Quadripartite Select Committee Minutes of Evidence

Examination of Witnesses (Questions 120-139)


13 MARCH 2006

  Q120  Chairman: So they are aware of this, are they? Revenue and Customs were advised that this took place and that officials told these guys to stop so we can ask Revenue and Customs what action was taken subsequently.

  Mr Williams: Yes. They had two officers at the fair.

  Malcolm Wicks: They were issued with warning letters by HMRC but you would have to pursue with HMRC as to exactly their activities.

  Q121  Judy Mallaber: You said that when you saw this evidence that we have had it caused you concern. You are not saying that that was the first you knew about it; you are just confirming that you did have officials at the fair that did pick up the problem?

  Malcolm Wicks: Soon after I became Minister I was told about this and it distresses me that that is happening. We have all been at big conferences and exhibitions, sometimes speaking at them or whatever. Sometimes there will be things exhibited that should not be and the important thing to do is to find out, act on leads and take action. Action was taken.

  Q122  Chairman: I accept that action was taken and that is commendable but, if it had not been for an investigative journalist who had a pass to visit the arms fair and if he had not observed this, would we know about it now?

  Malcolm Wicks: I alluded to that earlier. You could well say why did it take an investigative journalist.

  Q123  Chairman: So that the record is clear, what is the answer to that question?

  Malcolm Wicks: It is regrettable. I do not have the materials in front of me but I think some of them were not prominent. There was not a great display. Some of them were somewhat buried. I am told that was the case and it is just a question of what is reasonable. We have laws on this in this land and they should be obeyed and enforced but sometimes they are broken. Where they are broken, the authorities have to take action. This is an instance.

  Q124  Chairman: We are all required to have TV licences but we do not just leave it at that. We have these vehicles chasing us up and down streets checking that we have TV licences. In this case, if serendipity had not spotted this presumably we would not know about it and that raises an obvious question about the enforcement of our legislation which is why we are probing these questions.

  Malcolm Wicks: It also raises the point that we are still talking about relatively new laws and new policies. They should not be forgiven but some foreign companies may not have been as fully aware as they should have been, despite what we said to the exhibition organisers.

  Chairman: To the government's credit, the statement on torture equipment goes back to 1997.

  Q125  Robert Key: Minister, in your desperate attempt to cut the number of jobs attributable to the Civil Service and the DTI, you were forced to see if you could outsource the ECO. Were you very disappointed that you had to withdraw from that exercise?

  Malcolm Wicks: No.

  Q126  Robert Key: How finely balanced a decision was it?

  Malcolm Wicks: In terms of administration there were pros and cons. Those who argue for outsourcing I always feel to some extent are arguing for an unknown quantity. I do not take the view that the grass is always greener somewhere else. In the end a judgment was made, which ministers endorsed enthusiastically, that we could manage the thing ourselves, albeit with smaller staff numbers but cost effectively and efficiently.

  Q127  Robert Key: Seriously, it was suggested that you had downward pressure on numbers, that the Foreign Office wanted you to get much more friendly with certain states who you were not allowed to export the military goods to, that the Ministry of Defence were dead against it and it was a very finely balanced argument ranging across a number of government departments. Is that a fair representation?

  Malcolm Wicks: It is not the representation I have seen or heard. Things pull in different directions. Genuinely, what you said about the Foreign Office wanting to get friendly I have not heard at all. This is the first time I have heard that.

  Q128  Robert Key: We are always pleased to help.

  Malcolm Wicks: It is always a pleasure to come to select committees and learn of new hypotheses.

  Q129  Robert Key: The export industry was quite strongly opposed to this, as were the NGOs. Did they make strong representations?

  Malcolm Wicks: I heard different voices, yes.

  Q130  Robert Key: Do you agree that there is a period of stability now for the ECO? There will not be any attempt now to downsize them?

  Malcolm Wicks: I think there is a period of stability. We have made the decision. We are not about to revisit it. Whether colleagues in the distant future revisit it is a matter for them. As the Minister responsible for this immediately, I personally feel more comfortable about it being within the public service.

  Q131  Malcolm Bruce: What you have said is reassuring. As you will recall, this started in the previous Parliament and I think I asked Patricia Hewitt about it in oral questions. Her reply was that she had no plans to privatise the export credit guarantee department, for which I think there is some merit, when she knew perfectly well that we were asking about this organisation, which you then answered after the election as not being the case. It was interesting to us that the industry itself sees no case for a private Export Control Organisation. Can I press you as a matter of government policy? Is the Export Control Organisation simply an instrument of policy that should be within government and the privatisation or outsourcing of it is really not compatible with the role that we are trying to secure, namely the prevention of arms getting into the wrong hands? There is a conflict of interest involving a private agency.

  Malcolm Wicks: One dimension is that this needs to be run efficiently and, given our objectives, cost effectively. That is one dimension to the argument. If one day in the distant future someone revisits this, that will be up to that government, but I said earlier to Mr Key that as the Minister responsible I feel more comfortable about this being within the domains of the public service. There are certain issues for government which are so sensitive—and this is certainly one of them—where that would be my desired outcome.

  Malcolm Bruce: I am glad to hear it.

  Q132  Mr Borrow: The department sought advice from ASE Consulting and ASE Consulting gave us the view that it should not be outsourced but amongst the findings of ASE Consulting was that unless the department continued to invest in this area there was a danger that the functions would not be met. Obviously, you mentioned that this was a new area of work and there are signs that in certain areas perhaps controls are not being implemented as tightly as many people would wish. Do you accept that there is a resource side, not simply a stacking side? In a general sense, there is a duty on the department to ensure that there are sufficient resources devoted to this area to make sure that the functions as laid down by Parliament are carried out efficiently and effectively?

  Malcolm Wicks: I am satisfied that there is adequate resource. We face this in other parts of government but I do not think that head count is always entirely correlated with effectiveness. The head count is going down. I am satisfied that we are running the operation effectively. Obviously, there are always judgments to be made about where we use resources. Should we have two or three people on these websites, for example, or not? Of course there are judgments to be made but they are judgments you would have to make if you had double the resources. There are always those judgments to make in any organisation.

  Q133  Mr Borrow: Would you agree with me that it is reasonable in the early days of the implementation of this policy to keep the resource aspect under constant review and be prepared to listen to those organisations with a direct interest in the effectiveness of these controls when concerns are expressed that perhaps they are not being implemented as effectively as Parliament would have intended? I recognise it is early days but there are at least concerns amongst many people that, after a couple of years, things should be a bit tighter than they are at the moment.

  Malcolm Wicks: Of course I agree we have to listen. As the Minister responsible I need to make sure that I am getting enough resource for the ECO as I think and am advised is appropriate. At the moment, with strong management, greater use of IT and so on, we are doing the job well.

  Q134  Mike Gapes: Can I pursue this ASE review? It was concluded in December 2004 but not published until after the election in June 2005. It contains rather strong criticisms of the IT systems in operation, including, it says, "Specifically, the Department needs to invest now"—we are talking about the Department of Trade and Industry—"in additional resources and deployment of pan-government IT/IS systems if they wish [the Export Control and Non Proliferation Directorate] to make a step change in its operation." I understand that £157,000 was invested, according to a letter we received in December, on small scale IT systems but clearly you need to do a lot more than that if you are going to get a pan-government integrated system that works efficiently, rather than what is described as a wide range of disjointed IT systems. Can you tell us what progress has been made so far in solving that problem?

  Malcolm Wicks: The ECO at the moment is currently reviewing proposals to replace its main licensing database with new IT systems. The issue of pan-government is something we touched on earlier. We would need to evaluate that carefully, even if we had the resource because obviously there are issues about confidentiality of data of HMRC et cetera.

  Mr Williams: It is accepted that the IT we have could be improved. Management consultants always say that but in this case it is largely true. We are looking to improve the way exporters first apply to us to make that more of an electronic process. We are looking to improve the work flow systems within the ECO and to join up electronically with the FCO, the MoD and DFID so that we can send them licence applications electronically and get them back electronically and be able to extract more management information and data from the systems.

  Q135  Mike Gapes: Where are we with this review? What you have just said is hardly the significant investment in IT that was called for. Is the review at a point where we could say that there is agreement to go forward or nearly go forward on a business integration of the type that was called for, or are we just doing a kind of sticky paper and Sellotape exercise to try to get over the cracks and pull the thing together in an ad hoc way? Is this going to be a systematic improvement so that the systems are integrated and work efficiently and we do not have the problems of the ECO depending upon different computer systems and different departments which do not talk to each other?

  Mr Williams: We would like to make it as systematic an IT system as possible. It is not easy, as I have discovered over the last three years since I have been director—and this has been talked about during that period in varying forms—to link up IT systems across different government departments that have their own security protocols, for example—that is a big issue—and their own IT systems and so on. This is a serious proposition. We have been drawing up detailed user requirements. It is an investment of the order of two, three to four million. We have to make sure the business case is right because the running costs of the ECO are four to five million a year. As soon as you start talking about an investment more than your running costs, that raises questions. The systems we have at the moment have been described as disjointed by ASE, which is true. The performance levels within the ECO, which are a great credit to the staff, despite the head count reductions, have been excellent since 2003. One has to see all this in perspective. We are not in a disastrous situation where we need to invest endlessly in IT to rectify it. We have a sound base to build on.

  Q136  Mike Gapes: When are we going to get the decision?

  Mr Williams: I hope that we will move into the procurement phase of the IT project in the next two to three months.

  Malcolm Wicks: I have been in one or two areas of government where the grand computer solution has not always worked entirely efficiently and on time.

  Chairman: We were not going to remind you of that.

  Q137  Mike Gapes: Can I refer to the Foreign Office Prism system which you will see if you read the annual report of the Foreign Affairs Select Committee which was published last week. We also have some problems in departments other than those which you worked in.

  Malcolm Wicks: That is my Easter reading.

  Q138  Linda Gilroy: Various references have been made to head count loss. Between 2003 and April 2006 there will have been a staff cut of a quarter down from 146 to 117. How has this affected activities? What activities have been cut and how has it particularly affected the availability of ECO staff for UK and international outreach?

  Malcolm Wicks: I am sorry; again I have to defer to my colleagues who are at the operational end of this. As you know, we are not alone in government in terms of facing head count reductions. A judgment has been made, I think appropriately, that we need to reduce the size of the Civil Service and it is not surprising therefore that we are having to make our own contributions to that.

  Q139  Linda Gilroy: A head count loss of a quarter when it is a very new organisation merits some explanation, especially when sometimes that follows IT being put in which increases productivity, but we have just heard that these head count losses are not following in advance of IT being procured.

  Mr Williams: We are not a new organisation. The new controls have been in place since 2004 but they are obviously building on the existing controls. I have not cut any single function that we do in the ECO because we do not have any optional extras. We have achieved a reduction by a combination of measures such as restructuring. Not all the units were arranged very logically and they have been better integrated. We streamlined business processes. I think the Committee has already had evidence in the past about innovations like the so-called smart front end filter mechanism at the front end of the process. We are giving staff better training in export control so that they are more flexible and deployable. The joined up working—this is a cliche« but it is true in this case—of the government departments has become much better. The ECO is only one cog in the export licensing wheel. The support we get from the FCO, the MoD and DFID is crucial. The system as a whole is only as strong as its weakest link so it is not just a question of getting the ECO up to strength; it is a question of keeping everything together in tandem. I think we have become much better at that and we have put a lot of effort into outreach to exporters to improve the quality of the applications they put in to us in the first place, which helps.

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