Export Control Bill

Public Bill Committee, 19 July 2001.

Standing Committee B

Clause 8 - Guidance

Vincent Cable (Liberal Democrat, Twickenham)

I beg to move amendment No. 20, in page 5, line 31, leave out `falling to be'.

This is the first of a series of amendments to clause 8 that relate to the procedures governing the guidance. The underlying principle of the debate is the assiduity with which parliamentary scrutiny is protected in law. That takes me back to the Scott report, which told how some particularly nasty equipment fell into the hands of a pernicious dictator. It was about more than that: it was about decision making and the culture of secrecy in Whitehall, and the lack of accountability and parliamentary scrutiny. We must ask whether the legislation does justice to Scott's evaluation.

The Committee was put together hurriedly, and most of its members have not yet read the voluminous background literature. The Scott report is hefty, and so is the Quadripartite Committee's report and the evidence given to it. That might explain why Labour Members have been quiet so far. They should ask what would happen under a future Government who do not share the concerns of the Parliamentary Under-Secretary of State, Department of Trade and Industry, the hon. Member for Edinburgh, South (Nigel Griffiths). What would happen if that Government were not willing to give Parliament the benefit of the doubt, and did not have idealistic concerns about passing on weapons technology? Do we have sufficient safeguards against a repetition of the arms to Iraq scandal? Labour Members should brood on whether the Minister's reassurances are sufficient, or whether the legislation should be toughened up.

Guidance is a technical term of art, but it is the lowest form of pond life, and offers almost no opportunity for parliamentary scrutiny. Guidance allows Ministers to inform Parliament of intended changes. That is expressed in clause 8(3) in the magisterial phrase,

``guidance . . . shall be laid before Parliament and published in such a manner as the Secretary of State may think fit.''

The Secretary of State may not see fit to tell Parliament anything, or at least not much, and not punctually. The phrase is open to enormous abuse, so we must clarify the purposes of guidance.

In any common-sense approach to the Bill, some aspects of arms export control must be subject to perfunctory treatment in guidance. Many mechanical, technical and bureaucratic processes should be dealt with in that way: there is no reason for Parliament to brood over every minor technical change in export control. Worryingly, however, the Bill suggests that guidance may govern more than just such details.

Subsections (1) and (2) refer to licensing—in other words, to technical detail. That proves no problem. Subsection (4), however, mentions export criteria. That worries us because that phrase has far-reaching policy implications. I hope that the Minister will say explicitly what that phrase means. What are export criteria and what do they govern?

I have put that point as sharply as I can to produce both debate and clarity on the matter. Our understanding of export criteria is that they could include major changes to the export control system. For example, they could include changes to the European code of conduct, which was one of the Government's big innovations that introduced far-reaching controls on the export process. I would remind members of the Committee that the EU code of conduct has incorporated into the arms control regime such factors as respect for human rights in the country of final destination; the internal situation of the country; and the problems associated with end use, which the Minister assured me about on Tuesday.

My understanding is that the EU code of conduct could be changed by guidance. Therefore, export criteria—big issues of policy within the code of conduct and elsewhere—could be changed merely by the issuing of guidance. The code of conduct currently has the force of law, and it can be changed only with parliamentary approval, but it would lost that protection if it could be modified in guidance. We need a clear explanation from the Minister about what comes within the category of export criteria. We must be convinced that big policy issues—strategic decisions about export controls—cannot be abused as I have described, even by an ingenious Minister who is anxious to get round the controls. It is important that we have that assurance.

It would be desirable to modify the legislation to protect ourselves. We have suggested amendments that would steer us towards that end. The first would split the categories into two. The legislation is currently fine for mechanical guidance, but export criteria should be governed by the affirmative procedure. This House and the other place should separately approve any change. I remind members of the Committee that in his report Scott was anxious that the affirmative procedure should be embedded in the legislation. Active parliamentary participation in and scrutiny of the decision making process are necessary to end the secrecy culture. If we are faithful to the spirit of the Scott report, the Government should have no problem accepting that affirmative procedures should be adopted on export criteria. Therefore, we have split the process and distinguished between guidance, which should operate mechanically, and export criteria, which should be governed by the affirmative procedure in this House and the other place. That should not present a problem for the Government, but the Minister must tell us if it does.

The second safeguard would put some beef into the phrase in the clause that provides that the Minister may inform the House at his own discretion. We want to beef that up by introducing a time limit. If the Minister issues guidance, even limited guidance, that should be done within a specific time frame—governed by a ticking clock—and not years after the event. That is a minor change, but it introduces some discipline into the process of legislative scrutiny, and puts a little meat on the bones of the issuance of guidance.

We hope that the Minister and his colleagues will see fit to make those changes. They are not far-reaching, and we believe that they are in the spirit of the Scott report and the all-party consensus on the Quadripartite Committee.

Joe Benton (Labour, Bootle)

May I remind the hon. Gentleman that we are discussing amendment No. 20? He has touched on amendments Nos. 21, 22, 23 and 24.

Vincent Cable (Liberal Democrat, Twickenham)

I apologise, Mr. Benton.

Joe Benton (Labour, Bootle)

For the sake of progress and to save time, it seems to me that those amendments can be taken together if the hon. Gentleman is happy with that.

Vincent Cable (Liberal Democrat, Twickenham)

I am. They hang together and it would be sensible to consider them together.

Joe Benton (Labour, Bootle)

Therefore, with amendment No. 20 it will be convenient to take the following amendments: No. 21, in page 5, line 38, leave out ``under this section'' and insert

``under subsection (1) or (2).''

No. 22, page 5, line 39, leave out

``in such manner as the Secretary of State may think fit''

and insert

``within 28 days of issuance.''

No. 23, page 5, line 44, leave out ``or 2'' and insert ``2, 4 or 5''.

No. 24, page 5, line 46, at end add—

``(5) Any change to the guidance referred to in subsection (4) which alters that criteria relating to export licensing decisions shall not be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.

(6) any change to the guidance referred to in subsection (4) which does not alter the criteria relating to export licensing decisions shall be laid before Parliament and published within 40 days of issuance.''.

Bob Laxton (Labour, Derby North)

The hon. Member for Twickenham (Dr. Cable) made the unfortunate assumption that Labour Back Benchers may not be aware of the details and ramifications of the Scott report. Although that report was published before I came to this place, I have read it, and I sat on the Select Committee for Trade and Industry, which produced a report on strategic export controls. I have also, from time to time, sat on the procedurally rather tedious Quadripartite Committee, which lasted a considerable time but gave me detailed knowledge of the subject, although I would never claim to be an expert. The same applies to many of my Back-Bench colleagues. The hon. Member for Twickenham was rash to make assumptions about a lack of knowledge on this side of the Committee.

Richard Page (Conservative, South West Hertfordshire)

I am grateful to the hon. Member for Twickenham for agreeing to consider these amendments together rather than separately. They hang together and paint a continuous picture. The hon. Gentleman outlined the Bill's raison d'etre—the efficiency of the parliamentary scrutiny of the whole export control system. That is why we are here today, and amen to that.

I shall not expand on the hon. Gentleman's arguments to any great extent. The proposal treats the licensing process and the export criteria as equal. That is fine, provided that there are no dramatic changes and only minor alterations. The Bill provides that changes to the guidance

``shall be laid before Parliament and published in such a manner as the Secretary of State sees fit.''

My remarks are addressed specifically to Labour Members. We are creating legislation that we hope will endure for a long time, so why should we be concerned about the existing situation? The reason is that we all know that changing primary legislation in the House takes an inordinate amount of time. The pressure to get legislation on the timetable and in the queue for introduction is enormous.

I put it to Labour Members that we must pass legislation that endures. The Government have a small majority that enables them to do as they wish, which I freely accept, but as surely as night follows day, the wheel will turn and the Government's position will not last. Therefore, the legislation that we pass must stand the test of time.

Phyllis Starkey (Labour, Milton Keynes South West)

I am trying to follow the hon. Gentleman's argument. Is he suggesting that the legislation should be drawn more tightly to ensure that any future Conservative Government could, at some distant point in the future, be prevented from subverting it so as to allow the country to sell arms to countries to which most members of the Committee would not want arms to be sold?

Richard Page (Conservative, South West Hertfordshire)

My point is that a situation could arise in which Labour Members might say, ``Gosh! Golly! Shock, horror! I wish that we had agreed, in that Committee on 19 July 2001, to the affirmative resolution procedure under which changes in criteria could be debated by the House.''

I say to the hon. Member for Milton Keynes, South-West (Dr. Starkey) and to the Committee that it may not be a Conservative Administration who arouse concern; it could be another Labour Administration. We have seen this Labour Administration move across the political spectrum like Halley's comet. They may whistle in another direction in their next incarnation.

I endorse what the hon. Member for Twickenham said. We support the amendments, which argue for the affirmative resolution procedure.

Jenny Tonge (Liberal Democrat, Richmond Park)

As I am passionate about this element of the Bill, I want to reiterate the argument so that we all understand exactly what we are saying. The amendments are designed to give more power to Parliament so that it can scrutinise the export of arms and so that the onus is not entirely on the Secretary of State. I feel so passionately about that because of our good old friend, sustainable development.

We discussed sustainable development in a previous sitting and we were told that we need not worry since all exports would be subject to the European code of conduct on arms sales. Subsection (4) of the clause on guidance refers to the consolidated criteria and I am reliably informed that they refer to the European code of conduct. Hon. Members can see that if they read the criteria, which are laid out beautifully on page 61, appendix 1 of the House of Commons research paper on the Bill.

Sustainable development would therefore be protected by the Bill, because the guidance says that the consolidated criteria—the European code—will be adhered to and anything to do with sustainable development, human rights or economic development will be considered before arms export licences are granted. However, the guidance also says that a Secretary of State may change the guidance, so a less scrupulous Secretary of State who did not agree with the European code of conduct could conceivably say that the guidance should no longer relate to it. If, heaven forbid, the Opposition ever get into government and if, heaven forbid, we stop being a member of the European Union, they might say that we will no longer adhere to any European code of conduct. If that happened, no matter how far in the future it might be--after all, the last arms control agreement was formulated in 1939—sustainable development would not be considered. Effectively, we would be back to square one because a future Secretary of State had changed the guidance. That is why we feel so strongly about this matter.

Vera Baird (Labour, Redcar)

I support the openness implicit in amendments Nos. 22 and 24. The Bill is intended to provide openness at each stage, consistent with the speed and efficiency necessary to permit proper exports. I draw the same distinction as the hon. Member for Twickenham between licensing and export criteria. Without parliamentary scrutiny, I, too, fear that a future Secretary of State might use the ability to change guidance in a manner inconsistent with the rationale behind the Bill.

I mean no disrespect to the hon. Gentleman in recalling the proposal discussed during our debate on clause 1 that no Secretary of State should make an order under the Bill without consulting the relevant industrial organisations. That point was soundly made by the hon. Member for Richmond Park (Dr. Tonge) with the intention of giving the defence industry the advantages of access and persuasion. However, that is not possible, as the amendment was resisted. If such access and persuasion are to be available to any future Secretary of State who is considering guidance, their impact must be restricted. Parliament must be able to scrutinise the resulting guidance.

An amendment that we shall come to later would require due regard to be paid to ``commercial confidentiality''. That, too, takes account of the possibility that a future Secretary of State may have a point of view different from that of the present Secretary of State on the preparation of guidance. Such points might conflict with the need to ensure that guidance cannot be corrupted and they make me apprehensive. More parliamentary scrutiny of guidance on export criteria is necessary.

If the amendment were mine, I should not press it to a vote, but I ask my hon. Friend the Minister to reconsider his position and beef up parliamentary scrutiny. [Interruption.] If I have offended anyone by saying ``corrupted'', I apologise for that ill-chosen word. I certainly intended no allegation of mala fides. I heard the hon. Member for South-West Hertfordshire (Mr. Page) rumbling. I hope that he does not rumble any more.

Gerald Howarth (Conservative, Aldershot)

I, too, have some sympathy with the amendments tabled by the hon. Member for Twickenham, but for a slightly different reason. They bear on one of the key failures of the Bill--the failure to provide us with full details of the secondary legislation that lies at the heart of the measure. Sweeping powers are being given to the Government—to any Government; the powers will endure for the time being, if not for another 50 years—and it is our responsibility as parliamentarians to question whether Governments should have such excessive and unfettered powers.

The clause is permissive. The Secretary of State ``may'' issue guidance—it is not imperative that he do so—about the manner in which the licensing function is to be carried out, the reasons that ``may'' be regarded as justifying export licensing decisions and the

``matters to which regard ought to be had''.

The provision should not be permissive. It should be mandatory that the Secretary of State issue such guidance, so that everyone knows how the licensing functions are to be carried out, the reasons that underlie the policy and the matters that are to be taken into account—perhaps including sustainable development, as the hon. Member for Richmond Park suggests, although in my view that is not a key criterion. We should know what the ``matters'' are; we ought to know what the framework is.

Subsection (1)(a) is about the manner in which the sweeping licensing powers are to be used under clauses 1, 2, 4, 5 or 6(1). Clause 6(1) says that the

``Secretary of State may by order require any persons carrying on activities in relation to which controls are capable of being imposed by an order under any of sections 1 to 5''

to do various things, including keeping records. That could place a huge burden on industry. I am thinking not of companies such as BAE Systems, which is a substantial organisation, but of the many other companies, some small, in the defence industry. We all have such companies in our constituencies; they are an important component of Britain's defence industrial base.

The Bill, the meat of which has not been provided, invites us to give the Government sweeping powers to impose all those conditions on business. The hon. Member for Twickenham takes an interest in business matters, particularly in small businesses. I shall not say that my hon. Friend the Member for South-West Hertfordshire is a small business man, because he is a man of very adequate proportions. I hesitate to say of substantial proportions, but he is a business man. He does not run a huge business empire, but the imposition of more Government regulation could make a big difference to the way in which his business prospers. I remind the Committee that the Bill is not limited to defence equipment, but relates to any conceivable goods, so if we are to go down the road of greater openness in export licensing, the Government ought to be much more explicit with business, industry, commerce and the art world about what their policy on such exports involves.

Business likes to know the parameters within which it may operate—it likes certainty. Therefore, it is the Committee's duty to look to the future and to imagine how the powers conferred on Ministers when the Bill becomes law will be used in practice and what burdens they might impose on business. Sure enough, business will complain to us if it finds that the legislation is onerous and that we have not investigated it carefully enough at this stage of the legislative process to try to limit its onerous nature.

Aldershot and Richmond Park share some common ground on this issue, although I do not claim that it is middle ground. That might seem to the Minister to be an unholy alliance, although I am sure that it will do more damage to the hon. Member for Richmond Park than to me. None the less, the Government owe it to industry to issue clear guidance so that those engaged in exports—in defence exports, in particular—know the criteria against which their ability to export will be judged.

The notes on clauses refer to internal security. If I were the manufacturer of Land Rovers in the constituency of my hon. Friend the Member for Solihull (Mr. Taylor), I would be concerned about whether I could export to a friendly country given that there is a grey area as regards whether Land Rovers can provide a platform for machine guns and be used for internal repression. I would want to know where I stood.

If we are to go down the route of greater transparency, we should all know what the Government are doing in our name as regards authorising such exports. It is entirely legitimate for the United Kingdom to supply equipment to friendly Governments with whom it enjoys good relations to assist them to maintain order—that is entirely honourable.

As members of the Committee might know, I made what I hope was an impassioned plea on Second Reading for defence exports to be regarded as wholly honourable in principle. It is entirely honourable for this country, with its expertise in defence, to provide those of its friends who could be subject to threat with defence equipment so that they can defend themselves. Had we been able to provide Kuwait with more Hawk aircraft or more defensive equipment, it would not have been such a pushover for Iraq. I therefore have no qualms about championing the moral case for defence exports from this country. I understand that others do not agree, but they will have to answer for their views to the defence industries in their constituencies. I am happy to answer to those in mine for my views.

This is a matter of legitimate debate in this country, so the Government should be clear about which criteria they are applying and give adequate guidance to industry to enable it to have a degree of certainty about what it may do. I realise that circumstances change. This country might be dealing with a friendly Government with whom it has had enduring relations over many years--perhaps for decades or centuries--but as a result of a coup or other change, an unacceptable Government could take their place. Alternatively, in a situation such as that in Zimbabwe, someone regarded as acceptable could become beyond the pale and we would have to adjust our licensing arrangements accordingly.

For those reasons, the Secretary of State should be obliged to issue guidance. If such guidance is given, any changes to it should be laid before Parliament in the way proposed in the amendment. Therefore, I am pleased to support amendment No. 24.

Rob Marris (Labour, Wolverhampton South West)

I was fascinated by the lengthy peroration by the hon. Member for Aldershot (Mr. Howarth), most of which did not relate to the matter under debate. He discussed clause 6 and an alteration to the first line of clause 8, neither of which is among the amendments before us.

I am not as pessimistic as others who have spoken and I see the issue differently: if the Secretary of State wanted to tighten export controls, he or she could do so more easily. The object of some amendments is to fetter the power of the Secretary of State. The tone of the discussion suggests that, were that power to be fettered and when the wheel has turned, a Secretary of State could make it easier to export. However, in certain circumstances covered by the Bill, future Governments might want to make it harder to export not only arms, but objects of cultural interest, which have frequently been overlooked in the debate.

We can all recall instances of a proposal that an object of cultural interest be exported resulting in a lot of people in the arts establishment and the Government getting in a panic about a worthy piece of art that nobody had thought about before. If the discretion of the Secretary of State were fettered too much, which is what these amendments would do, that might have an adverse impact unintended by those proposing the amendments.

Nigel Griffiths (Labour, Edinburgh South)

We have learned the lessons of the past decade and a half in terms of lax licensing controls. For that reason, affirmative procedures have been adopted in key areas of the Bill. I do not believe in a ``one size fits all'' approach to legislation. I shall explain why I think the clause appropriate and why the amendments are, by and large, unnecessary. I do not have to remind the Committee that there was no clause 8 on guidance in the draft Bill. We have introduced it to be as clear as possible.

We particularly want to emphasise the status and importance of the criteria for considering licensing decisions and I agree with some telling points made by the hon. Member for Aldershot. There must be as much certainty as possible for manufacturers just as the public and those who do not support any arms exports must know the criteria so that they can make equal representations to him or any other hon. Member.

We agree that we are striving to be both clear and practical in the guidance and flexible, not so anyone can duck below the bar, but so that we can account for the many and varied factors in an uncertain international environment. Like my hon. Friend the Member for Wolverhampton, South-West (Rob Marris), I am not as pessimistic as some about the future actions of any Government. Lessons have been learned on both sides of the House. Perhaps we are sadder and wiser for that, but some of us are angrier, and rightly so. We drafted clause 8 on guidance in that spirit.

Before I go into the detail merited by the points raised by hon. Members, I shall talk about the overarching principle of future Governments' actions. We have signed up to the European Union code of conduct and will not withdraw from it. Hon. Members have expressed concerns about the views that future Governments might take. Of course, I cannot speak for those Governments, whatever their complexion, but it is unlikely that any Government would seek to withdraw from the EU code of conduct while the United Kingdom remained a member of the EU.

Gerald Howarth (Conservative, Aldershot)

Will the Minister give way? [Laughter.]

Nigel Griffiths (Labour, Edinburgh South)

Certainly.

Gerald Howarth (Conservative, Aldershot)

I am sorry to disappoint the Committee; my question is nothing to do with Britain's membership of the EU.

A key point on Europe and defence exports is the degree to which others play the game. We are known to be unusual because we play cricket, perhaps not always very well. The French do not play cricket, and nor do the Germans. Can the Minister envisage a situation in which other European countries flout the regulations to the extent that Britain and its industry might feel hugely disadvantaged, so much so that it ought to secede from the arrangements on European arms exports control?

Nigel Griffiths (Labour, Edinburgh South)

When I am presented with any evidence of flouting of the EU code, I will want to take it on at a ministerial level with my counterparts in the EU. That is the way to deal with any alleged flouting or contravention of the EU code by other countries. The code has been signed up to by all the Governments who share the aim of ensuring that arms do not get into the hands of regimes subject to international or EU embargoes and, in our case, embargoes laid down by the UK.

Gerald Howarth (Conservative, Aldershot)

Industry will tell the Minister that it is not always possible to give chapter and verse on such questions. That is my experience of international banking, from before I entered the House, and it is a source of frustration in the industry.

We operate a policy of not exporting combat aircraft to Taiwan. The Americans and French do it, and I do not know whether it comes within the EU code of practice. However, I should like the Minister to examine the issue, because Britain has a self-denying ordinance on the matter, but the French do not.

Nigel Griffiths (Labour, Edinburgh South)

The hon. Gentleman makes a point about a specific case—it may even be a constituency matter—and I have made no secret of the Government's policy of imposing, when they think it right, unilateral arms restrictions. That policy is now in the public domain, and will be enshrined in statute if the Bill is passed. The current practice is the subject of public debate and discussion, but it is not under consideration in the amendments before us today.

The amendments are about the Secretary of State placing guidance before Parliament, and about the publication of that guidance. Amendment No. 24 would require parliamentary approval for any guidance issued under clause 8(4). It would add two new subsections to the clause. New subsection (5) would require any changes to guidance in relation to the criteria to be subject to approval along the lines of the draft affirmative resolution procedure. New subsection (6) would involve the negative resolution procedure for any guidance that brought about no change in the criteria. Amendment No. 21 would require any guidance issued under subsections (1) and (2) only to be laid before Parliament and published.

The effect of amendment No. 24 would be to introduce parliamentary approval for matters that are not legislative, but which represent policy that is normally determined by international agreements and discussions in which the Government participate. Yet the underlying concept is increased accountability, and the Government certainly want the Bill—by different means—to create that.

The guidance referred to in clause 8(4) and elsewhere in clause 8 is guidance about announced policy, and about the way in which existing or future obligations concerning licensing decisions should best be carried out in furtherance of agreed policy. The consolidated criteria in themselves count as guidance, as is made clear in clause 8(4). Changes to the criteria, particularly those parts that give effect to the EU criteria, would be based on agreement with our European partners in the context of the common foreign and security policy, under title V of the treaty on European union, and would be subject to scrutiny by both Houses in the usual way. If there were to be changes to the criteria, the Government would announce them, and it would be for Parliament or parliamentary Committees to consider any changes in the usual way. Of course the Quadripartite Committee would have a role in scrutinising any changes with Ministers. Any other guidance issued under clause 8 could also be subject to parliamentary consideration in that way.

Those are matters concerning Government policy, and largely as agreed within the EU and in the context of the international control regimes. They are not changes in secondary legislation, which would of course justify a formal procedure for parliamentary approval.

Amendment No. 21 would have the effect that the consolidated criteria and any other published guidance falling into the categories described in subsection (4) would not need to be laid before Parliament or published. That is because it limits the guidance that may be laid before Parliament and published to that issued under subsections (1) and (2) only. However, as amendment No. 24 proposes a specific and new treatment of guidance referred to in subsection (4), amendment No. 21 would appear to be consequential on that.

The important underlying concept of accountability is raised. Amendment No. 24 is intended to achieve that by formal parliamentary procedures. The Government consider such procedures in this case to be inappropriate for the reasons already mentioned. I therefore invite the hon. Member for Twickenham not to press that amendment.

We will give consideration to the question of accountability and how it is reflected in the Bill as it stands. I hope that that reassurance will persuade the hon. Gentleman that we are serious about greater accountability and greater transparency.

Amendment No. 22 appears to be intended to require any guidance issued under clause 8 to be laid before Parliament and published within 28 days of being issued. It is already common practice for the Secretary of State to lay before Parliament and publish guidance of the sort described in clause 8. For example, in October 2000 we laid before Parliament and published the consolidated criteria. The current text already obliges the Secretary of State to lay guidance issued under the clause before Parliament and to publish it, and I cannot see the need to specify a particular timetable, let alone a limit of 28 days. The vigilance of members of the Committee and other hon. Members will ensure that the Secretary of State is accountable for the length of time that she takes to make a decision.

Where guidance is issued under the clause, we consider it vital that it be disseminated to industry and other parties as soon as possible. Indeed, it is likely that we would place a copy of any issued guidance in the Libraries of both Houses on the day that the guidance was issued. That is why we consider amendment No. 22 to be unnecessary; I invite the hon. Gentleman to withdraw it.

Gerald Howarth (Conservative, Aldershot)

The Minister told us that before orders were laid, industry would be consulted. Is he saying that if the Government were minded to issue guidance they would consult with industry before issuing the definitive draft guidance, which would then be sent out formally to industry for consultation and be placed in the Library of the House? Would the guidance then be laid before Parliament once it had been more formally agreed? Is that how the Minister envisages it happening?

Nigel Griffiths (Labour, Edinburgh South)

Yes. Consultation will take place not just with industry but with all parties and individuals who have an interest in export licensing. I can tell the hon. Gentleman and the Committee that the intention is to seek the views and opinions of interested parties as much as possible so as to better inform the framing of the guidance. However, there are certain circumstances in which it may be necessary to issue emergency guidance procedures in relation to a particular destination and that will limit the sort of consultation that takes place. However, as I said, it is deeply embedded in the Bill that the Secretary of State would have to account for such emergency guidance to the House after it had been issued. Such a time scale would make inappropriate the fuller consultation that the hon. Gentleman would like. I think that all hon. Members would accept that such consultation cannot take place in every circumstance.

Gerald Howarth (Conservative, Aldershot)

I am extremely grateful to the Minister—he has been very generous in giving way. However, we do not have the detail, so we have to press him to share with us his thoughts on how the detail of the Bill will be implemented. The hon. Member for Wolverhampton, South-West spoke about art exports. Let us say that, suddenly, there is a private sale of some fantastic work of art or sculpture, which is very important to the United Kingdom. Someone is selling it abroad, and there is an outcry, and the Government decide to invoke the powers in the Bill to prevent that work of art from being exported. I am speaking very slowly because it is important for the Minister to have plenty of time to understand my point. I hope that that is helpful. How will such crises—they do arise from time to time, and can engender public outrage—be dealt with? Our former colleague, Mr. Winston Churchill, planned to sell some family papers to the United States for a rather large sum. I believe that the Government stepped in to try to ensure that they remained in the United Kingdom. Could the Minister explain how such a scenario will be dealt with under the Bill?

Nigel Griffiths (Labour, Edinburgh South)

It is very much intended that, as now, secondary legislation made under the Bill will specify which objects require an export licence. A range of open licences will remove the requirement to obtain an individual export licence from the Department for Culture, Media and Sport. Of course, the Bill itself provides for such emergencies. We are trying to ensure that any exporter is aware of the regulations governing exports and the general thrust of Government policy. On the steps that might be necessary to prevent the immediate export of a cultural object, the whole House will want to ensure that powers exist to allow my right hon. Friend the Secretary of State for Culture, Media and Sport to prevent such an object from leaving the country, pending a review, proper consideration and a decision. That is allowed for in legislation.

On clause 8 and the points raised by the hon. Member for Richmond Park in particular, I believe that, under the amendment, the consolidated national and European Union criteria and other existing published guidance would apply to licensing decisions—now it is my turn to go slowly—and new controls introduced under clauses 4 and 5, and that guidance would be issued accordingly. However, the amendment is not appropriate because clause 8(4) provides that the consolidated criteria and any existing published guidance that are

``capable of applying in relation to the exercise of functions under an order under section 1 or 2, shall''—

until withdrawn or varied—

``be treated as guidance under this section.''

Reference is made solely to section 1, covering export controls, and section 2, covering transport controls, because only those activities are controlled under the Import, Export and Customs Powers (Defence) Act 1939, which deals with export controls, and the European Community regulation, which deals with export and transfer controls.

The consolidated criteria and other published guidance have therefore been issued only in respect of export and technology transfers. They are the only functions in the Bill to which the guidance can directly apply once the legislation comes into force, and the guidance takes that into account. For example, the consolidated code, announced in October last year, refers throughout to export licences.

In the consultation document on the draft Bill, which was published in March, we announced our intention to introduce a licensing system under clause 5 for what is generally referred to as arms trafficking and brokering. I assure hon. Members that we will apply similar criteria to licensing decisions on trafficking and brokering to those that we apply to the export of arms. The EU code does not apply to trafficking and brokering. However, discussions in the EU on principles for national controls on arms brokerage have demonstrated that there is a consensus on introducing controls on those activities.

Member states should assess licence applications case by case, against the criteria of the EU code of conduct and arms exports. We will apply similar criteria to the consolidated EU and national criteria to decisions on licence applications made under the controls. That provision will be introduced under clause 5. We expect to issue guidance under clause 8 to that effect. Clause 8(1) provides for guidance to be issued in relation to licensing or other functions conferred by clauses 1, 2, 4, 5 or 6. Whether we issue a separate guidance for trafficking and brokering that is modelled on the consolidated criteria, or revise the consolidated criteria to take account of trafficking and brokering, has yet to be decided.

Clause 4 deals with technical assistance and hon. Members will be aware that the only controls that we have proposed to introduce under that power relate to activities for which we would not expect to issue a licence. Those would be activities that the provider knows—or is informed by the Government—are intended to take place in connection with weapons of mass destruction or a related missile programme. Nor would we expect to issue a licence if controls on the provision of technical assistance to embargoed destinations were introduced. We propose to state in guidance the situations in which the Government would not expect to grant a licence for a particular activity or to a particular destination.

Amendment No. 20 would empower the Secretary of State to issue guidance about reasons that may be regarded as justifying a decision taken in the exercise of licensing or other functions. I believe that the intention of the hon. Member for Twickenham is to give the Secretary of State the power to issue guidance on the reasons that justify a licensing decision that has already been taken. The clause provides that the Government can publish guidance about matters to be taken into account and the reasons that might justify licensing decisions, before decisions are taken. The Government therefore do that already, as seen in the export of nuclear-related dual-use items to India and Pakistan.

The amendment may allow the Government to change existing guidance without publishing the changes until after a licence has been refused. The purpose of the clause is not to provide for the Government to issue guidance on the reasons justifying a decision after it has been taken. Existing arrangements ensure that any company whose licence application is refused is given reasons for the Government's decision. Those arrangements are intended to continue after the Bill has been introduced. Parliament has a full opportunity to undertake retrospective scrutiny of the Government's operation of the export licensing regime, for example, through scrutiny of the annual report. For those reasons, I consider the amendment to be unsuitable, and unnecessary for the purpose of the clause. I hope that the hon. Gentleman agrees to withdraw it and other amendments in the light of my explanation.

Vincent Cable (Liberal Democrat, Twickenham)

I thank the Committee for producing the best exchange that we have so far had on the Bill. It vindicates what was said in the first sitting on Tuesday. Giving hon. Members time to reflect on the Bill has produced a higher quality of scrutiny and debate, evidence of which we have seen this morning.

I will first deal with the criticism that the hon. Member for Derby, North (Mr. Laxton) perceived in my introductory remarks. I had no intention of criticising him personally. I recognise that he is a distinguished member of a Select Committee. There are two other Select Committee members here: the Member for Milton Keynes, South-West and my hon. Friend the Member for Richmond Park. They have no doubt accumulated considerable expertise. However, unless I am mistaken in my understanding of the membership, not one member of this Committee—on the Front Bench or Back Bench—sits on the Quadripartite Committee. We have all had to read its reports to understand its deliberations.

Phyllis Starkey (Labour, Milton Keynes South West)

I understand that my hon. Friend the Member for Derby, North is a member of the Quadripartite Committee, and I was certainly a member.

Vincent Cable (Liberal Democrat, Twickenham)

I apologise to the two hon. Members. However, the majority of us have not been in that privileged position and we have had to master not just the text of the reports, but the evidence. In addition, we have had to master the Scott report and most of us were not Members of the House when the Scott report was debated. There is a substantial body of background documentation and I am simply making the elementary point that, given time for reflection, we foresee problems with the Bill that may not be immediately apparent. I did not intend to make a personal criticism and I respect the hon. Members' expertise on the matter.

Secondly, we may going beyond party political points about the way in which future Governments might deal with the matter. The Scott report was produced under the last Conservative Government and the Conservative spokesman made the point very well that we do not know how a future Conservative Government would deal with it. With the period involved, there may be Liberal Democrat Ministers and although we like to think of ourselves as being saintly and idealistic, I cannot speak for future generations. We must test the boundaries and ask how the Bill might be used. Our point of reference could be the hon. Member for Aldershot, who is a valuable member of the Committee and is a convincing devil's advocate. Perhaps we should apply the Aldershot question. If we shut our eyes and try to imagine the hon. Gentleman as the Secretary of State for Trade and Industry, how would the Bill then be interpreted? That would be a useful discipline. The hon. Gentleman is a creative and intelligent man and I am sure that he could interpret the Bill differently from the way in which the Minister interprets it.

The Minister said that the amendments were not helpful, and various responses have been given. First, he said that he does not believe in a one-size-fits-all approach. If he read the amendments and listened to what I have said, he would realise that we are proceeding in the opposite direction. We are suggesting that there is currently a one-size-fits-all approach to guidance and we are offering two tracks. We want to create more varied treatment reflecting the different nature of the material that is put before Ministers, so the Minister's point is wholly irrelevant.

The hon. Member for Wolverhampton, South-West made several interventions reminding us that the Bill covers not just guns, but works of art and so on. His questions were valuable and deserve a proper answer. He asked whether the measures that we have suggested would fetter ministerial power. The hon. Member for Aldershot has already attempted to pose a hypothetical case and I shall pose another.

If a valuable work of art was under consideration, the words ``export criteria'' would not apply because it would be a single case. However, I have had 10 minutes to think of a hypothetical case. If a cow pickled in formaldehyde was thought to be a work of art and the Minister of the day wanted to preserve it for the nation, a change in export criteria might be required.

Gerald Howarth (Conservative, Aldershot)

May I suggest that the Aldershot test in such circumstances would definitely be for mandatory export?

Vincent Cable (Liberal Democrat, Twickenham)

That is very helpful, but it might not be helpful to the hon. Member for Wolverhampton, South-West who would, I am sure, want to preserve it for the nation.

Rob Marris (Labour, Wolverhampton South West)

It would not be a work of art; it would be an object of cultural interest, but I would not find it an object of cultural interest.

Vincent Cable (Liberal Democrat, Twickenham)

We have enjoyed a light diversion, but there is an important point behind it. How would such a case, albeit an exotic one, be dealt with? My understanding is that under the Bill, the Government would have temporary powers and the matter could then be referred to Parliament. They would not be obstructed by the changes that we are considering.

I was intrigued that the Minister did not, in his answer, use any arguments that Ministers have previously employed in trying to justify lack of affirmative action. Affirmative action has repeatedly been considered in the responses to the Green Paper, the White Paper and the draft Bill and by the Quadripartite Committee. On those occasions, Ministers repeatedly argued that they did not want to impose too much of a burden on Parliamentary business, in saying that they did not want an affirmative approval process. The Minister did not use that argument today, so I hope that he has absorbed the response that parliamentarians gave to that ministerial excuse: that Parliament is the best judge of how to use its own time. I note that the Minister has advanced a little way beyond the arguments that the Government have given in the past for refusing to allow an affirmative approval process.

I heard a very helpful phrase in the Minister's comments: that the Government are ``giving approval'' to accountability. I interpret that present participle as active, meaning that the Government are currently thinking about how to improve accountability in the Bill. Perhaps on Report there will be a slightly different text. I hope that my optimistic interpretation is correct and that the Government are still thinking about the matter and might come back with better drafting that will meet many of our concerns.

Given that we have had a good cross-party consensus about some of the matters that we have discussed, I do not see any advantage in pressing the amendment. I hope that when we reach the next stage of parliamentary deliberation there will be some Government amendments to meet my concerns. In that spirit, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill.

Question agreed to.

Clause 8 ordered to stand part of the Bill.

Clause 9 - Annual reports

Malcolm Savidge (Labour, Aberdeen North)

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.

Nigel Griffiths (Labour, Edinburgh South)

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.

Malcolm Savidge (Labour, Aberdeen North)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Richard Page (Conservative, South West Hertfordshire)

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

`with due care towards commercial confidentiality'.

Joe Benton (Labour, Bootle)

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'.

Richard Page (Conservative, South West Hertfordshire)

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.

James Gray (Conservative, North Wiltshire)

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.

Joe Benton (Labour, Bootle)

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

Richard Page (Conservative, South West Hertfordshire)

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.

Rob Marris (Labour, Wolverhampton South West)

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?

Richard Page (Conservative, South West Hertfordshire)

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—

Richard Page (Conservative, South West Hertfordshire)

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.

Phyllis Starkey (Labour, Milton Keynes South West)

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.

Richard Page (Conservative, South West Hertfordshire)

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—

Nigel Griffiths (Labour, Edinburgh South)

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—

Gerald Howarth (Conservative, Aldershot)

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.

Joe Benton (Labour, Bootle)

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

Gerald Howarth (Conservative, Aldershot)

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

Joe Benton (Labour, Bootle)

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

Nigel Griffiths (Labour, Edinburgh South)

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.

Richard Page (Conservative, South West Hertfordshire)

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.

Nigel Griffiths (Labour, Edinburgh South)

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.

Richard Page (Conservative, South West Hertfordshire)

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.

Gerald Howarth (Conservative, Aldershot)

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.

Richard Page (Conservative, South West Hertfordshire)

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.

Gerald Howarth (Conservative, Aldershot)

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?

Nigel Griffiths (Labour, Edinburgh South)

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.

Gerald Howarth (Conservative, Aldershot)

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.

Richard Page (Conservative, South West Hertfordshire)

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.

Gerald Howarth (Conservative, Aldershot)

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.

Kevan Jones (Labour, North Durham)

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—

Joe Benton (Labour, Bootle)

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

Kevan Jones (Labour, North Durham)

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.

Gerald Howarth (Conservative, Aldershot)

I did not say that.

Vincent Cable (Liberal Democrat, Twickenham)

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.

Richard Page (Conservative, South West Hertfordshire)

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.

Nigel Griffiths (Labour, Edinburgh South)

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.