Schedule — Purposes For Making Orders Under Section 1(1) or 2(1)

Orders of the Day — Export Control Bill – in the House of Commons at 6:00 pm on 8th November 2001.

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Votes in this debate

Amendments made: No. 20, in page 9, line 3, leave out paragraph 1.

No. 21, in page 9, line 5, leave out "An" and insert "A control".

No. 22, in page 9, line 7, leave out "An" and insert "A control".

No. 23, in page 9, leave out lines 13 to 26 and insert—

'4 An order may be made for the purpose of imposing export controls in relation to goods of any description if it appears to the Secretary of State when the order is made that there is a risk that exportation of such goods might have a relevant consequence.

4A An order may be made for the purpose of imposing transfer controls in relation to technology of any description if it appears to the Secretary of State when the order is made that there is a risk that transfer of such technology might have a relevant consequence.

4B An order may be made for the purpose of imposing technical assistance controls in relation to technical assistance of any description if it appears to the Secretary of State when the order is made that there is a risk that the provision outside the United Kingdom of such assistance might have a relevant consequence.

4C An order may be made for the purpose of imposing trade controls in relation to goods of any description if it appears to the Secretary of State when the order is made that there is a risk that carrying out the activities to be controlled in relation to such goods might have a relevant consequence.

4D(1) For the purposes of this Schedule a relevant consequence, in relation to any activity, is a consequence (direct or indirect) of a kind mentioned in the following Table.'.

No. 24, in page 10, line 2, leave out from beginning of line to "the" in line 3 and insert—

'The carrying out anywhere in the world of acts which facilitate'.

No. 25, in page 10, leave out lines 6 and 7 and insert—

'The carrying out anywhere in the world of (or of acts which facilitate)—'.—[Mr. Pearson.]

Amendment proposed: No. 39, in page 10, line 11, at end insert—

E An adverse effect on the sustainable development of the country to which the goods were exported, or the technology was transferred.'.—[Dr. Cable.]

Question put, That the amendment be made:—

The House divided: Ayes 92, Noes 237.

Division number 52 Orders of the Day — Export Control Bill — Schedule — Purposes For Making Orders Under Section 1(1) or 2(1)

Aye: 92 MPs

No: 237 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.

Amendments made: No. 26, in page 10, line 13, leave out from beginning of line to "acts" in line 14 and insert—

'The carrying out anywhere in the world of (or of acts which facilitate)'.

No. 27, in page 10, line 23, leave out sub-paragraph (2).—[Mr. Pearson.]

Order for Third Reading read.

Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry 6:17 pm, 8th November 2001

I beg to move, That the Bill be now read the Third time.

I thank hon. Members for the important contributions they have made to this vital Bill, not only on Report but on Second Reading and in Committee. Those who have participated in the debates have provided thorough and useful scrutiny of the Bill's provisions—indeed, so useful has the scrutiny been that it has informed the amendments that have just been made.

The Bill is the result of years of intensive work. Current export control powers were introduced more than 60 years ago. I shall outline the main advances shortly. The Bill is the product of an open and consultative approach, which I have every intention of continuing. The events of 11 September mean that there is now an even greater need for new controls on arms to be passed by Parliament. While work continues on new emergency legislation in the wake of events in America, the Bill plays an important part in strengthening and modernising the powers available to us to control the arms trade.

Whatever the technical details, we should never lose sight of the bigger picture, especially the humanitarian objective. The Bill is about controls on lethal weapons. There is, regrettably, too much evidence of what such weapons can do, which is why we are working with like-minded nations to reinforce and extend international counter-proliferation efforts. The Bill will make a significant contribution to that work.

One of the most important improvements is that the Bill provides for proper parliamentary scrutiny of secondary legislation. As well as negative resolution procedures, the Bill provides for both draft and delayed affirmative resolution procedures. It is worth remembering that the Act it will replace makes no provision at all for parliamentary scrutiny.

As well as replacing existing powers to control exports, the Bill will modernise our controls and provide powers to control the electronic transfer of relevant technology. It is essential that the controls that apply to exports should apply also to technology that may be communicated by telephone, fax or e-mail. The House will welcome the new power to allow the Government to bring controls on military technology into line with those on dual-use technology.

An equal welcome has been given to the new power to control the provision of technical assistance overseas. We intend to use the power to implement the EU joint action, which relates to controls on technical assistance.

Yet another widely welcomed measure allows us to control trafficking and brokering in arms. For the first time, the UK Government will have a comprehensive power that will allow them to introduce controls on UK involvement in trade between overseas countries in goods that are subject to export controls.

These measures will allow us to prohibit UK involvement in the illicit supply of weapons to regions of conflict. We all have a vested interest in ensuring that UK arms manufacturers that are at pains to comply with our export controls regime are not undermined by unscrupulous foreign agents and foreign companies. That is why the Government will continue to press for action to be taken at an international level.

We shall continue to press for international embargoes to be imposed on countries and regions of conflict. That is the best way to stop the supply of arms to those regions. We have supported, and we shall continue to support, efforts within the EU to secure a political commitment from all member states to introduce controls on arms trafficking and brokering. I am advised that such a commitment is imminent.

The Bill will also ensure greater transparency in decision making by setting out in the schedule the purposes for which export controls may be imposed. It will therefore be clear to all concerned exactly what the statutory parameters for imposing controls are. The Bill also provides for the publication of guidance about licensing decisions, and requires such guidance to be taken into account in licensing decisions.

The major improvement in transparency is backed for the first time by a statutory requirement on Government to produce annual reports on strategic export controls, and a separate annual report on items of cultural interest. The NGO Saferworld has said of our annual reports on strategic export controls that they

"currently stand as the most transparent reports published by any European country, and offer a potential template for best practice throughout the EU."

The annual reports are instrumental in enabling the Government to be held to account for their decisions. It is right that future Governments will be required to continue to report to Parliament annually.

There is no question but that the Bill will transform the UK's export control regime. It provides a new framework that allows for the introduction of an effective and comprehensive new set of export controls. I commend the Bill to the House.

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry) 6:22 pm, 8th November 2001

It has been a long haul to get where we are today. The Minister rightly paid tribute to the many Members who have contributed to the Bill's evolution, not least the members of the four Select Committees that came together to form the Quadripartite Committee.

I pay tribute to my right hon. Friend Mr. Heathcoat-Amory and my hon. Friend Mr. Page—they have not contributed to our debates today—for the work that they did on the Bill before they were substituted at half time, as it were, by me and my hon. Friend Mr. Key.

The Bill has had the longest gestation period of almost any Bill in recent years. The Scott report, which gave rise to the Bill, was published in February 1996, five and a half years ago. The Conservative Government accepted the report's recommendations and immediately issued a consultation document. The Labour party's manifesto in 1997 gave a firm pledge to take action. That was followed by the publication of the White Paper in 1998. Yet after that the Government sat on their hands, so it has taken three years for the Bill finally to be introduced. That is all the more remarkable given the fulminations of the current Leader of the House back in 1996 at the time of the Scott report. Yet when he was in a position to influence the timing of legislation, he and the Government allowed the matter to drift disgracefully.

Even now, we are merely at the end of the beginning. There can be little doubt, especially after this afternoon's debate, that there is still a great deal more work to be done when the Bill is considered in another place. Nevertheless, I do not wish to be too churlish; I recognise that the Bill will bring transparency and openness, which were previously lacking, and I welcome that. It deals with difficult questions.

Although the control of the export of goods related to armaments is clearly important, it is not always easy. I shall provide a brief illustration. A few years ago, when I was working for the then Prime Minister Margaret Thatcher, I accompanied her on a regional visit. We were returning to London from a Royal Air Force station, and had to wait for a short period while the plane was being prepared. The commanding officer of the station asked if we would be interested in seeing something, and took us to a disused hangar on the periphery of the base, where there were a large number of steel cylinders. They were in fact the Iraqi supergun but, even after I was told, that was not obvious. They may still be there for all I know.

Opposition Members welcome the Bill, but our welcome is qualified. As happens all too often, the Government have decided that most of the legislative detail will be left to secondary legislation, of which we have seen only draft orders at a late stage during discussion of the Bill. It will be difficult to judge the Bill's impact on British industry and commerce until we see those orders, which will be published after the Bill has become law. That is a bad principle for any Government to follow.

On Second Reading on 9 July, we made it clear that we believe that the Import, Export and Customs Powers (Defence) Act 1939 is inadequate, inappropriate and ripe for revision. However, what we have in its place is effectively no more than an enabling measure. Neither the Government nor British industry or its customers know precisely how the Bill will work. The Quadripartite Committee, which brought together the Defence Committee and the Select Committees on Foreign Affairs, on International Development and on Trade and Industry, recommended that the Government publish draft secondary legislation before Second Reading. In the event, the dummy orders, four of them stretching to nearly sixty pages, were first seen by members of the Standing Committee when they were published in October, halfway through their deliberations. That is a travesty of which the Government have every reason to be ashamed.

At the heart of the Bill lies the schedule which, for the first time, sets out in statute the purposes for which the Government can impose export controls. That brings welcome additional transparency, but the Bill also allows the Government to change the schedule simply by order without the need for further primary legislation. What is more, the Government can override the provisions of the schedule and impose export controls outside those provisions, again simply by means of secondary legislation. That was rightly criticised by the Delegated Powers and Regulatory Reform Committee of the other place.

In their consultation document on the Bill, the Government used weasel words:

"The negative procedure would provide Parliament with the opportunity to debate and vote on secondary legislation where appropriate".

For those unfamiliar with the workings of this place, that may well sound a sensible compromise. But as anyone who works here knows, it is not the reality of the situation. Parliament does not decide whether to debate a negative resolution: the Government do. As my right hon. Friend the Member for Wells said on Second Reading,

"If the Government do not want a debate, there will not be one."—[Hansard, 9 July 2001; Vol. 371, c. 552.]

We have rightly spent time this afternoon seeking to persuade the Government to change their mind. Lord Scott made it plain in his evidence to the Quadripartite Committee that he would prefer the affirmative resolution procedure to be used. The negative resolution procedure is not necessarily restricted to technical and uncontroversial orders, as the Government have tried to claim. Some of the orders that have already been laid before Parliament raise issues deserving examination. Yet at every turn, the Government have sought to resist the greater involvement of Parliament in a way that those concerned with improving the accountability of Ministers and the scrutiny of Government decisions will find difficult to understand.

When the dummy orders finally arrived on the desks of the members of the Standing Committee and were taken off the internet by British industry, the Government tried to justify their methods in the accompanying notes published at the time. The Government claimed that the export control provisions of the dummy orders represented a consolidation and a rationalisation of controls that were already in force; that the operation and enforcement of certain controls on the electronic transfer of dual-use technology were already contained in statutory instruments; that the dummy order includes provisions on the purpose for which information held by the Secretary of State may be disclosed; and that the new legislation simply codified existing practice.

The dummy orders increased the maximum penalty from seven years to 10 years, both under our national legislation and for offences under directly applicable European Community legislation. These are not matters of technicality. They raise hugely significant issues, yet the House is expected to believe that they will be dealt with adequately by statutory instruments and a short debate Upstairs.

One of the other main issues that has occupied our attention this afternoon has been the strange omission from the Bill of any reference to sustainable development. As has already been pointed out, in the consultation paper on the draft legislation, which was published in March this year, the schedule to the draft Bill contained in the table a section headed "Sustainable Development", which made it clear that the Government intended to take into consideration in granting licences a serious adverse effect on the economy of any country, or the potential for sustainable economic development in a country.

In the first paragraph of her speech on Second Reading, the Secretary of State said:

"We shall not ignore our international responsibilities: to reduce poverty, promote sustainable development and reduce conflict.

That is what the Export Control Bill is about."—[Hansard, 9 July 2001; Vol. 371, c. 542.]

Yet that is precisely what the Bill is not about, as the references in the draft Bill were subsequently removed. That absence from the Bill has caused concern to a number of NGOs and to a large number of hon. Members in all parts of the House, as has been evident this afternoon.

Photo of Nigel Griffiths Nigel Griffiths Parliamentary Under-Secretary, Department of Trade and Industry

Can the hon. Gentleman confirm whether the arms manufacturers asked for such a provision to be put in the Bill?

Photo of John Whittingdale John Whittingdale Shadow Secretary of State (Trade and Industry)

I do not believe that the arms manufacturers have made such a request, but it is the House, rather than the arms manufacturers, that wishes to determine the contents of the Bill. There are serious concerns that need to be addressed.

The Minister has claimed throughout our proceedings this afternoon that sustainable development is a criterion by which export licences can be judged, as set out in the EU code of conduct. He argued that it is therefore unnecessary to specify sustainable development as a criterion in the schedule to the Bill. However, he has plainly failed to explain why, if it is possible to use the criterion contained in the EU code of conduct, it cannot also be contained in the schedule. His explanations on that point have been profoundly unconvincing. For that reason, we supported amendment No. 39.

The Bill will have a considerable impact on a key sector of British industry. Not only is the United Kingdom's the fourth largest economy in the world, but we remain a major international manufacturing and trading nation, and our defence manufacturing industry is second only to that of the United States of America. It employs some 350,000 people and there can hardly be a single hon. Member whose constituency does not contain some defence- related businesses.

In my constituency, that is certainly the case. We have the BAE Systems research centre at Great Baddow, and just eight weeks ago I was the guest of Alenia Marconi at the Defence Systems and Equipment International, or DSEi, exhibition at the Excel centre in Docklands. Angus Robertson mentioned that exhibition and raised some questions about the people who had been invited to attend it. However, the exhibition was a fantastic showcase of British defence manufacturers and left one in no doubt about their importance to the economy.

These are difficult times for all involved in business, and manufacturing in particular. The manufacturing sector has been in recession since the beginning of the year and the latest figures show another significant drop in output. It is therefore essential that the Government should not add to the burden of regulation and bureaucracy any more than is necessary. The Government do not have a very good record on that, and defence firms are right to worry that the Bill might make it harder still for them to compete.

My hon. Friend the Member for Salisbury rightly pressed the Government with his amendment to include in the Bill a requirement that licence applications be determined within a specific period. I regret that the Government were not persuaded by his argument, although I draw some comfort from the assurances that the Minister gave. There is still concern that the Bill may make it even harder for Department of Trade and Industry officials to determine applications within a reasonable time, and that that might add a further impediment to the competitiveness of defence manufacturers.

The Government's task has been to strike a delicate balance between the need to exert proper control over the export of goods and related technology and the need not to inhibit legitimate trade unnecessarily by imposing unrealistic or burdensome regulation. How successful they have been in that task will be very difficult to tell until we have seen the detail of the secondary legislation. We shall, however, support the Bill on Third Reading, while continuing to raise these issues. I suspect that they will be the feature of debate in another place and perhaps here, too, when the secondary legislation comes back before the House.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee 6:36 pm, 8th November 2001

I listened with ever-increasing incredulity to Mr. Whittingdale. When he was carrying the bags of the then Prime Minister, I remember trying to elicit information from the then Conservative Government about issues such as Iraqi guns, and getting either a wall of silence or a cackle of deceit. We got no information; we had virtually no means of getting to the bottom of those matters.

I have been mildly critical of the Bill today. There have been pieces of legislation from which one derives particular satisfaction, and the legislation on the national minimum wage is an example. I take pride in this Bill because I realise that much of the campaigning and arguing that we did in the late 1980s and early 1990s is now bearing fruit; indeed, it has borne fruit.

There are some grounds for complaint about the tardiness with which the Bill was produced. Nevertheless, reports have been produced and improved on year on year, largely as a consequence of the Quadripartite Committee's criticisms. The reports started out with an unacceptable degree of opacity in their writing and presentation, and it was thanks to the Clerk of the Committee and some of its members—Ted Rowlands, its then Chairman, in particular—that the publications were put into an intelligible form. The importance of doing that was that the argument can no longer be levelled against us that we should not restrict trade in armaments because if we do not carry on that trade, someone else will because there is no leverage in the international arena. We now have that leverage.

I am always reluctant to place any Government on the high moral ground, but we now have a position from which to argue internationally in favour of a better control regime for armaments. That means that we can give the lie to the argument, hinted at by the hon. Member for Maldon and East Chelmsford, that we are somehow going to disadvantage our armaments industry. Armaments industries always complain, and they always will.

We now have a means whereby we can show a proper way of dealing with the arms business, which I believe is a legitimate part of economic activity. It reduces the cost base and the unit cost of our own equipment and is an important employer and trainer of labour. I know from my experience in the east of Scotland that the armaments industry was the engine that drove what became known as silicon glen and the high-tech civilian industries.

I welcome the Bill and I hope that it may be tweaked a bit in the Lords. Every Opposition complain about negative resolutions. I spent years labouring in the Augean stables of the Standing Committees, looking for references to negative procedures so that we could have a debate on them. That kept the Committees going. Sometimes that took us half the night—but my point is that, by and large, the Bill marks a major step forward in our handling of the armaments industry. It can be held up as an example to the rest of the world. It is not often that we can do that in Britain, and for that reason alone—apart from all the other desirable elements—I wish the Bill well elsewhere. I hope that eventually we shall secure a degree of prior scrutiny, but at this stage I am happy for the best not to be the enemy of the good.

Photo of Dr Jenny Tonge Dr Jenny Tonge Liberal Democrat, Richmond Park 6:40 pm, 8th November 2001

I well remember, as a very new Member, sitting in the Locarno rooms in the Foreign Office and listening to that speech about foreign policy with an ethical dimension. I do not think there was a dry eye in the house that morning: it was tremendously moving and very exciting to feel that we were part of a new Government with a new slant—a new ethical dimension.

We waited excitedly for tangible proof of the new direction that we had taken. We waited, and we waited. In my office, we waited particularly for a Bill to follow up the Scott report—a Bill on arms control. We waited four years. When the draft Bill was published, a cheer went up from the young people who worked in the office, and from me. We were delighted; it was extremely welcome. Mr. O'Neill is right. This Bill is welcome, and in many ways it is a very good Bill. We will, of course, support it.

In these closing stages, we should pay tribute to a couple of bodies. I am thinking of non-governmental organisations such as the UK Working Group on Arms, and Saferworld, which have done a tremendous job in supporting and briefing Members. Some of the issues have been very difficult, and I think that their good work should be recorded publicly. I also pay tribute to the Quadripartite Committee, which has been brilliant, and to its Chairman. I was sad to be a member of it for such a short time; its work and its report have been exemplary. I do not understand why the Government cannot accept the concept of prior scrutiny. A Committee like the Quadripartite Committee would be entirely responsible, and would surely respect the needs of the arms industry. It would weigh up those needs, and balance them against all the other needs that it had to consider.

I am still concerned about brokering. I am still not convinced that the Bill would prevent a man with a mobile telephone from selling arms wherever he wanted to. We have been given all sorts of assurances, but I hope the matter will be considered again in the other place. My main concern, however, still relates to the cumulative effect of arms exports on developing countries. Linked with that, of course, is our favourite topic this week, sustainable development. We have heard well-argued speeches on the subject today and yesterday, when we debated the International Development Bill. I feel that the Minister's responses today have been pathetic—he seems constantly to fall back on the European code of conduct, which he apparently considers to be legally binding. We all know that it is not.

Let me read the Minister a short extract from the report of the Committee stage. It is very short; do not despair. I said:

"The Minister must realise that much argument resulted when the Government gave permission for the repair of guns for Morocco, which borders Western Sahara."

Members may remember the incident. I continued:

"That contravened clause 8 of the European code of conduct, and nothing happened as a consequence. The provision is not legally binding."

In replying, the Minister said:

"Criterion 8 derives from the EU code of conduct on arms exports, and we are firmly committed to it. Hon. Members want to prevent a future Government from withdrawing from consideration of sustainable development as part of the export licensing process. They are ignoring the fact that we signed up to the EU code of conduct. We shall not withdraw from it, and a future Government will have to be bound by clause 8".—[Official Report, Standing Committee B, 17 July 2001; c. 47-48.]

That is all very fine, but a couple of months before the code of conduct had already been broken and nothing happened, so it is not very reassuring constantly to fall back on that code.

Sadly, although it is welcome, it is a curate's egg of a Bill. I hope that it will be further improved in the other place.

Photo of Mr Roger Casale Mr Roger Casale Labour, Wimbledon 6:45 pm, 8th November 2001

I wish to make three brief points. At the end of our proceedings on the Bill, first, let us not lose sight of where the Bill came from. I certainly remember that afternoon in February 1996, before I was a Member of this place, when the Scott report was published and layer after layer of deceit was peeled away to reveal a rot at the core of our Government, which was the old decrepit system of arms control. All of us have a duty to restore public confidence in the transparency of our political system and in the Government's capacity to exercise a rational, fair and effective policy on the control of arms. I believe that the Bill goes a long way towards that end.

Secondly, the Bill is long overdue. The previous such Bill was passed before the second world war in 1939. Times have changed since then, but let us remember that times have also changed since 11 September. We started to consider the Bill before the events of that day. I hope that the Minister and the Government will recognise that times change, the world becomes a more dangerous place and we need all the time to keep arms control measures and legislation under review and up to date.

Thirdly, I welcome the spirit of many of the responses during the debate. Clearly, there is much work still to be done on parliamentary scrutiny, on end-use monitoring and in particular on ensuring that sustainable development is, if not in the Bill, very much part of the spirit of the legislation as it operates in practice.

It is a landmark Bill and it rightly has all-party support. Although we understand and support the Government's desire to ensure that the Bill works in practice, much work can still be done when we review the Bill's operation in the light of experience to keep the ideas and aspirations that lie behind it alive in the years to come.

Photo of Gerald Howarth Gerald Howarth Conservative, Aldershot 6:48 pm, 8th November 2001

It looks as though it falls to me to be the tail-end Charlie in the debate on this important Bill. I entirely support the observations of my hon. Friend Mr. Whittingdale, who made a number of extremely important points about detailed aspects of the Bill. We shall follow with great care how the Government implement the Bill, if it manages to secure safe passage through the other place.

However, I think that it is wrong to pretend to the British public that there has not been a system of arms export control in place over the past 60 years—there has. It may not have been perfect, but Governments of all complexions have tried to operate an ethical foreign policy in respect of arms exports. It would be invidious to suggest that any previous Government had been cavalier in the way in which they allowed British arms equipment to be exported to other countries.

Despite my repeated requests for evidence from Ministers of where there had been any lack of integrity on the part of British defence exporters, virtually no evidence whatever was forthcoming, apart from the mention of Sandline. Certainly, none of our major companies in the UK, which employ so many of our constituents, has ever been cited by any hon. Member—any Back Bencher or Minister—as having shown any lack of integrity in the way in which it promoted its business overseas. Those who are engaged in these activities are generally people of integrity and the last thing that they would want to see is British equipment falling into the hands of those who might use it against our own armed forces.

The Bill generally commands support. We have had a system of export control, but it has been deemed inadequate. That is why we had the Scott inquiry, which made a number of recommendations that the Bill is seeking to implement.

BAE Systems has its headquarters in my constituency. It said:

"The new Bill will render the UK's export control regime more efficient and more effective whilst at the same time meeting the ethical objectives set out in the preamble to the Bill. However, it is also our hope that the Bill will not have the effect of adversely affecting either the competitiveness of UK companies or their ability to collaborate effectively with EU and/or US partners."

It also believes that it should not be put at a disadvantage as against its competitors in the United States or the EU. It is a common view among Conservative Members that the Government must implement this legislation carefully to ensure that it is not our companies in our constituencies that are put at an unfair disadvantage.

On a point of principle, I believe that the supply of defence equipment to our friends and allies enhances Britain's interests and influence overseas. It helps to reinforce stability in potentially turbulent regions of the world. It reduces the unit cost of supplying British equipment to Her Majesty's forces and is an honourable thing to do.

The Government have frequently committed British troops to action and we stand poised now. Who knows the extent to which British troops will be called upon to act in defence of our interests and in the wider interests of freedom around the world in the coming weeks. Defence exports help to ensure that they can afford to go into battle with the best of British equipment, not with equipment that we have had to buy from overseas because we have reduced our domestic capacity to produce it. The Government must strive to operate this law without emasculating a vital component of British manufacturing industry. I hope that they will interpret the law in that way.

Question put and agreed to.

Bill accordingly read the Third time, and passed.