I beg to move Amendment No. 5, in page 6, line 2, leave out

``as soon as practicable after the end of 2002''

and insert

``within seven months after the end of 2001''.

The amendment is one of the less important of those that I tabled to this Clause, so I shall not press it. However, I appeal to the Government to show good faith in the matter and deal with reports expeditiously. More widely, I hope that they will show flexibility and openness in considering amendments to the Bill. Whether on clause 9 or other parts of the Bill, I hope that the Government intend to look carefully at the possibility of permitting prior scrutiny. That was recommended by the Quadripartite Committee, and was fully expanded on on Second Reading. It is done in other legislatures, and I know that the Secretary of State has promised various hon. Members that she will consider the matter. I ask the Minister to look at my suggestion sympathetically, and I hope that it will be debated on Report.

I am at one with my hon. Friend in wanting to ensure the timely publication of annual reports. We can be proud of our annual reports. We have opened up export licensing to an unprecedented degree. I welcome his constructive comments and his intimation that he intends to withdraw the Amendment.

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

I beg to move Amendment No. 43, in page 6, line 4, after `6(1)', insert

`with due care towards commercial confidentiality'.

With this it will be convenient to discuss Amendment No. 44, in page 6, line 4, after `6(1)', insert

`which would include the work of Export Licensing'.

I move the Amendment with a degree of temerity, bearing in mind that the hon. Member for Twickenham said that the quality of debate was going up as time advanced. However, I am encouraged to proceed by the fact that he then destroyed his whole argument by referring to the possibility of Liberal Democrat Ministers. I realise that I have given the Minister a stick with which he can beat me when he responds to the amendments.

I should be very surprised if the Minister agreed to include amendment No. 43 in the Bill, and I do not want to see it there. Its purpose is to give him the opportunity to flesh out the editorial instructions and guidelines that will underlie the drafting of the annual report.

The annual report has been generally welcomed on all sides as something that can make the processes by which decisions on exports and export controls are taken much more readily available and accessible, so that people can see what is going on. I am a great believer in more openness and accountability. The hon. Member for Redcar (Vera Baird) may regard that as a form of corruption, but I do not. I should like as many people as possible to see as much as possible of what is going on.

However, we must be slightly careful. In its report, the Quadripartite Committee said:

``we see no harm in putting the Annual Report on a statutory basis''.

It is most important that it should be so. Only recently, the Government announced that they were going to produce an annual report, then scrapped it because it was getting too complicated and troublesome. I therefore welcome the fact that the annual report will be produced on a statutory basis.

Before my hon. Friend moves on from his point about annual reports that do not occur, does he recall that when we were in office we produced two annual reports on the environment and on the countryside, which carefully examined how far the Government had progressed down those tracks? Both were abolished by the Government when they came to power, like the governmental report to which my hon. Friend referred.

Order. That Intervention is not relevant to the amendments, and it is best not to pursue it.

You are absolutely right, Mr. Benton, and I was going to tell off my hon. Friend for introducing such a diversion into our discussion of the statutory basis of the annual report, which we welcome wholeheartedly. We want to ensure that the report is produced in a way that is satisfactory for all concerned.

The export of arms and military technology is a field of activity that attracts a great deal of competition, not only inside, but outside the United Kingdom. Some organisations in this country oppose any form of such exports. The Bill refers to the activities of foreign countries' security services in seeking to obtain, directly or indirectly, information about the activities and contracts of UK-based companies and the markets that they are targeting. Although it is vital that the annual report is as informative as possible, it is equally vital that it has a care not to divulge information that is potentially useful to companies elsewhere in the world that are aiming to win orders in competition with British firms. There is a duty of care towards companies operating in or out of the UK, which—in the view of official Opposition Members, and perhaps Liberal Members also—should be extended to deal with concerns that have been expressed over the commercial terms on which their activities depend. It should also be extended to credit and financing arrangements, manufacturing locations, transport issues and, most importantly, employee safety.

I shall not expand the point, although it goes deeper. However, it would make a mockery of the reporting arrangements envisaged in Clause 9 if they were to be the basis for action by small groups of activists of the kind that appear to be accumulating in Genoa or the sort of activists who mount campaigns against companies going about their legitimate business, which brings to mind the conditions faced by Huntingdon Life Sciences. I shall not develop that point, but the report must be as informative as possible while providing that type of protection.

In Amendment No. 44, I have asked that the words

``which would include the work of Export Licensing'' be added to the Bill. The amendment should be included because the clause, as drafted, simply requires the Secretary of State to offer an annual report to the two Houses of Parliament on the operation of the Bill, if it becomes law. However, it fails without the amendment because it does not guarantee that Parliament or the wider public will receive an automatic assessment of the effectiveness or speed of the export licensing system. The amendment would ensure that that information would reach Parliament, which would allow the performance of the export control organisation within the Department to be monitored. It is the logical corollary to the revised procedures and controls that the Bill is supposed to introduce.

It is also a matter of vital importance to the companies engaged in exporting from UK. I understand from a parliamentary answer provided by the previous Secretary of State that

``The Government aim to provide a substantive response to Standard Individual Export License (SIEL) applications within 20 working days, except in special circumstances.''—[Official Report, 10 May 2001; Vol. 368, c. 305W.]

This figure came up on Second Reading and I shall repeat it here: only 57 per cent. of those applications were processed within 20 working days in the year 2000. The figures provided by the Department of Trade and Industry on the average length of time taken to process those applications do not take account of the periods during which the applications were referred back to the manufacturer for further information.

I can now take the next hour and a bit—I did not intervene when my hon. Friend the Member for Aldershot was discussing examples—going through specific examples of where this country refused export licences and the orders were promptly taken up and supplied from countries such as Italy and France. I am not discussing weaponry; I am discussing the supply of machine tools and similar equipment. There are various companies throughout the world to which British exporters cannot supply, although the products that they require are not of a military nature. There is an unofficial blacklist that exists and it is most confusing to British manufacturers. Abroad, on the Asian sub-continent, there are companies that have many subsidiaries. Some of those subsidiaries carry out perfectly standard day-to-day operations that have nothing to do with armaments or nuclear work. If they want to buy equipment—measuring equipment is an example that comes to mind—they cannot be supplied by a British company because of the blacklist. As soon as we say no, that equipment is supplied from one of our EU partners.

The Minister would have difficulty in putting an objection to our EU partners on that matter because they would legitimately say, ``We see no reason for you to have refused the request.'' We sometimes draw our lines too firmly and tightly.

The hon. Gentleman made a serious allegation when he referred to an unofficial blacklist. He is alleging that officials in the various Departments or Secretaries of State are acting outwith their statutory powers. Will he expand on that statement or have I misinterpreted what he said?

The hon. Gentleman has grasped what I said clearly and effectively. I am glad that he has done so, and I should be delighted to hear the Minister's answer. Sometimes, companies that are blacklisted are not officially recorded as such, and that is wrong. The list should be examined more thoroughly. British manufacturers are suffering because of those refusals.

Dr. Starkey rose—

If the hon. Lady will hold her horses for a second, I shall be delighted to give way.

Let us suppose that a Member of Parliament is approached by a company that has waited seven or eight months for permission to go ahead or not to go ahead. It is most worrying when that Member of Parliament makes an application and, wham, within a week or two a refusal comes through. One of the reasons that I welcome the Bill is that matters will be much more open and transparent.

The hon. Gentleman has confused me still further. Will he clarify whether he is talking about the problem of delay in reaching a decision? That issue was highlighted by the Quadripartite Committee, which has made many representations to the Government about avoiding such delays. Is he talking about an official blacklist, which is the reason for refusal? If an application is refused, does he accept that the applicant has the right of appeal? The Quadripartite Committee has discussed the important occasion when an appeal was won and arms were exported that many of us consider should not have been exported.

Given her experience of Select Committees, the hon. Lady will be aware that the procedure is most cumbersome. I feel sorry for the Minister because the Department of Trade and Industry is the postbox for applications. They are then handed to the Ministry of Defence and the Foreign Office. The applications travel backwards and forwards. The system is not smooth and efficient. It takes an extraordinarily long time. Some delays are inordinate and I do not believe that some of the reasons for refusal are clear and fully understood by those companies that make the applications. Moreover, some companies from overseas that are placing orders are starting to put onerous conditions on a British company if it is asked to quote, because of the delays and the less clearly understood reasons for the refusal.

I have said from the start that I do not want to be unfair to the Minister. I know that the Department is working on export applications. There is a genuine acceptance that the present system is not satisfactory and that the Government are trying to improve it. The purpose of the Amendment is simple. It would ensure that the annual report sets out how matters are developing. Annual announcements are made concerning the various crimes that are committed. We know whether the number of robberies is rising or whether the violent crime rate is decreasing. I see no reason why the annual report cannot show how export licensing is proceeding, which would help, because we would find the bottlenecks. The House recently witnessed a splendid example of how supplying a little pressure could help reinforce an argument for removing a bottleneck.

I need not continue to emphasise the point in this day of openness, targets and objectives. An annual report would present no difficulties, and I cannot understand why we cannot see as of right how export licensing is operating.

Several hon. Members rose—

I hope that the Committee will forgive and indulge me in speaking to the Amendment. At the beginning of his speech, the hon. Gentleman raised the important subject of commercial confidentiality. Applications for export licences are assessed carefully against the consolidated criteria—

On a point of order, Mr. Benton. Forgive me, but have you called the Minister to reply to my hon. Friend, or may we continue to debate—[Interruption.] I thought that the hon. Member for North Durham (Mr. Jones) was trying to catch your eye, too.

Amendment No. 43 is grouped with amendment No. 44. After I stated the question no one rose, so I called the Minister.

Further to that point of order, Mr. Benton. I rose, and so did the hon. Member for North Durham.

I apologise if I have been remiss, but that was my understanding. After the Minister has spoken, nothing prevents hon. Members from doing so.

In your defence, Mr. Benton, I believe that the hon. Member for Aldershot was distracted and had stopped standing by the time that you called me. I waited, because I want all hon. Members who want to contribute to do so. I shall be happy to consider any subsequent comments that are made and will keep my response brief and relevant to the Amendment, which I shall ask the Committee to reject.

Before the point of order, I was outlining the procedures that we adopt, to reassure the Committee that we adhere to commercial confidentiality in the usual way. We advise exporters not to enter into a contractual commitment until they have a licence. The danger of not following that advice is that the refusal of an export licence would make an exporter unable to fulfil a contractual commitment. It is therefore important to maintain the confidentiality of export licensing information before a decision is taken. Knowledge of an application by a particular company could constitute valuable market intelligence to a competitor, and it would clearly not be right if making an application led to a competitor's ousting the original applicant. The amendment does not specify a particular test of commercial confidentiality, and I hope that in light of my assurances about how seriously we treat the matter, the hon. Gentleman will withdraw it.

We are talking about the annual report, not someone applying for a licence. There is a fundamental difference. I should be appalled if someone submitted an application for a licence and any confidentiality was disclosed, as that would negate the process. I echo what the Minister says about not entering into contractual arrangements. Delays have been so long that it would be to the detriment of British companies to do so and to be hit and held by the many costs involved when they fail to obtain a particular licence. I am talking about the draft report, what goes into it, and confidentiality, and I seek editorial guidelines on that point.

I hope that I can help the hon. Gentleman. I have in my hand the last annual report, which is full and detailed. I am not aware of any firm that said that its confidentiality was breached in this or the previous two annual reports. I have some responsibility for better regulation, and I do not want non-governmental organisations or firms to have to pore over even more legislation. Currently, I am not aware that there have been any complaints or problems of commercial confidentiality resulting from what has been published in any of the previous three annual reports, so in that spirit Amendment No. 43 is unnecessary. The proof of the pudding is in the eating, and we have had three years of eating not a bad pudding.

I thank the Minister, particularly for the last aspect of his reply. I was delighted to hear what he said. We are in a new ball game and are framing new legislation. As I said, I do not want to include the Amendment in the Bill, but I was seeking assurances about how we will proceed in the future. The Minister has given a firm commitment that we will continue as now, so I am delighted to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause stand part of the Bill.

It might be easier if I made my remarks on the Clause now, so that the Minister has the opportunity to hear the pearls of wisdom that I have to offer him, and he can respond.

In our earlier discussion about the previous amendments, my hon. Friend the Member for South-West Hertfordshire raised an important point about the nature of the information that will be supplied in the annual reports. The Minister sought to assure us that, by virtue of his Department's past practice, we should be confident that the Department of Trade and Industry will be careful how it couches the reports so that commercial information is not imparted to a wider public that would benefit the competitors of British industry. I am sure that we all welcome that assurance, but I emphasise the point that my hon. Friend made and invite the Minister to assure us that as the debate and scrutiny of defence export contracts progresses, he and his Department will resist pressure to reveal information that would not be in the interest of British companies.

Clearly, there is a conflict between the need for scrutiny and the need to protect British companies and not handicap their operations. From my own experience, I can tell the Committee that this is a serious matter for British companies. Hon. Members should not take my word for that, but should consult defence contractors in their own constituencies, if they have not already done so—I am sure that many have. It is very competitive world out there. If we are to maintain the level of defence exports that provides British industries with the economies of scale that enable us to manufacture defence equipment for our own forces in the United Kingdom at a non-prohibitive price, we must be very vigilant so as not to handicap British companies in their pursuit of the markets. I accept the Minister's assurance, but I also hope that he—along with his departmental colleagues and whoever might succeed him—will be vigilant about the information that they reveal.

My hon. Friend the Member for South-West Hertfordshire referred to the delays in the issuing of export licences, as did the hon. Member for Milton Keynes, South-West—although she is not in attendance at present. Those delays are a major concern to business. I have discussed the matter with the Defence Manufacturers Association, which is concerned that, although the French can get things through almost at the drop of a hat, it is more difficult for British companies to obtain licences.

I am raising the matter in relation to the clause under discussion because the annual report would be a suitable place to record the operation of export licences, and particularly the processing of them by the Department of Trade and Industry. My hon. Friend the Member for South-West Hertfordshire mentioned that there are key performance indicators for almost every area of public life. Perhaps there should be a key performance indicator for how the Department of Trade and Industry issues export licences, particularly for defence contracts.

I do not wish to disagree with my hon. Friend, but the Bill—which we all support—refers to goods of any description: it covers a wider area of trade than defence. Although that is a valuable and important industry, a further 80 or 90 per cent. of our manufacturing economy is also affected by the Bill.

I agree with my hon. Friend, and we must never lose sight of that fact. The Bill gives the Government carte blanche to deal not only with the whole of British industry, but commerce and the world of art—for which the hon. Member for Wolverhampton, South-West is rapidly becoming the official spokesman in the Committee.

I want the Minister to supply hon. Members and the public with the relevant information concerning the performance of his Department on the granting of export licences. It may also be appropriate for him to impart information about how the other European Union countries are operating and performing in that regard, because if we are all caught within the ambit of the European code, should not Parliament and the public be told how long it takes the French or the Italians to issue export licences not only for defence equipment, but across the board?

I showed the annual report to the Committee. I am aware that it is a mighty tome, and that hon. Members may not have had enough time to read it in detail. However, on page 295 it contains information on licensing performance, under the helpful heading of ``Performance on processing licensing applications''. If the hon. Gentleman thinks that there is a clearer way of directing hon. Members and the public to that information, I would be grateful for his advice.

That could be interpreted as a very ambivalent heading but, as the Minister is a straightforward chap, I am prepared to interpret it straightforwardly. Would it be possible for me to see page 295? This is a weighty tome, as the Minister rightly said. However, I confess that I have not seen the document before. I wonder whether the hon. Member for Twickenham or the hon. Member for Richmond Park have seen it.

Anyone who has watched American football will know that this is called running interference. My hon. Friend has made an important point about comparisons among our competitors in the European Union. In a world in which there is greater and greater competition in international goods, it is necessary to have the correct comparisons and to check the relative rates of efficiency. Ideas elsewhere about the processing of licences might be adopted here for smoother and more efficient working.

I am most grateful to my hon. Friend for that helpful Intervention.

The Minister's intervention was extremely helpful. Having had an opportunity to glance at the appropriate page of this document, I am bound to say that it contains the information that I was seeking. I therefore apologise to the Committee for detaining it on account of my having failed to see that information. [Interruption.] Well, at least I am being honest. It would also help if, through the European code, we could see how our competitor countries are treating this important matter.

I welcome the hon. Gentleman's openness. As someone who supports and recognises the importance of the arms industry, certainly to the region that I represent, I believe that it is important that the Amendment gets the balance right between neutering the report—making it so anodyne that people do not understand it—and openness. The United States has a successful—

Order. I remind the hon. Gentleman that we are discussing Clause 9 stand part. We are not dealing with any amendments.

I just want to make the point that the report must have openness and transparency; otherwise, it will be a neutered report and will gather dust, as other reports have done, which was shown by the hon. Member for Aldershot not having read the relevant part of it.

The important thing is to get that balance right. Clearly, the United States has a successful arms export industry, but it also has openness. That must underline this annual report if it is to be meaningful, which is the key point. I also welcome the benchmarking in terms of licensing against other European countries, as well as the fact that the hon. Member for Aldershot thinks that something good is coming out of Europe.

I did not say that.

The hon. Member for South-West Hertfordshire threw out an interesting point in the course of his discussion of Clause 9, and caused a brief flutter of excitement to which the Minister did not respond, and which was not taken any further. I was intrigued, and interested to know the implications of the so-called blacklist of countries. It would not surprise me if such a list existed—I do not know about it, and it is probably not improper either. Dodgy business practices are common, and in countries such as India, where there is great transparency and arms contracts have been investigated, it has been shown that the industry is replete with all kinds of practices. It would not surprise me in the least if, in order to protect Ministers, officials occasionally recommend that certain licences should not be approved because of the company rather than the criteria relating to the country. How will the Bill relate to the problem to which the hon. Member for South-West Hertfordshire referred? How will such a definition of a company be dealt with under the Bill? Will it be permissible for Ministers to ring-fence certain companies because of their reputation and the way that they operate? How will Parliament come to know about that practice generally or in relation to specific cases? The hon. Gentleman has raised an important issue, to which the Minister has not responded. I do not know where this hare might run, but the argument needs to be developed.

My Amendment is carefully phrased. The words ``the work of'' allow for a broader reference. That is necessary not just because of the statistical aspects but to give better guidance to the companies involved in handling and processing applications, so that time is not wasted in submitting export licence applications that will not succeed.

We have had a well informed debate on the Clause. I congratulate the parliamentary draftspeople for drafting in three sentences one of the most vital clauses in the Bill. I want to reinforce the message that we intend to continue the practices that up to now have been voluntary, and make them statutory. I do not ask the Committee to take only from me the high quality of the Government's annual report. I quote the organisation Saferworld, which said that that report

``currently stands as the most transparent report published by any European country, and offers a potential template for best practice throughout the EU.''

I hope that in commending this clause, I have covered the points made by my hon. Friend the Member for North Durham and the hon. Member for Aldershot. We hope that our EU partners will follow our example so that we can see what happens when we reject licences. Of course, we have a procedure to inform our partners in Europe of that, and they must circulate the information in their countries, too.

The clause places the annual report on strategic import controls on a statutory basis. It requires my right hon. Friend the Secretary of State for Culture, Media and Sport to report to Parliament on the operation of the export licensing system for objects of cultural interest.

For those reasons, I consider the clause an important part of the Bill and am sure that the Committee agrees with me. I urge the Committee to agree that the clause should stand part.

Question put and agreed to.

Clause 9 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Pearson.]

Adjourned accordingly at twenty-three minutes past Eleven o'clock till Tuesday 16 October at half-past Ten o'clock.