Dr.
Murrison: The Minister has already cut across his right
hon. Friend Baroness Taylor in his previous replies to me about
subcontracting, as the record will show and which we shall almost
certainly pick up. The explanatory memorandum asserts on page 6 that
there is extensive application of exemptions from public defence and
security contracts from the rules of the internal market. Does the
Minister know how many referrals there have been to the ECJ on the
grounds of inappropriate use of article 296? He has admitted that
Nordic T-shirts and south-European firemen’s hats are not part
of that number, but can he cite any that have been referred using that
mechanism and tell us what the outcome
was?
Mr.
Davies: I have already said that I am not aware of any
such cases. If I become aware in the next few minutes, I will certainly
let the hon. Gentleman
know.
Dr.
Murrison: It is important because we are being invited to
ratify a piece of legislation. If there have not been any referrals, we
have to question why it is necessary, but I will come to that during
the debate. As the
Minister for the Armed Forces, the right hon. Member for Coventry,
North-East (Mr. Ainsworth) said on 10 March that
the UK has one of the most open defence markets in the EU, one would
expect that the UK contracting parties would be referred less often.
May I press the Minister—his officials may want to drop him a
note on this—on whether that is the case? In other words, are UK
contracting parties referred less often than anybody
else?
Mr.
Davies: I have just explained that I do not know of any
cases when any parties—that is to say ourselves or any other
member states—have been referred for abuses of article 296. I
may have to go back over this because it seems that my first answers
were not taken on board. Although I said that I did not know of any
such cases, I now understand that there have been one or two down the
years, but no more than six and the UK has never been referred. That
answers the hon. Gentleman’s question. My right hon. Friend the
Minister for the Armed Forces was absolutely right that the UK defence
equipment market is the most competitive and the most open in the EU.
That is precisely why there is some benefit to bringing the directive
forward. Doing so will create a more open market in defence so that
member states cannot argue that it is essential to their security
interests that they do not buy from outside their own country. If they
were buying war-fighting equipment and they wished to give the order
exclusively to their own nationals, they would have to argue that it is
essential to their security interests to do so. In so far as the
directive might push member states into adopting a more liberal and
less protectionist attitude—and we believe that will be the
case—that will be to the corresponding benefit of UK industry.
We may stand to gain proportionately more from this trade
liberalisation than other member states—although, of course,
everybody gains from trade
liberalisation.
Dr.
Murrison: We will come to the attitude of indigenous
industry to the measure later. However, regarding the hypothesis that
existing structures have not been tried sufficiently well and we are
introducing a directive unnecessarily, what assessment has the Minister
made of the 2006 code of practice that was drawn up by the EDA, which
the Spanish promptly announced they would ignore? That set the scene
for yet another agency flop. It is important to audit the success or
otherwise of what is currently in place before we go on to something
else. I hope the Minister agrees and will tell me what assessment he
has made of that code of
practice.
Mr.
Davies: The code of practice is a voluntary and
non-binding inter-governmental regime and two things flow from that. It
does not necessarily have an immense effect, whereas if the directive
is adopted, it will be binding, and if there are any evils, they will
not necessarily be overwhelming. In addition, participating member
states must agree to advertise contracts. As the hon. Gentleman can
see, that is already in the text of the proposed directive.
If member
states subscribe to the code of conduct, contracts must be advertised
on the EDA’s electronic bulletin board. We have no problem with
that. Six exemptions are made to advertising such contracts in order to
respect the sensitivity of certain procurements—for
example, nuclear weapons, nuclear biological and chemical, cryptographic
equipment and so forth. We are happy with those exemptions and agree
with
that. During
the past four years, several hundred contracts worth billions of
dollars have been advertised on the electronic board. Those are
contracts that otherwise might not have been advertised and that is a
favourable development. Following on from my previous answer, if more
business is done across member state borders in the European Union, our
industry is well placed to get a decent share of it. That is an
entirely benign development, which we
support.
Dr.
Murrison: May I ask the Minister about research and
development? He will know that that is extremely important to the
United Kingdom because we do most of the research and development in
Europe. Governments and industry are unlikely to invest in R and D as
heavily as they currently do if they think there will not be much in it
for them, particularly if they think that jobs will not be created in
their country. Given that most of the research and development in
Europe is done in this country, what impact does the Minister think the
directive will have on British R and D and on our technology
base?
Mr.
Davies: The latest presidency draft has reinstated the R
and D exemption that exists in the classic directive where the new
provisions on article 20 have been retained for circumstances in which
the exemption will not be applicable. That satisfies the objectives of
our position. We have recently had discussions with industry to
consider what further changes might be sought and we have made
proposals
accordingly.
Dr.
Murrison: May I quiz the Minister on conflicts with other
pieces of work and institutions? I shall start by mentioning the
defence industrial strategy. I am in a slightly difficult position
because in a way I am defending a piece of Government material. We
agree with parts of the strategy, particularly on appropriate
sovereignty. It is perhaps up to us to say
so. On
10 March, the right hon. Member for Coventry, North-East said that
further work must be done to deconflict the DIS, any partnering
arrangements we might have, and the draft directive. What has been the
outcome of that deconfliction exercise? What conflicts have been
identified and what remedial action has been necessary, particularly in
relation to version 2 of DIS, which we thought we would get this year,
but for which we will have to wait a little
longer?
Mr.
Davies: The theoretical conflict exists and must be what
my right hon. Friend was referring to earlier this year. Clearly,
member states such as the UK can develop long-term partnership
arrangements, such as those set out in the DIS, and can decide
explicitly, as we have done, that we set store by having a sovereign
capability in some areas. The hon. Gentleman will be familiar with
those—naval and submarine shipbuilding, complex weapons,
encryption and so forth. It is good to know that we have the support,
as least for the moment, of the Opposition on those matters.
Theoretically, directives of this kind would cut across that. As I
said—I anticipated the hon. Gentleman’s question in my
opening remarks—we
are happy that the protections that we required in those areas are now
in the directive. I refer the hon. Gentleman to article 9(a) on secure
information, and to recital 7 and articles 14 and 15 on security of
supply and national capability. If he reads those, he will see that our
position is pretty satisfactorily protected in those important
areas.
The hour
allotted for questions is almost over, but several Members still wish
to ask questions. Under the provisions of Standing Order No. 119(7), I
am extending the time to allow the remaining questions to be asked. We
shall move on to the debate after no more than half an hour. Any extra
time given for questions will be deducted from the total debate time,
so we should still finish no later than 7
o’clock.
Mr.
Jenkin: On a point of order, Mrs. Dean. I had
intended to wait until questions were finished, but I wonder if I may
raise this matter now. In my view, it is unprecedented for a Committee
to be asked to consider a draft directive without it having been
furnished with the latest draft of that directive in advance. Were this
not material, Mrs. Dean, you might not have to consider the
matter so seriously. Given that the Minister confirmed that certain
wording has been amended, which resulted in the Government withdrawing
a matter of key concern from the negotiations—security—it
is impossible for the Committee to fulfil its function under the rules
of the House, as laid down by Standing Orders and as charged by the
European Scrutiny Committee, without the document. The Committee should
adjourn forthwith until another day when the document is
available.
The
Chairman: I can confirm that there has been no breach in
Standing Orders. If the Minister wishes to respond, he may do
so.
Mr.
Davies: I have already expressed my regret that we did not
have the latest text available. As I explained, I discovered that fact
only about an hour and a half before the Committee was to meet and have
already launched an inquiry into why it happened. I am not in a
position to offer a further explanation now, unfortunately. The matter
of the point of order is not for me to decide. I stand ready to follow
the Committee’s wishes.
Mr.
John Hayes (South Holland and The Deepings) (Con): Further
to that point of order, Mrs. Dean. I came to the Committee,
albeit tardily, and had the papers before me, having done my research.
I now learn that we do not have the draft directive that we are
considering. Frankly, is it not appropriate to adjourn so that we can
have proper
consideration?
The
Chairman: Order. I must suspend the Committee for 15
minutes for a Division in the House.
5.29
pm Sitting
suspended for a Division in the House.
5.44
pm On
resuming—
Mr.
Jenkin: On a point of order, Mrs. Dean. It
might be said that we are not here to scrutinise any particular
document but to scrutinise a general approach by the Government, which
is what the motion refers to. However, the document before us is dated
2007, which suggests that rather a lot of water has gone under the
bridge since then. That has been confirmed by the Minister, and on a
crucial point about essential national security interests. I submit
that the Standing Orders were not written to accommodate such tardy
production of documents and such slovenly production of information on
the important issues that the Committee has been constituted to
scrutinise.
I ask you,
Mrs. Dean, to reconsider the request that the Committee
should adjourn until we have the final wording of the entire document
laid before us, which we can question the Minister about and debate as
part of the assessment of the Government’s overall approach. To
proceed on a document that is almost a year out of date seems to fall
outside the spirit of the Standing Orders as they were intended to be
interpreted.
The
Chairman: Are there any other points of
order?
Mr.
Hands: Further to that point of order, Mrs.
Dean, as a member of the European Scrutiny Committee I am equally
amazed that we are considering the document, which is dated 13 December
2007, not least because the European Scrutiny Committee has considered
the document on six occasions since it was published, as can be seen
from the front page. We kicked off on 6 February 2008 and continued to
scrutinise it all the way through to 12 November
2008.
It is
surprising that we cannot have an updated version of the document,
considering the amount of scrutiny that I and other members of the
European Scrutiny Committee have given to it since it was published.
Furthermore, I believe that there have been at least two revisions to
the document since its publication. I suggest, in the name of the
European Scrutiny Committee, that it is essential that we reconvene to
debate the document when we have a proper copy of
it.
Dr.
Murrison: Further to those points of order, which were
well made by my hon. Friends, we have been looking through these
documents all day. Indeed, some of us have been looking through them
all weekend. We found, for example, in the first document in our pack
references to things such as “A new recital 19(a)” and
“A new article 5(a)”. There are numerous
“recitals” throughout the document. The Minister referred
to material on subcontracting, which can only have come from the
up-to-date document. I do not see how we can proceed on the
basis of material that is a year out of
date.
Mr.
Burns: Further to that point of order, Mrs.
Dean, I seek your guidance, as it seems unsatisfactory to me that we
are questioning the Minister and having a debate on a final document
that we do not have in front of us. Clearly, given the time span since
2007, there have been changes and the document has moved on.
There is a
precedent. During the Committee stage of the Health and Social Care
Bill, when a Minister failed to produce the explanatory memorandum for
some significant changes that the Government were making to the Bill,
the Chairman of that Committee suspended the Committee until the
documents were made available, on the grounds that it was wrong for a
Committee to study something when they did not have the information
before them. That Committee was suspended until the Minister could
bring the information before the Committee so that a proper debate
could be
held.
Mr.
William Cash (Stone) (Con): On a point of order,
Mrs. Dean. I arrived here because I heard that there was a
certain amount of difficulty arising.
[Interruption.] Well, we are in a European
Standing Committee, of course. I am concerned about this issue, for the
very simple reason that in the report of the European Scrutiny
Committee, of which I am a member, it says that there is also the risk
of amendments being made and it goes on to clearly indicate that,
although we would like the matter to be debated and we recommend that
it should be, that debate should take place on the basis of documents
that are in front of the Committee.
My concern is
simply the same as that expressed by other Conservative members of this
Committee. If we had had the document that we should have been
considering, we might have come to a different conclusion in deciding
whether or not this document was of legal or political importance. In
fact, our report would therefore have been different, which raises an
important question. I suggest that, in those circumstances, there is a
strong case for the adjournment of this
Committee.
Mr.
Davies: I should be very grateful if I could come up with
a point of order, too, in response to the points of order that have
been made. I am glad to see that the Opposition have called in the
heavy artillery as a result of the recent interval, and I look forward
to debating with the hon. Member for Stone (Mr. Cash) in a
few moments’ time. I was extremely sorry to discover this
afternoon that the document before the Committee is not the latest one
that was available to me. That is unsatisfactory, and I shall write to
the Committee with an explanation when I have
it. Let
me not apologise for things that we have not done. I shall not go too
far in apologising, because there are some misunderstandings on the
part of the Opposition. First, I am told that the latest document that
they have seen is not the original draft, which is the only version of
the directive; everything else is just a discussion document. It is not
the Commission’s original 2007 version; it is a more recent
document, which the European Scrutiny Committee discussed only two
weeks ago, so let us not pretend that they have seen nothing about it
since 2007. I am informed that they have seen more recent versions, but
they did not apparently see the latest
version. Secondly,
if the Committee wants me to return on another occasion, I shall be
delighted to do so. It is entirely a matter for the Committee, but the
presidency has produced a whole series of these discussion documents,
which is, as hon. Members know, how decisions proceed in Brussels. I am
informed that the presidency will circulate another version shortly,
and I am expecting it on Friday. If the Committee decides to postpone
discussion
for a few weeks, I cannot undertake that there will be any finality
about whatever document happens to be in front of us at that
time. Thirdly,
the presidency—we cannot directly influence it on this
matter—hopes to be able to conclude consideration of the
directive and to approve it by the end of December, at the end of the
presidency. That means that matters may move fast in December, so if
the Opposition want us to take account of the Committee’s views
in time to inform future discussion, there would be a considerable cost
in delaying our discussion much
longer. That
brings me to my final point, which the Committee must decide. The
Government are at its service, and there is a balance to be struck. I
hope that hon. Members appreciate that there may be some cost in delay,
and that, whatever happens—and as has been conceded in a number
of points of order from the Opposition—the Committee’s
purpose is to provide the Government with the benefit of the
Committee’s view on the general principles at stake, and not to
approve a particular document, let alone one version of a large number
of presidency drafts, which will inevitably be produced during the
course of
discussion.
| 
