Examination of Witnesses (Questions 82
- 99)
WEDNESDAY 12 JANUARY 2005
RT HON
JACK STRAW
MP, MR EDWARD
OAKDEN CMG AND
DR DAVID
LANDSMAN
Q82 Chairman: Foreign Secretary,
welcome. Perhaps for the record and for the benefit of the public,
you could introduce your two colleagues.
Mr Straw: Edward Oakden, though
I am not sure of the title now.
Mr Oakden: Now Director for Defence
and Strategic Threats, which means counter-terrorism, counter-proliferation
and organised crime.
Mr Straw: We have had a reorganisation
where the jobs are the same and the titles have changed, so he
is Director for Counter-Terrorism and Strategic Threats.
Dr Landsman: Head of Counter-Proliferation
Department.
Mr Straw: His title has not changed.
I am the Foreign Secretary!
Q83 Chairman: You are very welcome.
Thank you to yourself and your colleagues for the replies you
have provided to again a substantial list of questions which we
submitted and you kindly responded to. Could I perhaps just say
that there have been a number of issues in the media recently
in relation to arms exports, some of which we are not going to
cover this morning. For example, the Export Credits Guarantee
Department and allegations of transparency or the lack thereof
is an issue which I know the Trade and Industry Committee is going
to be pursuing. I mention that primarily for the benefit of the
public. There are some issues which you might think we would question
the Foreign Secretary on, but in fact other committees are pursuing
them with appropriate Ministers, so I thought I should mention
that. Foreign Secretary, could I just start by asking you about
the Export Control Organisation in relation to the job cuts following
the Budget Statement this year. How will that affect the number
of people employed in this activity?
Mr Straw: It will not have an
effect on the Foreign Office where we are making efficiency savings,
but this is an important aspect of the Foreign Office's work.
It is a matter of public knowledge that the savings required of
the Department of Trade and Industry are greater and this is more
of a problem for them. It is the determination of Patricia Hewitt,
the Trade and Industry Secretary, and myself to ensure that the
current standard of service continues at its present level and
improves and we work around it.
Q84 Chairman: As we understand it,
the Export Control Organisation faces cuts of 25% this year and
then further cuts a year later. Both the NGOs and the defence
manufacturers have expressed concern about this and, at face value,
it does seem an alarming thing to do if we want to be very effective
in terms of dealing with arms export licence applications.
Mr Straw: I will ask Edward or
David to comment in more detail, but can I say that I have had
a lot of experience in efficiency exercises over the years and
I think there are colleagues here in different guises who have
done so serving on their local authorities or as Ministers. My
experience of that is that they are worthwhile exercises. Often
if you do drill down into an organisation, you end up with a more
efficient organisation, employing fewer staff. Both Patricia Hewitt
and I accept that there are plain limits and the key here is that
we deliver an appropriate level of service, but my own view is
that we will be able to achieve that and there are plenty of organisations
you can point to where at the same time as staff numbers have
been reduced, you end up actually with a more efficient service.
I cannot guarantee that that is going to happen here, but I can
tell you that, as I say, we are determined that the current level
of service should continue. Edward, is there anything you wish
to add?
Mr Oakden: I think what is absolutely
clear is that between the different departments there is a shared
commitment to retain the coherence of the present system, the
integrity of the regime and the integrity of the controls. We
have seen over the years a number of incremental improvements
and the introduction of the Smart Front End over the last year
or so has been a real success and we have seen that in the performance
figures. There is almost always with an organisation of this size
a better way of doing things in some particular aspects.
Q85 Chairman: Sorry to interrupt,
but we have only just had the JEWEL exercise, which stands for
"joined-up and more efficient ways of export licensing".
Your latest report says that you have reviewed these processes
via the JEWEL exercise and you then go on to say that the JEWEL
review has confirmed that, "whilst performance has been improving,
we can do more to make it better", and then within a few
days of that being published, effectively there is the announcement
that the Export Control Organisation is going to face 25% job
cuts in the near future. You will understand, Foreign Secretary,
why I ask the question.
Mr Straw: Of course, absolutely.
Q86 Chairman: In these circumstances,
is there not some risk that the export control regime will not
function as you wish?
Mr Straw: I understand the question.
All I am saying and Mr Oakden is saying is that it does not follow
that because you are securing efficiencies, the result of that
is going to be a lower level of service. You are right to point
to the sequence, but I also just say this: that whilst comparisons
between government, central or local, and business should not
be taken too far because they are performing different functions,
the Government has to be much more accountable than business.
In business operations, businesses, if they are going to stay
alive, have constantly to seek better and more efficient ways
of performing.
Q87 Chairman: Foreign Secretary,
we all understand the reason for making efficiency savings, but
we have had the JEWEL review, the process has just been undertaken,
and now we are told that there will be 25% job cuts.
Mr Straw: Mr Chairman, you are
right to point that out and we are both acting as soothsayers
about the future, but my response to that, just to repeat, is
to say 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. Let us see, but I take on board obviously
the concern that you have expressed, which I dare say is shared
around the table, that of the NGOs and that particularly of the
industry.
Q88 Chairman: I was going to ask
if at this stage you know where the cuts are going to take place,
which particular activities?
Mr Straw: We do not know. The
purpose of them is that this is an administrative operation and
it is quite a complicated one. It aims to be very efficient and
it aims to deal with the scores and scores of very, very detailed
questions which we have received from your Committee as efficiently
and as effectively as possible which, I have to say, does add
to the burden, but it is maybe a necessary part of all this. Anyway
all I can say is that having witnessed all sorts of administrative
systems which have both reduced their numbers and improved their
efficiency, I do not believe that there is a level of staffing
which has to be fixed and what we are also trying to do all the
time is to improve the use of information technology in this area.
Q89 Donald Anderson: You will understand
the suspicion, Foreign Secretary, that, having survived an efficiency
operation, the cuts are simply a mechanical cut across the board.
Mr Straw: Of course I understand
that. You may want to get more detailed evidence from Patricia
Hewitt because the responsibility for this is split principally
between the DTI and ourselves, but obviously MoD and DFID have
an involvement as well, but what I have said is what I have said
and, as I say, I am well aware of our responsibility.
Dr Landsman: As far as the Foreign
Office is concerned, the Foreign Secretary mentioned some changes
of name and some organisation changes which we have been making,
what we call the Organisation Project, reallocating resources.
May I suggest that we are operating within the JEWEL framework
of the Export Control Organisation, but we, as part of our efficiency
changes and reorganisation, have made some changes very recently
in the way that export controls are handled in the Foreign Office
side. That, we believe, will save us some resources by, in this
case, concentrating the processing work and the bureaucratic work
within my department rather than scattering it around the whole
of the FCO and the geographical departments. That will save us
some resources and we believe it will actually make us more efficient
and effective.
Q90 Chairman: I understand that and
my question really about the Export Control Organisation was to
do with joined-up government and all of that, but let me just
ask you two very quick questions. Do you believe reduced staffing
will result in the greater use of open licences?
Mr Straw: I see no evidence to
that effect. We have to make judgments about open licensing on
the basis of the merits of the case.
Q91 Chairman: Fine, that is what
I was hoping you would say, Foreign Secretary, thank you. Have
you considered charging for the Export Control Organisation's
services?
Mr Straw: Some other countries
do charge and that includes the United States, Australia, I think
France, and Germany charges as well. It is possible. We have not
done so. I would need a lot of persuading, and I think so would
the Trade and Industry Secretary, about the case for charging.
Obviously we need to take the industry with us and the industry,
as you are aware, have got complaints about the way the process
operates and we are constantly in contact with them to try and
alleviate those concerns. We do not happen to believe that the
system is more onerous than those of other countries, though we
are always willing to look at where they think it is, but there
are no present plans to bring in charging.
Q92 Mr O'Neill: On the question of
charging, it is the case that your embassies do charge companies
for trade information when they want to get involved in non-defence
activities, so it is not a matter of principle, it is just a matter
of pragmatic judgment, I take it.
Mr Straw: The charging for trade
information is a way in which UK trade and industry can recoup
its costs, but also it is about ensuring a level playing field
between those companies which seek to use or choose to use the
British Government's trade and investment services and those which
may go to private consultants. This is actually different. This
is a control established not for the convenience of the industry,
but for public purposes. 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 and, as I say, be aware of the potential consequences
for the industry if we are to go down that route.
Q93 Donald Anderson: Foreign Secretary,
are there any suggestions within the European Union to harmonise
the position in respect of charges, otherwise there might be unfair
advantages to some countries?
Mr Straw: No, I have not seen
anything about that. We may come on to deal with the issue of
the EU arms control system for China, but one country in the EU
at least which is quite a substantial arms exporter, Germany,
does charge. I am not aware of the level of charges and I do not
know whether either of the officials here are, but we could get
you information about that.[1]
I doubt there would ever be an argument in favour of the harmonisation
of charges in any event because the level of the charge relative
to the total value of any arms sale would have to be fairly low
and you could not get, as it were, forum-shopping by arms exporters;
arms exporters have to apply for a licence in the country of origin.
Q94 Mr O'Neill: If we could go on
to the transparency of government reporting, Foreign Secretary,
and I do not want to appear churlish because I think most of us
would agree that the Government has broken new ground in being
open—
Mr Straw: Good.
Q95 Mr O'Neill:— although I
think some of us are a wee bit concerned because the detail which
is offered is tantalisingly inadequate in a number of areas. For
example, parts and components of electronic and communications
equipment, there is not much information about that. There is
information about brokering, about the source, but not the recipient,
and there is little information about end use. As I say, some
of this information could be in greater detail and at the moment
we are seeing the tip of the iceberg and I think we would, therefore,
be asking if you could provide us with more information because
there is a feeling that perhaps having been asked to provide more
information, what you have done is provide a little information
about a lot more things, but not really very much about what they
want to do with it.
Mr Straw: Well, you said you did
not want to be churlish, Mr O'Neill, but I think you are being
a tiny bit churlish.
Q96 Mr O'Neill: You know the spirit
in which it is intended.
Mr Straw: Sure. I have always
sought to be very open and properly so in my dealings with Parliament
and the public. We now have, my guess is, the most transparent
system of arms control in the world. There is a limit to the amount
of information that can be put on the public record because you
have to take account of the concerns of the industry and legitimate
end users, but if there are proposals from the Committee for an
increase in information, I will look at them, but I also say that
there has to be, since you are concerned about the efficient operation
of this system and, with different hats on, everybody around this
table, regardless of Party, has a responsibility to ensure that
there is, a limit to the amount put on the public purse. The necessary
duties of this Committee do themselves add significantly to the
overall cost of running the operation. In those countries where
they do not have parliamentary scrutiny, the system is very much
more straightforward. It is self-evident that there would be much
less systematic record-keeping, much less concern about consistency
and so on. I happen to believe in this system, but there has to
be a limit and there is a balance to be struck.
Q97 Mr O'Neill: Given that we can
agree between us as to the quality of the substance of the information
you are providing and against the backdrop of job cuts, can you
give an assurance to the Committee that the standards that you
have already reached, not the ones we would like you to aspire
to, will be sustained and defended through the changes?
Mr Straw: Yes, I can. Can I just
say that we have altered the reports in two respects. One is that
we now provide quarterly reports and I think we are the only country
to do so. I may say, just adverting to the issue of EU arms control,
when I took to the Foreign Ministers' meeting the annual report
which is two or three centimetres thick and showed it to colleague
Foreign Ministers and took them through the detail, they were
astonished about the amount of detail that we are providing. I
think we may get to a position where they are also under an obligation
to provide similar detail which would be a very good thing, so
we have done that. We now make quarterly reports on the website
which, as I say, is a major improvement and instead of simply
listing the aggregated goods items licensed by country SIEL, the
quarterly reports show the number of SIELs issued for each specific
goods summary. If we take both the quarterly reports and this
change, this adds significantly to the transparency of the reports.
Q98 Mr O'Neill: I think we would
accept this and we would hope that you might encourage EU colleagues
to publish reports on a quarterly basis.
Mr Straw: I am because with, as
it were, competitive advantage, that transparency across Europe
is absolutely essential if there is to be a consistent standard
in the application of the EU Common Criteria.
Q99 Mr O'Neill: One of the undertakings
that was given to the Committee was that information on new types
of licences created under the Export Control Act would be more
comprehensive and that they would be not dissimilar to those available
for OIELs, but it does not include any information on the type
of equipment or technology being licensed. Do you think that there
could be scope for greater information there? Well, maybe you
could come back to us on that point because undertakings were
given that there would be more information.
Mr Straw: We always stick to our
undertakings, Mr O'Neill.
Mr O'Neill: Eventually!
Chairman: And we always chase them!
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