4Processing of licence applications
Role of the Export Control Joint Unit
63.Statutory responsibility for the licensing of controlled exports now rests with the Secretary of State for International Trade; and licences are issued by ECO, which forms part of DIT.66 Staff involved in advising on licence-applications work in the ECJU, which is based at DIT and brings together operational and policy expertise from ECO, the FCO and the MoD. The ECJU was established in July 2016, following the Government’s 2015 Strategic Defence and Security Review (which “mandated the creation of a number of joint units to bring together resources and expertise from across Whitehall to deliver more effective ways of working”).67
64.The ECJU has targets to complete 70% of applications for SIELs (the most popular type of licence) and SITCLs within 20 working days, and 99% within 60 working days. In the 2016 Annual Report, the Government stated that 17,870 applications for SIELs had been processed in that year, 82% of them within 20 working days and 99% within 60 working days. This compares to 17,550 SIEL applications being processed in 2015, with 69% being completed within 20 working days and 98% within 60 working days. (These targets do not apply to OIELs and OITCLs, due to the diversity of caseload associated with them.)68
65.ADS Group praised the Government’s approach, saying it allowed “individual departments to apply their perspective and expertise to every license application”, with the ECJU complementing that departmental expertise “by instilling independence and objectivity into the decision-making process”.69 When we asked ADS Group’s Chief Executive, Mr Everitt, about his experience of how matters had changed since the formation of the ECJU, he said:70
The general view from people is that there has been no major […] improvement or deterioration. By and large, for the overwhelming majority of the licence applications that are made, they go through reasonably speedily.
Sue Tooze, of BAE Systems, likewise told us:71
From a practical perspective, since the ECJU was formed, although we appreciate that having everybody together in one place will facilitate scrutiny of licences, we have not seen a great deal of difference in the way that licences are processed.
66.We asked Sir Alan Duncan to respond to these views. He said that “In terms of internal administration, we think [forming the ECJU] has had a very positive effect. It has very successfully joined up all the elements that need to feed into this process.” All of the FCO elements of the system had:72
been well brought together and co-ordinated so the setting up of the ECJU has been a success. Actually, what is also true is that in terms of meeting deadlines and things, the Foreign Office side of it certainly exceeds all targets in over 90% of instances. I would say that it is not only effective in co-ordinating, but very efficient.
67.As regards licence-processing, the Head of the ECJU, Mr Bell, told us he could not show any “improvement in terms of metrics” since the ECJU’s formation, “because what we didn’t do with the joint unit is fundamentally change the system where one Department is a regulator and a number of other Departments act as advisers to that regulator.” Performance against licence-processing targets had certainly “shown no decrease”. He thought the change in working brought by forming the ECJU could be perceived qualitatively: “I can see every day colleagues from the MOD, FCO and DIT getting up, talking to one another and working through the cases in a way that they couldn’t when they were scattered across a number of different buildings”. This “closeness” also helped to facilitate policy development.73
Online licence application system
68.Applications for export-control licences are currently handled through an online system known as SPIRE.74 ADS Group stated in its written evidence:
We have been working closely with the dedicated team within the Government who have been working on the development of the new Licensing for International Trade & Enterprise (LITE) electronic licensing system, which is due to start being phased in to replace the existing SPIRE system during 2018. This team is to be warmly commended for these efforts, which they have sought to keep u[s] apprised of throughout, and we are hoping that what starts to be rolled out from later this year will be able to provide process efficiency benefits for both Government and Industry over the coming months.75
69.Mr Stuart further explained to us as follows:76
SPIRE is around 10 years old and needs to be replaced to ensure that the digital platform meets modern standards and allows business improvements to be made […] LITE will be released in phases. The first phase, comprising a new digital tool to help exporters assess whether or not their export requires an export licence, is due to be released for testing by a small number of exporters later in 2018. We envisage completing the transition to LITE over the course of 2019 […]
Processing of Open Individual Export Licences
70.ADS Group informed us that: “the Open Individual Licensing System is still fraught with perceived problems and delays, especially when it comes to the time and bureaucracy involved when exporters seek to have the existing OIELs renewed or replaced.”77 This point was reinforced in oral evidence by Mr Everitt:78
The area that causes us concern is where a company has used [an OIEL] efficiently and effectively and then wishes to re-apply. They effectively have to go through exactly the same process again, and the processing time for an open licence is up to 60 days. By and large, the process works reasonably well. There are obvious areas where, with a little more flexibility, we could take some of the burden out of the work that the unit does so that, rather than spending its time on processing things that are, by and large, non-controversial, it has more opportunity to focus on areas where there are more serious concerns.
71.ADS Group’s concerns were echoed by Ms Tooze, who said that delays in the processing of OIELS were “something that industry has reported across the board”. She was sceptical as to whether the introduction of LITE would make any difference in this respect.79
72.In response, Mr Stuart told us there was a tendency in industry both to complain that the scope of open licences was too narrow and to demand that licence-renewal applications “be rubber-stamped […] for commercial reasons”. He said the Government was “extremely thorough” in dealing with renewal applications, looking “in detail at whether the situation has changed and whether it needs to be reviewed”, and made no apology for this: “The open licence provides benefits to those who receive it, but we must ensure that they are entirely in line with Government policy.”80
Conclusions and recommendations
73.We welcome the fact that Standard Individual Export Licences were processed more quickly in 2016 than in 2015, as long as this was not accompanied by a reduction in the quality of the consideration given to applications. We note that the head of the Export Control Joint Unit told us that he could not show any “improvement in terms of metrics” since the Unit’s formation in July 2016; and that industry told us the formation of the Joint Unit has made no perceptible difference to the processing of licence applications. The Government should set out, in its response to this report or in correspondence, clear evidence to show the benefits brought by formation of the Joint Unit. This evidence must include (but not be limited to) data in respect of processing times for all types of licence.
74.We are concerned to have heard from industry that the Open Individual Licensing System is “fraught with perceived problems and delays, especially when it comes to the time and bureaucracy involved when exporters seek to have the existing OIELs renewed or replaced”. While we acknowledge that such applications require careful consideration, the Government should bring forward detailed plans to address unnecessary delays and bureaucracy in the process; and it should show how they will be addressed in the design of the new LITE online licensing system.
67 Department for International Trade, “Notice to exporters 2016/20: export control joint unit goes live”, 28 July 2016
68 United Kingdom Strategic Export Controls Annual Report 2015, HC (2016–17) 594, pp 1, 18; HC (2017–19) 287, pp 1, 19, 20
74 SIELs could previously be applied for through the Electronic Licensing via the Internet System (ELVIS); and OIELs could be applied for through a CD-ROM-based system, Open Licensing Liaising with Industry Electronically (OLLIE) – Export Control Organisation, Introduction to the Export Control Organisation and to Export Controls, January 2006, p 13
Published: 18 July 2018