The Security Service should not be "licensed to bribe", a committee of MPs and peers recommends today.

The Joint Committee on the draft Bribery Bill recommends that the Government should drop clauses under which MI5 and its agents would be exempt, in some cases, from observing a proposed new law.

If passed, the Bribery Bill would modernise the law by creating two new offences; one dealing with the giving, promising, and offering of a bribe and the other with agreeing to receive or accept a bribe.

The Bill also creates a stand-alone offence of bribery of a foreign public official and a new offence of negligent failure of commercial organisations to prevent bribery. It is based on recommendations from the Law Commission at the end of last year.

But the Government has added clauses to the commission's draft that would permit a Secretary of State to authorise actions otherwise amounting to bribery.

The minister must first be satisfied that the bribe is "necessary for the proper discharge of a function of the Security Service, the Secret Intelligence Service or GCHQ". This wording is broad enough to cover agents working for MI5 and MI6 - spies - as well as the those employed by the agencies.

The spooks' exemption is based on the Secretary of State's existing power to authorise the Secret Intelligence Service to commit criminal offences and civil wrongs of any kind under the Intelligence Services Act 1994.

The key differences are that:

• The Security Service and GCHQ would for the first time be able to gain an authorisation to bribe;
• The Secret Intelligence Service would be in the same position as present, except that the 1994 Act would be narrowed to remove the power to bribe foreign public officials; and
• The 1994 Act is limited to acts overseas while the draft Bill applies to acts anywhere.

The Joint Committee said it heard "no persuasive evidence" that the domestic intelligence agencies needed an authorisation to bribe.

"Neither are we persuaded that this draft Bill is the appropriate vehicle to extend the security services' powers to contravene the criminal law," the MPs and peers added.

More generally, the committee strongly supported the draft Bill. But its members feared that ministers would not take the necessary steps to get it through Parliament before the next election.

Viscount Colville of Culross, the committee's chairman, said bribery added 10% to the cost of doing business globally and as much as 25% to the cost of procurement contracts in developing countries, where it was arguably the most damaging.

"There is no room for bribery, which distorts free competition, undermines society and the rule of law, and worsens the living conditions of the poorest in society."