not be constrained by an arbitrary list. However, I understand the important points made about clarity and information on where our threats are coming from. The NCSC annual report highlights the risks posed by foreign actors, and we work with it to mitigate those risks. The report clearly articulates the cyber threats from Russia, China, Iran and North Korea, as well as cyber criminals. I hope that also addresses the point raised by the noble Lord, Lord Alton.

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

To address the question from the noble Lord, Lord Alton, about further deliberations by the Government on his committee’s report, I will write to him with an update following this debate.

I am grateful to noble Lords for this debate. I believe that we share the same aims: decisions about vendors should be evidence-based, proportionate and open to proper scrutiny. I hope I have provided reassurance that the vendor risk management framework provides these safeguards through its statutory tests, the duty to consult, judicial review and reporting to Parliament.

Amendment 1 agreed.

Clause 9: Managed service providers

Amendment 2

Lord Clement-Jones (Liberal Democrat)

My Lords, in moving Amendment 2 in my name, I will open the debate on this group addressing a wide range of issues: regulatory scope, implementation machinery, workforce capability and corporate governance across the Bill.

Amendment 2 tackles a vital question around regulatory proportionality: the definition of a managed service under Clause 9. On these Benches, we fully support bringing relevant managed service providers—RMSPs—into the NIS regime. Third-party IT suppliers frequently hold deep, interconnected access to critical networks, making them prime vectors for supply chain contagion. However, as Clause 9 is drafted, the definition remains a regulatory dragnet. Amendment 2 provides a clear, pro-enterprise statutory boundary; I made the case for it in Grand Committee and will not repeat that now. Blurring the lines risks swamping the Information Commissioner with compliance paperwork while diverting supervision from genuine systematic vulnerabilities.

I also welcome Amendment 3 from the noble Lord, Lord Ravensdale, and Amendment 62 from the noble Baronesses, Lady Morgan and Lady Kidron, both of which seek to ensure that size alone is not treated as an arbitrary proxy for risk. We must not fall into a false sense of security, as was set out in an amendment that the noble Baroness, Lady Morgan, secured to the then Online Safety Bill.

On the implementation amendments in this group, effective resilience requires far more than statutory assertion—it requires capability and accountability. On the workforce deficit, I pay tribute to the advocacy of my noble friend Lady Northover on Amendments 64, 81, and 107; they were tabled in Committee and have now been retabled alongside my own Amendment 105.

Over 50% of cyber professionals cite skills shortages as their greatest hurdle to compliance. Regulation needs competence. These amendments mandate that covered entities place primary system responsibility in the hands of accredited professionals registered with the UK Cyber Security Council and properly define an independent skilled person under Clause 43. I also commend my noble friend Lady Northover’s Amendment 90, which would establish a free digital safety net for SMEs, and her Amendment 84, which would require the Secretary of State’s review to assess duplication and divergence from EU NIS2 requirements for UK businesses trading across borders.

On corporate governance, Amendment 69 from the noble Baroness, Lady Morgan of Cotes, supported by my noble friend Lady Ludford, is indispensable. On future-proofing and statutory review, I welcome the Government’s Amendment 82, which concedes our Committee arguments by reducing the Clause 40 review period from five years to three years, but in a threat landscape, moving at machine speed, three years is still a long time. Amendment 83 in my name and that of the noble Lord, Lord Holmes, tests whether the Government will commit to a two-year review cycle, while the noble Lord, Lord Ravensdale, rightly embeds post-quantum cryptography migration timelines under Amendments 58 to 60.

The group would give the Bill both its proper boundaries and its operational teeth. I beg to move Amendment 2.

Lord Ravensdale (Crossbench)

My Lords, I declare my interest as the chief engineer working for AtkinsRéalis and start with my Amendment 3. Very briefly, the central problem remains that if I am a small or mid-sized enterprise—an SME—I cannot tell with any confidence whether I am in the scope of the Bill as a critical supplier. That uncertainty creates a cost, because firms delay investments and can overprepare or even walk away from public service contracts altogether because they do not want to fall within the scope of this legislation. I go back to the impact assessment, which could not say how many SMEs will be designated within the powers of the Bill. I simply ask the Minister whether she can provide any further clarity on SMEs and critical suppliers, and who exactly is in within the scope of the Bill, because that would be tremendously helpful for all small and medium-sized businesses out there that are concerned about whether they will fall within the scope of the Bill.

My other Amendments 58 to 60 all relate to quantum computing and quantum cryptography. Noble Lords have quite rightly focused on AI within the scope of the Bill—that is the zeitgeist and the issue of the moment. However, AI does not fundamentally change the rules of the game in terms of protection of our information, but quantum computing fundamentally does. We are talking about a technology that can potentially break the public key crypto that we rely on across financial services, energy and telecommunications.

This technology is advancing tremendously quickly. In Committee, I brought up the example of the Willow chip that Google has produced. Industry is now analysing, or has come up with, a fully compiled end-to-end resource estimate for a 20,000-qubit system. That is the class of system that can really break the 256-bit encryption that we use across many of our services.

We look across this more broadly in terms of what organisations and Governments are doing. Google is now saying that by 2029 it is going to complete transition to post-quantum crypto. In fact, earlier this year, the USA brought forward an executive order that brings forward its federal migration timeline by four to five years. Previously, the target was 2035 and now it is 2030.

This indicates the case for action from all the organisations cited on how fast this technology is advancing. The Minister will point to the NCSC and the timescales we have published in the UK, but there is a good opportunity within this Bill, or within the guidance to the Bill, to ensure, first, that regulators are aligned in the approach they are taking on post-quantum crypto, and, secondly, that the priority of post-quantum crypto migration is set out in the Bill. I am after some confidence from the Minister on how the Government will work towards those objectives within the framework of the Bill. Quantum is the elephant in the room when we are talking about specific technologies in the conversations we have had about AI, so I would welcome some comments from the Minister on how the Bill’s supporting documents will work towards the objective of protecting our most sensitive information against these threats.

Lord Holmes of Richmond (Conservative)

My Lords, it is a pleasure to take part in this Report stage. I declare my technology interests as set out in the register as adviser to the Crown Estate and Simmons & Simmons LLP. I support all the measures in this group. They are practical and proportionate and, as a package, will make a real difference not just to the Bill but to all those working in cyber security and all of us whom they seek to protect.

To take quantum first, does the Minister believe that the current NCSC timetable still looks right in the face of the threats we are now up against and the speed of advancement of quantum compute? On the workforce issues to which my friend, the noble Lord, Lord Clement-Jones, referred, we know there is a significant, chronic and worrying shortage of cyber professionals. Are the Government satisfied that the measures in the Bill will do everything required to address this? In later amendments we will come on to other ways to protect those who work in cyber and seek to keep us safe, but the workforce question is more than pressing.

My Amendment 5 in this group goes to the heart of so-called data poisoning. The Bill has much to commend it in terms of cyber events, but what about where the data itself has been interfered with or poisoned? There are no reporting requirements in the Bill. If there is an interruption in service, that is critical. Sadly, we have seen plenty of those in recent history, but what about circumstances where there is no interruption in service but the data has been corrupted, manipulated or poisoned? Imagine those who seek to work or invest in financial markets or those who seek to work in education, health or any sector of our society or economy. If they cannot rely on the data being presented to them, because data poisoning is not set out in the Bill, is that not as serious—perhaps in some ways more serious—than the more obvious circumstances when there is a break, a breach or an interruption in the service? I look forward to the Minister’s response.

Baroness Morgan of Cotes (Conservative)

My Lords, I will speak to Amendments 62 and 69, which I have tabled in this group, and Amendment 78, to which I have added my name. The noble Lord, Lord Clement-Jones, is right to say that this is quite a disparate group. That just shows how complicated the issues in the Bill are and how fast moving this area is, as the Minister will know extremely well. I thank her for her engagement on these amendments and the conversations we have had.

Amendment 62 is about being guided not just by the size of a provider but by the risk that it presents. It reflects an amendment that was discussed in Committee. I moved it to Clause 29 at the suggestion of the Minister, because she pointed me to that clause. I had not spotted it, but Amendment 3 from the noble Lord, Lord Ravensdale, is perhaps another way of looking at this. I totally understand the point that he is making: SMEs need to know whether they are caught by this Bill and similar provisions in future. It may not be quite as easy as telling them whether they are in or out, but the issue—we are talking now about cyber security resilience—really has to be about the risk that these services pose to our essential or national infrastructure. As we saw just last week with the PHP attack, the reality is that it might be the smallest element of software that causes some of the greatest harm. I will return to these issues that Amendments 62 and 69 capture because I do not think that any Governments have yet worked out how to legislate on the basis of the risk posed by these services. It is exactly the same as the noble Lord, Lord Clement-Jones, said in the debate on the Online Safety Act about categorisation of platforms; it is an issue that is not going to go away and that we will return to later this week. The smallest platform or service can present the greatest risk. We have to work out a way to legislate or pass regulations that reflect this.

The regulations under Clauses 29 and 30 could bring in smaller providers, but the power is discretionary, there is no risk test and it comes with no commitment to use it. I am interested to hear the Minister’s response to that. The Government’s revised Part 4 extends national security directions to persons beyond regulated persons, regardless of size. Risk-based reach does therefore exist in the Bill, but only for national security and not for wider resilience risks.

Amendment 69 is about corporate governance, which might not seem the most exciting of subjects, but the Bill is about the regulation of essential activity. In Clause 24, “essential activity” is defined as activity

“essential to … the economy of the United Kingdom or … the day-to-day functioning of society”.

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

The noble Baroness suggested when we spoke that perhaps governance could be addressed in codes of practice. I am not sure that goes far enough, but it could be a start. Is a general duty of board oversight sufficient? I am very happy to discuss this further with both the noble Baroness and her ministerial colleagues. The Government have indicated that they think Clause 29 already allows regulators to address governance in codes of practice. They will not accept an individual fiduciary duty, but a general duty of board oversight may be acceptable. I would be interested to hear what the Government’s position is, but this is going to be relevant for all related tech or cyber resilience legislation.

On Amendment 78, to which I have added my name, I support the principle that large businesses should report on cyber security and resilience plans. I am not sure that it goes far enough, but I think it starts the point where boards and senior managers actually take responsibility for what their services are doing. It would be a welcome step forward, and that is why I was pleased to add my name. I look forward to hearing the Minister’s response on these issues, and I would very much welcome further conversations with her because these issues are not going to go away.

Baroness Northover (Liberal Democrat)

My Lords, I will speak to Amendments 64, 81, 84, 90 and 107 in my name. They are all about the implementation of this legislation, including the standards that are now urgently required, as my noble friend Lord Clement-Jones laid out. All these amendments came out of the evidence given to us on the National Resilience Select Committee, and I thank the various expert organisations for their submissions and subsequent assistance. Given what has emerged in the last week or so, who can doubt the urgency of what they recommend?

Amendments 64, 81 and 107 seek to drive up standards in terms of skills and companies being able to rely on skilled people in this complex field. A great deal of effort needs to be put into ensuring that we have an adequate number of people being suitably trained and registered.

Amendment 64 would ensure that the entities covered in the Bill place primary responsibility for their systems in the hands of registered, ethically accountable professionals. Amendment 107 would provide a definition of a skilled person in the context of Clause 43. Amendment 81 would require the Secretary of State within a year of this Bill becoming an Act to make regulations to establish an organisational cyber resilience framework and to recognise a professional competence benchmark, maintained by the UK Cyber Security Council. The Minister placed great emphasis on the council in Committee, and this seeks to ensure that it can drive and secure the necessary standards. We need skilled professionals and we need them urgently, and it is vital that they be properly accredited and regulated.

Amendment 84 addresses another area. We were told by experts in the field and businesses that it was important for the UK to align with the EU, and the relevant Minister in the other place at the time, Minister Narayan, pointed out that the EU was significantly ahead of us while we “lagged behind”. We need to assist businesses that operate across both the UK and the EU to reduce duplication and divergence. This amendment would require the Secretary of State to assess and report on any duplication of—or, more particularly, divergence from—the EU network and information security requirements for businesses which operate in both the UK and the EU.

Turning to another implementation issue, there has been considerable concern about the position of SMEs, and we raised this last week in the light of the information emerging then. They are of course very important in the supply chain, but we also know that it is not a matter of whether an organisation will undergo a cyber attack, but when. For more than 60% of SMEs suffering such attacks, it is existential, and they can go under. Amendment 90 would therefore introduce a new clause requiring the Secretary of State to ensure that there is a free cyber security advice and incident response service for relevant small and medium-sized enterprises, and that the Secretary of State report annually to Parliament on its use and effectiveness.

All the provisions in these amendments are designed to strengthen our ability as a country to withstand cyber attacks. I commend them to the House.

Baroness Ludford (Liberal Democrat)

My Lords, I just want to back up the noble Baroness, Lady Morgan of Cotes, in her Amendment 69, on board oversight of security, and resilience of network and information systems.

There was a recent data breach at the retailer ASOS. It reportedly began not with a sophisticated technical exploit but with someone impersonating a trusted contact to obtain an employee’s log-in credentials. To judge from reporting last year, although there is always coyness about exactly what happened in these scenarios, the breach of data at Marks & Spencer happened in a similar way. It seems a bit “Elementary, my dear Watson” that employees have not been sufficiently trained and made aware of the absolute necessity of not falling for scams, especially because, as consumers, we get these warnings all the time.

Just last week, Catherine Braddick, the CEO of the top regulator in the City of London, the Prudential Regulation Authority, said that the PRA would “significantly increase” its focus on firms’ operational and cyber resilience. She said that the PRA and the Financial Conduct Authority would consult

“to clarify our expectations of firms as we develop our experience and understanding”.

That, of course, comes in the wake of disruptions to and breaches of websites and apps of businesses, including Lloyds, HSBC and Revolut, and their card payments, cash transfers and so on.

What I and, I think, the noble Baroness are looking for from the Government is more of a specific focus on the responsibility of boards. After all, they have various duties under the Companies Acts, such as to promote the success of the company as a whole, exercising reasonable care, skill and diligence; to maintain a reputation for high-standard business contacts; to think of the effect of the company’s operations on the community; and to foster the company’s business relationship with suppliers, customers and others. Of course, a good board should be doing that anyway, but according to a statistic I quoted in Committee, the Government’s own cyber security breaches survey revealed that board-level ownership of cyber risk in the UK has declined from 38% to just 27% over the last three years. This issue needs to zoom up—if that is not an awful pun—the agenda of companies and, inevitably, the board.

We are looking for a little more than a rather generalised response from the Government, claiming that all this will be dealt with under the security and resilience requirement regulations. It needs to be a lot more targeted on the board, as cyber health is such an important factor in the success of a company these days. Eventually, customers might well pass their verdict on a company which has poor cyber health, but perhaps the Government should help to avoid the need for a marketplace solution.

Lord Markham (Conservative)

I thank all noble Lords for their contributions. Every time, I am reminded how fortunate we are in the Lords to have experts such as the noble Lord, Lord Ravensdale, and my noble friend Lord Holmes, who can talk to us about the next level of threats around the corner, and who made the points about quantum very strongly. We also have the noble Lord, Lord Clement-Jones, here today—on his 49th birthday, is it?

Lord Clement-Jones (Liberal Democrat)

1949!

Lord Markham (Conservative)

I start by adding my thanks to the Minister for the constructive approach she has brought to the whole process. She really has listened, engaged and looked to make changes, and that is much appreciated by me and all my colleagues. I thank her for meeting us at least part-way on Clauses 36 and 40 and the timing of the intervals in the NIS regulations. However, as this is such a fast-moving environment, I have some sympathy for the suggestion of the noble Lord, Lord Clement-Jones, that the interval be two years, rather than three.

My Amendment 78, also in the names of my noble friends Lord Camrose and Lady Morgan, is very similar in intent to the amendments of my noble friend Lady Morgan, as described in her speech. It would require companies to encourage accountability on their part, and to use the board reporting and annual reporting mechanisms to allow the board and shareholders to hold them to account. While we have been talking today mainly about government moves, we have all seen the cyber security disruption in the private sector. Making sure that any CEO is, frankly, embarrassed if they cannot say in their annual report that they have good plans in place, so their own shareholders and board can hold them truly to account, has to be a sensible way ahead.

Amendment 160, which is in my name and that of my noble friend Lord Camrose, looks to see how we can use the information-sharing and analysis centres—again, these are voluntary bodies—to play their part. Cyber security is everyone’s job, and we should try to get not just government institutions but wider institutions to play their role in it.

On Amendment 162 in my name and that of my noble friend Lord Camrose, while I appreciate the constructive approach taken by the Minister, I am slightly disappointed that we have not heard anything on my amendments on data minimisation and anonymisation. I spoke about this in Committee, so I will be brief. I was Health Minister in the summer of 2024 when there was massive disruption to our London hospitals. Critical operations were being cancelled, impacting the health of the capital. When I dug into it, I found that it was all due to an attack on one of the suppliers of diagnostic tests which had loads of patient data that it never needed to hold in the first place. All that data could have been anonymised and the company would never have been a target for attack in the first place. As always with these things, if you do not create a juicy target for people to attack, then there is no reason to. This must be the first rule of cyber security.

As I mentioned then and have said all the way through this, I cannot find anyone in the NHS to take this issue seriously. We will return to this in the Health Bill on the single patient record; they are very good proposals for patient benefits and health, and I completely support that, but they will potentially create an even juicier target for hackers. We need to look at what data are held by those public and private sector bodies involved in the health service and government institutions and make sure that they are doing an audit to minimise all the data that they hold so that they do not create a target for hackers in the first place. With that, I look forward to hearing from the Minister.

Baroness Lloyd of Effra (Labour)

I thank noble Lords for the constructive debate that we have had and heartily concur with the noble Lord, Lord Markham, on not only his happy returns to the noble Lord, Lord Clement-Jones, but the valuable contributions of noble Lords who have brought their expertise and experience to the wide variety of points that have been raised.

These amendments all touch on a key point. The Bill’s potential will not be realised at Royal Assent but through effective implementation and clear measures of success. Let me begin with a key principle. The regulations must be durable and equip regulated entities to respond to any threat or hazard now and in the future. Neither the Bill nor its implementation should narrowly focus on specific technologies or risks. These will soon become outdated, so that would undercut a holistic approach to risk. Through the security and resilience requirements, or SRRs, we will take this purposeful “all technologies, all threats, all hazards” approach to protecting regulated services.

As I have set out, these requirements will be introduced in secondary legislation and will be mandatory. We propose that they will cover, among other topics, data security, risk management, board governance and incident response and recovery. We will be consulting on SRR proposals in the coming months. I thank noble Lords who attended the round table that I hosted on them after Grand Committee. As such, I caution against singling out specific risks such as data poisoning, as highlighted by the noble Lord, Lord Holmes, as they do not reflect the full range of risks that each entity manages. The noble Lord raised incident reporting. This is already designed to capture incidents that have a significant impact on the authenticity and integrity of data, so that is already within the scope of the reporting framework.

The SRRs will further touch on a number of topics raised by noble Lords, which I will address in turn. On data retention, UK GDPR requires public organisations to implement appropriate measures to ensure the security of personal data. The Information Commission regulates the data protection legislation independently of government. Under the existing NIS framework, service operators can and do assess their data retention. For example, the health sector assesses compliance against a tailored cyber assessment framework objective on using and sharing information appropriately. This includes principles on transparency, using and sharing information and records management. However, as a result of the focus on this that noble Lords have brought—in particular the noble Lord, Lord Markham—I will ensure that the SRR proposals in the upcoming consultation cover data underpinning the provision of regulated services and include minimising unnecessary data collection and retention.

Turning to the points on governance raised by the noble Baronesses, Lady Morgan of Cotes and Lady Ludford, I agree that boards and senior leaders should have clear sight of the cyber security and resilience risks their organisations face and be able to hold people responsible. The Government’s cyber governance code of practice sets expectations for formal reporting on a quarterly basis at a minimum, setting suitable metrics to track cyber strategy and agreeing tolerances for risk appetite. Additionally, the UK’s corporate reporting framework is undergoing wider modernisation efforts. We are seeking views as part of the current consultation on whether the existing risk reporting framework produces sufficient reporting on cyber risk management. If introduced, this will also cover some businesses not in scope of the Bill.

However, on the point made by the noble Baroness, Lady Morgan of Cotes, we are going further and propose introducing mandatory SRRs on governance and risk management. These will ensure clear, board-level accountability for risk management arrangements. This includes proposals for boards to establish and oversee their organisation’s security and resilience framework, alongside requiring skilled and accredited individuals with senior accountability. While I agree with the amendment’s objective of strengthening accountability and transparency, I believe the approaches we are developing via the Bill and in the modernising corporate reporting consultation provide a more continuous means of achieving this.

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

On Amendments 105 and 107, I emphasise that a “skilled person” appointed under Part 4 of the Bill is defined, but with intentional flexibility. A skilled person would be appointed to assist with actions that are necessary to protect the UK’s national security. There is no limit to what threats could emerge to threaten our national security. It is therefore right that we do not restrict our options to mitigate these threats and that the Secretary of State instead should appoint skilled persons on a case-by-case basis, on the expert advice of officials and our intelligence community.

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

I intend the statement of strategic priorities to address risks posed by emerging technologies—this could include quantum—to drive consistency between regulators. We will consult the regulators to identify risks from emerging technology in their sectors. Additionally, the SRRs will support regulated entities to manage the risks posed to their systems by new technological developments.

I turn to points raised about business support by the noble Baroness, Lady Northover. There are a wide range of free tools available to SMEs, including the Cyber Action Toolkit, providing tailored cyber security advice with NCSC-certified cyber advisers; the “Report Fraud” service, which offers free business incident reporting; and regional cyber resilience centres, which offer SMEs guidance on incident response and business continuity. These resources are available to all businesses, whether they are regulated under this regime or not. It is worth noting, though, that very few small organisations and micro-organisations will be regulated under the Bill and would benefit from the support service proposed under Amendment 90.

Coverage is a key point raised by the noble Baroness, Lady Morgan. While we must be mindful of undue burdens on small businesses, I recognise that there is a potential gap where small and micro DSPs and MSPs do not directly provide services to other regulated entities under this regime, but none the less may be critical or risky. That is why I propose to introduce a mechanism to enable the Information Commission to bring individual small and micro DSPs and MSPs into scope where they are high risk. This would be made using the Bill’s delegated power under Clause 29, subject to consultation, and be similar to the mechanism already in place for OESs. This approach complements the critical supplier measure, which already enables small and micro DSPs and MSPs to be brought into scope. Any such mechanism would be risk-based, targeted and developed in consultation with industry and relevant stakeholders. I thank the noble Baroness, Lady Morgan, for her engagement on this matter, as well as on the topic of board oversight. As these areas are taken forward, I would be more than happy to meet her to discuss them in more detail.

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

On Amendment 3, I emphasise that there is a high bar clearly set out in the Bill. Only suppliers whose disruption could have a significant impact on the economy or society can be designated. The noble Lord’s amendment would limit designation to suppliers posing a systemic risk and prevent designation if a supplier serves only a single regulated entity. I do not agree with this point. The key consideration should be the impact of disruption rather than the number of regulated entities served. We will consult on the question the noble Lord asked on critical suppliers in 2027. Regulators have already started their necessary analysis and will begin working with the sector next year.

On Amendment 160 on ISACs, spoken to by the noble Lord, Lord Markham, I caution noble Lords against the risk of government intervention in what has usually been a voluntary scheme. This could undermine trust and the wider benefits of ISACs. ISAC initiatives already exist, and many are supported by public authorities such as the NCSC. A statutory approach would undermine the success of the existing voluntary scheme, and we must be careful not to complicate the regulatory landscape by conferring powers on organisations that are not regulators.

I agree that the success of this regime must be closely measured, and I heard noble Lords’ concerns that the five-year reporting cycle was too long. I have tabled an amendment shortening it to three years. I believe this now strikes an appropriate balance, ensuring the report is both meaningful and timely.

On Amendment 84, tabled by the noble Baroness, Lady Northover, I disagree that placing this stringent requirement on the report in the Bill will help us assess the effectiveness of this regime, largely because each EU member state has implemented the NIS 2 directive in a different way, so a report would have to identify and assess the divergences not only between the UK and the EU, but within the EU itself.

Finally, I turn to the three final amendments in this group tabled in my name. The first amendment will remove the ability to change the procedure for issuing a code of practice via regulations. Should further changes be required, they would need to be made through primary legislation.

The second amendment will limit the Secretary of State’s power to change the matters to be covered in a report required under Clause 40. In short, matters can only be added to, not removed. This will strike the right balance between preserving transparency and accountability, while ensuring that the report remains comprehensive as both the regime and cyber security practices develop. With these assurances, I hope that noble Lords will not press their amendments, and will support the government amendments in this group.

Lord Clement-Jones (Liberal Democrat)

My Lords, before the Minister sits down and I have to stand up, I wonder whether she could confirm something. She mentioned, I think on two occasions in her speech, consultation. Is that in essence consultation on the SRRs, or is there another form of consultation taking place as well?

Baroness Lloyd of Effra (Labour)

The consultation I was principally referring to was the consultation on the SRRs. There is a separate mechanism for consultation on the statement of strategic priorities.

Lord Clement-Jones (Liberal Democrat)

My Lords, I thank the Minister for her response. Having listened to the debate, I was more convinced than ever by the amendments from around the House about the implementation of the new regime. I also thank her for her careful and detailed response to the points that have been made—and I thank her, and the noble Lord, Lord Markham, for their birthday greetings. This is not the ideal place to be celebrating. Nevertheless, needs must.

In an ideal world, we would press some of these amendments, because this is all about the SRRs: “It’ll all be all right on the night, don’t worry your heads about this, it’ll all be contained in the SRRs—or in secondary legislation”. Relying on secondary legislation is always a rather unsatisfactory position to be in, but the Minister has given quite a lot of assurance today, and we have got into the habit of looking at the implementation of Bills, particularly digital Bills, of late, so we will be on the case, and I have no doubt that we will take part in the consultations. But, for the moment, I beg leave to withdraw my Amendment 2.

Amendment 2 withdrawn.

Clause 12: Critical suppliers

Amendment 3 not moved.

Amendment 4

Baroness Lloyd of Effra (Labour)

My Lords, I shall speak also to the other amendments in my name. The amendments all concern small, technical changes and corrections to the Bill’s text which I hope noble Lords will be content to accept.

Amendments 45, 46, 47 and 48 amend provisions on the international sharing of information by NIS regulators. I begin by thanking noble Lords, particularly the noble Lord, Lord Alton of Liverpool, for their time and constructive engagement on the issue of overseas information-sharing. I have heard the concerns that noble Lords have expressed about regulators sharing information with overseas authorities where the right to fair trial is not guaranteed. While I am reassured that such risks are unlikely to materialise in practice under the Bill’s information-sharing provisions, I want to put that issue beyond any doubt as part of the Government’s commitment to safeguarding the rule of law and fundamental liberties.

That is why these amendments will restrict the overseas sharing of information by NIS regulators to Switzerland, our Five Eyes partners—the United States, Canada, Australia and New Zealand—and countries within the European Economic Area, which consists of EU member states, Iceland, Liechtenstein and Norway. Maintaining these gateways is essential for preserving overseas co-operation against cyber threats.

The Bill’s delegated powers will enable the Government to add to or amend the list of permitted countries, if this is considered necessary. I can assure noble Lords that changes to this list will be subject to existing safeguards, such as parliamentary approval under the affirmative procedure and consultation requirements. I remind noble Lords that regulators are under no obligation to share information overseas under this Bill, and the Bill adds explicit safeguards that information must be disclosed only if it is relevant and proportionate.

Nevertheless, information sharing remains an essential part of both the NIS framework and our international co-operation. It is important that we and our regulators can share the best practice and information needed to defeat cyber threats, which have no respect for national borders. I beg to move.

Lord Alton of Liverpool (Crossbench)

My Lords, as I indicated earlier in our proceedings, I want to speak to government Amendment 45. In doing so, I reiterate my thanks to the noble Baroness, Lady Lloyd of Effra, for the diligent way in which she has engaged with those who were concerned about data sharing with hostile states.

This amendment had its origins in another place, where Sir Iain Duncan Smith moved an amendment concerned that data might be shared with countries that do not have a judicial system that would ensure that, for instance, extradition requests would stand up to scrutiny. Particular examples were given of things like the national security law in Hong Kong and how data might be shared that would allow young people who have been involved in pro-democracy protests there to then be removed from the United Kingdom and have to stand trial in a place such as Hong Kong.

During our proceedings in the Joint Committee on Human Rights, which I referred to earlier, we had a remarkable young woman who waived her anonymity to come and give evidence to us. Chloe Cheung was just a young teenager when she took part in pro-democracy demonstrations in Hong Kong. She, like many others under our BNO scheme, came to live and claim sanctuary in the UK. At the age of 19, she was told that a bounty of 1 million Hong Kong dollars would be placed on her head. She was not alone; there were several others, including Carmen Lau, who was a legislator in the Hong Kong legislature. One of their great fears in giving evidence to our committee was that they would be subjected to all sorts of intimidation in the UK, including potential removal in due course. They had seen the incident that had occurred outside the PRC consulate in Manchester and were fearful about the new super-embassy being created in London, and all of us on that committee unanimously signed a report saying that we had to go a lot further in dealing with transnational repression.

Having had its origins in the House of Commons, the amendment was supported by a number of organisations across the non-governmental organisation sector. In particular, I pay tribute to the work of the Inter-Parliamentary Alliance on China and, notably, Luke de Pulford and Jaya Pathak, who participated in the constructive and helpful meetings that we held with the Minister.

Here in the House of Lords, the amendment was recast and retabled by me with the noble Lords, Lord Hunt of Kings Heath and Lord Markham, and the noble Baroness, Lady Ludford. In my unavoidable absence at that moment in the Committee, I was extremely grateful to each of them for their important remarks and support. That unity of purpose has resulted in a shared, unyielding conviction that, in an era of unprecedented systematic competition, our sensitive regulatory and enforcement data must never, in any circumstances, be exposed or gifted to hostile authoritarian regimes.

In the best traditions of your Lordships’ House, the noble Baroness carefully listened to the grave concerns which were raised and recognised the fatal vulnerability in the Bill as originally drafted. She has acted decisively. By closing the loophole that would have permitted disclosure to authorities in any foreign country with a strict, closed list of trusted democratic partners—our Five Eyes allies and our friends across the EEA and Switzerland—the Government have closed a dangerous statutory void. For that constructive engagement and for bringing forward these amendments, I am profoundly grateful.

I refer again to the brave dissidents and diaspora striving to live in peace on our shores, despite intimidation from regimes such as the CCP, and what the noble Lord, Lord Robertson, memorably described as the “deadly quartet” of China, Russia, North Korea and Iran. It is outrageous that people resident in the UK have been subjected to intimidation, harassment and coercion as political targets, some of it utilising data and cyber availability, in CCP-orchestrated extensive and sophisticated campaigns of transnational repression.

Hostile states routinely camouflage political persecution as legitimate, with the systemic abuse, as we heard in the Joint Committee on Human Rights, of Interpol red notices, for instance. Network and information systems data, such as IP addresses, server logs and digital fingerprints, are not neutral administrative information. In the hands of hostile states and their security services, that can become actionable intelligence used to unmask, to geolocate and to surveil individuals on British soil.

We desperately need a comprehensive cross-departmental strategy to prohibit such actions, and government Amendment 45 is a step in that direction. For that, I am extremely grateful to the noble Baroness and felt no need therefore to bring back an amendment in any hostile way today.

Baroness Ludford (Liberal Democrat)

My Lords, I congratulate the Minister on having listened, resulting in government Amendment 45 to limit disclosure of information to our allied liberal democracies. Most of all, I congratulate the noble Lord, Lord Alton, and Sir Iain Duncan Smith in the other place, as well as other parliamentarians and NGOs who have taken this up. I have worked with the Committee for Freedom in Hong Kong Foundation, as has the noble Lord.

My thanks and congratulations are accompanied by a certain surprise that the Government did not originally limit information sharing in this way. The noble Lord, Lord Alton, ended with a plea for cross-departmental working; we are concerned that the Home Office is refusing visas to Hong Kongers who have been convicted in Hong Kong of offences such as “rioting”, as classified under the Chinese Community Party’s criminal code, which we would call legitimate protest. Some of us find it extraordinary that brave Hong Kongers are denied refuge in this country for something that would obviously not be a crime here.

I mention that only because of the worry that the Government as a whole do not seem sufficiently sensitised to the dangers of the transnational repression which emanates from China and, to a large extent, via Hong Kong. The noble Lord, Lord Alton, mentioned that China was not designated in the highest tier of the foreign registration scheme. It all adds up to a puzzling picture from the Government.

I hope that this information-sharing episode under the NIS regulations was an oversight of some kind—a worrying one, if it did not occur to anyone drafting the Bill that there could be some rather undesirable regimes out there with which we would not want to share information—but, anyway, it has been pulled back. I hope that will result in a somewhat better alert system within government on the dangers of information sharing with dodgy regimes, but also, hopefully, the start of a cross-departmental, cross-government assessment of the needs of our relationship with China and its tentacles in Hong Kong and in this country.

I think I saw that the noble Baroness, Lady Winterton, was on a trip to Hong Kong. I cannot remember the details, but I hope that she is able to take up with the authorities in Hong Kong—meaning China—the guarantees that China has given in the past, which are not being complied with, and that she will fly a strong British flag for freedom and democracy and against the repression that is unfortunately being targeted at those in Hong Kong, including British citizens.

That took a bit longer than I meant. I welcome Amendment 45, but wish that an operation did not have to be mounted to pull the Government back.

Lord Markham (Conservative)

I will be brief, because there is not much to add to the powerful speech by the noble Lord, Lord Alton. I thank the Minister for introducing this group of amendments. In Committee, I was very happy to support the amendments tabled by the noble Lord. It was a fantastic example of the whole House, with parties from all sides, coming together to make sure that we do something that is right. I am pleased that the Government and the Minister took up the cause and I thank her for her work on that.

Baroness Lloyd of Effra (Labour)

I thank noble Lords for their contributions to the debate and for providing the important context behind these amendments. With that, I commend these amendments to the House.

Amendment 4 agreed.

Amendment 5 not moved.

Clause 15: Reporting of incidents by regulated persons

Amendment 6

Baroness Lloyd of Effra (Labour)

My Lords, I will also speak to the other amendments in my name. I thank noble Lords for the constructive engagement I have had since Committee, in particular with the noble Baronesses, Lady Harding and Lady Neville-Jones. Incident reporting is a critical pillar of the NIS regime and it is essential that we get it right, so that the regulators and the NCSC receive early information and can step in to help and so that the Government build a comprehensive picture of the threats we face and businesses are not overburdened by too many requirements. I have listened carefully to the views from across this House, as well as from industry and regulators, on the incident reporting regime. In response to feedback, I have tabled a number of amendments.

I will start by addressing concerns about the need for consistency in the incident reporting regime. I agree that, as far as sectoral differences permit, we should ask regulated entities to take a similar approach to how they assess whether an incident is significant enough to be reported. That is why I have tabled an amendment to bring parity between factors that operators of essential services must consider and those of relevant managed and digital service providers. Under this amendment, operators of essential services must consider the impact of an incident on users’ network and information systems, and the economy and society more broadly, in addition to the existing factors specified in the Bill. This will create greater consistency across the regime and ensure that regulators receive visibility of the full range of significant incidents.

I have also heard the challenges around data centre operators having broader reporting duties. This approach was taken to reflect the unique and systemic nature of a data centre and the services it provides downstream. The key difference was in the requirement to report certain near-miss incidents to their regulator, Ofcom. I have now tabled an amendment to remove mandatory near-miss reporting by data centre operators. I have also tabled an amendment to bring the overarching definition of an incident in Regulation 1(2) in line with these changes.

The Bill now makes it clear that an incident is an event which has had an actual adverse impact on the security and operations of an entity’s systems. The revised definition still covers the key types of incidents that we want reported under the Bill, including ransomware and pre-positioning attacks that have successfully compromised a security system. Instead of mandating near-miss reporting, I commit to establishing a voluntary near-miss reporting mechanism for all regulated entities under this framework. This is in line with the amendment tabled by the noble Baroness, Lady Harding. However, we can establish the voluntary framework without primary legislation.

As we design the voluntary regime, we will engage and consult with industry, regulators and others on the full spectrum of measures that could encourage meaningful disclosure, including the role that legal or regulatory protections, trusted reporting arrangements and information-sharing mechanisms may play. I am confident that this approach strikes the right balance between minimising burdens and ensuring that the regime delivers meaningful improvements to our cyber resilience.

I am also strengthening the regime with regard to consumer information, and I thank the noble Baroness, Lady Harding, for her amendments in this area. I agree that customers should receive timely and useful information on incidents that affect them, for however long those incidents remain ongoing. That is why I have tabled amendments to strengthen the duty on data centres and relevant digital and managed service providers to ensure that they keep any affected customers updated with timely and appropriate information while an incident is ongoing. This obligation is subject to the same enforcement and compliance rules as the current notification regime, with regulators able to issue penalties for failures to comply.

However, Amendments 29, 32, 34 and 39, also tabled by the noble Baroness, Lady Harding, would place a prescriptive requirement on entities to advise customers on specific mitigation measures within these updates. We do not agree with this approach. The nature of incidents affecting customers, and relevant mitigations, can vary considerably, and regulated entities may not be best placed to provide tailored cyber security advice to each affected customer. Instead, providing timely and relevant information to customers will enable affected organisations to determine their own mitigation options based on their respective cyber security controls and protocols.

I am confident that the amendments I have tabled will deliver a more coherent, proportionate and resilient incident reporting regime. They will ensure that regulators, the NCSC and affected customers receive the information they need to understand and respond to significant cyber incidents while avoiding unnecessary burdens on businesses, and they ultimately work to deliver on our shared objective of strengthening the UK’s cyber resilience. I look forward to the contributions from noble Lords. I beg to move.

Baroness Harding of Winscombe (Conservative)

My Lords, I thank the Minister and her officials for their detailed and extremely helpful engagement between Committee and Report. I apologise to the House, as I have been rather greedy in tabling 25 amendments in this group, but I promise that I will try to explain them as briefly as I can. The amendments in my name and those of my noble friend Lord Holmes and the noble Baroness, Lady Kidron, are in three subgroups, to which the Minister alluded. I will briefly go through them.

The first group, which includes Amendments 7, 9, 10, 11 and 18 to 25, would strengthen the staged reporting requirements on the three different groups of regulated entities set out in the Bill. These amendments would require regulated entities to produce a final report 28 days after they first reported an incident to their relevant regulator. My experience of going through a cyber attack—sadly, it is real, lived experience—is that, for the first 72 hours, you do not know what has happened. If you really want to learn what happened in a cyber attack, you have to let the dust settle a bit to know who attacked you, what data was accessed and what was going on with the systems. Therefore, in addition to the 24-hour and 72-hour reporting requirements, it would be much more sensible to have a 28-day final report. That would be completely consistent with the NIS2 directive, and it is just common sense.

In Committee, the Minister said that she did not think it was necessary to put this in the Bill because regulators could choose to request a report from a regulated entity. Again, in my experience, that is the worst of all possible worlds. When you are in the midst of a cyber attack, the last thing you need is people making up the rules as they go along. The more certainty you can have on what the reporting requirements are from each of the different regulators that you will undoubtedly have to report to—it will be more than one—the more that the limited cognitive capacity which everybody has in a cyber attack can be focused on fixing the problem.

Therefore, while you want to retain the ability for regulators to intervene during this 28-day period, having a firm, final report stage will give real certainty to the regulated entities and the regulators themselves that this is a regime that will aim to learn and share that learning as, I am afraid, we have more and more of these incidents. I ask the Minister to reconsider the view that she set out in Committee, because my amendments in this subgroup would both help victims of cyber attacks—those regulated entities trying to grapple with the fog of these attacks—and ensure genuine, proper learning from the incidents.

The second group of 12 amendments I have in this group concerns the reporting to customers, as the Minister has just addressed. Amendments 26 to 29, 31 to 34 and 36 to 39 require regular reporting to customers. The Minister has tabled similar amendments: Amendments 30, 35 and 40. The only difference, to which she has just alluded, is that in my amendments the regulated organisations would be required to advise on any measures or remedies that customers are able to take. I would hope that good service providers are trying to help their customers when their customers are caught up in a cyber attack, but I accept the Minister’s argument that they might not always have the appropriate skills to give good advice. As such, I thank her very much for her constructive engagement. I will, when the process allows, not move my amendment in favour of the Government’s one in this group.

My final amendment in this group is Amendment 42, to which the noble Lord, Lord Clement-Jones, the noble Baroness, Lady Kidron, and my noble friend Lord Holmes have added their names. This amendment would allow regulated persons to report incidents, cyber threats and near misses voluntarily, either to the NCSC or their regulators—again, in line with Article 30 of the NIS2 directive. This reporting would not increase their liability or impose any new obligations on them.

Again, I welcome the constructive discussions that I have had with the Minister and her officials on this, and I welcome her statement at the Dispatch Box as she introduced this group. I ask her, when she sums up, to confirm why the Government do not need to put this in the Bill, when a voluntary scheme will be developed and how she intends to consult on it. I am sure that she will have good answers to those questions. I repeat my grateful thanks for the positive collaboration in this group.

Baroness Neville-Jones (Conservative)

My Lords, Amendment 16 in my name is also concerned with reporting. Reporting, I think the Government agree, is a general proposition, and getting it right lies at the absolute core of a successful cyber security and resilience regime. In our work on the Bill, we have been able to agree on what constitutes the trigger for reporting. Like many other colleagues, I thank the Minister for the way in which she reacted to the comments made by colleagues and the amendments that she has made to make the system more operational and to reduce the liability of having unnecessary reporting of a kind which overloads the system without increasing the level of security that it brings.

Where we have not yet succeeded in entirely agreeing, I think, is on the question of the factors which operators should take into account when they are making their report. Operators not located in data centres have, in fact, been given guidance; they know what they need to put in their reports and what they need to cover. But for data centres, the Bill contains no guidance at all on the relevant factors. While the Government have said, and I believe them, that they wish to increase the consistency of treatment between operators—that is to say, in different locations—it is odd that operators in data centres which we hope people are going to want to occupy are the people who are left in the dark about their duties.

If you look at the numbers, operators of essential services in locations other than data centres have seven factors that have been identified as necessary for reporting, and the Government have recently added a further two without feeling the need for consultation. The relevant digital service providers have seven factors, and many service providers which hitherto have not been regulated now have seven factors to take into account. So one can see—which I think is perfectly sensible—that a list of topics and aspects that must be reported on is very clearly set out, except for those who operate in data centres, who are left in the dark. They are left in the dark as to what the trigger, “significant impact”, is meant to mean. That is what they have to focus on. They do not know what the regulators would identify as constituting “significant impact”.

The great advantage, obviously, of factor lists being in the Bill is that it gives operators time to prepare for the regulatory regime before it comes into effect. Knowing the definition of “significant” is absolutely key to being able to make a proper report. So my amendment inserts into the Bill 10 factors that data centres’ operators should have regard to. They are drawn from the Bill’s own definition of the functions of a data centre, and they have been developed with techUK, which represents over 90% of data centre operators in the United Kingdom. These thresholds will still be set up and done through secondary legislation for data centres, on the same basis as other categories. But without the factor list, the data centres will be the last to get going with preparations, and the security the Bill is designed to deliver, and which we all want, will arrive later, too.

Given the high penalties involved in failure to report properly, £17 million or 4% of turnover, legislative differentiation between data centre operators and the rest could have an unintended—and, I am concerned, unwanted—discriminatory element. So I hope the Minister can accommodate the notion of bringing the factors into the Bill, and I look forward to her reply.

Lord Holmes of Richmond (Conservative)

My Lords, I will speak briefly in support of all the amendments in the name of my noble friend Lady Harding in this group, to which I have added my name.

There are many things that are in short supply when somebody finds themselves on the end of a cyber attack. But surely one of them is clarity, and that is something the Bill can address, as the first block of amendments in the name of my noble friend does. I ask the Minister to reconsider many of the issues set out in those amendments, to potentially bring forward other elements at Third Reading to further clarify the procedures within the Bill and to make the Bill even sharper while we still have this somewhat unique opportunity. Clarity and learning are at the heart of all the amendments in this group; I look forward to the Minister’s reflections.

Lord Clement-Jones (Liberal Democrat)

My Lords, this group goes to the operational heart of the Bill—incident reporting. I too welcome the Government’s Amendments 6 and 12. In Grand Committee and across industry, there was strong backing for the noble Baroness, Lady Neville-Jones, when she raised serious alarms that drafting Clause 15 so as to catch anything “capable of having” or

“which could have had … a significant impact”

would drown the NCSC in thousands of false positives and routine phishing attempts. Reporting is not resilience. By removing “could have had” and narrowing the definition of an incident to events having an actual adverse effect, the Government have conceded to the noble Baroness’s core argument, and I welcome that. However, we must ensure that operators have objective clarity, and I pay tribute to the noble Baroness, whose Amendment 16 sets out the clear physical criteria—power loss, data compromise and duration—for assessing data centre impacts.

I also pay tribute to the work of the noble Baroness, Lady Harding of Winscombe, some of whose Amendments 7, 9 to 11 and 42 I have signed. Amendment 42 is important as it establishes a statutory regime for the voluntary notification of incidents, cyber threats and near misses, modelled directly on Article 30 of the EU NIS2 directive. Threat intelligence thrives on early detection, but operators will report near misses only if they are protected by an ironclad, statutory safe harbour, ensuring that voluntary reports cannot be weaponised against them in regulatory penalties or civil litigation.

Furthermore, the noble Baroness’s amendments on customer notification—Amendments 26 to 29, 31 to 34, and 36 to 39—seek to introduce a duty of customer care. When an OES cloud provider or managed service provider suffers an incident, notifying the regulator within 24 hours is only half the battle. It must keep its customers informed without undue delay, provide continuous updates as circumstances change and advise on actionable mitigation measures.

Finally, Amendment 159 in my name would require an annual report on incident volumes to be laid before Parliament. We need transparent, aggregated data on the sectors attacked, the frequency of significant incidents and the principal root causes, so that Parliament and industry can track systemic vulnerabilities.

I think the noble Baroness, Lady Harding, has given us advance notice of her intention to accept the voluntary scheme, but we believe that, in the best of all worlds, with these amendments we could ensure that incident reporting is proportionate, actionable and focused on collective defence.

Viscount Camrose (Conservative)

My Lords, I thank the Minister for introducing this group of amendments. I am grateful for the concessions that the Government have made on the definition of an incident, following my noble friend Lady Neville-Jones’s amendments in Committee.

However, I will press on the point that my noble friend made on her Amendment 16. The Government have expanded the number of factors determining whether an incident involving essential services is “significant” and widened the reporting requirements for data centres, without outlining a similar list of factors for them. Surely, if consistency between data centres and other regulated services is the goal, widening the discrepancy in the lists of factors constituting significance must be counterintuitive. I hope the Minister will be able to consider my noble friend’s Amendment 16, at least in light of the need for consistency for all those affected by the Bill.

I am also grateful to my noble friend Lady Harding of Winscombe for retabling her amendments to the reporting regime. She has raised a number of important points that we should take very seriously. As far as I know, she is the only one among us today who has led a sufficiently large organisation to be impacted by this through a serious cyber attack. I and everybody else must take extremely seriously the input she has set out not just here today but in her very good opinion piece in this morning’s Financial Times, which I commend to noble Lords. I hope that the Government will, at the very least, keep her suggestions under review.

Amendment 86, in my name and those of my noble friends Lord Markham and Lord Holmes, is a slightly reworked amendment from Committee. It would require not only a consultation into amnesty-based reporting but confidential reporting. A great many ransomware attacks go unreported because victims choose to avoid public knowledge. This hinders our efforts to protect others against falling victim to the same attack. Governments must strike the right balance between encouraging reporting of these attacks and penalising those who do not adhere to their security duties.

I understand that a poorly designed amnesty risks letting off the hook those who should be penalised, but I am also aware that the threat of either a penalty or merely public knowledge of a breach often works to deter reporting. We think it is well worth conducting a consultation into this balance in order to collect appropriate data about these serious events in a way that does not prejudice the outcomes for any victims of these attacks. I hope the Minister will urge her officials to carry on considering this and to come back with proposals in future.

Baroness Lloyd of Effra (Labour)

I thank noble Lords for their amendments tabled in this group and their continuing positive intentions within our discussion. It is clear that we all share the same objective: a functional and proportionate regime that balances timely and relevant information for regulators, the NCSC and customers, without placing undue burden on business.

I will start with the amendments tabled by the noble Baroness, Lady Harding, which seek to add an additional reporting requirement at 28 days. I am grateful to the noble Baroness for the discussion we have had on this point and appreciate the constructive spirit in which these amendments have been tabled. However, I still do not think that a further stage of mandatory reporting is needed to ensure that regulators and the NCSC have the necessary information. In our view, the Bill’s existing provisions already strike the right balance in this regard. The two-stage reporting model ensures that regulators and the NCSC have sufficient information to start assessing what has occurred, what support may be needed and what wider risks may be posed, without imposing additional blanket reporting obligations on all entities.

I agree that learning lessons from incidents is crucial for resilience. However, I am not persuaded that a mandatory 28-day report is the right mechanism, noting that regulators can request more information when they need it. Effective resilience works best when organisations engage openly and constructively with regulators throughout recovery. Given the variation in cyber incidents, a fixed reporting requirement risks prioritising compliance over meaningful engagement and may not produce information of sufficient value to justify the additional burden. This approach supports a collaborative relationship between industry, regulators and the NCSC, focused on recovery and resilience outcomes.

The amendment in the name of the noble Baroness, Lady Neville-Jones, would add a list of factors for data centre operators to consider when determining whether an incident is significant. I agree that proportionate and workable factors will be important for the sector. Data centres are one of our newest designated CNI sectors. They have rapidly become a fundamental part of the infrastructure underpinning our economy, while our understanding of this infrastructure and how best to regulate it is still developing.

This makes consultation particularly important. I have committed to giving industry, academics, technical experts and Ofcom the opportunity to inform the development of these factors, drawing on their operational expertise. We will draw from the proposals in Amendment 16, and the noble Baroness will see these factors reflected in the consultation, but it is right that we do not pre-empt a full, open consultation. Operators will have an appropriate period to prepare for the new requirements before they take effect, ensuring they have time to understand and adjust to the final framework.

On the amendment in the name of the noble Viscount, Lord Camrose, regarding a consultation on amnesty-based reporting for ransomware, I thank him for our discussions since Committee on the amendment. However, I am still not persuaded that there is a case for consulting on a protected route for ransomware reporting. On the contrary, regulators must be able to access ransomware reports if they are to assess whether organisations have taken the necessary steps to secure their systems. This is particularly important in the context of the NIS regulations, which have been put in place to ensure the security and resilience of the UK’s most essential services. If NIS regulators are denied the ability to scrutinise how ransomware attacks have succeeded in compromising these services, there is a risk that the regulatory framework will not work as intended. In saying this, I am not rejecting the idea that safe harbours can play a role in facilitating some types of reporting. I have already said that the Government will examine the role that legal protections may play in voluntary reporting, but I cannot endorse the noble Viscount’s proposals given the challenges they would create for existing regulatory regimes.

The noble Baroness, Lady Harding, posed a question on the next steps for the voluntary scheme. Significant work is required to design a voluntary reporting regime that can meaningfully deliver engagement, avoid duplication with existing reporting routes and secure industry participation. We therefore intend to undertake further work on the design of the regime.

The mandatory obligations in the Bill apply to entities within the regulatory scope. The primary purpose of the voluntary regime would be to increase the reporting of cyber near-misses by regulated entities. However, this would not automatically preclude participation by other organisations, and there may be value in receiving information from other organisations outside the regulatory parameters, particularly where this can contribute to wider cyber resilience. So, we will take that consultation forward in due course as part of the implementation of the Bill.

Finally, I thank the noble Lord, Lord Clement-Jones, for his amendment and agree with the principle that visibility and transparency of the reporting regime are important. Parliament, regulators and the public should have confidence that the regime is operating well. However, I am not persuaded that placing a statutory duty in the Bill to publish incident volumes is the right approach. The Bill already provides mechanisms through which the Government and regulators can provide oversight and transparency on the operation of the regime. In particular, and subject to consultation, I expect the statement of strategic priorities and wider engagement with regulators will provide opportunities to share insights on how incident reporting obligations are implemented in practice. For this reason, while I support the objective of transparency, I do not consider that prescribing these reporting requirements in the Bill is the most appropriate or proportionate approach.

Once again, I thank noble Lords for their collaborative approach. Their scrutiny and expertise have been hugely valuable and have resulted in the amendments in this group tabled in my name, which I agree have improved the Bill.

Amendment 6 agreed.

Amendment 7 not moved.

Amendment 8

Amendments 12 to 15

Amendment 16

Baroness Neville-Jones (Conservative)

I would like to respond to the Minister’s comments on my amendment. That she will take account in the consultation of the detail of my amendment and ensure that it will be reflected in the discussion that takes place is a very helpful response. I hear what she says about her desire to have a full and open consultation on how data centres, which are new in our regime, will be developed. I accept that their development should take place separately from other operating centres. Therefore, I shall not move my amendment.

Amendment 16 not moved.

Amendment 17

Amendment 30

Amendment 35

Amendment 40

Amendment 41

Baroness Harding of Winscombe (Conservative)

My Lords, there are a lot of amendments in this group that attempt to fill the AI-shaped hole in the Bill. I probably speak for everyone who engaged in Committee when I say that we were all intensely frustrated by the absence of AI in the Bill. It is in danger of proving correct the people who think that you cannot regulate AI, because we are not even trying.

This is quite a complex group. I extend my support to Amendment 65 in the name of the noble Lord, Lord Clement-Jones, on “last-resort” powers; Amendment 66 in the name of the noble Lord, Lord Tarassenko, on AISI audit powers; and Amendment 67 in the name of the noble Baroness, Lady Kidron, on AI red lines. I will not speak to them, because I know that everyone wants to move at pace.

I will focus my remarks only on Amendment 41. My amendment is not techy or complex; it is very simple. It would require frontier labs to report to essential services and their relevant regulator if one of their AI agents or models gained unauthorised access to UK essential services and/or their data. The reporting requirements would be similar to those imposed on the essential services—the 24/72-hour piece that we have just been discussing. By way of example, if a frontier lab’s AI agent accessed NHS data without permission, once the frontier lab became aware of this, it would be required to report the incident within 24 hours, update within 72 hours and issue a final report within 14 days.

This is currently not happening, as witnessed in Australia quite recently. OpenAI accessed Australian Medicare data in June. It did not inform the Australian Government until September via an unmanned email address, such that the Australian Prime Minister was at the UN General Assembly rallying support for the innovative growth potential of AI while OpenAI knew that it had accessed his country’s health data and he did not.

Other countries are already requiring this basic thing. In New York, the RAISE Act requires AI frontier labs to report within 72 hours if one of their agents has gone rogue. In California, it is within 52 hours. The EU AI Act requires it without undue delay. The AI labs themselves agree that clear reporting requirements would be helpful. In front of the Business, Innovation, Science and Trade Committee in the other place only last week, representatives of OpenAI and Anthropic, including my noble friend Lord Booth-Smith, representing Anthropic, supported the idea of required reporting, at least in principle—that is an important “at least”, I suspect.

I know there is concern that this could be seen as international overreach and that all AI regulation needs to be global. That is one of the favourite tropes of tech companies: “Do not do anything locally; it has to be done globally”. Those of us who have campaigned for regulation of social media have been fighting that battle for more than a decade. But this really is an instance that does not need to be global. This is about UK services and data being illegally accessed. It does not matter that it might be an American company doing the accessing—it is accessing our data illegally. This surely should be the purview of this House. I believe the Minister agrees with me. I think the Government’s AI Minister in the other place also agrees with me. In fact, he has said in public that it is important to have these reporting requirements. However, I cannot see it in this Bill.

I support government Amendment 70 in this group, but that just puts even stronger requirements on the essential services that might have had their data hacked, not on the companies whose AI agents would have done the hacking. I very much hope that the Minister can explain to me and all of us in this House how the Government intend to require AI labs to report incidents and when this is likely to come into effect, if not through this amendment. It is simple common sense that if these agents access our data, they should be under a legal obligation to tell us. We should not be leaving that to chance; we should be making it the law. I beg to move.

Baroness Berger (Labour)

My Lords, I have added my name to Amendment 41 because it identifies and addresses a significant gap in our approach to cyber security: the growing capacity of frontier AI models to interfere with systems on which our essential services depend. This amendment would ensure that there is a corresponding duty on developers to report such incidents and to do so in a timely fashion. This has been put forward as a cross-party amendment because technology is advancing so rapidly and the security of our critical infrastructure is a shared responsibility. It demonstrates that, by working together, we can address what is a very serious emerging risk.

If it was not already clear, the urgency of this issue has been brought into sharp focus by recent events, even since we last met in Grand Committee to scrutinise this Bill. The past month, as noble Lords may be aware, has been named “Black October” after advanced AI models accelerated the discovery of critical, long-standing security flaws, most notably in the PHP programming language, triggering global emergency patches and widespread server shutdowns. On 22 October, the Government confirmed that 32 government services had been taken offline as a precaution following the discovery of critical vulnerabilities in PHP, which is a programming language underpinning an estimated 70% of the world’s websites. These vulnerabilities were identified with the assistance of frontier AI, and cyber security companies have subsequently reported millions of attempts to exploit them. To be clear, the Government have said that these precautionary shutdowns did not mean that those websites had been hacked, but this incident demonstrates how AI can help uncover long-standing vulnerabilities at unprecedented speeds and how quickly that discovery can trigger a global security crisis. Cyber security experts are warning us of a new era of AI-enabled hacking.

This technology has a dual nature. AI can strengthen our defences, but it can also lower the barriers to finding and exploiting weaknesses in systems on which we all depend. This is not a theoretical concern. In July, the UK AI Security Institute identified an incident during frontier AI testing in which AI agents took sustained, unauthorised actions against real people and organisations. In the most serious case, an agent attempted a software supply chain attack, submitting malicious code and creating fake accounts to pressure a software maintainer into accepting it. Although no real-world harm resulted, the incident demonstrates exactly why we need effective safeguards and clear reporting obligations when AI systems behave in unexpected and potentially harmful ways.

We already know the consequences when our digital systems fail. The cyber attack on Synnovis disrupted blood testing and forced the cancellation of hospital appointments and operations. The ransomware attack on the British Library caused extensive disruption to its services, with recovery requiring a prolonged effort. These attacks pre-dated the latest developments in frontier AI, but we must take seriously the possibility that AI will make future attacks faster, more sophisticated and more damaging.

The question before us is therefore straightforward. If a frontier AI model gains unauthorised access to or interferes with a regulated organisation’s systems, who ensures that that incident is reported promptly? We know from the example that has been set out that it took 84 days for OpenAI to inform the Australian Government about its model’s breach, and just this weekend Anthropic slipped out an announcement to let us know that Claude has accessed publicly available voter data without any human authorisation. These events are taking place on a daily basis. The organisation affected may not know that AI was involved. The developer, meanwhile, may hold crucial information about the model’s behaviour, the nature of the threat and the steps needed to mitigate it. Without a clear reporting obligation, that information is not reaching the people who need it when they need it.

This amendment addresses that gap. It would require an initial notification within 24 hours, a fuller account within 72 hours and a final report within 14 days, and ensure that the affected organisation, its regulator, the relevant cyber security incident response team and the AI Security Institute receive information essential to containing an incident and preventing its recurrence. These are practical and proportionate requirements. They would not prohibit innovation but establish a basic principle of accountability. Those developing powerful technologies must at the very least take responsibility for reporting serious incidents involving their models when an incident has occurred. Without meaningful penalties for non-compliance, these obligations risk being little more than words on paper.

During last Thursday’s Cross-Bench debate on AI and children, a point was repeatedly made that is worth repeating here. AI is currently less regulated than milk. The risks to children and the risks to our critical infrastructure and government systems are of course different, but the underlying principle is the same. Our regulatory frameworks must keep pace with increasingly powerful technologies. We are already at the point where harm has become widespread. We need to establish reasonable safeguards, clear responsibilities and effective oversight.

Lord Tarassenko (Crossbench)

My Lords, I declare my interest as senior adviser to the Alan Turing Institute. I wish to speak in support of Amendment 41, in the name of the noble Baroness, Lady Harding, to which I have added my name, and then briefly about my own Amendment 66 in this group. We heard during Committee not only about the out-of-control behaviour from agents running AI models from OpenAI, Google and Meta but about the unacceptable delays before the incidents were reported. Contrast that with our own AI Security Institute. When it found unsanctioned agent behaviour during its testing this summer—and this was confirmed to us by Henry de Zoete at a meeting in Portcullis House today—it immediately declared a security incident and contained it within an hour of the alert being raised, with all relevant machines isolated within that time. That is the standard we should be expecting.

With Amendment 41, the developer must notify the affected organisation and its regulator within 24 hours. The duty applies where the developer is aware, or ought reasonably to be aware, so no company can avoid it by not looking. The report must say whether the model acted autonomously or was used by someone else.

On 12 October, the Government said that they would look at strengthening this Bill so that serious AI incidents are reported. Their Amendment 70 gives the Secretary of State powers to investigate where control of an AI agent is lost. However, no one can investigate an incident they have not been told about. Amendment 41 is what makes Amendment 70 work. I would therefore be interested to find out whether the noble Baroness will be minded to accept Amendment 41.

I turn briefly to Amendment 66 in my name, to which the noble Lords, Lord Clement-Jones and Lord Holmes of Richmond, and the noble Baroness, Lady Harding, have added their names. This amendment would require the AI Security Institute to audit frontier AI products before they were used in the network and information systems that run our hospitals, our energy networks and our water supply. Developers would submit their evaluation results using methods and thresholds set by AISI, with evidence of a tested means of suspending the system in the UK. Where the institute found a serious risk that was not mitigated, the Secretary of State would have to decide within 14 days whether to act and give reasons.

As I have already said, I welcome the Government’s Amendment 70, which accepts that loss of control of an AI agent is a risk to essential services that should be addressed in this Bill. However, it operates after the event and does not mention the AI Security Institute. I would be grateful, therefore, if the Minister could tell the House what role the Government see for the institute—AISI—in assessing frontier models before they reach our critical systems and whether the power in Clause 29(1) could give it that role.

Viscount Colville of Culross (Crossbench)

My Lords, I too rise to support Amendment 41 in the name of the noble Baroness, Lady Harding, and to support Amendments 65, 66 and 67, to which I have also put my name. As the noble Baroness, Lady Harding, said, to have a Bill with “cyber security” in the title and not mention AI seems to have been a huge error. The Government seem to have recognised the great lacuna in some of their amendments in this group, which is most welcome. Also, we must welcome the Chancellor of the Exchequer’s low-key announcement over the weekend that the Government would invest £120 million in the Artificial Intelligence Security Institute. Surely this Bill should be an opportunity to ensure that AISI investment is used as effectively as possible and that, just as this country recognises the importance of AI in keeping our technical leading role, this new, incredibly powerful technology has new frontier models that need to be investigated prior to release.

Amendment 41 is an important step forward in ensuring that AI developers notify the relevant authorities when things go wrong, so if the noble Baroness decides to take this amendment to the vote, I will support her. I am surprised that not all parties think that the measures in this amendment need to be supported. AI frontier models have proved to be a threat, and we need to face up to it. The AI providers’ own safety report tells us of the threats posed by new models. Google wrote that a person outside the company had attempted to use its AI tool, Gemini, to obtain

“a complete, step-by-step technical guide for synthesizing weaponized biological agents”.

An Anthropic report found that there were five case studies of actors using its models in a way that could support biological weapons development. There were also reports of the terrorist group, Boko Haram, using frontier AI, including ChatGPT, to plan attacks and design explosive devices. Surely these concerns should encourage the Government at least to look at my noble friend Lord Tarassenko’s Amendment 66, which would have safety against terrorists and biological attacks, among other things, built into new AI frontier models and put AISI in a stronger position to be a third-party evaluator of frontier models.

I had such hopes when the 2023 Bletchley Park summit announced that AISI and the model providers would work together and voluntarily submit their new models to the directorate, but this is decreasingly happening. Anthropic’s Claude Mythos 5.1 was withdrawn from AISI last month. There are other cases such as Claude Opus 5.5, which was reportedly withdrawn from AISI’s pre-release evaluation in September, as was the OpenAI and GPT-6 Luna model.

I hope that your Lordships will listen to the chair of the Business, Innovation, Science and Trade Committee in the other place, who this month during an evidence-gathering session with AI leaders announced that AISI lacked compulsory access to models and a power to stop new models coming to the market. I call on the Minister to address these concerns.

This brings me to Amendment 67, in the name of my noble friend Lady Kidron. As many other noble Lords have said during the passage of this Bill through the House, this is a defensive Bill. Surely the best way to stop new frontier models from going rogue is to be proactive in putting guardrails around their design. Otherwise, we are just going to play a game of whack-a-mole. The principles in the Online Safety Act were to try to instil safety by design into the algorithms of online content providers. Surely the same needs to happen to AI frontier models. Amendment 67 sets out to provide guidelines for how the design of AI models might be kept in check.

I ask His Majesty’s Government to ensure that safety is built into new AI model designs and that the highly respected AISI is given sufficient power to ensure that they are safe. The Minister must know that the world would be grateful if new models were safe by design and properly evaluated before release.

Lord Holmes of Richmond (Conservative)

My Lords, there is a huge hole that has already been identified through all stages of this Bill, and that is the absence of AI. As we have gone through each stage of this Bill’s process, that hole has become wider and deeper. As we have gone through this process, external events have only highlighted that.

Amendments 41, 66 and 67 in this group, which I support, do something that is practical and effective about this. Specifically on AISI, does the Minister think that citizens up and down the United Kingdom are in a better situation now that AISI is the “security institute” rather than the “safety institute”—more than just a question of a change of word, but a change of emphasis and change of impact in terms of every citizen in this country?

As has been rightly mentioned, milk is more regulated than AI. With this in mind, does the Minister agree that, when it comes to cross-sector, cross-economy AI legislation, the Government need to discover the bottle to bring forward a Bill?

Lord Clement-Jones (Liberal Democrat)

My Lords, as the noble Baroness, Lady Harding, and other noble Lords have said, this group confronts what was termed in Grand Committee the “AI-shaped hole” in our national cyber security architecture. At Second Reading and in Committee, the Government maintained that AI sat outside scope of this Bill, yet recent events have shattered any illusion that AI is merely an emerging hypothetical threat. Frontier general-purpose models and agentic workflows are supercharging offensive cyber capabilities, discovering zero-days and exploiting vulnerabilities at machine speed. Indeed, we have seen this unfold directly in front of us, and the noble Baronesses, Lady Harding and Lady Berger, and the noble Lord, Lord Tarassenko, have all described extremely cogently what has been happening over the last few months.

I welcome the Government’s Amendments 70 and 74, which introduce provisions addressing loss of control of an artificial intelligence agent. It is an important concession: a first acknowledgement by the Government that it is not enough to be technology-agnostic and that agentic AI risks must be addressed. However, the Government’s approach remains entirely reactive and diagnostic: gathering information only after the horse has bolted.

The cross-party and Cross-Bench amendments in this group, which I have been pleased to sign, establish a comprehensive, forward-looking governance framework. First, Amendment 41 in the name of the noble Baroness, Lady Harding, which was so brilliantly introduced by her and which I have signed, places a direct reporting duty on developers of frontier AI models to report to regulated persons, the NCSC and the AI Security Institute within 24 hours whenever an AI model gains unauthorised access to or interferes with critical systems. We must close the loophole where victim organisations bear all the reporting burdens while frontier developers remain unaccountable. On these Benches, we will support the noble Baroness if she presses her amendment to a vote.

Secondly, Amendment 66, in the name of the noble Lord, Lord Tarassenko, which I have signed, and Amendment 79 in my name, empower the AI Security Institute. Some of us had an impressive presentation today about the work of AISI. However, it is time now, in principle, for the institute to be placed on a statutory footing, with powers to conduct pre-deployment audits of frontier models before they are deployed in critical infrastructure, set safety standards and recommend that the Secretary of State restrict or suspend unsafe deployments. Can the Minister give the Government’s response to a very clear set of recommendations in this respect from the Joint Committee on Human Rights? I recognise that the Government’s response is due in a few weeks’ time, but it would be useful if the noble Baroness could give us an indication of their approach.

Thirdly, Amendment 67, in the name of the noble Baroness, Lady Kidron, and myself, establishes clear statutory red lines against autonomous AI systems executing cyber attacks, evading human shutdown or self-replicating uncontrollably.

Finally, Amendment 65, standing in my name and also tabled in Committee, provides the ultimate indispensable emergency backstop: statutory “last resort” powers for the Secretary of State to direct the shutdown of data centres or large-scale AI deployments during a catastrophic AI emergency. As former Technology Secretary Liz Kendall rightly noted, true digital sovereignty requires the means to contain an emergency on our own soil. Crucially, Amendment 65, the so-called “kill-switch” amendment, wraps this emergency power in rigorous constitutional safeguards: a 24-hour continuous necessity review reporting to Parliament within seven days, pre-tested emergency communication protocols, and an immediate right of appeal to the High Court, with power to cancel orders and award compensation.

We must empower the AI Security Institute, hold frontier developers accountable and equip the state with court-supervised emergency backstops.

Viscount Camrose (Conservative)

My Lords, I am grateful for the Government’s amendments and for the clarity that they have given us following, I think, some confusion in Committee.

None of us can be blind to the need to ensure that AI is made safe by appropriate safeguards: regulations. We support any activity that moves us towards the global implementation of AI safety rules, whether via national routes or not, but in the context of always driving economic growth and maintaining our attractiveness as an investment destination.

We have to recognise the challenges of designing rules that govern technologies rather than products and do so in a rapidly changing environment. However, for the effective development of AI regulation, a necessary if not sufficient condition will be continuing to have direct conversations between the Government and industry. Those conversations are evidently taking place, as I hope the Minister will confirm when she gets up to speak. Given these government amendments and the words of the AI Minister over the past few weeks, we on these Benches feel that it may not be helpful on this occasion for Parliament to impose policies as they are in the process of being formulated—although I think I am not alone in wishing they could be formulated a little faster.

I turn briefly to the Government’s Amendment 70, granting the Secretary of State the power to intervene in a loss of control incident. TechUK and others have raised a number of concerns about this, including a lack of definition of the terms used, the lack of transparency to third parties, and the frankly odd decision to name agentic AI as a specific technology in the Bill. I urge the Minister to take these concerns seriously and to see what can be done to address them while retaining the amendment’s intended results.

Finally, there is an important conversation to be had surrounding the role of the AI Security Institute, as the noble Lord, Lord Tarassenko, and others compellingly pointed out. I am grateful to AISI for its briefing to noble Lords earlier today. The evolving direction of AISI is a difficult question. We would support this being reviewed, which is part of the reason why we support Amendment 163 in today’s final group. I look forward to it being debated then.

Baroness Lloyd of Effra (Labour)

I thank noble Lords for their engagement on the important issue of addressing AI cyber risks and I share the concerns raised by this House and the public. The Government take the safety of the British people incredibly seriously.

AI risks are trans-national threats. The best response to a global issue is a global response. At the UN General Assembly in September, the Prime Minister set out that the UK will work towards agreeing a single set of global principles and standards to ensure that AI development is safe and will make AI a central focus of our G20 presidency next year. It is important to situate this Bill and its important yet targeted role within the Government’s broader approach. We will legislate where necessary, alongside all the other tools at our disposal.

I will now set out how the NIS regime currently covers AI risk and applies to some AI digital services. The Bill takes an all-technologies, all-threats, all-hazards approach to protecting regulated services. This means that essential services need to manage cyber and physical risks associated with AI systems underpinning their services and protect themselves from threats. Many digital and managed services within scope of the regime are enabled by, deploy or help to deliver AI capabilities. This includes cloud computing services, which provide software, platforms and infrastructure services that many organisations across the economy rely on.

Commercial AI services are often delivered under similar digital service models and so are likely to be in scope. This includes AI assistance delivered via software-as-a-service models, AI platforms, and infrastructure used for AI workloads. Where an AI digital service falls in scope, the provider will have to take steps to manage the security and resilience of their services and the systems that underpin them, just like any other regulated entity.

I have met with the CEO of the Information Commission. We agree on the importance of guidance to provide industry with clarity on these definitions. The regime is not designed to provide a comprehensive framework for AI governance, including frontier AI capabilities which have not been released to customers, or wider safety or societal impacts. These are important issues that need addressing at the global level, as well as through the AI Taskforce and regulation at point of use in the UK.

Where AI-centred digital services are in scope of the NIS regime—for example, registered as cloud computing—our national security powers of direction could be used to direct those regulated organisations, subject to meeting strict legal tests. The direction power allows government to direct regulated organisations to take specific action where a security or operational compromise, or threat to their NIS, creates a national security risk. Directions must be necessary and proportionate. Where the legal tests are met, the direction powers enable the Government to require certain actions in an AI loss of control scenario; this could include actions such as isolating systems, restricting data flows or suspending automated actions being taken by an affected AI system.

AI models are often distributed across different data centres and jurisdictions. A broad power to shut down AI systems could have implications for investment, growth and our digital sovereignty. It must be very carefully thought through. If there is a loss of control scenario that compromises a regulated entity and poses a national security risk, directing the entity to take certain actions is more proportionate and, likely, more effective in containing the risk. This addresses the underlying risk raised in Amendment 65 tabled by the noble Lord, Lord Clement-Jones.

I turn to Amendment 41 tabled by the noble Baroness, Lady Harding, and spoken to by my noble friend Lady Berger, the noble Viscount, Lord Colville, and the noble Lord, Lord Holmes of Richmond. Where AI digital services are regulated under the NIS regime, the providers of those services will have to report incidents that have affected the security and operation of their systems. This includes incidents where there is a loss of control of an AI system used to provide a regulated service and where that loss of control disrupts the provision of that service, compromises user systems or has other significant impacts on the functioning of the UK’s society and economy. We will bring forward a consultation setting out further detail on how the incident reporting regime will work, including how the regulated organisations should assess whether an incident is significant. This will consider how the framework applies to emerging technologies such as AI.

However, I would like to reassure noble Lords that the Bill’s reporting requirements already provide the underlying framework for identifying and reporting significant incidents involving AI systems used in regulated services, as well as other cyber incidents affecting those services. Indeed, these requirements place the onus for reporting on the regulated entities affected by an incident. This is in keeping with the overall principle of the NIS regulations, which are about how the UK’s most essential services can manage risks to their systems. It is also one of the reasons why I cannot support Amendment 41 from the noble Baroness, Lady Harding, which would place the onus for reporting on developers of frontier models rather than regulated entities.

Regulating the developers of frontier AI is a different question, and I do not believe that this Bill is the right legislative framework in which to answer it. The Government will, of course, continue to take action where necessary to keep the UK safe, but these risks and technologies are global. Placing duties on developers operating in the UK will not by itself keep us safe from developers and models elsewhere in the world.

Turning to how we plan to strengthen the Bill and the NIS regime to better understand and protect against AI cyber risks to our essential services, the Government have tabled an amendment to the delegated powers in the Bill. Clauses 30 to 35 list examples of what provisions may be made under Clause 29 and set out certain requirements and restrictions. Amendment 70 expands this to clarify that future regulations may enable the Government to use in-house expertise, such as AISI, and gather information on why agentic incidents in our essential services happen. Our intention is for the information to then be shared with relevant stakeholders to help prevent similar incidents. Detail on how this function could work will be consulted on.

I will also bring forward three further measures in secondary legislation to manage the risks posed by agentic AI. These will be consulted on. To the question raised by the noble Viscount, Lord Camrose, I have seen the questions raised by techUK and undertake to continue to consult with industry on these matters. The measures are: first, to include technical and organisational requirements within the proposed security and resilience requirements to reduce the risk of agentic incidents affecting regulated services; secondly, to preserve information that regulated entities hold on incidents that stem from agents malfunctioning, so that others can use that information to understand why incidents happen; and, thirdly, to require regulated entities to tell other organisations—for example, suppliers—if agents used by the regulated entity are negatively impacting those organisations’ operations when an incident is occurring.

Finally, the changes I mentioned today on developing a voluntary framework for regulated entities on near-miss reporting will also be a meaningful step to developing our understanding of why and how this type of incident takes place. The commitments I am making today are an example of us responding with speed and precision to address potential harms to the UK posed by novel AI risks. I strongly consider this to be the right approach. I understand that there are diverging views on how fundamental AI regulation should take place, and there is a debate to be had on this, but the Bill is not the place for it.

The amendments tabled by the noble Lords, Lord Tarassenko and Lord Clement-Jones, and the noble Baroness, Lady Kidron, would provide the AI Security Institute with a statutory role to regulate the deployment of frontier AI models in the UK. These amendments would not be effective in making our essential services safer. AI is a dual-use technology. Malicious actors could use frontier AI capabilities to attack the UK, but defenders can use the same capabilities to protect it, as my noble friend Lady Berger pointed out. Delaying essential services’ access to the latest tools would leave them less well defended, while attackers would face no such delay. These amendments could hold back adoption for up to 10 weeks in a field where new models come out every few weeks.

The scope of this Bill is also not right for AISI, or the regulation of frontier AI models. In particular, a regulatory role for AISI would undermine its voluntary partnership with leading AI developers, which give it early access to the most advanced models and on which its vital work to inform government depends. This is in contrast to the EU’s regulatory stance and lack of access to frontier models.

Finally, as I have said, the risks from frontier AI do not respect borders. We believe that the most effective response, as the Prime Minister committed to, is agreeing international standards. This Government remain committed to making sure that AISI is equipped to fulfil its vital role, and will keep the House updated on its work. In response to the question from the noble Lord, Lord Clement-Jones, I will not pre-empt the Government’s consideration of or response to the Joint Committee on Human Rights; the response will be published in due course.

I thank noble Lords for their contributions. Through the commitments I have made today and the commitments made by the Prime Minister, the Chancellor and the Minister for AI in recent weeks—which, critically, seek to build UK capability through our sovereign AI fund and other measures—I hope I have been able to show that the Government are absolutely committed to ensuring that we will do whatever it takes to keep the British people safe.

Baroness Harding of Winscombe (Conservative)

My Lords, I thank the noble Baronesses, Lady Berger and Lady Kidron, the noble Lord, Lord Clement-Jones, and the many other noble Lords who have spoken from across all Benches in this debate for their support. I really wanted to hear something from the Minister that would give me comfort that the Government are really going to address this issue, and I am quite concerned that I have not. I appreciate that she has tried very hard to set out why she does not agree with my amendment. As I understand it, her argument is that this should be tackled globally, yet in the EU it has already been resolved, as it has in California and in New York. It seems a strange position to go to the G20 to say, “We’re going to lead the world by catching up with where some of you have already got to”.

I do not accept the argument that this is a global issue. Not all tech regulation needs to be global; we have absolutely learned that for social media. A number of us in this debate have spent the best part of the last decade campaigning for stronger regulation of social media. I have been having flashbacks in this debate, as the same arguments have been used again and again. The awful truth is that 10 years ago, when a number of us tabled amendments to regulate social media, both Front Benches told us that we were wrong. I used to joke that when both the Government and Opposition Front Benches are not on your side in tech regulation, you are probably in the right place. I fear that I am in the same place again tonight. Although I am not optimistic in this vote, I believe that we as a House will be debating these issues for quite a long time to come. It will require national action, not just global talking. With that, I would like to test the opinion of the House.

Ayes 95, Noes 165.

Amendments 43 and 44

Amendments 45 to 48

Amendments 49 to 52

Amendments 53 to 55

Amendment 56

Amendment 57

Amendment 61

Lord Clement-Jones (Liberal Democrat)

My Lords, I will speak to this group and move Amendment 61 on behalf of the noble Baroness, Lady Kidron, alongside speaking to Amendment 158 in my name.

Amendment 61

“requires the Secretary of State to prepare, maintain, and lay before Parliament a Digital Sovereignty and Resilience Strategy”.

In modern cyber defence, we must know not just how we will defend our networks but whose technology we are relying on to do so. The strategy establishes a statutory digital sovereignty dashboard developed in consultation with the NCSC, the Competition and Markets Authority, the ONS and the AI Security Institute. This dashboard would monitor foreign state dependencies, supply chain bottlenecks and the security of core sovereign data assets, including NHS records, BBC archives and meteorological data. It will provide the evidence base needed to reform government procurement, promote resilient UK-developed technology and safeguard critical open source software. We cannot build genuine cyber resilience on borrowed or vulnerable foundations.

The Government cannot continue to substitute a disparate list of commercial partnerships and piecemeal initiatives for an overarching, statutory digital sovereignty strategy. True digital sovereignty is not merely a question of data residency, of where servers happen to be located; it is about decision rights, operational agency and jurisdictional immunity. When key public functions, policing databases and essential national infrastructure are underpinned by foreign-owned platforms, subject to extraterritorial levers such as the US CLOUD Act, the UK exposes itself to acute single-point-of-failure vulnerabilities and sudden regulatory hostage taking. Relying on the good intentions of overseas boardrooms or transient administrative commitments is a fragile foundation for our national resilience.

Amendment 61 provides the clarity and coherence we currently lack. It would require Ministers to audit our strategic dependencies, benchmark foreign ownership across critical systems and ensure that Britain retains the statutory levers, open technical architectures and domestic capability needed to control its own digital future. This amendment mirrors the amendment so powerfully championed in another place by my honourable friend Victoria Collins, alongside our honourable friend Freddie van Mierlo. As she warned, in an unstable world, true cyber resilience cannot exist without a statutory strategy to confront foreign supplier dependency and build sovereign capability. It is in that same spirit of transparency and digital integrity that I warmly welcome Amendment 165, tabled by the noble Lord, Lord Moraes.

I turn next to Amendment 158, which stands in my name and that of the noble Lord, Lord Holmes of Richmond. This new clause would

“place a statutory duty on the Secretary of State to review, within 12 months, whether a statutory defence under section 1 of the Computer Misuse Act 1990”

should be introduced for legitimate, “good-faith cyber security researchers” and threat intelligence practitioners, and to report the findings to Parliament. I made the case as strongly as I could in Grand Committee.

Competitor jurisdictions, including the United States, France and Belgium, have already updated their laws to provide legal certainty for ethical research. The Pro-innovation Regulation of Technologies Review from the noble Lord, Lord Vallance, explicitly recommended introducing a statutory public interest defence. Amendment 158 does not write the defence into law today. It would simply place a statutory obligation on the Government to conclude their discussions with the CyberUp campaign and industry within 12 months and lay concrete proposals before Parliament. It is time to untie the hands of our cyber defenders. I beg to move Amendment 61.

Viscount Camrose (Conservative)

My Lords, I once again reiterate the Opposition’s support for Amendment 158, the review of “good-faith cyber security researchers”. Creating self-improving systems is one of the most effective actions a Government can take, and permitting the work of good faith researchers has that potential. It does not cost the taxpayer but can organically improve the security of the private and public sectors. I really see no reason why the Government should not at least review the possibility.

Our Amendments 161 and 166 would require the Government to publish the national cyber action plan. It is fair to say, and I have said this a few times during the passage of the Bill, that we are frustrated and perhaps even baffled by the lack of a holistic strategy from the Government. Cyber security can most effectively be applied if all parts of the system are both considered and acted upon together. That is what the ever-imminent, never-arriving national cyber action plan should be doing. I am an optimist by nature; I cling to the hope that the Minister can maybe give us some good news in her response.

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

Baroness Morgan of Cotes (Conservative)

My Lords, I was not sure whether the noble Lord, Lord Holmes, who added his name to Amendment 61, was going to speak. I will briefly speak to it, for two reasons. The first is that the Minister, in her response to the previous amendment, talked about the critical role of the Government in keeping people safe in this country. We have already heard in this debate about the growing threats in relation to digital security and safety. Therefore, it seems extraordinary that there is not an overall digital sovereignty strategy in place already. That is what this amendment highlights.

I also want to return very briefly to the debate that we had a little earlier on my Amendment 62, which I suppose could have sat in this group, because this amendment says that the strategy must set out the Government’s assessment of the risks. The Minister said very clearly in relation to that amendment that she accepted, I think, the argument about how the risk posed by services is not just related to size and that the Government would inform or help regulators to arrive at their assessment of risk. Therefore, this amendment, which as part of the strategy would mean that the Government had to set out their assessment of the risks, would help to inform regulators in relation to deciding which services provided a risk to essential activity in this country. Therefore, there is a symmetry and relationship between those two amendments. We have obviously decided not to push Amendment 62 to a vote, but the need for a digital sovereignty strategy is more pressing than ever. If Amendment 61 is pushed to a vote, I will support it.

Lord Holmes of Richmond (Conservative)

My Lords, I apologise for not getting to my feet before our Front Bench. I was clearly so moved by the eloquence and erudition of the noble Lord, Lord Clement-Jones, that it slowed my motor function, and by the speed of my noble friend Lord Camrose, who clearly has his Asics on today. I very much support Amendment 61. There is so much talk about AI sovereignty, data sovereignty and digital sovereignty with it potentially meaning different things to each speaker of the sovereignty spiel. We need greater clarity across this. In the Bill before us, having this comprehensive clause covering what is required when it comes to digital sovereignty for the United Kingdom makes complete sense.

Moving to the Computer Misuse Act, the noble Lord, Lord Clement-Jones, my noble friend Lord Arbuthnot, I and others have pushed various Governments over at least a decade on this issue. Our cyber professionals, those who do so much to keep us safe, often and understandably in silence and in the shadows, deserve our support. It cannot be that they are still on the wrong side of a statute that is racing towards its 40th birthday. We should update the Computer Misuse Act. The noble Lord, Lord Clement-Jones, has offered a pragmatic solution in his proposed new clause, with a 12-month period to bring this to fruition. Our cyber professionals do so much; they deserve our support. This proportionate amendment should be accepted by the Government and put in the Bill.

Lord Moraes (Labour)

My Lord, I shall speak briefly to Amendment 165 in my name. This amendment was introduced because the scope was quite difficult in Committee, and the question of end-to-end encryption is so fundamental to cyber security that it needs to be discussed.

Any weaknesses or access points that can be exploited by hackers and hostile threats can make us less safe and undermine the whole purpose of the Bill. It is a difficult one. The Government issue technical capability notices, and they have back doors into encryption, but this is an extraordinary issue. We are discussing AI machine-learning attacks, but if systems are vulnerable because the encryption has broken down, which happens every time there is a TCN or a back door, we have a real problem. This issue is not discussed enough, so I wanted to get it into the discussion on the Bill. I hope this will be addressed at some future point.

The amendment asks simply for a level of scrutiny. Is it really necessary to have the back door? Can it be scrutinised, for example, by the Intelligence and Security Committee of Parliament? That is what the amendment asks, and I hope that end-to-end encryption will be taken seriously as we move ahead.

Baroness Harding of Winscombe (Conservative)

I rise very briefly to support wholeheartedly Amendment 158 in the names of my noble friend Lord Holmes and the noble Lord, Lord Clement-Jones. I just find it gobsmacking that we have not been able to sort this out. I really hope that the Minister can give us some reassurance that the Government actually intend to give, as my noble friend Lord Holmes has set out, cyber professionals the comfort that they have been telling successive Governments they need in order to do their valuable work.

I also to support my noble friends’ Amendments 161 and 166. We must have a cyber action plan and a cyber strategy. Again, it is slightly bizarre, extraordinary—I have run out of words—that we do not have them.

Finally, I shall expand a little on why I support Amendment 61. The Government cannot have it both ways. It cannot be both a global issue and that we do not need to have a plan to manage the fact that it is a global issue. It is clear to me that we have to recognise that there will always be sovereignty risks in our digital strategy as a country. We are simply not large enough to be able to do absolutely everything ourselves, which makes it all the more important that we have a digital sovereignty plan, that we have thought about the risks and that we are strategic in how we protect ourselves, because we are not going to be able to be an island in the digital world, as the Minister said on the last group.

Baroness Ramsey of Wall Heath (Labour)

I thank noble Lords for their contributions. I will begin with the amendment tabled by the noble Baroness, Lady Kidron, on digital sovereignty, which was spoken to by the noble Lords, Lord Clement-Jones and Lord Holmes of Richmond, and the noble Baroness, Lady Morgan—I hope I have not missed any noble Lords out.

I assure noble Lords that entities in scope of the NIS regime are already required to manage and mitigate the risks posed to their systems that deliver essential services. As set out in the Government’s response to the Science, Innovation and Technology Select Committee report in September on science diplomacy, this Government recognise and are actively working through the issue of digital and technical sovereignty, but we do not think that a fixed statutory public strategy is the appropriate vehicle. It remains this Government’s opinion that the rapid development of new technologies means that a fixed statutory strategy would reduce our flexibility to respond to new developments and might require the publication of sensitive material, including commercial information.

The Government do not see digital sovereignty as total independence. It is about capitalising on our domestic capabilities, achieving strategic resilience and building trusted interdependence. This has been set out in current strategies, including the Modern Industrial Strategy Digital Technologies Sector Plan of 2025 and the Cabinet Office’s June 2026 Procurement Policy Note 025, which recognises AI as one of four key sectors critical for national security and outlines new guidance to prioritise contracts for British businesses to protect national security.

Actions were announced by the Competition and Markets Authority to improve competition in cloud services following last year’s investigation. These will support greater choice for UK businesses and the public sector and include voluntary steps agreed by Microsoft and Amazon, safeguards to personal data through UK GDPR and legal and regulatory frameworks and continuing to encourage organisations to follow the UK Software Security Code of Practice and relevant international standards to manage cyber risks, including those related to open-source software components. The current approach remains the most proportionate and effective, providing the Government with the flexibility they need to respond to emerging developments.

Most importantly, we need to act to build UK capabilities, just as we are through investment to grow our domestic capability, including £500 million for the Sovereign AI Fund, £1.1 billion for the AI hardware plan and support for a £2 billion investment in quantum computing. This weekend, the Chancellor announced further investment to boost the UK’s ability to build our own chip design and cyber defences. By making active choices about how we harness AI, we can ensure that this technological revolution benefits our society and economy more fully than the Industrial Revolution.

Turning to the amendment tabled by the noble Lord, Lord Clement-Jones, and spoken to by the noble Lord, Lord Holmes of Richmond, and the noble Baroness, Lady Harding, I thank the noble Lord for returning to this important subject. I share the view that the UK should have the right legislative framework to tackle cyber criminals. The Home Office has already carefully reviewed the Computer Misuse Act and proposes to introduce a defence to Section 1 for accredited cyber security researchers when carrying out certain cyber security activity that would currently be unlawful under that section. The Home Office has worked closely with NCSC, law enforcement and the cyber security industry to refine these proposals.

As my noble friend the Minister set out in Committee, the Home Office recognises that legislating in this area is a priority, and will do so as soon as parliamentary time allows. As the noble Lord will be aware, the King’s Speech in May included a commitment to a national security-focused Bill, with measures to update the Computer Misuse Act. This legislation is in development. While I understand the objective behind this amendment, reforms to the Computer Misuse Act extend well beyond the sectors covered by this Bill and are better taken forward through this wider programme of reform.

I thank my noble friend Lord Moraes for his amendment, which seeks to create a requirement to assess risks relevant to encryption. I recognise the intention behind this amendment, but I do not consider it necessary. The Government support strong encryption and robust privacy protections.

The Investigatory Powers Act 2016 is world-leading legislation that helps keep the public safe while protecting privacy. It contains important and extensive safeguards, oversight and scrutiny arrangements in relation to the exercise of investigatory powers, including powers that may engage encrypted services. Decisions under the Act are subject to statutory tests, independent oversight and, where appropriate, approval by judicial commissioners. This includes duties to consider impacts on privacy and system security.

The amendment would duplicate existing considerations of security and privacy and wider impacts, while creating an additional reporting process alongside the framework established in the Investigatory Powers Act. Creating a parallel statutory assessment regime through this Bill would not materially add to the existing and robust safeguards and oversight.

Finally, on the amendments tabled by the noble Viscount, Lord Camrose, regarding the national cyber action plan, I can assure him that the Department for Digital, Culture, Media and Sport is working closely with the Cabinet Office to develop the action plan, and that the Government remain committed to publishing it shortly. We will update Parliament on the publication and implementation of the plan in the usual way. The action plan will make it clear that cyber security is a shared responsibility that requires action from government and businesses, including delivering this Bill to secure the UK’s most critical systems. With those reassurances, I hope that noble Lords will feel able to withdraw, or not move, their amendments.

Lord Clement-Jones (Liberal Democrat)

My Lords, I thank the Minister for her cameo appearance today on this group, and for having the temerity to give an undertaking on behalf of the Home Office. I hope that the Home Office will deliver in due course. That was as expected as regards Amendment 158. I very much thank the noble Lord, Lord Holmes, the noble Baroness, Lady Harding, and the noble Viscount, Lord Camrose, for their support. We will look forward to that Bill when it comes forward with that provision in it.

As for digital sovereignty, I think we are on the same page in not believing that this amounts to total independence. But it does mean, as the noble Baroness indicated, having resilience across the full stack involved in the development of AI in particular.

If circumstances were different and we had more time, we might be pressing further on this amendment. I am certain that if the noble Baroness, Lady Kidron, were here she would be wanting to do that, but I think we are anxious to move to the next group. In the meantime, we will be holding the Government’s feet to the fire, in terms of their AI sovereignty strategy in particular. I beg leave to withdraw Amendment 61.

Amendment 61 withdrawn.

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

Amendment 62 not moved.

Amendment 63

Amendment 68

Amendment 70

Amendments 71 to 73

Amendments 74 and 75

Amendment 76

Amendment 77

Lord Markham (Conservative)

My Lords, although we are grateful for the way in which the Minister has listened and modified the Bill on many of the things we say, I think it is probably the feeling of most noble Lords that the Bill is very much piecemeal in nature—or maybe, as the noble Viscount, Lord Colville, said earlier, it is a bit of a whack-a-mole plan for tackling cyber security, rather than setting out a comprehensive strategy for cyber security. Amendment 77, in my name and those of my noble friends Lord Camrose and Lord Holmes, seeks to address this by trying to have a strategic review of which entities should be brought into scope and which should not.

Amendment 163, tabled by the noble Lord, Lord Birt, and signed by the noble Lord, Lord Clement-Jones, the noble Baroness, Lady Kidron, and me, seeks to build on this. As ever, the noble Lord, Lord Birt, has made some very thoughtful and insightful points, and I know that much work has gone into this. Through Amendment 163 we are trying to require a regime-wide effectiveness review, looking at which sectors should and should not be included, and at how we can use our world-class AI safety institute to play a crucial role in cyber security. In all this, Amendment 163 is critical in building a comprehensive cyber security strategy and action plan—or, dare I say it, a national cyber action plan. Given that the Minister said earlier that DCMS is in the process of preparing such a plan, I hope that this is something the Government are prepared to support. If it is not, and if it is something that the noble Lord, Lord Birt, wishes to divide on, we will support him in testing the opinion of the House.

Lord Birt (Crossbench)

Amendment 163 is in my name and those of the noble Lords, Lord Markham and Lord Clement-Jones, and the noble Baroness, Lady Kidron. I think the earlier stages of this Bill have seen this House on all sides at its very best, with Members bringing real-life experience and serious expertise to bear in a considered and non-partisan way on the grievous challenge that the cyber threat presents to our country. That scrutiny has demonstrated, I am afraid, just how limited this Bill is in addressing that grievous challenge. It has almost been forgotten in our debate today that it focuses on only a small fraction of the economy and the public sector, not on the lessons of JLR, M&S, TfL or the Department for Education. It fails to appreciate the enormous complexity of technology platforms and the origin of their vulnerabilities.

Just a few days ago, a leading CTO, in the midst of negotiating a contract to be supplied with data services by a leading provider, read out to me one of the legal conditions of that supply: “We shall not be responsible for any damage caused to the customer’s computer or to customer data, or for any bugs, viruses, Trojan horses or other destructive code”.

Extraordinarily, and this has been touched on more than once today, the draft of the Bill that reached us did not even mention AI. Can that be believed? It is a Bill that creates a multiplicity of cyber regulators, an estimated 18 in all. In Northern Ireland it is the Department of Finance that will be the designated regulator, not just for energy but for health, road and rail and drinking water. How could 18 regulators possibly amass the necessary skills to regulate in this deeply complex and ever-evolving environment? Week by week, as we have considered the Bill, the ever-darkening cyber storm-clouds gather. Last week, as we all will have noticed, the PHP incident affected 70% of the world wide web, with 10 million servers identified as at risk.

Our amendment seeks to see the Bill as a work in progress. It would require the Government, over the coming 12 months, to address the whole of the challenge identified throughout our proceedings and to conduct and publish a review, inter alia, of the appropriate regulatory framework for cyber, which we manifestly do not have; a review of which organisations have a material impact on the economy and society in both the public and private sectors and should be brought into scope; a review of what obligations should be placed on those organisations to promote cyber resilience; a review of what obligations to provide safe services should be placed on technology suppliers, and noble Lords should remember the quote I have just read out; a review of what scale and nature of cyber professionalism the UK needs; a review of what incidents should be reported and to whom; and, critically, a review of the powers of the AI Security Institute or another regulator in relation to frontier AI systems—a matter that has come up over and over again today—to make AI a safe technology for us all to deploy.

Our hope is that this Minister will welcome the opportunity that such a review would present to address all the many questions that have arisen but not been properly answered today, and that it would speedily promote further legislation that would enable us to grip this challenge in a way that the Bill in its present form simply does not.

Lord Londesborough (Crossbench)

My Lords, I support Amendment 163 tabled by my noble friend Lord Birt. In Committee we debated the need for a single expert regulator for cyber security versus the more fragmented approach in the Bill, which involves, as my noble friend has just pointed out, a whole host of players, departments, centres, agencies and all 12 existing regulators. I will avoid another dairy analogy, but I will just say “cooks and broth”. I do not want to rehearse those arguments other than to say that a comprehensive 12-month review mechanism, as specified in the amendment, is absolutely required in such a fast-moving, complex and costly area. On the costs, I remind the House of current estimates that cyber attacks are costing our economy between £15 billion and £30 billion per annum and rising. I think we can all predict that the Bill will bring unforeseen consequences, but none of us quite knows what shape or form they will come in, hence the need for a review such as this.

Lord Tarassenko (Crossbench)

My Lords, I too support Amendment 163 in the name of my noble friend Lord Birt. It has not attracted much notice, but the series of incidents in the last few months in which frontier AI models broke into the systems of several organisations is beginning to generate some sort of response among the culprits. OpenAI, Anthropic and Google are reported to be planning to launch their own standards authority for frontier AI, which would establish qualifications for independent auditors of the models and labs.

We have the best independent auditor in the world in our AI Security Institute. We should not leave it to the frontier AI developers to mark their own homework or decide who audits them, so I welcome the additional £120 million investment in AISI announced on Saturday. The director of AISI told us today that it is £120 million over four years, which is very much needed to keep AISI at the forefront of frontier AI evaluation.

We should also acknowledge that the Government have moved since Committee. Their Amendment 70 gives the Secretary of State powers where a compromise may be attributable to loss of oversight or control of an AI agent. However, as we have already noted, Amendment 70 operates after the event. It also does not mention the AI Security Institute, yet AISI is the only body in the UK with the technical capability to determine before a model is deployed whether it can attack the systems that the Bill protects. Today it has that access because developers choose to give it. The suspension of that access for three weeks at the request of the US Government shows that it can be withdrawn overnight.

With frontier AI capability advancing every few months, should our critical national infrastructure rely on good will alone? That is the question that proposed new subsection (5)(d) in Amendment 163 asks. It would require the review to consider whether AISI should have powers over frontier AI systems that pose a material risk to our essential services, to audit them before deployment, to set standards, to inspect them and to require or recommend their suspension.

Amendment 163 proposes a review, not new regulation, and I therefore hope the Government will not find it too difficult to accept. However, a review is only as good as its conclusions. I would therefore be grateful if the Minister could give the House two assurances: first, that the Government will reach a clear conclusion, and not simply keep the matter under review, on whether AISI should have a statutory role before deployment; and, secondly, that the power in Clause 29(1), which the Government’s Amendment 70 will now use for AI, could give it that role without further primary legislation. Amendment 163 is critical. If my noble friend Lord Birt chooses to test the opinion of the House, I shall support him.

Lord Clement-Jones (Liberal Democrat)

My Lords, we have had three persuasive and excellent speeches in support of Amendment 163. I thank the noble Lord, Lord Birt, for tabling this extremely comprehensive cross-party amendment. I wonder whether the Deputy Speaker has the details of some of the typos in the amendment so that we do not vote on something that will have to be changed at Third Reading.

The amendment covers the scope of the Bill, which, as has been explained, is not adequate. The food and essential goods supply chain could be under review, as could local government and democratic infrastructure, advanced manufacturing, software as a service and cloud intermediaries. It would create a structured evidence-based review, with a mandatory interim report at six months and a comply or explain mechanism requiring the Government to state publicly why any excluded sector was not being brought into scope. Crucially, as the noble Lord, Lord Tarassenko, says, it would require the review to examine the institutional architecture, including whether the AI Security Institute should have formal audit powers over frontier AI systems deployed in essential activities.

We risk leaving our primary technical watchdog equipped only with voluntary oversight, while the capabilities it is charged with scrutinising outpace the law. We face an era of persistent cyber warfare: we cannot leave our food supply, our local democracy and our advance industries unprotected. If the Minister cannot accept having this review in the Bill, we on these Benches will strongly support the amendment of the noble Lord, Lord Birt.

Baroness Lloyd of Effra (Labour)

My Lords, the amendments in this group seek an early review of various aspects of the legislative and regulatory framework. Amendment 163 would require the Government, within a year of Royal Assent, to undertake and publish extensive reviews of the NIS regime, including its institutional architecture—what regulator does what and the scope of activities it regulates. This was set out by the noble Lords, Lord Birt and Lord Londesborough, and the aspect relating to AISI was set out by the noble Lord, Lord Tarassenko.

I caution noble Lords that this amendment would commit the Government to reopening the fundamental basis of how cyber security is overseen in the UK on an annual basis. This would create a destabilising and uncertain regulatory, business and investment environment. Although it is right that we consider how best the NIS regime can be used to protect the cyber security of the UK’s most essential services, I am concerned about conducting the wide-ranging and comprehensive review envisaged by the amendment within a year of the Bill’s passing and every single year thereafter. I am deeply concerned that this will be a distraction from the effective implementation of the changes that the Bill introduces and the reviews of scope that noble Lords and I have discussed during its passage. The imperative, once the Bill passes, should be to focus on working with regulators and regulated sectors to ensure that the updated regime delivers its objective of improving the cyber security and resilience of the UK’s essential services. These are risks we see every day.

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

I recognise the strength of feeling expressed by Peers in this and previous debates about the importance of critical services not currently in scope of the Bill having adequate cyber security defences. Building on previous discussions, I can today commit that, within 12 months of the Bill passing, the Secretary of State will lay a Statement setting out whether future CNI activities should be brought into scope of the NIS regulations.

As set out in the Bill, for something to be defined as a new essential activity, the Secretary of State must be satisfied that the activity is essential to the economy or day-to-day functioning of society in all or part of the UK. A 12-month review of scope will allow the Secretary of State to conduct an evidence-based assessment, as mentioned by the noble Lord, Lord Clement-Jones, of whether they consider other sectors would meet this test and the suitability of bringing them in scope of the regime. Once the review is completed and the Statement laid, the Government could then consult on which of those sectors could be added. To ensure there is focus on the areas where the impact of a cyber incident would be greatest, the review will focus on CNI sectors not currently in scope of the NIS or the Bill, including, for instance, government and the food sector. I believe that this approach, focusing on the implementation of the Bill with a targeted review of where the UK’s most critical services should be brought into scope, will best enable us to deliver our objectives ahead of a comprehensive post-implementation review within three years of Royal Assent.

I reassure noble Lords that, under the Bill’s current provisions, such a post-implementation review will be able to consider the effectiveness of the regime’s institutional architecture. I hope that noble Lords are reassured by this approach and that the amendment will be withdrawn.

Lord Birt (Crossbench)

I thank noble Lords who have spoken in support of these amendments—my noble friends Lord Londesborough and Lord Tarassenko, and the noble Lord, Lord Clement-Jones. I have to admit to real despondency at the Minister’s response. As I have said before, I am not a technologist but for 30 years I have been involved in major institutions in the public and private sector, without any pause, and I have been involved in technology challenges throughout that time. I can promise the Minister—perhaps she would like to listen to what I am saying—that this Bill simply does not reflect the real world that I have inhabited and do inhabit. It simply does not measure up at all to the scale of the challenge that we face, and I deeply regret that I want to test the opinion of the House.

Baroness Morris of Bolton (Conservative)

My Lords, I will get to Amendment 163 when it comes in its place in the Marshalled List. In the meantime, does the noble Lord, Lord Markham, wish to withdraw Amendment 77?

Lord Markham (Conservative)

Yes, I beg leave to withdraw the amendment.

Amendment 77 withdrawn.

Amendments 78 and 79 not moved.

Clause 37: Procedure for issue of code of practice

Amendment 80

Amendment 82

Amendment 85

Amendments 87 to 89

Amendments 91 to 94

Amendments 95 to 104

Amendment 106

Amendments 108 to 116

Amendments 120 and 121

Amendments 122 to 131

Amendments 132 and 133

Amendments 134 to 139

Amendment 140

Amendments 141 and 142

Amendments 143 and 144

Amendment 148

Amendments 149 to 157

Baroness Morris of Bolton (Conservative)

My Lords, before I call Amendment 163, I have a few words to read out. There are three cross-referencing errors in the Marshalled List. In the proposed new clause in this amendment, in subsection (9), the cross-reference to subsection (10) should instead read subsection (8). In subsection (10), the second cross-reference to subsection (8) should instead read subsection (7), and in subsection (10), the cross-reference to subsection (10) should instead read subsection (8). I hope that is clear.

Amendment 163

Lord Birt (Crossbench)

My Lords, I have nothing to add to what I said before. I would like to test the opinion of the House.

Ayes 202, Noes 155.

Amendment 164

Lord Markham (Conservative)

My Lords, we believe it is vital to the cyber security of the United Kingdom that we keep a register of hostile foreign actors. We would like to test the opinion of the House.

Ayes 194, Noes 155.