Quadripartite Select Committee Minutes of Evidence

Examination of Witnesses (Questions 140-159)


13 MARCH 2006

  Q140  Linda Gilroy: When we had evidence on 31 January from representatives of the industry, they told us that because of staff cutbacks there were no longer any in-house capabilities to provide expert guidance on encryption matters. Is that right? Why did you make that particular cut and are there other areas of technical expertise that are no longer available?

  Mr Williams: We have expertise at our disposal. It does not need to be always within the ECO. For encryption we can go out to GCHQ and the MoD, for example, and solicit advice from them. I have no worries about our ability to tap into expert advice that we may need.

  Q141  Linda Gilroy: You can get that and commission it from other departments. What is SPIRE?

  Mr Williams: That is the IT programme.

  Q142  Linda Gilroy: That is an acronym of the IT?

  Mr Williams: Yes.

  Q143  Linda Gilroy: The ECO currently has plans to reduce the head count by a further 10 posts as the information technology changes are fully implemented?

  Mr Williams: Yes. If I can bring the Committee up to date, the current head count is 110. Substantively, that is 115 because we have five IT experts who are effectively working for us, who have been transferred to the centre at the DTI. We expected that further IT investment might allow us to reduce the head count by, say, another 10 but I cannot guarantee that because that depends on exactly what form of IT investment we decide we can afford and implement.

  Q144  Peter Luff: Can I ask two questions of the director and the Minister? Can I ask the director, first of all, how much enthusiasm is there for work in your organisation? When I was a specialist adviser at the DTI, it was regarded as something of a pariah status for the rest of the department because it did not do policy; it just administered which was a very dreary task for civil servants. That was a problem then but now there has been cut upon cut upon cut. You must be a very demoralised bunch of people.

  Mr Williams: Not at all. I have a tremendous staff and I am very proud of the achievements that they have made over the last three years. It is not true that we do not do policy. Much of the discussion within your Committee is about policy. We are responsible for the legislation. It is true the FCO and the MoD obviously in many ways lead on policy but the DTI is responsible for legislation, the Export Control Act and all the regulations made under it, all the EU stuff, all the sanctions legislation, and there are some important issues.

  Q145  Peter Luff: You are satisfied with the morale of your staff in these rather difficult circumstances?

  Mr Williams: The whole of the DTI has faced cutbacks and we are not immune from that. We are not a special case in any respect.

  Malcolm Wicks: The ECO is regularly set challenging and detailed questions by this Committee which stimulate of course.

  Q146  Peter Luff: You have one of the most important jobs in government at present as Minister for Energy. How much time do you spend on the ECO?

  Malcolm Wicks: I certainly spend a great majority of my time on energy policy which, wearing one hat, would no doubt please you but I do not neglect my other responsibilities and this is one of them. When I talk to officials in the ECO, yes, like any other area of government there is an amount of administration and, I guess, routine work to go through but officials are very much aware that they are at the forefront in dealing with some immensely important issues of national concern. I think they take their work very seriously, as I do.

  Q147  Peter Luff: You are happy that your day job as Energy Minister does not get in the way of an effective supervisory role for the ECO?

  Malcolm Wicks: Yes.

  Q148  Chairman: How much was the ability to cut staff made easier by the fall in the number of standard individual export applications? I think they fell by about 13% in 2004 and it clearly required more effort to evaluate an application for open licences.

  Malcolm Wicks: You probably have the data that I have on this. There has been something of a fall since the early part of the century, I suppose I could say. There were about 9,000 SIELs processed in 2004 and a similar number in 2005, while the number of multiple ones issued had a blip upwards in 2004, which I am advised was for technical reasons, but I think they have been relatively steady as well. I know the Committee is concerned about this but when I look at the data does it bear it out, Chairman?

  Q149  Chairman: In terms of applications received, yes, it does bear it out. Do you accept that the greater use of open licence does reduce transparency?

  Malcolm Wicks: Yes. We need to balance here the number of applications against the numbers issued, yes, and the ones issued—the OIELs, the multiple ones—has been fairly steady, I believe.

  Q150  Chairman: I am assuming that the ECO staff deal with applications.

  Malcolm Wicks: Yes.

  Q151  Chairman: The figures that we have indicate a very substantial decline in SIEL applications. That would seem an obvious way in which it would be possible to save staff without too many dire effects elsewhere in the system. What has happened is that we therefore have a higher proportion of applications being open licences which you have accepted reduces transparency. We do not have data on volumes and values and so on. I do not know whether you regard this as a problem in a way that some members of this Committee might regard that as a problem?

  Malcolm Wicks: The short answer is no, but I will let Mr Williams answer. I hope that we have the same statistical table in front of us. The number of SIELs processed has gone down. In 2000 it was about 10,500.

  Q152  Chairman: We have got it from page 20 of the annex in the document you gave to us.

  Malcolm Wicks: I have got it going down from 10,500 number of SIELs processed in 2000.

  Q153  Chairman: I am talking about applications received.

  Mr Williams: As we have seen in the process there is a slight difference but not much. Between 2000 and 2003 the number of SIELs processed or received was in the 10,000s and something. In 2004 and in 2005 it was just over 9,000, so there has been a drop of just over a thousand. It has been stable.

  Q154  Chairman: At around 10%.

  Mr Williams: Yes. It has been stable in 2004 and 2005. The number of OIELs which were received, processed and issued has been stable, except that in 2004 the number received went up from the 600s to 806. I think that was linked to the advent of the new controls with companies getting in open licence applications in advance of those coming into force.

  Q155  Chairman: There are two separate issues, are there not, between what has happened and what your attitude is towards what seems to be a greater use of open licences. We have heard what you have said and we will, as a committee, think further on that and perhaps even have a recommendation on that issue as well, Minister, who knows?

  Malcolm Wicks: We look forward to that.

  Q156  Chairman: We look forward to drafting it as well.

  Malcolm Wicks: If it is a 10% decline or whatever it is, then it is 10%.

  Chairman: That is quite a lot of staff I would have thought, but there we are.

  Q157  Mr Crausby: I would like to ask a couple of questions on how responsive the open licence system is to security concerns. For example, let's take a UK company exporting computer components to a company within the EU under an Open General Export Licence. Then the recipient country's security services discover that the company has been taken over by a terrorist organisation. The computer components would then obviously be of some concern. Firstly, how would you stop the UK company exporting further components? Secondly, will the ECO have records of other UK companies and their exports to that initial front company?

  Malcolm Wicks: The short answer to the first part of the question is that if we became aware that someone in the UK was trying to export to a company that had been taken over by a terrorist organisation, then they would not be given a licence. That must be the simple answer, Mr Williams, must it not?

  Q158  Mr Crausby: The point I am making is that these things move on part-way through. How do we deal with that?

  Malcolm Wicks: Do you mean if after the licence has been granted? If it had already been exported then it has been exported, I guess, but it would not happen again.

  Q159  Mr Crausby: How would we do that? We would clearly clamp down on that. What information would we have on other UK companies? Would the information be available that other UK companies were exporting into that front company?

  Mr Williams: If you are talking about exports under an individual licence, we can revoke the licence if the export has not already gone. We would ask the authorities in the other country to see what they could do at their end. We would put that end user on our watch list to ensure if it came up in future it would get a red flag in the system and we would not issue a licence to it.

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