The report by the House of Commons' Intelligence and Security Committee (ISC) was released after whistleblower Edward Snowden exposed mass surveillance techniques used by the UK's listening post, Government Communications Headquarters(GCHQ), and its US counterpart.
"Each Agency reported that they had disciplined – or in some cases dismissed – staff for inappropriately accessing personal information held in these datasets in recent years," the ISC writes in the report.
The heavily redacted report titled 'Privacy and Security, A modern and transparent legal framework' admitted that it was "unavoidable that some innocent communications may have been incidentally collected".
The report concludes that the legal framework governing GCHQ, MI5 and MI6 is "unnecessarily complicated" and "lacks transparency".
But the inquiry found the intelligence agencies were not trying to cheat the law through mass surveillance programmes.
The report said, "Our inquiry has shown that the agencies do not have the legal authority, the resources, the technical capability, or the desire to intercept every communication of British citizens, or of the internet as a whole: GCHQ are not reading the emails of everyone in the UK.
"Given the extent of targeting and filtering involved, it is evident that while GCHQ's bulk interception capability may involve large numbers of emails, it does not equate to blanket
surveillance, nor does it equate to indiscriminate surveillance.
"GCHQ is not collecting or reading everyone's emails, they do not have the legal authority, the resources, or the technical capability to do so."
The ISC inquiry began after leaks in 2013 about surveillance by US and UK spy agencies.
Snowden, a former US intelligence contractor who now lives in Russia after fleeing the US, gave the media details of extensive internet and phone surveillance.
Shami Chakrabarti, director of rights campaign group Liberty, dismissed the ISC report as "a simple mouthpiece for the spooks".
The report looked at whether current legislation providesthe necessary powers, what the privacy implications are and whether there is sufficient oversight and accountability.


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