Select Committee on Foreign Affairs Third Report


Stage 1 Notifications

49. In our July 2000 Report we concluded that, in the absence of any satisfactory criteria for pre-selection of categories of licence applications which did not potentially require prior scrutiny, a summary list would have to be provided of all applications. We favoured neither a cash threshold nor a categorisation by destination. We did however explicitly suggest that "the Committee would in due course no doubt identify classes of applications not requiring Stage 1 notification, e.g. for exports to NATO member countries".[81]

50. We envisaged a weekly list of around 250 applications for SIELs, and 10/15 for OIELs. We understand that such a list, giving (a) a reference number, (b) a description of the item as in the Annual Report, together with volume and value and (c) the intended destination and end-user could indeed be provided within days of the receipt of the application, probably electronically, and subject to suitable security. It would involve extra time for officials, since there is no departmental requirement for such a list. The formulation of the short description is not as easy as it sounds, and can require clarification from the applicant. It is however required at a later stage for the purposes of the Annual Report.

51. No objection was raised to this proposal in the Government's 9 December 2000 response, nor in the 14 December 2000 Ministerial speech in Westminster Hall. We did not therefore raise the issue in our 12 January 2001 letter. In exchanges during oral evidence on 31 January 2001, however, the Foreign Secretary suggested on several occasions that the proposed requirement to supply details of all applications was a stumbling block to the Government's acceptance of prior scrutiny. He told us that it would involve "a significant investment of staff time" and that he could not understand why we could not define some parameters which would reduce the administrative burden of Stage 1 notifications.[82]

52. In view of the Foreign Secretary's expressed concerns, we have reconsidered our original proposal. It is essential that prior scrutiny should embrace the sort of licences which our experience we have found it necessary to submit to ex post facto scrutiny. For that reason, we cannot contemplate a cash threshold. But there are several areas where we are prepared to consider limits on coverage.

  • NATO and other close allies: our experience suggests that licences to NATO countries and other close allies, which account for around 40% of all SIELs, may not require prior parliamentary scrutiny. We have scarcely ever raised a question about an intra-NATO transfer. Ex post facto scrutiny would still be possible.

  • Dual-use goods: we have only rarely raised issues arising from the refusal of licences for dual-use goods, and only on one or two occasions the grant of licences. The principal concern in deciding on such licence applications must be the bone fides of the notified end-user, which is not a matter on which a Committee could be expected to make any useful input. It would still be possible to examine dual-use licences ex post facto.

  • Non-circulated applications: around 15 per cent of all licence applications are determined within DTI, on the basis of criteria agreed with the other departments. We understand that those not circulated would generally be dual-use or NATO or both.

53. We are prepared on an experimental basis to recommend exclusion from Stage 1 notification of —

      (a)  licence applications for exports to NATO countries and other close allies, on the basis of a list of criteria to be agreed between the Committee and Ministers:

      (b)  licence applications for dual-use goods, subject to the right to identify in the light of experience specific countries or specific categories of goods where prior scrutiny would be required: and

      (c)  licence applications not circulated to other departments.

That should halve the number of licence applications requiring initial notification, significantly reducing the administrative burden.

Scrutiny to Stage 2

54. In our July 2000 Report we suggested that the Committee would seek further information on a "small minority" of the notified applications, in a process of elimination which would eventually lead to an even smaller proportion to be formally notified at a time when a decision was pending — "Stage 2 notification". In oral evidence the Foreign Secretary expressed concerns at the number which might be involved and expressed himself as prepared to discuss the issue again with colleagues if we could give " any indication" of the very small fraction of licences on which we envisaged Stage 2 notification as being required.[83]

55. The vast majority of licences are granted without Ministerial involvement. It was suggested to the Trade and Industry Committee in 1998 that a few hundred required Ministerial decision or inter-Ministerial correspondence or discussion. The FCO estimate that between 5 and 10% of SIELs processed by the FCO in 2000 were seen by Ministers.[84] We would expect to require fewer notifications at Stage 2 than the number of applications referred to Ministers. We would not for example be in a position to anticipate problems over applications arising from possible diversion to programmes on weapons of mass destruction. We have hitherto been unwilling to give figures. Based on our experience of looking at three Annual Reports, and on the reference by the Foreign Secretary to having had barely half a dozen in the four years he had been in office which raised major issues,[85] we would not expect to seek formal Stage 2 notification of more than a hundred licence applications a year. Of those, a number might in any event be refused by Ministers, leaving a handful of possibly controversial cases.

Stage 2: Delay

56. Our July 2000 proposals suggested that the Committee have at most 10 working days — 2 weeks — to comment on a Stage 2 notification. We emphasised that it would always be open to Ministers to grant a licence "in crises or conflicts". The 9 December 2000 Response referred to this period as introducing significant delays into the process, all the more if a dialogue was necessary between the Committee and government. The Foreign Secretary told us on 30 January 2001 that "we take a deep breath at the idea of anything that might significantly affect our ability to perform quickly...". He agreed that the issue of delay was affected by the proportion and number of licences involved. [86]

57. The Government have a target of deciding on 70% of those applications circulated to other departments within 20 working days. Departments consulted — principally FCO, MoD and DfID — have targets of 10 working days to arrive at a view. The achievement in recent years has hovered around the 55/60 per cent mark. In other words, even the most optimistic assessment of the time taken within Government to process applications recognises that around 25% of all applications, meaning around 3,000 ,will require more than a month to process. In practice, the most difficult applications take months and months before a decision is reached, as correspondence from companies testifies. The proposition that an additional 10 working days in a handful of cases would have any significant additional impact is not tenable.

58. We should in any event make it clear that we envisage the Committee as having received any objective information it needed on an application before Stage 2 notification. Having received such a notification, the Committee should in the majority of cases be ready either to express an opinion in writing to Ministers, or to express no opinion.

59. We do however take the issue of delay very seriously. We are only too well aware from the correspondence from exporters who have appealed against refusals that they are already subject to excessive delay. Government should not be allowed to use the requirement for prior scrutiny as an excuse for its own dilatoriness. We are therefore prepared to concede that Ministers should be free to go ahead with the grant of a licence otherwise subject to Stage 2 notification, not only as a result of national security and operational considerations in crises or conflicts as set out in our July 2000 Report, but also where there are genuine and well-founded grounds for believing that a contract may otherwise be lost.

Stage 2: confidentiality

60. Our July 2000 Report stated that we hoped and expected that the Government would feel able to make Stage 2 notifications in a non-classified form, as is the case under the broadly equivalent US system, while accepting that some notifications might have to be made in classified form for operational and security reasons.[87] We also noted that , while much of the Committee's work would have to be conducted in private, the Committee would have power to report to the House where it had "major concerns", and that such a Report could be debated. The Government Response of 9 December 2000 expressed three concerns on this —

      (a)  commercial confidentiality: "any publicity before a licence is issued could alert potential competitors, either in the UK or overseas, and thereby risk the loss of the contract";

      (b)  diplomatic confidentiality: "premature publicity of an overseas Government's requirements may harm their legitimate security interests";

      (c)  diplomatic embarrassment: "there is a real risk that a detailed debate about the merits of exporting particular goods to a particular destination might damage bilateral relations with the country in question".

61. We are not persuaded by the arguments in (b) or (c) above. Transfers are in due course reported in the Government's Annual Reports: that they should be reported marginally earlier cannot be a major issue. Nor, as we said in our 12 January letter, can we accept that —

    "the danger of damaging bilateral relations with a country can be sufficient reason not to engage in debate on the merits of exporting goods to that country...we do not think it can be seriously suggested that the sensitivities, real or imagined, of the intended recipient should weigh heavily in the balance against the need for democratic accountability for such important decisions".

62. We are however conscious of the possibility that a public Stage 2 notification system may work against the best interests of UK exporters, who apply for licences in advance of signing contracts, and who may be vulnerable to other companies seeking to "poach" business of which they had hitherto been unaware. There is also the possibility of unintended revelation of details of licence applications subsequently refused, which undesirably advertises a recipient country's unmet requirements.

63. We have given this matter serious reconsideration, in the light of the Foreign Secretary's remarks, and the memorandum received from the Defence Manufacturers' Association.[88] We are prepared to accept that —

  • Stage 2 notifications should normally be made in confidence, and that confidence would be preserved until the licence was granted and contract signed;

  • in those very rare cases where the Committee considered that the seriousness of the case required a Report to the House of Commons, or, in extremis, parliamentary debate, the Committee would report only the bare minimum of details required to make debate possible, such as "Hawk aircraft spares to Zimbabwe", "potential mustard gas precursors to Sudan" or "refurbishment of Moroccan artillery". In such cases, even these details would only be reported with the agreement of both the Government and the applicant.

It will always be open, in any event, for the Government to submit information under a classification which would require the Committee to observe confidentiality. No Committee would disregard such a classification. None has in the past. It is really up to the Government to decide what level of classification to put on information given to a Committee. The solution to the concerns expressed on confidentiality lie in the hands of Government, and do not constitute any sort of reason to resist prior scrutiny.

Stage 2: advice to Ministers

64. Our July 2000 proposals envisaged a process of gradual "elimination of applications identified as potentially requiring Stage 2 notification, through —

  • clarification of the intended end-user;

  • clarification of the application of embargoes, special regimes etc to particular cases;

  • information from open sources on the political and human rights situation in particular countries.

Once the Committee had as much information as possible, it would be able to come to an informed view on the handful of licence applications on which it required Stage 2 notification.

65. The 9 December 2000 Response suggested that "the Committees are likely to find it difficult to take an informed view on the merits of particular applications without access to sensitive and technical advice on the nature of the material covered by an application, or the detailed advice available to ministers on, for example, the proposed destination or end user". In our 12 January 2001 letter we noted that—

    "The operation of prior scrutiny would indeed depend on the development of a modus operandi on the supply of technical clarification of the material for which a licence is sought... there has been no evident problem with the provision of information on either the nature of the material or the end-user when we have sought it in the course of the past eighteen months."

66. We raised this issue in oral evidence with the Foreign Secretary. We seek to distinguish between "advice to Ministers", which is an admittedly ill-defined category, and "information". The first category seems to be used by Ministers to cover not only advice in the sense of "we recommend you grant/do not grant this licence because ..." but also "advice" on the lines of "this piece of equipment could well destabilise the delicate regional balance/could be used in internal repression, based on past experience ..." and so on. The Foreign Secretary told us that —

67. It will be for Ministers, not the Committee, to decide on the interpretation of the conventions governing what information will be supplied, and when "information" becomes "advice". It may be that Ministers will be less open before a licence is granted than they have been after licences are granted. That will be for the Committee and Ministers to work out in practice. That there may be points of friction and areas of disagreement over the provision of information argues, not that the proposed system of prior parliamentary scrutiny is unworkable, but that it will require give and take on both sides: a self-evident truth we do not seek to conceal.

Issue of principle

68. The final paragraph of the December 2000 Response stated the Government's view that "there is no role for advance scrutiny of individual casework decisions, which are quintessentially matters for ministerial decision in accordance with delegated powers conferred by Parliament". If that were the case, there would of course be no purpose served in seeking to agree a workable system of prior parliamentary scrutiny.

69. We expressed the view in our July 2000 Report, that "the authority to export arms is of a different degree of sensitivity to other types of Ministerial casework....We are convinced that accountability demands that Parliament is engaged in scrutiny of arms export licences before as well as after their grant....Issues of such importance warrant democratic involvement." That does not mean that a Committee would share responsibility or take decisions, as the Foreign Secretary hinted.[90] Where Ministers disagree with advice from a committee, as already happens not infrequently, the world does not come to an end. It is open to a committee to continue to oblige a Minister to account for decisions, but not to change them.

70. The Foreign Secretary candidly set out one principal reason for Ministers to feel nervous about prior scrutiny in this one case: the fear that it might become the practice in other areas of ministerial casework.[91] That may of course be the subject of inquiry by individual committees. The fear of setting a precedent cannot be erected into a principle. We cannot agree that all "individual casework decisions" by Minsters can be automatically exempt from prior scrutiny.


71. This is our third and probably our last Report of this Parliament on the subject of strategic export controls. Thanks to the admirable determination of Ministers to publish more details on arms export licences than ever before, we have been able to come together from four separate committees and examine broad policy issues, the exercise of powers in relation to particular countries, and individual licence applications granted or refused. We have enjoyed excellent cooperation from the departments concerned in providing the detailed written information we have sought. We have identified some cases where in our view mistakes or errors of judgement have been made. We have placed in the public domain some issues hitherto clouded in secrecy or obscurity. The Foreign Secretary told us that the possibility of their licensing decisions being subjected to our detailed scrutiny had already had an effect on Ministers when making such decisions.

72. We have however concluded, after detailed consideration and in the light of representative visits undertaken by Committee members specially for that purpose to Sweden and the USA, that the special nature of the authority delegated to Ministers to license the export of arms justifies the establishment of a system of prior parliamentary scrutiny. We recommended this in July 2000. The Government took five months to turn down our proposals. Following a debate in Westminster Hall in December 2000 and oral evidence in January 2001, we have significantly revised our proposals to meet practical objections raised by Ministers, without surrendering the principle of prior scrutiny. Our new proposals deserve proper scrutiny within Whitehall; but there is no reason to wait another five months for an answer. There is every good reason to have a system of prior parliamentary scrutiny ready to operate as soon as committees are set up in a new Parliament.

81  HC 467, para 83 Back

82  Qq 3-6 Back

83  Q 13,22 Back

84  Ev, p 39, 7 Back

85  Q 41 Back

86  Q 38 Back

87   HC 467, para 86 Back

88  Ev, pp 18-22  Back

89  Qq 28-9 Back

90  Eg Qq 10, 34 Back

91  Qq 26, 38 Back

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