GUIDANCE

HC Deb 08 November 2001 vol 374 cc442-50

Mr. Key

I beg to move amendment No. 28, in page 5, line 27, after "function;", insert— '(bb) the time necessary to process applications;'.

Mr. Deputy Speaker

With this it will be convenient to discuss amendment No. 35, in page 5, line 33, leave out subsections (3) and (4) and insert—

'(3) Any published guidance relating to export licensing, which is capable of applying in relation to the exercise of functions under an order under section 1 or 2, shall be treated as guidance under this section.

(4) The consolidated criteria relating to export licensing decisions announced to Parliament by the Secretary of State on 26th October 2000 shall be included in the guidance referred to in subsection (3).

(5) Changes to any guidance issued under subsection (4) shall not take effect until laid before and approved by a resolution of each House of Parliament.

(6) Changes to any guidance issued under subsections (I) or (2), or under subsection (3) which does not contain any guidance made by virtue of subsection (4), shall be laid before Parliament and published within 40 days.'.

Mr. Key

Many hon. Members on both sides of the House have companies great and small in their constituencies that produce goods for export, and some of them require export licences. Many hon. Members present today can tell their own tales of letters to Ministers, telephone calls, parliamentary questions and debates concerning delay in granting export licences to companies.

We have heard some passion about the great companies in this country that do so much to create wealth, which is therefore taxed, from which we all benefit. We have heard a lot of good sense. We have heard one or two over-the-top comments about the merchants of death—over the top in my view, anyhow. I suggest that: the hon. Gentleman who made that comment finds out how many people in his constituency who vote for him are involved in defence industries. Nevertheless, one of the perennial problems—the Minister and two former Ministers present have commented on it at some length—is the care that is taken in assessing the value and disbenefits of any export licence application.

The officials who carry out the scrutiny before the decisions go to Ministers have themselves found that their departments have been understaffed and that extra burdens have been put on them. Under this Government, a new department was set up in the Foreign Office to secure a particular Foreign Office input to the ethical dimension. I am not arguing about that, but whatever mechanism Government create to handle the issue, it should be efficient and not unnecessarily disadvantage British industry where it is pursuing lawful objectives in the interests of this country and of their employees, our constituents.

As long ago as 10 May 2001, my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) asked the then Secretary of State for Trade and Industry what the (a) average and (b) maximum length of time taken to process export licences was in 2000."—[Official Report, 10 May 2001; Vol. 368, c. 305W.] The answer came back that in 2000 the mean length of time was 26.5 working days, the mode was 15 working days and the median was 17 working days. A lot of other statistics were given, but the basic message was, "Too long."

My amendment is concerned with the fact that the Government have failed to introduce time limits in granting licences in this Bill, which provided a very good opportunity to do so. That is essential to help competition. It would mean that manufacturers could guarantee a time scale for the production and delivery of goods. The 20-day average causes anxiety to businesses, great and small. We heard some interesting ideas from the hon. Member for Leeds, West (Mr. Battle) about the equivalent of an outline planning permission being put in by some large companies to try it on with an export licence. That is not the norm; it is the exception.

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Many of the difficulties have arisen with small and medium-sized enterprises and, sometimes, very small family-based engineering companies in our constituencies. For example, I learned recently of a small family-run civil engineering company near Manchester. It specialises in high-quality, low-volume production of orders made to high specifications. Some of its orders are involved in defence. For example, it makes parts of a periscope for tanks as well as all sorts of bits and pieces, such as fins, for aircraft and, on occasion, missiles.

Anyone who knows anything about the engineering industry knows that, although there are the big boys, most of the work takes place in small firms in our constituencies that might employ only a dozen or so highly skilled engineers. They are the hardest hit by delays in export licensing.

That particular company in the north-west was approached to make a piece of equipment. It quoted, got the order and immediately put in a licence application.

It went ahead, produced the goods and finished production on time but could not release them and so lost the order. It had done the work, but because three Departments could not process the application in time, it lost the order and was not paid.

On 9 July this year, my hon. Friend the Member for Buckingham (Mr. Bercow) asked a question of the Secretary of State for Trade and Industry. He congratulated her on her appointment and asked what she would do about the issue of the 20 working days. In a straightforward answer she said: Like him, I am worried about the delays and our failure to meet the target for dealing with all the applications on time. However, I am sure that he acknowledges that some of the applications raise complex and difficult issues on which a careful judgment must be made."— [Official Report, 9 July 2001; Vol. 371, c. 543–44.] We all understand that; it is inevitable. However, many issues are not complex. For example, a company in my constituency has made marine flares for the best part of half a century. It had a repeat order from Turkey—a member of NATO. It lost the order. It did not get the export licence in time because someone had decided that they suddenly did not want Turkey to receive flares any more. It was not even a new order. That is another frustrating example. There are many more, but I will not bore the House.

It is important to flag up this problem and for the Opposition to try to be constructive. Let us put target times in the Bill to encourage industry and give Ministers and officials an extra incentive. It is not that Ministers are being idle, not doing their boxes or failing to do their duty. I know what it is like; I have been there too. The boxes pile up and woe betide anyone who does not get them back. I admire enormously colleagues who tell their private secretaries that they are not taking boxes home. There are some who do that, but I never managed it. At 7.15 every Saturday morning the boxes arrived, never fewer than three, often as many as five, and that was the weekend gone. We know the feeling. It is not that Ministers or officials are failing to do their jobs properly but the system needs more discipline if we are not to disadvantage British companies. The purpose of the amendment is to introduce such discipline.

The Secretary of State said that she would do everything possible to speed up decision making, but that the Government would not risk making wrong decisions. I agree that they should not risk that. I shall table a written question in a few minutes asking what initiatives the Export Control Organisation is taking to reduce the processing time of licence applications because that touches on the livelihoods of some 400,000 people in this country. If the Government's objectives for the success of British industry are to be realised, export licensing must be an important part of that process. That is why I encourage the Government, through amendment No. 28, to consider inserting a specific sub-paragraph on the time necessary to process applications.

Dr. Cable

I should like to say a few words on amendment No. 35, which is on a theme rather different from that of amendment No. 28. It tries to bring together the two streams of argument current throughout this afternoon's debate. One is that there should be a new way of tackling the issue of appropriate parliamentary scrutiny. Opposition Members accept that the Government's business must be done and that small procedural questions must be dealt with speedily. That is why in many cases the lowest level of parliamentary scrutiny is appropriate. However, in other cases, stricter parliamentary scrutiny is required.

That leads me to the second theme: sustainable development. A successor Minister might wish to change the export criteria, and that should be taken seriously and subject to proper scrutiny. Now that the Minister has had an hour or so to cool down, he might accept that his part in that debate was not his finest hour in Parliament. Perhaps he will respond, therefore, to our helpful suggestion in the amendment that he tackle the problem, which is recognised on both sides of the House, in a different way. We suggest that a distinction should be drawn between narrow procedural problems, which are properly dealt with by the most limited form of parliamentary scrutiny, and changes to the consolidated criteria, which are very important and require proper parliamentary oversight.

I remind the Minister of his comments in the earlier debate on sustainable development that might make him think again about facilitating a separate bite of the cherry and providing a different way of safeguarding parliamentary scrutiny. He said that sustainable development was not the only exception to the consolidated criteria that he had not included in the schedule. I endeavoured to intervene to tell him—he was not willing to accept the point—that when he first introduced the Bill, he explained that the concept of diversion had not been included because it was a totally different idea. In fact, that was not a good reason for excluding sustainable development, which is conceptually very similar to issues such as internal repression. When he reflects on that, he will realise that his arguments were weak.

A difficulty was also made of the fact that there are different ways of interpreting sustainable development. I have since in the past hour had an opportunity to check the way in which different Departments deal with the matter. One Department has several definitions, all of which are consistent and relate to the Brundtland criteria. I mention those points because, when the Government reflect on the day's work, I think that they will realise that they did not handle the matter well. There are other ways of safeguarding the criteria from future changes by any Minister who might wish, perhaps capriciously, to ignore the will of Parliament. By splitting the guidance criteria into two, we have suggested a neat legislative way of doing so.

Mr. Peter Luff (Mid-Worcestershire)

It is a pleasure to have the opportunity to speak briefly on an issue that has been of some concern to me in the past in two capacities, one more recent than the other. In the 1980s, I had the privilege of being a special adviser at the DTI. I formed a deep admiration for the work of its officials, but felt that they were generally more concerned with policy than its implementation. Inventing a new policy is a wonderful thing, requiring a great deal of intellectual exercise and agility. Going through the rather dreary process of making sure it works in practice is slightly less appealing.

When it came to export licensing, there was perhaps a tendency to relegate the importance of that part of the Department's work. What my hon. Friend the Member for Salisbury (Mr. Key) had to say was very important, as it reminds officials that it is as important to deliver a policy speedily as it is to invent a marvellous policy. I commend what he said and hope that the Government will reflect that it would do no harm to accept this important amendment.

More recently, I had experience of this problem as a constituency Member. It was a particularly strange occurrence. A company in my constituency that had been actively encouraged by the DTI to export to Pakistan—and had received great assistance from the export promotion wing of the Department, for which it was grateful—then found that the export of the piece of machinery concerned was frustrated by the export licensing regulations. The machinery was impounded at the dock and it took weeks and weeks for the Department to make a decision on the granting of the licence.

We had a bizarre situation, in which the company had been encouraged to export a product by one part of the Department but the export of that piece of kit was frustrated by another part of the Department. Eventually, the Department decided that it should not be exported at all, so all the work of the export promotion part of the DTI was entirely wasted. Now, the same company is being encouraged by the Department to export the same kit to China. Will it get an export licence in reasonable time for the export of that piece of kit? It is odd to see a Government who boast of joined-up government not being able to join up the work of one Department of State.

It would be a generous and wise act to accept the amendment to ensure that there was some pressure on the export licensing function of the Department to act speedily in the interests of British business.

Mr. Gerald Howarth (Aldershot)

I rise to support my hon. Friend the Member for Salisbury (Mr. Key) and amendment No. 28, which would make a vital contribution not only to the efficient working of the system, but to reassuring companies up and down the country. Many of these companies are small. They are not necessarily located in the major centres of defence manufacturing, but in constituencies across the country. Their concerns ought to be taken into account.

I cannot see the harm in adding to the Bill this modest amendment. It is not specific in terms of the number of days within which the Department should make a decision, but it puts in the Bill the need to provide a timetable as guidance to officials. That would provide industry with a degree of certainty. Despite being, generally speaking, favourably disposed towards the Bill, industry sees an element of uncertainty in it. Industry does not like uncertainty; it likes to be certain about the conditions that apply to its operations.

The amendment would send out to industry a strong signal that the Government understand their concern that they must expeditiously handle applications for defence export licences. It is in the Government's own interests to accede to my hon. Friend's suggestion. It would be beneficial to them not only in their relations with industry but from a macro-economic point of view because, as the Minister—and I believe the House—knows, I believe strongly in defence exports. They are vital to the success of Britain's aerospace and defence manufacturing industry, which employs 350,000 people, and absolutely essential to ensure economies of scale in our manufacturing for our own forces. Therefore, anything that we do to enhance those exports, within a system of licensing, must be good news for Great Britain generally.

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Therefore it is important, at a macro-level, that we should be perfectly clear in our mind of the merits of including, on the face of the Bill, guidance to impose on the Government an obligation to specify conditions regarding the time scale for the granting of licences.

I shall not cite any specific instances, but I know that my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) informed the House earlier in the year of a case in his constituency, and my hon. Friends the Members for Mid-Worcestershire (Mr. Luff) and for Salisbury have told the House of cases in their constituencies. I am sure that the Minister knows that there are many other cases around the country. I hope that when he responds to the debate he will seize the opportunity to tell the House that he accepts the amendment—there is still an off-chance that he might, but I suspect not. I hope that, in the event that he does not do so, he will take the opportunity to tell the House, and through the House British industry, that the Government do understand that if the system of licensing is to work, they must ensure that departmental officials take seriously the need to handle these export licence applications expeditiously, because if they do not, they will lose British business its export markets.

Finally, I shall refer to some comments by the Defence Manufacturers Association which, as the Minister knows, represents the smaller businesses in the defence manufacturing field. In a submission at the time of Second Reading, it said: A delicate balance must be achieved between the introduction of controls which are so vague as to be ineffective and easily circumvented by unscrupulous proliferators, and controls which are so stringent as to strangle UK Industry and make exporting by responsible firms almost impossible. Already we are aware of a number of companies who feel that the situation on export controls in the UK is so unhelpful and obstructive that they are either getting out of the business altogether or talking of doing so. I hope that the Minister will be able to say that the message from Her Majesty's Government tonight is, "We recognise that in the past there have been delays. You can take it from us that we will give this undertaking to the House, and to industries across the country: we will ensure that these applications are handled expeditiously, and that when a company says that if it does not get a decision within the next 48 hours it will lose the order, Ministers will ensure that action is taken to ensure that that company does not lose the order."

Mr. Mark Hendrick (Preston)

I also represent a constituency where thousands of workers work in the defence industry, and I also am keen to see that many of the brilliant aircraft that are produced in and around my constituency are exported to many other countries. Is the hon. Gentleman assuming that if a time limit—a deadline—is set for the Department to determine a licensing application, the outcome will be more likely to be positive than negative? It would appear to me that some civil servants—and Ministers—may err on the side of caution when an attempt is made to accelerate the decision-making process. Does the hon. Gentleman agree that rigour may be more important than speed?

Mr. Howarth

I am grateful to the hon. Gentleman for that intervention, which enabled me to adjust my dress to be appropriately attired for the Chamber.

Mr. Luff

For the record, I assure the House that the article of dress to which my hon. Friend referred is the poppy in his lapel.

Mr. Howarth

I am grateful to my hon. Friend for that. My poppy fell off earlier when I was visiting the field of remembrance.

Mr. Key

I always carry a spare.

Mr. Howarth

My hon. Friend would make a marvellous Minister for defence procurement, as he always carries a spare. I shall convey that message to those involved in exercise Saif Sareea 2.

The hon. Member for Preston (Mr. Hendrick) makes a valid point. I am not seeking to alter decisions, but I noted earlier that industry prefers certainty. The House has heard that export orders have been lost because of delays in Government decision making. Business wants decisions to be made quickly so that orders are not lost. It is no good for a Minister to come along 10 days after an order has been lost and say that an export licence has been approved. Indeed, companies could reap an advantage if they knew at the outset that they were not going to get export licences for particular contracts. They would not then waste their time trying to pursue a contract.

The amendment does not specify a time limit on the consideration of applications. The power would be permissive in that, if the amendment were accepted, the Bill would state that a Minister "may" issue guidance with regard to the time scale for applications. That is a modest and fair way to proceed.

Nigel Griffiths

Amendments Nos. 28 and 35 relate to the guidance to be published under clause 7, and I shall explain why neither is appropriate. First, however, it may be true that civil servants were undervalued when the hon. Member for Mid-Worcestershire (Mr. Luff) was a special adviser at the Department, but I assure him that no one values civil servants more than I do.

Mr. Luff

There is no question—civil servants were not undervalued at that time. I hope that the Minister heard me praise their talents and abilities.

Nigel Griffiths

I am glad that the hon. Gentleman has had a chance to put the record straight. I assure him, the hon. Member for Aldershot (Mr. Howarth) and other hon. Members that there has been an improvement in the delivery of the service. More of the 20-working-day targets are being met now than in the recent past, and that shows that the Government take the issue seriously.

Amendment No. 28 would provide for the publication of guidance about the time necessary to process applications under clause 7. That publication would not be mandatory, so I am pleased to tell the House that it is possible to publish such guidance under clause 7. The Government already publish targets for processing standard individual export licence applications.

The amendment, however, raises important issues to do with the time taken to process licence applications. The Government recognise the difficulty that any delay in processing an individual export licence application can cause the exporter concerned. We aim to ensure that the controls are applied efficiently and impose minimum burdens, but the objective of giving every applicant a decision as quickly as possible cannot outweigh the need to give every application careful assessment against the relevant criteria. That can take time, especially if the application is particularly complicated or if there are concerns about the destinations involved. In an uncertain world, the international status of a destination country can change overnight, and what was an acceptable export last time may thus cease to be acceptable.

The Government are working hard to reduce the time taken to assess export licence applications. We have set demanding targets for processing standard individual export licence applications. In most cases, it is necessary for such applications to be circulated to other Government Departments. Our aim is to provide a substantive response to 70 per cent. of applicants within 20 working days.

Those targets are set out in a service and performance code, which is published by the Department's export control organisation. Information on performance against those targets is already published in the Government's annual reports on strategic export controls.

Amendment No. 28 is not practical, and I assure the House that the Government are doing all that they can to improve the efficiency and effectiveness of the licensing system.

Amendment No. 35 would do two things. Proposed new subsection (3) would provide that all guidance published relating to the exercise of licensing functions for export or transfer controls would constitute guidance under clause 7. Proposed new subsection (6) would require all such guidance to be laid before Parliament and published within 40 days. In effect, any guidance on export licensing would have to be laid before Parliament and published within 40 days. Under the Bill, the Secretary of State will be obliged to lay before Parliament guidance issued under clause 7.

Let me outline why we do not consider it sensible that all guidance, including practical guidance on procedure, should have to be laid before Parliament. The Export Control Organisation publishes on its website a range of guidance for exporters, which is updated constantly—if necessary, on a daily basis. To lay that material before Parliament every time it was updated or changed would unnecessarily overburden the procedures for laying documents before Parliament. That would be unnecessary, because that material is accessible to all Members and the public on the DTI's website or on request from the Export Control Organisation. Moreover, in the Government's view, it would be inappropriate.

We believe that clause 7 should be used to lay before Parliament key guidance documents—for example, where new international commitments have been entered into—and, of course, the consolidated criteria. Proposed new subsections (4) and (5) would require that changes could only be made to the consolidated criteria with Parliament's approval.

The House will not deny the Government credit for making public and transparent the criteria against which licence applications are assessed. We have gone further, pressing the EU to adopt a similar code of conduct for arms exports to ensure that common standards apply across the EU. No one is in any doubt about the importance that we attach to the existence of the consolidated criteria and the EU code, and the Bill will, for the first time, make reference to the criteria in legislation. The consolidated criteria are based predominantly on that code of conduct.

It is quite proper to obtain parliamentary approval for new legislation, but this matter does not require new legislation to be made. If changes to the criteria were made, the Government would, of course, announce them. Parliament or parliamentary Committees could consider any change in the usual way, but it would not be appropriate for such changes to be subject to formal parliamentary scrutiny of the kind that applies to new legislation. In view of the explanations that I have given, I invite the hon. Member for Salisbury (Mr. Key) to withdraw the amendment.

Mr. Key

I am grateful to the Minister for that explanation. I believe that the message has been taken, and it will be transmitted around Whitehall, no doubt. In good faith, therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.