HC Deb 28 April 1980 vol 983 cc1113-24

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]

10 pm

Mr. Cyril D. Townsend (Bexleyheath)

The House has been told that, following the Soviet invasion of Afghanistan, all aspects of Britain's political, commercial and cultural links with the Soviet Union were being reviewed. In addition, hon. Members have criticised the Government for asking our Olympic athletes to bear an unfair portion of the burden of our disapproval. The onus rests on the Government to convince all concerned that that is not so. For these reasons, I welcome this opportunity to bring to the notice of the House the presence of Soviet and Eastern European trade inspectors in this country and to call upon my hon. Friend the Minister of State to tell the House the attitude of our Government towards them.

According to information I have obtained from parliamentary questions and other sources, there are at present no fewer than 65 Soviet inspectors permanently in this country monitoring the manufacture by British companies of goods and equipment to be delivered to the Soviet Union under export contracts. Last year there were 68, and the year before there were 79 inspectors. Before 1978 the figures were not kept in such a way as to make it possible to distinguish between Soviet inspectors and Soviet technicians on temporary attachment to the Soviet trade delegation. The combined figures for these two categories for the three years previous to 1978 were 73, 75 and 83. The 65 Soviet inspectors presently in the United Kingdom have been here for an average of one year and two weeks. The longest length of stay is 36 months, and 50 of the inspectors are accompanied by their families.

In the Official Report of 1 December 1975, the Labour Government gave a list of British firms which had Soviet inspectors attached to them. The firms included John Brown Engineering, International Computers, the Singer company, Swan Hunter shipbuilders, Vickers, and Wilkinson Sword. The present Government have decided that it would be undesirable to update the list. I have been told that there are two inspectors in Scotland, one in Wales and three in Northern Ireland and that one chemical company has no fewer than 11 inspectors attached.

I believe that the House will be surprised to learn that there are no limits on the number of inspectors permitted to work here at any one time. In theory, there could be several hundred. They are required only to demonstrate that they are needed here under the terms of particular contracts and they qualify for entry under our immigration rules. They have to apply for extensions of their stay every four months.

In contrast, there are fixed limits on the number of Soviet officials resident in the United Kingdom for periods longer than three months, which have remained unchanged since 1971. For example, the figure for the Soviet embassy is 93 and for the Soviet trade delegation it is 47. In the present circumstances, 65 trade inspectors is a large number. That number is greater than the number of diplomats in the Polish embassy, the Bulgarian embassy or the Hungarian embassy. At a time when the Government are trying desperately to convince our sportsmen not to go to Moscow, are these 65 trade inspectors fully justified and, if so, should not 65 at least become the maximum limit for the time being?

I do not oppose trade with the Soviet Union, but this is the moment to start laying down our terms to that country. Certainly, it allows only half that number of our business men to reside permanently in the Soviet Union.

On 28 February, I asked the Foreign Office which other Communist countries had trade inspectors here, and how many there were per country. There was an embarrassingly long pause. The Minister kindly wrote to me on 26 March to apologise for the delay which was caused, he said, by the need: to consider with other Government Departments the feasibility and necessity of changing the way in which the Home Office maintain their records so that it is more immediately apparent which of the trade personnel from Eastern European countries as opposed to the Soviet Union can properly be called inspectors. You will see from the information that I am now giving that we have concluded that a change of practice in the Home Office would be useful in this case ". The House will welcome the news that changes are to be made. I am most grateful to the Minister for being here tonight, and I hope that he will go a little further. However, it is clearly suggested that in former years there has not been the surveillance and control of trade inspectors from Eastern Europe that there should have been. There is reason for concern that the Government do not know how many are permanently residing in our country or that they have not been prepared to tell hon. Members.

Surely it would be foolish to draw too great a distinction between trade inspectors from Russia and East Germany. To put a specific point to my hon. Friend, is he now in a position to tell me how many trade inspectors there are—or approximately how many—from East Germany? Soviet inspectors resident in the United Kingdom are subject to a travel notification scheme. May we be told whether that now applies to those from other Eastern European countries, or are they still to be treated differently? Soviet inspectors resident in London hate to give at least two working days' notice of travel to places more than 35 miles from central London. Those resident outside London are required to give one working day's notice of travel outside the immediate area of their residence. The mind boggles at the amount of extra work that must cause the authorities.

From the correspondence I have had with companies to which Soviet trade inspectors are attached, it appears that they are accepted willingly in return for the companies getting important contracts from the Soviet Union. That is an understandable commercial attitude. But there are wider implications for the House to consider. The companies normally supply furnished accommodation and arrange for the inspectors to be accompanied inside the plants. The administrative burden must be considerable. The inspectors travel unaccompanied away from the factories and, when an overnight stay is necessary, they are not supervised in the evening. Renewal applications for visas and certificates take a very long time to be dealt with—up to three months—and are often returned with errors resulting in prolonged correspondence with the immigration department.

I heard one report of a Soviet inspector attached to a company in Northern Ireland who was not much of a problem since he was often away visiting officials in the Soviet embassy in London. One wonders why. Another firm told me that its Soviet inspectors have been located in Portsmouth, specifically at the request of the Foreign Office with the intention of reducing security problems. These inspectors and their families are allowed complete freedom of movement within a 10 mile radius of Portsmouth, but on the mainland only. I am concerned at the openings for industrial espionage. Is it possible to prevent a Soviet trade inspector taking photographs of another highly sensitive manufacturing process operating either within the company to which he is attached or within another company that he might legitimately be able to visit?

Almost certainly the vast majority of these Soviet trade inspectors are genuinely performing a routine technical service. Many overseas clients will make it a condition of contract that their inspectors should have access to offices and works to check design and equipment and ensure adherence to contract specifications.

In 1971, as the House will remember, 105 so-called diplomats and trade delegates were expelled by the Conservative Government in a purge called for—it appears for some time—by the security authorities. They were expelled for being spies and agents provocateurs. Are the Government satisfied that the KGB has not found a way round the ban imposed by my right hon. Friend the Member for Sidcup (Mr. Heath) through the fine print of the Anglo-Russian trade agreement, signed by the right hon. Member for Huyton (Sir H. Wilson)? The record all too clearly shows that the KGB never misses a chance to infiltrate spies into a Western country, and Britain has proved to be a prime target in recent years.

It is unusual for the Soviet Union to allow more than 100 of its citizens outside the diplomatic world to live for approximately a year in the West, sampling all its advantages, including consumer advantages, before being replaced by others.

Are the Government convinced that not one of those Soviet inspectors represents an intelligence threat or is involved in subversion in the heart of Britain's industrial life? How can the Government be certain that none of these technical inspectors has been given a crash course in intelligence work by the KGB? Are they sure, for example, that the wife of a trade inspector in Northern Ireland is not in reality a Soviet agent in contact with the IRA? Indeed, is it wise to have three Soviet inspectors in Northern Ireland at present?

I seek firm assurance from my hon. Friend that if the security services are convinced that any of these inspectors have been involved in espionage they will be sent packing without delay. When two Hungarian diplomats were caught red-handed photographing a secret nuclear weapons establishment in April 1976, the Labour Government failed to expel them. The late Mr. Crosland, then Foreign Secretary, described the action as " foolish and provocative ", but questioned whether their expulsion would serve any useful purpose.

In conclusion, may I remind my hon. Friend that my right hon. Friend the present Prime Minister said in Dorking on 31 July 1976: We must consider how we can ensure that our commercial relations with the Soviet Union don't damage our own long-term security interests.

10.13 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Peter Blaker)

I am grateful to my hon. Friend the Member for Bexleyheath (Mr. Townsend) for initiating a debate on this important subject.

As he said, the Soviet invasion of Afghanistan caused the Government to review every aspect of our relations with the Soviet Union. That included a review of our policy on Anglo-Soviet trade. Since the presence of Soviet trade inspectors in this country is a consequence of that trade, I should like to remind the House of the Government's present policy on this matter.

The Government continue to support trade between the United Kingdom and the Soviet Union which is of benefit to the United Kingdom. That means that we are not attempting to place a total embargo on trade. Such an embargo would not harm the Soviet Union because other countries would not impose a similar embargo, but it would be damaging to our own interests, and our exporters would sacrifice business to their competitors in other countries. There is no prospect of getting our partner countries to agree to a total embargo on trade with the Soviet Union, even if one were thought desirable.

On the other hand, the Government firmly believe that Anglo-Soviet trade should not confer special benefits on the Soviet Union. That is why we decided not to renew the Anglo-Soviet credit agreement of February 1975 which made available to the Soviet Union credit on particularly preferential terms. That is also why we are engaged in consultations with our partners on how to ensure that the export to the Soviet Union of sensitive goods and technology is more tightly and effectively controlled. There is already agreement that no significant exceptions will be made to the COCOM rules for the time being. That represents a tightening of past procedures. We are now discussing how the rules can be tightened on a longer-term basis.

As a consequence of our review of British-Soviet trade policy, and encouraged by my hon. Friend's interest, the Government have also reviewed the arrangements for Soviet trade inspectors in this country. If we are to export to the Soviet Union, we must be prepared to compete for the business. Much of this business involves heavy industrial exports. If we are to get the business, our firms have to meet the terms which the buyer lays down. The buyer knows that firms in other exporting countries will do that. Our exporters have to match them if they are to have a chance of getting the business.

One term which is frequently laid down is that the exporting company shall receive Soviet inspectors on its premises to monitor the quality of the goods and equipment concerned. This is a normal practice in international trade in industrial products. The alternative to having these inspectors in Britain is thus to lose the business which, of course, would mean losing jobs. The Government's policy is, therefore, not to object to the presence of these inspectors as long as they are performing functions necessary for the conduct of trade which is beneficial to the United Kingdom and are doing so in a proper manner. Other Western Governments pursue a broadly similar policy.

Since the level of Anglo-Soviet trade varies, and the frequency with which particular contract negotiations come to a head is irregular, it would make no sense to place an arbitrary limit on the number of inspectors permitted to reside in this country at any one time. I think that that answers one of the points which my hon. Friend raised. This also applies, of course, to inspectors from other countries, such as China, and the countries of Eastern Europe.

The Government's policy, therefore, is to treat each application from a Soviet trade inspector to reside in this country on its own merits on a case-by-case basis. Numbers have, in fact fallen in the last five years, from 83 in February 1975 to 62 today. That is a further drop compared with the last figure which my hon. Friend gave.

My hon. Friend will not need reminding—indeed, he mentioned it himself— that a previous Conservative Government found it necessary in September 1971 to require the Soviet Government to remove from the United Kingdom the 105 Soviet officials stationed here who had engaged in unacceptable activities. The fact that this was necessary clearly demonstrates the need for all Governments to exercise particular vigilance towards Soviet nationals Present in their territories.

As a consequence, the Government's arrangements concerning the granting of visas to Soviet inspectors include provisions for careful and thorough control. These are designed to ensure that inspectors are here for the right reasons and are working to advance trade which is in this country's interest.

My hon. Friend referred to some of the safeguards. Perhaps I can spell them out a little more fully, because I think that it will help to reassure my hon. Friend. First, a visa will not be authorised for a Soviet inspector wishing to work in this country unless the Government, after consultation with the British company concerned, are satisfied that his presence in the United Kingdom is required under the terms of a particular trade contract. The Government require information about his precise role, his place of work and his residence. He must also satisfy all the other requirements of the immigration rules.

Secondly, every Soviet inspector is required to seek an extension of his visa every four months during his stay in this country, if he stays longer than that period. At these times, the British company concerned must confirm to the Government's satisfaction that the inspector is still required and that he is carrying out his duties satisfactorily. If this confirmation is not given, or if the Soviet inspector concerned has not carried out his duties satisfactorily from any other point of view, the Government may decline to renew his visa. This has happened on a number of occasions.

Thirdly, Soviet inspectors staying in this country for more than three months are subject to a travel notification scheme. This requires those resident in London to give two full working days' notice in advance of travel more than 35 miles from the centre of London. Inspectors resident outside London must submit notifications of travel beyond the immediate vicinity of their place of residence at least one working day in advance.

Following our review of these controls, we are satisfied that they are generally both reasonable and adequate. The review has brought to light a possible need for some minor adjustments to the administration of our system. My hon. Friend mentioned, I believe, one such adjustment in a related area which has already been made: the Government are now beginning to keep separately the figures for Eastern European inspectors so that their numbers will be immediately distinguishable from the numbers of other types of commercial personnel. Other changes may be made after further study by the Government Departments concerned.

Mr. Cyril D. Townsend

Will my hon. Friend give way?

Mr. Blaker

I am just about to take up a point. I shall give way later if time allows, but I have some important things to say which I think my hon. Friend will want to hear.

My hon. Friend referred to the delay in answering one of his questions—a legitimate point to take up. The question which took a long time to answer was one concerning the numbers of Eastern European trade inspectors in this country. As I have explained, the reason for the delay in this case was the need to consider whether the Government would change this method of keeping records. Since then we have conducted a careful review of the situation. This has involved a significant amount of work by a number of Government Departments. It is better to conduct a review of this sort thoroughly than to do it in a rush. As a result, we have changed our system.

Since I answered questions from my hon. Friend on the subject of Eastern European inspectors on 27 February and 26 March, our research has shown that there is at present only one Eastern European national resident in this country on attachment to a British company who can properly be described as an inspector. Eastern European countries are generally entitled, under their contracts with British companies, to appoint resident inspectors. However, this function is generally carried out in practice on behalf of the Eastern European countries by visitors from the commercial section of the London embassy concerned or from the headquarters in Eastern Europe of the relevant trading organisation.

My hon. Friend may have in mind the possibility that some Soviet inspectors in this country are involved in industrial intelligence-gathering activities. I am sure that most British companies, particularly those with international markets, are very well aware of the need for safeguards. To a large extent, this is a matter of commercial judgment. No Soviet trade inspector is allowed here unless his presence has been agreed by, indeed in effect requested of the British Government by, the British company involved. For their part, however, the Government are also alive to the potential risks in this area.

As part of the review I have mentioned and in preparation for this debate, the Government have been in touch with some of the British companies with most experience of working with Soviet inspectors. None of these companies suggested that the Government's general approach to the matter was wrong; and all took the view that Soviet inspectors generally performed a useful and helpful function. The consensus was that Soviet inspectors are almost invariably genuine experts in their field; that they are kept busy on their inspection jobs; that they are useful to both buyer and seller since they reduce the chances of damaging and long drawn out disputes at a later stage about whether particular items of equipment were properly manufactured and packed and who is responsible for any damage to them; and that they help companies in the difficult business of establishing better communications with Soviet buyers.

My hon. Friend has asked in the past about the apparent lack of reciprocity in this area. He referred to that today. He has said that there appear to be no British inspectors in the Soviet Union. The main reason for this disparity is no doubt that we import few capital goods and little capital equipment from the Soviet Union. The need for inspectors does not, therefore, normally arise. However, there are quite large numbers of British site personnel in the Soviet Union supervising the erection of plant exported from the United Kingdom.

Mr. Cyril D. Townsend

I have listened with close attention to the encouraging news that my hon. Friend has brought to the House. Will the one Eastern European trade inspector we have come across be treated in the same way as the Soviet trade inspectors? Secondly, and perhaps rather more importantly, will he give the guarantee for which I asked— that if the Government suspect that any Soviet trade inspector is involved in espionage, they will send him packing without delay?

Mr. Blaker

If my hon. Friend is referring to notification of travel, I cannot give that guarantee. We do not operate a similar arrangement for the Eastern European countries. The main reason why we operate the notification of travel arrangements with the Soviet Union is that the Soviet Union operates restrictions on the travel of our people in the Soviet Union. It is a matter of reciprocity.

In answer to my hon. Friend's second question, I merely say that the Government will yield to none in their determination to safeguard the security of this country.

I am grateful to my hon. Friend for raising the issue of the Soviet inspectors in the United Kingdom. It is of great importance and of particular interest at present. I assure him, having examined carefully the system that we operate, that I do not believe that there is cause for concern. I can also assure him, in response to his second question, that if there were cause for concern the Government would not hesitate to take immediate action.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Ten o'clock.