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Lord Sainsbury of Turville: My Lords, the House will remember that at Report stage I said to my noble friend Lord Campbell-Savours that the Government have given his proposal careful consideration. I added that that consideration had served to demonstrate both some possible attractions of his proposal, but also some significant problems.

As I promised on Report, the Government have continued to examine my noble friend's proposal. Moreover, I have met with my noble friend and heard more about his proposal, how he envisaged it might work and how he considered potential problems might be overcome. My noble friend has sought to provide reassurance to the Government on a number of points. I am most grateful to him for the care he has taken to address the issues that I raised on Report and subsequently at our meeting.

However, the Government remain concerned about several aspects of the proposal. We remain concerned about how a defence exports scrutiny committee (DESC) would interrelate with the Quadripartite Committee in another place. I was glad to learn at our meeting that it is now common ground between us that the membership of the Quadripartite Committee and a DESC should not overlap. However, in spite of what my noble friend Lord Campbell-Savours has said today, the Government still remain concerned that the functions of the committees would overlap. As I said before, a DESC will almost certainly need and might well seek to take on major parts of what is now the role of the Quadripartite Committee. For example, a DESC would need to undertake a degree of retrospective scrutiny of both individual cases and strategic export licensing policy, if only to investigate and discuss why its advice was, or indeed was not, followed by the Government.

Moreover, in that context I point to subsection (1) of the proposed clause, where it states that a DESC will examine the licensing process in addition to examining licence applications. Examination of the licensing

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process is currently a role of the Quadripartite Committee which it undertakes alongside its retrospective scrutiny function.

Leaving aside the merely practical problems which would be associated with a government being required to account for the same actions to two different committees, we have real concerns about the possibility that the two committees would give completely different advice to the Government on an identical issue.

I would not rule out the possibility that we may be able to resolve those concerns, but I detect in all the representations that the Government have received on this particular issue a similar degree of unease. Whenever we have received clear assurances that an individual or organisation believes that the two committees can work together without difficulty, those assurances have always been immediately followed by a stern assertion that the authors would totally oppose any diminution in the role of the Quadripartite Committee or in existing levels of transparency of the scrutiny process. That suggests to me that it would not be so easy to separate the different roles of the committees and that the creation of a defence exports scrutiny committee would indeed have real implications for the role of the Quadripartite Committee.

I add that the Government are also not as sanguine as my noble friend that the introduction of a DESC would not lead to increased delays and uncertainty in the export licensing process. I understand that the Defence Manufacturers Association has also expressed that concern. It has said that it is the "overwhelming view" of its members that the proposal for a DESC,

"would not be welcome, necessary or, in our view, workable in a way that did not increase delay and uncertainty in the licensing process".

I turn to the point raised by the noble Baroness, Lady Miller. We issue about 12,000 standard individual export licences a year. In terms of the number of civil servants engaged in export control, I can speak only for my department and say that we have a little over 100 officials who undertake work on export controls and non-proliferation related work. We reckon, however, that not all those 12,000 individual export licences would need to be looked at. But on the basis that has been put forward, we believe that some 4,000 licences would need to be looked at.

When I said that the Government are concerned about delays and uncertainty in the licensing process, I do not just have narrow issues of official resources in mind. The proposal has been that the DESC should consider licence applications in parallel with ministerial consideration to avoid risks of delay. Yet that runs the risk that the committee will consider applications before all information on a particular case has been gathered. Thus the Government face an unenviable alternative. If the committee considers cases in parallel, it may be forced to give advice on the basis of insufficient information. That increases the risk that the committee's advice will conflict with the

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Secretary of State's final decisions and thus increase legal uncertainty and delay while issues raised by the conflicting advice are resolved. If, however, the committee considers applications consecutively, once all the facts have been gathered, it is very difficult to see how that will not lead to the likelihood of delay.

I have outlined in some detail some of the Government's concerns to the House today as I was concerned to demonstrate that these issues are not straightforward. Any decision taken by the Government in this area could have profound implications for industry, for Parliament in general and the Quadripartite Committee in particular and for the good conduct of the export licensing process. While our continued examination of the proposal for a DESC since the Report stage has allayed some of our fears, new issues have come to light, such as the concern that the advice of the committee is most unlikely to remain private were a company or another interested party to seek its disclosure in judicial review. Perhaps I may say to my noble friend, Lord Campbell-Savours, that it is a question really of disclosure and not of sub-delegation that we were concerned with in the issue. Our concern is not illegal sub-delegation of power; it is that the advice of the committee is most unlikely to remain private were a company or another interested party to seek its disclosure in judicial review.

It has been put to me that this amendment would be only an enabling power. But I would say in response that passing primary legislation is an effective commitment to take action. I appreciate the spirit in which my noble friend has proposed an amendment which allows detailed arrangements to be made in due course, but I am afraid that the Government cannot agree that acceptance of this amendment would be anything other than a commitment to introducing the committee.

I also do not think that it is right that we should approve the amendment tonight. The Government do not think it right that the Bill should be amended at this time in this way. Our unwillingness to reach a hasty conclusion on this proposal is reinforced by the fact that, as we have said before, we are clear that the Government, were they to decide to adopt this approach, would be able to set up a defence exports scrutiny committee, in all its essentials, without a requirement for new legislation. There is no need for primary legislation, so rushed consideration of these important issues is not only highly undesirable, it is clearly also unnecessary. Given the vital issues covered by the Bill, the Government do not want to see the Bill delayed still further. It is essential that we can start the process of consultation on the secondary legislation and thereafter implementation as soon as possible so that we can ensure the UK has the export controls it needs.

Therefore, for all those reasons, the Government consider that they are unable to support the amendment. However, I would like to assure my noble friend and others in this House and interested parties elsewhere that not amending the Bill does not in any way mean, as has been suggested to me, that the issue will consequently be left to moulder in the long grass.

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Ministers intend examination of my noble friend's proposal to continue. It may prove possible to resolve all of our concerns. Moreover, the Government will also continue to work with the Quadripartite Committee to see whether we can take additional steps to achieve greater accountability and transparency in the export licensing process through greater co-operation with the committee. The Government are clear that the issue of how to improve the scrutiny of the export licensing process must be addressed, but we are not and cannot yet be convinced that the commitment to introduce a DESC represented by the amendment is the right or only way forward.

For all those reasons, and reminding my noble friend once again that primary legislation is not a prerequisite for the adoption of his proposal, I ask him to agree to withdraw his amendment.

Lord Campbell-Savours: My Lords, I thank my noble friend for his response. Perhaps I may say one or two words before I withdraw the amendment.

The House should ask itself a simple question: why does the system work in the United States of America? Why do a number of countries throughout the world operate prior scrutiny systems on their defence contracts which work, which are internationally recognised as working, and which are supported by their respective defence industries?

I listened to the comments of the noble Baroness, Lady Miller, with interest—especially her reference to what I suspect is an underlying suspicion of political processes and politicians' involvement in security matters. Throughout the late 1980s, I ran with the hounds in another place on the whole question of the Official Secrets Act and of abuses in which we believed government to be secretive. We rode the issue in the country; there may well be those outside or inside the House who would say that we exploited the issue. The reason that we could exploit it was that there was no structure in place to deal with the concerns of Members of Parliament. No sooner had the ISC been created than the debate effectively ended. Parliament was satisfied that while the committee was not a committee of Parliament—it was a committee of parliamentarians—at least a structure was in place to deal with the issues raised by Members of Parliament.

Defence contracts represent precisely the same case. There will be endless grandstanding in the House of Commons, exploitation of stories in the media, rumours and whatever, until we establish a structure capable of nipping the issue in the bud and dealing with the concerns of Members of Parliament. The moment that we create such a structure, we will find that much of the controversial public debate will disappear because Members of Parliament will know that there is a place to which they can go to raise their concerns—albeit in the confidential conditions inside the DESC, appointed as it would be by the Prime Minister and unable to report directly to the wider public or even to Parliament, because its reports would go to the Prime Minister and could be sidelined accordingly. There is no need for the suspicion

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expressed by the noble Baroness, Lady Miller. The structure works and would defuse conflict within our parliamentary arrangements.

The noble Baroness and my noble friend referred to the issue of delays. We have dealt that issue before. As I witnessed in the ISC, if we sit a group of civil servants in a room with a bunch of politicians in conditions of confidentiality to discuss, debate and ultimately advise Ministers on particular matters—in this case, contracts that they have scrutinised—that committee will develop a culture of understanding whereby, over time, the number of cases referred to it will reduce. That is the inevitable consequence of the meeting of minds inside that forum, based as it is on confidentiality.

It is that meeting of minds between politicians of all political persuasions and civil servants that is essential if the debate on who is allowed to export what is to be influenced. The committee will make no decisions; it will only issue advice to help in the process of developing policy on particular countries. My guess is that, ultimately, when the structure is set up, as I expect that it will in the end, we will be surprised by how few cases have to go before the committee.

Finally, on the question of confidentiality, the ISC never leaked. The DESC would never leak. The party of the noble Baroness, Lady Miller, will at some stage have influence on these matters in future. She should trust politicians in those conditions to be prepared to safeguard the interests of the state. There would be no abuse. My noble friend accepts that. I understand that confidentiality was not a matter that troubled Ministers, in the end, because they have learned from the operation of the ISC.

I regret what has happened tonight. The debate will continue. I thank all the Ministers who have listened to the debate as it has developed. As I told my noble friend, the Quadripartite Committee will take the matter forward. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.45 p.m.

In the schedule:

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