Intelligence and Security Committee Annual Report 2003–2004 Chairman: The Rt. Hon. Ann Taylor, MP Intelligence Services Act 1994 Chapter 13 Cm 6240 £10.50 Intelligence and Security Committee Annual Report 2003–2004 Chairman: The Rt. Hon. Ann Taylor, MP Intelligence Services Act 1994 Chapter 13 Presented to Parliament by the Prime Minister by Command of Her Majesty JUNE 2004 Cm 6240 £10.50 ©Crown Copyright 2004 The text in this document (excluding the Royal Arms and departmental logos) may be reproduced free of charge in any format or medium providing that it is reproduced accurately and not used in a misleading context. The material must be acknowledged as Crown copyright and the title of the document specified. Any enquiries relating to the copyright in this document should be addressed to The Licensing Division, HMSO, St Clements House, 2–16 Colegate, Norwich NR3 1BQ. Fax: 01603 723000 or e-mail: [email protected] From the Chairman: The Rt. Hon. Ann Taylor, MP INTELLIGENCE AND SECURITY COMMITTEE 70 Whitehall London SW1 2AS 26 May 2004 Rt. Hon. Tony Blair, MP Prime Minister 10 Downing Street London SW1A 2AA In September 2003 the Committee produced a unanimous Report following our inquiry into Iraqi Weapons of Mass Destruction – Intelligence and Assessments. I now enclose the Intelligence and Security Committee’s Annual Report for 2003–04. This Report records how we have examined the expenditure, administration and policies of the three intelligence and security Agencies. We also report to you on a number of other Agency related matters and the wider intelligence community. ANN TAYLOR iii THE INTELLIGENCE AND SECURITY COMMITTEE The Rt. Hon. Ann Taylor, MP (Chairman) The Rt. Hon. James Arbuthnot, MP The Rt. Hon. Alan Howarth CBE, MP The Rt. Hon. The Lord Archer of Sandwell, QC The Rt. Hon. Michael Mates, MP The Rt. Hon. Kevin Barron, MP The Rt. Hon. Joyce Quin, MP The Rt. Hon. Alan Beith, MP The Rt. Hon. Gavin Strang, MP i. The Intelligence and Security Committee (ISC) 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 Security Service, the Secret Intelligence Service (SIS) and the Government Communications Headquarters (GCHQ). The Committee also takes evidence from the Security and Intelligence Co-ordinator, the Chairman of the Joint Intelligence Committee (JIC) and the Defence Intelligence Staff (DIS), as well as departments and other organisations that receive secret intelligence from the Agencies. ii. The Prime Minister, in consultation with the leaders of the two main Opposition parties, appoints the Committee from members of both Houses of Parliament. Nominations are put forward by the Government and Opposition parties’ whips, in a broadly similar way to the nomination of select committee members in the House of Commons. iii. The members are notified under the Official Secrets Act 1989 and, as such, operate within “the ring of secrecy”. The Committee sees significant amounts of classified material in carrying out its duties and it takes evidence from Cabinet Ministers and senior officials – all of which is used to formulate its Reports. iv. The Committee is required by the Act to produce an Annual Report on the discharge of its functions, which the Prime Minister is required to lay before Parliament, and the Committee can and does produce other Reports on specific topics. When laying a Report before Parliament, the Prime Minister, in consultation with the Committee, excludes any parts of the Report (indicated by the *** in the text) that would be prejudicial to the continuing discharge of the functions of the three intelligence and security Agencies. To date, no material has been excluded without the Committee’s consent. iv CONTENTS The Intelligence and Security Committee Page iv Glossary Pages 3–4 Introduction Pages 5–10 The Threat Pages 5–8 The Limitations of Intelligence Pages 9–10 Work Programme Page 10 Expenditure and Resources Pages 11–19 Spending Review 2004 Pages 11–12 Public Service Agreements Pages 12–13 Security Service Pages 13–14 Secret Intelligence Service Pages 14–15 Government Communications Headquarters Pages 15–17 New Accommodation Programme Pages 16–17 Serious Organised Crime Pages 17–18 BBC Monitoring Pages 18–19 Administration Pages 20–21 Staff Page 20 Legal Matters Pages 20–21 Policy Pages 22–24 International Co-operation on Terrorism Pages 22–23 Relations with the Media Page 24 Special Branch Page 24 Weapons of Mass Destruction Pages 25–26 Iraq Pages 25–26 Libya Page 26 Joint Terrorism Analysis Centre Pages 27–28 Counter-espionage Pages 29–30 The Intelligence Community Pages 31–35 Ministerial Involvement Page 31 Security and Intelligence Co-ordinator Pages 31–32 Joint Intelligence Committee and Assessments Staff Page 32 Defence Intelligence Staff Pages 32–33 SCOPE Pages 33–34 Information Assurance and Communications Pages 34–35 1 Collection Pages 36–38 Requirements and Priorities Page 36 Collection Gaps Pages 37–38 Assessment Pages 39–40 Other Matters Pages 41–43 Postal Screening Page 41 Acts of Parliament Pages 41–43 The Official Secrets Acts Pages 41–43 The Regulation of Investigatory Powers Page 43 Act 2000 Conclusions and Recommendations Pages 44–48 Annex A – Those Who Have Given Oral Evidence Pages 49–50 2 GLOSSARY CESG Communication, Electronics and Security Group CIA Central Intelligence Agency CIG Current Intelligence Group CNI Critical National Infrastructure CSI Ministerial Committee on the Intelligence Services CSIA Central Sponsor for Information Assurance DIS Defence Intelligence Staff DOP(IT) Ministerial Sub-committee: Defence and Overseas Policy (International Terrorism) FCO Foreign and Commonwealth Office FBIS Foreign Broadcast Information Service (US organisation) GCHQ Government Communications Headquarters GSIA Government Strategy for Information Assurance IT Information Technology ISC Intelligence and Security Committee JARIC Joint Air Reconnaissance Intelligence Centre JIC Joint Intelligence Committee JTAC Joint Terrorism Analysis Centre LOC Limited Operational Capability (part of the SCOPE programme) MoD Ministry of Defence NAO National Audit Office NCIS National Criminal Intelligence Service NISCC National Infrastructure Security Co-ordination Centre PFI Private Finance Initiative 3 POAC Proscribed Organisation Appeals Commission PSAs Public Service Agreements PSIS Permanent Secretaries’ Committee on the Intelligence Services PSX Ministerial Sub-committee: Public Services and Public Expenditure RICs Regional Intelligence Cells R&P Requirements and Priorities SDAs Service Delivery Agreements SIA Single Intelligence Account SIAC Special Immigration Appeals Commission Sigint Signals Intelligence SIS Secret Intelligence Service SO Official Committee on Security SOCA Serious Organised Crime Agency SO(IS) Information Systems Security Policy Sub-committee of SO SR2000 Spending Review 2000 SR2002 Spending Review 2002 SR2004 Spending Review 2004 TIDO(H) Official Committee on Domestic and International Terrorism (Home) TIW Temporary Intelligence Watch TRANSEC Security Division of the Department for Transport TTIC Terrorist Threat Integration Centre (US organisation) UKIMN UK Intelligence Messaging Network WMD Weapons of Mass Destruction 4 INTRODUCTION 1. The period from May 2003 to May 2004 has been an extremely difficult one for the intelligence and security Agencies and the whole of the UK intelligence community. Not only have they been faced with greater threats and challenges but they have, perhaps more than ever before, been subjected to intense public scrutiny of elements of their work. This has meant that the ways in which intelligence is authorised, collected, analysed, assessed, disseminated and used have been examined and criticised in a way that has put a spotlight on those used to working in the background. 2. During this time the Agencies have continued to fulfil their statutory duties: operating at home and around the world, alone or with international partners, and gathering intelligence to identify, monitor, report and disrupt threats to the UK and its interests. Their task is to inform decision-makers and allow the formulation of policy to be based on more information than is available from open sources. 3. The work of the Agencies, most of which is necessarily unpublicised, is primarily focused on international terrorism, on preventing the proliferation of Weapons of Mass Destruction (WMD) and associated technologies and on the protection of UK interests, including deployed forces. It is often undertaken at great personal risk in places such as Afghanistan and Iraq. Most of the hard work that the Agencies do every year will never be made public. The staffs of the Agencies are to be commended for what they have done in difficult circumstances: in particular we should record that UK Force Commanders in the Gulf reported to us that they had been well served by the intelligence community during military action. The Threat 4. Since the end of the Cold War, the demands on the intelligence and security Agencies have changed significantly: the threats have become more numerous and varied. Initially, there was a belief, now recognised as misplaced, that this was an opportunity to reduce the Agencies (and the Armed Forces) as the threat was seen to have diminished. But, in a world no longer dominated by opposing super powers, new threats emerged, such as terrorism inspired by Islamic extremism, and organised crime increased