The
JEWEL and Gershon reviews
70. The JEWEL project (Joined-up and more Efficient
Working in Export Licensing), a review of ways to improve co-operation
between the various government departments involved in the licensing
process, was completed in 2003. We welcomed the results of the
project in our last Report.[87]
Changes to be introduced as the result of the review included:
- establishment of improvements
in the decision making process to speed up decisions on less complex
cases (Smart Front End);
- common staff induction and
training programmes, development of a joint mission statement;
new performance targets;
- measures to improve the relationships with exporters,
for example production of a DVD/CD Rom on export control, and
changes to the website; and
- new IT developments.[88]
The positive impact of the review has been borne
out by the comments noted previously in this Report about the
improved performance of the licensing operation.[89]
71. We were therefore concerned to hear that the
ECO will be dramatically affected by the efficiency savings in
the civil service announced by the Chancellor of the Exchequer
in the 2004 budget. The Organisation had on average 166 staff
during 2003-04; this will fall to 136 by 31 March 2005 and 109
by 31 March 2006. Staff reductions have been made in all areas
except the compliance team, ie: export control policy (which includes
UK legislation and input into EU and international export control
regimes, bilateral relations, Parliamentary work), export licensing
units, IT and data support and the continuous improvements projects
team.
72. NGOs and industry were united in their opposition
to the proposals. The UK Working Group on Arms stated:
That such a large cut in staff at the ECO will
inevitably lead to less scrutiny of export licences as well as
less transparency and urges the Government to reverse this decision.
[90]
EGAD also expressed its concern:
We would not want to see any retrograde steps
taken as a result of Treasury-inspired arbitrary cuts in personnel
and resources allocated to export control. As we have said in
our submission, at this time when there is increased recognition
of the importance of export controls, if the staff really are
surplus to requirements for the licence processing then surely
they can be reallocated to what we call missionary-type work,
going out there trying to be more proactive, trying to identify
companies who currently are operating outside of the system, either
deliberately or inadvertently. [91]
73. The Foreign Secretary assured us that "the
Trade and Industry Secretary, Patricia Hewitt, and I understand
our statutory parliamentary responsibilities about ensuring that
this system works efficiently and we are determined to ensure
that that happens."[92]
74. We were told by the Secretary of State for Trade
and Industry that levels of service would be maintained. She noted
that performance figures for 2004—after the first cuts had
been made—showed an improvement in SIEL application processing
times. She linked the cuts already made to the JEWEL review and
further changes in processes, for example, streamlining processes,
increasing exporter awareness to improve the quality of applications
and improving the competences of staff. She told us that "measures
are in place to help maintain the levels of service to exporters."[93]
The Secretary of State also commented that ECO staff were now
"encouraging exporters to use open licences whenever these
are available",[94]
something about which we expressed our concerns earlier in this
Report.[95]
75. She admitted to us that the "reduction in
staff is however a steep one, over a relatively short period of
time " and added:
I am therefore considering whether there may
be further steps we can take. I want to consider the scope for
involving private sector partners, for example in processing licence
applications, in delivering the IT investment which the Jewel
project identified as important to future delivery, and in carrying
out awareness and compliance activities. I am not in a position
at this stage to reach conclusions about future options but will
keep you closely informed.[96]
76. This statement causes us considerable concern.
The UK Working Group on Arms had commented that:
Under no circumstances should the Government
consider privatising any part of the export licensing process.
Any such moves would have huge implications for the accountability
of the system, would be highly likely to give rise to conflicts
of interest, and would send exactly the wrong signal to other
states in the process of improving their own export control regimes,
especially in Europe, where the UK is regarded as playing a leading
role on this issue.
We share these worries. We were also surprised to
hear about this step relatively late in the day, and are disappointed
that the Foreign Secretary did not alert us on 12 January to the
fact that these options were being considered.
77. It is unfortunate that the export control
system, which has only just been subject to a major efficiency
exercise, and has important additional responsibilities arising
from the Export Control Act 2002, is suffering cutbacks. We are
concerned that ECO work that is seen as more peripheral, such
as seminars for industry, outreach to other countries to improve
their export control systems and, dare we say it, provision of
information to us, may suffer. This would be very short-sighted.
It seems to us that there is also a possibility that the current
encouragement for open licensing is resource-driven. There is
a very fine line between optimal efficiency and needless risk
and the Government must not cross it.
78. We welcome the Secretary of State's undertaking
to keep us closely informed about plans to involve the private
sector in parts of the Export Control Organisation's work. We
trust that no changes will occur until our successor Committees
in the next Parliament have had an opportunity to take evidence
on the proposals.
Charging for licences: an alternative
to job cuts?
79. One alternative to job cuts would be the introduction
of charges for licences. The UK Working Group on Arms stated in
a memorandum to us that "if financial savings have to be
made a far better approach would be to charge for the licensing
services provided by the ECO." [97]
Brinley Salzmann of EGAD commented:
We do have naturally, as you would expect, some
concerns about that but we do also recognise that there is charging,
for instance […] the United States and I believe Germany.[98]
His colleague Michael Bell expressed particular concerns
about the possible impact on compliance.[99]
80. The Foreign Secretary had an open mind on the
issue:
You could argue that there are charges for licences
in many other areas, for example, there are charges which are
imposed, and quite substantial charges these days, in respect
of planning applications, so I am not saying that it is a black-and-white
issue, but we have to think it through very carefully[100].
However, he confirmed that there were "no present
plans" to introduce charges.[101]
81. The FCO confirmed in a supplementary memorandum
to us that France and the Netherlands do not charge for licences,
that Germany charges for ancillary services (which provide guidance
and assistance) and Italy charges 11 euros per application, plus
an annual registration fee of 258 euros. It added that "Following
this initial survey, we will now be conducting a wider study within
the EU. We will provide the Committee with a copy of our findings."[102]
We welcome this initiative.
82. Charging is a complex matter, and would have
a dramatic impact on the licensing system. The structure of charges
would have to be carefully thought through so that it did not
have an unintended impact on demands for particular licences,
and did not adversely affect the competitiveness of British companies.
But if the pressure of cost-savings at the ECO becomes too great,
it could represent the lesser of two evils.
87 Committees' 2004 Report, paras 204-209 Back
88
Committees' 2004 Report, Ev 50 Back
89
See para 47. Back
90
Ev 80 Back
91
Q 37 (Mr Salzmann) Back
92
Q 87 Back
93
Ev 84 Back
94
Ev 84 Back
95
See para 62. Back
96
Ev 84 Back
97
Ev 80. See also Saferworld Report pages 8 and 18-19. Back
98
Q 38 Back
99
Q 38 Back
100
Q 92 Back
101
Q 91 Back
102
Ev 87 Back
