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My Lords, in moving Amendment 17, I will also speak to Amendment 28, which is closely related. Amendment 17 is in part a probing amendment about what constitutes an incident and the circumstances in which reporting is obligatory. It does not affect the amendment that I think the Government will move immediately afterwards.
As drafted, Clause 15 gives the very strong impression that an incident “capable of having” an adverse effect on security must be reported. If this is the case, it constitutes a much wider definition of what should be reported than if it were described as an incident “likely to have” an adverse effect. I think it is a widely held view—it is certainly the case in the industry and a point with which I agree—that “likely to have” would be far too wide a definition and would lead to extensive overreporting and an undue and unnecessary burden on regulators. Looking at the drafting, I asked myself what was the point of the “capable of having” definition in Clause 15.
I shall put forward a hypothesis. It would be very helpful if the Minister could confirm that it is a correct understanding of the existing draft, and that it does not mean that all incidents capable of having an adverse effect on security will need to be reported. Is it right to say that the definition in Clause 15 of what constitutes an “incident” applies across the whole of the regulations, and therefore feeds into security as well as reporting duties? That is to say, firms have a preventive duty to defend against what could be and what could happen, as well as what is likely to happen. That is a preventive duty. Can the Minister confirm that the phrase “capable of having” means that firms should have adequate preventive policies, but it is not—this is where the point comes in—the trigger for an incident to be reported, because in each case this requires it to have affected or be affecting the system?
I am making a distinction between “capable of having”, which applies to a duty to pursue preventive policies, and the trigger of the duty to report, which lies not in the phrase “capable of having” but in “likely to have”. Then there are examples of what I am saying in the regulations, and I can cite them: Regulation 11(3)(a), on page 21 at line 35; Regulation 12A(2)(a), on page 26; and Regulation 14E(2)(a), on page 29 at line 27. If the Minister can confirm that, within existing structures, what I have said is correct—there are no circumstances in which “capable of having” would be the reporting trigger—that would be a very helpful clarification. I will listen closely to the Minister’s reply on this point.
There is a “however”: there is a snag when it comes to the introduction of data centres, and that is the object of my Amendment 28. Data centres sit outside the existing structures that I have just talked about but, as yet in the drafting, there are no reporting trigger regulations for them. It is intended that the data centres should be, in future, big players in the system, so it matters that there is a gap in our information about the circumstances in which they would have a duty to report. It is an odd anomaly. New Regulation 11A(3)—on page 23, from lines 13 and 14 onwards—makes reportable
“an incident which could have had … a significant”
effect, whether or not it had any impact at all or anything was affected. As there is no list of factors for judging what constitutes a significant attack in the Bill, it makes it quite difficult to interpret.
For the operators of essential digital services and managed service providers, such factors are set out expressly in the new regulations in the Bill. However, they are absent for data centres. Why is this the case? What is the rationale for what appears an anomaly? It means that, when reporting an incident, a data centre has to do so when any of the following have had, or were likely to have,
“a significant impact on the operation or security of the network and information systems relied on to provide the data centre service … a significant impact on the continuity of the data centre service … or … any other impact, in the United Kingdom or any part of it, which is significant”.
These are very wide definitions of liability to report, and the discrepancy between them and those applying to other operators seems neither sensible from a security point of view nor fair for different business circumstances, as there will be all sorts of different businesses using data centres.
Although I hope that this will not be the case, I fear that the Government may say that the thresholds and factors for all categories of business will be set out in secondary legislation and subject to consultation. I ask the Minister to think hard about the adequacy of that reply. We are talking here about a penalty-backed duty, which is the core element of the Bill; it is not some minor point. It would seem a poor legislative approach in a foundational Bill for a new regime to fail to define the factors leading to a penalty for a significant segment of providers, when there are indicators in the Bill for other categories of provider. Those other players have different, less demanding and more sensible terms for a trigger for reporting. If data centre regulations need to be different from those for the other players that I have mentioned and the rest of the market, can the Minister explain why? It is the kind of complexity that will give the sectoral approach to regulation a controversial reputation, because it immediately raises the issue of making different rules for people who are apparently, in practice, in the same category. I hope that is not the case and that the issue can be resolved by remedying the drafting.
To sum up, in addition to my request for a clear statement from the Minister about the trigger for a duty to report in existing structures being related to the likelihood of an adverse effect on security and not on capability, I hope she will also take seriously the need to level the playing field for data centres on this issue and remedy what seems an important defect in the drafting of the Bill. I beg to move.