HC Deb 03 December 1990 vol 182 cc27-36 3.55 pm
The Minister for Trade (Mr. Tim Sainsbury)

With permission I should like to make a statement about exports to Iraq.

The Exports of Goods (Control) Order 1987 specified the goods the export of which would require a licence from the Secretary of State for Trade and Industry in 1988. The export of any military equipment required a licence. The order specified a range of equipment that is capable of being used for either military or civil purposes which also required a licence. Decisions on export licences applications are taken on a case-by-case basis.

My right hon.and learned Friend the Member for Surrey, East (Sir G. Howe), the then Foreign Secretary, set out the guidelines applying to exports of defence equipment to Iraq in a written answer on 29 October 1985, at column 450 of Hansard. Those guidelines state that we should maintain our consistent refusal to supply any lethal equipment and that, subject to that overriding consideration, we should attempt to fulfil existing contracts and obligations. However, the guidelines said that we should not in future approve orders for any defence equipment which, in our view, would significantly enhance the capability of Iran or Iraq to prolong or exacerbate the conflict between them.

It is clear whether or not most goods fall within the guidelines. There is, however, a range of equipment—particularly machine tools—which could have either a civil or military use and for which a licence will be required.

When appropriate, both the Foreign and Commonwealth Office and the Ministry if Defence are consulted before a decision is made by my Department on whether a licence will be granted.

Applications for export licences are made on a form that requires the exporter to state both the customer and a description of the equipment. It is normal practice for it to be emphasised to those applying for licences that they should make clear the purpose for which the equipment is to be used.

In early 1988, following representations from a number of hon. Members on both sides, of the House, my hon. Friend the Minister for Defence Procurement, the then Minister for Trade, agreed to meet the Machine Tool Technologies Association to discuss the application of the guidelines in relation to the export of machine tools to Iraq.

My hon. Friend the Minister for Defence Procurement strongly denies the interpretation put on the remarks alleged to have been made by him in The Sunday Times article. I will not comment on the record of the meeting kept by the MTTA, which was not sent to my Department at the time, as I am advised that to do so might prejudice possible proceedings.

As the House will be aware, some matters concerning the licences granted to Matrix Churchill and the exports carried out by that firm to Iraq are now the subject of investigation by Customs and Excise. These investigations are carried out by Customs and Excise under the Customs and Excise Management Act 1979. It would therefore be improper for me to comment on those matters or to say anything that might prejudice any proceedings.

Mr. Martin O'Neill (Clackmannan)

That insignificant statement will surprise and satisfy no one. It will certainly not satisfy the readers and reporters of The Sunday Times It will not satisfy the arms manufacturers who were first encouraged to sell arms to Iraq and who now have the possibility of prosecution hanging over them. It will not even satisfy the Minister for Defence Procurement over his role in this sorry affair.

Perhaps the Minister will confirm that there have been arms sales to Iraq, involving battlefield radar supplied by Thorn/EMI, tank-tracking equipment supplied by Bimec Industries, engineering equipment for mortar shells supplied by Wickman Bennett, as well as many parts of the so-called supergun which required explosive retardants and which got through the gap.

Will the Minister say more about the status of the meeting that took place on 20 January 1988 between the then Minister, the hon. Member for Plymouth, Sutton (Mr. Clark), and representatives of the Machine Tool Technologies Association? Did the then Minister advise them about filling in forms? Did he tell them to couch their applications in a manner designed to emphasise—and therefore by implication to mislead the other Departments—the peaceful aspects of the deals?? Did he warn them of the need for speed to avoid bureaucratic—Foreign Office—interference because of external, namely United States, considerations?

Does the Parliamentary Under-Secretary appreciate that his totally inadequate explanation and his spurious distinction between lethal and non-lethal equipment make a mockery of the explicit instructions set out in December 1984 and the guidelines announced by the then Foreign Secretary on 29 October 1985? Is he aware that those statements were reinforced by the then Prime Minister on 10 November 1989 when she said, in reply to a question by my hon. Friend the Member for Workington (Mr. Campbell-Savours): supplies of British defence equipment to Iraq and Iran continue to be governed by the guidelines introduced in 1985,"—[Official Report, 10 November 1989; Vol. 159, c. 800.] Does the Parliamentary Under-Secretary not appreciate that the casuistry of those concerned will continue to be exposed and that the Government will not get away with selling what, if it is only the straw, is the straw with which the Iraqis are making the bricks which will be built up against our troops in the Gulf if it ever comes to action? Does he realise that, if people have been distorting, bending and falsifying the rules and hiding behind commercial constraints when they choose to ignore questions from hon. Members, they will be found out and the wrath of the British people will be heaped on them as a consequence?

Mr. Sainsbury


Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

On a point of order, Mr. Speaker.

Hon. Members

Is it a point of order?

Mr. Speaker

Order. I cannot know whether it is a point of order until I have heard it.

Mr. Beaumont-Dark

On a point of order, Mr. Speaker. The hon. Member for Clackmannan (Mr. O'Neill) said that the statement would not satisfy the readers of the Sunday Times. Is it not—

Mr. Speaker

No. That is not a point of order; it is a point of argument.

Mr. Sainsbury

When I was Parliamentary Under-Secretary of State for Defence Procurement I occasionally had opportunities to debate with the hon. Member for Clackmannan (Mr. O'Neill). I recall that he was very hard to satisfy. However good the news one announced, he would find cause to criticise it. Just for the record, may I say that I have moved on and I am now Minister for Trade, not a Parliamentary Under-Secretary of State.

The hon. Member for Clackmannan is an Opposition Defence spokesman and he is perhaps not as familiar with the procedures for export licensing as he might be were he Opposition spokesman on Trade and Industry matters. It is the exporter's responsibility to provide information to the Department which will enable the department with responsibility for issuing licences to determine whether the equipment concerned qualifies for a licence.

The guidelines to which the hon. Gentleman referred are clear. They were set out by my right hon. and learned Friend the hon. Member for Surrey, East (Sir G. Howe) on 29 October 1985, and since then they have been scrupulously and carefully followed in the issuing of licences. No other country has such a careful method for scrutinising applications for export licences and for controlling exports.

Mr. Michael Grylls (Surrey, North-West)

Does my hon. Friend agree that it would be unwise for hon. Members to pursue a witch hunt in a vacuum when we do not know the facts? If any firm has deliberately broken the rules, it will be prosecuted by the proper authorities. We should not have a witch hunt against many firms which, over the years, with the best of good will, have genuinely tried to maximise their exports for the good of the country.

Mr. Sainsbury

I agree that it would be most unwise for any of us to make statements or allegations which might prejudice the outcome of proceedings. Surely it would be in the interests of both sides of the House that, if proceedings are brought, they are not frustrated by comments made in the House.

Mr. David Winnick (Walsall, North)

Is the Minister aware that his statement will not satisfy most hon. Members and that it will certainly not satisfy public opinion? Is he aware that the most serious allegation 3 have been made that, in the months and years leading up to the invasion of 2 August, there were exports to Iraq which helped to build that country's war machine and that there was much complacency on the part of the Government and on the part of the Minister who was named in The Sunday Times report? Does the Minister really believe that his feeble excuses today will satisfy the House and the country?

Mr. Sainsbury

When it comes to being hard to satisfy, the hon. Member for Clackmannan (Mr. O'Neill) is certainly put in the shade by the hon. Member for Walsall, North (Mr. Winnick). The exports to Iraq in the period to which the hon. Gentleman referred were made strictly in accordance with the criteria to which I have referred. I hope that the hon. Gentleman heard what they were. They barred the export of lethal equipment or equipment that would significantly enhance the capability of Iraq or Iran to carry on their conflict.

Mr. Roger King (Birmingham, Northfield)

My hon. Friend mentioned that he had received representations from both sides of the House. Would he care to elaborate a little on the role of the Labour party?

Mr. Sainsbury

I shall have to write to my hon. Friend to let him know the full list of hon. Members who wrote to my predecessor seeking meetings on behalf of the Machine Tool Technologies Association. I assure my hon. Friend that the meeting that took place and which was referred to in the article in The Sunday Times arose as a result of those representations.

Mr. Ted Garrett (Walsend)

I must declare two interests. First, I am a member of the Amalgamated Engineering Union and, secondly, since 1968, I have advised the Machine Tool Technologies Association. Many members of my union worked on the machines that are now in Iraq and they would deeply resent any imputation that they were guilty of helping Iraq to protect—[Interruption.] Let me have my say.

It is wrong to pillory the management of the machine tool industry—men who have served their apprenticeships, gone through the ranks and worked to produce exports for the industry and for the country—to the extent that the Minister alleges that they might face charges in court. The Minister should state clearly that it is a tale of confusion between the Department of Trade and Industry, the Foreign and Commonwealth Office and Customs and Excise. None of them has got its act together, and that is why the article appeared in the "Insight" column of The Sunday Times. It is wrong for there to be public recrimination on an issue which the Government should admit would not have come forward had there been co-ordination in their activities and information to the machine tool industry.

Mr. Sainsbury

The hon. Member is a strong supporter of the machine tools industry. It is a significant industry, with a good export record, and it provides much employment. I do not wish to comment on the matters to which the hon. Gentleman has referred because—I apologise to hon. Members for it and hope that they understand—I must fall back on saying that it would not be proper to comment on matters that are currently subject to investigation under the Import, Export and Customs Powers (Defence) Act 1939.

Mr. Derek Conway (Shrewsbury and Atcham)

Does my hon. Friend recall that, during the Iran-Iraq conflict, when a company in my constituency wanted to supply engines for recovery vehicles, the application went to a Cabinet sub-committee and was declined in case the engines could be put to military use? Is that not a clear example of the Government abiding by the regulations? Bearing in mind what the hon. Member for Wallsend (Mr. Garrett) has said, it will come as a great surprise to the House that the Liberal Democrat and Labour parties are attacking the machine tools industry in this way—[HON. MEMBERS: "Not true."] That has to be the case, despite Opposition Members' protests. If exporters are misleading a Government Department, that is a matter for the courts, not for the bear garden of Opposition Members.

Mr. Sainsbury

I do not remember the particular application to which my hon. Friend refers. I believe that it would have come before one of my predecessors. However, I can confirm, as I have done already, that there were guidelines which were well known to both exporters and the House. I can assure the House that those guidelines were scrupulously followed and that the Foreign and Commonwealth Office and the Ministry of Defence, when appropriate, were consulted before my Department issued or refused a licence application.

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Does the Minister accept that his statement is nothing less than a Sir Humphrey classic in its desire to obscure, confuse and cloud the issues??While accepting that he does not want to prejudice possible legal proceedings, surely the best way not to do so is to come forward this afternoon with the fullest possible disclosure of the facts, but that is what the hon. Gentleman has singularly failed to do. Why was not a minute of the meeting between the association and the Minister, to which he referred in his statement, not sent to his Department, given that his Department would then have been responsible for the granting of subsequent licences arising from the context of the discussions at that meeting? Is it not a ludicrous failure in the civil service, where the Government are policing their own policy?

Mr. Sainsbury

As I said in my statement, it would not be right for me to comment on the record that was kept of the meeting by the Machine Tool Technologies Association. I am advised that to do so might prejudice possible proceedings. I realise that the hon. Gentleman finds that unsatisfactory, but when he asks me to come to the House to make the fullest possible statement, he is asking me to do just that—to make a statement that would prejudice possible proceedings, and that I do not intend to do.

Mrs. Alice Mahon (Halifax)

On a point of order, Mr. Speaker. Is it proper for the Minister to claim sub judice when no proceedings have been started, which is what he has been doing throughout?

Mr. Speaker

Order. I did not hear the Minister claim sub judice—[HON. MEMBERS: "He did."] Well, it is up to him how he answers the question. The case is not sub judice, and I did not hear him claim that it was.

Mr. Peter Bottomley (Eltham)

Is not one of the differences between Iraq and this country the fact that a newspaper here can raise such issues? Is not one of the differences between this country and Iraq the fact that Parliament can respond to it? Is not one of the differences between Iraq and this country the fact that the trade association or The Sunday Times could publish the whole of the note that was made by the trade association, so that the rest of the House can make either the same judgment as the newspaper or a different one?

Mr. Sainsbury

My hon. Friend draws attention to what some of us would regard as the less important differences between our country and Iraq. I rank human rights as the most important. However, these are significant differences, and my hon. Friend makes a good point.

Mr. Dave Nellist (Coventry, South-East)

Leaving aside how British troops in the Gulf must now feel towards the hon. Member for Plymouth, Sutton (Mr. Clark), and the fact that the occasion of this statement is not only a good occasion for his resignation but another good reason for not drifting senselessly towards war in the Gulf, how can this Minister now face the 89 workers and their families from Matrix Churchill in Coventry who this weekend were given notice of their redundancy, which will take effect four weeks today? The Minister seems to have done nothing in the five weeks since I led a deputation of workers to him in his office. Is it not a fact that his Department encouraged general exports to Iraq, including machine tools and lathes from Matrix Churchill and Wickman Bennett?

Is it not a fact that in November 1988 the former Secretary of State for Trade and Industry announced £400 million in credit to enable those exports to be made and that 10 days before the present Secretary of State for Health said in the House that the Iraqis were using chemical weapons to bomb the Kurds? Is it not a fact that the Department allowed the Iraqi secret service to take over Matrix Churchill? Is it not also a fact that, after sanctions were imposed in August, the Government washed their hands of the responsibility for workers in Coventry and elsewhere? As it is all the Government's responsibility, should not the Minister announce today that the Government will take over the firm, take it out of the hands of the Iraqi secret service, and guarantee the jobs and livelihoods of the workers in Coventry and elsewhere?

Mr. Sainsbury

Job losses and redundancies are always a matter for regret and I am sorry to hear what the hon. Member for Coventry, South-East (Mr. Nellist) said about some of the workers in Matrix Churchill. The hon. Gentleman read out a list of "facts", most of which I did not recognise as facts.

Mr. John Bowis (Battersea)

Will my hon. Friend pay attention to the wise words of the hon. Member for Wallsend (Mr. Garrett), and not the synthetic row being artificially created by the main Opposition? Does he agree that the gist of the Opposition's argument seems to be that any type of export from this country could conceivably, some day, somehow, be used for aggressive purposes and that their main accusation against my hon. Friend the Minister for Defence Procurement is that he did his best, within the law, to promote British trading interests? Will the Minister confirm that British policy on lethal weapons has not and will not change?

Mr. Sainsbury

I can confirm that our general policy has not changed and that our policy on the export of military equipment and arms to Iran and Iraq was clear and has been adhered to. The most that we can do at any time is to make the most informed, cautious and considered judgments in the light of all the information available. I doubt whether any other country has a more comprehensive and rigorously enforced system of defence export control.

Mr. Max Madden (Bradford, West)

Does the Minister accept that it is the Government, not the machine tool industry, who are in the dock today? Were any private officials present at the meeting between the Minister and the Machine Tool Technologies Association? If there were, does their minute of that meeting coincide with the minutes published this weekend in The Sunday Times?

Mr. Sainsbury

I can confirm that it was a normal meeting and officials were present, as normal. The hon. Gentleman asked who was in the dock. Nobody is in the dock, and it is important to keep that in mind. I am not prepared to make statements that might prejudice any proceedings that may be brought because, as the hon. Gentleman is aware, Customs and Excise is at present investigating certain matters, as I said in my statement. I should have thought that the hon. Gentleman would recognise that it would be unwise to make statements that might prejudice any proceedings arising from those investigations.

Mr. Alan Williams (Swansea, West)

The Minister has admitted that, as one would expect, his officials were present at the meeting. Is it not a fact that the Department's normal practice is to keep its own minutes of such meetings? Has he not said that the meeting was not of a confidential nature but was to clarify already published guidelines to industry, so there was no secrecy in relation to the meeting or the minutes? How do his Department's minutes differ from those of the trade association?

Mr. Sainsbury

I hope that I made it clear to the House that the meeting was not to discuss any specific licence application but was held with the trade association to discuss the application of the guidelines in relation to the export of machine tools to Iraq. We seem to be talking about two entirely different issues.

Mr. Beaumont-Dark

Does my hon. Friend accept that, in the cut and thrust of politics, we are all used to saying things about each other as a matter of course, but for Opposition Members to suggest that for some sordid reason, my hon. Friend the Minister for Defence Procurement would be willing to put British lives at risk for his personal interest is unworthy of them? Right from the word go, the Labour case has been that this will not satisfy readers of The Sunday Times. Nothing will satisfy The Sunday Times short of seeing blood on the sword.

This House needs to state clearly that we do not believe that any member of Her Majesty's Government, Labour or Conservative, would ever sell the people down the river. I would not—[Interruption.]—I would not believe that of a Labour Minister or of a colleague. Surely none of us should laugh at the honour of our people. Accusing the Minister of knowingly selling arms to an enemy of this country is something of which the Opposition should be thoroughly ashamed.

Mr. Sainsbury

I am grateful for my hon. Friend's remarks and for his reminder that in the heat of the moment things may be said about hon. Members which perhaps should not be said. In the Department of Trade and Industry we endeavour both to promote exports and to stay strictly within the clear guidelines controlling defence exports.

Mr. Martin Flannery (Sheffield, Hillsborough)

It ill becomes the Conservative party to engage in self-righteous indignation merely because hon. Members are honourably questioning certain events and want to know the truth. We know from long experience that war is terrible but also that it is terribly profitable to some people. If we admitted that we supported Saddam Hussein throughout the war against Iran, that might clear the air a bit.

The Minister above all people should understand this: he comes of a family that understands trading. I do not impute any ill motives to him. Only recently we were found to be clearly guilty, and I told the Prime Minister that she did not seem to understand the difference between a gun barrel and an oil pipe. We were found to be exporting gun barrels to Iraq, so why do Conservative members quibble about our honourable anxiety about what is going on?

Mr. Sainsbury

The hon. Gentleman was slightly short on specific questions, but he seemed to suggest that we had exported lethal equipment and supported Iraq by so doing. I assure him that we have not been exporting lethal equipment. I remind him that it is the responsibility of the exporter to fill in the export licence application form, and to state, under CS, the nature of the ultimate user's business", and, under C6, the precise purpose for which the goods are to be used". If that information is not accurate, wrong decisions can be reached.

Mr. Peter Viggers (Gosport)

Does my hon. Friend share my confusion about the message that seems to be coming from the Opposition? Does he agree that, like it or not, the manufacture and export of military equipment and of equipment that could have some military application are important to this country? Does he recall that, in a constituency manifestation and in a previous manifestation as a Minister, I have received vigorous representations from trade union leaders who are anxious that the scrupulous attention paid by the Government to the purpose of exports should come down on the side of the workers and their unions? Does my hon. Friend therefore agree that scrupulous tests are applied and that there does not seem to have been any impropriety in this matter?

Mr. Sainsbury

I entirely agree. It is incumbent on any country with defence exports to ensure that there are strict controls and that they are well enforced. As my hon. Friend well knows, all countries have the right to self defence. Under article 51 of the United Nations charter, they are free to acquire defence equipment, and in many cases it would be a gross waste of resources if they tried to provide their own. The defence export industry is important and provides employment for at least 100,000 people. We should be careful in criticising it as if any defence export were wrong.

Several Hon. Members


Mr. Speaker

Order. I remind the House that this is a fairly heavy day, with two Second Reading debates. I shall call four more hon. Members and then we must move to the next business.

Mr. Greville Janner (Leicester, West)

Does the Minister recall that there was almost precisely the same row at the time of Idi Amin over the export of telephonic equipment? Have the Government learnt nothing from this? Is it not true that licenses were granted when they should not have been, that this was either deliberate or negligent, and that either way the Minister of State for Defence Procurement should resign?

Mr. Sainsbury

I do not recall the export of what the hon. and learned Gentleman called telephonic equipment at the time of Idi Amin. I assure him that we continually review our procedures for controlling defence exports. The procedures are applied most scrupulously and carefully. As he will see from recent events, we have further reviewed and improved those procedures, and we are open to further suggestions about anything that can be done to make them even better than they are.

Mr. Richard Caborn (Sheffield, Central)

Will the Minister please answer three questions? First, when was his Department informed about Project Babylon, which was in 1988? Secondly, when was his Department informed about Project 839, which has been referred to a number of times through the supergun affair? That concerned an order not for the supergun but for 75 major field guns. I understand that the intelligence service believes that three of those guns have been installed. Thirdly, will there be a change in the procedures for applying for export licences by saying that no licence will be granted unless the end use of all components and manufactured goods is contained in the export licence form that the Minister read to the House?

Mr. Sainsbury

As I have said, it is for the exporter to provide the information that is necessary for the Department to determine whether a licence is required and whether it will be granted. Sometimes it is necessary to ask for additional information, more details of specifications and other matters connected with the application. If the exporter fails to provide accurate information, that part of the form which draws attention to the fact that misleading or wrong information may give rise to proceedings comes into effect. That warning is given on many Government forms.

Mr. Dennis Canavan (Falkirk, West)

As the Minister of State for Defence Procurement insists on denying the Sunday Times allegations, which if true would surely be a resignation issue, may we assume that he will take legal action against the Sunday Times?

Mr. Sainsbury

As I said in my statement, my hon. Friend strongly denies the interpretation put on the remarks alleged to have been made by him in the Sunday Times article.

Mr. Harry Barnes (Derbyshire, North-East)

I am probably the only Member who at one time had a job filling in forms in Iraq. That was during my national service. What has happened to Britain's so-called arms embargo in connection with trade fairs in Iraq which we have supported and which have been held since the embargo? How has Britain been involved in those trade fairs? Have we been attempting to sell dual purpose machine tools?

Mr. Sainsbury

The hon. Gentleman speaks about the "so-called" embargo. I assure him that it is an embargo and that, under the terms of the United Nations mandatory sanctions order no civilian or military exports, apart from medicines, are being made to Iraq and Kuwait. He asked about trade fairs since the embargo came into effect. If there have been any such trade fairs, I assure him that there have been no British exhibitors and no support from my Department.

Mr. O'Neill

Does the Minister not realise that no Opposition Member objects to the production of machine tools or to the Machine Tool Technologies Association meeting the Minister? We object to Ministers conniving with exporters to bend the rules to afford trading with Iraq. Until we get a clear indication of where the Minister's minute deviates from that of the trades association, we will continue to push this matter. We will not be satisfied by the use, or abuse, of the sub judice rule. We recognise that legal action may well be brought, but that threat cannot hang indefinitely. As we come nearer to 15 January, right hon. and hon. Members will become more and more anxious about what has or has not been exported to Iraq, and for what purpose.

We give notice that we shall seek clarification in the light of any legal proceedings that have or have not been instituted. If legal proceedings have not been brought, we shall be anxious for the Minister to clarify the matters on which at present he feels incapable of enlightening the House.

Mr. Sainsbury

Perhaps I could clarify the point about the sub judice rule. I did not at any time refer to anything being sub judice. [Interruption.] I chose my words carefully, and I shall repeat them. I pointed out that the exports carried out by Matrix Churchill to Iraq and some of the licences granted were now the subject of investigation by Customs and Excise, and it would therefore be improper for me to comment on those matters or say anything that might prejudice any proceedings. That is not the same as the matter being sub judice. I hope that the hon. Gentleman agrees—presumably this would be in conformity with his views—that, if anything improper had occurred and it was decided that there should be proceedings, we should not say anything that might prejudice those proceedings.

The hon. Gentleman asked about the note of the meeting. As he well knows—I think that he should well know—it is not the custom to disclose such working papers. I note the words that he said in support of the machine tool industry, and I am sure that it was glad to hear them. I was certainly glad to hear them. We continue to hope that it will be successful in exporting machine tools for civilian use to all parts of the world where such exports are permitted.