I beg to move Amendment No. 48, in page 2, line 21, after second `transfer', insert `other than within a company or group'.

Under the current legislation, only the physical export of defence equipment is regulated. Controls on the transfer of dual-use technology were introduced in September 2000 when the revised European Community dual-use item regulation came into force. It is reasonable that the Government should propose to close the loophole in the Import, Export and Customs Powers (Defence) Act 1939. However, controls on the transfer of technology by intangible means need to be clearly defined to avoid damaging the competitiveness of the UK defence industry.

The Bill takes little or no account of the globalisation of the defence industry or the increasingly multinational character of defence companies. It is important to recognise that defence manufacturers do not oppose the idea of the Bill covering electronic communications; it is an anomaly that they have not been covered. However, they are concerned about how the provisions will work in practice.

The reality of the defence industry has not been fully recognised. For example, fast and efficient access to and exchange of information is essential for multinational companies and for any collaborative programmes. I recall—it seems like yesterday—the scenes on the doorsteps of various chancelleries and Prime Ministers' residencies, when the Government tried to persuade the German and French Governments to move towards a more together defence industry for Europe. All sorts of mergers were proposed and sounded out, but various companies blasted them out of the water and they did not get as far as some people might have wished. If those companies had got together and formed one company, they would still have been caught by the Bill, as existing companies might if, for example, a United Kingdom-based engineer in a UK company wanted to make a telephone call to another engineer on a collaborative project in another country—a friendly ally. Would that call require an export licence or could it be covered in some way?

In my local pub in Salisbury over the weekend I happened to meet a person who worked for QinetiQ, the privatised part of the Defence Evaluation and Research Agency. He recalled that things were easy for him and his colleagues when they were civil servants at DERA; they would not have thought for a moment about whether an export licence was needed to make a telephone call to Lockheed Martin, Airbus or anyone else. Now that they are in the private sector, they have to think all the time about what is on their computers and whether they should be in rooms for meetings. He said, ``We didn't realise that the private sector had to behave like that.''

Everyone now has to tackle that cultural change. My amendment simply attempts to clarify what the Government mean. We want to know whether the Government really intend that someone in a company or group on one project could find himself in trouble if he did not have an export licence every time he sent an e-mail from one part of the group or joint project to another. That cannot be the Government's intention, but that is what the Bill says, as I and industry read it. The Government cannot intend to impose such strict regulations and bureaucratic controls on UK companies that our manufacturing industry will become known throughout the world as an especially difficult partner. I hope that the Minister will allay those fears.

It is far more sensible to allow the free flow of information within companies, and to require export licences for information that will go outside a company, group of companies or a collaborative project sanctioned by Governments. That is the purpose of the amendment. It does not seek to exempt swathes of British industry from reasonable surveillance or permissions, but to ensure that the burden placed on them does not make them hopelessly uncompetitive. That would not be to the advantage of anyone.

I welcome you back to the Committee, Mr. Benton, and I thank the Minister for providing us with dummy orders. I am delighted to know that there will be a consultation period, because someone in industry to whom I spoke this morning told me that he and his colleagues would be closeted with their lawyers for a month, pouring over the detailed legislation to understand the full implications of the dummy orders for them.

May I be permitted to single something out in passing, Mr. Benton? I was interested, as you may be, in the definition of a robot, which is:

``A manipulation mechanism, which may be of the continuous path or of the point-to-point variety,'' and ``may use `sensors'''. There is a variety of descriptions, but there is an exception for robots that are

``Mechanically controlled variable sequence manipulation mechanisms which are automated moving devices, operating according to'' programs in which the motions are mechanically

``limited by fixed, but adjustable, stops such as pins or cams'' and in which

``The sequence of motions and the selection of paths or angles are variable within the fixed program patterns.''

Clearly that is a reference to the Secretary of State for Transport, Local Government and the Regions. I am sure that he will find the dummy orders as interesting to peruse as we have done.

I welcome the consultation period. If the industry takes longer than 12 weeks, I hope that the Minister will be flexible.

I strongly endorse the remarks of my hon. Friend the Member for Salisbury on the Amendment. Like him, I have associations with QinetiQ. Its name presumably has something to do with physics. The people in QinetiQ have operated under a very different system, called the Ministry of Defence form 680 procedure. Under that system, if they wish to discuss restricted matters with somebody in another country, they have to obtain permission. They have been able to work with that, and it is an established procedure with an element of flexibility.

I entirely understand my hon. Friend's point that those people who prior to 1 July were part of DERA frequently held discussions with their counterparts, and those in Defence Science and Technology Laboratories—the remaining public sector defence research establishment—will continue to have discussions about sensitive matters with the United States in particular, but also with our allies elsewhere. It is important that the Bill does not obstruct the sharing of important information among scientists who are trying to develop defence equipment for the protection of our own people. It would be a paradox if, at the same time as we are looking for co-operation on a broad scale to defeat terrorism, we were to place in the path of industry and the scientific community impediments to their ability to work together to make the world a safer place. The United Kingdom is a world leader in this area, so we must be careful how we deal with the matter.

This country is participating in a number of joint projects. For example, as part of the joint strike fighter project, BAE Systems is involved in both the Boeing project and the Lockheed Martin project in the United States. We need specific assurances that there will be no attempt, either by the state authorities such as the Crown Prosecution Service or by others seeking to move the law, to inhibit the efficient and proper consultation that must take place among people in this country and people in the United States on one of the most important military projects on the drawing board.

That applies not only to our relations with the United States, but to our relations with our continental partners as well. The Typhoon—formerly and unfortunately known as the Eurofighter, but now with a much better name—is a project being conducted by the United Kingdom, Germany, Italy and Spain. Clearly, an exchange of information is necessary for that project. I hope that the Minister can assure us that the Bill is not intended to catch the transmission of information such as my hon. Friend referred to—in particular, oral communications by telephone or communication by e-mail or fax. If the Bill were to do so, it would seriously inhibit the ability of defence manufacturers to work on important joint projects across national boundaries. Future projects may involve the United Kingdom in partnerships not just with the United States or other EU member states, but with countries such as Singapore or Australia or elsewhere where there are not exemptions for EU member states.The point made by my hon. Friend is important.

Thales is another instance relevant to the United Kingdom. It was formerly known as—

Thomson-CSF.

I thank my hon. Friend--I was just checking. Thomson-CSF and Racal are now known as Thales, and my right hon. and noble Friend Lord Freeman is chairman of the British end of that important company. Like BAE Systems it has offices around the world. It is a French-owned company operating in the United Kingdom. Will it fall foul of the Bill if there are normal on-going discussions between various units of Thales, such as the United Kingdom element and the headquarters in Paris?

It is a sensible suggestion that the words

``other than within a company or group'' should be added to the Clause, and perhaps we should also add the words ``or where companies are working together on a joint international project''. Whatever the merits of the Bill—and I quite understand that it has its merits—none of us would want so to hobble British industry, and particularly our defence industries, that they were unable efficiently and effectively to contribute to the defence of the United Kingdom and of freedom in the wider world.

We welcome the spirit behind Clause 2. It is obviously necessary to exercise control over software as well as hardware if the objectives of the Bill are to be achieved. The transmission of technology, and the means of transmission—fax and telephone—must be part of that.

Order. Is the hon. Gentleman speaking to the Amendment? It sounds as if he is on Clause stand part.

I was putting my remarks in the context of the Clause.

I understand the basic point made by the hon. Member for Salisbury that the structure of industry is changing and globalising. That is important, and creates a need for tighter control as well as for an understanding of how the industry functions. In the old days, a company like BAE systems would have been an old-fashioned British company with a large labour force, lifetime employment, internal cohesion, conditions of confidentiality and so on. That was the old way of doing things and it probably made it rather easy to exercise control over the inappropriate dissemination of technology.

The more fluid structure described by the hon. Gentleman, with lots of subcontracting, a small core management team and overseas alliances that come and go, undoubtedly makes businesses more efficient. However, it also creates plenty of opportunities for the transmission of technology to countries that should not have it and where there are genuine problems of end use. That is why we support the clause in its unamended form. The Amendment would weaken the spirit of the clause.

A separate concern, which may or may not be dealt with by the amendment, is that of the universities about how far proper academic discourse can be allowed under the Bill. I do not think that the amendment is specifically directed at those concerns, but perhaps the Minister could explain how, in the Government's view, the universities' concerns are being taken care of. Perhaps he will need to prepare some amendments of his own that set out how information that is in the public domain and of a genuinely academic nature can properly be protected. I realise that that is not the objective of the amendment, but it is relevant to the discussion and I hope that the Minister can respond.

I apologise for not being able to stay for the Minister's reply, but I am on the Speaker's list to participate in another debate at 11 o'clock.

I understand the concerns of the hon. Members for Salisbury and for Aldershot, but I think that the Amendment is opaque and misconceived. It is opaque because it does not describe what ``group'' means, unless it is defined later and I have not seen it. For example, a group of companies may have encompassed Iraq in the mid 1980s, and if the amendment were agreed, we would not be able to stop the transfer of technology there. The amendment is misconceived in that the fifth word in line 18 on page 1 of the Bill is ``may''. That is permissive, not mandatory.

I have sympathy with the concerns of the hon. Member for Aldershot, because there have been worries about arrangements made by some companies—for example, Swan Hunter in the north-east, which is now Dutch-owned. We need reassurance from the Minister that these companies are now clearly international and pan-European. I agree with my hon. Friend the Member for Wolverhampton, South-West (Rob Marris) that the Amendment does not cover this issue because it mentions a group. I am not sure how ``group'' is defined, because a lot of defence contracts these days are made by consortia of different companies and groups. Industry needs reassurance on the matter because the Clause does not, in its present form, answer its concerns. I look forward to hearing from the Minister.

I thank the hon. Member for Salisbury and other hon. Members for their kind words of welcome to the developments on the Government side since the recess began, and for the dummy orders which hon. Members have clearly studied in detail.

I shall go through the points that have been raised and explain why I shall urge the Committee to resist this Amendment. The hon. Member for Aldershot raised an important point, and he illustrated it with examples such as QinetiQ and Thales, expanding our lexicography if confusing our spelling. Industry will be able to apply for licences to cover a single or joint project or groups within a company for intra-company transfers and for industry partnerships. I heard with concern what my hon. Friend the Member for North Durham (Mr. Jones) said, and I hope that that goes some way to reassuring him also. The planned public consultation will provide a further opportunity to take into account the views of those affected by the new controls. Naturally, the Government will make every effort to fine tune the controls to meet any concerns expressed so far as is possible within the bounds of agreed Government policy. I am pleased to announce that the Export Control Organisation will be carrying out an awareness and education programme in the run-up to the introduction of new controls. We aim to work together with exporters to ensure that the transition to the new export control regime is as smooth and effective as possible.

Perhaps it would be useful for the Minister to suggest to the Export Control Organisation that it consult the Defence Export Services Organisation, because I gather that the MOD form 680 procedure is largely governed by DESO. It therefore has a wealth of experience in this respect. If the orders are to be made workable and cause the least possible encumbrance for industry, DESO can perhaps give some advice to the organisation that the Minister mentioned.

I am sure that we and our associated bodies will welcome advice from anyone with expertise in the field.

The hon. Member for Twickenham (Dr. Cable) raised two important points. My officials have had a valuable meeting with the universities, which, I believe, are now satisfied that we shall be able to work together to ensure that academic freedoms are respected while proper controls are enforced. I know that that will be conveyed to the hon. Gentleman. We also intend that the existing open and individual licences for transfers of military technology will be automatically extended to cover the transfer of the same technology electronically.

The Amendment would ensure that transfers of technology within one company or group could not be subject to control. The Government firmly believe that the power to control the transfer of technology within one company is essential to the effective operation of our export control regime. If transfers within one company were excluded from control, an unscrupulous exporter or individual could transfer sensitive technology simply by setting up a company with offices overseas. I am sure that members of the Committee agree that that would amount to an unacceptable loophole in our controls.

I can allay the fears of the hon. Member for Aldershot. I am confident that the continued use of open licensing will enable transparency to continue and red tape to be reduced.

My hon. Friend the Member for Wolverhampton, South-West highlighted the fact that the amendment would create problems by generating loopholes.

In view of those arguments, I hope that the hon. Member for Salisbury will withdraw his amendment.

I am grateful to the Minister for his considered view of the Amendment. I listened with great interest to the contributions from both sides of the Committee. The most important thing that the Minister did was to give an assurance that companies would be able to apply for licences for joint or group actions and that intra-company transfers and partnerships would be handled sensitively. That satisfies the main purpose of the amendment, which is to tease out the issues. There was agreement on both sides of the Committee that it was necessary to seek clarification from the Government.

I am relieved to hear about the meeting with the universities, and I am delighted that they are happier than they were. I am glad that the Export Control Organisation will carry out its important awareness exercise. Hon. Members tend to think that the Confederation of British Industry is the answer to all questions on consultation between the Government and industry, but it is not. Plenty of small companies are not members of the CBI and feel left out in one way or another. I am glad, too, about the Minister's remarks on open licensing.

Bearing in mind the fact that we have had a commitment from the Minister, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move Amendment No. 49, in page 2, line 28, leave out sub-paragraph (b).

Mr. Benton, I am sure that you and the Committee will be enormously relieved to hear that I am not a lawyer. My amendments are not tabled in that spirit; I am simply representing the voice of the common man and, I hope, common sense.

The amendment is not difficult: quite simply, I do not have a clue what subsection 5(b) means. The Home Secretary was disarmingly honest with me in the Chamber yesterday, but we shall come to that later. I will use my disarming simplicity now and say that I do not know what on earth subsection 5(b) means. It appears to say that

```technology' means information . . . capable of use in connection with . . . an activity of any other kind whatsoever'', such as pencil sharpeners, garlic presses and cricket bats. It does not refer specifically to dual-use technology, but is as broad as the Atlantic ocean and as long as a piece of string. An incidental bit of useless information is that, when I was a Minister at the Department of National Heritage, I discovered that the length of a piece of string is 600 ft, so it is finite. One needs to learn in this place.

I do not know what the Clause means. As a non-lawyer, all I know is that subsection (5)(b) is a lawyer's paradise. The courts will be full of people arguing about what it means by

``an activity of any other kind whatsoever'', so I would be grateful if the Minister would tell us what it means.

It may help the Committee if I give a little explanation of Clause 2(5) and the definition of technology, which reads:

``information . . . capable of use in connection with . . . the development, production or use of any goods or software''

``the development of, or the carrying out of, an industrial or commercial'' or other activity. I assure the Committee that it could not cover garlic presses, because the subsection is governed by the purposes of the Bill. If hon. Members want to think up a few slightly more plausible examples, I would be happy to give a considered opinion on them.

I agree that many types of technology that could be covered by the definition will not in practice be subject to control. Given the pace of technological change in development, the concern is that new technologies could be developed in the future—perhaps the near future—that could threaten any consequence in the schedule. The broad definition of technology used in the subsection is therefore necessary to enable the Government to impose controls on any such technology, should it emerge.

The deletion of subsection (5)(b) would limit the type of technology controlled under the Bill. Any other type of information, no matter how serious its potential for misuse in the wrong hands, would be excluded from control if the Amendment were made. Although I understand the concern that the new controls on technology transfer should be clear to industry and not an undue burden, I fear that the amendment would significantly restrict the powers available to the Government.

Subsection (5)(b) is necessary because we cannot foresee new types of technology that may be developed that, although not related to goods or software, could none the less be used to threaten any consequence in the schedule. Such is the pace of technological change and innovation that we must ensure that the new legislation is not rendered quickly out of date by the emergence of new technological methods and processes that fall outwith the relatively conventional definition of technology in subsection (5)(a). The UK cannot be in a position in which new primary legislation needs to be passed before new and possibly highly sensitive technology can be controlled, simply because the technology may not be covered or fully covered by the traditional definitions used in the existing control regime.

It is important for the Committee to appreciate the fact that sensitive technology might not necessarily be associated with goods or software. For instance, it might support more experimental work carried out before the actual development of the goods or software, or could simply relate to information connected with a specific activity that did not necessarily involve goods or software.

I assure the hon. Member for Salisbury and other members of the Committee that controls may be imposed on classes of technology only when their export or transfer from the UK could threaten one or more of the consequences in the schedule. That is clearly specified in the draft dummy order that has been made available to the Committee relating to the export of goods, technology transfers and technical assistance. In view of that, I invite the hon. Gentleman to withdraw the amendment.

Well, that is exactly as I feared. The provision is a completely open-ended gift to the Government. The Minister has done a fine job in explaining what he means, and what he means is that I was absolutely right. Now he invites me to withdraw the Amendment. Given that there will be a consultation period with industry, during which interested parties will have the opportunity to explore the matter more fully, and given that the Bill will go to the other place, where they are rather good at this sort of thing, I am prepared to give the Minister the benefit of the doubt.

However, the Committee should recognise that this is a huge open-ended provision. I cannot recall any other legislation that not only allows the Minister and the Government to do what they wish but also makes it easy for them by including provision for unforeseen events and uninvented technologies. I remain concerned about that, but I can see that we will not get any further on the matter. However, I have a feeling that it will re-emerge in the other place as an important issue. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

The Clause is a vital part of the Bill. It represents an essential modernisation of existing controls. At present, we can only impose controls on military technology in physical form, such as on paper or on computer disk. That does not make sense given the huge developments in communications, particularly in electronic communications, that have taken place since the 1939 Act came into force. We intend to use the powers in the clause to impose controls on the transfer abroad of military technology by electronic means, mirroring the controls that we now have on exports of such technology by physical means. We also intend to use these powers to introduce controls on the transfer by any means of technology for use in the development of weapons of mass destruction or missiles capable of the delivery of such weapons. We are committed to taking action in this area by the terms of the European Union joint action programme on weapons of mass destruction, which we agreed last year and which will ensure that controls are implemented across Europe. I commend the clause to the Committee.

We agree with British industry and many other outside organisations such as charities and NGOs that the law in this area needs to be revised. We all broadly welcome the revision. We have drawn attention to some of our concerns, but we believe that this is a sensible review and we support it.

I rise briefly to echo my hon. Friend's caveats about the open-ended definition of the powers that the Clause gives to the Government. The clause could provide the Government with a substantial power on which there would be a limited check. I accept the Minister's point that technology moves on. There is no point in passing legislation that will be out of date in two years' time because technology has changed. However, it is the duty of Parliament to scrutinise the Government's intentions, and I have reservations about the catch-all nature of the clause.

The Minister talked of weapons of mass destruction, and we all understand the need to be absolutely rigorous in ensuring that anything that goes to make a weapon of mass destruction is not exported from this country into the hands of those who would do us injury. However, we should also understand that the Bill's scope extends far beyond weapons of mass destruction to cover other technologies such as military pyrotechnics. I was involved with a company that made military pyrotechnics—simulated battlefield devices for training purposes.

We should not misrepresent the Bill. It is not simply about preventing weapons of mass destruction, or components thereof, from falling into the hands of people such as Saddam Hussein. It is much more comprehensive and wide-ranging, and imposes conditions on the export of a large number of components in the defence sector. I hope that my hon. Friend the Member for Salisbury is correct when he says that there reposes in the House of Lords a wealth of experience in these matters. It also contains some very fine minds. In the intervening period, they may be able to find a way to ensure that the Government achieve the overall objective without taking controls and powers that are so extensive that they are unaccountable in this important area.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.