Joint Committee on
National Security Strategy

Oral evidence: Work of the National Security Adviser, HC 644
Monday 1 February 2016

Watch the meeting

Members present: Dame Margaret Beckett (Chair); Crispin Blunt; Lord Clark of Windermere; Baroness Falkner of Margravine; Damian Green; Mr Dominic Grieve; Lord Hamilton of Epsom; Sir Gerald Howarth; Lord Levene of Portsoken; Dr Julian Lewis; Mr Angus Brendan MacNeil; Lord Mitchell; Robert Neill; Lord Trimble; Stephen Twigg; Keith Vaz; Lord West of Spithead and Mr Iain Wright.

Questions 1-76

Witnesses: Conrad Bailey, Director Strategic Defence and Security Review (SDSR) and Defence in the Cabinet Office’s National Security Secretariat, and Sir Mark Lyall Grant, National Security Adviser, gave evidence.

Chair: Can I, on behalf of the Committee, welcome you, Sir Mark and Mr Bailey? Thank you both for coming to give evidence to us. For the sake of clarity, I remind everybody that we are in public and broadcast session.

Sir Mark, you are relatively new to the post. Can you explain your role and give us an indication as to why we now have a National Security Adviser? I know you are the third, but in that sense it is a comparatively new post. What did they tell you was your job description?

Sir Mark Lyall Grant: Thank you for this opportunity to engage with the Committee relatively early in my term as National Security Adviser. As you say, I have only been in the job five months, so please excuse my ignorance in response to some of your questions. But I have brought with me Conrad Bailey, the director for the strategic defence and security review, and defence, in the National Security Secretariat; he will be able to help me with any answers that I cannot respond to myself.

I see my role in three parts, really. The first is as personal adviser to the Prime Minister on national security issues. The second is as secretary to the National Security Council, and the third is as head of the National Security Secretariat. Those obviously are three linked roles, but none the less are slightly distinct.

Q1 Chair: Is this a post that has been evolving? We had Peter Ricketts at a previous Committee when he was the first National Security Adviser and I suppose he gave us the same kind of answer. But I suppose that one of the things that the Committee would be interested in is to what extent now your role as the Prime Minister’s personal adviser on these issues impinges on the others. Where does the balance lie, broadly speaking?

Sir Mark Lyall Grant: I think it is difficult to establish a sort of percentage of time spent on each function. I do travel overseas with the Prime Minister, particularly when he travels outside Europe. I sit in with him on bilaterals that he has with incoming visitors to the UK. I do prepare briefs for him in terms of those bilaterals that he has with foreign visitors.

But in addition, I have a role as secretary of the National Security Council, which is an official role that is an important part of the structure of Government. My job is to ensure that the meetings are held in good order, that there are proper agendas, that there are minutes kept and that there is proper implementation of the decisions that are taken at the National Security Council. In a sense, in that role I am acting on behalf of the Prime Minister, but I am also acting on behalf of the Cabinet Secretary, Sir Jeremy Heywood, and the civil service as a whole to make sure that government is carried out efficiently.

In terms of the National Security Secretariat, that is more of an overall managerial role but making sure that the right people are there and that we are producing the goods for other Government Departments as well as for No. 10 Downing Street.

Q2 Chair: In the past, this Committee has expressed concern as to whether or not you were actually sufficiently resourced.

Sir Mark Lyall Grant: There are about 200 people in the National Security Secretariat, and I do not think that is under-resourced. My staff do work very hard and they may say something different. Our job is not to take the place of Government Departments: our job is mainly a co-ordinating one at the centre of Government. So it should not be for us to take on all the responsibilities of offering advice to the Prime Minister. The Prime Minister has a Foreign Secretary and there is a Foreign Office who offers foreign policy advice—likewise, the Defence Secretary and the Ministry of Defence. Our job is to help co-ordinate, resolve problems when there are differences between Departments and advise the Prime Minister when there are differences between his Ministers.

Q3 Chair: You say that there are 200 staff, and that does sound good, but as I recall in the past that included people like the Civil Contingency Secretariat and so on—bodies which existed prior to the existence of the National Security Council and basically have just been put into that box.

Sir Mark Lyall Grant: That is correct. There are four broad areas of work that the National Security Secretariat undertakes. The first is foreign and defence; the second is security and intelligence; the third is cyber and cyber-security; and the fourth is civil contingencies. There are about 50 people in the civil contingencies secretariat who do work in my secretariat but are looking much more at domestic resilience issues—flooding, problems in Calais and so on—and they administer on behalf of Government the COBRA network, for instance. It all comes under the civil contingencies secretariat. But that is a key role of national security, because our national security is both domestic and overseas.

Q4 Chair: Roughly speaking, of that group of staff who have been in the past in these various different roles, how many solely and specifically are working on the NSS and the National Security Council?

Sir Mark Lyall Grant: All of them at different times are working for the National Security Council. I think it is fair to say that the Government’s national security strategy flows through the National Security Council. So, one way and another, everyone in the National Security Secretariat is servicing the National Security Council. Whether that means servicing meetings that are actually held in a slightly different body like COBRA, or in Cabinet or in another Cabinet Committee or a sub-committee of the National Security Council, it all comes under that national security space. I would not want to make a distinction between the 200. They all flow from the National Security Council.

Q5 Chair: I understand that. I was probing it a little because in the past we were told there were about two people specifically working on the NSS.

Sir Mark Lyall Grant: There are two people who do the logistics and the mechanics of a National Security Council meeting, ensuring that everyone has the necessary papers, that there are name tags around the table and so on, but that is an administrative task. All 200 people are servicing the National Security Council in some way or another.

Q6 Chair: You mentioned the relevance of domestic resilience, which brings me to another question. I particularly wanted to ask you about your own role. Please do not take this in any way personally, but one of the things we asked Peter Ricketts when he first came to the Committee was whether this would always be a Foreign Office appointment. Since he was the first one, that was slightly unfair, but, as it happens, you are now the third Foreign Office appointment and there has not been an appointment from any other Department. Is that significant and is this a pattern that we must expect to continue because of the range of your responsibilities?

Sir Mark Lyall Grant: I think that is a question for the Prime Minister rather than me, as I am appointed by the Prime Minister. Both Kim Darroch and I came into the job from holding quite a wide-ranging job in the Foreign Office. He was from Brussels and I was at the United Nations as the British ambassador to the United Nations. In that role I dealt widely with all foreign security and defence issues. In that sense, I think I have some reasonable background, even on some of the harder defence issues.

But there is no doubt that I am more familiar from my own personal background with some areas of the work than I would be, say, on the cyber part of it, which is a relatively new area for me. But I have experts working for me in the National Security Secretariat to make up for my relative lack of knowledge of cyber.

Q7 Chair: One thing has occurred to us, which has come up in the past. I recognise fully your point that it is not your job to make this decision, but we would be interested in your view if you care to express it. Do you think there would be any merit in making the National Security Adviser appointment a fixed-term appointment parallel to the Parliament? Obviously, it could be renewed, but you would be dealing with somebody who was dealing with the same time period, as the Parliament is dealing with the national security strategy?

Sir Mark Lyall Grant: You can certainly make that case. In each new Parliament, it does make sense to have a rotation, and each new Government would want to appoint its own National Security Adviser. I certainly do not think that the National Security Adviser has per se to come from the Foreign Office. I can see that lots of other people in the national security space in other Government Departments might be well qualified to take on the job, so I certainly would not suggest that it has to be done by a Foreign Office person.

Q8 Lord Hamilton of Epsom: Has your role changed since Paris? Has it entered into a new gear and have you been given different advice since then?

Sir Mark Lyall Grant: I don’t think the role has changed. Obviously, after Paris a lot of lessons have been learned and we have rolled those out into how we prepare for the possibility of similar attacks in the UK. It has made a change in terms of our engagement with some of our European partners in looking at counter-terrorism.

Of course, we had a number of discussions in the National Security Council after Paris about reactions to that, and indeed there were COBRA meetings in the immediate aftermath.  Some changes of activity have certainly taken place, but I wouldn’t say that it has fundamentally affected my role. The threats we face from terrorism, unfortunately, are well known and have been of some long standing, and I do not think that the attack in Paris has fundamentally changed the assessment of the risks that we face.

Q9 Lord West of Spithead: I am interested in your relationship with the Prime Minister.  You say that you go with him to other countries.  Is that all other countries or just some countries? You say that you attend meetings if representatives of countries come here. That sounds very much like what used to be done by the senior civil servant in the Foreign Office and his people. 

Are you involved with the flooding, let us say? Do you look at that and think “What is the nodal impact of this?”—if you remember, one pumping station took down all power in the west of England; that was a risk. Are you talking to him about that? You talk about COBRA and, to me, it is operational. I used to go to COBRA regularly, but it was when things were happening, and I would be involved. I did like to sit back and think blue skies about what was actually the crucial thing: we are having to react to something, but maybe looking 10 years or 20 years ahead, we can do something to resolve this.  How does that relationship with the Prime Minister work? Do you go to Chequers and sit down with him over a whisky and talk about it? How does it actually work?  

Sir Mark Lyall Grant: I could not give you a complete breakdown of the countries that I have visited with the Prime Minister and those that I have not, but I think it is fair to say that, since I joined, I have accompanied him on all his visits outside Europe, and some of those inside Europe, but not all of them. 

Q10 Lord West of Spithead: Isn’t there an overlap with the normal Foreign Office person?  Do you see what I mean? Are you there in terms of overall foreign policy or in terms specifically of national security?

Sir Mark Lyall Grant: I am there to advise the Prime Minister on national security issues that may come up in those discussions. Obviously, I do not advise him on areas that do not come under my competence, which is European renegotiation or whatever. For instance, when the President of China came to this country or the Prime Minister of India, I was partaking of meetings both in Downing Street and in Chequers, because on the agenda was the question of our defence and security relationship with India and China.  Indeed, I have just been to India and I will be travelling to China later this month to follow up those visits to ensure that there is proper implementation of the agreements that were reached at the time of those inward visits last year. That is part of my function to represent the Prime Minister and the Government in following through on the policy agreements that are reached at that level.

In terms of the flooding, I have not had a hands-on role in responding to the crisis because we have experts who are doing that, but I did attend the COBRA meetings. There was one chaired by the Prime Minister and one chaired by the Secretary of State for Defra.

Q11 Lord West of Spithead: But you take my point about the operational versus—

Sir Mark Lyall Grant: Absolutely. I have not been directly involved in the sort of crisis response on the flooding because there are better people than me to do that, and that isn’t my job, but it is my job to make sure that the process of the COBRA meetings works properly, and also I need to know enough about the detail of the problem so that I can offer some strategic advice about how to look at it in a more strategic, long-distance way. I attended those meetings because I am not familiar with flooding, for instance, in this country.

Chair: I have got Lord Clark, Mr Neill, Mr Vaz and then Baroness Falkner, who is going to take us on to the issue of the National Security Council.

Q12 Lord Clark of Windermere: Lord West was particularly interested in your relationship with the Prime Minister. I am interested in your relationship with the other 200 “members”, who obviously mainly come from other Departments and other agencies. You have already mentioned that you sit in overseas, and there will be representatives of the Foreign Office. Given the nature of Whitehall and the nature of the silos, and having seen how Departments fight for their own interests in the Cabinet and elsewhere, is there any tension within your 200 between their representing what could be departmental interests as opposed to national security interests?

Sir Mark Lyall Grant: I have not sensed that in the five months I have been in this position. There will be meetings in which there will not be a Foreign Office representative. Sometimes the Foreign Secretary will be there; sometimes it will be the ambassador. If it is an overseas visit, the ambassador would certainly be in all the meetings with the Prime Minister as a representative of the whole of Government, not just the Foreign Office. Sometimes there may be a Foreign Office representative travelling with the Prime Minister, but not always by any means. I do not sense that there is a tension there.

We work very closely with all the Departments in the national security space: not only the Foreign Office, but the Ministry of Defence, the Home Office, the intelligence agencies and others. You would have to ask them, but I do not think that that causes any particular problems. In terms of the relationship with others, I sit in the Cabinet Office. The Prime Minister has some foreign policy private secretaries. They sit in No. 10, and their job is to service the Prime Minister and take minutes of meetings that the Prime Minister is in and so on. I am in the Cabinet Office, next door to No. 10, but it is a slightly separate role.

Q13 Robert Neill: Can I take you on, by way of analogy, to working with this Committee, Sir Mark? The Lord Chief Justice comes and gives evidence and has a discussion with the Justice Committee once a year at least. I imagine that you would be perfectly happy to have exactly that same sort of level of engagement.

Sir Mark Lyall Grant: Yes. I am at your disposal.

Keith Vaz: That was a remarkable answer to Mr Neill’s question, because whenever the Home Affairs Committee has asked you to appear, we have had a letter from the Prime Minister protecting you and stopping you from coming before departmental Committees. You are now saying that you are prepared to appear before departmental Committees—Foreign Affairs, Justice, Home Affairs—

Robert Neill: I was drawing an analogy of the appropriate Select Committee. In this case, that is this one.

Q14 Keith Vaz: Right. Why is it that the Prime Minister protects you from appearing before departmental Committees when their subject matter, be it home affairs, justice or even foreign affairs, merits it?

Sir Mark Lyall Grant: I do give evidence to the Intelligence and Security Committee, and I do give evidence to this Committee, because it is very focused on the national security strategy and I have some responsibility for that. Given the breadth or number of potential parliamentary Committees that could ask for evidence, I think it is felt that I should not be spreading myself too thin. I apologise for that, Mr Vaz, but that is the situation.

Q15 Keith Vaz: No, it is okay. I have just one follow-up. When the Home Affairs Committee recommended the creation of a National Security Adviser, we were mesmerised at the time by Condoleezza Rice. You, of course, are not Condoleezza Rice. Do you think that you have a role in exposing yourself and your office much more to Parliament and to the public? You are obviously extremely able to answer questions here. When you were in the Foreign Office and I was the Minister for Europe, you taught me the difference between Bulgaria and Romania. You can handle all kinds of issues. Is there anything to stop you having that kind of wider role, as the National Security Adviser has in the United States of America?

Sir Mark Lyall Grant: I think the role is slightly different. Despite your kind words, it is not such a public role as my previous position as ambassador to the United Nations, where I was giving press conferences and doing a lot of public speeches. I do not think it is appropriate in this role for me to be making so many public statements and speeches. I no longer go on Twitter, for instance. I had built a following of Twitter followers in New York, but I have discontinued that. That is not the same as Susan Rice, or indeed Condoleezza Rice. The concept of a National Security Adviser in the UK is a little bit different: it is not such a public role.

Chair: Lady Falkner is going to join in and take us on to the National Security Council.

Q16 Baroness Falkner of Margravine: I want to turn to that, but bearing in mind the conversation that you were having with Lord West, I want to probe a bit further. We have taken evidence in the past on the role of the National Security Council and witnesses such as Sir David Richards, when he was Chief of the Defence Staff, said, “We never talked grand strategy. We never talked national strategy. There is a big difference between talking about strategic issues and being strategic.” You have commented a great deal about issues, and certainly in referring to accompanying the Prime Minister and giving the Prime Minister advice and things like that, that is obviously at a rather more granular level of detail.

I wonder whether you would be able to tell us who does the long-term, strategic thinking on the United Kingdom’s interests, its capabilities and the horizon now, in the next five years and in the next 20 years, and on where we stand, and where we stand in relation to allies. Who does that kind of strategic thinking if you are so hands-on and reactive, as you appear to be in the description you have given us?

Sir Mark Lyall Grant: We do that longer-term strategic thinking in the National Security Secretariat. Indeed, the expression of that is the National Security Strategy and Strategic Defence and Security Review, which we will be coming on to. That was an attempt to give a strategic umbrella of our national security interests, the threats and our priorities going forward. That is an extremely—I hope you find it—strategic document, but we will come on to that later.

The National Security Council does discuss a range of issues. I think we provide for you an agenda of the previous quarter’s meetings and it is a mixture of foreign, domestic, strategic and operational issues. It is fair to say that there is a mixture of those.

But if you look at the issues that we have discussed since the election in May last year, there were quite a number of strategic issues, starting off immediately after the election with a discussion of the national security priorities. The SDSR itself was discussed in preparation four times by the National Security Council. We have discussed the relationship with China, with Russia, with India and with Turkey. All those issues have been looked at in a strategic sense, so a lot of strategy is discussed by the National Security Council, and that is where strategy is evolved.

Q17 Baroness Falkner of Margravine: I want to go back a little bit on this. We were caught asleep at the wheel over Russia’s invasion of Crimea. Other things come up that we do not seem to anticipate, and even if we are able to anticipate them, we do not seem to have the capabilities in place to deal with them.

I remember, for example, that the Foreign Office had almost no Russian-speaking expertise at the time. The deputy head of mission was serving in another country and had to drive across four countries to get to Moscow to beef up the support there, and so on. What I am trying to get from you, in terms of the National Security Council, is that beyond writing a report every five years, which as you said, we will come to, is there an ongoing process whereby a conversation takes place between the political end—the Prime Minister and Cabinet—the security end and Parliament, as has been mentioned, about where we stand in the world and where we will find ourselves in the light of things that happen very far away?

I will give you an example. You may not wish to go there, but is China’s new military strategy being discussed with regard to the long-term implications for the west, for NATO and for the United Kingdom, or is just going along with a prime ministerial visit to Xi Jinping enough to warn about Hinkley Point or cyber?

Q18 Lord West of Spithead: Can I jump in to add a little piece there, because I share your view? We did have a thing called the national security forum, and that had some Nobel prize winners and all sorts of amazing people in it. We were tasked by the Cabinet to look at certain things, ranging from the UK’s energy policy down to little things, such as “How can we be sure of the waters around the UK to stop migration?” and so on. That team then looked at it, over a matter of weeks, to produce something.

I find it difficult to see how, because of the operational constraints you have, you are able to do that—not quite blue-skies thinking, but in-depth thinking on a specific issue. You mentioned China, which is a very relevant issue. I find it difficult to see how you can manage that within the constraints and pressures you are under—running those other things—and how you are able to get that council to look at those things.

Sir Mark Lyall Grant: You have raised a lot of issues there. I do not think that the failure to predict the Russian invasion of Crimea is linked, really, to the question of a strategy. One has a strategy; we had a strategy for Russia. Unfortunately, that strategy was driven off track, rather, when they invaded Ukraine, and we have had to adapt. That is why you will see that the strategy on Russia in this new National Security Strategy is rather different from the one in 2010, and that was the result of that.

There are a lot of places where the sort of discussions that you are talking about, Lord West, take place. The Foreign Office has a planning unit; so does the Ministry of Defence. They get together. They discuss issues. I chair the National Security Council Officials meeting once a week. We meet every week, even when the National Security Council does not meet. The council does not meet during parliamentary recess, for instance, but we meet at official—Permanent Secretary—level, and it is an opportunity to discuss some of those big issues. Do we perhaps need to bring them to the National Security Council? Do we need to think ahead? That is what the NSCO often does. So that is another forum.

There are issues that individual Departments will bring forward, and they may say, “I think we need to look at the overall relationship with China”—or Pakistan, India or wherever—“in the light of changing geostrategic developments”. Then we discuss that at official level, and if there is a need we go to the National Security Council.

But don’t forget that not all policy is made, nor all decisions taken, by the National Security Council. There is a lot of correspondence between Ministers and there are a lot of policies that are taken forward by individual Departments where there is no disagreement between Departments, and therefore perhaps no need for discussion in the National Security Council. The National Security Council meets for only one hour a week and cannot deal with the breadth of national security issues that have to be dealt with by the Government.

Sir Gerald Howarth: May I follow up on that?

Chair: If Lady Falkner wants to come back, I will then have you, Sir Gerald, and Mr Grieve.

Q19 Baroness Falkner of Margravine: So has the creation of this post and the National Security Council itself led to improvements in our ability to withstand unforeseen events and shocks? Do you think that, through your existence and the council’s existence, we now have a policy-making advantage over our partners, and indeed over our rivals?

Sir Mark Lyall Grant: Many of our partners and rivals have a National Security Council equivalent—they actually had them before the United Kingdom did. So I would not say that it necessarily gives us an advantage, but I think that the National Security Council has been a very valuable addition to the machinery of government. It gives a structure to the discussion on national security priorities, both long-term and immediate ones, and by including the Home Secretary, the Department of Energy and Climate Change and the Secretary of State for Business, Innovation and Skills it brings together the domestic and the foreign in a relatively small committee, where you can hammer out these issues in a very transparent and open way. I think that is a valuable addition to the machinery of government. I am not going to pretend that it has transformed the way in which the Government operate in the national security space, but it is a valuable addition.

Q20 Sir Gerald Howarth: Sir Mark, I am encouraged that you have this meeting—once a week?—with the FCO and the MOD.

Sir Mark Lyall Grant: It is much wider than that. It is all the officials of the Ministers who are represented in the National Security Council, plus others if we are discussing issues of relevance, such as the Department for Transport. That Ministry is not formally a member of the National Security Council but we would invite the Permanent Secretary if we were discussing aviation security, for instance, which we have recently.

Q21 Sir Gerald Howarth: Encouraging, but as Baroness Falkner says, these bountiful meetings did not stop you—not you, but your predecessors—failing to establish what the Russians’ intention in Crimea was, notwithstanding the fact that there was a template already in existence called Georgia, Abkhazia and South Ossetia.

One thing that concerns me, which I have raised repeatedly on the Floor of the House of Commons, is what is going on in the South China sea. I get soothed by Ministers—“Don’t worry, Gerald; we’re well aware of what’s going on”—but the only people who take any action, as the Chinese are building port facilities and runways on disputed atolls in the South China sea, are the United States. It is only Ash Carter who has raised this. I see no evidence that it is on our radar here, and I am not soothed by the words I hear. It seems to me that that is the next potential issue coming down the track. I might be wrong, but is it on your radar?

Sir Mark Lyall Grant: It is on my radar. I don’t want to go into policy responses in this format, but it is very much on the radar of the National Security Council and, indeed, the Departments most closely involved. It is an issue we consider.

Q22 Sir Gerald Howarth: Are you looking at it in the context of whether we need, in the light of it, to adjust our national security strategy? Are you feeding that into the consideration of Hinkley Point? Should it inform our military disposition?

Sir Mark Lyall Grant: As I say, I don’t want to go into policy conclusions; that is for Ministers. What I can say is that the National Security Council has discussed China twice since the election, and of course all those issues were discussed in the course of those meetings. The document that we are going to come on to in a minute highlights the fact that one of the four threats or challenges we face is state-based threats; that is clearly set out as one of the challenges. I don’t think that has changed since the document was produced. The South China sea was an issue before the document was produced, and it is taken into account in the document.

Q23 Damian Green: I want to move on to the more detailed input into the committee on domestic counter-terrorism. Obviously, the Home Secretary is a standing member of the committee, but what about the police directly, and particularly the counter-terror heads of the police—are they regular attenders of the committee?

Sir Mark Lyall Grant: Yes. Both the National Crime Agency and the counter-terrorism lead in the Metropolitan police regularly attend National Security Council meetings when the National Security Council is addressing any subject of interest. Mark Rowley, for instance, attends a number of National Security Council meetings.

Q24 Damian Green: What about when Parliament is not sitting and you have officials’ meetings instead? I am interested that you talk about when the council is discussing things that are relevant. It is hard to envisage a time when domestic potential terrorism is not relevant at the moment.

Sir Mark Lyall Grant: He has a standing invitation to the officials’ meeting that I referred to, which meets every week. He comes sometimes. He doesn’t come all the time, if he feels it is a subject he is not particularly interested in, but he has a standing invitation and regularly comes.

Q25 Crispin Blunt: Today’s newspapers suggest we are about to go back to war in Libya. I wonder whether, by illustration, you can tell us how you and the council have been involved in managing this issue, as far as you reasonably can.

Sir Mark Lyall Grant: As I say, I don’t want to stray into policy issues in this evidence session. We have discussed Libya in the National Security Council—I am trying to look at the list here—certainly two or three times over the past six months. It is an issue of major concern in a number of different contexts: in the counter-terrorism context, in the stability context and in the counter-migration context. When we discuss counter-terrorism, Libya is a feature. When we discuss migration, Libya is a feature. But we have also discussed Libya itself in terms of the instability and the political progress. We take into account all those issues as the National Security Council discusses this issue.

Q26 Crispin Blunt: Can you give us an illustration of just how the council is working at an official level and then advising Ministers on the options where there appears to be a divergence of policy between the United States and Europe? Obviously, there are discussions about whether the Italians are going to be involved in a lot. Just how much of this is done by you shuffling around, or by officials on your behalf? What is the process of advice? What is going on through Departments as opposed to being co-ordinated?

Sir Mark Lyall Grant: It varies hugely from issue to issue, obviously, but on Libya, for instance, there is a regular, almost weekly meeting, chaired by either me or my deputy, to look at the Libya situation. The Foreign Secretary regularly offers advice to the Prime Minister on Libya policy—what the next step should be, how we should react to developments—and there have been, as I mentioned, a number of discussions at both NSCO and NSC over the last six months on the Libya issue. So it is a regular agenda item in the national security space, in the same way that Syria is at the moment, for instance, or migration.

Chair: We are going to move on to the document.

Q27 Mr Grieve: Sir Mark, turning to the document, when the Prime Minister came before this Committee—I was not on it; it was before the last election—he described the process of carrying out the review as refreshing the 2010 paper. Is that how one would describe it, having gone through the process? I wonder if it is not a bit more fundamental than that.

Sir Mark Lyall Grant: I think it is more fundamental than that. It is an evidence-based and risk-based review. That work was done—I would not say from scratch, because obviously you start from where you are, but none the less, I think it was a very thorough process. Conrad has been involved in it since the start; I was only involved in the last three months.

If you look at the strategy—maybe I can just say a few words to frame our discussion on this—it does set out an integrated approach to national security, and a very clear, assertive vision for the UK’s place in the world. We deliberately framed it around three overarching national security objectives: protecting our people, projecting our influence and promoting our prosperity. That was underpinned by the Government’s commitment to spending 2% of GDP on defence and 0.7% of GNI on overseas development.

As I mentioned, the National Security Council has discussed this four times since the election. Although an amount of preparation was done before the election, clearly it could not be started in earnest until after the Government was appointed. It was the product of extensive collaboration across Departments and outreach to defence experts, academia, think-tanks, the devolved Administrations, our partners and allies and parliamentary colleagues. It was underpinned by the 2015 National Security Risk Assessment. So it was a thorough review.

It was, I think, quite a substantive and strategic review. How much it is different from 2010 I leave to others to judge, but clearly some big developments happened between 2010 and 2015, of which we have taken account. We have discussed one, which was Russia’s invasion of Ukraine; the other was the rise of Daesh, which changed the face of counter-terrorism activity to some extent. We had to take those into account, and we set it around four major risks and challenges that we felt would hold good for at least the next five years, and maybe beyond: counter-terrorism, state-based threats, cyber and the potential erosion of the rules-based international order.

We hoped that putting the national security strategy together with the strategic defence and security review, underpinned by the risk assessment, would make a coherent, strategic and well-received document. I have to say that we are very pleased with the way it has been received; it has been received extremely well internationally by our allies and partners. I think it is a coherent document, and much credit for that goes to Conrad.

Q28 Mr Grieve: I want to pick up on the point about the merger between the strategy and the strategic defence and security review. A moment ago you were being asked by some of my colleagues on the Committee whether we were losing sight of the strategy; is a consequence of the merger a diminishment of the strategic overview because of the necessary financial constraints, or are there advantages to bringing it together?

Sir Mark Lyall Grant: No. Perhaps I should take responsibility for proposing that we put the two together. When I arrived, we were thinking of perhaps following the 2010 model and keeping the two separate, but it seemed to me that although one should maintain the correct sequencing of the national security strategy, then the review and then the spending round, it made more coherent sense to put the strategy and the review together to show that the review flowed directly from the strategy. I made that recommendation to the Prime Minister and he accepted it, so we put the two together so that they could be announced together as a coherent whole.

We also deliberately had the announcement of that single document shortly before the spending round announcement, so that it was coherent with the spending round. Again, I think lessons were learned from 2010, when there was a bit of a divergence between the review and the spending round and quite a lot of scrabbling and back-engineering to try to make that work. In this case, it was much smoother because we co-ordinated very closely with the Treasury in the spending round as we finalised the review.

Q29 Lord West of Spithead: Can I jump in quickly? In 2010, the national security strategy came out the day after the SDSR. That was the timing of the two—when the two papers came out—which was clearly completely wrong, although I admit that they must have been going on at the same time. The national security strategy this year is dramatically better than the one in 2010—that aspect of it—and Conrad should be congratulating you on that.

I am speaking at the Chamber of Shipping dinner tonight, and I have one little point. When I am speaking I hope to explain to them why the national security strategy does not actually mention the fact that we are an island. I am interested, because it is something I would like to mention to them this evening.

Chair: You might bear this in mind for the future, Sir Mark, when you come before the Committee again. Lord West feels very strongly about the fact that it is not understood that we are an island.

Baroness Falkner of Margravine: It might be useful to have a map of the UK on the front.

Sir Mark Lyall Grant: Thank you for pointing that out!

Chair: Mr Twigg.

Stephen Twigg: I think my question will follow on when Dominic has completed his line of questioning.

Q30 Mr Grieve: Before the election, the previous Committee was unable to provide any input into the strategic defence review. In reality, it might be that the strategic defence review only really got off the ground after May last year. Is that in fact the case? There was certainly no opportunity for our predecessor Committee to express a view on what might be in it.

Sir Mark Lyall Grant: Perhaps I can ask Conrad to answer that, as he was here before the election and I wasn’t.

Conrad Bailey: I took up post in April, but prior to the election a lot of work was done among Departments to develop the contextual underpinning for the strategy. There was some discussion with some of the experts—we had events at Ditchley Park and elsewhere—and then there was the work on the national security risk assessment, which again had some external input. We were very conscious that the Committee was not formed at the point at which we were working on the strategy, so one of the things we did was to go back and look at the report of the previous Committee and its recommendations and try to take some of them into account. There were things about the importance of being coherent between the SDSR and the spending review and the importance of a comprehensive approach. Again, we created a team that was drawn from across Government and from a number of other areas.

Q31 Mr Grieve: Before we go on to the detail, if you were having to measure the success of this review in five years’ time, what would you be hoping to see from it?

Sir Mark Lyall Grant: There are a number of aspects. First, I would hope that the risk assessment and strategy we set out holds reasonably well. As I say, there were some dramatic developments over the past five years that were not predicted, but I hope we have created a strategy within which we can react to developments. Secondly, and most importantly, I hope that the 89 commitments that are made in the review are implemented and followed through properly. We have deliberately, I think it is fair to say, reduced the number of commitments from 200-odd in 2010 to 89 in this review. That is still a substantial number, and each and every one has to be implemented, followed through and monitored to make sure that it is still credible. If we can achieve those two things, that will be important. We will make annual reports to Parliament about the review, and of course there is the possibility of refreshing or renewing the review within that five-year period. If we do not have to do that, that in itself will be seen as a success of the review.

Q32 Stephen Twigg: Sir Mark, you mentioned that the review was underpinned by the twin commitments to 2% spending on defence and 0.7% on international aid. In 2015 we also saw the publication of the new aid strategy from the Government. Do you see in this next phase of work the NSC aid policy in general and DFID in particular having a different role from that played in the previous five years?

Sir Mark Lyall Grant: I don’t think fundamentally different, no, but what I hope the strategy brings out quite clearly is the balance of hard power and soft power. One of this Committee’s recommendations concerned the fact that not enough emphasis had been put on the United Kingdom’s soft power attributes. We have brought that out in this strategy, and one of those attributes is certainly DFID and the spending round. I know better than many people, having been ambassador to the United Nations, the fact of the benefit that we get and the credibility we gain, speaking internationally, from being the only G20 country that meets that 0.7% target. That is a very important influence lever for us internationally.

Certainly we are looking to maximise the opportunities for the United Kingdom from that 0.7% commitment, and in the document you will see that we have established a prosperity fund, which is designed to promote reform and development, particularly in middle-income countries, in a way that will make it easier for others to do business, and in particular there will be opportunities for British business to take advantage of that. That is a new development that has come out of this review. But I would not want to suggest that fundamentally DFID are doing something different from what they have done before because their focus on elimination of poverty is as strong as ever and that is extremely important.

Q33 Stephen Twigg: Did you have an input into the new aid strategy?

Sir Mark Lyall Grant: We did have an input into it, absolutely.

Q34 Lord Hamilton of Epsom: The US military, when it goes to war, takes with it its own money for aid projects, and can build schools and, presumably, win hearts and minds at the same time. Have we considered doing anything similar to that?

Sir Mark Lyall Grant: Not identical to the United States, but we have established a conflict stability and security fund, which is over £1 billion a year, and about half of that is non-ODA money and can therefore be spent on things similar to the direction in which the US Government is going: quick-win projects and projects that can make it easier to achieve your aims in-country. Obviously, the ODA part of the budget needs to be spent within the ODA Act and within the Development Assistance Committee rules, but the non-ODA part can be spent on a wider system of projects. We have a widespread number of projects in these fragile, unstable countries which we can use to support the wider British Government aims. In Nigeria, for instance, we are trying to support capacity building of the armed forces and their counter-terrorism effort against Boko Haram. That can be funded out of the conflict stability and security fund. That was established only in April 2015 and is just coming to the end of its first year of working.

Sir Gerald Howarth: May I make an observation? We did actually have a quick impact programme which the armed forces used in Iraq immediately after the end of the war in 2003. They had about—Lord West will know, but it is something like £10 million.

Lord West of Spithead: It is something like that, yes. We did something in the Balkans as well.

Q35 Sir Gerald Howarth: Within weeks, while DFID was working out the forms for people to apply for money, the military had gone out and had refurbished 13 schools. Perhaps that is something that you might like to look at as a good way of doing business while billing DFID for the money.

Sir Mark Lyall Grant: I don’t know whether the Ministry of Defence still has that facility or not.

Conrad Bailey: Most of that kind of work is now done through the new fund, but it can be pretty agile and there are elements of the fund that are rather less bureaucratic than others, to allow you to pay money out quickly when you need to get on with stuff.

Chair: While taking Sir Gerald’s point, we don’t want the Committee to become the forum for interdepartmental bust-ups.

Q36 Dr Lewis: I am mainly going to be asking you about the national security risk assessment, but I have one other thing to put to you first. Am I right in thinking that each of the security and intelligence agencies are separately and directly represented on the National Security Council?

Sir Mark Lyall Grant: That is correct. Most of the meetings would be attended by the chairman of the Joint Intelligence Committee and the intelligence heads.

Q37 Dr Lewis: Yes, whereas the armed forces are represented on the JIC solely by the Chief of the Defence Staff.

Sir Mark Lyall Grant: And the Defence Secretary.

Q38 Dr Lewis: And the politician, as it were, yes.

Are you satisfied that the voice of the military is sufficiently represented on the nearest thing that we have to a strategic planning body, given that you can be the head of the Royal Navy, the Army or the Royal Air Force, but have no direct representation on this Committee? They have to feed it all through the Chief of the Defence Staff.

Sir Mark Lyall Grant: I haven’t heard that consideration mentioned in my time in this position. I haven’t sensed that it has been a problem and I haven’t had representations from any of the single service chiefs to that effect. I think that they would feel that they’re adequately represented by the Chief of the Defence Staff at the meeting. It is a slightly different position from the three intelligence heads, because there is no person who can speak on behalf of all three of them, so there is a reason why all three are represented separately.

Q39 Dr Lewis: My concern is that it is far easier for a politician, be it the Defence Secretary or, in particular, the Prime Minister, to brush aside the concerns of one man, however eminent and authoritative the Chief of the Defence Staff might be, than to brush aside the concerns of the heads of the armed forces as a committee or sub-committee. There was a much-reported episode over Libya when the Prime Minister was supposed to have said to the then Chief of the Defence Staff, “You do the fighting and I’ll do the politics.” This isn’t an ideal balance of forces and lacks the creative tension of wartime arrangements when the chiefs of staff usually play a central role.

Sir Mark Lyall Grant: I don’t recognise the behaviour that you mention. I haven’t seen any evidence of the Prime Minister brushing off the concerns of any members of the Committee, certainly not the Chief of the Defence Staff.

Q40 Dr Lewis: Finally on this, may I draw your attention, because you weren’t in post at the time, to one of the last reports of the previous Defence Committee under my predecessor Rory Stewart, in which a recommendation was put forward that the chiefs of staff committee could be reconstituted as the military sub-committee of the NSC? In that way, it could perhaps have a stronger voice in the counsels of the nation.

Sir Mark Lyall Grant: I take note of that. Again, I haven’t had any representations on that issue since I took up this post.

Q41 Lord Levene of Portsoken: When I was asked by the then Secretary of State to produce a series of reports on what we call defence reform, the whole issue of the relationship between the Chief of the Defence Staff and the other chiefs came up. Surprisingly, as a number of people find out as they work their way into the Ministry of Defence, there is no such hierarchy. The three chiefs, plus the Chief of the Defence Staff, are all on a par.

So, with the agreement of the then Secretary of State, what has now been put in place is that the Defence Council has the Chief of the Defence Staff and the Vice-Chief of the Defence Staff, and the Chief of the Defence Staff has his own committee of the other chiefs, and he speaks for them, so you do actually get one voice coming through. And I think that if you talk to the people who have been involved in this since then, they have taken the view that this is a better way of getting things done, and there has not been a lot of push back from the single service chiefs. It has actually worked rather well.

Q42 Dr Lewis: I am just flagging up the point that these reforms were indeed radical, and what we are entitled to do as a parliamentary scrutiny body is to assess whether in fact they are working well, or whether they have led to a degree of imbalance. That is a theme I wish to come back to in the future.

Turning to the national security risk assessments themselves, on page 6 of the document there is an excellent little paragraph from the Prime Minister’s foreword, which says, “History teaches us that no Government can predict the future. We have no way of knowing precisely what course events will take over the next five years. We must expect the unexpected, but we can make sure that we have the versatility and the means to respond to new risks and threats to our security as they arise.” That is a very firm and welcome warning about the dangers of prediction.

However, when you turn to annex A on page 85 of the document, you have the summary of the NSRA, and that gives us our famous three tiers of threats, and we are told that “Tier One risks are the highest priority based on high likelihood and/or high impact.” I have been led to understand that the characterisation, therefore, of Tier One is high impact and high probability; the characterisation of Tier Three is lower impact and lower probability; and in between we have Tier Two, which I understand to be high impact but lower probability. Am I roughly correct in the characterisation of the three tiers?

Conrad Bailey: Each of these tiers, and indeed the elements within each one, is a combination of likelihood and impact. It is certainly true to say that the combination of the two can lead you to be in Tier One, but when you get down to Tiers Two and Three it will be a mixture of likelihood and impact, and it will really depend on the individual risk to some degree. So that weighting depends on the individual risk.

Q43 Dr Lewis: How central is this ranking to the priorities that are then enunciated in the whole document? It is pretty central, isn’t it?

Conrad Bailey: The way we approached this was to take the NSRA—so, the detailed analysis—and then to take alongside that the input we had from Departments, from the Joint Intelligence Committee, from allies and from external experts, and I guess we also used that more qualitative input to develop the overall strategy.

Q44 Dr Lewis: But then, having done all that and having arrived at your three tiers—I come back to my question—how central is that to the setting of the priorities? Are you saying that basically these are just the starting point for the decisions and conclusions that you come to?

Conrad Bailey: They were an essential starting point for the strategy, and if you look at them—Sir Mark set out the key priorities. You can see terrorism, state-based conflict and cyber are all there in the priorities that came out.

Q45 Dr Lewis: I am just wondering how useful this is, because if the Prime Minister’s foreword is right and most threats that actually materialise very often take us by surprise, and he is right, how sensible is it to put some very serious threats indeed in Tier Two and Tier Three categories? For example, in Tier Three we have, “Military Attack on the UK, Overseas Territories or Bases”. Now, a military attack on the UK would be a very high impact thing if it happened, albeit, we hope, with a very low probability of happening. Should that really be only a Tier Three threat? It is something we have to prepare against because it would have such a high impact. Similarly, Tier Two includes CBRN attack, “Attack using chemical, biological, radiological”—which is presumably a dirty bomb—or nuclear.

Now, a nuclear attack on this country is the ultimate horror, yet it ends up in Tier Two, presumably because it is a lower probability. If it is sufficiently terrible a threat, we will presumably have to spend money to guard against it, even though it is a lower probability. In the end, given that there are some terribly important threats in Tiers Two and Three, how does it help us to put them into those tiers? Surely we will have to deal with them because we cannot predict whether they will happen.

Sir Mark Lyall Grant: One can parse this in too much detail. Of course individuals have different views of the specific gradations but this was our best effort at trying to get that intersection between high likelihood and high impact. Of course a nuclear attack on the UK would have high impact, but we consider it to be a very low likelihood, which is why it does not appear in Tier One.

Q46 Dr Lewis: Yes, but it does appear in our strategy because it is so dangerous.

Sir Mark Lyall Grant: That comes to the third element—the mitigation that is already in place. With some of these threats, a lot of mitigation has already been done to affect the potential damage or the likelihood of it happening. In other areas such as cyber, we felt that it was a serious threat with a high impact and that maybe we did not have enough mitigation in place. Therefore, one of the conclusions of the review was that we should have more expenditure in the area of cyber-security because we identified and predicted it as a realistic threat with a high impact and we did not necessarily have the mitigation in place.

I do not want to go into too much detail on the risk assessment. The full assessment is a secret document for a reason. We do not want to give others an indication of where vulnerabilities might lie. This is very much an unclassified version of a much more detailed and complex document.

Lord West of Spithead: Could I be supportive of what you are saying? In an improvised nuclear device used by a terrorist, one can break down all the aspects—I know because we have done so historically—to ensure that the intelligence to know whether they are out to get one is really, really high. But, actually, the levels of radiation you are willing to accept within damage zones and what you do in terms of rapid cleaning of buildings are actually quite low because of that unlikelihood. There is a difference between the various aspects of it.

Q47 Dr Lewis: To conclude, I put it to you that to say at the beginning of a report that we cannot predict what is going to hit us and then to have, central to the production of that report, a table that is at least 50% based on prediction or probability seems a little bit inconsistent and perhaps ought to be looked at again. How often will this risk assessment be updated and would this Committee get the opportunity to see those updates, albeit in an unclassified form, when they take place?

Conrad Bailey: The risk assessments are done every two years so the next one will start being worked on in 2017. That is the way the process works. I think it would be sensible for us to give you a confidential briefing at that point.

Chair: As I recall, we have had briefings previously.

Q48 Lord Trimble: You say that you are going to update the risk assessment every two years but earlier, Sir Mark, you said that you are going to make an annual report to Parliament. What things would be in the annual report?

Sir Mark Lyall Grant: The annual report will focus primarily on the implementation of the strategy and the commitment in it to update Parliament on how we are delivering the agreed strategy. The main focus will be on implementation, but if there are developments that warrant commenting on, they will be included in the annual report to Parliament. 

Q49 Lord Trimble: It depends how you interpret what is meant by the term “developments”. We were talking earlier about things having higher and lower probabilities. Your view of how you rank those things, which depends on the likelihood of their happening or not, might change. Would that be a development?

Sir Mark Lyall Grant: As Conrad just said, the risk assessment is done every two years, and I don’t think we would be looking to change it before that. The tradition is that it is done every two years, but if something absolutely fundamental changes, all bets are off and one can review the whole strategy. As I said, one of the measures of the success of the strategy is that we don’t have a review of the strategy within a five-year period. Of course, there may be unexpected developments, as the Prime Minister highlighted very clearly in the foreword. He made the point that we must not over-engineer it, because there will be unexpected developments, as there have been in the past five years. Then, of course, we can look fundamentally at the review itself.

Q50 Baroness Falkner of Margravine: Staying with the risk assessment, I notice that there are two categories of economic and financial crime: financial crises and hostile foreign action against economic interests, which are both Tier Two. You described the expertise in your Department, but do you keep a watching brief on those things, and to what extent is your expertise in this ongoing?

I will give you three very brief examples. At the moment, there are approximately £27 billion-worth of Russian investments in the UK, and yet our relationship with Russia is deleterious to our interest in Syria, as well as in Europe. On the other hand, there is a lot of concern at the moment in financial circles about a downturn, in terms of financial risk, this year across the globe. Then there is an issue to do with foreign banks, which is that a lot of people think that a failure to prevent economic crime should be an offence. Do you believe you are on top of those risks, which are not within the immediate purview of security but can have an extraordinary impact on employment, the economy and its welfare?

Sir Mark Lyall Grant: Those are all very good points. I hope the answer is yes, we do have that expertise. Hostile foreign action incorporates a number of activities, including intelligence activities against the UK’s interests. That is something that the intelligence agencies are very focused on defending against. In terms of the financial issues, we have discussed in the National Security Council corruption, anti-money laundering and the risks to the City of activities there and the involvement of the dependent territories. All of those issues have been discussed by the National Security Council, and they will be discussed again in preparation for the anti-corruption summit that the Prime Minister is hosting in May.

Q51 Baroness Falkner of Margravine: I wanted to go a bit broader than that. Were lessons learned from 2008, and do you have expertise that assesses and analyses the prospect of another financial meltdown, banking-driven or otherwise?

Sir Mark Lyall Grant: There are two aspects to that. First, the Chancellor and the Secretary of State for BIS are members of the National Security Council, so they bring their expertise to bear in the discussion. There is another secretariat in the Cabinet Office—the European and Global Issues Secretariat—which is primarily focused on those sort of financial cross-cutting issues that are discussed in the G7 and G20, for instance. It has a lot of expertise in that area. We work very closely with it on issues like corruption and financial crime, for instance. On serious and organised crime, the main expertise lies in the Home Office, and those are issues that they bring to the National Security Council every now and again. Yes, there is expertise. I can’t pretend that it is all in the National Security Secretariat, but it is certainly available in Departments and in the Cabinet Office more widely.

Chair: I want to bring in Lord Hamilton, and then I want to move on if we can, because we have other issues.

Q52 Lord Hamilton of Epsom: Margaret, I had this argument with Lady Falkner before you came in. She is very keen to broaden every aspect of risk to include absolutely everything you can possibly imagine.

Baroness Falkner of Margravine: No, not every aspect. I identified three distinct areas.

Lord Hamilton of Epsom: Way outside the remit. If we do that, I think we blunt our approach to this. Would it not be helpful to define the prime risk as being to the lives of people of this country, and to work backwards from there? If we broaden this too much, we will end up completely all over the place. It seems to me that a mass terrorist attack, probably on London, is the thing that we should be really focusing our minds on. We have seen a warning in what has happened in Paris, and it seems to be very likely that one day the terrorists will get through and will succeed where to date they have been thwarted. Very large numbers of people may be killed in one of the cities of this country. When you think of that as the primary threat, it strikes me that virtually all else pales into insignificance.

Sir Mark Lyall Grant: I have some sympathy with that view, and I think the strategy does bring that out. We have identified terrorism as one of the four major risks. It is up there in lights throughout the document precisely because of the high likelihood and high impact that such attacks have. Likewise, we reflected that in the overall objectives. “Protect our people” is the No. 1 objective, and that is absolutely there as well. I wouldn’t want just to restrict it to that and say that everything else is subsidiary to it, because I think there are other threats that are important and that need to be taken into account, but we have protecting the British people and addressing the terrorist threat right up there as the No. 1 issue.

Q53 Chair: We are going to move on in a moment, Sir Mark. Can I just put it to you that, in the past, the Committee has recommended—I am pleased to hear what Mr Bailey said—that there should be a classified version of the risk assessment and the national security strategy? Equally, however, this Committee would like to see them both. You might like to take that on board and take it away. I do not mean in any kind of public session, but to have a private briefing.

Sir Mark Lyall Grant: As Conrad said, we are very happy to give you confidential briefings. We are at your disposal.

Chair: Thank you very much.

Q54 Mr MacNeil: I would like to probe how this interplays with energy. There are currently some investments in what is known as critical infrastructure, particularly at Hinkley Point, which could be 33.5% owned by the Chinese if it gets going, with other further investments, according to EDF—such as at Sizewell and Bradwell—dependent on Hinkley Point happening. Is there any point that you can see where investment poses a threat to the UK’s security?

Sir Mark Lyall Grant: That is a balance that is considered by the Government, and was considered in the case of Hinkley Point C. There is a committee called the infrastructure security group, which is chaired by one of my deputies, and it meets regularly to look at all cases of inward investment into the United Kingdom in the critical infrastructure area to ensure that that investment is consonant with our national security. So there is a committee that looks specifically at that issue, and if it becomes a strategic issue it will be raised up to the National Security Council to discuss and take decisions, as was the case with Hinkley Point.

Q55 Mr MacNeil: On Sizewell, last week EDF had a finance hiccup, so the threat might be more from France than from China, which I am sure is not something that was envisaged. There is a threat with the finance, and there is also a threat with the technology. Three EPRs are in construction: one in Finland, which is nine years late and three times over budget; one in Flamanville in France—again, three years late and three times over budget; and two in Taishan in China, which are two years late. As well as the finance issue, there seems to be a technology problem. What is your view on that?

Sir Mark Lyall Grant: I do not want to discuss particular policy issues. These issues are taken seriously by the Government. The lead Department is the Department of Energy and Climate Change, which regularly writes to National Security Council members with proposals and suggestions for policy issues. An official body, chaired by one of my deputies, looks specifically at critical national infrastructure and security questions. If those questions are sufficiently acute and important, they will be brought before the NSC to make a decision.

Q56 Mr MacNeil: At what point does it cease to be an energy issue and begin to be a security issue? Is there a definition of a problem in energy that would cease to be an energy problem because it is so important that it moves out of the normal commercial sphere and goes into security?

Sir Mark Lyall Grant: I am not aware that there is a specific definition, but I may be wrong. I will write to you separately if I am. Clearly, if you are talking about Chinese or Russian investment, or about a monopoly by an overseas country on our critical national infrastructure, there are potential national security implications, and that is what the official committee is there to look at. If it is considered by officials to be sufficiently serious to warrant ministerial attention, it goes to the National Security Council.

Q57 Mr MacNeil: There is a knock-on effect, because the head of Hitachi is concerned about a refinery development in Anglesey, at Ynys Môn in Wales. There are other concerns that I have heard about in the refining sector regarding imports of diesel. Can you give a quick summary of your view of UK refineries and what they produce, and what the loss of a refinery or two might mean for the security of fuel supplies?

Sir Mark Lyall Grant: Energy security is clearly a national security issue; it is extremely important that our energy supply is secure. How we make it secure is a policy question for Ministers—there are different ways of skinning that particular cat—but if there are concerns that somehow our energy supply may be interrupted or is vulnerable to pressure from a foreign Government, that potentially becomes a national security issue that Ministers need to address.

Q58 Mr MacNeil: If a Government Department were seen by industry as having problematic policies—if the Treasury, for example, had a taxation policy that worked to help overseas refineries more than UK refineries—would you play a role in trying to change Treasury policy to create even ground for UK refineries, to ensure the security of those on the islands?

Sir Mark Lyall Grant: I am sure that that is a hypothetical question.

Q59 Mr MacNeil: Not quite, but let us say that it was—would you have a role?

Sir Mark Lyall Grant: As I say, if it was a national security question it would go to the official committee, and if it was sufficiently important it would go to Ministers. I cannot say more than that at this stage.

Chair: I am going to bring in Mr Wright.

Q60 Mr Wright: Thank you, Chair. Following what Angus was saying, how far do you drill down into the industrial supply chain? This is not necessarily about inward investment but about essential present UK capacity. For example, in the replacement of nuclear power stations or the replacement of our nuclear submarines, to what extent would you say that a company had a capability or capacity that was so important that, first, we could not allow it to be sold to an overseas investors and, secondly, we could not allow it to fail, so there would need to be some sort of propping up of any financial concerns. To what extent would you do that?

Sir Mark Lyall Grant: There are some companies that fit into that category, and Conrad may want to say a little more about certain key areas for us and our industrial base. The Government can intervene to prevent certain shares from going overseas and so on. You are also talking about resilience, and the resilience of our critical national infrastructure is a national issue, as we have seen in flooding. One of the lessons learned from the recent floods is the need to focus more on the protection of critical national infrastructure, because beyond the flooding of individual homes if a substation is flooded, many more householders are affected. That is considered part of the national grid, and is therefore critical national infrastructure. Protecting it and ensuring that it is resilient is a national security issue, and we play a role in addressing that.

Q61 Mr Wright: That is not necessarily what I was thinking about. I was thinking about a company that might make sophisticated widgets.

Sir Mark Lyall Grant: As I say, there are companies in that space, but perhaps, Conrad, you want to say something.

Conrad Bailey: I think we set out in the document a number of areas where there could be those sorts of exceptions around highly classified or sensitive technologies, where things are governed by export controls and treaty restrictions, where we need to maintain particular capabilities to ensure interoperability with allies and where there are strategic military or particularly economic benefits from long-term collaboration with others. We set out some of those areas in the prosperity section of the document.

Chair:  I am going to let Lord West speak and then go back to Mr MacNeil to finish this session.

Q62 Lord West of Spithead: This is slightly supportive of what Mr MacNeil was saying. We know that the US has said quite clearly that it will not use any Huawei equipment in any of its communications systems. I am not aware of there being a full and deep discussion within the National Security Committee about those aspects. I know you probably can’t tell us, but I am not aware of that. Clearly, that sort of debate is absolutely crucial because if we have routers and so on with a company and the Americans say we cannot trust them because they are upgraded by software from China, there has to be a full debate on that. Is that done outside the National Security Council? Is outside advice given? I am not sure how that is done and it applies to the things that Mr MacNeil was raising.

Conrad Bailey: I think that those issues are discussed initially in the Committee Sir Mark referred to and then are escalated up to the NSC when necessary.

Q63 Mr MacNeil: We are a scrutiny committee and we must scrutinise that certain things are happening and we must be satisfied that certain things are happening, I am not sure we are. Regardless, the final point I want to raise is: when overseas investment arrives, can the Government veto that on national security grounds, and has that happened in the past?

Sir Mark Lyall Grant: Certainly the Government can veto that in many cases. As I say, there are specific companies or industries that are protected by golden shares and so on that the Government have and they can veto takeovers or a certain percentage of shares being bought by foreign companies or countries. Certainly there are cases when that power has been used.

Q64 Mr MacNeil: But the critical point that Lord West raised was about, say, a Chinese company holding the strings of software. Would the Government look at it from that point of view and say, “This is far too critical to be left outside the UK, so we will veto it.”

Sir Mark Lyall Grant: That decision can be made. The one in my mind refers to Russia and North sea gas rather than China, but decisions have been taken in recent months along those lines.

Chair:  Lord Mitchell will move on to the final section.

Q65 Lord Mitchell: Thank you Chair. Sir Mark, I would like to address the issue of cyber-security. It is an environment that is changing so fast and, even more than terrorism, it is so difficult to predict the areas from which it will come. Indeed, it seems to me that the key criteria are just a lot of very clever people gathered together in any sort of state you can think of—probably a totalitarian state—who do not have our best interests at heart and their ability to move very quickly. I would like to ask you one question, but in replying could you say something about the quality of the people we have? Do we really have the high quality IT and computer scientists to be able to combat what is happening around the world? My specific question is: given our enhanced capability for combating cyber-security, what does that entail? The budget is now £1.9 billion.

Sir Mark Lyall Grant: The reason the budget is £1.9 billion over the next five years, which constitutes a significant increase in the amount of money spent on cyber, is that we have identified in the strategy that cyber is a top-tier risk, that it is a major threat and that there are some vulnerabilities that need to be addressed. The aim of the additional expenditure is to address those weaknesses and strengthen our resilience against cyber-attack, whether that attack comes from a foreign Government or indeed from an individual or a criminal group.

I think it is fair to say we have struggled to keep pace hitherto with the threat, and the additional expenditure is designed to do that. It will strengthen the UK skills base to make sure that we have the right people who can apply their minds and their careers on cyber-security.

We need to secure the critical national infrastructure. We need to simplify the architecture of cyber, which at the moment has been relatively siloed, so one of the proposals—the commitments—in the SDR is to establish a new national cyber centre, which would have both an inward-facing and an outward-facing function to help the private sector strengthen their security. Practically every week, or certainly every month, we see companies being hacked and individual data being stolen. These are all vulnerabilities for companies and we can use our expertise and advice to help them strengthen their defences.

So I think there is a skills gap, and this additional money will try to address that problem.

Chair: I have three colleagues who want to come in on this. Mr Vaz.

Q66 Keith Vaz: Sir Mark, this is the biggest area where we probably need to do more work first of all in terms of terrorist organisations like Daesh, which manage to amass a fortune because they are able to attack the bank accounts of individual people, and also because it seems like a victimless crime in the sense that people who have money taken out of their accounts get their money back, and they are not concerned as to who has done it so long as they are recompensed. The Government promised £1.9 billion over five years. How much has actually been spent so far and how many people have been recruited to deal with what you correctly say is a skills shortage?

Sir Mark Lyall Grant: The additional expenditure will only kick in from April. In that sense, none of that additional money has been spent, but a lot of work is going on in building on the existing national cyber-security programme, which already exists, but more money will be put into it as a new programme comes into play. That current programme runs out in 2015—

Conrad Bailey: That was £860 million.

Sir Mark Lyall Grant: The £860 million runs out in 2015 and will be replaced by a bigger programme that will start in April this year, as I mentioned. That will allow more people to be recruited and more skills and training to be done. I cannot give you the exact numbers, but I am sure that I can provide that for you.

Q67 Keith Vaz: This is super-geek stuff, isn’t it? The ordinary civil servant in Whitehall would not know how to deal with cybercrime, just as, with the greatest respect to colleagues around this table, I do not think we would know. How do you know that you are dealing with the right people, in terms of procurement, to avoid the catastrophe of the e-Borders programme in the Home Office? Clever people came to Home Office Ministers under the previous Government and promised them the earth as far as e-Borders was concerned. They delivered absolutely nothing, but it cost us £750 million. How do we know we are dealing with people who can deliver?

Sir Mark Lyall Grant: It is a constant struggle.

Keith Vaz: Sorry, I wasn’t blaming you, Damian. I meant the Government before you.

Damian Green: I cancelled it.

Keith Vaz: Exactly.

Sir Mark Lyall Grant: Public sector salaries are certainly not consonant with what you can get in the private sector if you are a skilled geek, as you say, Mr Vaz. We need to make sure that we get the right people on the right side so that we can defend against increasing threats. It is reasonably clear to me as a layman that it is much easier to hack than to defend against a hack. There is a gap. As the attackers get more skilful, we need to get even more skilful to close the gap. I don’t know whether we will ever be able to do it fully. There is certainly a long way to go. I have talked about the extra money that goes in. There are also 1,900 additional members of the SIA—the intelligence services—who are being funded as a result of this review.

Q68 Keith Vaz: How many have been recruited since the last one?

Sir Mark Lyall Grant: I cannot give the exact recruitment numbers, I am afraid, but GCHQ are certainly taking on more people and have trouble housing them. As you can tell, there is an expansion when they can no longer house them in their estate. There are additional numbers. They are raising standards.

You will have probably seen in the newspapers that in Robert Hannigan’s Christmas card list, he put out a little quiz to test capabilities, and out of 600,000 people, no one has solved it yet. Clearly, we have some expertise in house that can still defeat external people. We need to use that and deploy it not only to protect the Government’s systems but to help private industry do their own protection. Some of the recent hacking of the private sector—when one looks into the defences they had, frankly they were pretty low standard.

Q69 Keith Vaz: Just to clarify, we have recruited more people to GCHQ but there is no accommodation to put them in there—is that what you are saying? We have an accommodation crisis for our spies.

Sir Mark Lyall Grant: There are issues about estate that we are working on to make sure that the additional numbers, which are quite considerable, will have somewhere to work. There is no crisis of accommodation, Mr Vaz; let me assure you of that.

Q70 Damian Green: You talk about very clever people, and many of them work for the big private sector computer companies. One assumes that Google and Facebook in particular probably know more about British citizens than our own security services do, simply because of the way we all give information freely to them. How co-operative are Google and Facebook specifically with the efforts that we as a Government and as a country require of them? What strategy do we have to try to make them more helpful?

Sir Mark Lyall Grant: We will have to come back to you on that one.

Q71 Mr Wright: The NSS 2015 states that the national capabilities against cybercrime will be “developed and operated by the private sector.” What does that mean? Who is that? Who owns the intellectual property as a result of that? Is it the British Government or is it the private sector, and can Government not do that?

Sir Mark Lyall Grant: Government can certainly do a lot, but Government is not responsible for cyber-security for all of the private sector. The private sector has to take its own responsibility and has to spend its own resources on protecting itself. You only have to look at the sort of companies that have been attacked in the past 12 months—Sony and companies like that, the Montana health department and all sorts of public agencies and private sector agencies. Each organisation is responsible fundamentally for their own cyber-security.

The Government can help with that. We can help give assurances. We can help test those defences. We can help with expertise. We can help with training—we do that, and part of the extra money will go in that direction, but it is not the Government’s responsibility to look after the entire cyber-security of the country. It is our responsibility to look after certain key national infrastructures that could also be attacked and are in the public domain, and that is certainly us.

It is our responsibility to ensure cyber-security in Government systems, and it is our responsibility in the national health service, for instance, to protect medical records of individuals. So yes, the Government has a responsibility and will play its part, but I don’t want to suggest that that absolves the responsibility of every single organisation for their own cyber-security.

Q72 Mr Wright: And where would the line be drawn? HSBC, for example, suffered a cyber-attack a couple of days ago. A lot of data on the private bank accounts of hundreds of thousands of customers might have been compromised. Is that a national threat? To what extent does it become a national threat? Do you have a sort of line that you would draw?

Sir Mark Lyall Grant: I don’t think there is a hard line you can draw. HSBC is a private company. It is a well-resourced company, and it is up to them to ensure their own cyber-security. If they need advice from the Government, the Government can certainly help, and we have the ability to do that. Indeed, there is a team that works for me that does that sort of work. But it is fundamentally their responsibility.

Chair: I have Sir Gerald, and then Baroness Falkner and Lord Mitchell want to come back at the end. May I remind colleagues that we are now close to 6 o’clock, and Sir Mark and Mr Bailey have been with us for quite a long time?

Q73 Sir Gerald Howarth: Thank you, Chair—sorry to prolong this. Philip Hammond, when he was Secretary of State for Defence, made the announcement to the House about two and a half years ago that we were engaged in offensive cyber. I am not going to ask you to tell us what you, or the Government, are doing in the field of offensive cyber but, given your position as the National Security Adviser, I wonder whether you, or indeed Conrad Bailey, could tell us how you see offensive cyber helping to strengthen Britain’s protection from cyber-attack as well as helping our capacity to inflict damage upon a potential enemy.

Conrad Bailey: In the section on protecting our people we intentionally started off by focusing on conventional deterrents and the full spectrum of tools that we had available as Government, and the list obviously included the armed forces—including, ultimately, the nuclear deterrent—diplomacy, law enforcement and offensive cyber. I think it is one of those potential tools that we have, that we can use hopefully to deter adversaries, and if necessary deny them the opportunity to attack us. So it was very much in the thinking as we went through and developed the strategy and, indeed, as we work across the National Security Strategy.

Q74 Sir Gerald Howarth: So it is central to the strategic thinking.

Conrad Bailey: It is one of a number of elements.

Q75 Baroness Falkner of Margravine: Sir Mark, I want to go back to when you were talking at the beginning of the session about advising the Prime Minister on international strategic issues. You will be aware, of course, that when Xi Jinping, the Chinese President, went to the United States it was more or less well known that there was a certain building in Shanghai that was very active in cyber-attacks on US and other institutions. During that visit, President Obama got President Xi Jinping to give a public assurance to the US that China would not allow cyber-attacks, neither state-sponsored nor private ones, on other countries. It was more or less along those lines. I do not remember the exact words but there was a pretty good assurance.

Xi Jinping then came here to the United Kingdom. In those kinds of circumstances, we know of other countries—friend and foe by the way, thinking about the arrests in India today—where there is a permissive environment for private individuals, if not the state itself, to involve themselves in cyber-attacks on our interests. Do you advise that public assurances be given? Do you have advice that private conversations are had? And, on the whole, do we actually bring these up with our partners in uncertain terms?

Sir Mark Lyall Grant: First, in a communiqué between the UK and China, during the state visit, there was a very similar agreement to the one signed with the United States. There is also a follow-up dialogue that is taking place with China as we speak, and cyber will be part of the broader security dialogue, which I am leading, as I mentioned, when I go to China later this month. So that is very much part of our dialogue with China, and that issue was raised during the visit.

Q76 Lord Mitchell: I just want to pull a couple of things together if I may. We spoke earlier in this session about potential exposure from, say, China in respect of Hinkley Point and others and their involvement, and Mr Green just raised a question to do with Google and others. I think it is just worth considering that some of these what I would refer to as west coast bullies have, in their behaviour, which we see in the press every day now, been hardly as concerned with the interests of the United Kingdom as they might be. They have amassed the most amazing amount of information on every single person. Facebook has 30 million accounts. Apple, worldwide, has 1.3 billion accounts, I think, on iTunes. These companies, that are highly skilled in anything to do with digital information and therefore cyber, have massive amounts of information, and I suppose all I am really saying is that these companies too might not have our best interests, as a nation, at heart.

Sir Mark Lyall Grant: All I can do is comment on the first part of your question, about Hinkley Point. The fact is that the full implications—the national security implications, the economic implications—of Hinkley Point C were discussed in the National Security Council, and the Government collectively took the decision that it was a good deal for the UK and should be promoted and welcomed. That was what happened, but it was after a thorough discussion of all the different implications.

Chair: Thank you very much, Sir Mark. I just take the opportunity to observe that Mr Vaz, I think, elicited from you a remark about public sector salaries, in terms of getting the right kind of people to deal with cyber-threats, and it strikes me that this might be a classic occasion when it is the job of the National Security Council to tell the Treasury which way is up.

Thank you very much indeed, both of you, for your attendance. I am sorry that we have kept you for so long, but it has been extremely interesting and we are all very grateful. The staff will be in touch to facilitate some of the further dialogue that we touched on.

              Oral evidence: Work of the National Security Adviser                            21