INTELLIGENCE AND SECURITY COMMITTEE
Annual Report 1999-2000
Contents
Letter to
The Prime Minister
Intelligence
and Security Committee
Glossary
Introduction
Programme
of work
The
Agencies' Current Activities
SIS
GCHQ
Security Service
Central
Intelligence Machinery
National Intelligence Requirements
The JIC and the Intelligence
Co-ordinator
Defence Intelligence Staff
Personnel
and Management Issues
Recruitment and Retention
Employment Tribunals
Efficiency Advisor
Commissioners and Warrants
The
Investigator
Security Policies and Procedures
Information Technology in the
Agencies
Laptop Computers
Expenditure
Issues
Annual Budgets
***
GCHQ New Accommodation Project
Other
Matters
Report on the Agencies' handling of
Mr Mitrokhin and his material
Kosovo
Information Warfare
Files and Information Storage
Serious Crime including organised
illegal
immigration
Tobacco Smuggling
Drugs
Illegal Immigration
Y2K
Regulation of Investigatory Powers
Bill
Visits to
Developing Oversight
Conclusions
and Recommendations
Future
programme of work
Appendix 1
- Witnesses
Appendix 2
-
Appendix 3
- US Visit
Appendix 4
- Detailed Budgets
Prepared
From the
Chairman: the Rt. Hon. Tom King, C.H., M.P.
INTELLIGENCE
AND SECURITY COMMITTEE
70
The Rt.
Hon. Tony Blair, M.P.
Prime
Minister
Dear Prime
Minister,
In
accordance with the Intelligence Services Act 1994, I submit herewith the
Annual Report of the Intelligence and Security Committee for 1999-2000. Depending
on the date of the general election, this may well be my last as Chairman, and
I wanted to give you some thoughts on the experience so far.
I was
appointed in 1994 by your predecessor, John Major, as the first Chairman of the
newly established Committee, and I was reappointed by you in 1997. No such
Committee, with MPs being given wide access to the top secret workings of the
Intelligence and Security Agencies, had ever existed previously.
The
Intelligence Services Act defined the ambit of the Committee as the three
Agencies, SIS, Security Service and GCHQ. It soon became clear that the
Committee needed to look more widely at the whole intelligence community and
the law enforcement bodies that are making increasing use of intelligence in
their work. This has included the MOD, as the largest single customer of GCHQ,
and particularly the Defence Intelligence Staff, with its own substantial
intelligence capability. On the law enforcement side, there is an increasing
involvement of the Agencies with the police and HM Customs & Excise in the
field of organised crime, in particular in drugs, immigrants and excise
evasion, as well as the close co-operation in anti terrorism work. The final
element in the intelligence community is central co-ordination, with the
Ministerial Committee, the Cabinet Office co-ordinating and assessment staff,
and the Joint Intelligence Committee.
This much
more comprehensive range of intelligence related bodies, none of these
previously looked at by any Parliamentary Committee, is now covered by the
Committee.
The
Intelligence and Security Committee came into existence not long after the end
of the Cold War. The Soviet threat had been a principal pre-occupation of the
Agencies for nearly 50 years. There was an understandable expectation that this
new situation would allow considerable reduction in the scale of resources
devoted to intelligence and security. That started to happen, but more recently
new demands have emerged, and it will be necessary to maintain a sufficient
level of resources for this work. In contrast to what was the fixed defensive
line of the Cold War, well documented and studied, British troops, and our
allies, now find themselves deployed on active service at short notice in
hitherto unfamiliar territory such as Bosnia, Kosovo, East Timor and most
recently Sierra Leone. Their first requirement is fast accurate intelligence.
This requires greater flexibility in redirecting intelligence effort, and a
rapid response capability, and is a challenge for the Agencies which it is
essential they continue to meet.
One
particularly unwelcome consequence of the end of the Cold War has been the
boost it has given to international serious organised crime. There is less
control over materials for weapons of mass destruction, and the illegal trades
in drugs, immigrants, and cigarettes are on a truly global scale. In the face
of the volume of traffic entering this country the chances of preventing
criminal activities are not good. The briefest study of Heathrow or Dover
reveals immediately how fragile our present defences are, and without
intelligence they would be virtually non-existent.
On the
security front, the risks from international terrorism continue, while the dissident
Irish republican groups require attention as well.
The
Intelligence Services Act includes in the Committee's remit oversight of the
finances of the Agencies and we have developed this role significantly with the
assistance of the National Audit Office. In addition to reviewing the on-going
costs, we have particularly noticed the exceptional costs of the new
headquarters for both SIS and the Security Service, and the challenge of GCHQ's
New Accommodation Project, the largest expenditure ever in the intelligence and
security field, and which will need the closest interest of Ministers.
Initially
there was undoubtedly some apprehension in the intelligence community about
passing on sensitive information to the Committee, but gradually that has
improved. In part I believe this is due to the closer contact with
Parliamentarians (for some for the first time!) and an acceptance of their
integrity. In part it is due to the recognition by most in the intelligence
community that it is in their own interests to be as frank and forthcoming as
possible. They see that if the Committee is to reach fair judgements, it must
be well informed. I believe the Security Service and GCHQ recognise this and
try and achieve it. SIS seem to find it more difficult.
In general I
believe the Committee has made a good start and that there is a good basis of
confidence and trust with the Agencies which is essential if oversight is to
work. At the start the Committee's membership was almost entirely ex-Ministers.
After the last election there was a substantial change in membership with the
new members drawn more widely from the back benches, but no change in the
responsible and keenly interested approach that all have taken. That approach
has been further reinforced by the appointment of an investigator to support
the Committee.
I believe
your decision to invite us to conduct the Mitrokhin inquiry and to make
available all relevant papers, including exceptionally advice to Ministers,
reflected that confidence. In our findings, we sought to reflect both the
mistakes that were made that needed to be addressed, but also the context of an
outstanding intelligence achievement, which it certainly was. The Times leader
described the inquiry as "a strikingly successful piece of public accountability"
from which the Agencies, albeit subject to some criticism, could expect to draw
benefit from public confidence in their accountability.
One final
thought, Prime Ministers have differed in the degree of interest they have
taken in the Intelligence and Security Agencies, for which they have had
ultimate responsibility. The Ministerial Committee on Intelligence, which the
PM chairs, has met, under both recent administrations, very infrequently.
Efficient,
fully accountable Intelligence and Security Agencies are vital to our country
and that importance should be formally and regularly recognised. I therefore
hope you will accept the Committee's recommendation that the Ministerial
Committee should meet at least on an annual basis.
It has been
a most interesting challenge to chair this new Committee and I am grateful for
the active involvement and support of my colleagues. In particular it has been
a privilege to work closely with those who serve in our Intelligence and
Security Agencies. Mistakes are made and we will criticise failings as we find
them, but these should not detract from the recognition of the generally high
quality and commitment, and at times, great courage of those who serve our
country in these essential tasks.
Sincerely,
[Signature]
TOM KING
GLOSSARY
ASA Annual Security Appraisal
CDI Chief of Defence Intelligence
CESG Communications-Electronics Security Group,
GCHQ
COTS Commercial off-the-shelf
CNI Critical National Infrastructure
CNIP Critical National Infrastructure Protection
CSI Ministerial Committee on the Intelligence
Services
CSR Comprehensive Spending Review
DERA Defence Evaluation and Research Agency
DGIA Defence Geographic and Imagery Agency
DIS Defence Intelligence Staff
DPA Data Protection Act
DTI Department of Trade and Industry
DV Developed Vetting
FCO Foreign and Commonwealth Office
*** ***
FRY Former Republic of Yugoslavia
GCHQ Government Communications Headquarters
ISTAR Intelligence, Surveillance, Target Acquisition
and Reconnaissance
IT Information Technology
IW Information Warfare
JARIC Joint Air Reconnaissance Intelligence Centre
JIC Joint Intelligence Committee
JSSU Joint Services Signal Unit
KLA Kosovo Liberation Army
MOD Ministry of Defence
NAO National Audit Office
NAP (GCHQ) New Accommodation Programme (Project)
NATO North Atlantic Treaty Organisation
NCIS National Criminal Intelligence Service
NISCC National Infrastructure Security
Co-ordination Centre
*** ***
NTAC National Technical Assistance Centre
*** ***
OSA Official Secrets Acts
PAC Public Accounts Committee
PES Public Expenditure Survey
PFI Private Finance Initiative
PFIAB President's Foreign Intelligence Advisory Board
(USA)
PSA Public Service Agreement
PSIS Permanent Secretaries Committee on the
Intelligence Services
RIP Regulation of Investigatory Powers (Act)
SIE Romanian Foreign Intelligence Service
SIS Secret Intelligence Service
SIV Single Intelligence Vote
SRI Romanian Intelligence Service
UKIMN United Kingdom Intelligence Messaging
Network
UKUSA United Kingdom/USA (Intelligence
Agreement)
UNIRAS Unified Incident Reporting and Alert
Scheme
UOP Office of State Protection (Poland)
VAT Value Added Tax
WSI Military Intelligence Organisation (Poland)
Y2K Year 2000 problem/Millennium Bug
INTELLIGENCE
AND SECURITY COMMITTEE
The Rt.
Hon. Tom King, CH, MP (Chairman)
The Rt.
Hon. Lord Archer of Sandwell, QC The Rt. Hon. Barry Jones, MP
Mr Kevin
Barron, MP Mr Michael Mates, MP
The Rt.
Hon. Alan Beith, MP Mr Allan Rogers, MP
Mr Dale
Campbell-Savours, MP Ms Rosie Winterton, MP
Introduction
1. This
Annual Report covers the Intelligence and Security Committee's fifth year of
operation. The Committee is established under the Intelligence Services Act
1994 to examine the expenditure, administration and policy of the United
Kingdom's three Intelligence and Security Agencies: the Secret Intelligence
Service (SIS), the Government Communications Headquarters (GCHQ) and the
Security Service. Committee members are notified under the Official Secrets Act
1989 and operate within the 'ring of secrecy'. We report directly to you on our
work, and through you to Parliament. In the past year the Committee's
membership changed when Ms Yvette Cooper MP left the Committee to join the
Government. You appointed Ms Rosie Winterton MP to replace her.
2. In
preparation for this Annual Report we have taken evidence from 51 witnesses. A
full list is at Appendix 1 and includes:
- the Heads
of SIS, GCHQ and the Security Service, and a number of their staff;
- the Home
and Foreign Secretaries; and
- officials
from the Cabinet Office, the Foreign and Commonwealth Office, the Ministry of
Defence, the Home Office and the National Audit Office.
3. In
addition to our work on the Annual Report, you and the Home Secretary asked us
on 13 September 1999 to carry out an inquiry into the Security and Intelligence
Agencies' handling of the material provided by Mr Mitrokhin. We requested and
received a great deal of material from both this and the previous
administration, including advice to Ministers, and took evidence from a number
of witnesses. We reported to you on 20 April 2000, and the Report1 and the
Government's Response2 were both published on 13 June 2000.
4. The
Chief of Defence Intelligence gave evidence to the Committee and we had several
informal sessions with the three Agencies at their headquarters. We conducted
full Committee visits to the Composite Signals Organisation Scarborough, RAF
Menwith Hill and ***
as part of
our work and we also visited HM Customs and Excise in London and Dover. We
conducted sub-group visits to the SIS and Security Service.
5. As part
of the Committee's work on parliamentary oversight of intelligence matters we
visited Romania, Poland and the USA. We also hosted visits to the UK from the
oversight organisations in Slovakia, Norway, Croatia and Poland.
1. Cm 4764,
June 2000.
2. Cm 4765,
June 2000.
Programme
of work
6. In our
last Annual Report3 we identified a number of issues that would form the basis
of this year's programme. These were:
- the
process of establishing the requirements and priorities for the Agencies and
the allocation of sufficient resources to requirements;
- the
details and costs of the Private Finance Initiative (PFI) for GCHQ's New
Accommodation Project;
- the
Agencies' ability to operate into the year 2000 and other Y2K issues;
-
co-ordination between the Agencies and law enforcement organisations in
fighting serious organised crime, in particular the Agencies' work conducted
overseas;
- the
intelligence contribution to the Kosovo campaign and the analysis of the
material produced;
- in
respect of personal files:
i. whether
individuals should have rights in connection with the destruction or otherwise
of any file held on them and protection against having inaccurate information
gathered, stored and used against an individual's interests;
ii. the
position under current/future data protection legislation; and
iii.
implications of the European Convention on Human Rights;
- recent
measures taken to enhance the Agencies' internal security policies and
procedures; and
- any
changes in the funding and structure of the Defence Intelligence Staff (DIS) as
a result of the Government's Strategic Defence Review, and the implications
that these may have for the work of the Agencies.
7. We also
proposed to continue our inquiries into the UK's defences against information
warfare and the Agencies' Information Technology (IT) systems, in particular
the co-operation between the Agencies and their customers.
8. In the
event, our programme of work had to be reorganised to meet your request to
conduct an inquiry into the Security and Intelligence Agencies' handling of the
material provided by Mr Mitrokhin. This proved a substantial undertaking,
including taking oral evidence from 32 witnesses. As a result, our planned
programme had to be adjusted. During the year we:
- monitored
the impact of Y2K issues on the Agencies before and immediately after the New
Year, in terms of technical resources and impact;
- took
evidence on the process of establishing the Agencies' requirements and
priorities, in particular the roles of the Ministerial Committee on the
Intelligence Services (CSI), the Permanent Secretaries' Committee on the
Intelligence Services (PSIS) and the Joint Intelligence Committee (JIC);
- took
evidence on and a great deal of interest in GCHQ's New Accommodation Programme,
as it is now known, including reporting to you in March 2000 our concerns over
the large increase in transition costs;
- took
evidence on the impact of the Strategic Defence Review on the DIS and the
Agencies;
- examined
the intelligence contribution to the Kosovo campaign, taking evidence from the
Foreign Secretary and the Ministry of Defence in their role as customers;
- examined
the co-ordination between the Agencies and law enforcement organisations in the
area of excise evasion; and
- visited
Romania, Poland and the USA, which gave us a good insight into parliamentary
oversight systems that control and allocate funds for the intelligence
agencies.
9. The two
items we could not complete were consideration of the UK defences against
information warfare and the implications of the new data protection and human
rights legislation. We will, therefore, carry these forward in the coming year.
10. The
Investigator completed two investigations during the course of the year. He
reported to the Committee on the Agencies' Security Policies and Procedures,
and carried out supplementary work into the security of laptop computers. He
has also reported to us on the Agencies' IT Systems and Policies.
11. In
addition, the Committee considered a number of other intelligence and security
matters, which are relevant to our remit. We continued to work closely with the
National Audit Office (NAO) and examine any NAO reports pertaining to the
Intelligence and Security Agencies.
The
Agencies' Current Activities
12. Every year
each of the Heads of the Agencies gives formal presentations to the Committee
on their performance, priorities and future plans, and, in addition, we
conducted a number of joint sessions with them. We continued to take an
interest in the activities of the Defence Intelligence Staff (DIS), the Joint
Intelligence Committee (JIC), and the law enforcement agencies, examining in
particular these organisations' work with the Agencies. The DIS has a
particularly close relationship with the Agencies, as it is both a collector of
intelligence and a customer for the Agencies' product. The Chief of Defence
Intelligence (CDI) gave evidence to the Committee in these regards, (see
paragraph 24). There is a particularly close relationship between the DIS and
GCHQ as currently *** military personnel work within GCHQ4.
SIS
13. SIS
continued to devote significant resources to Russia and the Balkans. There are
currently about *** officers working on this latter area and this level of
commitment is expected to grow. Work against the proliferation of Weapons of
Mass Destruction also continued to account for a substantial share of SIS's
effort. About *** of SIS's effort is devoted to the fight against drugs ***
***.
In total,
approximately *** of SIS's effort is directed at meeting JIC First Order of
priority tasks. SIS has also been more involved in Africa in the last year,
particularly ***
***.5
GCHQ
14. GCHQ
has continued to provide valuable intelligence for both policy makers and
operational deployments of UK forces. *** of their effort is targeted against
Russia, which includes strategic, political, and military reporting, *** on
terrorism, and *** on the Balkans. The quality of intelligence gathered clearly
reflects the value of the close co-operation under the UKUSA agreement. A
recent illustration of this occurred when the US National Security Agency's
(NSA) equipment accidentally failed and for some three days US customers, as
well as GCHQ's normal UK customers, were served directly from GCHQ6.
15. The
major challenge to the continuing effective performance of GCHQ will be the
successful completion and transition to the new single site as part of the New
Accommodation Programme, which we discuss further in paragraph 51.
Security
Service
16. The
Security Service devotes over 50% of its effort to the fight against terrorism.
A significant proportion of this is linked to Irish related terrorism, with
work against state sponsored, separatist and Islamic terrorist groups covering
the remainder. The bomb attacks in London during June and July indicate that
the threat from Irish-related terrorism still exists. Just over 20% of the
Service's work is directed against hostile activity by foreign intelligence
services. The Committee was told once again of the significant Russian activity
in the UK. Other countries mentioned in this context include ***
***7.
The
Security Service's role in support of the law enforcement agencies is clearly
increasing and it is likely to continue to do so.
Central
Intelligence Machinery
National
Intelligence Requirements
17. The
Committee has investigated the role of Ministers, the Joint Intelligence
Committee (JIC), the Intelligence Co-ordinator and customers in establishing,
authorising and verifying the National Intelligence Requirements, which are the
requirements and priorities for secret intelligence for the SIS and GCHQ. The
National Intelligence Requirements paper is a five-year forward look, but with
particular concentration on the year ahead. The Security Service's priorities
are directly determined by its own statutory function, which is to protect
against substantial, covertly organised threats, primarily from terrorism,
espionage and the proliferation of weapons of mass destruction, and support law
enforcement agencies in fighting serious crime. However, the National
Intelligence Requirements are noted in drawing up these priorities. The
Security Service's work is reviewed and validated by a separate Cabinet Office
committee, known as the Sub-Committee on Security Service Priorities and
Performance, and then agreed by Ministers.
18. The
present system is that the Intelligence Co-ordinator compiles the National
Intelligence Requirements paper, following discussions with the customers of
secret intelligence within Whitehall and other organisations such as the
police, and the Agencies. The paper is then endorsed by the JIC before being
passed to the Permanent Secretaries' Committee on the Intelligence Services
(PSIS), which is chaired by the Cabinet Secretary. PSIS, which also considers
the Agencies' budgets, endorses the National Intelligence Requirements and then
passes them on to the Ministerial Committee on the Intelligence Services (CSI),
which you chair. CSI approves the National Intelligence Requirements, but this
is done by correspondence8.
19. We were
surprised to learn that the CSI has not met since 1995 and that PSIS has only
met 3 times since 1997. We were told that CSI is not responsible for setting
the Agencies' budgets, because it is done within the Single Intelligence Vote
(SIV) which is jointly sponsored by the Home, Foreign and Defence Secretaries
in the public expenditure planning process. The Secretary of the Cabinet is the
Principal Accounting Officer for the SIV. We believe that there should be a
clear recognition and demonstration of the lines of responsibility and
authority for these important Agencies. We recommend that CSI should meet,
under your Chairmanship, at least annually to approve the National Intelligence
Requirements and endorse or approve the Agencies' budgets.
The JIC and
the Intelligence Co-ordinator
20. The
Intelligence Co-ordinator also develops and approves the *** regional and
functional Guideline papers, which supplement the National Requirements Paper,
and also only apply to the SIS and GCHQ9. These Agencies and their customers
engage in a bilateral process, know as "fine-tuning", to ensure that
the intelligence collected is focused to the needs of the customers. These
Guideline papers do not need to be approved by the JIC.
21. Turning
to the JIC itself, we were surprised to learn that the Home Office only became
a permanent member of the JIC in April 200010. The JIC is currently formed by
its Chairman, the Chief of Assessments Staff, three MOD members, two FCO
members, a DTI member, a Treasury member and the three intelligence and
security Agencies' heads. The Intelligence Co-ordinator used to have a seat on
JIC, but as the Chairman of the JIC currently holds that appointment as well
there is no need for separate representation. There are no representatives from
Law Enforcement Agencies on the JIC. We were told that they are invited to
attend as necessary. This means that the Police, NCIS and HM Customs and Excise
are only able to influence the Requirements and Priorities and the assessments
when they are consulted. With the increasing involvement of the Agencies in the
fight against serious crime, we are concerned that interests of law enforcement
are not properly represented within the JIC. We recommend that a NCIS
representative be appointed to the JIC, in addition to the Home Office
representative. Additionally, we believe HM Customs and Excise's interests
should be directly represented.
22. The
Committee noted the Government's decision to combine the position of JIC
Chairman with that of the Intelligence Co-ordinator. This allows the central
government customer, the JIC Chairman, to set the Agencies' requirements and
priorities, and advise on their funding needs. Traditionally, the JIC Chairman
has been from the FCO, whilst the Co-ordinator had been ex-Agency at a minimum
of Deputy Secretary level.
23. The
Committee is concerned that, by appointing the JIC Chairman as the Intelligence
Co-ordinator without previous Agency experience, the position is being reduced
in scale and influence. The joint JIC Chairman/Intelligence Co-ordinator may
not "know and understand" the Agencies' business nor does the
position of the Intelligence Co-ordinator carry sufficient authority within the
Central Intelligence Machine. We have noted in our Investigator's reports (for
details see paragraph 41) that there is a weakness in the centre and that the
Agencies need stronger co-ordination. The Committee believes that the person
appointed to this joint position will have to be at least as senior as the
Agency Heads in order to be able effectively to co-ordinate the Agencies. It is
for consideration that the post should be filled from within the intelligence
community rather than the Diplomatic Corps. We believe that the joint position
of JIC Chairman/Intelligence Co-ordinator will only be successful if the post
holder has sufficient authority and influence to formulate and implement
policy, as well as offer guidance to the Agencies.
Defence
Intelligence Staff
24. The
Committee notes that the Joint Air Reconnaissance Intelligence Centre (JARIC),
now joined with Military Survey to form the Defence Geographic and Imagery
Agency (DGIA), is controlled by the Chief of Defence Intelligence (CDI). JARIC
is tasked by the MoD to support the intelligence requirements of operational
commanders, military staff and the DIS. Whilst JARIC does not fall within the
remit of the JIC and the National Intelligence Requirements, CDI stressed in
evidence to the Committee that he and the Commanding Officer at JARIC used the
JIC's requirements to guide its work. However, in the MoD's report into Kosovo
"Lessons from the Crisis"11, the lack of Intelligence, Surveillance,
Target Acquisition and Reconnaissance (ISTAR) capability was highlighted. It is
also important to remember that the UK's modern precision weapons all need
highly accurate target data. This is an area where strategic assets can play a
role.
25. In
evidence to the Committee CDI stated that the Agencies were using more and more
of JARIC's product as part of their work12. In the Committee's view JARIC is a
national resource and could be better tasked from the national level. This
would mean that the JIC National Intelligence Requirements paper would act as
the prioritising document and that JARIC would then serve the national requirement
and its performance would be assessed by the JIC. This would not mean a
degradation in the product that JARIC produces for operational commanders, as
support to UK armed forces and operations is ***.
The
Committee believes that this administrative move would recognise that JARIC
supports national interests and therefore opens the way for JARIC to be funded
in part from outside the MoD budget.
26. During
our visit to the US, we were able to meet with the Directors of the National
Reconnaissance Office and the National Imagery and Mapping Agency. From our
discussions with them on *** it became apparent that *** will be upgraded ***.
We believe
that the UK needs to be *** to ensure that the UK remains ***.
***
***
***
***
***
***
***
***
***
We believe
that the UK cannot afford not to be involved in this work. We will continue to
monitor this matter.
Personnel
and Management Issues
Recruitment
and Retention
27. The
Agencies confirmed that they have been able to recruit sufficient main stream
staff but they were still having difficulty recruiting specialist staff, such
as IT and electronics specialists. The Security Service stated that it was
employing more casual staff on short contracts to ***. The Service also was
having retention problems with staff after 3-4 years, in common with other
Government Departments.
28. The
Agencies have continued to consult their staff over a number of issues, by
means of staff surveys. The Committee notes that these have generally shown
satisfaction with the Agencies as employers. In the recent staff survey in the
Security Service, the main complaint was that a significant number of the staff
did not believe that they were paid enough for their work. In GCHQ's case the
staff expressed concerns about management, team working/communications and pay.
The Committee notes that the senior managers of both Agencies are taking steps
to address these issues. The report by Lt Gen. Sir Edmund Burton into GCHQ's
NAP also highlighted the need for better training and career planning within
the Agency to ensure that it has the correct skills base in the future. We
believe that the staff surveys and the more recent Burton report were valuable,
and we shall continue to monitor them, and management responses to them.
Employment
Tribunals
29. In our
1997-98 Report13 we recommended that a dedicated and specially cleared
Employment Tribunal be established to hear Agency staffs' cases when they could
not appear before a normal Employment Tribunal for national security reasons. Last
year the Government amended the Employment Relations Bill in the Lords to allow
the Agencies' employees the opportunity to attend a specially constituted
Employment Tribunal. The Committee, which was not consulted about the drafting
of the amendment, was concerned that the Government would have the ability to
exclude the applicant and/or their legal representative from all of the
proceedings. Whilst the Secretary of State for Trade and Industry did not
accept the amendments tabled in the Committee's name, which wished to limit the
applicant's exclusion to only part of the proceedings, an amendment was later
accepted allowing an applicant to make a statement prior to their exclusion. The
Secretary of State also offered us the opportunity to comment on the draft
Rules of Procedure covering the Employment Tribunals (National Security).
30. In our
Report last year14, we said that, if the Government required special powers of
exclusion on grounds of national security, we believed that the Commissioners
should examine the use of those powers. We recommended that you require any
Minister exercising this power to submit their direction to the Commissioners
for their consideration. We also recommended that this provision be
incorporated in legislation. Our reaction had been based on our view that the
Act, as amended, did not fully meet the objective of the Committee because
access to a tribunal was potentially severely limited and reliance was placed
on Judicial Review as the only means of redress by an excluded applicant.
31. In the
response to our Report15, the Government stated that it had "legislated
quickly to allow all staff of the Agencies to take grievances to an employment
tribunal. This followed the Committee's recommendation last year". The
response continued "The Government is therefore disappointed at the
reaction of the Committee to this prompt improvement in the rights of members
of staff of the Agencies". The response addressed the issue of the
involvement of the Commissioners as follows "In view of the Committee's
recommendation, the Government will consider, in the light of experience of the
operation of Ministers' powers of exclusion, whether there would be any benefit
from involvement by the Commissioners". The Government once again stated
that if an applicant wished to challenge a Minister's decision to exclude them
"judicial review would provide an immediate remedy".
32. During
the debate on the Committee's Report16 on 22 June 2000, the Foreign Secretary
stated that the Department for Trade and Industry intends "to consult the
ISC next month on draft regulations, and I hope that that will enable us to
make progress"17. As we prepare this Report for you, we have not yet been
given the draft Rules of Procedure for the Employment Tribunals (National
Security). This delay in producing the regulations for the operation of the
tribunal is not "a prompt improvement in the rights of members of staff in
the Agencies". The Committee expects to be consulted on the Rules of
Procedure and to see them carried into effect without any further delay.
Efficiency
Advisor
33. In our
Report last year we requested that the Efficiency Advisor's reports be copied
to the Committee. The Government gave us a copy of the Efficiency Advisor's
first report, dated April 1999, in June 2000, over 14 months after it was
produced. We have just received a copy of the Efficiency Advisor's second
report dated April 2000. The Committee hopes that further reports will be
passed to us in a timely manner. These reports build on the areas of efficiency
identified in the Single Intelligence Vote Review and the Efficiency Advisor's
first report. The first report recommends that the Agencies "need to
consider on a consistent basis and at a strategic level the potential for
synergies with other parts of UK public service engaged in analogous work,
notably the law enforcement agencies". We have not examined these reports
this year, but it will be part of our programme of work for next year and we
will report to you in due course.
34. We
noted with interest that the Agencies now have formal Public Service Agreements
(PSA), which are currently being revised. One of the major difficulties the
Agencies have in producing a workable PSA is in defining the measurable outputs
of the organisations. While the Agencies are working to develop sensible but
challenging measures that they can then be assessed against, some of those
developed to date seem unrealistic. We support the development of sensible,
quantifiable measures, but believe that more work is needed in this area.
Commissioners
and Warrants
35. In our
last Annual Report18, we requested sight of the confidential annexes to the
Commissioners' reports to the Prime Minister under the Interception of
Communications Act 1985, the Security Service Act 1989 and the Intelligence
Services Act 1994. In the Government's response19 you declined our request,
stating that the Government would seek to provide the Committee with the information
necessary to satisfy any particular concern the Committee had. This request for
the annexes did not mean that the Committee wished in any way to scrutinise the
warrants, which is the sole task of the Commissioner, nor would the Committee
wish to have unnecessary access to operations or technical methods. But we do
wish to establish how mistakes were made and to oversee the action the Agencies
have taken to ensure the errors do not occur again. We still believe that it is
important for us to see the classified annexes to be able to establish the
corrective action that the Agencies have introduced following the
Commissioners' identification of errors and thus fulfil our statutory
requirement to oversee the Agencies' administration processes.
36. Lord
Nolan and Lord Justice Stuart-Smith retired as Commissioners earlier this year.
The Committee appreciated the opportunity to discuss their work and we
recognise the serious and conscientious approach that they both brought to
their important tasks. We look forward to an early opportunity of meeting their
successors Lord Justice Swinton Thomas and Lord Justice Simon Brown.
The
Investigator
37. The
Committee's Investigator completed two substantial reports for us during the
year. In November 1999, he completed his report into the Agencies' Security
Policies and Procedures. Additionally, as part of this, the Investigator
produced a short report on the Agencies' use of laptop computers and the
security issues arising. We then tasked him to look at the Agencies' IT Systems
and Strategies. The aim of this latter report was to examine the Agencies'
record of IT procurement, in light of the prominent IT failures within other
areas of the public sector, and establish the views of the Agencies' customers
on the IT connectivity between them and the Agencies.
Security
Policies and Procedures
38. Since
its establishment the Committee has maintained a keen interest in the security
policies and procedures of the Agencies. In his report to the Committee the
Investigator set out to establish what progress had been made in the areas
which concern us most, notably personnel and IT security. The Committee:
a) notes
that the Cabinet Office provides the policy framework for protective security,
but Departments, including the Agencies, manage their own security risks. The
Security Service is pursuing what it believes is scope for significant
improvements in overall UK security standards. The Investigator told us that in
recent years the Agencies have taken significant steps to improve their overall
security and have further promising measures in train;
b) notes
that the Agencies are working on methods of psychological testing to identify
adverse character traits as a supplement to the DV process. However, the cases
***
have highlighted
the importance of personnel security and of identifying individuals with
problems at the earliest possible stage. We recommend that a more co-ordinated
and rigorous project-based approach is adopted, building on US experience;
c) notes
that the Annual Security Appraisal (ASA) exercise for all DV'd staff provides a
valuable method of identifying emerging problem cases. We recommend that all
three Agencies adopt an ASA procedure based on the GCHQ approach as
representing best practice;
d) recommends
that the periodic (generally 5-yearly) DV review process is strengthened to
detect lifestyle mismatches and the possession of unexplained wealth by holding
more DV review interviews at the subject's home;
e) notes
that each of the Agencies maintains its own small team of vetting officers. While
it might appear that a common pool would be more efficient, we agree that there
are strong grounds for retaining individual Agency ownership of the vetting
process;
f) notes
that GCHQ's 7-point Risk Rating system provides a systematic way of identifying
character defects and measuring the personnel security "health" of an
organisation. We recommend that SIS and the Security Service give serious
consideration to adopting it as best practice, despite their belief that this
is an unnecessary addition to their procedures;
g) notes
that the Agencies are seeking to improve security by reducing the volume of
paper records and as far as possible eliminating ***.
These steps
make it harder for a spy or a person with malicious intentions to remove
classified material. ***
***
***
and
deterring anyone who may be tempted to breach the "need to know"
principle. We were told that the SIS and Security Service plan to bring in ***
as soon as possible and it may be applicable to other organisations. By
contrast, GCHQ are seeking to control access to information through the
establishment of ***
We accept
that ***
***
***
***; and
h) believes
that it would be a cause for serious concern if the high levels of security in
the Agencies were not matched by correspondingly high standards in the
Departments receiving their products. We recommend that where best Agency
security practice is identified, it should be considered for application by the
wider UK DV community.
Information
Technology in the Agencies
39. The
Investigator's wide-ranging review of Information Technology in the Agencies
covered four interlocking elements:
a) the
Intelligence Community's central IT policy mechanisms and how these affected IT
developments in the Agencies;
b) the
Agencies' internal IT systems;
c) the secure
electronic communications systems linking the Agencies, their customers and
other organisations; and
d) IT
developments in the Agencies' key customers, and the extent to which IT
developments in the Agencies and their customers affected each other.
40. Thus
the investigation embraced IT developments throughout the UK Intelligence
Community. It included an examination of each Agency's performance against its
IT plans during the past decade. In addition, at the Committee's request, the
Investigator undertook a detailed review of David Shayler's public allegations
of IT mismanagement in the Security Service, (see paragraph 41 e).
41. The
review of IT developments in the three Agencies since 1990 concluded that the
overall record of each is creditable. There have been significant problems with
administrative IT projects in each Agency, while some core business IT projects
have gone through difficult patches. But these were no more than might be
expected in comparable public or private sector organisations. The Committee:
a) notes
the concerns about ***
***
***
***
The
Committee is awaiting a Security Service memorandum on the subject;
b) notes
that there were worries in the Community about a "void at the
centre", in particular the feeling that the JIC should play a more active
role in developing IT issues. The Investigator concluded that the central IT
machinery was not appropriately structured to support Community-wide
developments such as the UK Intelligence Messaging Network (UKIMN) and its ***
development, ***. We are concerned that a proper business case had not been
produced *** (which is as yet not funded centrally) and that it had still to
find agreement on the right balance between security and functionality. The
Committee notes that the Chairman of the JIC/Intelligence Co-ordinator is now
playing a more active role in the co-ordination of community-wide IT issues,
***
***
However, we
recommend that a Project Manager is assigned to this project;
c) notes
that there are specific concerns about ***
***
***;
d) notes
that the threat from computer viruses and worms is not receding and may
increase; ***
***
***;
e) notes
that the Investigator carried out a detailed examination of David Shayler's
allegations about Security Service IT incompetence in the 1990s. He concluded
that Shayler's allegations can be discounted as unjustified, that the situation
was not as Shayler described and that the Service's record on IT is creditable;
f) notes
the Investigator's conclusion that the Agencies' current IT planning is well
integrated with their business strategies, and that they are taking account of
lessons learned, in particular the need to involve users more closely in
projects and have an effective change management strategy. However, there has
been a historic weakness in carrying out formal Project Implementation Reviews
in SIS and the Security Service, both of whom are now taking appropriate
action. The Committee accepts these findings, but in the case of GCHQ it will
be considering the broader issues raised subsequently in Lt Gen Sir Edmund
Burton's "Review of GCHQ New Accommodation Project". The Committee is
concerned that IT planning is not adequately integrated within the New Accommodation
Programme. This is further covered in paragraph 58;
g) notes
that the Agencies are still unable to offer the market pay rates needed to
retain or recruit all the skilled and specialist IT staff they require. This is
due at least in part to internal policies, but also to HM Treasury rules which
forbid switching money between staff and non-staff costs. The result is an
excessive (and expensive) reliance upon the long-term use of external, contract
staff. We recommend that this situation is reviewed to ensure that the Agencies
can provide the best value-for-money service; and
h) there is
good co-operation between the Agencies on IT issues and mutual support where
appropriate. But we recommend that there should be more active interchanges
between the Agencies and the DIS, their largest single customer, in particular
to resolve outstanding *** relating to the storage and use of Agency products.
Laptop
Computers
42. The
loss (and subsequent recovery) and theft respectively of SIS and Security
Service laptop computers led the Committee to ask questions about the Agencies'
security policies for portable digital storage equipment. We commissioned a
short report by the Investigator on the basis of which the Committee:
a)
recognises that laptops are a necessary element in Agencies' work;
b) supports
the basic assumption that on occasion it will be necessary for laptop computers
to be taken out of an Agency. The Agencies are clearly aware of the risks
involving laptop computers off their premises and have appropriate protection
measures in place;
c)
recommends that where there is a loan pool of laptops, they must be issued by
the competent IT organisation for a specific period on a "recall and
wipe" basis;
d)
recommends that when laptops are issued for extended personal use there must be
a procedural system to ensure the laptop's contents are monitored regularly to
ensure there is no excessive build-up of classified information and to remind
the user of their security obligations;
e) notes
that there is an imperative requirement for further development of Kilgetty
Plus (a hardware/software kit developed by CESG (Communications-Electronics
Security Group, GCHQ) which provides complete technical security) to ensure
that it keeps up with hardware and software developments. We recommend that
robust funding arrangements are put in place to cover this work. Assuming this
is done, the Committee:
f)
recommends that Kilgetty Plus ***
***
Security
checks on entry and exit can verify that the laptop is ***. Special arrangements,
***, will be necessary to cover laptops ***;
g) notes
that Biometric techniques (e.g. fingerprint recognition) may some day prove
useful in protecting laptops against attack, but the technology is far from
mature; and
h)
recommends that Agencies ensure that their security procedures are laid out as
clearly as possible and regularly reviewed, that staff know whom to consult in
case of doubt, and that there are periodic publicity campaigns on the
importance of observing the set procedures.
Expenditure
Issues
Annual
Budgets
43.
Following on from our Report last year and the Government's response to it, the
Committee met the Heads of the three Intelligence and Security Agencies. At
that meeting it was agreed on all sides that, subject to Ministerial approval,
the budgets for the individual Agencies could be made public next year for the
first time as part of the process of increasing transparency. This will allow
the figures to be published in the new Government Resource Account method. However
we understand that at present Ministerial approval is not forthcoming for this.
The Committee would not wish to see the figures published annually as this
would indicate the funding trends for the Agencies, which would not be in the
National Interest. We request that you give the issue of publication further
consideration.
44. The
Agencies' budgets are shown below, with the figures for 2001/02 onwards taken
from the Comprehensive Spending Review announced on 18 July 2000. The
individual Agency budget and expenditure figures are at Appendix 4. The
Committee has noted that the figures given are under resource rather than cash
accounting and that, due to the different treatment of civil estate costs under
resource accounting, the annual budgets have appeared to increase
significantly. The Committee was told that the Single Intelligence Vote has
increased by just under 10%, largely to fund GCHQ's New Accommodation
Programme.
All figures
£m (Cash)
SIS
GCHQ Security
Service SIV TOTAL
1994/95 *** ***
*** 855.1
1995/96 *** ***
*** 780.8
1996/97 *** ***
*** 740.7
1997/98 *** ***
*** 703.3
1998/99 *** ***
*** 685.7
1999/2000 *** ***
*** 768.9
2000/2001 *** ***
*** 802.8
2001/2002 *** ***
*** 876.0
2002/2003 *** ***
*** 885.9
2003/2004 *** ***
*** 940.9
Notes:
1. These
figures exclude the costs of the SIS and Security Service pension schemes.
2.
'Exceptional' costs associated with the moves of SIS and the Security Service
into Vauxhall Cross and Thames House respectively are included in the earlier
years.
3. Figures
for 1998/99 onwards show a net reduction of around £14m, reflecting
accounting adjustments with the introduction of capital charging for property.
4. The
figures for 1998/99 are the final outturns for the period, the figures for
1999/2000 are provisional outturns.
5. The
figures for 2000/2001 to 2003/2004 are taken from the Comprehensive Spending
Review announced in July 2000 and are the new resource account. They include
provision for the GCHQ New Accommodation Programme.
45. We
examined the budgets for the three Agencies, both in cash terms and the new,
draft resource form, with the NAO. Our biggest concern was the GCHQ Resource
Account, which showed that GCHQ had not developed a suitable system of
locating, tracking and agreeing ownership of its assets. We noted that GCHQ is
working with the Valuation Office to ensure that its asset register is current
and that the assets listed are identified. The SIS budget also increased this
year as a result of the PES transfer from the FCO to cover the accommodation
abroad and a share of FCO infrastructure costs at missions and in the UK. This
means that the Service now pays for what it uses.
46. All
three Agencies submitted bids for additional funding within the Comprehensive
Spending Review (CSR) to enable them to maintain the current service they
provide and to take on additional work, such as funding for the National
Technical Assistance Centre (NTAC). The Director General of the Security
Service confirmed that next year was going to be difficult. He had ***
***
***
Additional
work requiring new money was bid for as policy options, in which the Government
was invited to choose which options it wanted the Service to pursue. These included
***
***
***
47. The
Chief of the SIS stated that, ***
***
***
***
***
***
***
***
***
***
48. We are
also concerned that GCHQ has to find additional funds from its already
stretched budget to fund the transition costs for its move into the New
Building at Benhall. This additional burden of an average of *** per annum for
the next five years is forcing the Director to cut back on both operational and
research spending. In evidence, the Director told us that GCHQ was "***
***
***
***
***
***
***
***
***
***".
49. The
Committee believes that the Government needs to consider carefully these
requests, particularly if it wishes the Agencies to do more work in these
areas, which include additional work against serious crime and drugs, Critical
National Infrastructure Protection and support to the Government Technical
Assistance Centre. We will review the individual Agency budgets to establish
that the Agencies are not being overstretched by being asked to do more for
less. We are also very concerned about the budgetary pressure that is being
placed on GCHQ.
***
50. ***
***
***
***
***
***
***
***
***
***
GCHQ New
Accommodation Project20
51. In our
last Annual Report21 to you, we stressed "the challenge of ensuring that
the project [GCHQ New Accommodation Project] is brought in on time and to cost
with no interruption to operating capabilities during this reorganisation is a
daunting one, which will demand the highest levels of management and technical
skills". We set out the key principles for managing a project such as
this:
i. Initial
estimates should be adequately drawn up.
ii.
Objectives including time and cost targets should be set at the earliest
opportunity.
iii. The
cost of consultancy work should be set against a pre-determined target
percentage and be subjected to rigorous competitive tendering.
52. We were
particularly concerned because we saw the GCHQ NAP as a much more complex and
critical project than the other two new headquarters, in which cost had
significantly exceeded early estimates. We were determined to warn against a
repeat of this with the new GCHQ building.
53. In
December 1999/January 2000 we learnt that while the negotiations with the PFI
preferred bidder were slowly progressing, GCHQ had revised the transitions
costs of the move from the two existing sites to the new building. We
understood that Ministers would be asked to authorise transition costs between
four and ten times the original estimates. We therefore recalled with interest
the Government's statement in its response to our Annual Report "GCHQ has
sought to ensure that the maximum likely costs have been identified (and
included in value for money assessments) before Ministers are invited to reach
a final decision on whether or not the project should proceed"22.
54. We
visited GCHQ on 28 February 2000 to discuss the NAP with GCHQ managers and to
meet the NAP team. During the course of the presentation we learnt that, while
the negotiations with the PFI bidder had proceeded successfully, the estimated
transition costs (which are not part of the PFI package) had now risen from the
approximate £60 million given previously in evidence23. We were told that
if GCHQ conducted the move in the way it had initially wished, with a
significant element of duplication and parallel running, the cost would be
approximately *** million. However, GCHQ had revised its transition method and
an estimate of *** million was put to the Treasury and Cabinet Office. Further
work had been done on this plan and the cost was brought down to an estimated
*** million. This was over four times the original estimate.
55. We also
noted that by December 1999 the net present value of the PFI contract had risen
to £540 million. This, we were told, compared favourably with the revised
(September 1999) Public Sector Comparator Benchmark of £763 million.
56. The
Chairman wrote to you and the Foreign Secretary on 1 March to express the
Committee's concern at the scale of the cost increases. The Foreign Secretary
replied on 3 March stating that the only alternative to the Benhall PFI
proposal that would substantially reduce the costs of transition would be to
continue on their two existing sites. This two-site option had been estimated
to cost £842 million (net present value) while the Benhall PFI and
transition costs was estimated at £793 million (net present value). The
Foreign Secretary stated that the Benhall PFI "is therefore substantially
cheaper, as well as offering considerably greater efficiency and economy in
operation. The Chief Secretary [to the Treasury] and I are therefore satisfied
that the Benhall PFI proposal continues to provide better value for
money". However, the Foreign Secretary admitted "the detailed work to
identify the full costs has certainly been undertaken later than it should
have. But it has been carried out before we took a final decision that the
single site PFI option (including transition costs) represented the best value
for money".
57. The
Foreign Secretary was also under pressure to take that final decision and
authorise GCHQ to sign the contract with the PFI consortium. The PFI consortium
needed to start preliminary work in March and was content to do so without
contract signature, provided they were assured that the Foreign Secretary had
approved the project. This meant that the Foreign Secretary had to approve the
project in early March.
58. In the
light of the increase in cost, the Secretary of the Cabinet, Sir Richard
Wilson, invited Lt. Gen. Sir Edmund Burton, formerly Deputy Chief of Defence
Staff (Systems), to conduct a review of the management of the project. The aim
of the review was to establish the reasons why a substantially based cost
estimate and options for the technical decant emerged only late in 1999; and,
whether the arrangements now in place for managing the project as a whole are
effective and provide confidence that it will be implemented successfully. The
Committee welcomed this review, which was concluded on 1 June 2000 and passed
to us on 12 June 2000. The review confirmed in the clearest terms the scale of
the challenges that the programme presents GCHQ, and the range of high risks
that could affect its successful completion.
59. We
discussed the review with the Foreign Secretary on 21 June 2000, during which
we stressed again the critical importance of high quality project management
skills within GCHQ to ensure that the Benhall PFI and the transition were
completed within budget, on time and with minimum disruption to the service. We
also met Sir Edmund on 19 July. The Committee is in substantial agreement with
his conclusions and believes that Sir Edmund can play a very important role in
the NAP to facilitate its successful completion and we recommend that he
remains involved in an advisory capacity.
60. The
Committee believes that the NAP represents a very substantial additional
responsibility to the already demanding responsibility of managing the normal
operations of GCHQ. It is essential that this is recognised and that the
Director gets the support necessary for this dual responsibility.
61. Work is
in hand in the NAO to examine the arrangements surrounding the PFI contract and
we look forward to seeing their report in due course.
3. Cm 4532,
November 1999.
4. Evidence
from GCHQ, May 2000.
5. Evidence
from the Chief of SIS, May 2000.
6. Evidence
from the Director of GCHQ, May 2000.
7. Evidence
from the Director General of the Security Service, April 2000.
8. Evidence
from the Cabinet Office, March, April, May 2000.
9. Evidence
from Cabinet Office, April 2000.
10.
Evidence from the Cabinet Office, May 2000.
11. Cm
4724, June 2000.
12.
Evidence from the Chief of Defence Intelligence, March 2000.
13. Cm
4073, October 1998.
14. Cm
4532, November 1999.
15. Cm
4569, January 2000.
16. Cm
4532, November 1999.
17. Hansard
22 June 2000 Col 538.
18. Cm
4532, November 1999.
19. Cm
4569, January 2000.
20 The New
Accommodation Project became the New Accommodation Programme in early 2000 to
encompass both the PFI and the transition.
21 Cm 4532,
November 1999.
22 Cm 4569,
January 2000.
23 Evidence
from GCHQ, June 1999.
Other
Matters
Report on
the Agencies' handling of Mr Mitrokhin and his material
62. We
reported to you on 20 April 2000 on the findings of our inquiry into the
Security and Intelligence Agencies' handling of the material provided by Mr
Mitrokhin. The Committee was only able to carry out this inquiry through access
to all the relevant papers, including advice to Ministers, from both your and
the previous administrations. We believe that, as a result, our Report24, while
critical in a number of important aspects of the Mitrokhin affair, gave credit
where credit was due, was recognised as a fair and objective review of the
various issues, and put in proper perspective matters of keen public interest.
63. In the
Report, we highlighted the fact that while mistakes had been made within the
Security Service, the system to consult the Law Officers on prosecutions had
been changed, and a new system and criteria for referral were being trialled. Additionally,
we were told that the Director General of the Security Service would now report
annually to the Home Secretary on the current status of all espionage cases. As
part of that work, the Director General had employed a retired staff member to
check the records to ensure that no other cases had slipped out of sight. We
intend to monitor these new systems and will report to you again in due course.
Kosovo
64. In our
last Annual Report25 we stated that we would take evidence on the intelligence
contribution to the Kosovo campaign and the analysis of the material produced. To
that end we took evidence from the three Agencies on their contribution to the
campaign, together with the lessons they had learnt. We also received evidence
from the Cabinet Office, MoD and FCO from their perspective as customers and
users of the intelligence provided by the Agencies. We asked these departments
to identify any shortcomings with the system, particularly in terms of response
time, flexibility and quality. As part of this work we also took oral evidence
from the Foreign Secretary, the Chairman of the JIC, and the MoD Policy
Director.
65. We were
told that the SIS and GCHQ provided very valuable intelligence before, during
and after the campaign. The SIS made full use of its *** sources ***
***
During the
campaign itself, SIS provided intelligence on ***
***
***
The SIS
also provided intelligence ***
***
Reporting
also illuminated ***
***
***.26
66. GCHQ
provided a flexible and in-depth service of intelligence, including***
***
***
It provided
intelligence on ***
***
GCHQ
monitored the situation *** and helped to provide reassurances that ***
***
***
GCHQ stated that some *** of the intelligence that went to
UK customers was *** in origin27.
67. GCHQ did comment that ***
***
***
The Committee is concerned that ***
***
The Foreign Secretary stated that "***
***
***28
The Committee noted that GCHQ is working with the MoD ***
Additionally, we understand that GCHQ ***
The Committee will continue to take an interest in this
matter, to ensure that the Agencies' views can be taken into consideration ***
in future conflicts.
68. The Agencies' customers were fully satisfied with the
Agencies' reporting and were able to interact effectively with them to ensure
best use was made of the available resources. The customers also stressed that
"the close intelligence relationship with the US continued to be very
important." The intelligence provided helped to inform the decision-making
process across the range of Government activities, from decisions on overall
direction of policy to issues such as targeting. The customers found the
Agencies to be responsive to changes in tasking as circumstances changed29.
69. One particular requirement the Government put on the
Agencies, and the MoD, was for suitably sanitised material that could be used
for a variety of purposes, including being passed to NATO and other Governments
or into the public domain. The MoD commented that this was one area where
national assets were useful, as the UK had control over the sanitisation and
distribution process30. The Government has also learnt that it needs to collect
intelligence *** from the early stage of any crisis. The customers also
commented that the Agencies were ***
***
70. The SIS told us that it was able to respond to the
demands made upon it, but these demands placed a severe strain on its staff.
***
***
***
***
The SIS identified the following lessons learned:
i. the importance of having mechanisms in place from the
beginning of a crisis to speed up the turnaround time of intelligence to the
senior reader;
ii. the need to cope with customers' demands for putting SIS
intelligence ***; and
iii. ***
***
***31
71. GCHQ ***
***
***
GCHQ's effective planning now means that it has sufficient
linguists (***) to cope with the workload. GCHQ's 24-hour *** watch ***
***
Despite ***
it was able in almost all cases to produce timely sanitised
versions releasable to NATO and the UK commanders in the field. The lessons
learnt by GCHQ were:
i. ***
***
ii. GCHQ ***
***
is working with the MoD on these matters; and
iii. ***
***
***
The MoD and GCHQ are fully seized of this issue32.
72. The Committee also took evidence from the Security
Service on their role in the Kosovo campaign. The Service's role has been to
identify and counter threats to national security from terrorist or espionage
activity, including UK interests and nationals in the UK and the Balkans.
During the campaign the Security Service ***
***
***
***
On its recommendation, ***
***
***33.
73. GCHQ and SIS are continuing to devote *** resources to
supporting the Government's policies in Kosovo and the Balkans, ***
The Security Service continues to monitor activity and to
provide assessments on the threats in theatre and within the UK.
Information Warfare
74. Following up our stated interest in defensive
Information Warfare (IW), we asked for an overview of the work being conducted
to defend the UK against IW threats. The note covered the Government's work on
critical national infrastructure protection (CNIP), identifying vulnerabilities
and taking steps to address them34. The Committee has noted the
characterisation of six key business sectors, which the Government judges to
contain infrastructure systems essential to national well being: telecommunications,
energy, financial services, water and sewerage, transport and Government
itself.
75. We have been told that the intelligence requirements on
information warfare and electronic attack became ***
This reflected the increasing awareness of the potential
impact of IW particularly in respect of the UK Critical National Infrastructure
(CNI)35.
76. The launch of the National Infrastructure Security
Co-ordination Centre (NISCC) by the Home Secretary in December 1999 provides
the country with a single point access to the Government's CNIP arrangements.
The NISCC, which is largely resourced by the existing Security Service and CESG
baselines, acts as an umbrella organisation co-ordinating relevant activities
in several departments and Agencies, including the Security Service, CESG,
Cabinet Office, Home Office, MoD, DERA, DTI and the Police. One of the main
activities of the NISCC is to issue alerts and warnings about security
incidents and vulnerabilities, firstly within the UK and then wider to other
international organisations, by means of the Unified Incident Reporting and
Alert Scheme (UNIRAS).
77. Whilst the Committee did not take any oral evidence on
IW this year, we did inquire how the CNI and Government responded to the
"love letter" virus on 4 May this year. The Committee was
disappointed to learn that the UNIRAS warning was not sent out until 12.45pm on
4 May. This, incidentally, compares with the House of Commons where a warning
was issued at 10.33am. By then the virus had infected a large number of the
Government's computer systems36. We established during our visit to the US that
the failure to send out a more timely warning meant that the UK was unable to
warn the US authorities of the virus before the US Departments started work.
The Committee believes that the UNIRAS system should be reviewed to ensure that
it is able to give far more timely warnings of serious virus attacks to both UK
organisations and allies.
Files and Information Storage
78. The Committee took evidence on the impact of the Data
Protection Act 1998 (DPA) and the Human Rights Act 1998 on the files and
information stored in the Agencies37. We considered two issues, the rights of
employees to access material stored on them and the rights of individuals to
see information stored by the Agencies about them. We noted that from 1 March
2000 when the DPA came into force, employees have the right to see information
stored about them. The DPA allows for data to be exempted on the ground of
national security, by means of a certificate. Other Data Protection exemptions,
such as material given in confidence (referees' comments) and data that refers
to more than one person, also apply.
79. We noted that an individual can, under the DPA 1998,
apply to see what information an organisation is keeping on them. The
information can either be on a computer or in a filing system. Under Section 28
of the Act the Secretary of State can issue a certificate withholding
disclosure on grounds of safeguarding national security, in which case the
applicant will be told that the Agency holds no information which the applicant
is entitled to see.
80. On being informed that the information they have
requested is being withheld on safeguarding national security grounds, the
applicant can appeal against the certificate to the Data Protection Tribunal.
Appeals will be heard by a specially constituted panel of the Tribunal
comprising legally qualified deputy chairmen appointed by the Lord Chancellor
and designated by him as capable of hearing such appeals, one of whom will be
designated by him to preside. The Tribunal will generally be quorate at three and
it must as a general rule proceed by way of a hearing. Hearings will generally
be held in private but there is provision for public hearings in certain
limited circumstances.
81. The practice and procedure of the Tribunal in respect of
these appeals is set down in the Data Protection Tribunal (National Security
Appeals) Rules (SI 2000 No. 206).
82. The Tribunal is placed under a general duty to ensure
that information is not disclosed contrary to the interests of national
security. It must exclude the appellant and/or their appointed representative
from all or part of the proceedings where it considers this to be necessary in
order to comply with this general duty. Otherwise, the Tribunal is required to
give the appellant an opportunity to address it, to amplify orally written
statements previously furnished, to give evidence, call witnesses, question
those giving evidence and make representations on the evidence.
83. If the Tribunal finds, applying judicial review
principles, that the Minister did not have reasonable grounds for issuing the
certificate, it may allow the appeal and quash the certificate. There is no
appeal against the Tribunal's decision.
84. This system is designed to allow individuals who believe
that the Agencies have incorrect or inappropriate information stored on them to
pursue the matter. However we note that, as yet, no appeal has been made
against a certificate. We will continue to monitor this system and will report
again in due course.
Serious Crime including organised illegal immigration
85. The Committee continued to examine the work conducted by
the Agencies in the fight against Serious Crime, which includes drugs, illegal
immigration rings and excise evasion. We visited HM Customs & Excise in
Dover to see the scale of the drugs and excise evasion problem. We were told in
the context of this work that *** of GCHQ's effort, *** of SIS's effort and ***
of the Security Service's38 effort was against serious crime. The Chief of
Defence Intelligence told us that *** of JARIC's effort was against serious
crime39. The Committee also noted that the ***
***
***
***
Tobacco Smuggling
86. We were briefed on the organised rings of smugglers
operating within the UK to bring in cigarettes and hand-rolled tobacco from the
continent into the UK and ***, via Europe into the UK. The main problems
concerning excise evasion are individuals who buy large quantities of
cigarettes and hand-rolled tobacco in Europe and then smuggle them into the UK
without paying the duty and VAT through the Channel Ports. Additionally groups
also buy container loads of counterfeit cigarettes *** and then import them to
the UK either directly or through an intermediate country, again without paying
duty or VAT.
87. Intelligence, from the Agencies and HM Customs and
Excise's own sources, plays a key role in tackling this issue. However, we were
told that over three-quarters of the seizures resulted from profiling work by
Customs Officers in the ports, rather than intelligence40. This year a number
of major smuggling networks have been closed as a direct result of joint
operations. The Customs Officers were particularly complimentary about the work
of the Security Service's surveillance teams. Additionally, the Security
Service has targeted and frustrated the smuggling activities of ***41.
88. We support the Agencies playing a bigger role in
combating excise evasion. However, the Agencies are still unable to allocate
resources to all the operations for which their support is requested. We
believe, as we stated in last year's Report42, that increasing the funding to
combat excise evasion would result in a net benefit for the Exchequer.
Drugs
89. We discussed the resources allocated to the fight
against drugs. We noted that combating drugs is a JIC First Order of Priority
requirement43 and that the Agencies are working together with law enforcement
organisations both within the UK and the rest of the world. In our last
Report44 we stated that the Committee believed that more could be done to stop
the drugs reaching the UK. We were told that more is being done in this area
but we are still not convinced that enough is being done. We noted that the
Agencies have bid for additional funds to increase the work they do against
drugs as part of the CSR, and this will be reviewed later in the year.
Illegal Immigration
90. The Committee has been concerned about the scale of
illegal immigration into the UK. We were told that the investigation of
large-scale networks aimed at bringing illegal immigrants into the UK was ***
requirement45. We were told that the SIS assisted in a successful operation
***, which broke up a major network. ***
***
***46.
We were also told that the JIC had taken a paper on illegal
immigration in June 2000. GCHQ and Security Service have also produced
intelligence on this topic, but accept that they could do more47. We believe
that directed and focussed use of the Agencies could assist the Immigration
Service and even help to prevent tragedies such as the death of the 58 Chinese
in June this year.
Y2K
91. In our Report48 to you last year, we outlined the work
the Agencies were conducting to ensure they were prepared to overcome any
Millennium Bug related problems, both internally and externally. We had been
told that the Y2K problem was being taken very seriously by the Agencies,
second only to support to operations, and that work had first started in 1996.
The Agencies reported their preparedness to us in November 1999 and in January
2000 they reported the outcome of the date change. We were also told that joint
meetings had been held by the Agencies and their main customers to share and
co-ordinate year end plans.
92. In November 1999 the SIS reported that they had tested
all 276 of their systems and proved that they were Y2K compliant. They had also
placed special contingency communications equipment *** overseas locations to
make them independent of local power and communications providers. The SIS told
us that there would be extra staff on duty and on call over the period,
together with a "Millennium Manager". In January 2000 the SIS
reported that it had not suffered any significant Y2K-related problems in their
computer systems and that all their communication links with other government
departments and overseas stations were functioning normally49.
93. GCHQ reported that by November 1999 94% of its over 1300
systems had been certified Y2K compliant and that they were on track to be
ready on time. They had also made contingency arrangements for backup power and
telecommunications both in their UK sites and abroad. GCHQ told us that a
Millennium Control Centre would supplement the normal 24 hour operation, with a
tiger team *** in attendance and a larger pool of *** technical and production
staff on call. In January 2000, GCHQ reported that there had been some ***
mostly minor, failures of its systems directly related to the millennium bug;
there were a further *** indirect faults. None of these had any significant
effect on intelligence production. They also noted that CESG had repaired the
Whitehall secure Intranet50.
94. The Security Service reported that by November 1999 the
Service was rated at 99% by the measures used for the Cabinet Office's
monitoring purpose. They had put in place fully independent alternatives for
each of their critical strategic IT systems and the Millennium Manager and Y2K
Director were confident that the Service would be able to sustain the Service's
outputs with no significant disruption. In January 2000 the Security Service
stated that all systems worked normally, with two minor exceptions. Of these
two areas affected, one was promptly fixed and the other was managed through
business continuity plans. The Service stated that there was no disruption to
its outputs51.
95. All the Agencies told us that they were able to deal
with the millennium issue because of their preparation and planning. They told
us that their work had found faults in commercially available software and that
these enabled revised Y2K patches to be given to other government departments.
Regulation of Investigatory Powers Bill
96. The Committee has continued to take an interest in the
legislation being introduced by the Government. In our last report we outlined
why the Agencies needed the ability to intercept and monitor communications in
real time and the effect that commercial encryption would have on the Agencies.
These powers, and the revision of the Interception of Communications Act 1985,
have been encapsulated in the Regulation of Investigatory Powers (RIP) Act.
97. The Government accepted our views on the RIP Bill on
limiting those who could apply for an interception warrant and amended the Act
accordingly. We also note that the RIP Act will amalgamate all the previous
Tribunals into a single, but regionally based, Tribunal. This will allow, to
anyone who believes that their Human Rights have been abused, or that the
Agencies and Law Enforcement Organisations have acted improperly, a single
point of contact to handle the complaint. We have also noted that the positions
of the Intelligence Services Commissioner and the Security Service Commissioner
have been amalgamated. In practice this is not a significant change as the same
person discharges both positions, currently Lord Justice Simon Brown. However,
the new position will also cover the warrants issued for the MoD operating
abroad.
98. We were also briefed on the establishment of the
National Technical Assistance Centre (NTAC). The NTAC will be a twenty-four
hour centre operated on behalf of all the law enforcement, security and
intelligence agencies, providing a central facility for the complex processing
needed to derive intelligence material from lawfully intercepted
computer-to-computer communications and from lawfully seized computer data,
which are being increasingly encrypted. The NTAC will also support the
technical infrastructure for the lawful interception of communications services
including Internet Services. We noted that the NTAC will be located in Thames
House, but that it will be operated by the National Criminal Intelligence
Service (NCIS) on behalf of the Home Office. The three Agencies will provide
the NTAC with both some staff and fund part of its activity. They will also be
fully engaged in its operation and will be customers of its product.
Visits to Romania, Poland and USA
99. The Committee visited Romania and Poland during the
period 11 to 15 October 1999. A full list of whom we saw can be found at
Appendix B. In Romania we were the guests of the Romanian Parliamentary
oversight committees for the Romanian Intelligence Service (SRI) and the
Foreign Intelligence Service (SIE). During our visit we had useful meetings
with the Minister of Interior, the Presidential adviser on National Security,
the heads of SRI, SIE and the Military Intelligence Service and the
Parliamentary oversight committees.
100. We then went to Poland as the guests of the
Parliamentary Special Services Committee. In Warsaw we met the Minister
Co-ordinator of the Polish Security Service, the National Security Adviser, a
representative of the Office of State Protection (UOP) and the head of Military
Intelligence (WSI).
101. During the visits, we concluded that, in countries
where the people had once been oppressed by the internal intelligence
organisations, Parliaments have sought to create a system of very strong
democratic oversight. In Romania, we were told that the parliamentary oversight
Committees receive daily reports from their respective agencies and recommend
the budgets to the President and Parliament. In Poland, we were told that the
Parliamentary Special Services Committee also sets the budgets of the
intelligence agencies and calls the agencies to account for their actions and
plans.
102. The Committee visited the USA between 7 and 12 May
2000. A list of whom we saw can be found at Annex C. We met both the House
Permanent and Senate Select Committees on Intelligence, together with the heads
and representatives of the US Intelligence agencies and the Presidential
Foreign Intelligence Advisory Board (PFIAB). We also visited the Joint
Interagency Task Force East, a US organisation set up to co-ordinate and
analyse anti-drugs intelligence in real-time involving the US intelligence and
law enforcement agencies, the four armed services and allied nations.
Developing Oversight
103. In submitting this Report to you the Committee looks to
the Government to ensure a prompt response. The Committee was disappointed that
last year's Annual Report, which was delivered on 6 August 1999, was not
published until 25 November 1999 and that the Government's response was not
published until 28 January 2000. Parliament did not have the opportunity to
debate the Report until 22 June 2000, which was nearly twenty months after the
debate on the previous Committee's Report. It clearly took too long for the
Annual Report 1998/99 to be published, responded to, and debated. The Committee
looks to the Government to ensure much prompter handling of this Report.
104. During the course of the year, the Committee and the
Cabinet Office agreed to modify the way the Investigator reports to the
Committee from that published in the Government's response to our last Annual
Report. Now the Investigator, on completing a report, sends it to the Agencies
for factual checking. He likewise sends relevant sections to Departments that
have contributed to the report (normally the Foreign and Commonwealth Office,
Ministry of Defence and the Cabinet Office). The Investigator then presents the
Report to the Committee. We can use the Report as we wish, although the Heads
of the Agencies are given the opportunity to comment to us on our draft
conclusions before we report to you.
105. The addition of an Investigator to the Committee's
staff has allowed us to pursue complex issues in considerably more depth. The
investigations have also spurred the Agencies and the Community as a whole into
re-examining aspects of their policies and procedures. The Investigator ensured
that Departments and Agencies were kept informed of his developing findings; as
a result they did not always wait for him to submit his report to us but took
early and positive action in problem areas he identified.
24 Cm 4764, June 2000.
25 Cm 4532, November 1999.
26 Evidence from SIS, May 2000.
27. Evidence from GCHQ, May 2000.
28 Evidence from the Foreign Secretary, June 2000.
29. Evidence from MOD/FCO, May 2000.
30. Evidence from MOD, June 2000.
31. Evidence from SIS, May 2000.
32. Evidence from GCHQ, May 2000.
33. Evidence from the Security Service, May 2000.
34. Evidence from the Cabinet Office, May 2000.
35. Evidence from the Cabinet Office, April 2000.
36. Evidence from the Cabinet Office, May 2000.
37. Evidence from SIS, GCHQ and the Security Service, March
and April 2000.
38. Evidence from GCHQ, SIS and Security Service, April and May
2000.
39. Evidence from CDI, March 2000.
40. Evidence from HM Customs & Excise, May 2000.
41. Evidence from the Director General of the Security
Service, April 2000.
42. Cm 4532, November 1999.
43. Evidence from Cabinet Office, July 2000.
44. Cm 4532, November 1999
45. Evidence from Cabinet Office, July 2000.
46. Evidence from the Chief of SIS, May 2000.
47. Evidence from SIS, GCHQ and the Security Service, April
and May 2000.
48. Cm 4532, November 1999.
49. Evidence from SIS, November 1999, January 2000.
50. Evidence from GCHQ, November 1999, January 2000.
51. Evidence from the Security Service, November 1999,
January 2000.
Conclusions and Recommendations
106. On the basis of the evidence we have taken this year,
our conclusions are as follows:
Central Intelligence Machinery
A. We believe that there should be a clear recognition and
demonstration of the lines of responsibility and authority for these important
Agencies. We recommend that CSI should meet, under your Chairmanship, at least
annually to allow Ministers to approve the National Intelligence Requirements
and endorse or approve the Agencies' budgets (para 19).
B. With the increasing involvement of the Agencies in the
fight against serious crime, we are concerned that interests of law enforcement
are not properly represented within the JIC. We recommend that a NCIS
representative be appointed to the JIC, in addition to the Home Office
representative. Additionally, we believe that HM Customs and Excise's interests
should be directly represented (para 21).
C. We believe that the joint position of JIC
Chairman/Intelligence Co-ordinator will only be successful if the post holder
has sufficient authority and influence to formulate and implement policy, as
well as offer guidance to the Agencies. We seek your assurance that this will
be the case (para 23).
D. In the Committee's view JARIC is a national resource and
could be better tasked from the national level. The Committee believes that
this administrative move would recognise that JARIC supports national interests
and therefore opens the way for JARIC to be funded in part from outside the MoD
budget (para 25).
E. The Committee believes that the Government should seek
the ***
***
***
***
***
We believe that the UK cannot afford not to be involved in
this work. We will continue to monitor this matter (para 26).
Personnel and Management Issues
F. We believe that the staff surveys and the more recent
Burton report were valuable, and we shall continue to monitor them, and the
management responses to them (para 28).
G. We expect to be consulted on the Rules of Procedure for
Employment Tribunals and to see them carried into effect without any further
delay (para 32).
H. We support the development of sensible, quantifiable
measures of outputs for the Agencies, but believe that more work is needed in
this area (para 34).
I. We believe that it is important for us to see the
classified annexes of the Commissioners' reports to be able to establish the
corrective action that the Agencies have introduced following the
Commissioners' identification of errors and thus fulfil our statutory
requirement to oversee the Agencies' administration processes (para 35).
The Investigator
J. In respect of the Investigator's report on security
policies and procedures in the Agencies, we recommend:
- that a more co-ordinated and rigorous project-based
approach to psychological testing is adopted, building on US experience;
- that all three Agencies adopt an ASA procedure based on
the GCHQ approach as representing best practice;
- that the periodic (generally 5-yearly) DV review process
is strengthened to detect lifestyle mismatches and the possession of
unexplained wealth by holding more DV review interviews at the subject's home;
- that SIS and the Security Service give serious
consideration to adopting GCHQ's 7-point Risk Rating system as best practice,
despite their belief that this is an unnecessary addition to their procedures;
and
- that where best Agency security practice is identified, it
should be considered for application by the wider UK DV community (para 38).
K. In respect of the Investigator's report on IT in the
Agencies, we recommend:
- that a Project Manager is assigned to ***;
- that the situation in which the Agencies are unable to
offer the market pay rates needed to retain or recruit all the skilled and
specialist IT staff they require is reviewed to ensure that the Agencies can
provide the best value-for-money service; and
- that there should be more active interchanges between the
Agencies and the DIS, their largest single customer, in particular to resolve
outstanding *** relating to the storage and use of Agency products (para 41).
L. In respect of the Investigator's report on the use of
laptop computers in the Agencies, we recommend:
- that where there is a loan pool of laptops, they must be
issued by the competent IT organisation for a specific period on a "recall
and wipe" basis;
- that when laptops are issued for extended personal use
there must be a procedural system to ensure the laptop's contents are monitored
regularly to ensure there is no excessive build-up of classified information
and to remind the user of their security obligations;
- that Kilgetty Plus is developed to keep up with hardware
and software developments and that robust funding arrangements are put in place
to cover this work. Assuming this is done, the Committee recommends:
- that Kilgetty Plus ***
***
and
- that Agencies ensure that their security procedures are
laid out as clearly as possible and regularly reviewed, that staff know whom to
consult in case of doubt, and that there are periodic publicity campaigns on
the importance of observing the set procedures (para 42).
Expenditure Issues
M. We request that you give further consideration to the
publication next year of the Agencies' budgets (para 43).
N. Our biggest concern was the GCHQ Resource Account, which
showed that GCHQ had not developed a suitable system of locating, tracking and
agreeing ownership of its assets (para 45).
O. The Burton review confirmed in the clearest terms the
scale of the challenges that the NAP presents GCHQ, and the range of high risks
that could affect its successful completion (para 58).
P. The Committee is in substantial agreement with the
conclusions of the review and believes that Sir Edmund Burton can play a very
important role in the NAP to facilitate its successful completion and we
recommend that he remains involved in an advisory capacity (para 59).
Q. The Committee believes that the NAP represents a very
substantial additional responsibility to the already demanding responsibility
of managing the normal operations of GCHQ. It is essential that this is
recognised and that the Director gets the support necessary for this dual
responsibility (para 60).
Other Matters
R. We intend to monitor the new systems in place in the
Security Service to consult the Law Officers about prosecutions of spies and
will report to you in due course (para 63).
S. The Committee will continue to take an interest in the
consultation procedures for *** to ensure that the Agencies' views can be taken
into consideration ***
in future conflicts (para 67).
T. The Committee believes that the UNIRAS system should be
reviewed to ensure that it is able to give far more timely warnings of serious
virus attacks to both UK organisations and allies (para 77).
U. We will continue to monitor the system established under
the Data Protection Act 1998 to allow individuals who believe that the Agencies
have incorrect or inappropriate information stored on them to pursue the matter
and will report again in due course (para 84).
V. We believe that increasing the funding to combat excise
evasion would result in a net benefit for the Exchequer (para 88).
W. We were told that more is being done in the fight against
drugs but we are still not convinced that enough is being done. We noted that
the Agencies have bid for additional funds to increase the work they do against
drugs as part of the CSR, and that this will be reviewed later in the year
(para 89).
X. We were told that GCHQ and Security Service have also
produced intelligence on illegal immigration, but accept that they could do
more. We believe that directed and focussed use of the Agencies could assist
the Immigration Service and even help to prevent tragedies such as the death of
the 58 Chinese in June this year (para 90).
Y. It clearly took too long for the Annual Report 1998/99 to
be published, responded to, and debated. We look to the Government to ensure
much prompter handling of this Report (para 103).
Future programme of work
107. Over the course of the next year, we shall pursue a
number of issues identified elsewhere in this Report, including:
- the role of the centre in the co-ordination of the
Agencies;
- whether individuals should have rights in connection with
the destruction or otherwise of any file held on them and protections against
having inaccurate information gathered, stored and used against the
individual's interests;
- the details and progress of the GCHQ NAP;
- staff matters, in particular staff views and the handling
of complaints within the Agencies;
- the arrangements between Security Service and Law Officers
for referring prosecutions;
- the Agencies' work against Serious Crime;
- the work of the Efficiency Advisor and his
recommendations, in particular Joint Working; and,
- what Internal Audit is undertaken by the Agencies.
108. We also propose to continue our work on Information
Warfare and we will examine how the Agencies are preparing themselves for the
future through investment. As part of the above, we have tasked the
Investigator to conduct investigations into the secure communications in the
FCO and the Scientific and Technical research and development supported by the
Agencies.
APPENDIX 1
THOSE WHO HAVE GIVEN ORAL EVIDENCE
MINISTERS
Rt. Hon. Jack Straw MP - Home Secretary
Rt. Hon. Robin Cook MP - Foreign Secretary
FORMER MINSTERS
Rt. Hon. Sir Nicholas Lyell QC MP - former Attorney General
Rt. Hon. Sir Malcolm Rifkind KCMG QC - former Foreign
Secretary
Rt. Hon. Michael Howard QC MP - former Home Secretary
Rt. Hon. Sir John Morris QC MP - former Attorney General
OFFICIALS
CABINET OFFICE
Sir Richard Wilson KCB
Mr Sebastian Wood
Mr Michael Pakenham CMG
Other Officials
SECRET INTELLIGENCE SERVICE
Mr Richard Dearlove OBE
Other Officials
GOVERNMENT COMMUNICATIONS HEADQUARTERS
Mr Francis Richards CMG CVO
Other Officials
SECURITY SERVICE
Sir Stephen Lander KCB
Other Officials
FOREIGN AND COMMONWEALTH OFFICE
Sir John Kerr KCMG
Mr David Manning CMG
Other Officials
HOME OFFICE
Sir David Omand KCB
Ms Hilary Jackson
Other Officials
MINISTRY OF DEFENCE
Vice Admiral Sir Alan West KCB DSC
Other Officials
NATIONAL AUDIT OFFICE
Mr John Pearce
Mr Bob Burwood
LEGAL SECREATRIAT TO THE LAW OFFICES
Mr David Seymour
Mr Stephen Parkinson
Mr Adam Chapman
OTHERS
Mr Vasili Mitrokhin
Professor Christopher Andrew
Dame Stella Rimington DCB
Ms Joan Ruddock MP
Lt Gen Sir Edmund Burton KBE MA
APPENDIX 2
THOSE MET DURING THE COMMITTEE'S
VISIT TO ROMANIA AND POLAND
11-15 OCTOBER 1999
ROMANIA
Parliamentary Oversight Committee For National Intelligence
Service (SRI)
Mr Nicolae Ionescu Galbeni (President)
Mr Ovidiu Camiliu Petrescu (Vice President)
Mr Liviu Spataru (Secretary)
Members
Ms Daniela Buruiana-Aprodu
Mr Mihai Drecin
Mr Vasile Mandroviceanu
Mr Costel Paunescu
Mr Vasile Vacaru
Mr Verestoy Attila
Parliamentary Oversight Committee For Foreign Intelligence
Service (SIE)
Mr George Serban (President)
Mr Alexandru Radu Timofte (Vice President)
Mr Mihai Gheorghiu (Secretary)
Members
Mr Cornel Boiangiu
Mr Marcu Tudor
Government and Officials
HE Mr Dudu Ionescu, Minister of Interior
Mr Dorin Marian, Presidential Adviser on National Security
Major General Georghe Rotaru, Head of Military Intelligence
Service
Mr Costin Georgescu, Head of Romanian Intelligence Service
(SRI)
Mr Catalin Harnagea, Head of Foreign Intelligence Service
(SIE)
POLAND
The Special Services Committee (KSS) of the Sejm
Mr Józef Gruszka, (Chairman)
Members
Mr Jan Litynski
Mr Konstanty Miodowicz
Mr Zbigniew Siemiatkowski
Government and Officials
Minister Janusz Palubicki, Co-ordinator of Special Services.
Minister Marek Siwiec, National Security Adviser
Col Tadeusz Rusak, Chief of Military Information Service
(WSI)
Mr Krzysztof Szwedowski, Deputy Chief of the Office of State
Protection (UOP)
APPENDIX 3
THOSE MET DURING THE COMMITTEE'S VISIT TO THE USA
8-12 MAY 2000
Senate Select Committee on Intelligence (SSCI)
Senator Richard Shelby (Chairman)
Mr Bill Duhnke (Staff Director)
Mr Alfred Cumming (Minority Staff Director)
Permanent Select Committee on Intelligence (PSCI)
Congressman Porter Goss (Chairman)
Congressman Sherwood Boehlert
Congressman Charles Bass
Congressman Bill McCollum
Congressman Alcee Hastings
Congresswoman Heather Wilson
Central Intelligence Agency (CIA)
Mr George Tenet (Director of Central Intelligence)
Mr Britt Snider (Inspector General)
Ms Ellen Laipson (Deputy Chairman, National Intelligence
Centre)
Federal Bureau of Investigation (FBI)
Mr Dale Watson (Assistant Director)
Ms Sheila Horan (Deputy Assistant Director)
National Security Agency (NSA)
Lt. Gen. Michael Hayden (Director)
Ms Barbara McNamara (Deputy Director)
National Reconnaissance Office (NRO)
Hon. Keith R Hall (Director)
Ms Patricia Hanback (Inspector General)
Mrs Susan Duclos (Assistant Inspector General)
National Imagery and Mapping Agency (NIMA)
Lt. Gen James King (Director)
Col. Ernest Moore (Inspector General)
National Security Council (NSC)
Ms Mary McCarthy (Special Assistant to the President and
Senior Director for Intelligence)
President's Foreign Intelligence Advisory Board (PFIAB)
Senator Warren B. Rudman (Chairman)
Department of Defense (DoD)
Mr David Crane (Director, Office of Intelligence Review)
Defense Intelligence Agency (DIA)
Mr Warren A. Uthe (Inspector General)
State Department
Mr Christopher Kojm (Deputy Assistant Secretary)
Joint Interagency Task Force East
RADM Ed Barrett, USCG (Director)
Col. Joe Gorman, USAF (Deputy Director)
APPENDIX 4
SECURITY SERVICE ESTIMATES AND OUTTURN DETAILS (CASH)
SUMMARY: £K
A1 - RUNNING COSTS: £K
A2 - OTHER CURRENT EXPENDITURE: £K
A3 - CAPITAL EXPENDITURE: £K
AZ - APPROPRIATIONS IN AID: £K (ANTICIPATED RECEIPTS)
SIS ESTIMATES AND OUTTURNS DETAILS (CASH)
SUMMARY: £K
A1 - RUNNING COSTS: £K
A2 - OTHER CURRENT EXPENDITURE: £M
A3 - CAPITAL: £M
AZ - APPROPRIATIONS IN AID: £M (ANTICIPATED RECEIPTS)
GCHQ ESTIMATES AND OUTTURN
SUMMARY: £M
A1 - RUNNING COSTS: £M
A2 - OTHER CURRENT EXPENDITURE: £M
A3 - CAPITAL EXPENDITURE: £M
AZ - APPROPRIATIONS IN AID: £M (ANTICIPATED RECEIPTS)
APPENDIX 4: SECURITY SERVICE ESTIMATES AND OUTTURN DETAILS
(CASH)
summary:
£K Explanation
of Variances
of +/-10%
a b
c d e f g
h 98/99 outturn to 99/00
estimated
outturn to 00/01 baseline
95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Cash limit 99-00
Est. Outturn 00-01
Base line 01-02
Base line
Running Costs *** *** ***
*** ***
*** ***
*** ***
Other Current
Expenditure (OCE) ***
*** ***
*** ***
*** ***
*** ***
Capital *** *** ***
*** ***
*** ***
***
Appropriations-in-Aid (Receipts) *** *** *** ***
*** ***
*** ***
***
Control Total *** *** ***
*** ***
*** ***
*** ***
Net Superannuation ***
*** ***
*** ***
*** ***
*** ***
Total *** *** ***
*** ***
*** ***
***
Note 1: In February 1999 The Treasury changed the way in
which VAT receipts are handled. Instead of netting off VAT receipts within the
RC/OCE/Capital subheads they are now included within Appropriations-in-Aid.
SECURITY SERVICE ESTIMATES AND OUTTURN DETAILS (CASH)
A1
- RUNNING COSTS: £K Explanation
of Variances
of +/-10%
a b c d e f g h
95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Cash limit 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
Staff Numbers *** *** *** *** *** *** *** ***
Staff Salaries *** *** *** *** *** *** *** ***
Seconded Staff Salaries *** *** *** *** *** *** *** *** ***
Casual/Local staff *** *** *** *** *** *** *** *** ***
Overtime *** *** *** *** *** *** *** *** ***
Cost of Living Allowance (COLA), transfer costs, overseas
rent and detached duty expenses etc.
Redundancy Costs *** *** *** *** *** *** *** *** ***
Pensions Contributions *** *** *** *** *** *** *** *** ***
TOTAL STAFF COSTS *** *** *** *** *** *** *** ***
Accommodation, maintenance, utilities, rates and rents *** *** *** *** *** *** *** *** ***
Capital Charge *** *** *** *** *** *** *** *** ***
Other Gov Depts. *** *** *** *** *** *** *** *** ***
Training, Phones & other supplies *** *** *** *** *** *** *** *** ***
TOTAL excl. VAT *** *** *** *** *** *** *** *** ***
VAT Refunds *** *** *** *** *** *** *** *** ***
TOTAL incl. VAT *** *** *** *** *** *** *** *** ***
SECURITY SERVICE ESTIMATES AND OUTTURN DETAILS (CASH)
A2
- OTHER CURRENT EXPENDITURE: £K
Explanation
of Variances
of +/-10%
a b c d e f g h
95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Cash limit 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
Costs of running agents *** *** *** *** *** *** *** ***
*** *** *** *** *** *** *** *** *** ***
Ops. Transport *** *** *** *** *** *** *** ***
Ops. Stores *** *** *** *** *** *** *** ***
Ops. Research & Development *** *** *** *** *** *** *** ***
Other Operational Expenditure *** *** *** *** *** *** *** ***
TOTAL OPERATIONAL *** *** *** *** *** *** *** ***
Supplies & Consumables *** *** *** *** *** *** *** *** ***
Other Government Departments *** *** *** *** *** *** *** *** ***
Capital Charging *** *** *** *** *** ***
TOTAL (Incl. VAT Refunds) *** *** *** *** *** *** *** *** ***
VAT refunds *** *** *** *** *** *** *** ***
TOTAL (Incl. VAT Refunds) *** *** *** *** *** *** *** *** ***
SECURITY SERVICE ESTIMATES AND OUTTURN DETAILS (CASH)
A3
- CAPITAL EXPENDITURE: £K
Explanation
of Variances
of +/-10%
a b c d e f g h
95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Cash limit 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
Operational Items *** *** *** *** *** *** *** ***
IT Equipment *** *** *** *** *** *** *** *** ***
Building Projects *** *** *** *** *** *** *** ***
Furniture *** *** *** *** *** *** *** ***
Property *** *** *** *** *** *** *** *** ***
Vehicles *** *** *** *** *** *** *** ***
Unallocated *** *** *** *** *** *** *** *** ***
TOTAL (Excl. VAT Refunds) *** *** *** *** *** *** *** *** ***
VAT refunds *** *** *** *** *** *** *** *** ***
TOTAL (Incl. VAT Refunds) *** *** *** *** *** *** *** *** ***
SECURITY SERVICE ESTIMATES AND OUTTURN DETAILS (CASH)
AZ - APPROPRIATIONS IN AID: £K
(ANTICIPATED RECEIPTS) Explanation
of Variances
of +/-10%
a b c d e f g h
95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Cash limit 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
Seconded Staff *** *** *** *** *** *** *** *** ***
Rents
Other Non-Capital Receipts
Capital Receipts *** *** *** *** *** *** *** *** ***
Running Cost VAT
Receipts *** *** *** *** *** ***
OCE VAT Receipts *** *** *** *** *** ***
Capital VAT Receipts *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
Payment of Pensions & Lump Sums *** *** *** *** *** *** *** ***
Receipts *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** *** ***
SIS ESTIMATES AND OUTTURNS DETAILS (CASH)
SUMMARY:
£K Explanation of Variances
of +/-10%
a b c d e f g h
1995-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 1999-2000
Estimate 1999-2000
Est. Outturn 2000-2001
Plans 2001-2002
Plans 98/99 outturn
to 99/00 estimated
outturn to 00/01 plans
A1 Running Costs *** *** *** *** *** *** *** *** ***
A2 Other Current
Expenditure (OCE) *** *** *** *** *** *** *** *** ***
A3 Capital Expenditure *** *** *** *** *** *** *** *** ***
AZ Receipts *** *** *** *** *** *** *** ***
Control Total *** *** *** *** *** *** *** *** ***
B1 Pensions *** *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
*** *** *** - - - - - -
*** - - - *** *** *** *** *** ***
*** *** *** *** *** *** *** *** ***
Note 1 The 1999/00 Estimate figures are drawn from the
position post-Spring Supplementary. The estimated outturn figures are based on
the situation at 29 February 2000.
Note 2 Figures for 2001/02 are based on spending plans to
maintain current outputs. They do not include SR2000 bids for additional
outputs and other unavoidable pressures.
***
Note 4 The figures for 2001-02 are in cash terms and do not
reflect current work within SR2000 to establish a resource based estimate for
that year.
SIS ESTIMATES AND OUTTURNS DETAILS (CASH)
A1
- RUNNING COSTS: £M Explanation
of Variances
of +/-10%
a b c d e f g h
1995-96
Outturn 1996-97
Outturn 1997-98
Outturn 1998-99
Outturn 1999-99
Estimate 1999-2000
Est. Outturn 2000-2001
Plans 2001-2002
Plans 98/99 outturn to 99/00 estimated
outturn to
00/01 plans
Staff
numbers *** *** *** *** *** *** *** ***
Staff
salaries *** *** *** *** *** *** *** *** ***
Seconded
staff numbers (out) *** *** *** *** *** *** *** ***
Seconded
staff salaries (out) *** *** *** *** *** *** *** *** ***
Seconded
staff numbers (in) *** *** *** *** *** *** *** ***
Seconded
staff salaries (in) *** *** *** *** *** *** *** *** ***
Casual/local
staff *** *** *** *** *** *** *** *** ***
Overtime *** *** *** *** *** *** *** ***
Redundancy
& early departure Costs *** *** *** *** *** *** *** *** ***
Pensions
contributions *** *** *** *** *** *** *** ***
Total Staff *** *** *** *** *** *** *** ***
COLA,
overseas travel, detached duty expenses and other staff related costs *** *** *** *** *** *** *** ***
Other Gov
Depts. *** *** *** *** *** *** *** *** ***
Training,
phones & other supplies *** *** *** *** *** *** *** ***
VAT Refunds *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
SIS
ESTIMATES AND OUTTURNS DETAILS (CASH)
A3
- CAPITAL: £M Explanation
of Variances
of +/-10%
a b c d e f g h
1995-96
Outturn 1996-97
Outturn 1997-98
Outturn 1998-99
Outturn 1999-99
Estimate 1999-2000
Est.
Outturn 2000-2001
Plans 2001-2002
Plans 98/99 outturn to 99/00 estimated
outturn to
00/01 plans
Operational
items *** *** *** *** *** *** *** *** ***
IT
equipment *** *** *** *** *** *** *** *** ***
Building
materials *** *** *** *** *** *** *** *** ***
Furniture *** *** *** *** *** *** *** *** ***
Property *** *** *** *** *** *** *** *** ***
Vehicles *** *** *** *** *** *** *** *** ***
VAT refunds *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
SIS
ESTIMATES AND OUTTURNS DETAILS (CASH)
A3
- CAPITAL: £M Explanation
of Variances
of +/-10%
a b c d e f g h
1995-96
Outturn 1996-97
Outturn 1997-98
Outturn 1998-99
Outturn 1999-99
Estimate 1999-2000
Est.
Outturn 2000-2001
Plans 2001-2002
Plans 98/99 outturn to 99/00 estimated
outturn to
00/01 plans
Operational
items *** *** *** *** *** *** *** *** ***
IT
equipment *** *** *** *** *** *** *** *** ***
Building
materials *** *** *** *** *** *** *** *** ***
Furniture *** *** *** *** *** *** *** *** ***
Property *** *** *** *** *** *** *** *** ***
Vehicles *** *** *** *** *** *** *** *** ***
VAT refunds *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
SIS
ESTIMATES AND OUTTURNS DETAILS (CASH)
AZ
- APPROPRIATIONS IN AID: £M (ANTICIPATED RECEIPTS) Explanation of Variances
of +/-10%
a b c d e f g h
1995-96
Outturn 1996-97
Outturn 1997-98
Outturn 1998-99
Outturn 1999-99
Estimate 1999-2000
Est. Outturn 2000-2001
Plans 2001-2002
Plans 98/99 outturn
to 99/00 estimated
outturn to 00/01 plans
Seconded staff *** *** *** *** *** *** *** ***
Rents *** *** *** *** *** *** *** ***
Other non-capital receipts *** *** *** *** *** *** *** ***
Capital receipts *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
Payment pensions and lump sums *** *** *** *** *** *** *** *** ***
Receipts *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** ***
GCHQ
ESTIMATES AND OUTTURN
SUMMARY:
£M Explanation
of Variances
of +/-10%
a b c d e f g h i
94-95
Outturn 95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Est.
Spring Supp 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
A1 Running Costs *** *** *** *** *** *** *** *** *** ***
A2 Other Current
Expenditure *** *** *** *** *** *** *** *** *** ***
A3 Capital Expenditure *** *** *** *** *** *** *** *** *** ***
AZ
Appropriations
in Aid *** *** *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** *** ***
GCHQ
ESTIMATES AND OUTTURN
A1
- RUNNING COSTS: £M Explanation
of Variances
of +/-10%
a b c d e f g h i
94-95
Outturn 95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Est. Spring
Supp 99-00
Est.
Outturn 00-01
Base line 01-02
Base line 98/99 outturn to 99/00 estimated
outturn to
00/01 baseline
Staff
numbers *** *** *** *** *** *** *** *** *** ***
Staff
salaries *** *** *** *** *** *** *** *** ***
Seconded
staff - - - - - - - - -
Casual/local
staff *** *** *** *** *** *** *** *** ***
Overtime *** *** *** *** *** *** *** *** ***
COLA etc *** *** *** *** *** *** *** *** ***
Redundancy
costs *** *** *** *** *** *** *** *** *** ***
Pension
contribution *** *** *** *** *** *** *** *** *** ***
*** *** *** *** *** *** *** *** *** ***
Accommodation,
maintenance, utilities rates & rent *** *** *** *** ***
NAP
payments ofwhich: - - - - - - - *** *** ***
NAP unitary
payment *** *** ***
NAP Pass
through *** *** ***
Other
government departments *** *** *** *** *** *** *** *** *** ***
Training,
phones, and other supplies *** *** *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** *** ***
Grossing up of
VAT recoveries - *** *** *** *** *** *** *** *** ***
Gross Running
Cost Total *** *** *** *** *** *** *** *** ***
GCHQ ESTIMATES AND OUTTURN
A2
- OTHER CURRENT EXPENDITURE: £M
Explanation
of Variances
of +/-10%
a b c d e f g h i
94-95
Outturn 95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Est. Spring Supp 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
Military manpower services *** *** *** *** *** *** *** *** *** ***
Numbers of military manpower *** *** *** *** *** *** *** *** *** ***
Other services from MOD *** *** *** *** *** *** *** *** *** ***
Services from other government depts *** *** *** *** *** *** *** *** ***
Technical maintenance *** *** *** *** *** *** ***
Communications rental *** *** *** *** *** *** ***
Technical services *** *** *** *** *** *** *** *** *** ***
*** *** *** *** *** *** *** *** *** ***
Surveying and other services for accommodation *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** *** ***
Grossing up of
VAT recoveries - *** *** *** *** *** *** *** *** ***
Gross OCE Total *** *** *** *** *** *** *** *** ***
GCHQ ESTIMATES AND OUTTURN
A3 - CAPITAL EXPENDITURE: £M Explanation of Variances
of +/-10%
a b c d e f g h i
94-95
Outturn 95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00
Est. Spring Supp 99-00
Est. Outturn 00-01
Base line 01-02
Base line 98/99
outturn to 99/00 estimated
outturn to 00/01 baseline
IT equipment *** *** *** *** *** *** *** *** *** ***
Building projects *** *** *** *** *** *** *** *** *** ***
Plant infrastructure *** *** *** *** *** *** *** *** *** ***
Vehicles *** *** *** *** *** *** *** *** *** ***
Furniture *** *** *** *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** *** ***
Grossing up of
VAT recoveries - - - *** *** *** *** *** *** ***
Gross Total *** *** *** *** *** *** *** *** ***
GCHQ ESTIMATES AND OUTTURN
AZ - APPROPRIATIONS IN AID: £M
(ANTICIPATED RECEIPTS) Explanation
of Variances
of +/-10%
a b c d e f g h i
94-95
Outturn 95-96
Outturn 96-97
Outturn 97-98
Outturn 98-99
Outturn 99-00 Est. Spring Supp 99-00
Est.
Outturn 00-01
Base line 01-02
Base line 98/99 outturn to 99/00 estimated
outturn to
00/01 baseline
Seconded
staff *** *** *** *** *** *** *** *** ***
Rents *** *** *** *** *** *** *** *** ***
Other
non-capital receipts *** *** *** *** *** *** *** *** ***
Capital
receipts *** *** *** *** *** *** *** *** *** ***
CESG
Trading receipts *** *** *** *** *** *** ***
TOTAL *** *** *** *** *** *** *** *** ***
*** *** *** *** *** *** *** *** ***
RC VAT
refunds
OCE VAT
refunds
Capital VAT
refunds *** *** *** *** *** *** *** ***
*** *** *** *** *** ***
Gross Total *** *** *** *** *** *** *** *** ***