Scrutiny of Arms Export Controls (2009): UK Strategic Export Controls Annual Report 2007, Quarterly Reports for 2008, licensing policy and review of export control legislation - Business and Enterprise Committee Contents

4 Enforcement


78.  In our Report last year we made recommendations concerning the provision of information in annual reports on strategic controls; specifically the number of seizures by HM Revenue and Customs and the trend and type of misuses of open licences.[118] The Government agreed to provide additional commentary on the number of seizures and information on the misuse of open general licences in its next Annual Report.[119]

79.  Due to the late publication of the 2008 Annual Report on United Kingdom Strategic Export Controls, after the date our Report was finalised, we were unable to comment on whether or not this information has been included.

Open General Licences

80.  In our previous Report we raised the issue of enforcement of Open General Licences. We recommended that where breaches of the requirements to use open general licences are persistent and an exporter shows no inclination to bring his or her administrative arrangements up to the required level, the Export Control Organisation (ECO) should automatically remove the exporter's entitlement to use open general licences.[120] The Government Response stated that where breaches of the terms of the licences were found which appear to be systemic rather than an isolated incident of human error, the company would receive a warning letter from ECO setting out the issues, what must be done about them, and the timescale for improvements to be made with arrangements for a revisit. As of 19 August 2008, 13 such letters had been sent in one year. If, at the time of the revisit, the company has made little or no attempt to correct the faults identified, ECO will consider suspending the company's use of the open general licences where faults are still occurring.[121]

Civil penalties

81.  In our last Report we considered suggestions from Amnesty International UK, the Omega Research Foundation and Saferworld that, rather than relying exclusively on the criminal law to prosecute breaches of export control, the Government should amend the primary legislation to be able to proceed through the civil courts as well as the criminal courts.

82.  We concluded that the use of civil penalties for the breach of export controls appeared to offer a method of strengthening the UK's export controls. We recommended that the Government inform the Committees and the House of the outcome of its deliberations at an early date. We agreed to consider this matter further once the Government had completed its consideration of the use of civil penalties for the breach of export controls.[122]

83.  In February 2009, the Committees received a joint memorandum from Rt Hon Stephen Timms MP, Financial Secretary to HM Treasury, and Ian Pearson MP, the then Economic and Business Minister. The memorandum said that BERR and HMRC had concluded that "there is a clear case for introducing civil penalties in the field of strategic export control […] not to replace any existing measures, but to supplement them."[123]

84.  The memorandum set out the cases in which civil penalties would be of greatest value:

    In particular, they could have value in cases of non-compliance with individual rather than open licences; where the frontier based seizure and restoration powers of HMRC cannot be used, (such as trade control cases, electronic transfers and situations where the goods have already left the UK); or for other breaches for which they offer a quicker and less costly means of sanction than full criminal prosecution of offenders. Key to this is that they are less resource intensive to administer than criminal penalties and require a lower level of proof.[124]

85.  The memorandum stated that primary legislation would be needed to introduce civil penalties and, after that, an independent tribunal would have to be established to deal with appeals. It was estimated that it would take approximately a year after the introduction of primary legislation to establish the tribunal. The memorandum promised a further update in 2009 with details of potential implementation timescales.[125] We conclude that the Government's decision to introduce civil penalties for strategic export control is a welcome one and we recommend that the Government inform the Committees by the end of 2009 of the timetable for primary legislation necessary to bring in civil penalties.

118   HC (2007-08) 254, paras 50 and 57 Back

119   Cm 7485, p 10 Back

120   HC (2007-08) 254, para 58 Back

121   Cm 7485, p 11 Back

122  HC(2007-08)254,paras60-63 Back

123  Ev 66 Back

124   Ev 66 Back

125   Ev 66 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 19 August 2009