Memorandum from Rt Hon Stephen Timms MP,
Financial Secretary at HM Treasury, and Ian Pearson MP, then Economic
and Business Minister at the Department for Business, Enterprise
& Regulatory Reform
STRATEGIC EXPORT CONTROL: ROLE OF CIVIL PENALTIES
You will recall that in response to recommendation
21 of the most recent annual report of the Committee for
Arms Export Control, the Government committed to responding on
its policy regarding civil penalties. We are now able to set out
our position on this matter.
In looking at the case for civil penalties,
it was vital that BERR, as the Department that operates the licensing
system and owns the export control legislation, and HMRC, which
enforces that legislation and takes action against breaches, work
closely together at official and Ministerial level. Both Ian Pearson
and I have considered these issues carefully and have concluded
that there is a clear case for introducing civil penalties in
the field of strategic export control.
As you know we have taken steps to increase
the range of compliance and enforcement tools available to us.
These steps are beginning to bear fruit but, nevertheless, we
have concluded that there remains a case for civil penalties,
not to replace any existing measures, but to supplement them.
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.
You will, however, appreciate that more detailed
work will need to be done before they can be introduced, and this
will necessarily take time. This is for two main reasons. Firstly,
primary legislation will be needed, and it will be necessary to
find time in a challenging Parliamentary schedule. Secondly, in
line with standard practice for Departments who use civil penalties,
there will need to be time to establish an independent tribunal
to deal with appeals. From previous exercises, we know that the
work associated with this, such as tribunal staff recruitment,
training in export control issues and the delivery of the necessary
guidance, can be expected to take roughly a year after the introduction
of primary legislation.
Notwithstanding these potential hurdles, I hope
that you will be reassured that our two Departments are working
together to take forward the introduction of civil penalties for
strategic export control. We will provide a further update later
this year, at which time we should be able to give you more information
about potential implementation timescales.
23 February 2009
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