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Roger Casale (Wimbledon): Before the right hon. Gentleman works himself up into a lather of self-righteous

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indignation over parliamentary courtesies, perhaps he will answer a question. Is he not rather ashamed to have been part of a Government who did nothing to introduce legislation to tighten up export control in the light of precisely the abuses that were highlighted in the Scott report?

Mr. Heathcoat-Amory: If the hon. Gentleman had been awake a few moments ago, he would have heard me say that Governments of all complexions relied on the 1939 legislation for too long. In the light of the Scott report, however, the previous Conservative Government immediately issued a consultation document and said that we would legislate to introduce the recommendations made by Sir Richard Scott, as he then was. Subsequently, however, we lost office. The incoming Labour Government could have introduced the necessary legislation, but they did absolutely nothing. It is only now that the Government are introducing a Bill to try to do the job.

I shall draw another item to the attention of the hon. Member for Wimbledon (Roger Casale), as he is so interested in the matter. The Select Committee observed that the Government could have used non-legislative means to implement some of the Scott recommendations. They could, for instance, have laid voluntarily before the House the necessary export orders. Instead, they did absolutely nothing in that respect until December 1999. It is, I am afraid, a shameful story of drift and neglect by the previous Labour Government.

Without the substance of the legislation, it is very difficult to make a final judgment on whether the Government have achieved the right balance between the acknowledged need for control over the export of such goods and related technology and the need not to inhibit legitimate trade unnecessarily, by imposing unrealistic or burdensome regulations.

The Secretary of State gave some purported examples of the damage done by unauthorised weaponry, but under questioning she failed to substantiate whether British firms or British defence equipment could be held responsible. It is no good her making generalised allegations about the inadequacies of existing controls unless she is prepared to say which firms are involved and whether the problem originates from a failure of existing export controls.

Mr. Bercow: Did my right hon. Friend, with his customary powers of observation, note that the Secretary of State declined to reaffirm the Government's commitment to the target of processing 70 per cent. of standard individual export licence applications within 20 working days, in response to my challenge to her to assure the House that the Bill would not exacerbate the delays?

Mr. Heathcoat-Amory: My hon. Friend is absolutely right. The existing licensing system is a scandal, and the Bill could easily make it worse. It was characteristic of the Government to start blaming industry for the delays. When my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) asked about a specific example, the Secretary of State suggested that the delay was caused by the failure of the firm to provide the right information, but the statistics that he cited exclude examples where the Government have to return to the company to get additional information, so the missing of the 20-day target

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is purely down to the incompetence of the licensing authority—in this case, the Department of Trade and Industry.

Conservative Members know that the defence industry is important in a very wide sense. It employs about 350,000 people in the UK, and the export trade is vital to those people as well as being important in keeping down the cost of equipment for our own armed forces. Moreover, because defence firms are heavily weighted towards manufacturing, they provide about 10 per cent. of the output and the work force in manufacturing generally, and that sector is practically in recession. The sector was ignored and badly treated by the previous Labour Government and is now suffering grievously from excessive regulation and taxation.

We hope that the Bill will not be another opportunity for the Government to repeat all the mistakes that they made in the previous Parliament. We have often commented on their in-built tendency to interfere and over-regulate, to the detriment of the industries concerned.

Mr. Jim Cousins (Newcastle upon Tyne, Central): Does the right hon. Gentleman accept that some of the most difficult decisions concern dual-use technology, with the terrible dangers brought by the proliferation of techniques of warfare that can rebound on our own forces and our own interests in the world? Does he also accept that that was precisely the area in which the Conservative Government failed so badly?

Mr. Heathcoat-Amory: Of course I acknowledge the importance of the subject and the need for a workable and realistic system of export controls, and I have already said that we give our support to that endeavour. However, we are entitled to look carefully at the Bill and ask whether it will discharge that responsibility. I hope that the hon. Gentleman, in a non-partisan spirit, will help us in that endeavour. The issue does not necessarily split the parties, because the whole House wants a parliamentary system of scrutiny to ensure that the Government are performing that task.

I cannot overlook the Liberal Democrats' contribution to the debate. Their only real contribution to the debate last year on the subject of the defence industry and exports was to suggest that the Government should withdraw cover under the exports credits guarantee system from that industry. In other words, that sector of British industry uniquely should not be able to export with cover obtained from export credits. When it was pointed out that that would put British industry at a disadvantage compared to other competitor countries, the hon. Member for Richmond Park (Dr. Tonge), who is in her place, conceded that it would lead to job losses. She said, in a slightly unfortunate phrase, that

Of course, it would be those who work in that important industry who would have to do so, not the hon. Lady and her party.

Mr. Bercow: I know how committed my right hon. Friend is to the principle of freedom of information. In those circumstances, does he agree that it is important

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that the Liberal Democrat position on that subject—unprecedented and deeply injurious to legitimate defence commercial interests as it is—should be widely communicated in every constituency that has a substantial defence interest and the misfortune to be represented by a Liberal Democrat Member of Parliament?

Mr. Heathcoat-Amory: I will join my hon. Friend in that endeavour, but he will know as well as I do that Liberal Democrats tell a different story when they are speaking in constituencies with important defence interests.

I welcome parts of the Bill and, in particular, the purposes contained in the schedule for which the Government can impose export controls. That is a definite advance on previous legislation. Rather less happy is the fact that the Government can change the schedule simply by order, and will not need primary legislation. Even worse, the Government can override the schedule and impose export controls that ignore the restrictions in the schedule simply by introducing such a control in secondary legislation. The Bill is a good example of restrictions and controls apparently being applied to the Government, but if they do not like them they can easily change them.

The Government's ability to introduce secondary legislation in that way was the subject of adverse comment by the Delegated Powers and Deregulation Committee of the other place. The Government may have set out with the laudable intention of establishing a system of parliamentary scrutiny of the issue, but they are retreating further towards a system of ministerial discretion. The same is true of the export control orders—in other words, the orders that will be brought forward to impose or change restrictions on exports of defence equipment to specific countries or parts of the world.

The Government say that there are about six such export control orders a year, and the Scott report recommended that they should be subject to the affirmative resolution procedure. However, as my hon. Friend the Member for Buckingham (Mr. Bercow) has already observed, the Government have insisted on the use of the negative resolution procedure. In other words, they will pass unless they are voted down. The point about the negative resolution procedure is that whether there is a debate or a vote is entirely at the discretion of the Government, not the House.

The Government used weasel words in their consultation document on the Bill, saying:

I am afraid that that is not true. Parliament does not have control over that. If the Government do not want a debate, there will not be one. If this new Parliament wants to take seriously the issues of parliamentary scrutiny and the powers of the House, it should at the very least ensure that the House itself decides whether there is a debate and a vote on matters of this importance.

The Bill also extends the licensing system. We do not know how many people will be caught up in these controls. They refer to activities that facilitate the acquisition or disposal of certain goods. Presumably, the airlines and shipping companies that transport the goods as well as the banks and finance houses that provide the

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credit all in some way facilitate the acquisition or disposal of such goods. All, therefore, will—at least in theory—be covered by the Bill. It could—and probably will—include British nationals who are working overseas, even if they are employed by foreign companies. All of them will be swept into the net. If that is not the case, we should be told early in the debate so that we do not unnecessarily suppose that the Bill's scope is as wide as it appears.

The Secretary of State alluded to the extension with regard to the transfer of technology where that is done by electronic means rather than by the physical export of equipment, tapes, plans or drawings. In other words, from now on electronic means will include the telephone, fax and e-mail. The Government's aim is understandable, but is it practical and enforceable?

The academic world is worried about being caught by oral transmission of information. For instance, giving a seminar or lecture on a scientific subject with possible defence implications to foreign students could be a licensable activity because it could mean that information was being transferred to people in another country.

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