Export Control Bill

HL Deb 07 February 2002 vol 631 cc824-76

8.46 p.m.

House again in Committee.

Clause 4 agreed to.

Lord Redesdale moved Amendment No. 19:

After Clause 4, insert the following new clause—

"CONTROL OF LICENSED PRODUCTION OF GOODS OVERSEAS

(1) The Secretary of State may by order make provision for, or in connection with, the imposition of controls regulating the licensed production of controlled goods overseas. (2) In this section "licensed production" mean, production under commercial licence from a United Kingdom person, United Kingdom company or company based in the United Kingdom of that entity's proprietary controlled goods or technology. (3) An order under this section may make provision in connection with any controls that may be imposed by a directly applicable Community provision on licensed production agreements. (4) Controls shall be imposed under this section on acts done outside the United Kingdom, but only if they are done by a person who is, or is acting under the control of, a United Kingdom person, United Kingdom company, or company based in the United Kingdom."

The noble Lord said: The gist of the amendment is to introduce controls on licensing overseas production. We have tabled the amendment because there is a trend among companies to diversify the areas

in which they manufacture overseas. If we are supplying markets overseas, there is competition over deals, and there is a trend to build factories in the recipient countries.

There are risks in producing overseas. Countries in which the equipment is manufactured require weapons that we would not sell directly to them. The equipment could be exported to regimes to which we would not license direct sales.

During the consultation process on the Export Control Bill, the Government acknowledged the need to address the potential dangers of licensed production. In evidence to the Quadripartite Select Committee, the then Secretary of State for Trade and Industry, Stephen Byers, stated that licensed production is,

"one of those areas where I think experience shows us that we could be in a potentially embarrassing position for the United Kingdom, as a country that cares about these issues, not to have an effective regime on licensed production in place. We need to use this as an opportunity to do precisely that".

That recognition has not been reflected in the Bill. In the draft Bill consultation document, two possible options for how such controls might be structured were advanced. There was also a commitment to push for reference to licensed production overseas to be included in the EU code of conduct on arms exports.

The proposals in the draft consultation put the burden of regulation on UK companies, requiring them either to require specific end-use undertakings from the overseas producer or to insert a clause in their contracts providing for restrictions on re-export. In both cases, companies would be required only to prevent re-export to destinations subject to international embargoes.

Only one of the Government's proposed options would have required the adoption of additional powers in the primary legislation. However, the Government have decided against giving themselves power in this area, stating that:

"The Government has decided, in light of the results of the consultation, not to introduce specific powers on licensed production overseas".

The purpose of this amendment is to put those powers back. The fact that the Government proposed extra controls on licensed production overseas in the consultation document and proposed new EU measures suggests that additional steps are necessary. Furthermore, it is difficult to see how the Bill's existing clause on international transfers addresses the particular characteristics of licensed production—say, how to apply controls on equipment produced under licence, not just the transfer of technology by intangible means.

Maintaining control over licensed production overseas is clearly more difficult than controlling direct sales. Yet if the Government feel it is right to exert full control over direct exports, they should do the same with licensed production overseas. I beg to move.

Lord Sainsbury of Turville: Amendment No. 19 seeks to include on the face of the Bill specific

provisions governing licensed production arrangements. The Government do not believe that this issue needs to be addressed in new primary legislation, nor do we consider that the addition of this clause would in practice add meaningfully to our efforts to prevent the supply of arms to conflict zones and other sensitive areas.

It is important to recognise, first, that the Government are already able to exert a significant degree of control over the supply lines on which licensed production arrangements typically depend; and, secondly, that the new powers in the Bill will significantly strengthen and widen that existing control. That is because licensed production usually requires an initial and often continuing supply of component parts and design or production technology to the overseas producer by the company licensing the manufacture of its products.

Where the product to be manufactured under commercial licence has a potential military use, an export licence will in most cases be required before the equipment and technology necessary for the establishment and operation of the licensed production facility can be supplied. We have made clear that an export licence will not be granted where there is a clear risk that the finished products of the licensed production arrangement could be used for internal repression, or international aggression, or where they could be diverted to an unacceptable end-user.

It is clear that licensed production does not take place unless there is some transfer of technology or knowledge, and the way we can control that is by licensing the technology and knowledge, which is greatly strengthened in this Bill. At present, however, the Government are able to control transfers overseas of design and production military technology to licensed production facilities only where the transfer takes place in a physical form; for example, on a piece of paper or on a computer disk. The new power in the Bill will add an important new pillar to our existing control regime on licensed production by allowing us to control electronic transfers of sensitive military technology to such facilities as well. The Bill will also enable us to control trafficking and brokering in the component parts often required for the production of arms overseas.

Additionally, the Government are committed to making more explicit in the UK export licensing process our existing commitment to taking account of whether any proposed export of military equipment or transfer of technology is destined for use in a licensed production facility. The UK also recently made a formal approach to the EU presidency and obtained agreement that there should be discussion of the issue of licensed production overseas among member states, with a view to seeking EU-wide agreement to adding explicit reference to licensed production in the EU Code of Conduct on arms exports.

There is therefore no doubt that the UK already takes and will continue to take seriously the issue of licensed production. Moreover, the new powers in the

Bill will augment the capacity we already have to control the supply lines on which licensed production depends.

Reference was made to the Secretary of State for Trade and Industry, Stephen Byers, when he appeared before the Quadripartite Committee in April 2001. My right honourable friend was right to say that the Bill will allow us to put into place a more effective regime on licensed production. The new powers the Bill provides to control electronic transfers of technology will be particularly useful in strengthening and widening our existing capacity to control the supply of design and production technology to overseas licensed production facilities. In view of that, I invite the noble Lord to withdraw his amendment.

Lord Redesdale

I thank the Minister for his reply and am grateful for the Government's move to widen the concept of licensed production overseas to an EUwide context. However, I feel that an opportunity has been lost in not including it in the Bill. I realise that this is an area which has been covered in another place. It may well be an area to which we return at the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Redesdale moved Amendment No. 20:

After Clause 4, insert the following new clause "END-USE MONITORING CONTROLS (1) The Secretary of State may by order require that, for any activities in relation to which controls are capable of being imposed by an order under section 1, 2, 3 or 4, provision shall be made for follow-up monitoring of the use made of the goods exported, the technology transferred, the technical assistance provided or the goods traded. (2) In this section "follow-up monitoring" means the undertaking of activities designed to verify that the use to which the goods, technology or technical assistance are put, and the identity of the end-users of the goods, technology or technical assistance, are consistent with the obligations stipulated in the relevant licence or end-use documentation. (3) In subsection (2) "activities" may include, but not be limited to, physical inspection of the designated goods or technology within the territory of the state, or the jurisdiction of the end-user stipulated in the relevant licence or end-use documentation."

The noble Lord said: The purpose of Amendment No. 20 is to introduce end-user certificates and monitoring controls. This is an area which has also been discussed at length in another place and is something which we feel strongly should be introduced into the Bill.

At the moment it is a great weakness with any movement of arms that they can be used in other countries and misdirected. We hope that this amendment will fill a gap in ensuring that weapons go to the destination stated in the export order. I beg to move.

The Lord Bishop of Manchester

I support Amendment No. 20, which seeks to introduce a clear system in the Bill for end-use certification and monitoring.

Over the past five or 10 years we have witnessed a number of incidents where arms of UK origin have been diverted for purposes or to destinations contrary to the Government's intentions. While the Government say that they are now taking greater consideration of the possibility of arms being diverted to undesirable users or usages and have already put in place a number of procedures—I am aware of that and they are welcome—we do not yet have a comprehensive system of end-use monitoring. We need to make it more comprehensive than it is at the moment. We must back up the present controls to give a signal not only to the people who might abuse the system, but also internationally, that we are taking end-use seriously.

I heard the Government's argument about this in the other place and also in this Chamber; that is, that we already have an adequate end-use monitoring process. But that is largely based on stringent risk assessment at an early stage of the licensing, rather than putting resources into a system of end-use monitoring. That seems to happen before rather than afterwards. While I accept that risk assessment on licensing is very important, we also need some kind of monitoring of our export regime.

One example which will be well known to Members of the Committee concerns the UK-made Hawk jets in East Timor and the Democratic Republic of the Congo. As I understand the history. repeated assurances were given by the United Kingdom Government over the years that the United Kingdom-supplied equipment would not be used in East Timor. The Chief of the Indonesian Armed Forces admitted on 15th July 1999 that a British-made Hawk jet was flying over East Timor as part of a programme of intimidation against the people of East Timor, who were then striving peacefully for independence. Despite the continued evidence of violation of human rights in East Timor, the United Kingdom Government—I am a United Kingdom citizen so I am guilty too—argued that we were contractually obliged to maintain supplies of such military equipment.

Such concerns about end-use and contractual obligation arose more recently with the UK transfer of spare parts for military aircraft to Zimbabwe in January 2000, despite reports that Zimbabwe was using those very same jets in a conflict in the neighbouring DRC, then subject to a European Union arms embargo. Following a public and parliamentary outcry and a worsening human rights situation in Zimbabwe, in this case the licences were eventually suspended in May 2000. But it took a lot to get them suspended and we had to go through all that agony and horror in order for it to happen.

Such misuse of UK arms and equipment results in human rights violations against some of the poorest people in the world. We need a system of end monitoring and a process to halt further UK supplies in order to ensure that further misuses do not continue. An end-use monitoring system would help the Government by providing them with information in future about pre-delivery licensing and assessment, making them more effective at preventing further diversion and misuse. The two systems would complement each other.

I have heard the Government argue that it is almost impossible to put in place such systems and we have heard today about the so-called failings of the system in the United States. However, the failings there should not mean that we do not attempt to introduce a system in principle. We could learn from America's mistakes, tighten up the system and do rather better.

The US system is not entirely a failure. The Blue Lantern system is working to catch cases of diversion and misuse. More than 4,000 checks have been made since the programme's inception, with 360 initiated during 1999. Of those, typically 5 to 10 per cent result in unfavourable results, which may lead to denials or revocations of licences, the imposition of sanctions or the prosecution of suspected law violators. State Department officials in the United States believe that the Blue Lantern programme has had some effect. It may not be perfect, but it does have a deterrent effect on would-be diversion.

Rather than saying that the United States system is not perfect, let us accept the principle of monitoring and an end-use system and see whether we can learn from its mistakes and do rather better.

It is also said that the Government should not be the monitoring system: we should rely on NGOs and the media. There were many comments earlier, from both sides of the House, about the media getting their stories right. It is therefore a bit rich for the Government to argue that we should rely on the media for information. NGOs are more reliable, but I still argue that it is a responsibility of the Government and not the NGOs.

It would be good to engage NGOs because they have vast experience throughout the world. I do not need to list them all; they are well represented here tonight. However, it should be on the face of the Bill that it is a government responsibility. There is no guarantee that a future government would stay in partnership with NGOs, even if this Government said that they would be very glad to do so.

I support the amendment. I hope that we will get a comprehensive, end-of-use monitoring system instituted. If we do not get it right first time, let us work at it and make it better.

9 p.m.

Lord Judd

The right reverend Prelate referred to East Timor, but there are other examples. I suggest to my noble friend the Minister that the Government's own annual report on strategic exports for 2000 gives a good deal of ground for concern. Let me be specific.

Listed in regard to Hong Kong are 24 small arms, a range of pistols, rifles and revolvers, including 15 submachine guns; a range of crowd control equipment, including ammunition; and CS hand-grenades and tear gas. But Hong Kong is now part of mainland China, which is under a European Union arms embargo.

Listed for Jordan are 102 small arms, including 53 sub-machine guns and 42 assault rifles; components for combat aircraft and large calibre artillery ammunition. But Jordan was named as a conduit for arms to Iraq in the Scott report.

For Paraguay there was listed 100 sub-machine guns plus components and technology. Paraguay has been named as a major transhipment route of all small arms to the illicit market in Brazil. Singapore is listed for 3,342 sub-machine guns, 744 rifles, 301 semiautomatic pistols, two sniper rifles, small arms, ammunition, components for combat aircraft and armoured personnel carriers. In the Bemarc case, British naval cannon which was sold to Singapore ended up in Iran.

Against this background, I hope that my noble friend will be able reply to two specific questions. First, what specific plans do the Government have to check whether in the instances I have mentioned the arms remained with the end-user? Secondly, does he agree that enshrining powers to monitor end use in law would strengthen the Government's ability to ensure that the weapons they are exporting are not being diverted or used in contravention of our national interest? The Export Control Bill could surely be undermined if there is no muscular mechanism to ensure that the arms we sell are with the correct end user and being used for the prescribed end use.

The Earl of Sandwich

I wish to speak to Amendment No. 49 in this important group of amendments. I make no apology for delaying the Committee. This is one of the crucial stages of the Bill.

The Government believe that they already have the power to revoke licences, but in practice any decisions are open to challenge from exporters on the grounds of their contractual obligations and the perceived need for Britain to maintain its reputation.

It is the view of many in NGOs, who have taken legal advice on the matter, that by including a revocation clause the Government would be given the necessary power in primary legislation and, in the event of any breach of a stated obligation, so reduce the likelihood of a legal challenge. In legal language, an individual's "legitimate expectations" can be overridden only by the statutory duties of the public body or by some overriding policy interest.

On end-use monitoring, the Government have decided to introduce stronger controls and to carry out risk assessment at the time of licensing. That is welcome. However, Ministers know that it is inadequate. I believe that the Minister in this House will take the issue seriously and take it away.

Mr Derek Fatchett, the former Foreign and Commonwealth Office Minister, who is highly respected, admitted in 1999 that no systematic monitoring takes place once defence equipment has been exported.

On 30th January last year, the then Foreign Secretary. Robin Cook, said to the Quadripartite Select Committee: I have to be candid with the Committee and say, having licensed equipment there is a limit to the extent to which we can then subsequently, when it has left our shores, verify where it is". Perhaps I may quote from Saferworld's latest briefing, which is backed up by the United Nations Association: Without a system of end use monitoring and a process to halt further UK supplies, misuses will continue to occur and the recipients continue to receive more arms and equipment enabling them to commit further human rights violations". Here I want briefly to mention the case of Israel. I have given the Minister notice of this. I know that Israel is a country to which the Government will apply the strictest controls in any export licensing. Defence exports to Israel are worth about £12.5 million a year, which is a tiny amount in the context of the arms trade and indeed of Israel's own arms industry. The UK has not sold significant equipment such as tanks or aircraft since 1997, although it has sold components for combat helicopters and related technology, small arms and ammunition. I am glad to say that in the year 2000 one application to export CS gas to Israel was turned down. According to a Written Answer given on 3rd July last year to Dr Phyllis Starkey, 84 standard individual export licences were issued covering the export of goods on the military list to Israel between January and May last year.

This is a country which is not only illegally occupying Palestinian territories but is using considerable force of weaponry to enforce the occupation. Apparently, it also uses civilian equipment for house demolition and road building which can in themselves be a form of internal repression.

The position of Her Majesty's Government has been made very clear, both through the Foreign Office and through the DTI. And yet, as I said at Second Reading, the latest annual report on strategic export controls includes equipment licensed for export which has a potentially offensive use to Israel. We are still exporting weapons and equipment without specific limitations or end-use conditions.

I do not doubt the Government's good intentions. I appreciate that they have stated more than once that they will not issue licences where there is a clear risk that the equipment might be used for internal repression. I have also read the Government's response last July to the Select Committee (Cm. 5141) which re-states that position with regard to civilians in South Lebanon.

But the point is that a great deal can happen after exports. This is where the amendments proposed by the noble Lord, Lord Redesdale, are intended to be helpful. In due course, possibly on Report, we shall examine the consequences of such amendments for the Government, which should not be exaggerated.

I am slightly concerned, like the right reverend Prelate, to hear the Government's plea of limited resources and the possible need to involve NGOs in the monitoring process. That would be absurd However, at this stage I merely ask the Government to reconsider their present position.

Lord Phillips of Sudbury

Amendment No. 21. standing in my name and that of my noble friend Lord Redesdale, is in this grouping. I can speak briefly to it, because a great deal of the ground is common to the other two amendments in the grouping and has already been covered. The power to revoke any licence granted under the first four clauses of the Bill is a crucial one.

I understand that the dummy order contains a revocation provision. The amendment would place on the face of the Bill an explicit right for the Government to revoke if, subsequent to the granting of a licence, there is any development which will bring into play the consequences set out in the schedule; namely, adverse consequences as a result of the export of arms or dealing in arms.

The points are simple. The Quadripartite Select Committee recognised the Government's dilemma in granting such licences; namely, the dilemma between the needs of the exporters on the one hand and the needs of arms control on the other.

It is also fair to say that the legal position in relation to licences can become quite tricky. The UK Working Group on Arms, which has done a huge amount of work in relation to the Bill and which has helped many of us in understanding some of the finer points, has taken advice from Matrix Chambers, which has given an opinion to the effect that it would be safer and better for the licence conditions to be set out on the face of the Bill in terms of a power for the Governtnent to impose the conditions set out in Amendment No. 21.

If there is any doubt about someone being able to wriggle out of those conditions because they are imposed not by dint of a power in Clause 6 but as a unilateral imposition by government in their licensing role, any amendment which prevents litigation around that point and enforces the Government's discretion in this regard must surely be to the good. Therefore, the amendment should be considered on those simple grounds.

Lord Haskel

When my noble friend the Minister considers the points made by the noble Earl, Lord Sandwich, I hope that he will bear in mind that, although some may consider the use of arms against the Palestinians to be warfare, others consider it to be a means of dealing with terrorism. The noble Earl said that Israel was using arms for certain purposes, but most people believe that those arms are clearly being used to deal with terrorism.

9.15 p.m.

Baroness Miller of Hendon

I accept that the amendments are somewhat tricky to interpret, as the noble Lord, Lord Phillips, said. I shall be most interested to hear what the Minister has to say about Amendments Nos. 20 and 21. I was pleased to hear what the noble Lord, Lord Haskel, had to say about Amendment No. 49, because had he not said it, I would have done so equally forcefully.

Lord Rea

It has been suggested that one of the Government's positions on the follow-up of end-use certificates is that it would waste very limited UK government resources. To quote Nigel Griffiths, the Minister in another place: it could send people off on wild goose chases and divert our officers from monitoring properly what is happening". Such follow-up of arms sales would be a proper role for military attaches in our embassies overseas. One of the roles of military attaches has been to promote arms exports from Britain to the countries in which they are stationed. It seems logical that they should follow up what happens to those arms after they reach the countries concerned.

It would be wrong to say that every arms export must be monitored. Those countries where arms transfers are in most danger of diversion or misuse should be prioritised. If we do not have a military attaché in those countries, there is a good case for appointing one.

Lord Sainsbury of Turville

The amendments would insert two new clauses about the related issues of end-use monitoring and licence revocation, together with a proposed addition to Clause 6 about licence revocation. The position on both issues is clear. The amendments are not necessary for the simple reason that the Government already have the power to revoke licences and to carry out end-use monitoring and they will continue to have that power under the Bill. I shall expand on those two points.

Under the Import, Export and Customs Powers (Defence) Act 1939 and secondary legislation made under it, the Secretary of State has the power to revoke any form of licence, whether open or individual. Article 7(1) of the Export of Goods (Control) Order 1994 refers to the power of revocation. Such revocation might take place when there is clear evidence that an undertaking given by the end-user is likely to be broken, or when the situation in the recipient country has changed significantly after a licence is issued. Revocation might also apply if new information comes to light after a licence has been issued that would have led to the refusal of the application.

We exercise that power. I refer noble Lords to our annual reports. For example, the annual report for 2000 shows that 16 licences were revoked in that year. The appropriate reference can be found on page 15.

Under the Bill, the Government will retain the power to revoke licences. Again, specific provisions will be set out in secondary legislation. The dummy draft orders made available to Parliament last October contained revocation provisions. The dummy draft order on export of goods, transfer of technology and provision of technical assistance—all issues mentioned in the amendment—provides for the revocation of licences in Article 10(5) on page 10. The dummy draft order on trade in controlled goods provides for revocation under Article 5(2) on page 4. The example that we have provided of a dummy draft order giving effect to an embargo includes revocation in Article 4(2) on page 2. The circumstances in which revocation will be considered are the same under the Bill as under existing legislation. All the matters to which the amendments relate are already fully accommodated within the dummy draft orders on the basis of the power contained under the Bill.

We do not need a specific legal provision to allow end-use monitoring of defence exports. Officials already systematically consider whether our overseas posts should make checks on the final customers of controlled goods. That is done as an integral part of the licence application process. Officials will also consider whether follow-up monitoring of certain exports is required. The procedures already in place makes use of best practice in risk assessments. They include standing instructions to posts overseas to be alert to and report on any misuse or diversion of UK-origin defence equipment. Any information from overseas is fed back into the licensing process for use in assessing new licence applications.

We take into account all reliable sources of information about end users—including external organisations, other governments, international bodies and non-governmental organisations. We will be able to continue conducting follow-up monitoring of end-use under the Bill.

We have no evidence that equipment or components manufactured in the UK and licensed for export were used by Israeli forces against civilians in the occupied territories during the recent violence. If any such evidence came to light, we would of course consider it carefully. I reiterate that we are not aware of any such evidence.

None of the three amendments is required because we have the necessary powers and use them in revoking licences. In light of that explanation, I invite the noble Lord to withdraw his amendment.

Lord Judd

Before the Minister sits down, I am totally convinced of his personal commitment and have no doubt that we are concerned about the same humanitarian issues. But in this particular context, does my noble friend agree that his answer sounded complacent? For a number of years, a deafening chorus of NGOs—and I was part of it—complained about the misuse of arms in East Timor. The time it took for that to be recognised requires some justification. That occurred under a previous administration but none of us is scoring party points tonight. There is a need to take Amendment No. 20 seriously. The issue needs to be addressed. We have to show more rigour and muscle.

Lord Sainsbury of Turville

We do share a common view but the Government have all the legislative powers that they need. If there is an issue, it is to do with implementation—which will not be changed by any legislation. There may be a debate about whether any particular administration implemented the measure properly but nothing will change by giving the present Government the power to undertake end-use monitoring.

The Earl of Sandwich

Among the reasons for revocation listed by the Minister was information coming to light over time—which must imply a form of monitoring. We know there is monitoring but it is riot systematised. The amendment only asks the Government to look once more—as the noble Lord, Lord Judd, splendidly said—at the present position. The Minister has simply restated the position of some time ago. Discussion among officials before the next stage would be helpful.

Lord Redesdale

I shall look closely again at the draft dummy order. The issue causes great concern. As the right reverend Prelate correctly pointed out, it would have been easy to check whether Hawks were being used in East Timor for military purposes. A monitoring system mounted on the wings could have clearly shown whether the aircraft had been used in East Timor to repress human rights. That case would have been covered by this amendment.

I do not wish to score party points, but there is a difference between intention and action. The 1997 Labour manifesto contained a commitment to strengthen, the end-use of defence exports to prevent diversion to third countries and to ensure that exported equipment is used only on the conditions under which the export licence has been granted". The Government may now feel that they have sufficient powers, but they did not believe so in 1997. I hope that the Minister will be able to look again at the issue. We certainly intend to raise it again at the next Stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Control powers: supplementary]: [Amendment No. 21 not moved.]

Baroness Anelay of St Johns moved Amendment No. 22:

Page 4, line 42, at end insert "for a period of three years after the granting of a licence"

The noble Baroness said: Clause 6 states that an order may introduce rules that make the keeping of records compulsory by those to whom export licences are granted. I have tabled this probing amendment simply to ask the Government to put on the record the reasons why the dummy orders are inconsistent in the length of time laid down for keeping such records.

The Export of Goods, Transfer of Technology and Provision of Technical Assistance (Control) Order and the Trade in Controlled Goods (Control) Order state that the records shall be kept for three years. Both those orders deal with military exports. However, the Export of Objects of Cultural Interest (Control) Order requires that records be kept for four years.

On 16th October 2001, in another place, my honourable friend Mr Robert Key asked the Minister—at col. 127 of the Official Report—-to explain that discrepancy. It does seem odd that the world of art exports should be subject to greater bureaucracy than the world of arms exports. The Minister could not offer an answer on that occasion. but he offered to write to my honourable friend. I am simply repeating the question, hoping that, after some months, the Government are now able to offer a stunningly simple and persuasive answer. I beg to move.

Lord Redesdale

I am grateful for that explanation. I was concerned that the amendment requires records to be kept for only three years whereas Financial records must be kept for a good deal longer. I should be grateful if the Minister could tell us why the Bill should require that records be kept for a mere three years rather than, say, six years.

Lord Sainsbury of Turville

I shall deal first with the amendment and then with the tricky question of three years versus four years. The amendment seeks to ensure that orders under the legislation can require that records be kept for only three years. I shall explain why the Government do not think that that restriction is appropriate.

A number of our export controls derive from our membership of international organisations, in particular the European Community. Those organisations may require exporters to keep records for certain lengths of time. Amendment No. 22 could prevent the Government from fulfilling our European Community obligations and our international commitments, or could prevent the Government from responding to any changes required of the UK. For example, the EC regulation governing exports of dual-use items requires records to be kept for at least three years from the end of the calendar year in which the authorised act—the export or technology transfer— took place. That requirement is therefore reflected in the dummy draft orders that we published last October to indicate how the Government intend to use the powers in the Bill.

Under the proposed amendment the Government would be unable to include this provision and hence unable to require UK companies to comply with the EC regulation. Moreover, the amendment would also prevent the Government from implementing any longer record-keeping requirements which might be proposed by the EC or other international organisations in future. Any failure to provide for the enforcement of directly applicable provisions of Community law can, of course, lead to infraction proceedings being taken by the Commission in the European Court of Justice.

Why are the record-keeping requirements in the dummy draft orders different for cultural and strategic exports? On 19th October my right noble friend Lady Blackstone wrote to the chairman of the Standing Committee in the other place regarding the point raised by the honourable Member for Salisbury, addressing the difference between the DTI and DCMS dummy draft orders in respect of the lengths of time which exporters will be required to keep records of any goods exported under the authority of a general licence. She agreed that it would be sensible for both departments to have the same requirement. Therefore, she was content that any orders made by her department should specify three years for the keeping of records. So now we have what is dear to all civil servants and others-complete consistency across the legislation. Having explained why we think that it is wrong to put a precise time limit in the Bill, I hope that the noble Baroness will withdraw her amendment.

9.30 p.m.

Baroness Anelay of St Johns

The Minister managed to be precise, simple and persuasive in one fell swoop. I am most grateful to him for putting on the record the explanation provided by the noble Baroness, Lady Blackstone, and for stating that there is now unanimity across the orders. I agree with the Minister that a rigid time limit should not be put on the face of the Bill. I mentioned it merely as a vehicle to obtain an explanation from the Minister. I therefore beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 23:

Page 5, line 3, at end insert ", but such disclosure shall not be permitted except insofar as is necessary in order to monitor or enforce compliance with the order or any licence granted under it, and shall only be permitted on condition that the recipient shall treat such material as confidential"

The noble Baroness said: It is clearly necessary that information may be properly demanded to be kept or provided for the purposes of what I may loosely call the operation of this Bill. The relevant paragraphs are (c) to (f) of subsection (I) of Clause 6. However, paragraph (0 implies that any information contained in the records that are required to be kept under paragraph (c), or provided under paragraphs (d) and (e), may be disclosed to what the paragraphs call persons".

The amendment requires that information obtained under the powers of the Bill shall be used only for the purposes of monitoring or enforcing compliance with the Bill and that the recipient shall treat the material as confidential. The reason for this requirement is to comply with the Human Rights Act which seems for some reason to have been overlooked by the draftsman in this particular case.

Perhaps the Committee will recall the Guinness case, and in particular the conviction of Ernest Saunders who was required to give evidence to the inspectors conducting an inquiry under, I believe, the Companies Act. The information that he was compelled to give was then used against him in his subsequent prosecution in breach of his rights against self-incrimination.

This amendment is intended to ensure that records and information will, as I said, be used for the purposes of this Bill and nothing else. There should be no disclosure to potential competitors; no disclosure to other governments or NGOs and no disclosure to other government departments. Here I have in mind the fact that this Bill will largely be administered by Customs and Excise. It would be wrong for information obtained for the purpose of the administration and enforcement of this Bill to be passed on to the VAT department of Customs and Excise. It is correct that any order under this subsection, including the provisions of paragraph (f), is subject to parliamentary scrutiny. However, bearing in mind how limited such scrutiny is, it is essential that the parameters of the disclosure should be defined within limitations laid down in the primary legislation. I beg to move.

Lord Sainsbury of Turville

This amendment seeks to place conditions on the Secretary of State's power to disclose information obtained through an order under the Bill. The Government require the power to obtain and share information connected to export licensing issues for two reasons. By virtue of its membership of a number of international organisations, the UK is committed to disclosing certain information to these bodies. Specifically, under the UN arms register and the Wassenaar arrangement, we are required to provide details of the numbers of certain categories of military or dual-use goods exported each year. The Government also wish to have the power to exchange information within Government, for example with HM Customs and Excise, for the regulation and enforcement of export controls and investigation or prosecution of offences.

The amendment proposed would restrict the uses for which the Government could share information to monitoring and compliance and require any such information sharing to be in confidence. The result would be to prevent the Government from meeting their international reporting obligations. In view of these arguments, I invite the noble Baroness to withdraw the amendment.

Baroness Miller of Hendon

I hear clearly the Minister's response. I shall withdraw the amendment. However, rather than simply stating that the power is left to the discretion of the Secretary of State, the provision should add specifically, "because of international agreement" or whatever it may be. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 24:

Page 5, line 9, at end insert— "( ) It shall be a defence to any charge under subsection (1)(g) of an offence described wholly or partially by reference to the uses to which any goods, technology or technical assistance may be put that the person charged did not know and could not reasonably have been expected to know that there was a risk that the goods, technology or technical assistance in question would be put to such uses."

The noble Baroness said: This simple amendment is self-explanatory. It provides a defence for someone who innocently supplies goods, technology or technical assistance in breach of a control order.

Members of the Committee will recall the notorious Matrix Churchill case where tubes were supplied ostensibly for an oil pipeline when it transpired that they were intended for the purposes of a so-called super gun. While providing a defence, this clause imposes an onus of proof on the defendant which I expect will be extremely difficult to discharge. There can be no grounds for creating an absolute offence in circumstances where a person, possibly even a subcontractor, may be relying entirely in good faith on information supplied by his customer. I beg to move.

Lord Phillips of Sudbury

I am inclined to support the amendment. The Minister may tell us that the wording undermines the effectiveness of the licensing procedure. However, with regard to a criminal offence which might bear a sentence of imprisonment of up to 10 years, and where that criminality can be imposed by secondary legislation, it must be right in principle that there should be some intent.

Lord Sainsbury of Turville

The amendment seeks to provide a defence against charges of committing an offence in relation to an end-use type of control. In such cases the amendment seeks to provide a defence that the supplier did not know, and could not reasonably be expected to know, about the uses to which the item of assistance would be put. This is essentially a defence based on the level of reasonable knowledge about intended end-uses. The amendment is not required and is inappropriate.

Clause 6 of the Bill illustrates the supplementary powers necessary in relation to the order-making powers. It is for the orders themselves rather than the Bill to spell out both offences and any necessary defences. It would not be appropriate, therefore, nor indeed possible, to provide in the Bill for a defence in respect of offences to be created in secondary legislation but which of course are not created until that secondary legislation has been made.

However, perhaps I can reassure the noble Baroness and the noble Lord that appropriate defences would, of course, be available in respect of offences to be introduced in secondary legislation. We have already made available to Parliament dummy draft orders under the Bill which illustrate how we propose to use the powers in the Bill. The dummy draft orders and existing secondary legislation contain provisions about offences and penalties. It may be helpful to refer to that now.

Taking an example from existing controls, the Dual-Use Items (Export Control) Regulations 2000, which deal with enforcement and offences related to Community legislation, specify that offences arise only where the person concerned has been informed by Government, is aware or suspects that an item is or may be intended for use in connection with weapons of mass destruction. In the case of "suspicion" the regulations further make clear that the person should make, all reasonable enquiries as to their proposed use that is, dual-use items and is satisfied that they will not be so used". That language is reproduced in Article 4(4) of the dummy draft order on export of goods, transfer of technology and provision of technical assistance. Similar principles would apply in relation to new controls. In addition, general provisions on indictable offences and penalties are set out in Article 15 of that same dummy draft order, which states: Any person knowingly concerned in the transfer of software or technology, or in the attempted transfer of software or technology, with intent to evade any prohibiton or restriction shall be guilty of an offence". That makes it clear that knowledge and intent are required for an offence to be committed. I hope that it is therefore clear that the objective of the proposed amendment will be dealt with in secondary legislation. But for the reasons that I have mentioned, we cannot properly include in primary legislation a defence that relates to offences not created by that primary legislation.

I hope that the noble Baroness and the noble Lord will be reassured by what I have said and that the amendment will be withdrawn.

Baroness Miller of Hendon

I shall withdraw the amendment with the leave of the Committee, but II am not happy with the explanation. Although I understand what the Minister is saying—I shall read his remarks carefully—I nevertheless feel that it is not appropriate that such matters should be dealt with by secondary legislation. The matter should be clearly spelt out. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Phillips of Sudbury moved Amendment No. 25:

Page 5, line 10, leave out "may"

The noble Lord said: In moving this amendment, I shall speak to Amendments Nos. 26 to 30, which refer to Clause 6, which, as Members of the Committee will recollect, gives the Government the power to make supplementary provisions with regard to licences granted under the first clauses of the Bill. Subsection (2) of Clause 6, to which the amendments relate, states that "an order may" provide yet further arrangements.

The purport of the six amendments is to require an order made under Clause 6(1) to apply to the Crown, leaving discretion with regard to the other provisions of Clause 6(2). We believe that the orders that may be promulgated under Clause 6 should apply to the Crown, not as a matter of discretion but compulsorily. There is no reason to exempt the Crown from the position of every other citizen whether corporate or individual.

It is notable that the Scott report recommended that the list of international organisations arid Crown agencies exempted from export controls should be

abolished. It is also the case that the Quadripartite Select Committee in its report of May last year recommended that,

"consideration is given to the desirability of ending the blanket exemption from controls of Government and its agencies as exporters of licensable goods and technology".

That is the consideration that we are giving the matter tonight. It is clear that the Select Committee was biased in favour of the amendments that are before this Committee. The Government are a major dealer in weaponry and defence equipment both to and from other governments. The amendments would ensure that the provisions that are to be applied under Clause 6 and the earlier clauses will apply to government as well. I beg to move.

Lord Judd

I hope that my noble friend the Minister will take seriously the amendment moved by the noble Lord, Lord Phillips. I imagine that my noble friend will argue that there is no need to control most of those exports because they involve providing essential equipment to our Armed Forces in connection with important international defence commitments such as peacekeeping. No one underestimates the significance of that. Does the Minister accept that that is only one aspect of the government transfers issue and that there are also a number of other aspects? They include, for example, the sales of Challenger tanks to Jordan and the largest-ever deal, the Al Yamamah deal, which was, after all, a government deal. I find it difficult to believe that in view of the logic of the Government's position, they do not feel that such arrangements should be open to the same scrutiny as any other arrangements.

9.45 p.m.

Lord Sainsbury of Turville

The reason why these provisions are included has perhaps been misunderstood. As I explain the situation, it should become clear that the problem that has been raised is rather different from the intention that lies behind the provisions.

Clause 6 sets out the various provisions that may be specified in orders that are made under the Bill. The amendments would provide that the matters that are specified in the orders should apply to the Crown. The substantive amendment appears to propose the replacement of "may" in line 10 with "shall". I shall focus on that amendment in responding. The other amendments are consequential on it.

The position is that controls on the export of most classes of goods fall within Community competence under the common commercial policy of the Treaty of Rome. As a limited exception to that, member states have the power to impose controls in respect of exports and transfers on defence items. Member states also have, in exceptional circumstances, the ability to impose controls for other significant reasons, such as public security. At the moment, our Community obligations are given effect under the European Communities Act 1972. By enabling the Crown to be bound in respect of EU obligations, Clause 6(2)(a) reflects existing powers and, as the main dummy draft order illustrates, will allow us to consolidate current export control legislation made under both the 1939 Act and the European Communities Act. That consolidation is a step which we believe will be helpful to business. That is, if you like, the "technical" reason for Clause 6(2)(a).

The Government's own exports tend to be those items of essential equipment that are used by our Armed Forces or in connection with important international collaborative defence projects. There will also be items that are exported for use for international development purposes, such as equipment used for mine clearance. It must be for the government of the day to carry out their various operations in pursuance of announced policy efficiently and effectively. Clearly, it makes no sense for the Government to be required to licence their own exports for those defence and other essential purposes. To impose such a requirement would create unnecessary bureaucracy and in some cases could hamper our ability to respond quickly. At the same time, the Government make information available in the annual reports, which gives Parliament the opportunity to scrutinise export decisions.

In view of that explanation and the fact that the matter relates to our treaty obligations, I invite the noble Lord to withdraw the amendment.

Lord Phillips of Sudbury

I am grateful to the Minister for that response. I shall deal with the only easy point first; that is, that the effectiveness of parliamentary scrutiny on these matters ex post facto is, I have to say, nigh on nil.

On the Minister's argument as a whole, I shall need to read his response carefully. He will perhaps accept that his answer was worthy of an advanced seminar in international law. I am not going to tread where others would not go, except to say—perhaps Members of the Committee will find this totally superfluous—that the nature of legislation these days is illustrated rather well by this provision. I make no criticism of the Minister or what he said, but the passage of legislation such as this is somewhat difficult when the issues are so contorted. I hope that he will allow me to come back to him at the Bill's next stage if I am dissatisfied. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 26 to 30 not moved.]

Lord Sainsbury of Turville moved Amendment No. 31:

Page 5, line 19. after second -different" insert "cases and different".

The noble Lord said: This amendment consists of a technical drafting change, which I hope Members of the Committee will agree raises no new issues of policy. At present, Clause 6(2)(e) illustrates that orders made under Clauses 1 to 4—that is, orders imposing export, technology transfer, technical assistance or trade controls—may make different provision for different

circumstances. For example, orders could set different restrictions on exports to embargoed and non-embargoed destinations.

The proposed amendment makes clear that control orders can also make different provision for different cases. An example of such a scenario would be to make an exception to an order imposing an arms embargo in order to allow equipment to be supplied to peacekeeping forces or to allow vintage arms or aircraft to be exported to museums. Clearly, that is a subject dear to some people's hearts. In view of that explanation, I hope that Members of the Committee will agree that the amendment is necessary and that they will feel able to support it.

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 32:

Page 5, line 19, at end insert "(3) No such order shall exclude the right of an applicant for a licence to apply to the High Court in appropriate cases for a judicial review of any refusal to grant such a licence or the imposition of any condition or conditions in such licence notwithstanding any other rights of appeal that may exist under this Act or any order made hereunder.".

The noble Baroness said: This amendment is intended to deal with an omission from the Bill. The licensing procedure that will be employed will undoubtedly include some right of applicants to appeal against a refusal of a licence or the terms that it contains. Such appeal will be internally within the department but will be dealt with by an official who is higher up the ladder than the person who dealt with it in the first instance.

I do not believe that that can simply be the end of the matter. An aggrieved applicant must have the right of appeal to the courts as a last resort in appropriate circumstances. An application for a judicial review cannot be launched lightly. In recent years, since this process has become more frequent, although it is still very uncommon, it is circumscribed by stringent rules of the court. The making of such an order is even rarer because of the strict criteria which the courts apply before granting one.

If only on the grounds of the substantial costs involved, it is impossible that the amendment would unleash a flurry of litigation. That is especially the case as only a small number of licences are refused—probably because applicants have more sense than to make hopeless applications in the first place.

The Bill, if enacted, would give the Secretary of State very wide powers to make orders and amend them in areas of which Parliament is still not fully informed because at present a fundamental part of the legislation, in the form of dummy orders, is still out for consultation.

The right to apply for a judicial review is well established in law. But we do not have a written constitution binding on the Government. The amendment seeks to ensure that the wide powers given to the Secretary of State to rule by statutory order will not be used by him to deprive anyone of a right which every citizen should have automatically; namely, the right of recourse to the courts to protect him against the unwarranted actions of a very powerful government. By accepting the amendment, the Government would make it clear that there will be no erosion of the rights of citizens in the cases covered by the Bill. I beg to move.

Lord Sainsbury of Turville

The amendment seeks to include in the Bill a provision relating to the right to apply for judicial review to the High Court where a decision is made not to grant a licence or where any conditions have been imposed on a licence.

In this case, I do not believe that the amendment would add anything to the Bill because it is not required. The key point concerning the amendment is that it would include in the Bill a provision that is unnecessary. Although now codified in Section 31 of the Supreme Court Act 1981, judicial review is a common law remedy. It may be used by those with a "sufficient interest" to challenge the exercise or non-exercise of powers by a public body, which includes the Secretary of State, on grounds of illegality, irrationality or procedural impropriety.

Unless specifically disapplied by statute—the Bill does not include any such provision—a claim may be brought by judicial review against any decision by the Secretary of State either to grant or not to grant a licence or to impose conditions upon the award of a licence.

Indeed it may reassure the Committee to know that to include in the Bill, or indeed an order made under it, a provision that ousted a person's right to apply for judicial review in relation to decisions taken by the Secretary of State under this Bill would be likely to breach the Human Rights Act and human rights convention. This underlines the point that there is no need for this amendment to protect the right to judicial review in relation to the exercise of powers under this Bill.

However, judicial review is not an appeal or a rehearing of the substantive decision taken by the Secretary of State. A full review of the substantive decision may be undertaken by the DTI on application. That is an important point because, as the noble Baroness may know, judicial review is an extensive burden for someone to take on. A review undertaken by the DTI on application is a mechanism open to all applicants, whose licence has been refused, revoked or suspended. It includes the ability for the applicant to seek a personal hearing and to be legally represented. The appeal would be determined by a senior person who was not involved with the original application and decision. This system exists now and will continue to exist. Subsequent to the appeal. if still dissatisfied, the aggrieved person would be able to make a claim for judicial review.

Because the right of judicial review already exists, and is unaffected by the order-making powers in the Bill, it is unnecessary to include such a provision in the Bill. I would, therefore, invite the noble Baroness and the noble Lord to withdraw their amendment.

Baroness Miller of Hendon

I shall read carefully what the noble Lord has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 33:

Page 5, line 19, at end insert "(4) An order under any of the preceding provisions of this Act shall (unless there shall be in force a general order applying the requirements set out in subsection (3)) make provision

1. (a) for a prescribed form of application in which descriptive details of the goods or technology in question, their value and the identity and address of the proposed consignee, and if known, both the potential uses and the actual uses by the consignee are set out;
2. (b) for the time after receipt of an application in which further information can be sought by the licensing authority to supplement the information contained in the application;
3. (c) prescribing a time (which may be varied between different types of applications or between different types of goods and technology) after the receipt of the application and any further information when an application shall be deemed to have been granted unless refused;
4. (d) for written reasons for refusal of any application to be given to the applicant, provided that if the refusal is for security reasons that fact should be stated, and details of either sort of reason shall contain sufficient information to enable the applicant, if so advised, to challenge the reasons on appeal; and
5. (e) prescribing an appeals procedure, either by way of a hearing or by written representations or both, and for reasons for the dismissal of any appeal, subject to security considerations, to be made known to the exporter in writing.

(5) In any case where a licence is deemed to have been granted pursuant to subsection (4)(c), the Secretary of State shall provide the applicant on request with a written document confirming that the export of the goods or technology is authorised."

The noble Baroness said: It is no exaggeration for me to say that Amendment No. 33 is of fundamental importance to the Bill. However, I can explain it simply and briefly. It is fundamental because it goes to the heart of the reasons for the introduction of the Bill.

Your Lordships will recall, as has been mentioned several times in this House and in the other place, that the need for the Bill follows the findings of the Scott report. That report made a number of specific recommendations that were expected by all parties. It specifically recommended certain procedural steps and matters to be included in any export licence. When I first read the Bill, I was surprised that nowhere are those recommendations carried into effect.

The amendment simply sets out those recommendations and requires them to be incorporated in any order made under the clause. That would be achieved in one of two ways, either by

setting out those requirements in detail in each order that is made, or by the Secretary of State making what is called a general order that sets out the requirements which are then incorporated by reference in each specific order that is made.

I invite your Lordships to look at the six Scott recommendations that are set out in the amendment. The first is that there should be a standard form of licence application. That would mean that there would be no question of delay on the grounds of inadequate details being supplied.

Secondly, there should be a fixed time for the authorities to require additional information. In other words, this provision is to concentrate the minds of those dealing with the application.

Thirdly, unless there is a refusal of the licence, one should fix a time after which an application will be deemed to have been granted. That too is designed to prevent lengthy delays, the result of which is lost business either because an order is cancelled or because a potential customer goes elsewhere, because he knows that his order is likely to be delayed excessively. There is urgent need for an obligation on the government departments involved to proceed expeditiously. We have already heard of the failure of the DTI to achieve its targets for the issue of licences by almost 50 per cent. The Defence Manufacturers Association tell me that it is aware of cases where export licences have been approved by both the Ministry of Defence and the Foreign and Commonwealth Office and returned to the DTI for final processing where further delays have then occurred. There has been one instance in which this further delay of two weeks cost the exporter concerned the business, as the customer cancelled the contract in frustration at the delay.

The DMA also reports another case in which the exporter knows that the MoD and the FCO gave their advice in favour of approval last September, but the licence is still awaited. Apart from a standard time after which a licence shall be deemed to be granted, as I propose in subsection (3) of the amendment, I believe that a specific time should be set in the regulations for the DTI to issue a licence after it has received a positive recommendation from its advisory departments.

Fourthly, an explanation should be given for any refusal of a licence unless of course there is a security reason for not giving one. In either case, as the amendment explains, this is to enable the unsuccessful applicant to appeal should he wish to do so.

The fifth recommendation is that the Secretary of State shall prescribe an appeals procedure.

Lastly, where a licence is deemed to be granted because of an absence of response from the department, the Secretary of State shall grant written proof that the applicant is free to export the goods in question.

In simple terms, the amendment is really a test for the Government. Either they accept the Scott recommendations, as they say they do, or they want to reserve the right to depart from them. If they accept the

recommendations then they will also accept this amendment which carries those recommendations into law, as I believe they deserve to be. I beg to move.

10 p.m.

Lord Judith

I find the noble Baroness, Lady Miller, as wonderfully seductive as ever in her argument, but there is only one point in her argument on which I agree with her on this amendment; that is, that it goes to the heart of the Bill. In saying that, we should think back to what the right reverend Prelate was saying earlier in our deliberations.

In the past I have been a member of the defence ministerial team. All of us surely see defence in the modern context as preserving peace and security. The evidence which has accumulated in recent decades has demonstrated repeatedly that arms are very dangerous and disruptive to peace and security.

I do not believe that we will get our export policy on arms right until we get a change of mindset which says that here should be a presumption that one does not export arms unless there is a very good reason for exporting them that makes sense in terms of a commitment to international peace and security; hence the need for the other points that we have been discussing on previous amendments. Therefore, in great affection I would suggest to the noble Baroness that she has the matter around exactly the wrong way; that there should in fact be a system of deemed refusal. Of course very often it is the most complicated, the most risky and the most intriguing deals that take the longest for the Government to evaluate and to reach a final conclusion on.

I suggest—I am sure that she does not intend it—that the noble Baroness is putting pressure on the Government to gallop into decisions which might be very ill-advised.

Lord Sainsbury of Turville

The amendment seeks to acid a number of detailed matters to the Bill. In particular, it requires orders to make provision for a prescribed form of licence application; a time within which any additional information must be sought by the licensing authority; a time after which a licence would be deemed to have been granted unless refused; written reasons for the refusal of a licence application which should be sufficient to enable the applicant to make an appeal; and prescribing an appeals procedure. Proposed subsections (4)(c) and (5) would, in effect, require the Secretary of State to issue a licence by default if a decision has not been made within a prescribed timescale. These various provisions concern procedures, or, in the case of licensing by default, a fundamentally different approach to export licensing.

The Government set out their views about what are essentially procedural matters in the White Paper on Strategic Export Controls, published in 1998. I shall return shortly to the substantive arguments against the approach represented by these amendments. A more general point that I should make is that the Government consider that such detailed matters do not need to be set out in primary legislation and that, therefore, this amendment is unnecessary.

As noble Lords may be aware, the matters covered by the Bill have already been the subject of a long and detailed process of consultation. Many of the issues raised by this amendment have already been consulted upon and considered carefully by the Government, with our conclusions about them included in last year's further consultation on the draft Bill.

The Government's 1998 White Paper on Strategic Export Controls, which paved the way for the Bill currently before the Committee, addressed the issue of procedures in detail. It stated: The Government considers that there could be merit in setting out the basic elements of the licensing process in primary legislation but not the detailed procedures. The latter are. in the Government's view, best included either in secondary legislation, or in guidance material as at present, or a mixture of the two". We consider that Clause 6 as it stands does indeed provide the basic power to deal with the necessary procedural matters. The Government consider that the issues included in the amendment are detailed procedures. Therefore, we would reiterate the point made in the White Paper that such details do not belong in primary legislation.

I shall now comment on the substance of what the amendment is seeking to do. The White Paper also dealt with the question of licensing by default, giving written reasons for refusing export licences and appeals—all matters covered in the amendment. Here again, the Government would reiterate the views expressed in the White Paper. On the question of licensing by default, the White Paper stated: The Government has considered this issue carefully and has concluded that licensing by default should not be adopted as it would introduce a risk of licences being granted that were contrary to the UK's international obligations or the Government's own policy". That remains our position. A further point is that the previous Conservative government, in responding to the inquiry of the noble and learned Lord, Lord Scott, commented on the question of prescribing time limits, as proposed in subsection (4)(c) of this amendment, as follows: Prescribed time limits for the consideration of licence applications could be particularly difficult given the complexity of the issues raised by some applications and would, in practice, be likely to result in an increase in refusals in borderline cases". We agree that an increase in the number of refusals in borderline cases is the only responsible approach where time limits apply. That does not seem to be a desirable outcome, particularly from industry's perspective.

On giving written reasons for refusing a licence application, the White Paper also explained that we already give such reasons that are as full as possible. However, in some cases a broad explanation only can be given for reasons of national security, as acknowledged in subsection (4)(d) of the amendment.

As to appeals, the Government have said that they intend to set out procedures in secondary legislation. Appeals procedures were in fact included in the dummy draft orders made available to Parliament last October. In particular, Article 14 of the dummy draft order on the Export of Goods, Transfer of Technology and Provision of Technical Assistance, and Article 8 of that on Trade in Controlled Goods, dealt with appeals.

Subsection (4)(a) and (b) of the amendment underlines the general point that I have made about it not being appropriate to include powers to prescribe detailed matters in the Bill. Prescribing the form of the application is essentially an administrative matter, but for EU-derived controls is also a matter of compliance with the EU form of application. Applications will remain relatively unchanged over time, but may need to be updated occasionally. It seems unnecessary to specify such a power in the Bill. The time allowed to seek further information from licence applicants is also essentially an administrative matter and one that will vary in individual cases, depending on the complexity of the proposed export or transfer. Because of the nature of the export control process with regard to strategic items applications, the further information supplied has to be circulated to all other interested departments. There must, therefore, be no constraints on the Government's ability to require information about a proposed export or transfer. The Government aim to deal with all applications expeditiously, but sometime delays can occur, especially if a number of requests need to be made and the applicant is slow to respond.

As far as concerns the performance of the Department of Trade and Industry, we are working hard to reduce processing times for licence applications. In 2000, 57 per cent of standard individual export licence applications were processed within the target. So far, the figure for 2001 is 60 per cent. Of course, unfortunately, a small proportion of cases raise especially difficult issues, and they may take longer to process. All long-standing cases are regularly reviewed by officials to ensure that they are progressed. It is not right—as the noble Baroness, Lady Miller of Hendon, would have it—that we should in such cases allow people to have the export licence by default. Equally, I am not certain that I agree with the noble Lord, Lord Judd, that they should be turned down by default. They are difficult decisions, and the most important thing is that they are properly considered. That may take more time than is ideal, but the important thing is that such important decisions are given proper scrutiny.

The Bill contains all the powers necessary to modernise our existing export control regime. It would be a mistake to encumber it with a multiplicity of specific procedural duties and deal with matters that are best left either to the existing order-making powers in the Bill or to guidance. I therefore urge the noble Baroness to withdraw the amendment.

Baroness Miller of Hendon

I shall withdraw the amendment this evening, but I cannot promise the Minister that I will not bring it back. It would convince me not to bring it back if the Minister were to consider some of the points that I raised and if he were to come up with an amendment that would satisfy me just a little more. I do not agree with the noble Lord, Lord Judd. Although it was flattering to be told by him that I was seductive, clearly I was not seductive enough, or he would not have said that he disagreed with absolutely everything that I said except for one point about the title.

The important point that I was making to the Minister and to the noble Lord, Lord Judd, was that I, too, do not want to see arms sent to all the wrong places and that I, too, believe in licences and controls. That is why we support the Bill; there is no question about that. We think that it is excellent. However, I differ a little from the noble Lord, Lord Judd, and am on the side of the Minister, in that I think that a balance must be struck. There is no question but that we rely a lot on our defence industry. It is important that suppliers who are doing the job properly and correctly should be able to get on with their business.

I was making the point that the advisory bodies to the Department of Trade and Industry—for example, the Ministry of Defence and the Foreign Office—will, in many cases, go through things carefully with a fine-tooth comb and come to the conclusion that the licences ought to be granted. The matter then goes back to the Department of Trade and Industry, which is where the delay comes in. As a result, our companies lose the business, but the arms are still exported; it is just that they are exported by another company, probably not in this country. That is a pity. We must strike a balance. I felt that my amendment would do that, because it followed the recommendations of the noble and learned Lord, Lord Scott of Foscote.

Having said that, I am sure that the officials in the DTI could examine the process and see which parts they could help to expedite, where it was necessary and safe to do so. In that case, I beg leave to withdraw the amendment although I hope that the matter will be discussed later, perhaps in a different form.

10.15 p.m.

Lord Judd

Before the noble Baroness resumes her seat, I must obviously be a little more careful with my language. I wanted to ask her whether I could tempt her to go a little further. However, the noble Baroness seemed to indicate that she agreed with me that there should be a presumption in the interests of peace and international security that arms were not exported unless there was a good reason for exporting them. If she can confirm that that is the position of the Opposition, it will he immensely encouraging.

Baroness Miller of Hendon

The position of the Opposition is that, if there was a reason for the arms not to be stopped, they should be allowed to be exported. I hope that the noble Lord will accept that. I am clarifying what I believe the position to be. We have no objection to the licences, to the control, and all the other matters that are appropriate and that also take into consideration the concerns of the right reverend Prelate; that is, they should not go all over without consideration. Having said that, when it is appropriate, export should not be held up by one department when another department has gone through the procedure carefully.

Amendment. by leave, withdrawn.

Lord Rediesdale moved Amendment No. 34:

Page 5, line 19, at end insert— "( ) The Secretary of State shall ensure that adequate financial provision is made for the granting and regulation of export licences for objects of cultural interest."

The noble Lord said: We on these Benches finally reach an amendment of our own on cultural interests. This is a probing amendment directed at the Department for Culture, Media and Sport. It seeks to test whether adequate provision has been made for the DCMS to undertake the requirements placed on it by the Bill.

I say that because, as has already been pointed out in earlier amendments, Britain has an extremely large art market and one of the biggest antiquities markets in the world[. However, the DCMS has a small team to deal with licensing. I hope that the Minister can give an indication of how that team is to be expanded; otherwise, the issuing of licensing on time which affects other areas of the Bill—the export of arms—might affect the export of cultural items for loans to exhibitions, galleries or even for sale.

The other aspect that particularly concerns me is that of policing the market place. Objects of cultural interest. especially archaeological items, can be procured illicitly and traded through on-line market places. A number of such sites exist and what is worrying about them is that objects that one assumes have a British context are put on the web for sale in dollars without at the moment any need for an export control licence. I believe that under the provisions of the Bill it will be the role of the DCMS not only to police this market, but also to make those who are putting items up for sale aware of their obligations under the Bill. I beg to move.

Baroness Anelay of St Johns

I am delighted to welcome the noble Lord, Lord Redesdale, into the cultural fold. He has of course raised an extremely serious issue in relation to the availability of staff and funding to make the system work effectively. I join him in inviting the Minister to give an explanation of how there will be sufficient establishment to make the controls within the Bill have real teeth where they need to bite. The noble Lord, Lord Redesdale, is right to point out some of the worries in relation to illicit items being offered for sale on the net, and obviously that will be an expanding market in the technological future.

In addition, perhaps I may ask the Minister a related question. When I looked at Amendment No. 34 I felt it raised more than the issues to which he addressed himself. It also raises the issue of what happens if and when the reviewing committee on art recommends to the Government that an export licence shall be delayed until a time when perhaps money can be found to "rescue it for the nation", to use common parlance.

That is the reality of what happens if the Waverley system kicks in effectively. It means that the Heritage Lottery Fund or other funds are approached to see whether money can be obtained. So, however active the officials may be in trying to police the system and ensure that illegal activity does not take place, the difficulty is that where legal exports are taking place, it may well be that there is not enough money to save those potentially legal exports for the national system.

Those who have read the reviewing committee's reports over the past few years will be as concerned as I am to note that it believes there is not enough funding in the system to save existing treasures. At page 2 of the 1999–2000 report it was suggested to the committee that the Secretary of State's expert advisers have been so demotivated by the relatively small number of important Waverley items that have been saved for the nation mainly as a result of lack of funds—that they were not even bothering to refer items to the review committee in the hope that they could be saved.

Indeed, in the previous year's report for 1998–99, at page 8 paragraph 7, the committee stated that, it appeared to the Advisory Council this year that there had been little progress since the Committee's Report of 1997–98, in which the efficacy of a system that was not able to retain in the country a greater number of deferred items was questioned. The then Committee's remark continued therefore to have resonance". The issue of funding goes rather wider than that raised by the noble Lord, Lord Redesdale, in. his explanation of the amendment. I hope that the Minister will be able to address the points I have made.

Lord Davies of Oldham

I am not surprised that the noble Baroness, Lady Anelay, welcomed the Liberal Democrats to the debate. It gave her the opportunity to raise a much wider perspective than the one countenanced in the amendment of the noble Lord, Lord Redesdale. However, I shall do my best to answer her.

I shall be slightly negative at first—I shall ask the noble Lord to withdraw his amendment in due course—but, before I sit down, I shall he reasonably positive about certain aspects of the issues he raised and I shall say a word or two about the issues raised by the noble Baroness.

The purpose of Clause 6(2) is to make further provision in respect of the order-making power of the Bill. The amendment makes reference to the financial provision to be provided by the Secretary of State, but not to how the order-making powers themselves might be exercised. There is no connection between the noble Lord's requirement and how the power might he operated. We fear that this would introduce an ambiguity into Clause 6(2)—which has a specific purpose in regard to the Bill—and that would he undesirable.

The noble Lord will recognise that we appreciate the thrust of certain aspects of the amendment—namely, it is necessary that there should be sufficient resources available to police certain aspects of the Bill. It should be noted that two years ago the Minister for the Arts at the Department for Culture, Media and Sport established an advisory panel on illicit trade. We referred to its functions earlier when the noble Lord, Lord Renfrew, was in his place. He, of course, is a member of that panel.

The Minister welcomed the recommendations of the panel made to him in December 2000 for regulation of the export licensing system. As a result, additional staff have been appointed to the cultural property unit of the Department for Culture, Media and Sport. So additional resources have been provided for this necessary work.

The Government are well aware of the need for adequate financial provision for the DTI's export control.

Lord Redesdale

I thank the Minister for giving way. Additional staff have been provided, but, from an answer given at Second Reading, I believe that the additional staff number two. In the department's eyes, is that realistic in view of the workload that will be imposed by the Bill?

Lord Davies of Oldham

The staff were appointed in response to the needs of the review committee, the Panel on Elicit Trade, to which I referred. The staff derive their work from ensuring that they fulfil the obligations generated by the work of that panel.

The noble Lord is right. This is not just a matter for the Department for Culture, Media and Sport. It is also a question of the work of the DTI's Export Control Organisation. The Government are well aware of the fact that the Bill will require adequate provision to ensure that its provisions are carried through.

The Export Control Organisation has benefited from increased manpower and resources over the past few years. The Government will continue to ensure that it is adequately resourced to meet its responsibilities, including what we all recognise are the new responsibilities under the Bill.

That does not allow me to go quite so far as the noble Baroness would want. She opened up the issue of necessary resources to ensure that the cultural treasures of this country are sufficiently sustained. First, we all recognise that that is a plea for a "bottomless pit-, if ever one were heard of, in terms of provision. I think that the noble Baroness will generously recognise that the funding and purchase of cultural goods deferred as a result of the review committee is not a matter for the Secretary of State but for those wanting to carry out the purchase.

Therefore, in all honesty, I do not think that that particular contribution—valued as ever, and proof of the Opposition's determination to ensure that the Government fulfil their remit with regard to the arts—relates directly to the provisions in the Bill. I give way to the noble Baroness.

Baroness Anelay of St Johns

I appreciate that the Minister is trying to be accurate in referring to the sources of funding available for saving works of art. Does he agree that the level of funding available to the Heritage Lottery Fund is indeed reliant to some extent on the share of the lottery pot available to it? That share is determined by government policy in relation, for example, to the New Opportunities Fund.

Lord Davies of Oldham

Most good things in this country are a matter of government policies, as the noble Baroness will recognise.

Of course I recognise the Government's responsibility in this area. I merely suggest that this is not the burden of the amendment, nor indeed this dimension of the Bill. In fairness to the mover of the amendment, it is only right to point out that, valuable though the noble Baroness's contribution to our cultural well-being always is, it is not strictly relevant to the amendment.

Lord Redesdale

This is a probing amendment. Finding a slot in the Bill in which to place it was difficult enough. I realise that in its present form it is flawed. I welcome the positive response by the noble Lord, but it is a matter that will need to be reviewed on a regular basis, considering the workload that could be envisaged in such a growing field. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave withdrawn.

Clause 6, as amended, agreed to.

Baroness Miller of Hendon moved Amendment No. 35:

After Clause 6, insert the following new clause— "TEMPORARY EXPORT LICENCES (1) Any order which is made under section I shall include provision for the activity to be authorised by a temporary export licence. (2) A "temporary export licence" is one which authorises goods to leave the United Kingdom on a short-term temporary basis for the purposes of exhibition or demonstration during which time the goods remain under the control of the UK exporter. (3) Any application for a temporary export licence shall be granted within 20 working days from the lodging of the application (or such extended time as the applicant may agree) and if it shall not be so granted, unless it is refused it shall be deemed to have been granted and the provisions of section 6(5) shall apply."

The noble Baroness said: The amendment is intended to correct a serious problem faced by the defence industry. As was mentioned at Second Reading, major delays are being incurred in the granting of export licences. Only 57 per cent are dealt with within the agreed target date. However, the situation is even more serious when it comes to granting the licences for exports governed by the present legislation for the purposes of taking part in exhibitions or of demonstrating defence material and technical material to potential customers. Timing in such matters is critical. Delay can prevent the applicant from participating in a trade show or demonstrating a particular piece of equipment to a potential customer before a competitor can jump in and get the business.

Very simply, the amendment defines a temporary export licence and then stipulates that it must be granted or refused within 20 working days, which is the

target time for normal licences. If it is not granted or refused within that time, it is deemed to have been granted and the applicant is entitled to receive the necessary paperwork.

The amendment is essential for the benefit of an important export trade, which has repercussions not merely on an order that may be lost, but also on the decisions of other governments, which may follow the lead of one customer. I also remind your Lordships that the issue has repercussions on the unit price of similar equipment purchased by our forces. I beg to move.

10.30 p.m.

Lord Sainsbury of Turville

The amendment would add a new clause requiring orders under Clause 1 specifically to provide for authorisation under a temporary export licence to cover short-term, temporary exports for exhibition or demonstration overseas. Such temporary export licences would be deemed to have been granted if they had not been refused within 20 days of application, unless the period was extended by agreement with the applicant.

As I explained on Amendment No. 33, the Government consider that detailed procedural matters do not need to be set out in primary legislation. More importantly, the amendment would be wrong in principle. It would have similar consequences to part of Amendment No. 33, in that it would require the granting of a temporary licence after a specified period—in this case 20 days. Such licensing by default would result in the Government turning down applications in borderline cases. I therefore refer to the points that I made on Amendment No. 33.

The published dummy draft orders relating to the Bill include broad provisions for the Secretary of State to grant export licences, which would allow the granting of temporary licences. It is the Government's practice to grant temporary licences in appropriate circumstances, including to cover exports for exhibitions and demonstration. The annual report on strategic export controls, in reporting on licensing decisions, indicates where temporary licences have been issued. The Government have no plans to stop issuing temporary licences. I therefore urge the noble Baroness to withdraw the amendment.

Baroness Miller of Hendon

The Minister said that the amendment would be wrong in principle. That makes me realise that he is not going to suggest that the provision might go into the regulations instead. I understand that temporary licences are granted from time to time to meet certain needs. The fact is that licences are supposed to be granted within 20 days. It is important for the DTI to realise that time is essential for a temporary licence. As 20 days is the specified time, there ought to be a mechanism to ensure that 20 days will be sufficient for temporary licences for exhibitions and the other purposes that I mentioned. There is no point in having a target of 20 days if it cannot be met even for temporary licences for specific purposes. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 9 [Annual reports]:

Baroness Anelay of St Johns moved Amendment No. 36:

Page 6, line 8, at end insert "ending 31st December"

The noble Baroness said: I shall speak also to Amendments Nos. 39 and 40. These are probing amendments about two issues. First, will the new format for annual reports have a constructive result? If so, how? I ask that in a positive frame of mind. I expect there to be an advantage to Parliament in the change of format for the report. Secondly, what are the implications of the provisions for the Reviewing Committee on the Export of Works of Art?

Clause 9 requires the Secretary of State to publish an annual report on controls of objects of cultural interest. On Second Reading, the Minister said:

"That report will cover cases considered by the Reviewing Committee on the Export of Works of Art which are currently presented by the Secretary of State for Culture, Media and Sport in a separate annual report to Parliament".—[Official Report, 8/1/ 2002; col. 464.1

Will the Secretary of State make a Statement to the House and be subject to questions when the report is presented or will that document merely be laid. before the House? What else will be in the report? Will it be a report by the Secretary of State in addition to the annual report of the reviewing committee or will the annual report to Parliament merely serve as a substitute for the report of the reviewing committee that is currently published? Will the report be available free of charge to the public on the department's website?

In the other place on 8th November, the Parliamentary Secretary gave outline information on the publication of reports, saying that the Government will ensure that the annual report on strategic exports will be available free of charge from the Foreign and Commonwealth Office website. He did not make the same commitment with regard to the art report. Why not? Was that an oversight?

As a result of the plans to bring forward the annual report, what will be the role and remit of the Advisory Council on the Export of Works of Art after the Bill is enacted? I am aware that the department is currently undertaking a quinquennial review of the reviewing committee's work, for completion by 30th June. Will that review be published or will it be an internal document—as is often the case with quinquennial reviews?

Amendment No. 36 inserts in the Bill that the annual report would cover the period 1st January to 31st December to provide consistency in the presentation of reports—a bit of a straitjacket, to make sure that we receive them. Amendment No. 39 requires the report to be published three months after the end of the report year at the latest. It would he better if the report were published earlier. At present, the Government simply say that the report will be published as soon as practicable. That seems sloppy and could encourage delay.

The reviewing committee's latest report should cover the period to the end of last June. I am intrigued that it appears not to have been published. It may be that the Library and I have committed an oversight. The department's website—which has never published the report but has always mentioned it in the past and presented extracts—makes no reference. We were told that the report would be published by the end of January at the latest. When might that report appear?

Amendment No. 40 would encourage the Secretary of State to produce the report in proper time. The amendment requires the Secretary of State to give an explanation in person to Parliament if the report is published late—or, in ministerial terms, very late. I beg to move.

Baroness Miller of Hendon

Clause 9 provides for the Secretary of State to make an annual report to Parliament on the workings of the Act. Subsection (I)(a) refers to the export of objects of cultural interest, whereas Clause 9(1)(b) refers to other matters relating to the operation of this Act". I find that funny. I am curious as to why those two aspects are separate, rather than covered by a simple requirement to report on all orders under subsection (1). Is it significant that items of cultural interest come first and defence equipment second? Given the Bill's purposes following the Scott report, that seems the wrong way round. If the Minister cannot deal with the point right away, I should be happy for him to write to me between now and the next stage.

On the substance of the amendment, however, I have to point out that the clause is not specific about what the report must say. I remember when I was in a business partnership with a multinational American company which demanded that I send it a monthly report on the operation that I was running. My first succinct report read, "Everything is going OK". That was factually correct and fully comprehensive, but the lack of detail did not please that company in the least. Nevertheless, it never again asked me to submit such a report. So there is something to be said for such an approach.

This amendment requires the Secretary of State to report on a matter that is of vital interest to exporters of defence equipment and technology. It would also be an indicator of the department's speed and performance in handling licence applications. As your Lordships are aware from earlier debates on the Bill, the DTI's performance has fallen woefully below the targets, to the detriment of exporters, both in the delays in their being able to accept orders and in losing business altogether to overseas competitors. Being required to place their performance on the record in their report will, I am sure, concentrate the minds of those charged with the responsibility for dealing with applications for export licences.

Paragraph (b) of the amendment stipulates that no details of temporary export licences shall be included, which is a separate issue from that raised in paragraph (a). The provision is included at the specific request of the defence industry as disclosure of such matters could disclose commercially sensitive material to competitors by telling them who is exhibiting or demonstrating what to whom and where.

I have often been accused by Ministers opposite of proposing amendments that are too prescriptive. In this case, I plead guilty to being prescriptive—but not too prescriptive. The public and exporters are entitled to know how well the department is doing, and, armed with the facts, Members of both Houses must be able to call the Secretary of State to account. Perhaps Ministers will bear in mind that if they do not accept the statutory obligation that the provision calls for, they will have to answer in a different way, at Question Time.

I hope that the Minister will either accept this constructive amendment as it is drafted or say that the Government can do much better and will table their own amendment on Report.

Lord Phillips of Sudbury

My noble friend Lord Redesdale and I tabled Amendments Nos. 48 and 41 which are in this group. My noble friend, however, has had to hurry off to the bedside of his very expectant spouse. I think that that demonstrates the relevance of the report having to be laid within nine months. I am also afraid that our two amendments make a rather wimpish pair compared with the much more rigorous and vigorous amendments tabled by the noble Baroness, Baroness Anelay of St Johns, which provide for a three-month period. Amendment No. 37, too, is a good deal more brisk than our foppish amendments. I shall therefore retreat behind those of the Official Opposition.

Lord Judd

Before my noble friend the Minister replies, may I assure him that many of us are very satisfied with the current situation and would regard any retreat from covering temporary licences as a blow to transparency? Of course temporary licences should be covered; they may be temporary, but they are real and should be subject to scrutiny. More importantly, temporary licences give an indication of trends, enabling the discussion on whether the trend is right or wrong to be opened up considerably. They are therefore very important to the cause of transparency. I hope that my noble friend the Minister will not be swayed by this amendment.

Lord Sainsbury of Turville

These grouped amendments seek to clarify and make statutory provision for the content and timing of publication of the annual reports on cultural and strategic exports. The annual reports on strategic export controls each cover a calendar year, and we intend to continue this practice under the Bill. However, the Government do not feel that it is necessary or appropriate to specify in primary legislation that reports should be published in respect of each calendar year.

As for the speed of publication of the annual reports, the Government are committed to publishing the annual report on strategic exports as soon as possible after the year to which it refers. The 1999 and 2000 annual reports were published on 21st July 2000 and 20th July 2001 respectively, well within the nine month target proposed by the noble Lord, Lord Redesdale, and the noble Lord, Lord Phillips. In this case pregnancy was somewhat shorter. However, the annual reports came to 350 pages—that is the size of a small baby. Therefore, those who produced the reports did well to do so within the time that they did. The 1999 and 2000 annual reports each weighed in at around 350 pages, the bulk of which consisted of tables showing types and numbers of licences granted. That was a reasonable performance.

Following introduction of the new controls on trafficking and brokering and technical assistance. yet more information will need to be collected and processed. With such a large and complex body of data there is always the possibility that problems occur in compiling it, or that anomalies are found that need to be resolved before publication. A legal obligation to publish a report within a certain time limit could risk forcing the Government to publish misleading or incomplete data. That would not be helpful to those, like the Quadripartite Committee, who may wish to scrutinise the reports.

Nevertheless, the Bill will require the Government to publish the annual reports as soon as practicable. That means that the Government cannot deliberately delay the publication of either annual report. Moreover, I can assure the Committee that the Government already endeavour to publish the annual report as soon as possible after the end of the year to which it refers.

Amendment No. 37 in the names of the noble Baroness, Lady Miller, and the noble Lord, Lord Rotherwick, seeks to require the Government to publish information in the annual report relating to the time taken to process licence applications and to prohibit the Government from including in the annual report any details of temporary export licences.

The annual report on strategic export controls already incorporates details of the Export Control Organisation's performance in processing licence applications. This data includes the percentage of applications processed within the target time of 20 working days as well as a breakdown of the performance of the main government departments involved in the export licensing process. The Government have noted the suggestion through this proposed amendment that this section of the report could be more detailed. Although we do not feel that it is appropriate for the detailed content of the annual report to be set out in primary legislation, we shall be looking at whether the section of the annual report on licensing performance could be made more extensive.

The amendment also proposes that temporary export licences be excluded from the annual report. The Government are proud of the fact that the annual reports have become progressively more informative over the past few years. To exclude temporary licences from those detailed in the report would be to take a step backwards from the increasing transparency and accountability to which we are committed. We believe it is important that export licensing policy and practice should be open to retrospective scrutiny, including in the area of issuing temporary export licences. As I say, to exclude temporary licences would be to take a step backwards. There is already in the annual reports all the information people need to hold the Government to account.

The noble Baroness, Lady Anelay, raised a number of extremely important points on the cultural report. I am afraid that I cannot answer those at the moment but I shall write to her in detail. In view of the assurances and arguments I have given, I hope that the amendment will be withdrawn.

10.45 p.m.

Baroness Anelay of St Johns

I am grateful for that careful reply. I appreciate the Minister's difficulty. Although in this Chamber all Ministers are expected to answer for all departments, such virtuosity cannot be expected on every single occasion. I am grateful for the Minister's offer to write to me with the details of the operation of the reporting system with regard to the cultural report. It would be interesting to know about the procedure under which Parliament will be able to hold Ministers to account and whether it is a matter of the relevant Secretary of State making a statement to the Chamber or whether it is simply a matter of a document being laid. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 37 to 41 not moved.]

Clause 9 agreed to.

Lord Phillips of Sudbury moved Amendment No. 42:

After Clause 9, insert the following new clause— "PARLIAMENTARY SELECT COMMITTEE As part of the licence application process required by an order under section I, 2. 3 or 4, the Secretary of State may take advice from a Parliamentary Select Committee."

The noble Lord said: The amendment stands also in the name of the right reverend Prelate the Bishop of Manchester. It deals with an important and sensitive issue; namely, whether a system of prior scrutiny of some of the more sensitive and important licences should be part of the licensing process. We understand that it is a highly contentious matter. It has been trailed by the reports of the Quadripartite Committee. It had meetings with the then Foreign Secretary, Robin Cook. The Government have responded to its first report. It issued a further report in July last year to which there has not been a government response.

The reason that the supporters of the amendment believe it important that the Government consider it favourably is because the licensing of arms is of the greatest public and often international importance. It has led us into deep waters in recent years. Far from prior scrutiny by a parliamentary committee obfuscating, obstructing or delaying the licensing process, we believe that the measure would be a valuable addition to the scrutiny process. It is vital to

bear in mind that Amendment No. 42 gives a discretion for the Secretary of State only to take advice from the parliamentary Select Committee.

Amendments Nos. 56 and 83 are grouped with Amendment No. 42. The noble Lord, Lord Campbell-Savours, has put in place detailed provisions as to how the measure might work as regards the constitution of the relevant committee, its powers and so on.

On this side of the Chamber, we believe that to give the Secretary of State the power to take advice from a parliamentary Select Committee in cases he or she considers appropriate—they will be cases of great importance and/or sensitivity—will he of great benefit to all concerned. At Second Reading, the noble and learned Lord, Lord Scott, expressed the fear that the measure could legally encumber the process and cause embarrassment. That fear is avoided by the fact that the committee consulted by the Secretary of State would merely give advice. There is no constitutional problem if the measure is confined to giving advice.

There is concern about the balance of power between Parliament and the executive. It is traditional for Parliament always to scrutinise the activities of the executive in retrospect. However, I believe—the right reverend Prelate will speak for himself—that this is one case where public interest will be well served if the Secretary of State has that right. Sweden has a prior scrutinising system. America has one. The objections voiced by the Government are that the provision could affect the competitiveness of British industry, the efficiency and effectiveness of the process, could breach confidentiality and so on. Those objections can be dealt with perfectly satisfactorily. We hope that the Government will look with approbation upon the amendment.

Lord Campbell-Savours

I rise to speak to Amendments Nos. 56 and 83. I apologise for detaining the Committee, but this is an extremely important matter that has been debated at great length in the other place. Outside lobbies are very interested in these amendments, as are many colleagues in the other place.

The arguments have been well rehearsed. Indeed, the noble Lord, Lord Phillips of Sudbury, has done so again this evening. They were convincingly put in the quadripartite reports of July 2000 and March 2001 and were unanimously carried by that committee, which was made up of four Select Committees of the House of Commons. There was almost universal support within those Select Committees themselves. An Early-Day Motion has been tabled in the other place today that has been supported by a cross-party alliance, including a number of former defence Ministers. It is strange that once defence Ministers leave the department, they suddenly become converts to the principle of prior scrutiny. I hope that my noble friend the Minister will have that in mind when replying to my amendments.

My intention is to cast new light on the issue of prior scrutiny and, in particular, the framework for a new scrutiny committee. I am proposing a practical and innovative solution, based on the operations of the Intelligence and Security Committee, whose operations would not be binding on the Government. The model framework in my amendment is set out in Section 10 of the Intelligence Services Act 1994. I have lifted the section out of that Act and have amended it to meet the new role of the proposed defence exports scrutiny committee.

Why did I select that structure? I did so primarily because of industrial and government concerns over issues of confidentiality. The truth is that business does not trust the politicians. This structure will give business a framework for a committee that it can trust. It will also deal with the issue of delay, to which my noble friend the Minister referred previously, as have Ministers in the other place.

It is interesting that concerns over confidentiality dominated the arguments within the security services in the 1970s and 1980s prior to the introduction of the Intelligence Services Act 1994. The then Prime Minister, John Major, established a structure that would reassure everyone in the community, which has been very successful. The services have been reassured and Ministers have been able to pray in aid its work in both Houses. On one occasion, that structure was commissioned by a Prime Minster to carry out a report into the Mitrokhin allegations. It carried out a full inquiry and the Committee enjoyed the confidence of both Houses of Parliament.

I shall say a few words about the structure. The committee is not a Select Committee, but a committee of parliamentarians, which is appointed by the Prime Minister. Every member has to sign the Official Secrets Act and it meets in conditions of total secrecy. The ISC structure comprises one Peer and eight Members of the House of Commons. It is always chaired by a politician of distinction and its members are all Privy Counsellors, apart from one, Michael Mates, who, in my view, should be on the Privy Council. The committee meets in Whitehall, not in Parliament, and has access to the whole intelligence community. Its powers are determined by law and it reports to the Prime Minister when necessary. Its role is to comment on matters set out in the 1994 Act. It has no executive power. Its decisions bind no one. Its reports are scrutinised by those who are being scrutinised; that is, the intelligence community. It never leaks. If it did, it would collapse.

What is wrong with setting up such a structure to oversee Britain's defence exports? My proposal is to establish a defence exports scrutiny committee, which we may refer to as DESC for the purposes of this debate. Its remit would be to monitor and report on defence export licence applications and policy wherever necessary. Its modus operandi would be given by a code introduced by the Prime Minister under paragraph 2(5) of the schedule in Amendment No. 83.

The code would deal with the procedures to be followed by the committee both prior to and post notification. It would define applications, which would be exempt from scrutiny. That involves the whole argument about NATO. It would deal with the treatment of classified information and it would obviously meet OSA requirements. It would deal with the arrangements for appointing a chairman and the special responsibilities of the chair in order to avoid delay—the very delays that were referred to by the noble Baroness, Lady Miller, who moved some particularly interesting amendments on that matter.

The code would deal with the whole question of a Secretary of State override in special circumstances, such as the potential cancellation of contracts. That issue was raised by the noble Baroness, Lady Miller. The code would deal with conflicts of interest and other matters. It might well reflect many of the ideas that were proposed by the Quadripartite Committee in its second report of 2001.

I place on record my appreciation of the work on the code that is being done by Saferworld and in particular by Vanessa Haines, who has been doing considerable work in that area. I asked Saferworld to help me, and it has been extremely helpful. I have given only recommendations for the code.

I turn to the Government's response. They have given a number of responses to the whole idea of prior scrutiny in the first and second reports of the Quadripartite Committee. The most considered response can be found in the second report; that is. the document entitled, Strategic Export Controls: Annual Report for 1999 and Parliamentary Prior Scrutiny. I shall pick out the key sentences of the Government's response. They said that the arrangement, could not be made to work in practice". That is the Government's position. My response is to point out that in the structure that I have proposed, the arrangement would work effectively because it provides for a limited form of accountability. The machinery of decision-taking would not be compromised by open debate because the committee would meet in secrecy.

I turn to another of the Government's responses. They said that, it would be wrong for Ministers to be required to consult Parliament before taking decisions in individual cases". However, they would be consulting not Parliament but a committee of parliamentarians, which is not a committee of Parliament. It is not a Select Committee; it is not protected by parliamentary privilege; it is subject not to parliamentary resolutions but only to primary and secondary legislation. It cannot report directly to Parliament—all reports go through the Prime Minister for sidelining—and it would not have the rights of a Select Committee and Ministers or civil servants could not be held in contempt in relation to the giving of evidence. What further protection could there be for the executive in such conditions?

In their response, the Government said that the committee's involvement would, "compromise confidentiality" and, give rise to legal difficulties". I shall come to that point later. They also said that, the public disclosure of any information before a contract is signed could he prejudicial". However, that would not occur because all relevant matters take place under the conditions prescribed by the Official Secrets Act. They state that, overseas Governments can have legitimate requirements for nondisclosure of their military procurement programmes. for example on grounds of national security, which they would wish to see respected". A safeguard in that area is built into Schedule 2 under paragraph 4(c). That is why that phrase is included; it is to deal with that specific matter. The Government say: Open debate of the merits of a particular proposed export, as the Committee believes it might wish to encourage in some instances, could quite simply result in UK exporter losing the business". That could not happen because, once again, I stress, the debates are not taking place in public; they are taking place in private inside the DESC.

The Government say that, in cases where the Committee's advice to the Government arose from a disagreement over policy, the Secretary of State would be unable to act on that advice without exposing the Government to an increased risk of judicial review on grounds of inconsistency and unlawful sub-delegation". My response is that, if the committee's position is unknown, clearly any disagreement with the Government is unknown. Therefore, there can be no basis for a legal challenge. The Government say that, the committee would be acting on the basis of less information than that available to the Government". Again, my response is that, if the OSA, is in operation, it is impossible to estimate the extent of knowledge available to members of the committee.

The Government say: The introduction of the Committee into the decision making process would increase the uncertainties for exporters and could leave those decisions more open to legal challenge. It is also difficult to see how such a system could be introduced without the Committee taking a shared responsibility, and becoming accountable for the role it would play in export licensing decisions. That would, in turn, make its retrospective scrutiny less effective". Obviously no legal challenge is possible without access to the deliberations of the committee. That access is denied, again, because it meets conditions of official secrecy. Without public knowledge of the committee's advice on an application, shared responsibility simply cannot arise.

The Government say that, prior parliamentary scrutiny would introduce further delays into the licensing process". We have heard a great deal about delays this evening. I understand that the position is that, when the Quadripartite Committee considered these matters, it said, "We shall deal with these matters concurrently with the Government". Therefore, again, I cannot see what the problem is.

Then the Government refer to the fact that, the 10 days proposed by the Committee represents the very minimum additional delay, and that in practice the delay would often be a great deal longer". Again, I refer to the speeches of the noble Baroness, Lady Miller. Today, we have heard about the reason for delays. I cannot understand how the intrusion of this committee structure or framework into the consideration of Ministers—in the event that they would wish to have the considerations of such a committee in mind—would delay matters any more than has already been alluded to by the noble Baroness, Lady Miller. The delay is likely only in cases which would be controversial and which, therefore, by implication, would take longer for the department to handle.

Finally, the Government say: The Government would need to devote significant extra resources to implement the much increased level of liaison with the Committee that would be needed by the system of prior scrutiny proposed by the Committee". The proposals for fast-tracking, which I would include in a code and which would be introduced by the Prime Minister, would, in my view, deal with that problem. I believe that if one fast-tracks, clearly one does not have to devote as much resource to the committee as Ministers may have in mind at present.

I also understand that there has been some argument about unlawful delegation. I understand that Matrix Chambers has responded that it may be better to deal with advice—that is, advice from the committee—in primary or secondary legislation. In the case of my framework, because it is not a committee of Parliament, I do not believe that even the Matrix Chambers representation is relevant. The question of advice is covered adequately under paragraph (5) of the new clause proposed in Amendment No. 56, which states:

The Committee shall make an annual report on the discharge of their functions to the Prime Minister and may at any time report to him on any matter relating to the discharge of those functions". That is a direct take from the 1994 Act as it applied to the intelligence community. We know that that structure can work.

I am also told that one of the final, core positions of the Government is the principle that governments must govern and parliaments must check. My response is that, before decisions are taken, consideration by the executive of the views of the legislature is not unprecedented. That happens all the time.

The other day I visited the tea room to talk to some of my old friends in order to acquire some examples of that. Within about half an hour I had been given a series of examples of Select Committees making recommendations to Ministers prior to Ministers taking decisions. I shall lay one or two of those on the record.

The Select Committee on Transport carried out two inquiries into the privatisation of NATS which preceded decisions by Ministers. On the restructuring of the TA, the Defence Select Committee took a view and made its recommendation to Ministers. On rail privatisation, the Transport Select Committee, under the chairmanship of Robert Adley, met for 185 hours on one issue and then Ministers took decisions. They may not have taken the decision that I wanted them to take, but they fully considered the recommendations of the Select Committee. I was in the House of Commons when a Statement was made to Parliament.

Another inquiry carried out by the Transport Select Committee considered the United Kingdom/US negotiations relating to the Bermuda agreement on transatlantic airline traffic. The Home Affairs Select Committee inquired into ID cards. That was immediately prior to Michael Howard's decision on smart cards, an idea that he turned down in the 1992/ 97 Parliament. The Public Administration Select Committee is currently inquiring into reform of the House of Lords prior to a decision being taken by the Government. We are told by the Lord Chancellor that that committee's recommendation will be taken into account in whatever decisions are taken by the Government.

The Agriculture Select Committee has inquired into the quarantine of animals. Some say that that was an inquiry that was born in the department with responsibility for agriculture and that the committee was asked to carry out that inquiry by Ministers. In that case Ministers turned down the recommendations of the committee, but they were implemented by the previous government.

Of course, prior to the decision that was announced today in the House of Commons, there was an inquiry into the PPP for London Transport. The one that may be of most interest to the Minister, because it deals with an individual decision, was the Daresbury Syncotron facility inquiry that was carried out, if I remember rightly, by the Science and Technology Select Committee in the other place. That committee made its recommendation to the Government and the Government took it into account.

I believe that often Ministers ask committees to carry out inquiries prior to taking decisions so that they have help in their deliberations. I place those examples on the record because we are being told that governments must govern and that parliaments hold governments to account. Already in this country a system is in operation whereby committee recommendations are being considered by government before government take their final decisions.

I believe that we have a powerful case on prior scrutiny. It has been widely put. I believe that the structure that I am proposing will deal with that. It is a structure based on trust. As relationships develop behind closed doors, away from public debate, between departmental officials, Ministers and members of committees that operate in these conditions, all sorts of information flows. I believe that in those conditions there will be a more sensitive appreciation of the concerns of elected Members of Parliament and Members of this House in the decisions that are finally taken by Ministers.

I ask my noble friend tonight not to knock it all on the head. I ask him in winding-up the debate to tell us that over the next five or six weeks prior to the Report stage that he at least will consider these arguments and perhaps have them in mind when we table amendments again, if necessary, on Report.

Lord Rea

I rise to support the amendment. One of the very few aspects of prior scrutiny that my noble friend did not mention is the fact that, as was mentioned by the noble Lord, Lord Phillips, prior scrutiny takes place in the United States and Sweden without seeming to damage the export potential of either country, particularly the USA.

The Government have rejected this as a supporting argument on the grounds that the systems employed in those countries would not be useful in the UK context. But members of the Quadripartite Select Committee actually noted during the debates on the Bill in the other place that the systems employed in those countries did have certain weaknesses which should not be imported wholesale. The committee considered those weaknesses and the peculiarities of the UK system when drafting its proposals. They have been outlined extremely skilfully and in some detail by my noble friend Lord Campbell-Savours. I commend strongly all three proposed amendments. They are workable. They should be considered by my noble friend.

In closing, I should say that my noble friend has been quite modest. He did not declare that he has been a member of the Intelligence and Security Committee of another place. He says that there is absolutely no question of any breach of security. As confidence grows between the intelligence and security services and the committee, more and more and more sensitive information will be discussed without any harm being done to our security services.

The Lord Bishop of Manchester

It is very late at night. It would be helpful if one of the three who tabled the amendment went on the record. I cannot compete with the noble Lord, Lord Redesdale, who has gone off for his own child to be born. I am waiting for a grandchild to be born which should have been born yesterday. It looks as if it has missed today and it will be tomorrow. But there it is.

'The basic assumption about all this is the Scott report's criticism regarding the lack of accountability and transparency in legislation. Those two issues are at the heart of it and are the two issues that govern my desire to support the amendment. We have heard a structure—a way forward—ably outlined. I do not have a better way forward.

To say that we have an accounts system at the moment—we rehearsed the issue earlier—is transparency post hoc and not prior scrutiny. I think that the Government might be glad of the kind of scrutiny that has been suggested and proposed. 'We might have avoid the kind of situation that we had over the sale of the air traffic control system to Tanzania if we had had some prior scrutiny of the situation. One can say that America or Sweden are not typical. That is all right, but let us buy into the principle again and work out some kind of proposal as has been suggested tonight over the next month or so that meets the concerns that the Government quite rightly have about secrecy, confidentiality and so on.

We need to make some provision for prior scrutiny that allows the public, the NGOs and the people beyond Britain to feel that we are consistent in our application of the UK criteria for arms export; that we are following the EU code and the proposals contained in the Bill. I hope that the Government will not be too coy but will buy into the principle and think creatively about how it might be worked out.

The Earl of Sandwich

I should like to express regret that the noble Baroness, Lady Warnock, could not remain with us because of the late hour. She would have been able to offer much wisdom on the subject.

We are most fortunate to have the noble Lord, Lord Campbell-Savours, with us in Committee. He had a special position in the other place, and I know that he has already earned a special place in the Chamber this evening. The noble Lord made a very powerful case, on which I shall not elaborate. However, when we are talking about delay, I should like to stress that we must remember, for example, the components of the Hawk aircraft that we allowed the Zimbabweans to have at a time when they were fighting in the Congo—not necessarily with that aircraft, but as has been universally recognised, it was not something that we should have done. The committee was not able to follow it up, but it could have clone something about it if it had been established at the time of the application.

Lord Judd

I must confess that I a:m among those former defence Ministers, albeit, in those days, a junior member of the team, who has seen the light. We have seen the light because of our experiences when in office. It is very significant that former defence Ministers are putting their names to an Early Day Motion in the other place. I, too, should like to put on record my deep respect for my noble friend Lord Campbell-Savours—we are neighbours in Cumbria—for his longstanding and salutary work in this whole area over many years. He spoke powerfully this evening.

I should also like to draw attention to the strength of argument put forward by the noble Lord, Lord Phillips, this evening. It would be possible to rehearse many of the arguments, but I believe that they have been more than fully covered. I have two questions for my noble friend the Minister that I hope he will address in his response. First, it seems extraordinary that the Government could view the operations of a committee modelled on the Intelligence and Security Committee as being in danger of breaching commercial confidentiality. If the Government really believe that a committee modelled on such an excellent committee with all its records so far could endanger commercial confidentiality, they must tell us why. That view certainly raises some pretty profound questions about the other committee that is already carrying out its work. The Government must be consistent and open about their argument in this respect.

Secondly, given the number of precedents for the Government consulting a committee or agency in the exercise of its functions, and the repeated emphasis that a defence export scrutiny committee would have a purely advisory role, can my noble friend clarify whether the Government foresee a constitutional barrier to the establishment of such a committee? I have certainly had sight of legal advice which says that there is no constitutional barrier. If there is such a barrier, the Government must specify exactly what it is.

Finally, we are not discussing this matter in a vacuum, or in an academic kind of way. In recent decades a number of very disturbing incidents have taken place that have come to light only after the persistent lobbying and outcry and, indeed, the courage of many people who have insisted that they should be taken seriously. That is no way to approach an issue of this kind, where we are all agreed that the irresponsible exporting of arms can have profound dislocating effects on international security and peace, as well as on the well-being of people. The need to approach the matter with a sound and convincing arrangement of the kind outlined by my noble friend Lord Campbell-Savours is really overwhelming. Therefore, as has already been argued, I hope that my noble friend will feel able to say this evening that he has listened—it is always good when a Minister can say that he has done so—that he will take the point seriously, and that he will take it away and return on Report with a convincing position.

Lord Sainsbury of Turville

The amendments would add new clauses to the Bill that would provide for the Secretary of State to take advice from a parliamentary Select Committee or a committee of parliamentarians in the licensing process. As we have heard, it is intended to provide for the prior parliamentary scrutiny of individual licence applications, a subject that has been raised by the Quadripartite Committee in the other place, and to which the Government have responded in the past. The amendments would, of course, extend prior scrutiny to licensing decisions made under the other powers in the Bill.

The question of prior scrutiny has already been considered at some length by the Government, in response to the recommendations made by the Quadripartite Committee. The Government's position on the issue was set out in their response of July last year, in which we stated that there was an important principle involved about the respective roles of government and Parliament. That can be best expressed by quoting from the Government's response: The Committee has reiterated that a system of prior scrutiny 'would not mean that a Committee would share responsibility or take decisions'. However, the Government strongly believes that bringing the Committee into the export licensing process, regardless of the formal status of the Committee's recommendations to Ministers, would in practice be bound to blur this responsibility. The Government therefore remains of the view that, as a matter of principle, it would be wrong for Ministers to be required to consult Parliament before taking decisions in individual cases". That remains the Government's view.

The noble and learned Lord, Lord Scott of Foscote, set out the issue with remarkable clarity in his speech at Second Reading. I hope noble Lords will bear with me if I quote his views on the subject in full, as he explains the position admirably. He stated that:

"Speaking personally, I am against prior scrutiny and am in favour of the Government's refusal to agree to its incorporation into the export licensing regime".—[Official Report; 8/1/02; col. 484.]

Lord Campbell-Savours

Can I take my noble friend back to the words about sharing responsibility? That response from Government came in the context of the recommendation that a Select Committee of Parliament deal with such matters. I am not proposing that. That proposition must now be revisited. They are not sharing a decision with part of the legislature.

Lord Sainsbury of Turville

I find it hard to understand the distinction that a committee of parliamentarians—that is what it is—is not, in some sense, representative of Parliament's views and that, if it takes part in the decision-making process, it is not, in some way, sharing in that process.

Lord Campbell-Savours

I am sorry to come back to my noble friend, but that discussion has taken place repeatedly in proceedings in the Intelligence Services Committee. The ISC draws a gross distinction, as has the Prime Minister in correspondence with me over the years, between a committee comprising parliamentarians and a parliamentary Select Committee. There is a clear distinction that is often referred to during evidence given by the chiefs of the security services.

My noble friend may not be able to understand that, but it is well rehearsed in other Government departments. He has given a reason as to why he may want to consult further. If that distinction exists, that answer does not stand.

Lord Sainsbury of Turville

I still find it difficult to see that a committee of parliamentarians taking part in decisions is not, in some way, taking part and sharing responsibility. I can only return to the quotation from the noble and learned Lord, Lord Scott of Foscote—

11.30 p.m.

Lord Judd

I am grateful to the Minister for giving way. He keeps saying, "taking part in the decision". The point that is being made by Members of the Committee this evening is that in a whole realm of instances the Government take advice before they reach decisions. What on earth suggests that if we have a Parliament worth having, it is not possible to have a group of distinguished parliamentarians who can give advice? They are not saying what should be done; they are simply giving advice which is taken into account.

I do not want to delay the Committee, but as I have the floor perhaps I might point out, just to take a random example, that Section 124 of the Environmental Protection Act 1990 requires the Secretary of State to, appoint a committee to provide him with advice [interalia] on the exercise of powers to grant licences … releasing or marketing genetically modified organisms". Why, if people outside Parliament can be appointed to such a committee, should there not be a committee of parliamentarians? Nobody is suggesting that they represent Parliament, but they are a wise group of parliamentarians whose advice is sought and taken into account. The Government then decide whether or not they want to take the advice.

Lord Campbell-Savours

Before my noble friend replies perhaps I can refer him to the case of the noble Lord, Lord Birt, and the railway system. He is an adviser to government and a Member of this House. I refer to the noble Lord, Lord Haskins, who wrote the report on agriculture for government. He is a Member of this place and he is also advising government. I ask my noble friend to see this point in that context and not in terms of a committee of the legislature giving advice or making recommendations

Lord Sainsbury of Turville

I would find this argument more convincing if the game had not already been given away by the noble Lord, Lord Phillips, who said that this would merely be giving advice and would have no constitutional implications. He promptly followed that by saying that many people were concerned about the balance of power between the legislature and the executive. He suggested that this would be a good way of dealing with that situation. I took that to be the implication. It was therefore quite clear that he saw this as having a constitutional implication. If the balance between the legislature and the executive is not a question of constitutional importance, I do not know what it is.

Lord Phillips of Sudbury

I am grateful to the Minister for giving way. As he quoted me, perhaps I can say that it is true that I talked in terms of a balance of power. I make no apology for that and it does not in any way go counter to the substance of the issue, which is whether or not the committee concerned gives advice or is a co-decision-maker with the Secretary of State. It is not the latter. Were it the latter, the Minister would have a constitutional point.

When talking about the balance of power, as has already been stated by several Members of the Committee, there are many instances where prior scrutiny, prior advice, is given to the executive in order to aid and abet it in reaching a decision. When I talk of the balance of power, it is more in the general sense of that phrase, indicating a concern on the part of the public that there is insufficient relationship between the executive and Parliament at all stages. But I emphasise that this would be an advisory and not a decisive exercise.

Lord Sainsbury of Turville

I am always concerned to find myself debating these issues with both distinguished parliamentarians and distinguished lawyers. I am only fortified in my views by the fact of what the noble and learned Lord, Lord Scott, said, who obviously has some understanding of these constitutional issues and particularly how they apply in this specific case. Perhaps I can quote his reasoning, which seems to be totally pertinent to this point. He said, It seems to me that the function of Parliament, whether of this House or another place, is to hold the executive, the government, accountable for the decisions that they take. Export licensing is essentially an executive function. Parliament has a constitutional obligation to hold government to account for their executive decisions and should not become complicit in them by prior scrutiny, which one supposes would disqualify whichever House had conducted the prior scrutiny from conducting a proper accountability exercise. For those reasons I believe that the prior scrutiny proposal was correctly rejecter.—[Official Report, 8/1/ 02; col. 484.] In summary, it is for the Government as the executive to take executive decisions and to answer for them later to Parliament as the legislature. The scrutiny of government licensing decisions can and should take place retrospectively rather than before a decision is made. This is where the annual reports on strategic exports play a vital role. The Government believe that their annual reports have greatly improved the transparency and accountability of decisions on export licensing.

Such decisions are made in the full knowledge that they will be subject to public scrutiny, including scrutiny by the Quadripartite Select Committee, and Ministers will, quite rightly, be held accountable for them.

My noble friend Lord Campbell-Savours, in an extremely interesting and carefully constructed amendment, has proposed a system to scrutinise licence applications and the licensing process which would provide for a degree of confidentiality in relation to the committee's activities, but it does not deal with this constitutional issue.

The Government also believe that a system of prior scrutiny could not be made to work without having a materially adverse impact on the efficiency and effectiveness of the export licensing process and without causing significant damage to the competitiveness of UK exports.

In spite of all the discussion about it being in parallel, I know of no case where another body added to the decision-making process—which almost certainly in this case could not start its consideration until it had received all the evidence from the different government departments—would not substantially add to the already complicated process of obtaining government agreement on these key issues.

The Government see Parliament's role in this area as being one of scrutinising decisions after they have been taken and having the opportunity to input into policy. We do not believe that it would be right for Parliament to take part in or advise on the decision-making process itself.

I have listened carefully to the arguments which have been made.

Lord Campbell-Savours

Before my noble friend sits down, perhaps I may place on record to him that his whole brief has been written on the basis that I am talking about a parliamentary committee. I am not talking about that. On that basis, I ask him to revisit the argument during the coming weeks.

Lord Sainsbury of Turville

As I said, we take this matter very seriously. I shall look carefully to see whether the arguments I have advanced are altered by the point made by my noble friend. I have listened very carefully. The government view has been stated very clearly, but I shall take it away and consider whether it has been altered.

Lord Judd

Before my noble friend the Minister sits down, my noble friend Lord Campbell-Savours has put the point extremely clearly. He is not alone in his conviction that we are not talking about a parliamentary committee. It is as clear as this Chamber to me that that is the case. We are not talking about a parliamentary committee.

In his response, my noble friend referred to the observation of the noble and learned Lord, Lord Scott, that it is Parliament's job to hold the executive to account. He seemed to imply, therefore, that what was being proposed would undermine Parliament's job in holding the Government to account. Can my noble friend the Minister illustrate how this will in any way undermine Parliament's ability to hold the Government to account?

The advisory group will give its opinion; its views will be accepted or rejected or whatever; and Parliament will then look at the decision and say whether it is a good decision or a bad decision. I do not see any logic in the case put forward by my noble friend the Minister

Lord Sainsbury of Turville

This is a case where there is impeccable logic. I am very happy to be associated in this view with the noble and learned Lord, Lord Scott. We are obviously alone in sharing this view, but it seems to me quite clear that if a parliamentary committee, or a committee which involves parliamentarians, is involved in the decision-making process it makes it more difficult for Parliament subsequently to hold the executive liable.

I have listened to the arguments and I will take them away. We take this matter very seriously but, in view of what I have said, I invite the noble Lord to withdraw the amendment.

Lord Phillips of Sudbury

We are grateful to the Minister for dealing with these amendments as he has and for being so good natured about the large number of interventions. It has made for a useful airing of the important issues involved.

In his response, he did not touch on the efficacy of prior scrutiny in political terms. Everyone has tried to urge upon him that this would be good for the Government, good for Parliament, good in terms of public opinion and good in terms of the quality of the outcome. He did not touch on any of that. It is a pity that the debate was dominated by the legal and constitutional issue.

The Minister said that he will consider these matters carefully. Perhaps I may suggest that he takes formal advice from Treasury counsel, or from another appropriate source, on the legal and constitutional issues. My belief is that the statement of the noble and learned Lord, Lord Scott—on which the Minister quite reasonably relied—was not an ex cathedra legal statement as regards the constitutional consequences of what is proposed, but the noble and learned Lord's political view as to the best way forward. We could ask the noble and learned Lord, Lord Scott. what he meant. But when he said that Parliament should not become complicit in executive decisions by prior scrutiny, I believe that the word "should" related to politics and not to law.

We need to get to the bottom of the legal issue. If the Government are right about that, frankly, we must withdraw from the field. If the Government are wrong, and several distinguished barristers have said clearly that because this is an advisory decision there is no constitutional or legal impediment. I respectfully disagree with the noble Lord, Lord Campbell-Savours, on this issue. I do not believe that his distinction between a Select Committee and a committee of parliamentarians is the crucial issue. It is the advisory as opposed to the decisive quality of the matter that is at the core of the debate.

If the Government find that they are not right in their constitutional and legal position, I very much hope that they will have regard to the fact that no one in this House is grinding any political axe. We have a great many people with huge experience in the fields about which we are talking. The view of those who have spoken has been unanimous.

Again, we are grateful for the Minister's response. We hope that the matter can be returned to on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Davies of Oldham

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

House adjourned at eighteen minutes before midnight.