Select Committee on Defence Fifth Report

PRIOR PARLIAMENTARY SCRUTINY OF LICENCE APPLICATIONS

History of the Debate

148. Our predecessors reported twice on the issue of whether there should be some form of prior parliamentary scrutiny of applications for licences to export controlled goods,[203] and the Government has rejected their proposals twice.[204] The Committees believed that arms export licences are an exceptional sort of ministerial casework which demand prior scrutiny because—

-    arms export licensing is a uniquely sensitive type of ministerial decision; and


-    while scrutiny of Government policy and administration more generally in the field of export licensing can usefully be carried out retrospectively, there is only a limited use to retrospective scrutiny of individual licences. The granting of an export licence, unlike many ministerial decisions, is usually irreversible. Prior scrutiny of individual licences could inform those decisions—but once decisions have been taken, it is too late. Tanzania is a case in point.

149. In its reply to the second of the reports on prior scrutiny in the last Parliament, the Government set out a number of reasons for rejecting the Committees' proposals for prior scrutiny of arms export licences. The UK Working Group on Arms[205] submitted a memorandum to us taking issue with the Government's arguments.[206] The Government's reply seems to us to have been constructed with the aim of repelling prior scrutiny at any price. While some of the its arguments may deserve attention and possible compromise on the Committees' part, others fail to take into account undertakings already made or raise spectres of problems which are unlikely to occur. We consider each of the major objections raised by the Government in turn.

Issues of Principle

150. The Government's July 2001 response stated—

The Government does not believe that it [export licensing] is uniquely sensitive when compared to other areas of ministerial work. [207]

The Government is deploying this argument against prior scrutiny when it has not done so in the past. The argument could just as well be turned on its head. What other areas of ministerial casework have an equivalent potential impact on global security and human rights? The Government makes this very bald statement, but it gives no examples of other equally sensitive areas of ministerial casework.

151. The Quadripartite Committee has said in the past that—

... the case for parliamentary prior scrutiny of applications for strategic export licences stands or falls on a judgement as to whether licences for arms exports are, for whatever reason, deemed to be a sufficiently distinct category of Ministerial decision as to justify reversal of the normal constitutional pattern, whereby Ministers make decisions on "casework" and are accountable for their decisions after they are made.[208]

We believe that arms export licensing is such a category; we believe the Government has not made its case to the contrary.

152. The Government's July 2001 response also argued 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 ... responsibility.[209]

Again, it is unclear from the Government's response why it takes this view. The Government frequently takes advice from outside organisations before taking decisions, but those outside organisations are not held to be complicit in those decisions, so long as the absolute right to take the decision rests with a Minister of the Crown. An example of where Parliament is involved in ministerial decision-making is the deregulation and regulatory reform process which requires committees of both Houses to satisfy themselves that consultation has been properly undertaken before Parliament approves a change in the law.[210] But the Committees are not asking for any such right here—merely the right to be consulted and to express a view. There are numerous other examples of a Minister being required to undertake consultations before taking a decision. One is planning appeals. In the case of export licences, whether the Government agrees or disagrees with the Committee's view—indeed whether it takes it into account at all—would be entirely a matter for the Government.

153. The Government's response also claimed that it was—

... 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.[211]

This is an argument which has also been put forward by Lord Scott. It is true that if the Committees recommend that an application be allowed, then they are scarcely in a position to criticise the Government for allowing the application in question. It is also the kind of Catch-22 argument which is bound to appeal to those who control information—if the Committees were able to affect licensing decisions they would be rendered ineffective by their complicity: therefore they must accept that they should be unable to affect licensing decisions and remain independent but ineffective. What the argument fails to take into account is that the whole purpose of prior scrutiny is to render individual export applications subject to effective comment in a way which retrospective scrutiny cannot. If the Committees were able to exercise prior scrutiny, there would be no point in them using retrospective scrutiny to the same ends. The Committees' retrospective scrutiny would concentrate on broader issues of policy and administration, rather than on individual licence applications.

Legal concerns

154. The Government's July 2001 response argued 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. Exporters have a legitimate expectation that decisions on individual export licence applications will be made on the basis of Government policy, and not on the basis of views of those outside Government.[212]

But we know that in cases where the Committees disagree with Government policy, they would recommend that policy be changed—not that an individual licence which is consistent with current Government policy be rejected.

155. In referring to the possibility that it might be unable to follow its published policies, the Government invoked the doctrine of legitimate expectation. A person would have a legitimate expectation that the policy would be followed, and might be able to restrain inconsistent action, if they clearly benefited from and relied on the published policy and would suffer from its reversal or from action being taken which is inconsistent with it. However, the expectation must be legitimate, and it would probably not be legitimate to expect a policy to be followed if it conflicted, in the circumstances, with a pressing public interest.

156. Furthermore, we accept, and indeed endorse, the notion that the Government must always be free to change its policies to take account of changing circumstances. (If it refused to do so, it could be unlawfully fettering its discretion and/or acting unreasonably.) Where a change is made to a published Government policy and the change interferes with an expectation which is legitimate, the law requires only that the change to the policy should be published so that people know of the change, and if practicable have time to adapt to it before it takes effect. As a matter of law and political practice, it is fanciful to suppose that any views of or representations by the Committees could put the Government in a situation where it would be forced to change its policy in ways, and in circumstances, which would necessarily and unlawfully violate anyone's legitimate expectation. We have supported and applauded the Government's commitment to an open and transparent licensing process, based on the published criteria. It is absurd to draw the inference that we wish, surreptitiously, to re-engineer the kind of situation that led to the setting up of the Scott inquiry.[213]

157. The Government's response also speculated that—

Should a decision that had been subject to Stage 2 be challenged, it might be argued that the Secretary of State had been unduly influenced in one direction or another by the Committee's recommendation, on a number of grounds including unlawful sub delegation and inconsistency with stated Government policy or other decisions in similar cases. 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.[214]

The Government appears to imagine that the involvement of the Committees will lead to a flood of requests for judicial review against decisions on arms export licence applications. But it is not at all clear why it should. The involvement of the Committee would not of itself render the Secretary of State's decisions justiciable; they are justiciable in any case.

158. The Government refers to the prohibition, on ordinary principles of administrative law, of sub-delegation. It is true that a decision-making function which Parliament has allocated to a particular person or body must be exercised by that person or body. An unauthorised sub-delegation is unlawful, but the Government, by involving the Committees in the decision-making process at a stage before the decision is actually taken, would not be sub-delegating its actual decision-making function: it, and not the Committees, would still make the final decision, taking account (or not, as the case may be) of any views expressed by, or representations from, the Committees. It would indeed be unlawful for the Government to fetter its discretion by committing itself to a policy of accepting recommendations made by the Committees, as this would deprive it as the statutory decision-maker of the freedom to make the decision. But the Government is extremely unlikely to divest itself of its discretion in that unlawful way, and we are certainly not inviting it to do so. We do not demand that Ministers' always accept a recommendation of the Committees, we only ask that they have the opportunity to hear it and give it consideration. That is the proper role of the Executive in relation to Parliament—we are not seeking to rewrite the constitution.

159. As for increasing the uncertainties for exporters, this argument seems misplaced. The Committees would be involved in a very few cases, which would in any case be almost certainly among the most difficult ones for Government to decide. For the vast majority of export licences, the Committee's prior scrutiny exercise would have no effect at all. It would simply ensure in the case of a very few sensitive licences that the Government was aware of the Committees' view. The Government would then proceed to take a decision on the licence application entirely as it sees fit.

Practical Problems

CONFIDENTIALITY

160. The Government's July 2001 response also claimed that—

... public disclosure of any information before a contract is signed could be prejudicial ... after a contract is signed, information may still be commercially sensitive ... overseas Governments can have legitimate requirements for non-disclosure of their military procurement programmes ... A report to the House or an effective Parliamentary debate on a pending licence application ... would ... not be possible without compromising commercial confidentiality.[215]

This is probably the real nub of the Government's objections. Our predecessor Committees were prepared to accept that any information, the disclosure of which would be prejudicial, could simply be submitted by Government under a classification which would require the Committee to observe confidentiality. What the Government may really be concerned about is that the process of prior scrutiny would be likely to involve the Committees requesting sight of intelligence material or highly embarrassing political assessments of individuals in relation to the proposed end-users.

161. What the Government seems not to recognise, however, is that in many cases in which the Committee would be likely to take an interest, sufficient information regarding pending licence applications would either be of minimal prejudice to exporters' business or would already be in the public domain (as has often been the case with controversial applications in the past) that useful and non-prejudicial public report and debate would be possible. To take two recent examples, the bare bones (and more) of the applications to export Hawk aircraft to Indonesia and a military air traffic control system to Tanzania were in the public domain through extensive media coverage, before the decision to allow those licences had been taken. It is hard to imagine in such cases how a report, or debate on the floor of the House of Commons, could compromise commercial confidentiality.

PROCESSING DELAYS

162. The Government's response also expressed the belief—

... 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.[216]

Any delay longer than the ten working days proposed by the Committees would be the responsibility of Government, not of the Committees. The only reason why the Government seems to be arguing that the delay at 'Stage 2' might be longer than ten working days, is that if after ten working days the Committees produced a recommendation with which the Government disagreed, the Government would want the opportunity to explain its views again. Although we might value such dialogue, we also understand the Government's need to reach decisions quickly, which is why we would want to minimise any extra delay which the Committees' involvement might cause. If after ten days at Stage 2 the Committees recommend that an application be rejected, and the Government continued to believe at this point that the application should be accepted, and moreover that to delay granting the application would jeopardise the contract in question, then the Government should first grant the application, and only then explain to the Committee why it has done so despite the Committee's view.

RESOURCE IMPLICATIONS

163. The Government's response also claimed that—

... any form of prior scrutiny would risk undoing the progress that has been made in recent years to improve efficiency and would impede the further progress that the Government is determined to make.[217]

Any form of parliamentary scrutiny of Government—indeed any form of audit—is going to involve the commitment of resources by the Government. Such is the price of democracy. However, the Government's somewhat apocalyptic vision—the machinery of the ECO breaking down under the strain of dealing with our demands—needs to be put into perspective. The amount of extra work which the Government would need to take on to deal with the Committee's prior scrutiny function would be minimal compared to the amount of work carried out in answering Parliamentary questions, for example.

The Way Forward

164. The Foreign Secretary assured us that he did not—

... have a closed mind about [prior scrutiny] at all ... there are considerations which ... need to be taken into account very carefully by Members of Parliament about prior scrutiny because it is not a one way street. I think if there were prior scrutiny you could end up with a situation, as they have in Sweden ... where the parliamentarians who are involved in the prior scrutiny, as I understand it, have to take what amount to Trappist vows of silence and are not able to take part in any parliamentary debates which follow ... I am a Member of Parliament as well as a Member of the Government ... I do not happen to think that I should dispose of my responsibilities or my concern ... to ensure that Ministers are held properly to account ... I think we have to try and work through to get the best system that we can which leads to efficient, consistent decision making in Government and proper parliamentary scrutiny ... I think the system that we have established over the past five years in the United Kingdom is far and away the most transparent system in the whole of the European Union ... At the moment we are world leaders in terms of parliamentary scrutiny for export licences. That does not mean for a moment that we should not try to improve the system but it does help to put our system into perspective.[218]

We are pleased to note that we share the same goals as the Foreign Secretary.

165. The issue of prior scrutiny has received considerable attention during the progress of the Export Control Bill through Parliament. In a debate in the House of Lords on 7 February on the Committee Stage of the Bill,[219] Lord Campbell-Savours made a suggestion which has already been made to our predecessors by Saferworld: that many of the Government's worries about prior scrutiny—particularly about confidentiality—would be answered by setting up a statutory committee of parliamentarians along the lines of the Intelligence and Security Committee to scrutinise export licence applications. The Foreign Secretary told us on 21 March that he was—

... looking very carefully at the proposals which are being made by Lord Campbell-Savours in the House of Lords for a system which would have a Committee which is similar to the Intelligence and Security Committee in terms of its appointment and responsibility ...[220]

166. When Lord Campbell-Savours moved a modified amendment at Report Stage on 18 April,[221] the Minister responded—

I am afraid that I cannot agree to make the commitment to introducing the committee that acceptance of this amendment would entail ... the Government intend to continue their examination of his proposals and their consideration of how best to achieve greater accountability and transparency in the export licensing process.[222]

At third reading, on 20 May,[223] Lord Campbell-Savours again moved an amendment in similar terms. On this occasion, the Minister, again rejecting the proposal, responded—

... the Government will also continue to work with the Quadripartite Committee to see whether we can take additional steps to achieve greater accountability and transparency in the export licensing process through greater co-operation with the committee.[224]

167. The UK Working Group on Arms wrote to us in the following terms—

... Lord Campbell-Savours has proposed the Defence Export Scrutiny Committee (DESC), a new system of prior scrutiny of arms export licence applications which would be based on the workings of the Intelligence and Security Committee ...We are in favour of the most transparent system of prior scrutiny possible. The DESC proposal would not allow for the same level of scrutiny and transparency as contained in the [Quadripartite Committee] QSC's recommendations ... However, it would at least provide a first crucial step towards adequate prior parliamentary oversight [that] does address concerns that the Government have hitherto raised about prior scrutiny, notably the constitutional objections ... the DESC and QSC would have very distinctive roles ... The DESC role would be to advise the Government on specific licences in advance of export licensing decisions and raise any concerns before decisions are made ... The QSC would continue to have a full retrospective scrutiny function including assessing the UK Government Annual Reports on Strategic Exports, calling on respective Secretaries of State to give evidence in public and making recommendations for changes in policy and law, none of which would fall within the remit of the proposed DESC ... Were the DESC to replace the QSC, this would be a serious backward step in terms of transparency in the UK ... The DESC as proposed and the QSC would have distinct but complementary roles.[225]

168. We do not agree with the UK Working Group's analysis. It is our belief that the setting up of a statutory committee along the lines of Lord Campbell-Savours's proposals would almost inevitably lead to the withering away of the Quadripartite arrangements. The risk would be that parliamentary scrutiny of strategic exports would be likely to be reduced rather than enhanced. Moreover, we consider that to have one parliamentary committee carrying out prior scrutiny and another retrospective scrutiny would lead inescapably to serious duplication of effort and in the case of follow-on contracts and spare part contracts would be wholly unworkable.

169. We do not accept the arguments of principle raised by the Government against our predecessors' proposals for prior scrutiny. Nor do we find the legal arguments at all persuasive. Having set those aside, we consider that it is possible to devise a practicable system of such scrutiny by our four committees or some new select committee established for the purpose, within the constraints set out by the Government, and we are willing to negotiate such details.

170. As we noted earlier, the number of seriously controversial applications for licences is small. Our predecessors, also noting this, were of the view that the number deserving of prior parliamentary scrutiny in each year would be around a hundred.[226] We believe that number might well be reduced by mutual agreement between the Government and our Committees. We also accept that it would only be possible to test these practical constraints by attempting to operate a system. We would therefore be ready to negotiate a temporary and experimental pilot scheme with the Government.

171. On 6 February, Ann Clwyd MP and others tabled an early day motion in the following terms—

That this House believes that specified defence export licence applications should be subject to prior scrutiny by a committee comprising honourable Members of Parliament.[227]

It has been signed by 311 members of the House of Commons. There is very substantial support for the case for prior scrutiny. We recommend that the Government, in its response to this report, come forward with proposals for a system of prior parliamentary scrutiny of export licence applications by a select committee, or committees, of this House.

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203   Defence Committee, Eleventh Report, Foreign Affairs Committee, Seventh Report, International Development Committee, Seventh Report, Trade and Industry Committee, Eleventh Report, Session 1999-2000, Strategic Export Controls: Further Report and Prior Parliamentary Scrutiny, HC 467; Defence Committee, Third Report, Foreign Affairs Committee, Third Report, International Development Committee, Second Report, Trade and Industry Committee, Seventh Report, Session 2000-01, Strategic Export Controls Annual Report for 1999 and Parliamentary Prior Scrutiny, HC 212 Back

204   Cm 4872, December 2000; Cm 5141, July 2001 Back

205   Amnesty International, BASIC, Christian Aid, International Alert, Oxfam, Saferworld  Back

206   See Appendix 4, Ev 20 Back

207   Cm 5141, p 8 Back

208   HC 41 (1999-2000), para 85. Back

209   Cm 5141, p 8 Back

210   See eg S.O. No. 141(6)(A)(d) of the House of Commons Back

211   Cm 5141, p 9 Back

212   Cm 5141, p 9 Back

213   see paras 34ff Back

214   Cm 5141, p 9 Back

215   Cm 5141, p 8 Back

216   Cm 5141, p 9 Back

217   Cm 5141, p 10 Back

218   Q 62 Back

219   HL Deb. 7 February 2002, cc 861-867. Back

220   Q 62 Back

221   HL Deb., 18 April 2002, cc 1185 to 1197 Back

222   HL Deb., 18 April 2002, c 1191 Back

223   HL Deb., 20 May 2002, cc 519 to 563 Back

224   HL Deb., 20 may 2002, c 561 Back

225   Appendix 11, Ev 48 Back

226   Defence Committee, Third Report, Foreign Affairs Committee, Third Report, International Development Committee, Second Report, Trade and Industry Committee, Seventh Report, Session 2000-01, Strategic Export Controls Annual Report for 1999 and Parliamentary Prior Scrutiny, HC 212, para 55 Back

227   EDM 826 of Session 2001-02 Back

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Prepared 19 July 2002