Quadripartite Select Committee First Report


2  The work of the Committees

Relations between the Committees and the Government

6. We and our predecessor Committees have looked not only at high-level policy issues but have also taken the lower-level scrutiny function seriously, and examined the operation of the system of export control and the detail of the licences issued (and refused) by Government. We believe that this is an essential component of the task that we have been set. We were pleased that the Government acknowledges the Committees' input and that we share the objective of strengthening the system further[8] and ensuring that it remains one of the most effective and transparent in the world.[9]

7. We start, however, on a discordant note. In responding to our predecessor Committees' final Report in July 2005 the Government warned us:

The Government would like the new Committee to be aware that its necessary duties add significantly to the running costs of the Government's export controls. The staff time involved in answering the Committee's requests is quite significant. The Government hopes that the new Committee will try to balance these costs with the level of scrutiny that it feels is necessary to ensure the Government's policy on strategic export controls is both effective and efficient.[10]

8. In our view, no select committee can carry out effective scrutiny under such constraints. Nor are we aware of similar warnings being made to other select committees. We review a very small proportion of the Government's decisions on licence applications and the purpose of our questions is to ensure effective scrutiny of government policy and operations in an area which affects UK business and security as well as the lives of millions across the world.

9. We were pleased to detect a change in the Government's attitude during the Westminster Hall debate on our predecessor Committees' final Report on 16 March 2006. When the Government's warning was raised, the then Minister for Trade, Ian Pearson MP, commented that "perhaps our response was not as felicitously worded as it could have been. I certainly want to see the Committee doing its job properly. If it needs to ask a large number of questions, it should ask them and we should provide timely answers."[11] We welcome the Minister's positive comments. We conclude that the Government recognises the need to respond to our questions in a timely manner.

ORAL EVIDENCE

10. Our approach to oral evidence for this Report was influenced by the evidence session that took place on 12 January 2005 when the then Foreign Secretary and his officials were unable to answer our predecessor Committees' questions about the Export Control Organisation. The incident raised doubts about the extent of "joined up government".[12] We therefore invited the Minister of State at the Department of Trade and Industry with responsibility for the Export Control Organisation, Malcolm Wicks MP, and his officials to give oral evidence on 13 March 2006; we also took evidence—both written[13] and oral—from officials in HMRC and the Revenue and Customs Prosecution Office, who are responsible for enforcing export control policy. They gave oral evidence on 25 May 2006. We found both evidence sessions valuable, and we must put on record our gratitude for the evidence they supplied. The evidence from the Revenue and Customs departments was especially useful as it was the first such contact we have had with them. In the light of this year's evidence sessions, we conclude that it is necessary for us to take evidence directly from the Export Control Organisation and the Revenue and Customs departments. We intend to repeat this practice next year.

WRITTEN EVIDENCE SUBMITTED BY THE GOVERNMENT

11. As we have indicated, we hope that we have now turned the page on the previous problems we have had in obtaining written answers to our questions. We have concluded that our approach now should be to send written questions to the Government once we have reviewed each quarterly report on strategic export controls and to raise specific issues as they arise. It is our intention that this arrangement will spread the work and prevent a bottleneck of questions concentrated after the publication of the annual report on strategic export controls. As a consequence of the general election in 2005 and the time it took to establish the Quadripartite Committee in 2005-06 the arrangement has not yet fully bedded down but we expect it to be fully developed in 2006-07.

DELAY IN THE GOVERNMENT'S RESPONSES TO CORRESPONDENCE

12. The Government has pointed out to us on several occasions that the process of agreeing a thorough response to any enquiry directed to four departments consumes more time and resources than a question to one department, involving as it does ministers in all the departments.[14] We accept this as self-evidently true but we point out that the administrative arrangements within Whitehall are the Government's responsibility, not ours. As we have explained, we aim to keep our requests to the minimum consistent with our responsibilities, but we cannot allow these constraints to blunt our scrutiny of strategic export controls. We are disappointed that, despite spreading our written questions to the Government over several months, the time that the Government took to reply to our questions increased during the year, though the reply to our questions on the fourth quarterly report showed an improvement; see Annex 1. While we recognise that, exceptionally, the ministerial reshuffle in May 2006 delayed some replies to our written questions this year, we recommend that, to assist our work, the Government agree to reply fully—other than in exceptional circumstances—to our letters on the quarterly reports within six weeks. We are confident that such an arrangement will allow the Government and us to plan work and to avoid past misunderstandings and difficulties.

CLASSIFICATION OF EVIDENCE SUBMITTED BY THE GOVERNMENT

13. We have always respected, and will continue to respect, government security classifications. A number of letters we received in 2005-06 were marked "In Confidence", which is not a recognised security classification. At the Government's request we have not made these public but we have challenged use of the designation in a number of instances. In one case we were told that the designation had been made in error and was removed.[15] In another case the designation was changed to "restricted" and in a third case the in-confidence classification referred to commercially sensitive information and could not be put in the public domain. The Government informed us that any information that was not for public disclosure would in future be marked "Restricted—Commercial" or "Restricted" but it would aim to provide as much information as possible to us in the public domain.[16] The Government explained that "information provided to the Quad on an 'in confidence' basis contains information that is provided to the DTI's ECO in confidence as part of the license application process. To release that information publicly may be damaging either for commercial or security reasons."[17]

14. We also detected a trend towards increased classification in correspondence from the Government in one area. The letters from the Government dated April,[18] 31 August, 7 November 2005 and 31 January 2006[19] giving details of the approval of exports of military equipment to Iraq for the four quarters of 2005 were unclassified but the letter we received on 2 May 2006[20] covering the January to March quarter of 2006 was marked "Restricted". We asked the Government about the change and it replied: "We would […] ask that all reports on approval of exports of equipment to Iraq that have been received by the Committee should be treated as "Restricted". This is because information contained in the reports is provided by UK companies to the Government in confidence as part of their export licence applications and is commercially sensitive."[21] The information provided in the earlier letters covering 2005 appears to us to be similar—both in terms of the descriptions of the exports and the general descriptions of the end-users—to that provided in the letter for the first quarter of 2006; we are unclear why the commercial sensitivities have altered the classification of the letters from the first quarter of 2006.

15. Some of the information we receive to carry out our work is sensitive and we recognise that it has to be supplied under a security classification and that it cannot, and should not, be published. We are, however, concerned by the use of the "In Confidence" designation on material concerning strategic exports which appears to us to blur the line between material which cannot be released because there are strong and clear reasons to withhold it—for example the disclosure of information that would make it more difficult to maintain the operational effectiveness of the security services—from that which is likely to provoke further questions or criticism of policy or particular licensing decisions. We recommend that the Government dispense with the use of the "In Confidence" designation when responding to our questions on strategic exports and that it provide a detailed statement, not a general restatement of the criteria, of the application of government security classifications to correspondence on strategic export controls and that it also explain its reasons for changing the classification on the letters concerning exports to Iraq.

VISITS

16. We carried out no visits in the session. Building on the useful oral evidence session with the Minister of State at the Department of Trade and Industry we conclude that we should visit the Export Control Organisation in 2006-07, to see it in operation.

Review of export control legislation in 2007

17. We are pleased that, in line with Cabinet Office guidance,[22] the Government intends to start the review of the regulations introduced under the Export Control Act 2002 after they have been in force for three years, in May 2007.[23] The review will be carried out by the Export Control Organisation, in consultation with other interested departments and parties.[24] One of the core tasks for select committees is "to examine the implementation of legislation and major policy initiatives".[25] We therefore plan to take up the Government's offer to make a contribution to its review of the export control legislation in 2007.[26] To assist the Government's review of export control legislation scheduled for 2007, we conclude that we should carry out, and have completed, a review of the operation of the legislation in time for it to be taken into account by the Government's own review. To assist our examination of the export control legislation, we recommend that the Government produce and publish its terms of reference for its review of the legislation by October 2006.

18. We have yet to settle the terms of the inquiry we propose to carry out in 2006-07. We note that the Law Commission published a consultation paper, "Post-legislative Scrutiny"[27] on 31 January 2006 which provides a number of models for post-legislative scrutiny. In broad terms, post-legislative scrutiny is the examination of a piece of legislation after it has come into operation to determine if it is working as it was intended and, if it is not, to discover the reason and to address the problems quickly and effectively. Typically post-legislative scrutiny also questions whether there have been any unintended economic, legal or social consequences of the legislation, and the legislation is assessed to see whether it has benefited the general public or other intended groups.[28] It is our intention to address these issues and therefore we consider that a review which took the form of post-legislative scrutiny of the legislation is the most suitable way to proceed. This approach will allow us to examine the broad operation of the Export Control Act 2002, and the secondary legislation made under it, and to take evidence from a wider range of interested parties than it has been the custom of the Quadripartite Committee in recent years—for example, we intend to seek the views of academics on the controls on the transfer of intangible technologies. We conclude that in 2006-07 we should carry out a review of export controls taking the form of post-legislative scrutiny of the Export Control Act 2002 and the secondary legislation made under the Act.

Prior scrutiny

19. Our predecessor Committees have commented on a number of occasions (most recently in their First Report of Session 2004-05)[29] that there should be a system of prior parliamentary scrutiny for the most sensitive export licence applications. The Government has repeatedly rejected this recommendation, and remains opposed to prior Parliamentary scrutiny of export licence applications.[30]

20. The UK Working Group on Arms suggested:

To resolve this impasse, a system of prior scrutiny could be developed on a trial basis for a specified time in a limited number of cases, for example where the Government acts as a principal in a transfer (e.g. where the UK makes a gift of military equipment) or where the recipient is of particular concern (e.g. for transfers to countries under or recently under embargo), with the process to be reviewed at the end of the trial period.[31]

21. We share our predecessors' disappointment with the Government's resolute opposition to any form of prior parliamentary scrutiny. We conclude that a prior scrutiny model for certain sensitive (or precedent-setting) arms export decisions—along the lines suggested by the UK Working Group, on a trial basis for transfers to countries under or recently under embargo—should be developed.

Allegations of bribery by DSO

22. One matter from an earlier report by the Quadripartite Committee resurfaced. In response to reports in the Guardian, in July 2003 the Ministry of Defence supplied the Committee with a memorandum refuting allegations that bribes had been paid by the Defence Sales Organisation (DSO, the predecessor of Defence Export Services Organisation, DESO) to obtain defence contracts. In a memorandum to us the Campaign Against Arms Trade alleged that the "Committee was seriously misled by the MoD in its memorandum".[32] Subsequently, a number of allegations appeared in the media[33] quoting a former defence minister in the 1970s as saying that the UK had bribed senior Saudi officials to secure arms contracts. It was reported that the allegations had been supported by documents available at the National Archives.

23. We put the allegations to the MoD, which responded on 11 July 2006:

The facts given to the Committee in that MOD Memorandum were accurate, both as they related to the practices of the DESO at that time and, from the records we have identified, in relation to practices at earlier times. The MOD rejects any suggestion that it was intended to mislead. The Memorandum addressed specific allegations by the Guardian newspaper and answered the Committee's questions in terms that we continue to believe are accurate. The Department does not have any specific comment on the reported recollections of Lord Gilmour and Lord Healey in respect of their understanding of the way agents were employed, and commissions were paid, at these times, nor on CAAT's interpretation of the documents it quotes in its memorandum.

The Government takes the control of defence exports, and the behaviour of British companies and individuals involved in this area, very seriously. Staff of the Defence Export Services Organisation are under instruction to report any action which might be a cause for concern in relation to the law of the UK or of the country with which business is being done.[34]

24. Because of the constraint of time we have not considered in detail the contentions concerning the accuracy of the MoD's 2003 memorandum refuting allegations that bribes had been paid by the Defence Sales Organisation and we conclude that we should consider the issue further next session.


8   Q 93 Back

9   Departments of Defence, Foreign and Commonwealth Affairs, International Development and Trade and Industry, Strategic Export Controls: HMG's Annual Report for 2003, Licensing Policy and Parliamentary Scrutiny Response of the Secretaries of State for Defence, Foreign and Commonwealth Affairs, International Development and Trade and Industry, Cm 6638, July 2005, p 2 Back

10   IbidBack

11   HC Deb, 16 March 2006, col 520WH Back

12   HC (2004-05) 145, para 18 Back

13   Ev 144,153 Back

14   For example, Cm 6638, p 5 Back

15   Ev 157 Back

16   Ev 168 Back

17   Ev 163, para 8 Back

18   No day indicated Back

19   Not printed Back

20   Not printed  Back

21   E-mail from the Foreign and Commonwealth Office dated 21 June 2006. Not printed. Back

22   Cabinet Office, Better Policy Making: A Guide to Regulatory Impact Assessment, section 10 at http://www.cabinetoffice.gov.uk/regulation/ria/ria_guidance/post_implementation_review.asp. On post-implementation reviews the guidance advises:

Describe how and when the review will take place. It is often a good idea to review a policy change after three years but this will depend on the policy. Key issues for review include whether:

the policy objective has been met;

impacts have been as expected, including the costs and benefits;

there have been any unforeseen unintended consequences;

government intervention is still required; and

compliance levels indicate that the enforcement regime is effective - perhaps it could now be lighter touch or more risk based. Back

23   HC Deb, 16 March 2006, col 521WH, Q 192 Back

24   HC Deb, 4 May 2006, col 1751W Back

25   Liaison Committee, First Report of Session 2002-03, Annual Report for 2002, HC 558, para 13 Back

26   Q 192 Back

27   Law Commission, Post-legislative Scrutiny, Consultation Paper no. 178 - http://www.lawcom.gov.uk/docs/cp178.pdf. The Commission aims to publish its final report in Autumn 2006  Back

28   Law Commission, Post-legislative Scrutiny, Consultation Paper no. 178, para 6.6 Back

29   HC (2004-05) 145, paras 21-23 Back

30   Cm 6638, p 3 Back

31   Ev 88 Back

32   Ev 158, para 12 ff Back

33   For example, "We bribed Saudis, says ex-minister", The Daily Telegraph, 17 June 2006, p 6  Back

34   Ev 168 Back


 
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