3
Joint Committee on the National Security Strategy
Oral evidence: National Security Capability Review: A Changing Security Environment
Monday 29 January 2018
4.17 pm
Members present: Margaret Beckett (The Chair); Lord Brennan; Lord Campbell of Pittenweem; James Gray; Mr Dominic Grieve; Lord Hamilton of Epsom; Lord Harris of Haringey; Baroness Healy of Primrose Hill; Baroness Henig; Baroness Lane-Fox; Dr Julian Lewis; Lord Powell of Bayswater; Tom Tugendhat; Stephen Twigg.
Evidence Session No. 1 Heard in Public Questions 1 - 20
Witnesses
I: Robert Hannigan CMG, Director GCHQ (2014-17); Lord Ricketts GCMG GCVO; Sir John Sawers GCMG, Chief of the Secret Intelligence Service (2009–14), and Permanent Representative of the United Kingdom to the United Nations (2007–09); Sir Adam Thomson KCMG, United Kingdom Permanent Representative to NATO (2014-16).
Robert Hannigan, Lord Ricketts, Sir John Sawers and Sir Adam Thomson.
Q1 The Chair: Thank you very much for coming, gentlemen. It is very nice to see you all again and I hope we will have a useful session. We are hoping to avoid asking each of you to answer every question, so we will mix it a bit. No doubt you will want to do that as well.
I will ask you all to have a bit of a go at the first couple of questions, because our first question is about the capability review itself. Is the national security capability review a good idea?
Lord Ricketts: Thank you for inviting me to join the Committee. I can understand why it was thought a good idea to have the capability review, given the extent of the disruptive changes that have happened since the 2015 SDSR, not least President Trump and Brexit, which are two pretty major strategic changes in the landscape. I cannot understand why it was limited to just capabilities, since that is only one part of the picture.
A considerable part of the reason for doing it, as far I can see, is because of the changes in the strategic backdrop. Separating off capabilities to look at them in a vacuum seemed to me odd. I noted that Sir Mark Sedwill said to you in evidence before Christmas that there was a bit of strategy and a bit of policy in it as well, so perhaps it is just a misnomer. I was surprised that they had not refreshed the National Security Risk Assessment as part of the review, because that seems to me an important part of the baseline for deciding which capabilities need to be changed.
Lastly, I do not understand the reason for separating off defence into a separate discussion, since we have all spent much of the last 10 to 15 years working to ensure a really joined-up approach across government to crisis management and conflict. The National Security Council’s whole raison d’être was that as well, so I do not understand why it is a good idea to separate it off. I can imagine the politics behind it, but it is backwards step to separate out defence and deal with it separately from other national security issues.
The Chair: Would you go so far as to say that the only reason you can think of for doing it is because of the politics behind it, or is that taking you too far?
Lord Ricketts: Yes, as far as I can see, that must be the reason, because it had been part of the package until a late stage in the process. It will now be separated off and done separately. I do not understand how you can set priorities and make choices across the spectrum if you are doing it in two separate boxes, and I worry that it will reintroduce competition between departments rather than the joined-up approach that certainly we had been following.
Q2 Lord Powell of Bayswater: Can one really have a defence capability review separate from the public spending review?
Lord Ricketts: There is that as well. I do not think it makes sense to have a defence capability review separate from other national security priorities, because they are all part of one continuum. If the defence part is not going to be fiscally neutral but the other part is, that does not seem to me to make any sense either. I am a bit confused as to what we can hope to derive by way of good policy from doing this separately.
The Chair: We are not clear whether anything is still fiscally neutral. It is not clear from any statements we have seen.
Lord Hamilton of Epsom: Is it not a worry in government, though, that we are very much tied into this 2% of GDP for NATO, and that if we muddled up defence spending with everything else, we would not be able to clearly identify that we were spending that 2%?
Lord Ricketts: I do not really follow that. You can always account for the spending of the MoD and defence separately, but if you are trying to make choices and set priorities, whether you want to give priority to cyber or to combatting terrorism, whatever it may be, it makes much more sense to look at that across the whole spectrum of the £56 billion a year that Sir Mark Sedwill was talking about as the total envelope for national security, if you like, than simply looking at defence. We can always make clear to NATO that we are spending 2%, and, indeed, that it is rising without having to indulge in a separate review of that.
Sir John Sawers: I agree with everything that Peter has said. The only point I would add is that the problem the national security community is facing at the moment is largely in defence because of the hole in the defence budget. One can identify the problems. One component seems to be the fall in the value of pound, which has affected all the important purchases that the 2015 review identified: for the Joint Strike Fighter; the maritime patrol aircraft, which of course was the big hole in the 2010 review; the drones capability; and the attack helicopters. All these are being purchased from the United States and thus purchased in dollars. The fall in the value of the pound has added to those costs.
Some of those programmes have suffered cost overruns, although I gather equally that they are being managed better than some previous defence programmes. There is also the question of efficiencies identified in 2015 in the Ministry of Defence which have not been quite as forthcoming as was planned.
The only caveat I would add to what Lord Ricketts said is that you would not want to fill that hole in the defence budget by robbing from intelligence, development or diplomacy.
Sir Adam Thomson: Thank you for the opportunity to address you. I agree with John Sawers on that last point about the defence budget. I am not sure I wholly agree with Lord Ricketts on separating out the defence programme. Of course, it makes absolute sense to look at defence alongside the other elements in the £56 billion national security programme, but some of the defence challenges that are being addressed will take much longer to come up with answers than the NSCR process will allow.
As John Sawers has just said, there are very big spending challenges. Defence was only one of the 12 strands of the NSCR but the largest of them by a long way, so it is slightly the elephant in the room. I can see reasons other than just politics for separating it out at this stage, provided, as we are being told, that it will take full account of the national security capability review.
In response to Lord Powell, I would say that it is possible and would make perfectly good sense to look at a set of national security capabilities without doing a full spending review. There is no perfect way of coming up with the size and shape of a pie. However, you can choose to decide that your pie is of a certain size and focus quite meaningfully on what the ingredients are and how you are going to mix them together. Just two years after the 2015 review, with the National Security Adviser telling us that at the outset the National Security Council had looked at the overarching national security strategy and concluded that it still held up reasonably well, and it was not the priorities within it but the pace of the threats that was proving really challenging, a smaller exercise in 2017 was a reasonable call.
Robert Hannigan: Thank you for inviting me. I was involved in drafting the first national security strategy when Gordon Brown was Prime Minister. The intention was precisely to bring together security, intelligence and defence, so I rather agree with Peter that pulling it apart now does not seem very coherent. Cyber, of course, is a perfect example of why taking it separately does not work, because it cuts right across public safety, security, intelligence, through to defence, and it is quite hard to see how you break it up.
Q3 The Chair: Sir Adam said, if I heard him correctly, and I know this to be the case, that in 2015[1] the National Security Council reached the conclusion that not enough had changed to make it worth while re-visiting the original national security strategy. Do you still share the view that that was a correct judgment?
Lord Ricketts: Personally, I do not. Both the change of President of the US and Brexit are very major changes in the strategic landscape within which British national security policy is being made, and neither, for perfectly understandable reasons, really figured in the 2015 SDSR. It seems to me odd that we should continue our grand strategy as set in 2015 through to beyond 2017-18 without pausing to decide how that affects Britain’s role in the world.
Britain leaving the European Union is an enormous change in the way Britain will deal with the world from now on. That seems to me to be enough of an argument at least to have another look at the national security risk assessment. I think Sir Mark told you that it would be done during 2018, but it does not seem to be being done as part of this capability review exercise. Our strategy and the budgets are not fully part of the refresh that is going on. That seems odd to me, and I must say I am surprised by that.
Sir John Sawers: One of the important priorities in the 2015 review was maintaining and upholding a rules-based system based on international institutions and multilateralism. An important and largely unwelcome development in US policy over the last year or so has been accelerating the move towards a world based on great power politics and away from the multilateralism that we have been building for the last 25 years. These are important factors that need to be worked into our own approach. It does not mean that we cannot do so, but these changes are quite significant. We do not quite know how far they will go, but one of the core elements of the 2015 review has brought this more into question than we would have liked.
Q4 Lord Hamilton of Epsom: We used to have defence reviews. The problem was that you made assumptions about what was going to happen. I was not there for the Falklands, but, as you know, the defence review before the Falklands was going to get rid of the carriers, and if that had gone through we would not have been able to retake the Falklands. Tom King is not with us. He got up and announced options for change. He did say that we had to be ready for the unexpected, and Saddam Hussein invaded Kuwait weeks later, on which we had no intelligence whatever. Does it not worry you that you make these assumptions, which you put into these reviews, and they all turn out to be wrong?
Sir John Sawers: Certainly you have to build capability for a great deal of uncertainty in the world, but you cannot have capability against every conceivable threat. You somehow have to prioritise the threats that you perceive and assess the intent of those who might want to do you harm, as well as their capabilities, against your own priorities. You need a rational approach to it while having a very sober and humble approach to the fact that you cannot predict the future.
Robert Hannigan: I would add that the four challenges outlined in 2015 are still the right ones. The context has changed, in the way in which John and Peter have described, but they are not the wrong challenges now. I agree that we will always miss things. We probably collectively missed the rise of Daesh, and that was true not just in this country but in the US. You have to make some assumptions. The previous strategy talked about having a “flexible posture”. The danger of that is that it can mean almost anything.
Lord Ricketts: May I quote Eisenhower to the Committee? Eisenhower said: “Plans are worthless, but planning is everything”. Going through the discipline of these reviews is useful, even if it cannot be predicted exactly what will happen the following year.
Q5 Dr Julian Lewis: Something could be said for prioritising threats if we had any sort of track record of accurately predicting them, but the reality is that the vast majority of conflicts in which we were engaged throughout the 20th century—and there is every sign that this still applies—were completely unpredicted.
Surely the approach, especially when you are dealing with military threats, has to be to construct your armed forces in such a way that they are flexible and capable of regeneration rather than trying to say, “We don’t think this or that particular sort of threat will materialise, so we will get rid of an entire capability”—such as our amphibious capability, to pick one example out of the air. Is that not the case? Prediction has been absolutely hopeless, has it not?
Sir Adam Thomson: It is right, as Robert Hannigan has just said, to do your best to predict, even if you recognise that you are going to be wrong. The key, as you say, is to give yourself a range of capabilities. There is a risk in national security strategising that you go with the fashionable issue of the moment and put too many eggs in one basket. I am a little concerned that that is what we are seeing at the moment in identifying Russia as the top state-based threat. While I was at NATO you could see the pendulum visibly swinging from expeditionary back to a Cold War capability, and it may swing too far.
Sir John Sawers: I would not be too harsh, Dr Lewis. It has been predicted in successive reviews that we would face terrorist attacks and cyberattacks, and we needed to have the capabilities to deal with this. Whether the war was going to be in Iraq, Syria, Libya, or wherever, you could have had a different view on it, but the likelihood of there being some break-up of dictatorships in autocratic parts of the world was also quite likely. We could well have got drawn into that and we had the capability to deal with that.
It is not about predicting which countries will collapse or which two countries are going to end up in a state of hostilities with each another. As you say—and I think your conclusion is right; it is just your premise that I disagree with—you have to build capabilities. That is why it is called a capability review.
Dr Julian Lewis: It was very easy to predict that there were going to be terrorist attacks after 9/11. The interesting thing was our total failure to predict terrorist attacks on any significant scale internationally before 9/11. It took the world’s only superpower completely by surprise, just like the Yom Kippur war took Israel by surprise, just like the Falklands war took us by surprise, and just like the invasion of Kuwait took everybody by surprise. It is brilliant trying to predict these things, is it not?
Lord Ricketts: What you are really saying, I think, is that the future is unpredictable.
Dr Julian Lewis: Yes, absolutely.
Lord Ricketts: So you need capabilities that are flexible and adaptable.
Dr Julian Lewis: Exactly.
Lord Ricketts: I remember the slogan from our 2010 SDSR: “an adaptable posture”. It is not just in defence either. The British intelligence community has shown itself remarkably adaptable to dealing with threats arising in unexpected places and geographies and of unexpected types. Maintaining capabilities that can be switched as the threat changes is fundamental.
Q6 Lord Campbell of Pittenweem: It is quite difficult to see how you budget for this approach, because if you have to have your mind open to any possibility rather than prediction, how do you find a financial basis upon which you can argue for priorities within overall government spending?
Lord Ricketts: It comes back to Lord Powell’s point that the Government are part of the overall process of dividing up the available taxpayer money and have to decide what priority they give to defence and other areas such as health, education and everything else. It is up to the national security community to make the most of that.
Lord Campbell of Pittenweem: One of the criticisms of the 2010 review, as you will recall, was that the Ministry of Defence, Dr Fox and Nick Harvey were given an envelope of money and told, “Go away and construct a policy within that sum”. If you are not going to make some effort at establishing principles, it seems to me that is almost inevitably the way you have to do things.
I would make one other point. It seems to me that resilience in this context is hardly ever mentioned. We went into Afghanistan. At that time, if I remember correctly, the Robertson review mentioned one major action. The second action was peacekeeping, or something of that kind. In the end, we found ourselves fighting in much more severe and, in terms of duration, much more demanding activities. How do you factor that in?
Lord Ricketts: Can I come back to you on the question of money? If you are doing strategic reviews, whether on defence or more widely, you have two choices: either you do them in the knowledge of roughly the amount of money you have or you make your strategy and go to Government and say, “Will you fund it whatever it is going to cost?”
Lord Campbell of Pittenweem: That is the classic definition.
Lord Ricketts: Neither works. In both 2010 and 2015 the SDSR and the spending review ran alongside each other. Defence was not just given an envelope of money. As far as I remember, there was quite a lot of interaction in the last month or two to come out with an answer that was acceptable just about to all sides. Strategic reviews have to be informed by the amount of money that is roughly available, otherwise you are in a void, and I think that is inevitable. Of course, it is not entirely satisfactory, but nothing is in this world.
On resilience—and others will have views—I agree that we need to plan for it in everything that we do. In my view, that is another reason for not separating off the consideration of defence capability from the other capabilities, including DfID, that are essential if we are going to have resilience in long-term operations.
Q7 Dr Julian Lewis: Very briefly on money, I am sure you all remember that during the 1980s when we had a combination of a very assertive Russia and the IRA terrorism campaign, we were spending between 4.5% and 5.1% of GDP on defence, but do any of you remember what percentage of GDP we were spending on defence in the mid-1990s after we had taken the peace dividend cuts?
Sir Adam Thomson: It was above 3%.
Dr Julian Lewis: It was exactly 3% in 1995-96. Now that we are facing a renewed and intensified threat, it is hardly surprising that a review of this sort breaks apart when the defence element is spending barely 2%—less than 2% on the old method of calculating it—and we are told that, because there is fiscal neutrality, intensified threats in other parts of the security domain will result in the loss of major conventional defence capabilities. That is an untenable situation, is it not?
Sir Adam Thomson: Maybe that is why—I speculate here—the modernising defence programme has just been separated out from the national security capability review. I maintain my point that although it is a different one it can make perfectly good sense to look at whether within a fiscal envelope the mix of capabilities is right against a fast-changing external picture.
Robert Hannigan: At the risk of making it sound even worse than you describe, the other factor—
Dr Julian Lewis: I have done my best.
Robert Hannigan: —is the technology. This was identified in the last review, and it makes it exponentially more expensive for defence. You are getting less for your money. It is a little like health inflation; defence inflation is behaving in different ways.
The Chair: I will move on in a second to the changes to the wider security environment, but before we leave the general process, because that was an interesting set of exchanges, do any of you want to add anything? Given that we are having this capability review and the way it is being handled, is the process itself effective?
Lord Ricketts: We have to see the outcome to be able to answer that. I hope that the NSC will continue to look at the entire picture, and I am sure it will, so that the different inputs that it will get from the different stages of the review can be meshed together into a strategy that makes good sense. That is what the NSC is there for, and it is more important than ever to have that joining-up, co-ordinating function of the NSC, given the political pressures that have already been evident in this conversation, for different amounts of funding for different parts of the national security spectrum.
Sir Adam Thomson: I agree with all that, but I would add a concern about the vast amount of relatively scarce staff resource that gets consumed in this kind of exercise. It is asking the most important questions that a nation can ask itself in one sense, so it is appropriate to do it thoroughly and properly, but it should not be done lightly because it has an opportunity cost in terms of what those people can be doing otherwise.
Q8 Baroness Henig: Going back to the theme of the changes since 2015, the global context has become less favourable to the UK in a number of ways since that time. Given this, is there now a gap between the ambitions articulated in the 2015 national security strategy and the United Kingdom’s capability as a mid-ranking power?
Sir John Sawers: I do not think it is quite as clear-cut as that. As I said earlier in answer to the Chair’s question, there have been some important changes in the strategic environment. We are facing a greater than anticipated threat of war in east Asia over North Korea. The stability concerns about the Iranian nuclear threat have been brought into question again because of US policy towards the Iran nuclear agreement. That agreement has shortcomings, above all the short timelines for the duration of the constraints on Iran, but prematurely jettisoning the agreement would be a net negative at this stage, as the British Government and the French and German Governments have made clear.
There are certain specific parts of the world that are more unstable and potentially more open to disruption, which could affect our own approach. Clearly, the impact of a series of terrorist attacks in this country has put the focus back on to the domestic terrorist threat and the extent to which it is inspired from abroad. I look to Robert to say a few words about the cyber threat and how our resilience might have been weakened over the last three years.
Robert Hannigan: Cyber is a good example of where we saw the threat coming. We probably underestimated the rate at which it would grow. The National Cyber Security Centre was set up in 2015-16 in shadow form and formally opened last year precisely because we saw this rising tide of state and criminal attacks. There were two objectives. The first was to organise government better. The second was, underneath the surface, to do some things to infrastructure to make the country more secure.
That has worked, and the NCSC would probably say that it has experienced a greater volume in its first full year of operation than it expected, but it has coped with it. I do not see a huge gap in capability. The problem with cyber is that it is escalating at an extraordinary rate, and the geopolitical instability that we heard about earlier is having an impact on the behaviour of people acting in cyberspace, so there will be more problems, and the capability review will have to look at how it meets that, not least through investment.
Sir Adam Thomson: If the question is whether ambition now outstrips capability and resources, it is less a matter of what has happened in the outside world and more a matter of the changing exchange rate for defence and other national security budgets, the faster rate of defence inflation compared with RPI, and perhaps lower projections of growth for the British economy. In other words, how much pie you have to address national security questions may have more impact on capability decisions than any single development in the wider outside world.
I join Robert Hannigan in feeling that terrorism, cyber, state-based threats and rules-based order are a pretty good catalogue of things to be prioritising. It is pretty hard to argue with the slogan, “Protect our people, project our global influence, promote our prosperity”, even in 2018.
Q9 Lord Harris of Haringey: Robert Hannigan said it first and Sir Adam has just said that the four principal challenges set out in 2015 are the right sort of challenges, but can you come at it another way? Sir John Sawers has told us about how several of those challenges are now worse. Robert Hannigan said that cyber was worse than perhaps anticipated. Which of these four challenges has changed the most in nature or in scale since the national security strategy? Does the UK’s response to any of those require more than just a course correction, which I think is what the National Security Adviser described it as?
Sir John Sawers: The factor that has changed most in the last two to two and a half years has been the expectations that countries have of the United States. I do not want to be misunderstood on this. I am not saying that the United States is a threat. Of course, it is not, it is our closest ally and will remain so. However, the change of US posture, the “America first” approach that President Trump has set out, and the approach, which has always been there in American politics, of dealing with other powers on a great-power basis, which has been enhanced under President Trump and been accompanied by a weakening of traditional alliances, or at least the ability of America’s allies to have 100% confidence in those alliances, are leading to changes of behaviour. We have seen it in the Middle East and we are seeing it to some extent in east Asia, and we Europeans collectively need to look at the implications for us as well.
The United States has explicitly changed its emphasis to downgrade the threat of terrorism and to upgrade the threat of state-based conflict or state-based confrontation. We do not have to do the same. You can see a trend in that direction. Interstate conflict between great powers is an existential threat to our way of life. Terrorism is corrosive and obviously deeply damaging. It takes lives and undermines public confidence, but it is not a threat to our way of life by any calculation. Those are the changes that I would identify as being the biggest environmental factors as you look at the national security environment.
Lord Harris of Haringey: If the US is becoming a less predictable ally, does that not make the argument almost inexorably that the sensible UK response is to be ready to devote more resources to protecting our interests and protecting against those challenges, because we can no longer assume that the US will be there to help us out?
Sir John Sawers: There are political responses and capability responses. As Peter said at the beginning, in a sense, the combination of a change in US politics and in the US approach to global leadership and our own withdrawal from the European Union creates a combined effect and can add to the complications for us as the UK. Again as Lord Powell said, every country has to work out where the balance of expenditure should fall.
We on this side of the table, and most of you, are deeply concerned with national security, defence and so on, so we would be advocates for putting more emphasis on defence, security and intelligence. Of course, in a different environment you would have people making equally compelling cases for more money for health, education or infrastructure. They would not be wrong, and it is ultimately up to the Government and Parliament to determine what the balance is.
Lord Ricketts: To extend John’s comment in relation to the European Union, clearly everyone hopes that Britain leaving the European Union will not disturb the important national security relationships that we have with our European partners. I know particularly well the case of France, where there are absolutely vital arrangements for counterterrorism, defence and other areas.
However, it will inevitably change the context. The European Union will have to adjust to the fact of not having Britain as a member. We do not yet know what impact that will have on the European Union and the extent to which the EU will be turned outwards in active foreign policy. We do not yet know the climate we will be in as we leave the European Union and how close and instinctive that co-operation with our European allies will be. That is another question mark that has appeared since the 2015 SDSR. We all hope that it will not have a great impact on our defence relationship with Europe, but we cannot know that yet.
Lord Harris of Haringey: With those question marks, and acknowledging that there are of course other demands on resources, does that mean that the Government should be explicitly restating and perhaps lowering their ambitions explicitly?
Lord Ricketts: I would not say so. Of course, we will have to adapt to the fact that we will not be in the European Union, but we should also recognise the assets that we have. Everyone on the Committee is very well aware, not just in the defence area but in intelligence development[2], foreign policy and all the soft power assets that we have, that quite a lot of it comes down to the political will and bandwidth to be an active foreign policy presence in the world. That in itself takes time, effort and political investment, but not necessarily a great deal of money. It is an act of will whether we want to be a major player in conflict prevention, post-conflict stabilisation and the other fields where we have had a lot of experience. We do not necessarily have to lower our ambition in these circumstances, but we have to decide what sort of role we want to play.
Q10 Lord Brennan: What is the effect on the wider security environment of Brexit up to exit and after exit? More particularly, while security was talked about in the first six to nine months, it is not much talked about now. Might there be some particular arrangements that we could make about intelligence, terrorism and so on that will continue despite Brexit? Is the hard reality as far as the rest is concerned—soldiers and materiel—that it is NATO, yes, the EU, no?
Lord Ricketts: No, I do not think it is as simple as that. I will leave the intelligence experts to talk about intelligence. That happens largely outside of EU processes and so, I hope, will not be affected. There is a whole area of co-operation with the EU that is based on treaties and agreements—judicial co-operation, the European arrest warrant, our participation in databases, and a whole lot of co-operation with law enforcement—which depends on a new agreement with the EU. It has not been part of the first phase of negotiations. We all hope that it will be, and it will be reasonably straightforward, as part of the second phase, but it has not been done yet, so we do not yet know what it will be like.
There is the whole area of foreign policy co-operation and defence policy co-operation where I would hope it would be in the mutual interest of the EU and Britain for Britain to work closely with the EU in many areas where we have shared interests and in the area of European defence. It is not an either/or at all. Of course, Britain will go on being a crucial member of NATO, but it is perfectly possible to agree arrangements whereby Britain can participate in EU military operations and missions.
In most cases, I think Europe will want us to because we are a major experienced military power and Britain will agree if it sees an interest in doing so. All that is still to be pinned down in negotiation. That is why I say there is still a question mark. I have no reason to believe that we will not be able to come up with an arrangement that allows us to continue to co-operate very closely. I leave others to comment on the intelligence side.
Robert Hannigan: The exchanges on intelligence and cybersecurity have always happened bilaterally or through groupings that are outside the EU, with a couple of very minor exceptions to do with the sharing of assessments on a voluntary basis through an EU institution. In general, it has all been bilateral. Those relationships have got deeper, driven by terrorism and the cyber threat, and I think they are going better than ever.
The most likely impact in the longer term will be in data sharing. The UK will need to negotiate some kind of data-sharing agreement for the wider economy to achieve adequacy in the eyes of the EU. One of the biggest potential problems in that will be the way we treat national security information, which of course is outside the remit of the EU, but it will have an impact on whatever agreement we have to conclude.
The US took a long time to negotiate the privacy shield. It is still being litigated and is a long way from perfect. It is not going to be straightforward. That is the most likely impact certainly on the data side of intelligence. I do not know whether we will have to change the provisions of the Investigatory Powers Act, for example, in order to convince the EU that we have adequate protections, but all that is to be negotiated.
Sir John Sawers: I very much echo what Robert says on the intelligence side. From my time as chief of MI6 I know that the arrangements are bilateral. They are in good shape, and I do not think Brexit will have a significant impact on those bilateral relationships.
My biggest concern is exactly in the field that Robert identifies: data. It is not just about us having a bilateral agreement for data sharing; it is the fact that most of the security-related provisions that are agreed at the European Union level, and which need to be, have been driven by the UK. We will no longer be in the room to shape the rules and regulations governing data sharing and data privacy to ensure that national security concerns are given the appropriate high priority.
There has always been a spectrum within the European Union, caricatured as Germany being at one end and the UK at the other, as to whether you prioritise privacy or national security. The right answer, as usual in these cases, is that it is somewhere in between. If you take the strongest advocate and the country with the greatest concern for national security issues out of that debate, the balancing point in the debate will be further away from meeting our national security concerns than they were before.
Sir Adam Thomson: Could I add a slightly more pessimistic note to Peter Ricketts’s point about the UK relationship on security and defence after Brexit? It is perfectly possible, as he says, for an arrangement to be negotiated, but at the moment—and I run an organisation that looks at European security—I see too much pride on either side to make the compromises that would allow the UK to participate easily in the fashion that the British Government wishes in common security and defence policy. Eventually, a way forward will be found. The UK is too big to leave out of the equation, but I think it will be a bit messy.
One other point is that while the 2015 national security strategy emphasised the importance of EU-NATO relations, they are now even more important for the UK. Happily, they are going quite well.
Lord Hamilton of Epsom: On this £56 billion that is being spent, it seems to me that there are lots of disparate parts to this: cyber, defence capability, terrorism. Who is deciding how much should go to where? I know that the intelligence services’ budget has been increased quite significantly. How are these decisions reached, and what is the basis on which they are made?
Lord Ricketts: The £56 billion is an aggregation of the departmental budgets for the MoD, DfID, the Foreign Office, the intelligence vote and, I suppose, the national security part of the Home Office. The answer is that they are settled in spending rounds at the start of each Parliament by departmental allocation, so £36 billion would go to defence and so on. The National Security Council allows you to look across all those, especially during a spending review, and decide, for example, as we did in 2010, to carve out £600 million for cyber investment, most of which went to Mr Hannigan’s organisation as money well spent in preparing for the cyber threat. You can do that within limits, but the answer to your question is that they are settled as part of a highly political process in five-yearly spending rounds.
Lord Hamilton of Epsom: And then somebody lumps them all together afterwards.
Lord Ricketts: That £56 billion is simply putting together the departmental allocations of all the departments that deal with national security. The scope to take a view across them is limited because each departmental Minister, of course, will defend their own budget very fiercely, but at the time of a spending review you can take the view across and try to make sure that, if you set priorities in your national security strategy, some money follows those in the budget.
Q11 Lord Hamilton of Epsom: Can I raise something that you have not been given any notice of at all? When I was on the Intelligence and Security Committee, we thought that a rather artificial division was made between MI5 and MI6 and that if you wanted them to work properly you would bring them together. Has there ever been any talk about that?
Sir John Sawers: The fact that they are numbered MI5 and MI6 shows that there has been some consolidation of intelligence agencies over the 20th century.
The three agencies have three distinct tasks. The first is domestic security, the second is overseas intelligence, and the third is signals intelligence writ large and cyber. They are three organisations with very different cultures and skill sets. They collaborate increasingly together in a way that frankly was unimaginable at times during the Cold War. We get the best from three separate agencies.
It is always worth examining this. France, for example, has its MI6 and GCHQ equivalents in the same organisation, but that adds to problems rather than reduces them, in my experience. Canada has its MI5 and MI6 equivalents in the same organisation, but it means that they are very domestically focused and contribute very little in the wider external intelligence domain. GCHQ is, by some way, the largest of the three agencies, and, indeed, it always has been, which I think is right in the modern world.
You get centres of excellence, centres of focus, and different cultures for the different security requirements that we face by having the three agencies. It is not immutable, but my judgment is that it is the best outcome for now.
Robert Hannigan: I agree, and the last spending round was quite a good example of the three agencies bidding together, because all three, as John says, are now involved in all the threats. The threat of terrorism involves all three agencies very heavily, as does cyber. Cyber is not “a thing” for GCHQ. All three are heavily involved in that and the other threats outlined in the strategy. It makes sense to bid as a bloc, which is effectively what happens, and then it is divided up in a conversation with the Cabinet Office.
Q12 Mr Dominic Grieve: Can I turn to the effectiveness of the National Security Council and its supporting structures for formulating and delivering a coherent domestic and international policy response to complex threats? This question is directed principally to Lord Ricketts. What is your assessment of its capacity for doing that?
Lord Ricketts: First, it is the right vehicle to have. We did not have a National Security Council as such before 2010. We had different Cabinet committee arrangements that were more ad hoc and variable. The great advantage of the National Security Council is that it has a membership that meets very regularly and considers the whole spectrum of threats.
The Home Secretary thus becomes more expert in foreign affairs, and all the Ministers learn about cyber and what the military instrument can do. Crucially, it brings together Ministers and senior advisers, and, in particular, the intelligence heads. I do not know if they are members or are regularly invited, but they were and are constantly there. That is really the first time in the British constitutional set-up that intelligence community heads have had regular systematic access to senior Ministers, which develops a community of understanding of the various national security issues that did not exist before and allows this cross-cutting view to be taken over priorities and so on.
Inevitably, how the machinery functions depends very much on individual Prime Ministers. Two Prime Ministers have used this National Security Council instrument, and I have only sat on it with one. Of course, each Prime Minister will bring their own priorities and styles, but I am encouraged to see that the NSC continues to meet on a very regular basis and also has sub-committees that meet. It has become a focus for Whitehall decision-making, which is much better than previous arrangements by which things were settled in bilateral contacts with the Prime Minister. It would evolve over the years, but is now established as a piece of constitutional machinery that has been shown to be useful. I hope that is true.
Mr Dominic Grieve: Do any of the rest of you want to add anything from your own experiences of attending?
Sir John Sawers: I attended it for about five years, and my assessment is that it is very good to have. It is good that the Prime Minister of the day determines to chair it on a regular basis. It creates a community across different disciplines in national security, between the political and the professional, between the military, the intelligence and the civilian, between domestic security and overseas and foreign policy concerns. That is a big step forward.
Its strength is in assessing specific issues, whether it is decision-making in a crisis or the strategy towards China, and so on. It has not yet developed into the sphere that you are getting at, Mr Grieve, about building up an overall balance across these various domains and developing a strategy. It is not that well-equipped for doing that. It will either receive something and say, “Yes, that feels about right”, or, “No, go back and try again”. It is a forum for debate where these different perspectives can be brought together and shared.
The total outcome is a significant advance on previous systems. I worked in John Major’s Government, which had a Defence and Overseas Policy Committee, and in Tony Blair’s Government and Gordon Brown’s Government, where, similarly, it was discussed either on an occasional basis or on an informal basis. Having this regular weekly meeting going across the spectrum of foreign and national security issues is a big step forward.
Lord Ricketts: The area which the National Security Council has found most difficult—and this is true across government and other Governments—is longer-term strategy. The US National Security Council, which has an enormous supporting structure, is regularly criticised for being much too tactical, too much in the operational detail and not thinking strategically. There is a real problem for Governments in the current world, with 24/7 media and the short-term pressures on Ministers, to find the time and the intellectual energy to try to detach from the immediate and think about the longer term. The National Security Council provides a place to do that, but it is extremely hard to do.
Q13 Lord Powell of Bayswater: Lord Ricketts and Sir John, you make a very persuasive case in process terms for the National Security Council, but if we turn it around and look at results, do you feel that our foreign policy is more effective and our national security better assured than it was before? Is it just a change of process, which, as I say, you can make a good case for? If I match it against the agendas we see from the National Security Council and the issues they look at, and as an outsider if one looks at the results in terms of what is said to Parliament or in the newspapers, it does not seem that our policy is very much more effective under the new system than it was under the old.
Sir John Sawers: That is a fair observation. It reflects the role that Britain is able to play in the world. I have said in evidence to other Committees that there are three components to being an effective player in the world. The first is strong economic performance at home. Frankly, we have not really had that since the 2008 financial crash, and it is more challenging now in the Brexit context.
Secondly, it is about having the quality of national leadership and the interest to devote to world affairs. We are seeing a contrast here with President Macron of France and the impact that he is able to have on the world. The third is investment in the tools to make a difference in the world, and that is what we are discussing now. The ability of political leaders to draw expert advice, be open to challenge from intelligence chiefs, diplomats and Armed Forces chiefs is a really important part of getting to the best possible decisions, but behind that, of course, you need a network of alliances and a level of political commitment to making a difference in the world, which in the wake of Iraq and Afghanistan and the aftermath of the financial crash has not been as consistent in the years since 2008 as it was, for example, between 1980 and 2008.
Lord Powell of Bayswater: Accepting all that, Sir John, which I think is absolutely right, one still hears frequent reports and sees evidence of a deeply demoralised Foreign Office, a grossly overfunded development department—DfID—and a defence budget in tatters. That does not sound like a great advertisement for the results of having a National Security Council.
Sir John Sawers: Some of those questions are for other people around this table rather than for us, but I would say that you cannot run an effective global foreign policy and have global reach unless you have a well-equipped and well-funded Diplomatic Service. That has certainly been driven too far down. I admire the aspiration to spend 0.7% of GDP[3] on development assistance, but it is unwise to build these things into law because Governments need flexibility to put investment where it is most acutely needed.
Lord Ricketts: Some of the threats that we have been talking about, such as the greatly intensified threat from terrorism and from cyber, have been much better handled because we have had a National Security Council that can look across all the different domains in dealing with them. I would also suggest that in process terms the Libya crisis in 2011 was handled in a much more disciplined way than the war in Iraq in 2003, because it was all done through a National Security Council, with the Attorney-General’s advice on hand and with a great deal of planning. In the end, it was not possible to carry out the post-conflict work that we had all prepared for, but, as a process, the build-up to that conflict was handled better through an NSC than through its predecessor.
Sir Adam Thomson: It is not just about process. I go back to the points that Peter and John have made about community. I have been more a subject of the NSC than a participant in it, although I have been there occasionally, and although it can take a tremendous amount of work, sometimes quite nugatory in the machinery, there is no denying the fact that it makes for much more joined-up government. It may be a more demoralised or ineffective Government, but we are, in my experience, the most joined-up western Government in the world, and although it is hard to say exactly how that tells on any single policy issue, it is of real value.
Q14 Lord Harris of Haringey: You have made the case for there needing to be a space for Ministers to think strategically about these issues. Do you think that a weekly meeting for perhaps less than an hour, and only by and large when Parliament is sitting, creates the right strategic space?
Lord Ricketts: Those are judgments that only a Prime Minister could make. A regular systematic meeting with all the senior Ministers present around the table is probably the only other occasion apart from Cabinet where that happens in the British system, and it is the best access collectively to senior Ministers that we could hope for.
It is up to a Prime Minister to budget more time for a National Security Council if they so choose. There are ways in which officials can help Ministers to detach themselves a bit from the immediate to think more strategically. We set up, and I think it is still functioning, a national security council at senior official level with the Permanent Secretaries and the intelligence heads that meets either before or after the NSC at ministerial level to prepare agendas and, from time to time, to do some thinking about the longer-term less urgent but important issues and feeding that into Ministers. The structures are there to do that, but how much time is spent has to be a decision for the Prime Minster.
Sir John Sawers: I think that is right. The NSC is the apex of the system. In some ways, the most far-reaching strategic discussions take place between senior officials of different parts of the system, the fruits of which are reported to Ministers, but the actual hard discussions take place between the professionals.
The Chair: Mr Hannigan, did I inadvertently cut you off before?
Robert Hannigan: Not at all, Chairman. I agree with that and I will not prolong the discussion.
Q15 Lord Campbell of Pittenweem: Finishing up on that last topic, are we not at risk of making the best at the enemy of the good? We did not have this arrangement before. You have described the ways in which it works. It may not be perfect, but if the United States, NSC is not perfect, perhaps this is a form that it is difficult to make perfect. It would not make much sense, in my view, to say that it is not doing as well as it could and use that as an argument to abolish it. It would make more sense to try to change it.
Can I go back to the question of the rules-based international order, which has been touched on? I wrote down the USA, because that was mentioned, and I wrote down Russia, China and Poland now within the European Union. There are those who argue that the action taken in relation to Iraq and Saddam Hussein was contrary to the rules-based order—and, of course, in relation to Libya, certainly the Chinese and Russians now believe that they did not properly understand what was being proposed and would probably say they were deceived.
It seems to me that the basis of all that is some kind of nationalism. One has to be very careful about using that word, especially in the United Kingdom and especially if, like me, you come from north of the border, but it is unlikely that trend is going to be arrested, is it? If that trend is not going to be arrested, what role can the United Kingdom play? Do we try to continue to enforce it or abide by it, or do we have to accept that the post-1945 settlement has gone and that it will be some time, if ever, before anything similar will be created?
Sir John Sawers: The West had a great advantage in the post-1945 period in that it was the victor in the war, and, led by the United States in a very dominant way, it included by far the most powerful nations in the world economically and militarily. We could design a system largely in our own image and to our own requirements, which put the focus on plural liberal democracy and free markets.
The trends since 1945, of course, have all been in a direction away from the dominance of the West, and although democracy spread quite widely, especially in the wake of the end of the Cold War, the growth of emerging powers, many of which do not have what we would recognise as liberal democracies, China being the most obvious one, has meant a rebalancing of the international system. The Americans are not wrong in identifying the need to build relationships and partnerships and, as necessary, confront and face down other major powers in the world, but it makes it more difficult for medium-sized powers, of which the UK is one and France and Germany are others, to play the sort of role that we have managed to do within the international system to shape outcomes on promoting free trade and open markets and promoting an international security system, which includes quality of governance and adherence to human rights and so on as important components of that.
We are moving into a new world and the point I was trying to make earlier was that the election of Mr Trump as US President has not changed that, but it has accelerated a trend in those directions, and it creates questions for European powers, above all Britain, France and Germany, as to how we assert our influence, views and values in the world when many decisions are going to be taken between Washington and Beijing and Washington and Moscow.
That collective debate and discussion is harder to have. I believe that some of the fabric is still in place. Our successors are still talking to their American counterparts just as frequently and intensively as we were when we were running agencies or at the centre of government, but there are greater strains in the system when you can see the leadership, above all in the United States, pulling in a slightly different direction. Some of the signs in the last month or two have been a bit more reassuring on those fronts. None the less, there are real challenges in here. The decline of the weight of the United Nations Security Council, of the IMF and of the World Bank all reflect these changes in the world that I have identified.
Lord Ricketts: There are also of, course, the big economic changes that are inevitable—China and India are growing fast—and the role for Britain is to help that international system to adapt, not to abandon it or walk away from it but to ensure that it adapts to these new realities and that we do not face a world that is much more about spheres of influence with dominant countries trying to control their regions, which you see increasingly as a trend at the moment. Not that many countries in the world are still prepared to bear burdens of international security and take their share of the wider collective responsibility. Britain is one. I do not despair—I agree with what Sir John says—but we ought to be actively helping to shape a new world order adapted to the new economic realities.
Lord Campbell of Pittenweem: By what means?
Lord Ricketts: By getting out there and participating in all the debates that are going on, being more present in Asia than we have been in recent decades, and using our influence in the UN and NATO and all the other fora in order to make sure that these organisations stay relevant as the economic balance changes.
Lord Campbell of Pittenweem: With a bigger budget for the Foreign Office.
Lord Ricketts: Why not? I agree with you 100%.
Sir Adam Thomson: I would make three very quick points. The first is that although the two things are connected, it is worth drawing a distinction between liberalism and democracy on the one hand and rules-based order on the other. While we might well want to promote our values, it is slightly different from ensuring that people respect a set of international rules. The latter is perhaps currently easier than the former.
The second point is that we focus on one area where rules are eroding—Russia’s annexation of Crimea, for example—but there is a plethora of largely western-established rules all around the globe for all sorts of things, whether it is radio frequency or trade through the WTO. Those rules are valuable to countries that absolutely do not share our values but that still need a framework in which to operate internationally.
My third and final point picks up on Peter’s point about getting out there and engaging and adapting. We do that. I was at the United Nations when we reluctantly, but I think very realistically, redesigned the UN Commission on Human Rights. It is still not a perfect body by any means, but had we not given other parts of the world a larger voice and made it less western-dominated, we would no longer have a UN human rights function. We can continue to be creative about making largely western-created institutions continue to work. If we funded the Foreign Office to do it, you would get even more of it.
Q16 Lord Hamilton of Epsom: Sir John, my question is about terrorism and these Daesh people who seem to be being encouraged to leave cities that are about to be taken rather than being killed as we might have hoped. Do we know how many are going to come back here? Do we have a handle on who is returning? Are we dividing them up into good terrorists who have seen the error of their ways and want to come back and become plumbers, get married and have a family, and others who want to kill everybody?
Sir John Sawers: I think you should pose those very valid questions to the current heads of MI5 and MI6, because they will be on top of the intelligence picture and will be able to give you a very well-informed answer. I stepped down as chief of MI6 at the end of 2014. My broader response to you is that of the 800 or more Britons who have gone out to Syria to join various groups, many of them joining Daesh, not all of them will come back convicted[4] terrorists. Some of them will be glad to have escaped the horrors of Syria and be able to have a more normal life, but you will not know who is in which category until you have had a good chance to question them, study their behaviour and monitor their activities for a while after they get back.
One or two rather loose things have been said about all these Brits who went out there should be killed. It is very important that politicians do not put members of the Armed Forces or the intelligence services in a position where they are expected to break the law. There are very clear laws governing military action and so on, and one of the essences of our system is that we operate within the framework of the law. Yes, many of these people need to be brought to justice, but that does not mean a wild west justice.
Robert Hannigan: All I would add on Daesh is that, as it has been destroyed on the ground, the online caliphate has become more and more important to it. It has always been important to it and it has understood the power of media. We need to bear down on that, as indeed we are. The longer-term worry, as I said earlier, is that we did not really see Daesh coming. If we see Daesh as simply the latest iteration of Sunni extremism, we have to assume that there will be another one and that it may not look exactly like Daesh. We need to try to predict correctly where it comes from and what it will look like. That ought to be a major concern for the next five years.
Q17 Baroness Lane-Fox: I apologise for being late into such a fascinating conversation. Robert, I will direct this question at you first, but I think everybody might have a view. Did the 2015 national security strategy get the cyber threats right? How do you think things have changed since that strategy, with state-based actors to criminals to terrorists and all the different pieces?
Robert Hannigan: I think it got it broadly right. I said earlier that the impetus to set up the National Cyber Security Centre and to do some of the big things that we have done under its name came precisely from the fact that we saw a rising tide essentially from the three sets of actors: criminals, nation states and disgruntled others. I said earlier that if we had underestimated anything, it was the speed at which that would happen, but not by much, and I think we were on top of this threat.
In the intervening years, there has been an increase in the volume of those attacks and an increase in the sophistication, because there are a lot of very sophisticated tools out there now, some of them stolen from nation states. Perhaps most worryingly, and this goes to the geopolitics that we have been discussing, there is an overlap of crime and nation state. Nation states are using very sophisticated criminal groups with access to these tools as proxies through a very complicated set of relationships that go from basic corruption through to embedded tasking. That looks set to continue. We will see a further rise in the volume and the sophistication of those attacks.
The behaviour reflects the politics. States behave remarkably consistently in the sense that what they do online tends to reflect what they do in the physical world. If they are prepared to invade part of Ukraine, why would they not switch the domestic power off in Ukraine in the winter a couple of years ago? North Korea is another perfect example of rational consistency. They need foreign currency. If they are looking for it in other ways, such as selling arms, why would they not also try to steal it through cyber means?
There is a reassuring predictability about this, but the worrying thing for me is that states have been prepared to take greater risks against the backdrop that John and Peter discussed earlier: a sense of a disintegrating set of rules and states being prepared to take risks that are seriously dangerous. The danger of miscalculation in cyber is much greater than in other areas. It is bad enough in nuclear weapons, but at least we know what nuclear weapons do and we have tested them. In cyberspace it is extremely difficult to know what the collateral damage and unintended consequences will be, because it is a new domain. These weapons have not been tested, and some countries are behaving quite recklessly with them. That is how it has changed, but it was all predicted in 2015.
Baroness Lane-Fox: Do you think that attacks on multinational companies and the roles that misinformation warfare have played are well enough understood and that the interrelationship between agencies, Governments and companies is positioned in the right way?
Robert Hannigan: There are two parts to that. On the attacks on international companies, if we look back at last year, the highest-profile and largest-scale attacks on the whole were accidental. They were collateral damage in ransomware attacks that got out of control, particularly in the case of the so-called NotPetya attack, which hit manufacturing businesses across Europe. I do not think anybody seriously suggests that they were the target of ransomers in that particular case. They happened to be caught in a wider political action.
It is worth remembering that the overwhelming volume of cyberattacks are crime. Most companies are being targeted, or not even targeted but sprayed at across the economy, by people who want to make money out of them. That is still the biggest threat. It is bigger than the nation state threat. The nation state threat is obviously more potent and worrying.
The second part of your question, if I understand it, is whether we are doing the right thing to link up within countries and across countries.
Baroness Lane-Fox: And with companies, I guess.
Robert Hannigan: The key new element of the NCSC was to take it out of the secret world and have one foot in the secret world and one foot in the industrial and commercial world. You cannot do cybersecurity behind the wire any more. Most of the data and skills are out there in the economy. All the money is out there, as we have just been discussing. The obvious way to tackle something that threatens the entire economy is to co-opt the whole economy and the whole of society to make this better. That was, and still is, the ambition of the NCSC. We are doing the right things. It will take time to build up those skills and to build those relationships. We are further ahead than probably almost any other country, but I certainly would not be complacent about it; we have much further to go.
Baroness Lane-Fox: I would be interested in everybody’s views on the subject of money and skills. You have made a convincing case that we are more joined up than we have ever been and that the National Security Council adds to that. My perception is somewhat different in that I have talked to people in agencies who are confused about who in government owns bits of the puzzle for them or which Minister or department is accountable. How do you feel the budgets are apportioned within the cyber bit of it? Secondly, can we get the people we need to do these jobs in any bit of the puzzle?
Robert Hannigan: People are a huge problem, as you know better than anyone—
Baroness Lane-Fox: People are a huge problem.
Robert Hannigan: —from your own work on skills, I should say. Right across the economy it is very difficult to get the right people in the right numbers. We have to address the pipeline and improve it. I know you are playing a part in that. Right from primary school onwards, we have to get that half of the population that is not involved in STEM at the moment—women and girls at school—fully engaged. A lot is being done by the Government and others to help to achieve that, but it will take time.
In the meantime we are fishing in a fairly small pool, trying to expand the numbers of people, both in government and outside, through all sorts of schemes—apprenticeship and scholarships and all the things you would expect—but it will take time to feed through. Government does not have the money that the private sector has. The private sector is also struggling, the finance sector especially, to get the right numbers and levels of people. We need to train people better. A lot is being done and can be done to address the skills gap. It is primarily about skills and not money at the moment. There is a lot of money in cybersecurity at the moment, particularly in the private sector.
The government money that we talked about earlier is adequate at the moment, but everybody recognises that more will need to be spent on cyber in the future, both defensive and offensive. There is no way around it. That is the way technology and the economy are going.
As for organisation in government, there is clearly one operational lead now, and that is the NCSC as part of GCHQ. If departments are still confused, that is slightly worrying to hear, but the problem with cyber is that it is a domain and it cuts across everything. Trying to pretend that a single Minister or department can “do cyber” is unrealistic and simply will not work. You have to do this as a cross-cutting coalition driven from the top, and I think the NCSC can help in that but, ultimately, it has to be for the Prime Minister.
The Chair: Can I remind colleagues, and thank him at this point, that Lord Ricketts has to go at a quarter to six. If you sneak out, that will be fine.
Lord Ricketts: I have a commitment I cannot break. I will sneak out in five minutes.
Q18 Lord Harris of Haringey: It may be a bit tangential to it, but my question is about the discussion of who owns some of the cyber issues. Could I ask Mr Hannigan, or indeed any of the others, and perhaps Lord Ricketts before he goes, who in government owns issues about the way in which artificial intelligence may be used to target the United Kingdom in different ways? Is that a GCHQ responsibility? Is it a Ministry of Defence responsibility? Is it spread out with nobody owning it?
Robert Hannigan: The government review of artificial intelligence at the end of last year showed that it is jointly owned by the Department for Digital, Culture, Media and Sport and the Department for Business, Energy and Industrial Strategy, because it is a key part of the industrial strategy. Artificial intelligence is so much more.
Lord Harris of Haringey: I am talking about the incoming threat as opposed to the opportunities. I can understand why BEIS and DCMS might own the opportunities, but who is looking at the threats?
Robert Hannigan: Artificial intelligence is not an incoming threat. It might enable some of those threats that are coming in. I completely agree that artificial intelligence is increasingly being used in weapons systems, cyberattacks and all sorts of hostile threats. Taking it as a single entity is probably not the answer. It is better to look at the way it is enabling particular threats. There are some cross-cutting issues, particularly ethical issues, but you could not honestly say that the intelligence community, or even defence, should be responsible for artificial intelligence; it is much broader than that.
Lord Harris of Haringey: What you are saying is that the response to it and the way in which artificial intelligence may enhance all the threats we have talked about should stay in those places?
Robert Hannigan: Absolutely, and it ought to be part of that pillar of the impact of technology, because artificial intelligence is already informing much of what we do. In the future it is going to be built into everything we do that involves data, which is just about everything. Most of that will not be to do with security threats, but a part of it will be. Everybody is going to have to be aware of what artificial intelligence can do to amplify the threats against us.
The Chair: Speaking of threats, I turn to Lord Powell.
Q19 Lord Powell of Bayswater: Right, on to Russia. Again, Robert, keeping you in the limelight, you have said that the UK underestimated Russia’s ability and intent to use unconventional methods to gain influence. On the face of it, that is rather strange. We spent decades looking at the Russian or the Soviet threat, and it was one of the principal skills of the Foreign Office and the intelligence services. Why did we suddenly lose out on this? Did we let our expertise on Russia run down too far? Did we run out of Russian speakers? What went wrong? To save time, the follow-up question to it would be: are you confident that we now understand Russia’s intentions and motivations? After all, the Prime Minister went to town on that subject in her Guildhall speech, and General Carter has been speaking about it. Are we now going too far the other way and exaggerating the Russian threat?
Robert Hannigan: To answer your first question, we ran down our Russian expertise and capability, including in the agencies, for the very obvious reason that at the end of the Cold War we thought that we were not going to need them. I know that the same happened in the United States. There was a conscious effort in the last seven or eight years to build up that capability again, particularly in the last three or four years, against what we saw as a growing threat. This was at a time when in political terms we were still talking about resets and rapprochements with Moscow, so there was a mismatch between that and what was going on behind the scenes.
Over 10 years ago, we saw Russia investing a lot of people and money in offensive cyber. It was always capable through the 1980s and 1990s. So the capability is there. What changed, as we were discussing earlier, is its aggressive intent and threshold of risk and not really caring too much for example about attribution. The intent has changed. We probably did not see that coming. We did not foresee its use of social media to deliver effects. It employed disinformation right through the Cold War, so it was not new, but the digital era gives the opportunity to do that very cheaply on a massive scale. People such as Mark Zuckerberg have said, “We were naive about it. We didn’t see it coming”, and I think he is right that we did not see it coming.
Lord Ricketts: May I make one last comment? I apologise for having to leave for something I cannot be late for. If you look more widely, Britain has for some time had a clearer-eyed view of Russia than, for example, many of our European partners. We had the experience of poor Mr Litvinenko in 2006, and we have been in no doubt about the willingness of the Russian leadership to take risks of that kind. Some of the European countries have maintained much warmer and much less critical relationships with Russia over that period than we have. We saw the trend of a more risk-taking and more aggressive Russia a decade ago. As Robert says, we have all been surprised by Mr Putin’s willingness to take risks and to exploit opportunities in Syria or to move as he did in Crimea. I do not think anybody expected that that would be his risk calculus at that moment. I am not sure that we should self-criticise too much over that. Our policy towards Russia has been pretty cold-eyed for some time, as I say.
We have also been making very clear that we have to live with this Russia and maintain links with it, not least because it will continue to be a significant player in this new international security order that is emerging. I remember back to those days of 2006; we were very clear then that we were facing a very different Russia from the Russia that we hoped might be taking shape in the first years of President Putin’s rule.
Lord Powell of Bayswater: Is our judgment of Russia going to be undermined by President Trump’s obvious desire to be on very friendly terms with President Putin and by his relative neglect of the Russian threat in relation to, say, China’s emergence?
Sir Adam Thomson: President Trump has less freedom of manoeuvre on Russia policy than any other western Head of Government at the moment, given the state of US domestic politics. I would comment from my vantage point at NATO from 2014 to 2016 on how institutionalised our approaches are to dealing with major threats. NATO, like the British Armed Forces, had been all about expeditionary capability for 15 years. It took several years for the pendulum to swing.
Now, I suggest, there is some risk of it swinging too far to deal with a Russia-type threat rather than other kinds of threat. I also think there is a risk in our rhetoric around this. Yes, Russia is a threat. It will present problems unless we deal with them, and the more firmly we deal with them the fewer Russia problems we will have, but, as Peter Ricketts has just said, we also need to engage with Russia. Painting Russia as completely black does not really help our cause, so we need to avoid slipping into both the dynamics and the rhetoric and institutionalisation of a second Cold War, which would be not just very dangerous but extremely costly.
Q20 Tom Tugendhat: This is possibly a question for the one agency former chief who is not here. The security and defence review of 2015 discussed very much the military threat. We have heard about the threat from Russia, and Mr Litvinenko was mentioned, but there have been various other elements of domestic destabilisation that would formally have come under the auspices of MI5 in terms of subversion. That area seems to have dropped away. I am reliably informed that it is reasserting its importance in Thames House. You have spoken, Mr Hannigan, about Facebook, but if you see the attacks on institutions such as banks in Estonia and on archives, you can see that the undermining of institutions is something Russia is doing very actively.
Robert Hannigan: They have always done it, but cyber gives them a new means to do it that is cheaper and at a larger scale. I absolutely agree with you that it is the classic job of MI5 to counter that subversion. You would have to ask them what proportion of their effort they are able to devote to it, given the other pressures on them, but I take your point that they take it very seriously. I know they do and, as we saw after the Litvinenko attack, they played a very important role.
It is an interesting reflection to compare the way the US and the UK have dealt with this. The UK system has been quite late coming to this. Parliamentary Committees are now asking the tech companies about the sources of money. The Electoral Commission has launched an investigation. All those things happened quite a long time before in the US, and for obvious political reasons there was an impetus to do so. It is not entirely clear in the UK system whose job it is to do that. MI5 has the job of countering subversion in its most extreme form, but it is not really clear whose job it is to look at social media subversion or the sowing of distrust. Unless it is a crime, it is quite difficult to know who in our system is responsible.
Tom Tugendhat: Is that not the role of the National Security Council? If this is not a strategic security threat to the democratic and other institutions of the United Kingdom, what is?
Robert Hannigan: It might well be the role of the National Security Council to decide whose job it is.
Tom Tugendhat: Sure, but I mean to allocate tasks and responsibilities.
Robert Hannigan: Absolutely.
Sir John Sawers: Can I step back a little from this Russia discussion? We have all dealt with Russia in different ways for many years. It is a difficult country to deal with. They feel themselves to be under pressure from the West. They will seek advantage where they can and they see the world largely in a zero sum way, so they believe if they can do damage to the West that is a net benefit for Russia. They are also quite reactive.
I do not believe that President Obama managed Russia particularly well during his eight years as President. Had Russia and the United States had the quality of communication that we had in the 1980s and 1990s, I do not believe the Ukraine crisis would have got out of control in the way it did. Had we upheld international standards on chemical weapons and intervened in Syria, we would not have left a vacuum for Russia to intervene in that country. They are not 10 feet tall. They know how to use the room for manoeuvre that they have, but they find it hard to sustain over a long period, which is one reason why they are trying to extract themselves from the Donbass in Ukraine and from Syria.
It is really important that we remain engaged with Russia. Being engaged does not mean being nice to them. It is a vehicle for having tough conversations. I have had many tough conversations with Russian counterparts over the years, whether in the Foreign Office or at the United Nations. Unfortunately, I was not able to do it as chief of intelligence, because we had a ban on communications between British and Russian intelligence. The Americans, the French, the Germans, the Italians and many others have quite established channels of communication and occasional exchanges of intelligence with the Russians. They all get value out of them, but we are unable to do that. We need a form of tough, direct, clear-headed engagement with Russia in order to ensure that there is proper understanding between the two sides.
We have sort of developed it over Syria now, because western forces and Russian forces are operating in the same theatre and we have to go to great lengths to avoid a clash between the two. Frankly, had we had that level of communication with the Russians over much of the last 10 years, some of the activities that we have seen the Russians involved in may not have taken place, certainly not in the same way. That said, if we have a political system that is vulnerable to being exploited from outside, yes, the Russians will try to do that, so we have to close down those vulnerable flanks to make sure we do not expose those vulnerabilities.
Tom Tugendhat: Would you argue that the rising oil price makes them more or less likely to engage, Sir John?
Sir John Sawers: The Russians have shown a willingness to engage with western countries. I do not think that is the problem. I am not sure the oil price makes a huge difference here and I would not bet on it remaining high for long.
Robert Hannigan: I agree. It is important to remember that, viewed from Moscow, the internet looks like a US-owned strategic advantage for the West in that the West has its arms around it, and it feeds the paranoia that is already there about a grand conspiracy against them. I tend to agree on the Obama Administration. A combination of humiliating Putin and not sticking to red lines, for example over chemical weapons, was pretty disastrous. It is not as if everything was great for the last 10 years, and I think we are paying the price for that.
Dr Julian Lewis: I detect a view that it is possible both to stand up to Russia where our interests clash and to co-operate with Russia to some degree where our interests might coincide, as with, for example, in opposing ISIL/Daesh. I have to say with respect to Sir John’s point about Syria that, if we had done in Syria what we did in Libya, we would have lived to regret it. I am looking at the Secretary of State’s interview with the Daily Telegraph on 26 January in which he had harsh words to say about Russia. We have here three singularly well-qualified people, two at least very much from the secret world, who would be able to confirm, I hope, what I see on reading this article, which is that there is no question of any classified information having been leaked in the course of that interview.
Robert Hannigan: I have not read the interview, but I saw the headlines on the BBC. It did not strike me that there was classified information in there. It seemed to me that the Secretary of State was saying in the interview that the risk of miscalculation by Russia in its interference in a critical national infrastructure, particularly of power, might lead to the deaths of many people. I think that is a perfectly respectable thing to say.
It is worth remembering that so far we have not seen anyone physically harmed or killed through cyberattack, but I think it is just a matter of time. If people take reckless gambles inside power grids or in hospitals, for example, it is almost inevitable that at some stage somebody will die as a result of cyberattacks. It did not seem to me from the press reporting of the interview that there was a suggestion that there was a Russian plan to kill thousands of people, but I have not read the article.
Sir John Sawers: If you want a serious answer to that question, you will need to get the Intelligence and Security Committee to ask the head of GCHQ in a private session.
Dr Julian Lewis: Surely, with your experience it is very straightforward to identify in the article what he is talking about as possible attacks on undersea interconnectors for electricity and gas. There is nothing there that has not been said by other senior figures in the military world, is there? Is that a yes or a no?
Robert Hannigan: The Russian capability is certainly widely discussed—I have discussed undersea cables myself—in the US and here.
Dr Julian Lewis: I served on the ISC for five years and I think I know what might conceivably be classed as classified and what might not. I thought this was a good opportunity. If you have not all read the article, you might have a look at it and write to us and let us know if you think there was anything there that is remotely straying into that territory.
Robert Hannigan: It is kind of you to ask, but it would not be possible, for the simple reason that since I left last April there may be classified information that is somehow behind it. It seems unlikely to me. I could only give you an answer that was out of date. That is a question that ought to go to the ISC. As John says, the easiest thing is to ask the ISC to ask this question.
Dr Julian Lewis: I am sure we could, but they might not be willing to reveal the results. Surely, if there was any question of this, one would be able to look at the article and say, “I see a point here which I have never seen in open discussion before”, and I cannot see any point there that I have never seen in open discussion before and I wondered if any of you had.
Sir John Sawers: You examine the details of the Daily Telegraph more closely than I do.
Dr Julian Lewis: It is up there on the internet and you know how to use it.
Lord Hamilton of Epsom: When I went to Chicago University with the NATO Parliamentary Assembly, they went to great lengths to emphasise that the Russian economy is positioned somewhere between those of Spain and Italy. I have also seen figures that show there has been a catastrophic drop in the GDP of Russia, presumably going back to Mr Tugendhat’s point that the oil revenue has dropped like mad and the oil price is very low. You have to ask how they can go on sustaining this gigantic defence expenditure and fighting wars which are astronomically expensive. Do you have a view on that? It strikes me it is smoke and mirrors. I do not know how they are doing all this. You need to have a very thriving economy to support this sort of activity.
Sir John Sawers: Let me answer one part of it and Adam can answer the other. The Russians were quite skilful in allowing their currency to float in parallel with the fall in the oil price so that the rouble income that Russia enjoyed from oil and gas did not vary a great deal while the oil price was more than halving. If you calculate the size of their economy and their economic strength purely in dollar terms, the very sharp fall in the value of the rouble will be tracked by a much reduced dollar GDP. The Russian economy has kept going. It is not in great shape. It is overly dependent on hydrocarbon revenues, as you say, but the level of economic activity in Russia is probably not a great deal less than it was before. They allocate very large proportions of their budget and their national income to defence and security matters.
Sir Adam Thomson: I agree with all that. The fall in the Russian GDP that I am aware of is only of the order of 3% or so, so it is painful but not catastrophic. The last assessment I saw of costs for military operations in Syria suggested that it was quite sustainable within the Russian defence budget. That budget as a whole has had to stand still for longer than was originally planned, so Russian defence procurement has been set back by economic difficulty, but in the short and medium term there is every reason to suppose that the Russians can sustain very substantial defence spending if they wish to do so. It seems to me that the larger question around the Russian economy concerns it fundamental political structure. It is a rent-seeking economy based on corruption and oligarchy and that inhibits the reform the economy needs to remain competitive, so over time it is reasonable to expect it to encounter growing difficulty.
The Chair: Thank you very much indeed all three of you, and Lord Ricketts, for coming. If, on reflection, there are one or two aspects that we would like to write to you about, I hope that is okay. If I recall correctly, the 2010 national security strategy said that we no longer faced any state-based threats. Without touching on China, Iran or North Korea—and I know hindsight is a wonderful thing—that was perhaps a rather optimistic judgment. Thank you very much indeed for coming. It has been a very useful session.
[1] In 2017
[2] Note from Witness: I meant “international development.”
[3] GNI, not GDP
[4] Note from Witness: It should be convinced, not convicted.