Examination of Witnesses (Quesitons 140-159)
RT HON
BARONESS TAYLOR
OF BOLTON,
MR STEPHEN
FRENCH, MR
TONY PAWSON,
MS GLORIA
CRAIG AND
MR PAUL
LINCOLN
21 NOVEMBER 2007
Q140 Mr Havard: Can I just say that
one of the answers given to us, when we asked this question about
the potential for research and development technology to be skewed
towards the US rather than not vested in the UK, was that, in
fact, the Treaty will help to avoid that, because at the moment
the temptation is that people have to put their money into the
US to do the research (one answer), and the other answer is that
the Defence Industrial Strategy and all the plans to develop home-grown,
as it were, capacity through that is another safeguard. You are
also going to have a technology plan, as I understand it. Is your
answer to all of this that all these things will actually avoid
this problem? Is that the hope? Is that the test that I have to
put on this Treaty, as to whether it will actually help to do
that or whether it will actually not help?
Baroness Taylor of Bolton: I think
the tests that you put on this Treaty are long-term: whether we
do improve interoperability and whether we do have a system where,
when we have companies co-operating with the United States and
asking for an export licence at present, which do take time, that
system is speeded up, it would be to the advantage of British
companies. In terms of research and development, I do not think
that there is one answer to how we make sure that we maximise
our effort on that. Part of it is resources, part of it is how
those resources are organised, and part of it is getting co-operation.
There is not one answer but there has to be determination and
a commitment to make the most of our opportunities to develop
the talent that is in this country.
Q141 Mr Havard: Can I ask a cheeky
question, which is: am I going to see the revision, then, of the
next stage of the Defence Industrial Strategy and the Technology
Plan together published on 12 December, before we go off for Christmas?
Baroness Taylor of Bolton: I think
the date that was previously suggested was 13th, and I have just
written to you, Mr Chairman, to say that as I have come into this
position I want to review the whole situation, so we will not
be publishing anything on 13th. I think we need to make sure that
anything we publish on the Defence Industrial Strategy dovetails
in with decisions we are taking on the planning round. I think
it would be foolish for me, having just come into this, to make
statements on 13th in advance of other work that is going on.
Q142 Chairman: Minister, you are
aware of how highly regarded your predecessor was.
Baroness Taylor of Bolton: I am.
Q143 Chairman: One of his great attributes
was not just his knowledge of industry but his ability to force
things through the Ministry of Defence at a pace which was understandable
to industry but quite astonishing to the Ministry of Defence.
I look forward to receiving your letter but I am afraid I will
receive it with sadness.
Baroness Taylor of Bolton: I think
that it would be wrong to get consideration of the second phase
of the Defence Industrial Strategy out of kilter with the planning
round. Certainly, from what I have seen, to simply reiterate what
was said the first time round would not take us very much further
forward, and to give indications to industry on a more specific
basis outside the planning round might not be a wise thing to
do. So I want to consider that further, not because I do not want
things to happen, and not because I do not admire what my predecessor
did in many respects. Some of the urgent, operational requirements
that he managed to get moving very quickly, as you say, were probably
a great shock to the MoD, but so far as DIS 2.0 is concerned I
think it needs further consideration.
Mr Jones: Can I just reiterate what the
Chairman said, Minister? I just hope that you have not actually
started wearing the grass skirt already and gone native within
the first few weeks, because one thing I think industry is looking
towards, which your predecessor did do, is not just to bring clarity
to the decision-making process but, actually, give clear deadlines
that industry can work to. I think that is important. So if it
is going to be delayed, I hope that we can certainly have a date
very quickly in the New Year and that you do not get sidetracked
(which I always thought would happen, frankly, if your predecessor
left) and that civil servantsI know they would be very
brave to take the honourable Baroness ondo not make attempts
to dilute the pace at which change has been happening over the
last few years.
Q144 Mr Havard: Can I ask a sub-question
to what I asked earlier? Is the Technology Plan coming with it
then? Are they going to come together?
Baroness Taylor of Bolton: I do
not want anything to get out of kilter; I want to be making sure
that we have a comprehensive strategy overall which does not leave
anything hanging and being added.
Q145 Mr Havard: That is a yes, then,
is it?
Baroness Taylor of Bolton: I am
not committing myself to any publications on any dates at this
stage. I think it is two weeks today that I came into this job
and, whilst I do appreciate deadlines and I do not like delaying
things unnecessarily, I think it is important to get these decisions
right. As I said, I do very much admire what my predecessor did;
I said that in the House two weeks ago during my first debate,
and I meant it. He has a lot of respect and, as you said, Mr Chairman,
he probably was a bit of shock to MoD and got things moving there.
I think that the impact of that will remain. I hope I have not
yet got the grass skirt (perhaps I will get it when Mr Jones gets
his) but I think we have got to have an absolutely comprehensive
look at what we are doing. We have got an important planning round
coming up and I think we have got to make sure that industry does
not think we are doing things quickly just for the sake of it
and then we make changes later. I want us to have a consistent
approach and I think that is the way in which industry will have
confidence in what we are telling them.
Q146 Chairman: All of this, of course,
is completely irrelevant to the UK/US Treaty, but you tempted
us and we fell. Let us get back to enforcement of the Treaty.
On the issue of enforcement, the UK and the US Governments will
co-operate on enforcement if there are breaches of this Treaty.
How will that work in practice? Will US law enforcement officers
have any jurisdiction in the UK? Will UK law enforcement officers
have any jurisdiction in the US?
Mr Lincoln: There are a whole
series of existing mechanisms which are in place between the UK
and the US through existing treaties, all of which potentially
will apply to enforcement matters on the Treaty itself. On the
specific example you saidwill we have US police, or whoever,
coming over to the UKonly in such situations as we would
currently envisage that happening now.
Q147 Chairman: So no change?
Mr Lincoln: So no change to the
existing mechanisms in that respect. The primary mechanism for
enforcement of the Treaty is using the MoD's industrial security
service, which is already adept at compliance with companies for
security matters. That is a system which has been in place for
some time.
Chairman: Thank you. Is this Treaty going
to be ratified? Kevan Jones.
Q148 Mr Jones: Obviously, we have
attempted before to try and get ITAR. A lot of work was expended
on it and, obviously, it came up against a problem in Congress.
What steps, Minister, are you going to be taking to ensure this
Treaty is ratified? For example, are you, yourself, going to visit
the United States to lobby for it? Although I understand (there
is a timetable in the memorandum that you sent us) that there
is a brief window of opportunity before December, it is unlikely,
frankly, with the way the Congress works. So what is the process
of trying to put maximum lobbying on, for example, the Senate
to ratify this? Also, if it does not get ratified, what is option
B?
Baroness Taylor of Bolton: You
are quite right to say that this has been tried before but it
has not been tried in this way before, and I think this new approach
is what is giving some optimism that there might be a realistic
opportunity to hear. As we mentioned earlier, we did have officials
from the United States here last week. I did meet with the main
official there and we want through quite a few of these issues
that were outstanding that we were talking about earlier, in terms
of the actual list of exclusions and things of that kind. So we
have done that so far. My officials are going next week to follow
up on those discussions in detail, both on the issue of nationality
and making sure that our system of classification and vetting
is fully understood, so that people can have more confidence in
that. I, myself, am trying to get there in, possibly, a fortnight's
time. You will appreciate that with Parliamentary responsibilities,
especially in the Lords, and some of the other commitments that
I have it is not easy, but we think we may have identified two
dates. I have written to some of the main players in the Senate
to express our view of the benefits that could accrue and, hopefully,
that will be a part of highlighting the importance that we attach
to this to the people who will be making that final decision.
We do not yet know when Congress will rise for Christmas (the
dates are not fixed quite as ours are); we know that they are
coming back on 15 January, and we are hopeful that they will be
responsive to the position that we are setting out. It is in the
interests of the United States, in terms of their relationships
with us; that they have an interest in interoperability as well,
and so we are hoping that we can explain that fully.
Q149 Mr Jones: Can I ask you all
to consider (because Mr Rennie and I went last year to talk to
Senators about issues around technology transfer) doing two things:
one, use our report when it comes out as a lobbying document from
our Parliament's position, in terms of the Hill? Can I also suggest
that, possibly, the Ministry look at the British and American
Parliamentary Association and individual Members of Parliament
who have got contacts on the Hill to actually try, if they are
visiting, and reinforce the message, but also possibly just write
to their contacts on the Hill about how important this Treaty
is?
Baroness Taylor of Bolton: I think
they are both suggestions that we would not be averse to. Obviously,
we do want to ratify as quickly as possible ourselves, and that
will also be good leverage, and that is where we have to be careful
about the timings in terms of your report and other things which
are happening. We will try to co-operate to make sure that we
make the timeframe as tight as possible, but I think that using
colleagues to try to emphasise the importance of this Treaty is
no bad idea. I am not averse to that. Lord Drayson, some time
ago, did write to some people within the House about this, but
I think it is certainly something we will follow up. It is getting
to a critical stage, so it might be appropriate to do something
in the near future.
Q150 Mr Jones: If you could actually
ask, perhaps, individual Members of Parliament or Members of the
Upper House who have got contacts to write on this toobecause
we all have friendships with individual Senatorsit might
also help the process.
Baroness Taylor of Bolton: I think
it might well.
Q151 Chairman: Kevan Jones asked
about a plan B.
Baroness Taylor of Bolton: Plan
B. We cannot make a plan B when we are hoping that plan A will
work. It is not as if we cannot get the technology, it is the
delay; it is not that we cannot get interoperability, it is just
far more complex and causes delays. So, at the moment, we are
absolutely concentrating on trying to deal with the two outstanding
issues, which we do not think are insurmountable. We think that
there are good reasons for thinking that we can convince those
who are making decisions in the United States that the protections
that we have on security and our vetting classification are very
strong and very significant, and we think that by discussing the
excluded list we can possibly get agreement on that. We are still
hopeful.
Q152 Chairman: So when you say you
cannot make a plan B when you are working on plan A, there is
no plan B.
Baroness Taylor of Bolton: There
is no plan B. We are very intent on making sure that this works.
As colleagues have pointed out, this has been tried in the past
and there have been difficulties, but this is a new approach to
the problem, by getting this kind of agreement for transfer in
this way. Hopefully, this new approach, with different mechanisms
around security protection of material, will give confidence that
it will work. So our efforts, I think, should be concentrated
on explaining why we are adopting a new approach and how it is
secure, because it is that bottom linesecuritythat
probably has to be underlined as being critical to this working.
Q153 Chairman: Minister, I think
that concludes the questions that we want to ask about the UK/US
Treaty. There are one or two questions which we would like to
ask about the Defence Exports Services Organisation. Therefore,
we are most grateful to Tony Pawson and Gloria Craig for coming
here today. The decision to abolish DESO was obviously taken above
all of our pay grades, yet it is one which has caused deep concern
amongst industry. I, myself, having been in your position, or
something like it, in the past, found DESO to be an exceptionally
useful and valuable organisation for the Ministry of Defence,
for the Government and for the country. Although you did not take
this decision, you are now in a position where you need to be
able to justify it. So how would you justify it?
Baroness Taylor of Bolton: I think
I would justify it by saying that UK Trade and Investment does
take the lead on exports across the whole picture, and you could
argue that the old system was actually an anomaly with defence
exports out of that. If it was simply transferring the DESO role
to new civil servants who had no experience of this in the past
and were going to reinvent the wheel of how to do defence exports,
I think I would be more concerned, but that is not what we are
talking about; we are actually talking about a lot of people who
have been working on defence exports for a very long time within
MoD going to UKTI, and I think they will take with them their
expertise and they will work in their situation with people who
are working on exports across the board and will, therefore, gain
their expertise as well.
Q154 Chairman: However, what they
will not take with them is constant contact with people from the
military in uniform, which is one of the things that industry
earlier on told us was one of their key concerns. Does that matter?
Baroness Taylor of Bolton: It
matters that they have contact and it matters that we have arrangements
for people in the military to play their part in terms of talking
about defence contracts that we have or those with other countries,
where they can talk about how equipment works, or what equipment
we need. The suggestion is that when people are transferred there
should be not just a bock transfer and that is the end of it,
but that there should be rotations of individuals so that some
of that expertise is, in fact, maintained. I think that that would
be helpful to those who are working in the new section, but it
will also mean that the links are kept with MoD, and there will
be new working arrangements to make sure that there is proper
contact between the departments. It is envisaged, actually, that
there will be service level agreements between the two departments
setting out what each department will do for the other. I do not
know, Tony, if you want to emphasise anything else within that.
Mr Pawson: Clearly, DESO has got
a great track record and I think it is a great place to work and
will continue to be a good place to work, because what you are
doing is contributing to both security and prosperity. That, in
a sense, is a great motivator. For the new organisation to work,
as the Minister has said, we do need the expertise transferred
across. The plan is that the military personnel in the core of
DESO will transfer across on the same sort of basis as now. There
will be a mixed economy in relation to the civil servantssome
will be on permanent transfer, some will be on loanto ensure
a sort of refreshment of that. UKTI is a large organisation, it
does have a large number of people compared to DESO overseas,
which we will be able to leverage for the future. Clearly, the
defence branding is very important indeed. The plan, as you probably
know, Chairman, is that there will be a separate element of UKTI
that will deal with defence and security issues; that those links
back to MoD, as the Minister has said, are planned to be maintained
and, therefore, with the support of the MoD, support (of course,
proportionate to what is under consideration) should, I understand,
be fully forthcoming and therefore will go forward on that basis.
Q155 Chairman: Will the MoD be a
sponsoring department with the FCO and the Department of Business,
Enterprise and Regulatory Reform?
Baroness Taylor of Bolton: No.
There was discussion about that but that was thought to make the
situation more complex, and that is why there will be a service
level agreement between the two departments about what each should
be doing for the other. I understand (it was before my time) that
the idea of it being a sponsoring department was considered but
it was thought that that would make the situation even more complex.
Mr Holloway: Forgive me, I do not understand.
What was the reasoning behind this?
Chairman: It was an anomaly.
Q156 Mr Holloway: What was the reasoning
behind this change -beyond that it was an anomaly?
Baroness Taylor of Bolton: It
was thought that by bringing all export potential together and
expertise together that could maximise the effort. As I say, there
was a great deal of experience within those two departments about
trade and exports of this kind, and it was felt that the defence
exports side of MoD could benefit from having that expertise with
them and working with them on an ongoing basis.
Mr Holloway: Does Mr Pawson think that
was a good idea?
Chairman: I do not think that is a fair
question to ask.
Q157 Mr Jenkin: Howard Wheeldon published
an article in Jane's Defence Weekly, in which he pointed
out the success of DESO, to which you referred; that we take 20%
of the global defence exports market and, obviously, clearly thinks
that this is a grave error that will undermine the success of
these efforts. What measures is the Government putting in place
to assess the success or failure of this change? If it turns out
to be detrimental to the effectiveness of UK defence exports,
would you at least leave the door open to possibly reversing the
decision in order to restore what has been an extremely effective
working relationship?
Baroness Taylor of Bolton: I do
not think that anybody would welcome that sort of ping-pong and
decisions being made to move back quickly.
Q158 Mr Jenkin: The criteria for
success?
Baroness Taylor of Bolton: In
terms of the success, I think we will see defence exports in the
future at a very high level. I think that the comments you made
about the success of the past are very valid and one that those
involved should be very pleased with, but I think the Committee
should understand that the Government would not want us to take
a step backwards in terms of our achievements there. Government
Ministers would not make that decision without a genuine belief
that this was one way of improving the situation in the future.
That was part of the reasoning behind this decision: they thought
that it was the right thing to do, and the Prime Minister made
that decision. We are now working with everybody involved, working
with the two sponsoring departments, working and having very careful
discussions with industry to make sure that they feel involved
and know what support MoD will give to defence exports, and we
are hopeful that when we are able to finalise some of these arrangements
(this is very early days) we will in fact have the confidence
of industry that we will be offering the kind of support that
will be helpful to them and maintain the success in this area.
Q159 Mr Jenkin: But this does contradict
what was in the Defence Industrial Strategy, and it, presumably,
is one of the reasons why you wish to delay it.
Baroness Taylor of Bolton: No,
not at all.
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