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Lord Fraser of Carmyllie: I was 16 months old.

Lord Callaghan of Cardiff: My Lords, whatever age he was, I am sure that he looked as young and handsome as he does now! There must be some noble Lords who remember the refitting of the naval ships when I was Foreign Secretary and the fact that we considered that we had to fulfil past contracts. Noble Lords may remember the flack that I took at the time when we had a public debate about the matter, which is the difference. Now they are all hidden away. Surely the refitting of naval ships and sending them, as I did, to Chile, which was under a dictator, was almost on a par with what was being done as regards Iran and Iraq. We thought that it was the right thing to do and we took the flack. There was a public debate about it, and that is the difference.

The Government would have escaped from many of their problems had they not concealed the facts but exposed them to public gaze and public argument. If they had ridden out the troubles, they would have had far fewer problems since. They would have escaped all the wretchedness that has been connected with this business during the past four or five years. I believe that the decision not to publish and not to allow public debate on the issues got them into trouble.

When the guidelines were amended at the end of the Iran-Iraq war the Government did not admit that, as the noble and learned Lord, Lord Hailsham, said. The tenor of their replies led Members of Parliament and the public then to believe that the Government's practice was based on the first guidelines to be published. I do not believe that that can be disputed. All the answers that were given were directed to leading the receiver to believe that what the Government were talking about were the original guidelines and not the amended guidelines. That is the reason for saying that Parliament and the public were misled. That led to a number of evasive replies to parliamentary Questions.

Another serious point is that it led to the Government implementing a policy different from the public statements that they were making. The fact that the guidelines had been amended was discovered only by

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accident when an official giving evidence to the Treasury Select Committee happened to say so, believing that it must have been known already. It was not. That was the way in which the amendment came out, but it was never admitted by the Government.

I turn to the problem which junior Ministers face. The action led to them almost taking control of the formation of policy in this area for at least two years without either let or hindrance. One Minister would give a nod and a wink indicating how to get round his own Government's policy, which ended up with some people being put in the dock in the Matrix Churchill case.

The action also led to Mr. Waldegrave stating:

    "All applications for export licences ... continue to be rigorously scrutinised to ensure that they fall within these guidelines".
It was not true and it is not true. I am sorry if Mr. Waldegrave is a man of honour, but the statement simply was not true. He may have deceived himself, but it was not true. Lord Justice Scott concluded that it was not true and one has only to read the paragraphs to see that it was not true. I do not understand how Mr. Waldegrave, an intelligent man, is lamely trying to defend the proposition that a change in implementing policy is not a change in policy. He has rightly been condemned for sophistry, as my noble friend Lord Richard said. I will not make too many quotations, but Sir Richard Scott said:

    "I regard Mr. Waldegrave's view as being not even remotely tenable".
He also stated:

    "I did not receive the impression of any insincerity on his part".
Let it be said in mitigation that there was no impression of insincerity, so if he was not a knave what was he, a simpleton?

Lord Hailsham of Saint Marylebone: Neither. He is a Fellow of All Souls, Oxford!

Lord Callaghan of Cardiff: My Lords, perhaps then as a Fellow of All Souls he was a clever silly! That is it; I shall spend no more time on that point.

I repeat, I do not argue that every act of high policy can be revealed, excepting issues such as interest rates and exchange values. However, perhaps I may give an example that has not yet been mentioned relating to nuclear issues. Ever since we struck up a relationship with the United States in the early 1940s it was not the practice, in particular during the Cold War, for discussions to take place in Parliament about the nature of that relationship and the pacts that had been entered into. Indeed, the information was not always revealed to the Cabinet but was sometimes kept to a small group of senior Ministers. In respect of one particular narrow but important issue, the relationship with the United States was never disclosed because it was conducted on a personal basis between President and Prime Minister at the beginning of every term of office of a new Prime Minister. Your Lordships do not find me arguing that everything can be revealed; I do not accept that. But since the end of the Cold War circumstances have been much easier. It is possible to be more open even about this matter and greater frankness can be expected.

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However, no one can claim comparison between the measures in the public interest which were adopted in our relationship with the United States as regards nuclear issues, when the world may have been faced with a holocaust of a nuclear war, and the supply of machine lathes to Iraq or Iran. The two issues are totally out of proportion and, in my view, there is no reason in the public interest why the matter should not be fully and wholly known to us all.

I have no doubt that the Government could have been better advised to try to gather public support for what they were doing and to face the criticism that would undoubtedly come. They would have escaped the inquiry; but Ministers proceeded on their own.

I wish to make one further point. After the end of the Iran-Iraq war there seem to be little reference to the Cabinet or the Overseas Policy Committee giving much thought to the strategic consequences. I hope to hear the noble Baroness, Lady Thatcher, comment on that. It was known that strategic issues had to be reviewed at the end of the war. Her Secretary, Sir Charles Powell, answered a letter in such terms in 1988, only asking that because those very important issues would have to be measured and decided, the Prime Minister should be kept informed. She was not. Perhaps for two months the letters passed but after that, they faded away. The junior Ministers took over. For a period of about two years, three junior Ministers were handling practically all those important issues. They were not qualified to do so in terms of the strategic issues which have to be answered. Only the Prime Minister and the Foreign and Commonwealth Secretary, together with their senior colleagues, should have done that. Why did they not do so? I hope that the noble Baroness will tell me why, when she was not informed of the progress, she did not follow that up when those important issues were involved.

In the absence of direction from the Cabinet, it was the three Ministers of State who were taking the decisions which led to Parliament being misled. They were an oddly assorted group. There was Mr. Waldegrave who was always pressing for restraint; he wanted to hold back. There was Mr. Alan Clark, with his devil-may-care attitude, who was concerned only with getting jobs and exports and was determined to do that because he thought that the guidelines were a lot of nonsense. Then there was the noble Lord, Lord Trefgarne, who sits in this House. It is difficult to assess him. He was on the side of whichever department he was in. When he was at the Ministry of Defence, on the whole he tended to side with Mr. Waldegrave. When he went to the Department of Trade and Industry, he put off that robe and assumed a new raiment. He was then very much in favour of relaxing the guidelines as quickly as possible. Therefore we can presumably place him as a floating voter.

When one reads the minutes, it is quite clear that each peddled his own departmental interests fiercely but there was no one of sufficient authority--and I ask the noble Baroness why that was so--to settle policy on the main strategic issues that had been raised by Sir Charles Powell in the letter in which he acknowledged the first approach that had been made.

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Therefore, for two years events and matters were left in their hands. It was then that Nicholas Ridley raised the issue with the Prime Minister. He was the Secretary of State for the Department of Trade and Industry. He urged a thorough review. I note that the Chief Whip is attempting to rebuke me, but I have not yet heard any of these arguments put and I believe that they are worth putting. Nicholas Ridley urged a thorough review of export policy and the Prime Minister decided that Mr. Hurd should conduct such a review with the other senior Ministers. That was two years later. In the meantime, the Government were getting deeper into the pit because of lack of direction at the top. The most damaging consequence of the failure to grasp this issue firmly was the Matrix Churchill case.

The Government were mistaken in not developing the guidelines so that the public could judge. They allowed it to be thought that export applications were being rigorously scrutinised. As has been said this afternoon, they were not being rigorously scrutinised; they were being scrutinised with a view to seeing how much could be given to one of the combatants.

I have taken too long and I apologise to the House for that. There is a great contrast in the debate today compared with the debate last week. In my view--and I speak with as much fairness as I can muster--the Government have discredited themselves by what has taken place over the past few years in relation to this particular matter. What is worse, they have discredited most of the rest of us because we are all tarred with the same brush; namely, that we have all tried to keep things from people and have acted in our own interests or whatever may be the criticism. I have a feeling that the country will not put up with it for much longer.

5.4 p.m.

The Lord Bishop of Lichfield: My Lords, I am grateful for an opportunity to speak briefly and to take up some of the issues which have already been raised. I should like to say a few words about arms sales; accountability in the light of the report; and I shall also attempt to be constructive.

In 1994 a Church report called Responsibility in Arms Transfer Policy was published. The report was prophetic in that it stated clearly that we need a national policy which is ethically responsible, transparent, publicly accountable and consistent. The coming now of this report brings back that prophetic side of the Church report in 1994.

With regard to arms sales, I suggest that we need to develop a society in which, as Cardinal Hume stated on numerous occasions, there is a moral presumption generally against arms sales unless the case for a particular transfer can be shown. I hardly need to remind your Lordships that arms are not like other goods. Of course they are designed to defend but they are also designed to kill, threaten and injure.

This report and inquiry provides an opportunity to set new standards in this matter because it is clear that in this particular affair the standards of truthfulness, accountability and honesty needed to be adhered to and,

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whatever the to and fro of this debate, are still not generally perceived to have been observed by many people among the general public.

Therefore, we are reminded that Ministers in positions of public responsibility should be seen to be accountable. That is still not crystal clear in the present state of this discussion. They have a duty to tell the truth--not half truths and not just a presentationally convenient part of the truth. There is a widespread perception that in recent years there has been something of a decline in standards in this matter.

In addition, Sir Richard Scott has shown that an overhaul of the licensing system and parliamentary accountability--both of those issues are mentioned in the report--are required. Technical details must be worked out with a clear need for openness, accountability and honesty. Sir Richard's report makes that clear.

As regards being constructive, I believe that the criteria outlined in paragraph K2.18 of the report presents a good basis for further development. Sir Richard makes recommendations in relation to complying with treaty obligations binding on the United Kingdom; the protection of our armed forces; the prevention of terrorism; and the avoidance of assistance to human rights abuses in foreign countries. Having worked for nearly 10 years in Uganda at the time of the Amin regime, I am particularly sensitive to the importance of that recommendation within the Scott report. He makes recommendations also in relation to avoidance of assistance to serious crime in foreign countries which is an issue that has already been referred to this afternoon; and the avoidance of assistance to aggression by foreign countries.

That clear statement of expert criteria and a recommitment to make such criteria the core of export policy is very much to be welcomed. The supervision of such policy will require vigilance and parliamentary control. Again, those are details which must be worked out.

In concluding my remarks, I should like to go further. I believe that there are other points in the Church report which could strengthen Sir Richard Scott's framework. First, there is the tug of war to which the noble Lord, Lord Callaghan, referred--that is, the tug between commercial needs and what is right. The difficult tension of that struggle between truth, rightness and industrial prosperity must never be relaxed. In particular, the question of political and ethical judgment must always have the upper hand.

The Church report goes on to say that there should be clear separation between arms transfers and the provision of aid, and that there should be a refusal of arms transfers to regions of tension, except to countries which are adjudged by the international community to be under threat and insufficiently armed. There also needs to be--and the report upholds this--a rejection of arms transfers to countries guilty of grave and consistent violations of human rights and those which have an unnecessarily high level of arms spending.

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In taking note of the Scott Report, my own hope would be that your Lordships' House will see that there are such deeper issues to do with the arms trade itself and to do with the public perception of ministerial accountability to which I have referred. Principled decisions will need to bear the test of time, but they will always be preferable to the arguments of short-term expediency and quick profit. To take considered and decisive steps on the basis of Sir Richard's inquiry at this juncture would do much to restore confidence in our public institutions.

5.11 p.m.

Baroness Thatcher: My Lords, in order to keep to my 10 minutes, which I had understood to be the maximum time that we had, I shall not honour the right reverend Prelate the Bishop of Lichfield; I shall get on with what I had intended to say. For some time now a great deal has been said about what has been misleadingly called "Arms to Iraq". Indeed, some of the Opposition and the media seemed to have made up their minds in advance that the Scott Report would attribute deliberate intent to the Government, both in breaking their own guidelines which prohibited the sale of lethal equipment to Iraq and Iran and in conspiring to send innocent men to prison. I never believed that Sir Richard Scott would make any such findings, and he does not do so. Indeed, he makes it absolutely clear that the Government did not authorise the sale of any lethal equipment to Iran and Iraq. By contrast, some of our competitors, particularly our fellow European Union members, showed no such restraint.

Nevertheless, the report raises important issues, many of which have been mentioned this afternoon, which merit full discussion and examination. I am sure that the Government will give both to them. As my noble and learned friend said, in that category are improved arrangements for the control of sensitive exports and improved handling of intelligence material in Whitehall--though I personally will always be on the side of those who wish to see the greatest care exercised in dealing with intelligence, remembering that carelessness can very easily put lives at risk. I believe that the Government have already taken action to deal with failure to ensure that Ministers responsible for decisions have access to all relevant intelligence and information.

On the question of public interest immunity certificates, there seems to be a divergence of view between lawyers, with many eminent judges, including the Master of the Rolls, Sir Thomas Bingham, and eminent and learned barristers, including my noble friend Lord Alexander of Weedon, supporting the view taken by the Attorney-General, as, indeed, I do. It is difficult when judges take different views. You might expect that of politicians and, of course, you would expect it in the Court of Appeal and in the House of Lords. But it is difficult when they take apparently different views on the subject.

I am most grateful to the noble and learned Lord, Lord Lloyd of Berwick, for the clearest and most authoritative exposition that I have heard on all the law to date. If I had been in No. 10 I would have said,

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"Well, that's that; put it into the pipeline and abide by it". I am not quite sure what the pipeline is, but I hope that that will be the case and that we can accept that fact. I have always believed that a public interest immunity certificate could not be final; a judge had to have the ability to disclose documents to the defence. Indeed, you could not have justice otherwise. That does in fact turn out to be the case, as I hope will be made clear.

The most contentious area of Sir Richard's report, as far as it concerns my time as Prime Minister, is his conclusion that the guidelines for the sale of defence equipment to Iraq and Iran were surreptitiously changed in 1988-89 and that this was not reported to Parliament. On that matter, I differ from Sir Richard. The original guidelines came to me for approval in 1984, approval which I readily gave.

Thereafter, no proposal to amend them was put to me until 1990. Then it came in the quite different context of the worldwide relaxation of COCOM controls. When such a change was being considered in 1990, it was explicitly and rightly envisaged that Parliament should be informed. In the event, the change was not made because the Gulf War intervened.

Sir Richard's report shows that there were discussions among junior Ministers and officials about possible evolution of the guidelines in 1988-89. I was not aware of those discussions at the time, but I would not expect to be told every detail of the handling of the guidelines in the light of changing circumstances. You must take account of changing circumstances when applying guidelines. In any event, the report indicates that the discussions were not conclusive and no recommendations for a change were brought forward to me or senior Ministers.

Equally, it must be remembered that the guidelines were precisely what their title implies: a guide to officials on how to handle applications for the export of certain sorts of equipment. Their core was the firm injunction against selling lethal equipment and that was scrupulously observed. But they retained an element of flexibility for dealing with non-lethal equipment.

That flexibility naturally took account of changing events, including the ceasefire between Iraq and Iran in 1988, as well as a number of other developments. The interpretation of the guidelines evolved to keep pace with those developments, without any need to change the guidelines themselves.

For example, on the big issues, the proposed sale of the Hawk trainer aircraft was rejected out of hand, while on the borderline cases, the Scott Report clearly shows Ministers and officials exercising enormous care in trying to reach decisions. Indeed, I believe that all fair-minded people would agree that the civil servants handling those difficult matters acted conscientiously and in good faith and should not be stigmatised.

If there was no change in the guidelines--and there was not--then the question of deliberately misleading the House does not arise. I am sure that there was never any intent to mislead on the part of Mr. Waldegrave or any other Ministers--and Sir Richard Scott himself concludes that there was not duplicitous intent.

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As my predecessor in No. 10 indicated, there will always be issues upon which Parliament cannot be as fully informed as might otherwise be desirable. I believe that he will remember that Parliament was not informed about the upgrading of Polaris to Chevaline. Doubtless there were good reasons for that, and I do not criticise that decision. Both Conservative and Labour Governments have found it necessary on occasion to be reticent with the House. I accept that the presumption should always be in favour of informing Parliament unless there are very strong reasons to the contrary. But we should recognise that it will not always be possible, and that has been accepted by previous governments of both parties.

In summary, we should thank Sir Richard for the immense amount of detailed work which he put into the report and study very carefully all the lessons which arise from it. We should bear in mind that government does not always lend itself to the exactitude rightly sought by the law. I come from a period at the tax Bar, so I know what exactitude means; it is quite different from government--we make the law; we do not apply the law.

Finally, amidst the mass of detail we should remember that at the end of the war to liberate Kuwait--in which the British Government and Armed Forces played such a proud role--no British lethal equipment was found among Iraqi supplies on the battlefield.

5.20 p.m.

Lord Cledwyn of Penrhos: My Lords, we much appreciated the speech of the noble Baroness. We are fortunate to hear the experiences of two former Prime Ministers, and their speeches have made a significant contribution to the debate. We also welcome our new colleague here, the noble Lord, Lord Taverne, and we very much look forward to his speech.

This long and intricate report has attracted more argument and dissent than any that I can remember, but I think all of us would agree that the main conclusions and recommendations should be made clear to the public because they will not have the opportunity to read its 1,800 pages. For this reason I think Sir Richard Scott was right to intervene last Friday and to correct those who were arguing that he had said there was no conspiracy and no cover up, even though his report contained no such statements. This shows that the long and complex document should be studied with great care.

Sir Nicholas Lyell and Mr. William Waldegrave are in the most exposed position and it is very much in their interests and Parliament's that their actions should be clearly understood. As my noble friend Lord Richard has said, the Matrix Churchill trial lies at the heart of the report. Here three innocent men could have been sent to prison on false charges allegedly to suit the Government's objectives. The report makes plain, however, that the Attorney-General's advice to Ministers about signing the PII certificates was as follows,

    "based on a fundamental misconception of the principles of PII law and without sound legal foundation".

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It has been clear from this debate so far that there are differing legal views on Sir Richard Scott's ruling. There is also the additional point that the Attorney-General failed to inform the prosecution that Mr. Michael Heseltine had serious doubts and feared that the withholding of crucial evidence might produce a miscarriage of justice. Fortunately, the learned judge in the case threw out the certificates and the men walked free. The President of the Board of Trade made what I thought was a weak attempt to defend the Attorney-General in another place, though both he and the Attorney himself should have realised that the integrity of British justice was on the verge of being seriously damaged. That is a lesson which should be taught in every law school in the country.

I now turn briefly to Mr. Waldegrave. I find his activities difficult to follow, especially the 38 letters he wrote in 1989 which are held to have misled Parliament. I get the impression that Mr. Waldegrave was wallowing in a mishmash of uncertainty at the time. For example, in a draft Sir Richard Scott writes,

    "Taken overall, the terms of Mr. Waldegrave's letters were apt to mislead the readers as to the nature of the policy of export sales to Iraq currently being pursued by the Government. Mr. Waldegrave was unquestionably in a position to know that that was so".
But in the report itself at paragraph D4.12 Sir Richard states,

    "Mr. Waldegrave was in a position to know that that was so although I accept that he did not intend his letters to be misleading".

I also regret to say that I feel that Ministers and civil servants interfered far too much in the process and production of this report. The fact is that the Government spent more on monitoring and lobbying the Scott Inquiry, £1.9 million, than the total amount spent on the inquiry itself, £1.8 million. Furthermore, the Prime Minister's Office and other departments have been working full-time in preparing a reply to the report. This is not an attractive scenario. It reveals a nervous and uncertain Government searching desperately for a way out of a quandary. But here again the Prime Minister and his colleagues made things difficult for Sir Richard, who had an extremely difficult task.

Finally, noble Lords will remember that we spent many hours in this House in debates and at Question Time seeking information and clarification about the sale of arms to Iraq and to Iran. This is referred to in detail in the report, as noble Lords will have noted. I hope I may be allowed to read out a question which I put to the Minister at Question Time on 14th December 1989. It was a question which noble Lords in this House and in another place were asking then.

    "Is it not the case that Iraq has an appalling record on human rights and that it is responsible for killing, torturing and imprisoning thousands of Kurds and members of opposition parties? It has imprisoned two British citizens and has not responded to representations made by the Government and others. Is it not further the case that the Government sell arms to this country and give it export credit? What kind of standards are the Government adhering to in these circumstances?".--[Official Report, 14/12/89; col. 1398.]

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I did not receive a satisfactory reply, although I was supported by a number of colleagues, including the late Lord Grimond on the Liberal Democrat Benches. The reply was inadequate, and the situation has never been made clear to us. This has been one of our problems in considering this report.

The report contains many of these government uncertainties. I am glad that the Prime Minister has agreed to accept and implement Sir Richard Scott's recommendations, as explained by the noble and learned Lord, Lord Fraser, in his opening speech. Yet this is a sad chapter in the Government's record and nor is it primarily a party political matter. When I entered this building 45 years ago I was immensely proud to become a Member of the world's greatest democratic institution. We do not want this Parliament damaged or its reputation destroyed. That is why we must avoid evasion and perversion when we deal with the Scott Report. Ministers will only gain respect if they face the realities and tell us and the people of this country the complete truth about all these problems. I appeal to them to do so.

5.28 p.m.

Lord Taverne: My Lords, it is, I understand, the tradition of this House--as indeed it is of another place--that maiden speeches should not be controversial. It may perhaps therefore surprise some noble Lords that I have chosen to make my maiden speech on the Scott Report whose publication has not been altogether without a measure of dispute. Let me therefore say that I hope to avoid controversy, certainly party controversy. If I stray into saying anything which may appear controversial--even designedly so-- I assure your Lordships I have no intention to be controversial, and certainly have no duplicitous intent.

As many have observed, the Scott Report is somewhat contradictory. It reminds me somewhat of a verdict by a jury in Southend at a time before the drinking and driving laws were changed in 1967. In those days a jury had to decide whether a defendant was unfit to drive through drink. In that particular case the jury reached a verdict: "drunk but not unfit to drive". It was the kind of verdict that led to a change in the law. There will now, it seems from the noble and learned Lord's opening statement, also be changes in the approach to public interest immunity certificates.

I want to speak today as an ex-Minister rather than as an ex-lawyer. It is a very long time since I have practised law. It is also a considerable time since I practised as a Minister. I want to make a few comments on the Matrix Churchill case and ask where we should go from here. In order to see where we should go it is important to look at what happened.

It has been very strongly argued by the Attorney-General, and in this House by the noble and learned Lord, Lord Lloyd of Berwick, that Sir Richard Scott was wrong in the view that he took of the law on public interest immunity certificates. The noble and learned Lord, Lord Lloyd, said that there was no doubt that the law was clear. I was a little surprised to hear him say so since other eminent lawyers, including the

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noble and learned Lord, Lord Scarman, felt that the law was clear in an opposite direction. The Attorney-General and the noble and learned Lord, Lord Lloyd, have strongly contended that, if these certificates cover documents within the right categories, Ministers have a duty to sign them and they should not concern themselves with questions as to whether the actual documents for which the immunity is claimed should be disclosed to the defence.

Let me assume that the law was as the Attorney-General and the noble and learned Lord, Lord Lloyd, say that it was. If that is so, it led to some very strange results. Was it really the case that Ministers must not concern themselves in these kind of circumstances with the issues of justice and the miscarriage of justice? Are questions whether someone may be wrongly tried or convicted perhaps to be regarded as questions too difficult or too technical to be considered by Ministers? Are they questions which should be reserved only for lawyers and the courts? That is what the doctrine seems to imply. Are Ministers to be, as my noble friend Lord Jenkins pointed out, rubber stamps? In which case, why do not civil servants sign the certificates? That is a question which was asked by Sir Richard. Indeed, it was a question asked by Mr. Heseltine.

No doubt there will be many cases in which Ministers will not be in a position to judge whether documents are relevant or should be disclosed. But the Matrix Churchill case shows how perverse the consequences of that doctrine can be. Here was a case which had had widespread publicity before the trial started. The Prime Minister, the Secretary of State for Defence and other members of the Cabinet were kept informed of the progress of the case. Ministers in the Department of Trade were to be witnesses in the case. The documents for which immunity was claimed were documents produced by the Department of Trade and Industry. Yet Mr. Heseltine, the head of the department which was centrally involved, was solemnly told that he had to sign a certificate to exclude from disclosure to the defence DTI documents which he thought were clearly relevant to the defence. He was told that it was his duty not to express any view on relevance. That was for the experts--the lawyers--not for him. Even though he felt that the defence needed the documents, and that if they were not disclosed innocent people might perhaps be convicted, he was told that he could not say so in his certificate. He did not say so in the certificate in the end, and he was told that he had to sign it.

What are Ministers for? Contrary to popular belief, they do not see as their ultimate role model the right honourable James Hacker. Mostly they are concerned with justice. And issues of justice and injustice, relevance or irrelevance, are not always so difficult or technical that they are beyond the wit of lay Ministers to judge. In fact, in the Matrix Churchill case the Minister concerned, Mr. Heseltine, actually had a clearer view of the relevance of the certificates than prosecuting counsel, who argued that they were irrelevant.

If the law was as the Attorney-General and the noble and learned Lord, Lord Lloyd, say it was, it is also not surprising that it led the Attorney-General into a rather

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embarrassing position. The Attorney-General accepted at a certain stage that he should take an overview of the case. That is something which he did not mention in his letter to The Times today, but it was an important feature. Nevertheless, he still felt no need to examine the documents which had caused Mr. Heseltine such concern. He did not find any need to mention Mr. Heseltine's concerns to the prosecuting counsel when he had a conference with prosecuting counsel a few days later.

If one was an ignorant outsider one might perhaps say that this was an extraordinary omission, that perhaps it was even negligent or irresponsible. But, good heavens, no, it was apparently his duty under the law as he saw it to see that the PII certificates were properly issued and signed and it was solely for the courts to decide whether they were relevant.

It has always been assumed that the judge was bound to look at the documents. However, on the best legal advice I have been informed that at that stage it was not customary for judges necessarily to look at the documents. Indeed, there have been some recent decisions in which judges have been told to be very hesitant about going beyond the certificates. In fact, counsel for the prosecution argued that there was no need for the court to look at the documents. He said, quite fairly, that he was happy for them to be disclosed, but he said that there was no need and he later argued that they were irrelevant. So Judge Smedley emerges as one of the two heroes of this rather sorry story.

If then, my Lords, the law was as the Attorney-General contends, and what it appears to be according to the noble and learned Lord, Lord Lloyd--and I realise that there are many eminent people far more learned than I who argue that that is the correct view of the law--and Sir Richard and the noble and learned Lord, Lord Scarman, are wrong in their view of the law, the conclusion seems to follow that the law was wrong. Indeed, an irreverent outsider who was not constrained by the inhibitions of making a maiden speech might even say that the law was an ass--but I could not possibly comment.

I welcome the fact that after the Scott Report there will now be a general discussion of PIICs. I hope that the Government, in the course of taking part in those discussions, will take into account the fact that Ministers cannot be expected simply to act as rubber stamps.

There must also be a sea-change in the whole culture of secrecy in government and Whitehall, not just this Government but all governments. It seems to me that the Scott Report presents a very powerful argument for a new freedom of information Act.

5.37 p.m.

Lord Simon of Glaisdale: My Lords, it is a real privilege to be the voice of your Lordships in congratulating the noble Lord on his admirable maiden speech. The noble Lord has had a distinguished career in the law and has been a distinguished departmental Minister in more than one department. He has also been concerned in commercial administration. Perhaps I may mention one other achievement which he brings to this

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House. He was one of the founders of the Institute of Fiscal Studies, whose activities have been so valuable. Indeed, he was its first president. So he comes to your Lordships' House bringing valuable gifts. Your Lordships will want to hear him again soon and will be all agog to hear him when he can be really controversial. In the meantime, I express the hope of all your Lordships that we may hear him speak again soon and often.

Important issues are raised by this report. The list of speakers is of great length and includes people whom your Lordships will want to hear on particular aspects. Therefore, I propose to confine my remarks solely to the question of the PII certificates and the advice given by the Attorney-General. In my respectful submission, that advice was not only given in good faith but was entirely correct in law. In that, I am reinforced by what has been said by my noble and learned friends Lord Lloyd and Lord Hailsham.

It was the duty of a Minister, clearly established as a duty and not a privilege or a discretion, to indicate clearly to the court the degree of confidentiality or secrecy which attached to any evidence, particularly documentary evidence, that might be advanced to the court. It was the duty of the litigant who desired to know the content of that evidence to urge the contrary. It was the duty of the court to weigh those two conflicting aspects of the public interest one against the other and to decide which should prevail. That is indeed precisely what the learned judge did in this case.

I need refer only to one of the seminal cases which has been mentioned today--Duncan v. Cammell Laird. I merely draw to your Lordships' attention that if the many documents--contracts, blueprints and so on--for which immunity was claimed had been divulged they would have shown a new type of torpedo tube fitted to the submarine. We were at war and that was highly secret. Therefore it is quite wrong to talk as though a class claim is merely a matter of a minute made by a minor official.

The law in that case was stated by Viscount Simon. He indicated that there were two categories: a contents document where the contents would be dangerous against the public interest if divulged; or a class of document which should not be divulged for the proper functioning of the public interest. However, he went far beyond what was necessary to decide that case. He said, for example, that the claim of immunity by the Minister was conclusive. He also stated broadly the claim on the class basis. That was lapped up with great glee by officialdom. It gave them a blanket cover. Professor Wade in his famous book on administrative law said that, that case having given officialdom a blank cheque, officials could hardly be blamed if they overdrew on the account.

I mention only one case where there was an overdrawing because it is relevant to the consideration which your Lordships have. That is Odlum v. Stratton in 1949. It was a libel action in which the professional competence of a farmer was in question. A series of reports on his competence was in the hands of the Ministry of Agriculture. The Ministry claimed that it

26 Feb 1996 : Column 1266

was immune from disclosure except for two documents. Those two documents told against the plaintiff. He wanted to see the others, but those were the only two for which immunity was waived. The judge had no doubt at all, nor do I think would anyone reading a transcript have had any doubt, that the documents were divulged precisely with the objective of discrediting the plaintiff.

Does that not show how dangerous it is to leave to a Minister the right to pick and choose as to what evidence should be divulged to the courts? Fortunately the answer was given in the case of Conway v. Rimmer. It was not for the Minister to argue conclusively. It was for the court to decide, weighing on the one hand what the Minister said as to the degree of secrecy and confidentiality, and, on the other, what the litigant said as to why the document was germane to his case.

That was the leading case up until the time that the Attorney-General had to advise in the present case. In other words, the Attorney-General's position was that he was bound to advise the Ministers that they should not attempt themselves to judge where the balance lay. That was for an independent court. He could point, though he did not so far as I know, to Odlum v. Stratton to show how partial the ministerial view might be. So it was vouchsafed to an independent judge. It was on that base that the Attorney-General gave his advice in the case which your Lordships are now reviewing. In my respectful submission, it was entirely right for the reasons that have been given by both my noble and learned friends.

Since then we have had later cases which have thrown more light, giving a greater discretion to the Minister. However, your Lordships may think that they should be viewed in the light of Odlum v. Stratton, in which a one-sided view of where the public interest lay was vouchsafed by the Minister.

What is the correct position? It is for the Minister to say where, from his departmental point of view, the public interest lies; it is for the litigant to say why that is not sufficient; and it is for the judge to do his judicial duty and choose between them. That is what happened in the Matrix Churchill case.

There is this also to be said. The judge took his view in the light of all the circumstances. On the one hand, he weighed the public interest asserted by the Minister, and, on the other hand, the need for disclosure in a court of justice argued for by counsel; and he decided rightly and fruitfully that all the documents should be disclosed. That was for him and not the Minister. In my respectful submission, the view put forward by my noble and learned friends Lord Lloyd and Lord Hailsham was precisely right. It is for the courts to judge and not for a Minister, however well informed, because he is almost bound to take a partial view.

In my respectful submission, in this case the Attorney-General gave the right advice. It was then open to those who wanted greater scrutiny of the material to argue before the judge, as they did successfully. If the law is allowed to operate in that way, it will do so fairly, as it did in the outcome of the case under review. However, if there is partial interference, the law is liable to miscarry.

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For those reasons, it seems to me that the advice given by the Attorney-General in this case was right. We shall have to watch carefully if there is a partial divulgence by Ministers, lest they take an exclusively Executive view. It is far better that they should put forward their view, the litigant should put forward his view and it should be left to the judge to decide.

5.52 p.m.

Lord Howe of Aberavon: My Lords, I should not be one to argue that this case shows a pattern of conduct free from error. Whose can be so? Nor should I begin by trying to minimise the importance of the original crisis, the collapse of the Matrix Churchill trial. That was the cause of the original public dismay which the inquiry was designed to allay. The tragedy is that it has taken us so little distance along the way towards clarity in the matter.

The noble Lord, Lord Cledwyn, referred to his difficulty in analysing the conclusions. We much welcomed the maiden speech of the noble Lord, Lord Taverne, who gave a rather harsh, if rather uncontroversial, judgment on it when he compared the case with the verdict of a Southend jury. I am not sure whether we look forward to the development of the noble Lord as a former lawyer or as a former politician, but we look forward to hearing him develop his talents in both fields.

The tragedy is all the greater because the story is one in which there are no villains and almost no villainy. I say "almost no villainy", because one cannot accept the reckless part played, I am afraid, by my honourable friend Alan Clark in the early stage in the matter. For the rest, all the actors were concerned only to promote or reconcile legitimate British interests or, at the least, interests which they were legitimately entitled to pursue. Yet we are left with many uncertainties. They are due to the form of and procedure adopted by the inquiry, about which I have said much in the past and to which I shall address myself again in a minute.

It is harder now to justify the procedure adopted even than when I first began launching my criticisms, if only to judge by the reactions that have followed publication of the report. First, there is shock, amounting almost to disbelief, at the length and density of the documents presented to us. Secondly, there is the universal difficulty in securing agreement on the substance of almost any of the conclusions, even on the law affecting PII. Finally, there is dismay--which I share--at the sharpness of Her Majesty's Government's reaction to the report. That was understandable, however much people may regret it, because the Government's defence had never been positively put forward in the course of the proceedings. The key conclusions positively in favour of the Government were scattered, buried in the body of the text. In Volume II, page 784 and volume III, page 1538, there were the clear acquittals on the key charges that Britain supplied no weapons to either side and that Ministers did not conspire to send innocent men to jail. Other misunderstandings are a consequence of proceeding, for example, by circulation of drafts from which leaking was almost inevitable, although the defence case at that time had never been heard. There

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were drafts where it was hard for the defence to secure the changes that they required. When they sought to procure the changes or even when Sir Richard Scott made them, the noble Lord, Lord Cledwyn, said that the Government were devoting efforts to getting at Sir Richard. They were intended to get at him in that way. In a newspaper headline shortly afterwards, the Independent said that Scott had been nobbled by the Government. But the procedure was designed to expose his thinking so that he might be nobbled.

It is less than satisfactory. The inevitable result has been confusion and unfairness because the procedures were fundamentally flawed by the standards of the Salmon Commission reporting 30 years ago. It is important to understand the background to that. Salmon designed procedures specifically to correct the faults of the inquisitorial procedure. He did so because of the concern at that aspect of the masterly report produced by the noble and learned Lord, Lord Denning, on the Profumo affair. The noble and learned Lord complained at having been required to act as detective, inquisitor, advocate and judge.

Therefore, Lord Salmon and his colleagues deliberately introduced elements of adversarial procedure, notably defined as:

    "the elementary right of being represented".

It is for that that I was pressing, but not in this case essentially for the right to cross-examine because that was hardly necessary. Certainly those of us who gave evidence were subjected to nothing but cross-examination. We were all treated in the same way. Virtually all the public and press saw of that part of the inquiry was the case for the prosecution being presented by the tribunal against us. What I was pressing for above all was that the tribunal should hear counsel, argument and representations on behalf not only of individual Ministers like us but also on behalf of the great departments of state whose records were being examined by the tribunal. I urged the Government specifically to seek the same right.

It is hardly surprising, in the absence of their having done so, that so much of their case has gone by default and had to be recovered by intemperate methods when the report finally came out. But Sir Richard would have none of that. He gave a long lecture to the Chancery Bar Association, summarised in the report. Its conclusions may be summed up in one sentence:

    "An insistence on an essential role for witnesses' lawyers in oral hearings is in my view unnecessary".
Lawyers before the tribunal could specifically be seen but not heard. The Secretary to the inquiry, in a letter addressed to me on 28th February (to be found in Appendix A, Part D) said that appearance by counsel would be "otiose and impractical". So there was the emphatic dismissal of the elementary right of being represented. That produced injustice to those who had to face years of critical and satirical tribulation--and I think particularly of William Waldegrave. Of all the Ministers, he was the most concerned to uphold the proper control of arms exports. Yet he, with other colleagues, has been exposed through three-and-a-half years to pre-emptive recrimination. But it was not only

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that about which I complain but also that the procedures disabled the inquiry itself by ensuring that the judge and those working with him were in a condition of almost total isolation from human exchange, dialogue or advocacy on behalf of the inhabitants of the outside world.

The inquiry went beyond that by making almost a virtue of such isolation. Mr. Muttukumaru gave a lecture, unusually, about the procedure while the inquiry was going on. He said that the judge had

    "an unrivalled insight into the whole picture".
In the same letter to me of 28th February 1995, he said that the judge had:

    "the best overall perspective on the matter".
It is hard to think of a better way of defining the claim to a panoptic vision denied to everyone else, but therefore, by definition, almost closed to advocates on the outside. That is true a fortiori, when one reflects, again unusually, that the judge was accompanied by no lay expert assessors at all. They are available in any form of inquiry. For example, in the Franks inquiry into the Falklands affair they were available, when it was set up in that way. They were available to me in a much more humble setting when I had to inquire into allegations of cruelty in Ely hospital in South Wales. There I enormously benefited from the presence alongside me of a hospital administrator, a senior nursing officer and a consultant psychiatrist. So I had lay experts. They were available to Lord Justice Edmund Davies in Aberfan. They were available to Lord Justice Bingham in the BCCI inquiry. In his report he paid tribute to the invaluable insights and guidance that he obtained from them. These are the deficiencies.

I do not believe that, had Sir Richard Scott heard oral representations from counsel and been equipped with lay assessors, it would have lengthened the proceedings. On the contrary, between counsel many matters could have been cleared up and the proceedings would have been substantially shortened. I venture to suggest that it would certainly have improved the clarity of the conclusions. I therefore devoutly hope that this pattern of inquiry will never be taken as a model for a future inquiry, and that it will not be taken as having overridden the crucially important recommendations of the Salmon Commission. That would be virtually to rule out any such inquiry in the future.

I now turn to the foreign policy aspects and, above all I am afraid, to the eponymously named Howe Guidelines. A necessary premise of this debate, mentioned by others, is that a state is entitled to defend itself, and for that purpose to manufacture or acquire weapons and to promote by trade the success, economic as well as military, of its own defence industries. For that very reason the Labour Government (with half its Cabinet scattered across a variety of Benches in this House) established many years ago for that purpose the Defence Export Sales Organisation. It is equally important, as the right reverend Prelate the Bishop of Lichfield said, to ensure that that arms and defence equipment export trade is properly controlled: control over certain types of weapon; ruthlessly effective

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control, which we certainly upheld, on the supply of atomic, biological or chemical weapons; similarly for missile technology. One requires control also over the customers to whom these weapons go: whether they are hostile or potentially so; whether or not they are repressive of their own population. One has to recall also that regimes may change: from Simonstown, about which my noble and learned friend Lord Rawlinson and I advised many years ago, to Sharpville; from the Shah to the Ayatollah. As such changes take place, although the contract is still in existence, governments can and must adjust their attitudes towards them, in a fashion that takes account of people's sensitivity but also of the interests of the British people who have until that moment been making equipment to sell in those countries.

As the noble Lord, Lord Callaghan, should recall very well, the truth is that international affairs are not only polygamous, but they are also kaleidoscopic. The noble Lord described the embarrassment that he faced in handling one, as it were, monogamous relationship with Chile. I gave that as an example to Sir Richard Scott: the defence in relation to Chile of the legitimacy of selling battleships but the illegitimacy of selling troop-carrying vehicles--the one for use on the high seas, the other in the repression of population. It requires a degree of duplicity to present that argument. In this field, there are few absolute rights and even fewer eternal truths. Governments are obliged to seek the best, not just of both worlds, but often of all possible fast-changing worlds. The implementation and presentation of policy is bound to be more than flexible and opportunistic.

Even so--and I do not quarrel with this at all--Parliament and the public are entitled to know, so far as possible, what policy Government are seeking to follow. But the key words are "so far as possible". Those responsible for the conduct of foreign, diplomatic and economic policy have always been obliged to safeguard a wide range of information: from many hostile or competing nations, institutions and individuals around the world whose principal interests include competing against, outwitting or otherwise damaging the interests of this country.

During the past 17 years, as the Minister said in opening the debate, this Conservative Government have made many moves in the direction of open government. It has to be said that they have not always been made without some prompting from press, Parliament and the European Commission of Human Rights. But we have made them. The awkwardness that we had when first we began talking about GCHQ we overcame. The Interception of Communications Act was put on the statute book by our Government; the Security Service and the SIS have also been brought into the outside world.

But even today, as the Leader of the Opposition has, I fancy, still to learn--and long may he await the opportunity!--the entire process of government cannot be conducted in a goldfish bowl. Publication to Parliament is publication to a world that is often hostile to this country. So Parliament has on some occasions to be content with a picture that is less than complete and less than completely up-to-date. That is rightly and

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inevitably so. That is the fundamentally legitimate argument that is not really grappled with or fairly evaluated in this report, nor in certain circumstances accepted as it should have been.

There are two points at which it should have been recognised as legitimate. The first is on the timing of publication of the Howe guidelines. Remarkably enough, Sir Richard sets out in three separate paragraphs the reasons why the guidelines were not immediately announced in December 1984: fear of diplomatic and trade repercussions, adverse to British interests, from Iran's Arab neighbours (which might actually have prevented delivery of two Yarrow ships to Iran following pre-revolutionary contracts, at great cost in jobs and compensation). We were right to go ahead with that contract, but right at that stage not to publicise it. Yet by October 1985 it then made sense--again Sir Richard records this--to announce the guidelines to defend the fulfilment at that time of the remaining pre-revolutionary contracts for armoured vehicle spares. Characteristically, I am afraid, in one paragraph Sir Richard says that those reasons "appear clearly enough"; yet in another he finds them, "no easier to accept than previous explanations". The truth is, they were legitimate and should have been accepted.

The second place where Sir Richard equally misdirects himself relates to the way in which the guidelines were applied in May 1989. My noble friend Lady Thatcher dealt with that, and I endorse her remarks absolutely. There was no change in essential policy at that point.

I go further than that: even if there had been a "change of policy" (of which, even on his own analysis, Sir Richard Scott accepts I had no reason to know), I should maintain what Sir Richard himself describes as the "more realistic" defence which I then put forward to him that it would have been wrong to disclose such a shift.

Sir Richard says (paragraph D4.9) that he,

    "can understand that the balance of British interests to which I referred",
might, in my judgment,

    "have required that there be no public disclosure of the relaxation of restrictions on defence sales to Iraq or of the divergence between the defence sales policy being applied to Iran and Iraq respectively".
Of course he can understand that. A shifting from one side to another in response to particular grievances might have jeopardised the safety of British hostages in the Middle East and British prisoners in the gaols of those reprehensible countries. So Sir Richard in one paragraph can understand why that required me to accept no public disclosure.

Nevertheless, he goes on to recommend changes in the presentation of government policy which he says could have avoided any dissimulation but which could in fact well have revealed the very things which he accepts ought not to have been revealed. Improvement, perhaps--but certainly not a subject for reproach. The criticism illustrates, I am afraid, the extent to which a judge sitting alone, however distinguished, can sometimes take insufficient account of the pressures of day-to-day ministerial and official life.

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I told Sir Richard, and I astonished myself, that I calculated that during my six years as Foreign Secretary, taking home on average three boxes a night five or six nights a week 40 weeks a year for six years, the weight of paper that crossed my midnight desk was 24 tons. That is a rather different perspective from the attention with which members of the Court of Appeal can address themselves to the case then in hand. It is no wonder that my colleague in the United States, George Shultz, said that being Secretary of State was "like trying to get a drink out of a fire hose". The noble Lord, Lord Callaghan, will remember that well enough, and it is important for us to remember it.

That is why, as I told Sir Richard, other countries adopt very much the same position as ourselves. Even those that have freedom of information Acts exclude from the scope of those Acts information about export--export control; export licence applications. Where such matters have been disclosed to congressional committees, it has happened on terms that they be not further disclosed. In other words, so far as the inquiry troubled to look into that matter, it upheld the case that I have sought to make.

I make one closing point. There is some reason to fear that Sir Richard, during his three-and-a-half years, and the rest of us in different ways to a different extent, have been unexposed to arguments which could and should have been put forward by the Government to the inquiry itself. We have been exposed instead to a massively enthusiastic press, clamouring above all for openness before everything else, carried beyond limits which at one time even the press itself would have regarded as legitimate.

Early in this story--I quoted this to Sir Richard as well--the Independent, which is not notably today a champion of any restraint in this field, on 9th December 1993 said:

    "The realities of foreign policy--and the tendency of public opinion to take impractical moral stands--may make it hard to debate the details of arms sales openly on the floor of the House of Commons. But outside the glare of publicity, there can be no excuse for keeping policy secret from two or three trustworthy and senior members of a Parliamentary Committee overseeing policy or intelligence on foreign affairs".
At that time, the Intelligence and Security Committee on which I have sat as a member in its first 12 months had not been brought into existence by this Government. It has been now and it becomes an appropriate vehicle for considering these matters. But it does not make it appropriate to go so far as to open them completely to public opinion.

My last remark is this. I warn against the danger for the judiciary as well as for Parliament of being swept unthinkingly too much further along that road. Soren Kierkegaard, writing almost 150 years ago--I ask noble Lords to listen perhaps with half a tongue in half a cheek--said:

    "Complete publicity makes it impossible to govern ... No one has understood that better than the daily press; for no power has watched more carefully over the secret of its whole organisation ... as the daily press, which then continually cries out that the government should be quite public. Quite right; the intention of the press was to

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    do away with the government--and then itself govern, and that is why it safeguarded the secrecy which is necessary in order to be able to govern".
Take heed, my Lords. Let us be warned.

It is, I am afraid, no surprise that Her Majesty's present Government, having placed their fate so exclusively for three years in the hands of a single Chancery judge, however distinguished, and having made no arrangements during that time for the case for the defence of themselves and their Ministers to be presented to that tribunal, should have ended up in certain difficulties. They cannot expect to be overwhelmed by sympathy. They do need our understanding. They certainly do not deserve our denunciation.

6.13 p.m.

Lord Merlyn-Rees: My Lords, this is a "take note" debate, which I imagine is undertaken in a quite different way from that at the other end of the building. That difference and the very nature of this House were exemplified in the way in which the noble Lord, Lord Taverne, and others have spoken. There will be no cries of resignation or calls for the fall of the Government. Noble Lords will not be accused of playing the orange card, as I understand will be argued at the other end of the building.

I shall concern myself with what went wrong, what was in the report and what changes should be made. My remarks will be based on my own experience. I do not want to warn in a grandiose way but I should like to ask noble Lords not to underestimate the effect that this report has had on opinion outside the House. It has reinforced views that cast politics in a light that I have never known in my lifetime. The report and the way in which it was handled when it first appeared at the Board of Trade 10 or 12 days ago was unpleasant and foolish. It was dealt with in the wrong way.

As a member of the Franks Committee--there were two Franks Committees, one of which dealt with the Falklands War--I shall make only one very brief comment about the report. Over the weekend, I have endeavoured to read most of the report and I wished that there had been a short report of 200 pages or so to front it, stating the views and referring to appendices, as we endeavoured to do with the Franks report. However, let that be as it may. I want to comment on what went wrong and what needs to be done.

I speak on the basis of experience as a junior Minister in defence relating to the Army and the Air Force, a junior Minister in the Home Office and later as Home Secretary and Northern Ireland Secretary. I had ample time to learn about the machinery of government. When the phrase "the machinery of government" is bandied about these days, I find that young people tend to say, "I have done an A-level course on the role of the monarchy, the role of the Lords and the role of the Commons." The machinery of government is more subtle than that and is about how government works in practice. Perhaps I may add--I shall speak further about

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it in a moment--that I worked very closely with MI5 in Northern Ireland. I was "responsible" for it when I was Home Secretary.

First, I refer to accountability to Parliament. When the noble Lord, Lord Tebbit, spoke 12 days ago, he said that he had acted impulsively and looked to see whether he was referred to. I did not do that until I had read what he had said and then I did the same. I found that I had put down a parliamentary Question to the (now) noble and learned Lord, Lord Howe, on this issue. His answer to me said that the Scott Report was not accurate, was false and misleading; the Government had changed their policy and it was a breach of accountability. I do not make that up. I do not read the Independent except on Thursday and then I read the rugby pages. But the Scott Report says that I personally was misled. I leave the matter there. It has provoked me to speak in this debate.

I know that there are many times when information cannot be given publicly. The security of the nation at this point of time would make it plain foolish for the Secretary of State for Northern Ireland to reveal what is going on with Sinn Fein and the IRA. It would be foolish for the Home Secretary to reveal the information that is available about proposed bombings in London. Things of that nature, let alone less important problems, have to be protected. So it seems to me, when I consider this report, that there was confusion in the mind of the Government or people in government between the public interest, the national interest and the interest of the Government. Reading through the report and between the lines, it seems that the machinery of government was befogged and not clear. It seems to me that there were departments which did not know what they were doing. So far as I am concerned, I am informed that I was misled.

With regard to the machinery of government, in the Franks Committee we were asked whether the Falklands War could have been prevented. We should have needed a great deal of hindsight to answer that question. However, we did say that the machinery of government could have been better used. This report refers to the machinery of government. So two reports have referred to the machinery of government. The Franks Committee referred to defects on the Joint Intelligence Committee, lack of resources, lack of co-ordination and lack of assessments at a different level. That is said in this report. So there are two things in common: the machinery of government and intelligence.

Let me refer first to the intelligence side. There was a failure to make proper use of intelligence information which could have come from MI6 (of which I know nothing). We hear that changes have already been made in defence intelligence. It may be that we should not be told of those changes. I only hope that they will protect future Mr. Hendersons and prevent cases such as the Matrix Churchill case. That should be borne in mind. Whose responsibility is it within government to ensure that relevant intelligence information is brought to the notice of Ministers?

So far as concerns the Home Office, for 200 years it has lived with intelligence of some kind. That is not true of the DTI or the Board of Trade, although the Board

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of Trade is a very ancient office which goes back into the 18th century and perhaps the 17th century. Procedures must be introduced whereby information that MI6 is used to keeping to itself--for very good reasons--is readily available, though it need not be circulated around the department. That certainly would not happen in the Home Office. That is where Ministers come in. Ministers who are Secretaries of State and not junior Ministers need to be advised of that information.

The noble and learned Lord, Lord Howe of Aberavon, referred to the changes that have taken place in relation to the accountability of the security services. That is absolutely right and I commend them for it. But MI5 is used to working on the home front. It knows that there is a place called Parliament. Members of the department read the newspapers daily. That may not be true of MI6, cached up in Aden or the Yemen, whose members may not be used to parliamentary accountability.

When I read through the report and tried to read between the lines I sensed that intelligence officers did not realise the importance of reporting to Parliament in some way. I do not mean completely. "Realise" may not be the right word; perhaps they were afraid of so doing because of what they had read over the years when they were abroad, which did not put the House of Commons in too good a light in relation to that kind of thing.

The reason I raise that point is that I hope that this matter will not be dealt with in a "machinery of government" way. I hope that the Opposition will be consulted. It may well be that there will be a change of government within the next 14 months. They will be faced with a fait accompli as to the changes that have occurred and that will not be good enough. Incoming governments are faced with situations of fait accompli all the time. In the first few months they will be facing up to a new life, considering what they said in Opposition and what they are going to do now. They will not have time to worry about the machinery of government. I hope therefore that it will not be an internal inquiry in relation to intelligence. Just as the Franks Committee found that intelligence was dealt with wrongly, so have we found in this case, but at a different level.

I want to say a word about the machinery of government and public interest immunity certificates. I was grateful to read in the lecture given by Lord Justice Simon Brown to the Civil Service staff on this subject in 1994--it answered a question that I had been asking myself--that up until 1973 it was Crown privilege and in 1973 it changed to public interest immunity certificates. Crown privilege had its own certificates. I read on and the report showed how the situation has changed over the years.

I want to relate the report to the question of junior Ministers. There is always a danger in speaking about what a junior Minister is doing, particularly when one becomes a Secretary of State and forgets that one was once a junior Minister. I observe that there appear to be far more junior Ministers today than there were previously. When one reads of the life of Rab Butler, who, for six or seven years, was a Parliamentary Secretary standing in more often than not for the

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Foreign Secretary, one realises that there was only one junior Minister in the department at that time. There are hundreds of them now; they are all over the shop. When one takes into account the PPSs, it is like the Portuguese Navy; everybody is an admiral.

However, there have to be junior Ministers and they perform a vital task. But I am clear on one thing that I learnt as Northern Ireland Secretary and Home Secretary: there are decisions that only a Secretary of State can take. Whether it is in relation to telephone tapping, detention in Northern Ireland or releasing from detention in Northern Ireland, only one person can do it. Reading through this report it seems to me that, quite apart from the proper functioning of a junior Minister answering Questions in Parliament and so forth, decisions of a legal nature are being taken that should only be taken by the Secretary of State, and I come back to the earlier point I made in regard to the DTI, in no derogatory sense of the term.

Since writing my notes I have asked myself the question--the one person who can tell me whether I am right or wrong has now appeared in the Chamber; he appeared at the wrong moment--whether I have ever signed a public interest immunity certificate. I can only remember signing one. I look for a nod from the noble Lord, Lord Armstrong, to make sure that it was not two, but there is only one that I can remember. Is not that surprising? I spent nearly three years in Northern Ireland and nearly three years at the Home Office and yet signed only one public interest immunity certificate. In this report they seem to have been signed like confetti; all around are signing public interest immunity certificates.

Why are there so many PII certificates about these days? There has been a great change in that respect. But I signed one and what I remember about it is that the Permanent Secretary came and put the facts in front of me. He did not say that he had come via the Attorney-General, though it must have come via the courts because it was a case about telephone tapping in Colchester or some such place in Essex. I was not advised that the Attorney-General had a role. I was given the facts of the case and was advised that we had to protect the sources of the telephone tapper. I signed that certificate, quite rightly. But the Attorney-General played no part and I was not told that I had no option. That is one of the points that I find strange when I listen to legal luminaries talking. I was not told that I had to sign. I had a choice and I decided of my own free will.

I have had my time and the rest of what I intended to say is all very interesting but will go into the drawer where I have kept 30 years of speeches that I did not complete. I have advised my children that they can publish them one day and no doubt they will be read with great interest; but they should not expect to get any money out of them. The Scott Report does not show a conspiracy; it does not show villainy; it shows that a lot of people did not know what they were doing.

6.28 p.m.

Lord Slynn of Hadley: My Lords, I am conscious that many of the issues with which your Lordships are concerned in this debate are a far cry from the daily

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round of the Judicial Committee of your Lordships' House. But there is one matter on which it is appropriate that a Law Lord should comment--that is, whether the Attorney-General got the law wrong; whether he misunderstood the legal position in relation to public interest immunity certificates.

We have been told many times that judges and members of the Bar are divided--it has even been said 50:50--on this question and therefore it is right to declare my position. For more than six years as junior counsel to the Treasury, I advised successive Attorneys-General--four of them; two Labour and two Conservative--on matters of this kind. The subject therefore is not one with which I am entirely unfamiliar.

I wish to make only two or three points. I shall be brief in view of what has been said before and I shall try--he is no longer in his place--not to encumber the noble Lord, Lord Callaghan, with the names of any further cases. First, I have the clear impression that some of those who are criticising what the Attorney-General has done, what was seen as the law in this case, do not give effect to the changes and developments which have taken place both in practice and in procedure. The noble Lord, Lord Merlyn-Rees, reminded us of the existence of Crown privilege. It is not so long since a claim to keep documents out of litigation and out of the public eye--a claim for Crown privilege--disabled a litigant from having access to those documents. Indeed, a claim in respect of a contents plea for Crown privilege was at one time virtually unassailable.

As we moved on, Crown privilege became known as public interest privilege, the name better indicating that documents should not be produced because it was contrary to the public interest, that they as a class, or because of their contents, should not be revealed to the parties to a dispute or to the world at large. We have moved on, and in the Wiley case to which reference has been made the Judicial Committee of the House recognises that changes need to be made. Ministers are apparently now to be encouraged not to claim the privilege in a very clear case. But even in that case I felt it right to leave open the question as to whether a claim to keep documents out of the papers in a case could include a class rather than the contents of an individual document. The changes which have taken place have been considerable. We must judge what the Attorney-General did by the law at the time.

Secondly, some of the comments which have been made seem to suggest that the decision for a Minister and for a judge whether public interest immunity should be claimed is a clear cut, black and white issue. But these questions have always been extraordinarily difficult. The noble Lord, Lord Merlyn-Rees, was lucky in that he was spared, apparently, a large number of these questions. As Treasury counsel, I found that the questions were very often extremely difficult. How should one balance, on the one hand, the desire of government departments and the need of the state not to give away sensitive information, the confidentiality of which needed to be

26 Feb 1996 : Column 1278

preserved in the interests of good government, as against the need of the litigant to prove his case or to attack the case of a government department? In order to protect the citizen against unjustified claims I believe it was right that the examination of this question was entrusted to a judge. He knows in a detailed way what the case requires. He can be informed as to the conflicting public interest which is concerned in excluding the documents and he can then decide.

The noble Lord, Lord Taverne, whom I should like respectfully to congratulate on a polished maiden speech, appeared to regard these as essentially clear cut matters; it is not difficult to see what is essential for the trial; it is not difficult to know what is relevant. That, in some cases, is undoubtedly true; but there are clearly cases in which this is a difficult matter. Therefore the balance between the view of the Minister and the decision of the judge is an extremely important safeguard for the citizen who litigates.

The Master of the Rolls is reported as having said that he considers that the Attorney-General approached the matter, on the basis of the law as it stood, in the right way. I am in full agreement with that opinion. But even if the Master of the Rolls is wrong, which is unlikely, and even if I am wrong, which may be more likely, I consider that the Attorney-General's decision to let the matter go to the judge for him to decide was quite clearly and unarguably a way which was open to the Attorney-General to follow. I believe he took the right course in this case on the law as it stood in referring the matter to the judge, and in any event it seems to me that he was entitled to do it.

I have spoken so firmly, and I now conclude, because I am quite confident in my own mind that if the Attorney-General had been Mr. John Morris or Mr. Alex Carlile I would have said exactly what I have said up to this moment. It would be very unfortunate if the passions generated by the other questions which arise in this very serious debate and this serious inquiry should blind the country or drive the country and Members of this House to a conclusion on a particular issue which is both unfair and is wrong.

In the course of the discussions which have taken place--and even in your Lordships' House--some fairly harsh things have been said about the Attorney-General which appear to go beyond the particular issue with which we are concerned. I do not accept those broader criticisms of the Attorney-General, even leaving aside today's discussion. It ought to be said in this House that Sir Nicholas Lyell was a very successful Solicitor-General to Sir Patrick Mayhew as Attorney-General. No one in the law could possibly have been surprised when Mrs. Thatcher (as she then was) as Prime Minister and subsequently Mr. Major appointed him to succeed Sir Patrick Mayhew and to continue as Attorney-General. Let us not forget that he has rendered eight years of loyal and able service to the nation and to Parliament. In my judgment, leaving aside entirely the present dispute, he has been a good Attorney-General.

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6.36 p.m.

Lord Hutchinson of Lullington: My Lords, after three and a half hours of debate I suggest that we have rather lost sight of the central issue of the report which is the miscarriage of justice which was perpetrated on three employees of Matrix Churchill. Paul Henderson, managing director, was arrested in October 1990, locked up, interrogated, charged with criminal deceit and dishonesty, kept in suspension for two years, put through the ordeal of a six-week trial at the Old Bailey and ultimately acquitted--with his business in ruins, thrown on the scrap heap with 600 other employees and his character largely destroyed, a victim of a prosecution which Scott says,

    "should never have been commenced".
The noble and learned Lord, Lord Hailsham, said that our system worked. Well, it did not work and a human miscarriage of justice occurred for which someone must be responsible.

The sickening account peddled by responsible Ministers and the media--that everyone behaved with honour, that they laid all the evidence fairly before the judge and that a fair trial was obtained with a predictable result--is a travesty of the contents of Volume III of the report. Their cry has been, "We deserve an apology. We have suffered for the past three years". I am sure your Lordships' hearts all bled to hear the noble and learned Lord, Lord Howe, left without a member of the Bar to represent him before Sir Richard Scott. Who is really owed the apology? Is it not Paul Henderson and his two colleagues? What is their injustice compared to the injustice to those three defendants?

Who is Paul Henderson? He was, said his intelligence contact,

    "a very brave man ... an extremely brave man ... Few people I've met would take such risks".
He was a spy in the land of Saddam. On hearing that evidence, Mr. Moses, the prosecuting counsel, had Sir Brian Unwin, head of Customs, asked whether it was proper in the public interest to continue the prosecution. Sir Brian's reply was that it should be firmly continued and, further, he penned a letter to Sir Colin McColl, head of intelligence, saying:

    "We were extremely surprised to say the least at the nature of the testimonial given by one of your junior officers".
He then referred to the effect that that might have upon the jury. That is symptomatic of this prosecution.

Two months after his arrest, the Sunday Times carried an "Insight" article saying that Henderson had been tipped the wink by the Minister, Alan Clark, and gave the place and the date, 20th January 1988, where that encouragement was given. That led to a meeting between Alan Clark and the Prime Minister. Sir Robin Butler made a note of what was said and sent it to Mr. Alan Clark. Scott found that that note was "significantly" altered in such a way,

    "that it was at least as consistent with the impression that Henderson and others received",
on that occasion. That vital note, filed by the Cabinet Secretary, a note which as good as proved Mr. Henderson's veracity, was never disclosed. It never got to the Old Bailey. In effect, it was suppressed throughout.

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Later, in August 1992, the Sunday Telegraph carried an interview with Clark in which he was said to have agreed that he tipped off the manufacturers. On reading it, Mr. Moses, the prosecuting counsel, demanded that Clark should be interviewed by his solicitors, for if what he read was true he would drop the case. Incredibly, that never happened. If it had happened, the prosecution would never have continued.

Scott finds that no investigation was made into MoD documents, that witnesses potentially favourable to the defence were not interviewed and that proofs of evidence of junior officials were altered by their seniors in order to reflect departmental policy. By October 1991, Customs and everyone officially concerned knew that Mr. Henderson was acting as an agent for MI6, yet no effort was made to get details of his 26 meetings with his contact or of his handing over blueprints of the very missiles which were going to be made. If that had been done, the prosecution would never have continued.

As we all know, as the trial date approached, Mr. Heseltine refused to sign PII certificates in relation to documents which he could see showed that what Henderson was saying was true. He said that it was in the public interest to disclose the documents. Then came the saddest moment of the whole story when the Attorney-General told his colleague that in law he must sign a certificate to say that his view was that it was in the public interest not to disclose those documents.

As a criminal lawyer and as one who is used to the criminal courts, I am amazed at the inability of civil lawyers to understand the fundamentals of the criminal law. Over and over again today there has been talk of "litigants". There are no litigants in criminal courts. There is the Crown on one side and the defendants on the other. If that was the law, then, not making a maiden speech, I can say to my noble friend Lord Taverne that I am prepared to say that the law was an ass. It was a monumental ass.

If I may say so to the noble and learned Lord, Lord Lloyd, it is not a question of balance. It is not a question of going to a judge and saying, "On the one hand, but on the other", and of taking along 10,000 supporting cases; it is a question of using your eyes and seeing that a miscarriage of justice is about to occur. Surely any Attorney-General who has any knowledge of the criminal law would have given such advice to his colleagues. Like, I am sure, most noble Lords in the Chamber, I entirely agree with Sir Richard's description of that interpretation of the law as "absurd". If the Minister has no discretion, what on earth is the point of asking him to sign a certificate?

The President of the Board of Trade signed under protest and on condition that his views were expressed to the judge at the trial. He reiterated that in a letter to the Attorney-General. In The Times today, the Attorney-General writes:

    "Mr Heseltine's ... letter thanking me ... was not 'left unread'".
It was not a "thank you" letter. It was a letter in which a Minister reiterated his view that documents should be disclosed in a criminal trial and that he wanted them to be disclosed. As Sir Richard says, the President of the

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Board of Trade gave that letter a large circulation. Your Lordships may feel that that is curious in regard to a "thank you" letter. Scott says:

    "I find it astonishing that a letter ... from a senior Minister dealing with a subject of difficulty should have been left unread for a period of between three ... and seven weeks".

The Attorney-General also writes this morning that he called a meeting with Mr. Moses and was,

    "assured that the prosecution was ... fair and proper".
Of course prosecuting counsel would not advance a case which was not in his opinion fair and proper. Scott finds that at that meeting Michael Heseltine was never mentioned. Michael Heseltine's letter was never shown to Mr. Moses. At that meeting he finds that Mr. Moses was not asked expressly about the contents of any particular documents but merely for an assurance that everything was all right. Can one imagine any Attorney-General behaving as Her Majesty's Attorney-General behaved and taking such a meek and hopeless course as that when, as I have said, a miscarriage of justice was staring him in the face?

The last matter which the Attorney-General raises in his letter today is vital. Kenneth Clarke, then the Home Secretary, released information involving intelligence which, of course, was subject to PII. He released it using his own discretion. That meant going against all the theory and all the law about which we have heard so much today which says that Ministers must never exercise their discretion. He exercised his discretion. Why? Because the Crown wanted the information, wanted a statement from that member of MI6 and wanted to call it in rebuttal of Mr. Henderson's defence. That is the point. The Attorney-General left the letter unread; left the documents unread; failed to interview Alan Clark; failed to read the intelligence reports; failed to interview Sir Robin Butler; failed to tell Mr. Moses to inform the judge; failed to apply the law even-handedly; failed to supervise prosecuting counsel; and instead of immersing himself in the niceties of the civil law of PII certificates, remained blind to the miscarriage of justice which was shining like a beacon from the Central Criminal Court. Dishonesty is not an issue in this report; the issues are incompetence, judgment and ignorance of the workings of the criminal law.

The last thing I have to say is that the Government have tried to say--and it has been said again today--that the prosecution case was perfect; that everything went according to the rules; that the documents were given to the judge and he was asked to make up his mind about them. That is another travesty of what happened, because prosecuting counsel spent more than two or three hours attempting to persuade the judge not to read the documents, not to release them and, as has already been said, that they were irrelevant to the defence. That is what happened in the trial.

The idiocy of having these PII certificates in a criminal trial is shown when Mr. Robertson, the defending counsel, had to argue for their release without having been allowed to see one of them about which he was making his submissions. That is the situation. He argued for a day, and, as a result the judge, being a

26 Feb 1996 : Column 1282

robust judge, released one part of the documents. But he was adamant that the SIS documents should not be released.

At that, most counsel would have sat down, but not Mr. Robertson. He argued for another day to have the SIS documents showing Mr. Henderson's relations with his contact go before the jury because they would prove his innocence. In the end Mr. Moses, being a fair-minded prosecutor, saw another miscarriage of justice was on its way and submitted to the judge that he ought to release them. When that happened then at last the judge released those documents.

That is the reality of this sort of certificate. A circuit judge, faced with PIIs eight or nine pages long, hearing argument in detail as to how the interests of the nation will suffer, how people's lives will be put in danger and so on, is then expected to say, "Here I am. I know nothing about politics. I have to balance the possibility that this man may go to prison for a year against people being killed and the interests of the country being at stake. How can I make such a decision?". Of course, in 90 per cent. of cases such a judge would simply say, "I do not allow these documents to be released". That is the reality and the mischief of these documents.

Now we have come to a situation where, after all these weeks, all this damage has been done to these individuals who all suffered from a prosecution which never, never should have been started and once started should never, never have been allowed to go on. I ask the Minister--who knows, as we all do, a great deal about justice--at the end of this debate to tell the House who is responsible for all of this and who is going to give an apology to Mr. Henderson and his colleagues?

6.55 p.m.

Lord Rippon of Hexham: My Lords, to the manifest disappointment of many people, including sections of the media, Sir Richard Scott's report was fairly summarised by he himself as no conspiracy and no cover-up. I believe that we can also say that there were no dishonest or dishonourable Ministers. Of course, a report of five volumes and weighing 17lbs cannot be dealt with in a few sentences or even, if I may say so, in a few ounces of Hansard.

There are many difficult and complex issues of law and administration. They deserve careful and dispassionate consideration. As I understand it from my noble friend the Minister, that is exactly what the Government are doing. All this demands a much calmer approach than is currently provided by the politically motivated witch hunt against two Ministers of known integrity.

The original accusation was allowing innocent men to go to gaol. That has been completely destroyed. The noble Lords, Lord Richard, Lord Jenkins of Hillhead and Lord Hutchinson of Lullington said that the trial should never have taken place. I ask your Lordships to consider this: given Mr. Alan Clark's original evidence--and my noble and learned friend Lord Howe said that there is some evidence that he had behaved rather recklessly throughout--what sort of uproar would have arisen if the Attorney-General

26 Feb 1996 : Column 1283

or the Government had attempted to interfere with the judicial process? We would then have had the name of Sir Patrick Hastings raised in almost every speech.

I am glad that my noble friend the Minister had something to say about Customs and Excise because there are no doubt difficulties where they are involved in a prosecution. I know that because I had a note left on my desk by my wife when we were negotiating to enter the Community. It says this:

    "Crispin telephoned"--
He is Sir Crispin Tickell now--

    "1. There is trouble over French cauliflowers.

    2. Customs and Excise say principles are involved.

    3. You are asked to telephone the Treasury and say either that no principles are involved or fresh principles must be found".
That was a difficult exercise. All I can say about it now is that I have no recollection about how it was dealt with.

The leading article in The Times of last Saturday was a particularly deplorable example of prejudicial media comment. It says that accepting that it was arguable whether the Attorney-General actually misread the law, The Times stated that Sir Richard Scott finds him "guilty" on this count. Presumably, any judge who is overruled by a superior court is guilty. In this instance, I suggest that the weight of legal opinion both inside this Chamber today and outside shows that the Attorney-General acted by the book throughout on the basis of the law as it then stood.

The Times goes on to denigrate the legal competence of the Attorney-General. I am sure that many of your Lordships, as well as the noble and learned Lord, Lord Slynn of Hadley, know as I do from personal experience that the Attorney-General is a first-class lawyer who has undoubtedly made a considerable financial sacrifice as a result of his public service. I believe that the editor of The Times, and some others, would do well to study very carefully the Priestland Memorial Lecture given last October by the noble Lord, Lord Habgood, which of course did not attract much attention in the media. In it he makes the point that the media--indeed all of us--should consider the damage done to our society by the culture of contempt. As he puts it, "What we are witnessing is more than a justifiable reaction against abuse of authority, but rather a reaction against the concept of authority itself".

There was a time when the other place could deal with matters concerning the conduct of its Members, whether Ministers or Back-Benchers, but, sadly, even the Select Committee on Privileges has faded away. I remember that Select Committee as being objective and non-partisan as well as being knowledgeable about parliamentary practice and the administration of government. It is no reflection on Sir Richard that he is inevitably not so familiar with these matters.

Then, in Volume I, Chapter I, I find rather puzzling what he describes in page after page as the,

    "constitutional and democratic significance of not applying as a minimum the negative resolution procedure in the context of the Import and Export Control Act 1990".

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Your Lordships will know that the negative resolution procedure is hardly an effective way of controlling the Executive in matters of constitutional and democratic significance. Even the affirmative resolution procedure is not much good. In those circumstances, it could be argued that the Act itself should properly include any matter of constitutional and democratic significance and with primary legislation needed to amend it.

Sir Richard states that the Opposition as well as the Government fail to realise the constitutional and democratic significance of the negative resolution procedure in these circumstances. Your Lordships may think it appropriate for our Delegated Powers Scrutiny Committee to consider and report on the value of Sir Richard's observations in that regard.

Enough has been said about national security and the need for some control over matters which are sometimes not even given to the Cabinet as a whole, as was said by the noble Lord, Lord Callaghan. I recall that when I had responsibility for such things, I had to tell my new Minister that the custom was for me to give him an oral report on certain nuclear matters and for him to give an oral report to the Prime Minister. Probably no one else would have the information at all.

Finally, I wish to comment on the conduct of the inquiry. I fully share the anxieties expressed by my noble and learned friend Lord Howe of Aberavon. I was disturbed by the confrontational nature of the hearings. I believe that my noble and learned friend's views on the shape and pattern of the inquiry deserve respect. He suggested--and I believe that he is right--a more conventional tribunal with lay assessors, free-standing counsel for the tribunal and legal representation and not necessarily cross-examination. Above all, I cannot understand why we should depart from the principles laid down by the late Lord Salmon. I agree also with my noble and learned friend Lord Howe that that might be fairer to all concerned and also more expeditious and effective. It could hardly be less so. I urge the Government to join my noble and learned friend in considering as soon as possible whether there is a much more effective way of dealing with the kind of matters that we are debating today.

7.3 p.m.

Lord Armstrong of Ilminster: My Lords, the noble Lord, Lord Merlyn-Rees, is incontrovertibly right in saying that we now have more junior Ministers than we had before the Second World War. As he referred to Mr. R.A. Butler, perhaps your Lordships will allow me a moment's diversion. I was Mr. Butler's Private Secretary when he was Chancellor of the Exchequer. I remember that once when we were walking together he was carrying a cane with a silver head. He explained that in 1938, at the time of the events in Munich, he had been a junior Minister at the Foreign Office. He said, "It was very difficult for me. I had no responsibility for formulating the policy or deciding what the policy should be. I just had to explain it in the House of Commons because my Secretary of State was in the House of Lords. I had no share in saying what it should

26 Feb 1996 : Column 1285

be". There was a pause and then Mr. Butler waggled his cane at me and said, "Since that time I have never carried an umbrella".

I share the views of the noble and learned Lord, Lord Howe, and the noble Lord, Lord Rippon, that there is room for doubt about whether the inquiry should have taken the form that it did. When the reputations and livelihoods of people may be at stake it is questionable whether one man on his own should be asked to combine the roles of inquisitor, prosecutor and adjudicator. I know that it is said that a full-dress tribunal of inquiry under the 1921 Act would have taken even longer and would have cost even more, and I think that there is room for doubt about that. But should those be conclusive considerations when it is important that justice should not only be done but should also be seen to be done and should be felt by those most closely affected to have been done?

However that may be, there can be nothing but admiration for the thoroughness with which Sir Richard Scott pursued his inquiry and his determination that the evidence on which his conclusions are founded should be made as fully available as possible. His quintuply voluminous report will remain a quarry for analysts of government and students of British political history for many years to come. He has described in the minutest detail, paper by paper and meeting by meeting, not only the processes by which the guidelines for the issue of export licences for the sale of defence-related equipment to Iran and Iraq were set and reviewed but also the handling of a succession of applications for such licences. At every stage, if he considered that things should have been handled differently he did not hesitate to say, with all the benefit of hindsight, what in his opinion should have been done. I suspect that there are few administrative processes inside or outside government which would emerge unscathed from such an intense ex post facto scrutiny.

But the perspective and clarity of hindsight should not blind us to the fact that things cannot have looked anything like so clear at the time. For example, Sir Richard has drawn attention to deficiencies in the handling and communication of intelligence material. There were deficiencies and we are assured that steps are being taken to remedy them for the future. But the fact remains that, for this and other reasons, those who were having to deal with these matters at the time were operating in a fog of uncertainty. It is a familiar experience that when you are in mediis rebus--an elderly retired mandarin cannot resist the occasional Latin tag--you have to do the best you can with the information that is available, even when it is incomplete or uncertain. Of course, you are probably having to do that when you are having to do many other things too.

Therefore, it comes as something of a relief that Sir Richard should be able to comment that up to the cease-fire in August 1988 the official processes for considering export licence applications conscientiously endeavoured to apply the then existing guidelines and that recommendations made and decisions taken were broadly consistent with the guidelines. I warmly agree with the noble Baroness, Lady Thatcher, that the

26 Feb 1996 : Column 1286

conscientiousness with which the public servants concerned addressed these matters shines out from the report. I would have expected nothing less but I am nonetheless glad that it attracted the attention of Sir Richard Scott and, in today's debate, of the noble Baroness, Lady Thatcher.

What went wrong thereafter? The third guideline, which denied approval for exports of defence equipment,

    "which would significantly enhance the capability of either side to prolong or exacerbate the conflict",
had been overtaken by events. All concerned thought that the cease-fire offered scope for some relaxation of the strict interpretation of the guidelines. The Department of Trade and Industry and to a lesser extent the Ministry of Defence, with the possibility of increased export sales, the need for British industry to be able to compete with its foreign rivals, who, as the noble Baroness said, were less inhibited, and with the implications for jobs in this country uppermost in their minds, wanted to allow greater relaxation than did the Foreign and Commonwealth Office, which had considerations of foreign policy and international relations uppermost in its mind. I believe that that ambiguity at the heart of the policy was never resolved, at any rate in relation to Iraq and not at senior ministerial level.

The third guideline was provisionally rephrased so as to deny approval for exports which would be of direct and significant assistance to either country in the conduct of offensive operations. One may discuss how great was the actual significance of that alteration. But I am sure that some Ministers thought quite genuinely that that was no more than a necessary reinterpretation of the original third guideline to take account of changed circumstances. Others may have thought that it went further than that, although not nearly as far as they would have liked because they wanted to be freer to approve exports of non-lethal but still defence-related equipment.

But all settled for that rewording because they agreed that, while there was scope for some greater flexibility in the application of the guidelines, there were considerations of public policy, notably in relation to the constantly changing situation in the Middle East, which made it undesirable to indicate publicly that there had been any change in the wording of the guidelines or indeed any change in the application of the policy.

It was a messy situation and an uneasy compromise. Whether it would have been possible to resolve the situation in a way which would have enabled Ministers to have been more forthcoming in their public statements at the time it is now impossible to say. But the fact is that, from time to time, governments find themselves in situations where there is no solution which satisfies all the conflicting considerations.

Sir Richard Scott clearly thinks that Parliament should have been told and he seems to regard that as the overriding consideration. As in some other matters, Sir Richard Scott's opinion is extremely significant but not, I think, conclusive. I can only say from my own experience under Conservative and Labour

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Governments that situations may arise where that cannot be the overriding consideration and other considerations must be and are legitimately taken into account. I can understand why this was genuinely and honourably thought at the time to be such a situation.

I accept Sir Richard Scott's conclusion that there was no "duplicitous intent". It clearly was the case--self-evidently was the case--that Parliament and the public were not told of any relaxation in the application of the guidelines, let alone of a change of wording in the guidelines. Ministers are entitled to claim that, in their opinion at the time, there were valid reasons of public policy for that. It seems to me that that is the judgment which has to be defended.

The question of the issue of public interest immunity certificates is not one on which I propose to spend any significant time. I should be foolish to rush in where so many noble and learned angels are treading with such weight and distinction. I say only that what actually happened in this case coincided with what was my understanding, when I was in the public service, of what was supposed to happen. It was for Ministers to certify as a duty that documents were such, or of such a class, that they should not be disclosed as a matter of public policy; it was for the judge to say whether their disclosure was indispensable for the due administration of justice in a particular case; and, if the judge said that it was indispensable, then either the documents must be disclosed or, if the Government thought that that disclosure would be too embarrassing, the proceedings must be dropped.

As to what the law was at the time, I can say only that, if I were the Attorney-General and I had the noble and learned Lords, Lord Lloyd of Berwick and Lord Slynn of Hadley, the Master of the Rolls, the noble Lord, Lord Alexander of Weedon, Mr. Justice Laws and Mr. Charles Gray, QC, to name but a few, on my side, I should feel reasonably comfortable.

There is one other point which I should like to make before I sit down. It has been argued this evening, notably by the noble Lord, Lord Taverne, in a maiden speech on whose eloquence, although not on whose completely uncontroversial nature, I should like to congratulate him, that this affair demonstrates the need for a freedom of information Act. There may be good arguments in favour of such legislation but this affair is not one of them. First, in any freedom of information Act there would be some categories of information which would be exempt from its requirements. Those categories would certainly include national security, prejudice to international relations and information which was commercially confidential. Papers about export licences for arms sales would be likely to be exempt on all three counts.

Secondly, a freedom of information Act should not extend to cover documents passing inside government while a decision or an issue is under consideration. As one noble Lord said, in government, just as in other organisations, decision-making cannot go on in a goldfish bowl. It must be possible to carry on discussion in private. Only full and frank discussion in private gives people, and particularly Ministers, the opportunity

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freely to change their minds before a decision is taken. If the noble Lord, Lord Jenkins of Hillhead, accuses me of plagiarism, I shall accept the charge willingly. Without that right to decide and if necessary to change one's mind in private, the collective responsibility on which, as we have seen so often lately, good government depends will unravel.

Of course Ministers are, and must be, accountable to Parliament. I favour greater openness in the sense that I should like to see fuller public exposition of the facts and considerations taken into account in making a decision when that decision is announced. It is not possible to give a full statement if that announcement is being made in the form of a Statement in this House or in another place because time considerations do not make that possible. Therefore, such a Statement should be accompanied by a parliamentary paper or some such other document which would give a much fuller account. In my view, that would make for both better government and better public understanding of public issues and policies. But an attempt to apply freedom of information legislation to papers relating to decision-making while the process of making a decision was taking place would for many reasons merely drive the process into channels which a freedom of information Act could not reach. That would be conducive neither to good government nor to public knowledge and understanding of public issues and policies.

7.18 p.m.

Lord Williams of Mostyn: My Lords, I know Sir Nicholas Lyell, the present Attorney-General. When I was chairman of the Bar Council, he was Attorney-General. I knew him as a colleague and still do and I think that it is fair to say that we had friendly relations. I do not know Mr. Waldegrave as well. The noble and learned Lord, Lord Hailsham, said that in private life he is an honourable man and I do not dissent from that. The real question is: what has caused two otherwise decent men to be afflicted by this degree of considered criticism by Sir Richard Scott? I suggest that one reason--and it is a criticism of the Government as a whole--is that this Government, after too long, have become careless. They have become careless of the proposition that party political interest does not always perfectly coincide with the public interest.

What happened about the management--and many, including myself, would call it the mismanagement--of Scott's report; and, not least, what happened in your Lordships' House a few days ago was properly described as shameful. It will be a lasting shame to this Government. On that occasion, I was present when the suggestion was being put that a former Chancellor of the Exchequer and Home Secretary and the Leader of the Opposition in your Lordships' House, both Privy Counsellors, should not be subject to the insult of what was offered. They rightly rejected it. My noble friend Lord Callaghan of Cardiff, to whom I paid attention, said that it was an abuse of the parliamentary process.

Therefore, I wrote to the Minister with three simple questions, the second of which I shall read to your Lordships. It said:

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    "Could you provide me with a definitive list of all those who received a copy of the report prior to its being made generally available in the Printed Paper Office? It would help me if you could indicate on what date each individual received his or her copy".
The Minister courteously replied on 22nd February saying:

    "You asked for a definitive list".
I omit some words--

    "I can tell you that the Report was received by the Government during the afternoon of 7th February"--
I knew that--

    "I shall answer the rest of your question as soon as practicable".
I have had no answer. I see that the noble and learned Lord wishes to respond. I give way.

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