Examination of Witnesses (Questions 40-50)
THURSDAY 3 APRIL 2003
MR MIKE
MCLAUGHLIN,
MR DAVID
HAYES, MR
TIM OTTER
AND MR
BRINLEY SALZMANN
40. Even worse than at the present? (Mr
Otter) Even worse than at present.
41. May I then raise with you the transitional
arrangements? I understand that you are rather concerned about
the transition period. Can you tell us why you regard the three-month
implementation period for controls on intangible items of technology
as inadequate? (Mr McLaughlin) It is in part linked
to my earlier answer about the effort we judge that companies
will need to put into two things in particular, a training regime
and an IT capability in whatever final form of technical detail
that manifest itself, and to get those in within three months.
I repeat that I think underpinning it is an issue of scale. For
a company of 50 people, it is going to be, one presumes, rather
more straightforward than for a company of 30,000 people, I think
you might admit, Mr Howarth. My own company has 16,000 desktops
and to have any hope of meeting the provisions of the documents
in a compliance sense, there will have to be at the very least—I
do not know quite how detailed and that is a separate debate—an
awareness and briefing programme for those 16,000 people with
desktops, any one of whom could make an intangible transfer. The
final point is that to do all that in three months I think is
asking rather a lot.
42. How long do you think it would take, realistically? (Mr
McLaughlin) On the intangibles specifically?
43. Yes? (Mr McLaughlin) I think
there ought to be some sort of gradual programme worked out, of
course in consultation with officials, spanning perhaps a year.
44. A company the size of Rolls Royce with 16,000
desktops is a very large company but a small company could perhaps
cope with a small supplier with, say, 50 employees? (Mr
McLaughlin) I do not think I am suggesting that. There are
representatives here of SMEs, which clearly I am not. Of course,
the resource of the larger companies is counter-balanced by the
lack of resource in the SMEs, so I think the problem is the same
irrespective of the size. Scale will make a difference to some
things.
45. Just so that we understand exactly what
is at stake here, can you give us some idea of the practical training
issues that could not be done in three months but you reckon could
be done in 12 months? Is it scale with 16,000 desktops and however
many thousand people or is it procedure? (Mr McLaughlin)
In an organisation it is setting up your training programme, getting
people to the right place at the right time. You have to have
the trainers fully understanding the rules. The theme running
through the discussion this morning has been: we collectively
judge there is a lack of clarity in some of the detail in the
consultation document. Until the trainers have that sort of clarity,
you clearly cannot communicate the information to 16,000 desktop
users. Just to pull out of the sky a comparator, Rolls Royce North
America, where we operate of course under the US export control
regime, ITAR regulations primarily, twice a year hires a local
cinema in Indianapolis, to give one example, where we have a few
thousand people. We bus everybody down there for a day's training
on export control. I do not judge we will get to that in terms
of scale of effort here in the UK, but it will begin to approach
it.
46. Have you made a strong protest to officials
about this and have you had any feedback? We gathered earlier
that perhaps there has not been a lot of feedback so far. (Mr
McLaughlin) I am not sure we have made a strong protest, either
individually or more generally as part of UK Plc. The Government
makes the rules; we try and comply with them. What I am here to
try to do is to help the understanding of some of the difficulties
of compliance in the way this consultation document is currently
drafted and highlight in some cases also the cost of that compliance.
The competitive dimension to it is self-evident to everyone.
Mr O'Neill
47. Is not the truth that you do not want these
changes and you are exaggerating at every turn the administrative
difficulties. You keep going on about 16,000 computers. For God's
sake, the whole point of computers is their ability to communicate
quickly. One would have thought that these desktops would have
been receiving instruments for a lot of the communications that
you would have to do. Now, with respect, Mr McLaughlin, you are
exaggerating at every turn and you are creating problems where
they do not necessarily exist. You choose selectively to ignore
the opportunities that the technology you keep going on about
can afford in terms of communicating quickly with all your workforce. (Mr
McLaughlin) I think I have been pretty clear, Mr O'Neill.
Mr O'Neill: You have been consistently clear.
Chairman
48. Let us hear what the reply is. (Mr
McLaughlin) I do not believe I am exaggerating. I have tried
to explain that I believe the question of scale and just how difficult
it will be to comply, if it is at the lower end of that or whether
it is at the higher end, will be largely determined by compliance
regime that you find is expected by officials.
Mr O'Neill
49. The truth is that you do not even accept
the point that at most there would be a 10% increase in licence
applications. You have never agreed on that. Would you accept
it? (Mr McLaughlin) I think I would disagree with that.
I was about to say, no, I do not think I would, but I do not know
where the number came from.
50. If there are several thousand applications
for licences every year at the present moment, and the officials
suggest that there will be a maximum of 150 of one kind and 250
of another kind in addition to what we already have, but if we
were to take the number of applications as being 4,000 and the
maximum number of increase as being 400, then a 10% increase is
what we are talking about and I am saying that is a very conservative
figure. Taking a low figure of the present number of applications
and the highest possible one that the Civil Service thinks is
going to be the increase, then you get to a figure of perhaps
10%. You keep going on about the difficulties of communicating
and, by your own admission, you say that you have got excellent
means of communicating with 16,000 desktops to start with. (Mr
Hayes) The issue in relation to intangible transfer for most
of industry is probably not one of licensing because I think it
is fair to say that for most of the defence industry a lot of
our intangible transfers of technology will take place under open
licences. The issue is primarily one of the knowledge of the people
who are making the exports because the choke point solution has
been removed. The export is not routed through an expert resource
any more and, if it were, on intangible transfers you would take
away the very means of rapid communication to which you refer,
Mr O'Neill. The bigger issue is one of record keeping, particularly
when you are talking about shared data environments, in which
each entry by the party into a shared data environment may be
regarded as an export and, if it is, then you are certainly talking
in the tens of millions per annum in relation to some companies.
Chairman: Thank you. We have taken the main
points that you have made this morning, which we have heard very
clearly from you. We are very grateful for the written evidence
you have supplied and for you taking the time to come to see us
this morning. Thank you very much indeed.
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