Orders of the Day — Export Control Bill

House of Commons, 8 November 2001.

New Clause 1 — General restriction on purposes of control orders

Nigel Griffiths (Labour, Edinburgh South)

I beg to move, That the clause be read a Second time.

Michael Martin (Speaker, Glasgow Springburn)

With this it will be convenient to discuss the following: Amendment (a) to the proposed clause, in line 4, leave out from "order" to end of line 6 and insert—

'(a) has been laid before and approved by a resolution of each House of Parliament, and

(b) provides—

(i) for the order to expire, or

(ii) for the provision imposing them to cease to have effect,'.

Government amendments Nos. 1 to 8, 10 and 12 to 15.

Amendment No. 30, in clause 11, page 7, line 4, leave out from "which" to "shall" in line 5 and insert—

'does not contain any provision made by virtue of (General restriction on purposes of control orders) (2), or under section 4 or 5'.

Government amendment No. 16.

Amendment No. 31, in page 7, line 15, leave out from "containing" to end of line 18 and insert—

'an order under section 14(3)'.

Government amendments Nos. 17 to 23.

Amendment No. 36, in schedule, page 9, line 18, after "have", insert—

', or contribute through cumulative impact to having,'.

Amendment No. 32, in page 9, line 19, after "Table", insert—

', or that exportation of the goods might run contrary to any of the criteria of the EU Code of Conduct on Arms Exports'.

Amendment No. 33, in page 9, line 26, after "Table", insert—

', or that exportation of the goods might run contrary to any of the criteria of the EU Code of Conduct on Arms Exports'.

Government amendment No. 24.

Amendment No. 38, in page 10, line 2, leave out from "of" to end of line 4 and insert—

'goods or technology anywhere in the world in connection with the development, production or use of nuclear, chemical and biological weapons.'.

Government amendment No. 25.

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

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

Government amendment No. 26.

Amendment No. 34, in page 10, line 15, at the end, insert—

'Economic capacity and sustainable development

F An adverse effect on—

(a) the economic capacity; or

(b) the sustainable development of the country to which the goods were exported, or the technology was transferred.'.

Nigel Griffiths (Labour, Edinburgh South)

As new clause 1 and amendments Nos. 1 to 8, 10 and 12 to 26 are Government amendments, I intend to speak in favour of them.

I want to give the House a clear and detailed explanation of the many and varied issues covered by the amendments, and I apologise because that is likely to take some time. I wish to give the clearest possible explanation of the Government's position, so I hope that hon. Members will keep their interventions to a minimum during my speech. The House will appreciate that I have a great deal of ground to cover and I ask the House's patience, as in most cases I am not likely to agree to give way immediately. The House will be aware that, unlike in Committee, we have only this afternoon, so I have limited time to speak and I wish to give the House the fullest possible explanation in the time available.

For clarity, I should say at the outset that I intend to oppose amendment (a) to new clause 1 and amendments Nos. 30 to 34, 36, 38 and 39. I support new clause 1 and amendments Nos. 1 to 8, 10 and 12 to 26. New clause 2, which will be considered in the next group of amendments, is a consequential amendment to this group of amendments.

At first sight, this group of a new clause and amendments may appear somewhat complex. I assure hon. Members that that is not the case. They provide that the powers to introduce orders imposing trade controls or controls on technical assistance are directly subject to the purposes described in the schedule to the Bill. They are then limited in scope to controls that are similar in effect to those imposed under clauses 1 and 2, on the export of goods and the transfer of technology. This, then, allows the definitions of "controlled goods" and "controlled technology" in clause 9 to be deleted. However, the alterations achieved in new clause 1 and amendments Nos. 4, 8 and 14 result in a large number of further consequential amendments. Let me explain why we wish to amend the Bill in this way.

In Committee there were calls from hon. Members for trade controls and technical assistance controls to be directly subject to the purposes in the schedule. It also became evident in Committee that the definitions of "controlled goods" and "controlled technology" used in clause 9 to achieve that effect could be confusing. There is also a risk that the current structure of the Bill could leave a loophole whereby brokers who arranged for their goods to transit the United Kingdom might be able to claim exemption from the controls. We want to avoid that at all costs. Hence the Government have concluded that it would simplify and clarify the Bill to ensure that trade controls and technical assistance controls are subject to the purposes contained in the schedule in the same way as the export and transfer controls.

The amendments proposed ensure that orders imposing controls on trading goods or on the provision of technical assistance overseas can be made only for one of the purposes listed in the schedule. The first subsection of new clause 1 proposes and states:

"The Schedule specifies the purposes for which an order imposing controls may be made."

The new clause then explains that controls include

"export, transfer, technical assistance or trade controls."

That amendment does not widen the Government's powers to introduce controls on trade, or on the provision of technical assistance overseas. Amendments No. 4 and 8 make it clear that controls on trade or on technical assistance are limited, not only by the purposes in the schedule but by the fact that the controls must be connected or correspond to export or transfer controls. Therefore it will not be possible for the Government to impose trafficking or brokering controls and technical assistance controls that are radically different from the export or transfer controls or of no connection with them.

The amendments seek to simplify the Bill, and to tighten it up to ensure that there are no potential loopholes. I know that hon. Members will agree that the Bill is of considerable importance, and it is important to get it right, so I urge hon. Members to support the amendments.

I shall now speak to amendment (a) to new clause 1, and amendments Nos. 30 to 31, as they address similar issues. Those amendments seek to alter the existing provisions in the Bill for parliamentary scrutiny of secondary legislation. Amendments Nos. 30 and 31 seek to replace the negative resolution procedures for orders made under clauses 1, 2, 4 and 5 with the delayed affirmative resolution procedure. Amendment (a) to new clause 1 seeks to subject orders under subsection (2) of the new clause to the draft affirmative resolution procedure.

A very similar set of amendments was debated in Committee last month. I made the general point then that the different scrutiny provisions of clause 11 reflect the distinction between orders that can change the fundamental purposes for which export controls can be imposed, and orders that set out the details of those controls. Clearly, where the fundamental purposes of the Bill are involved, it is right that Parliament should have the opportunity to debate such matters under the affirmative resolution procedure, but the Government believe that the details of the controls are best dealt with by the negative procedure.

Orders made under clauses 1, 2, 4 and 5, for which the negative procedure is provided, will frequently be of a technical nature, such as amendments to orders resulting from changes to lists of items subject to control. Such changes are usually a result of alterations to the international export control regimes such as the missile technology control regime, upon which many of our export controls are based. They are orders of the type for which the negative resolution procedure is best suited.

There is, rightly, parliamentary interest in the new controls to be introduced under the Bill, which is why we provided the Committee and Parliament with draft dummy orders, setting out how we proposed to use the new controls. That is why I announced last month that the Government would hold a full public consultation on draft secondary legislation before the new controls were introduced next year. That will provide an opportunity for all those with an interest to consider and comment on the new controls to be introduced under the Bill.

We believe that amendment (a), relating to new clause 1, is intended to require that no orders made under subsection (2) of new clause 1 may be brought into force without prior approval of Parliament. We fully accept that draft affirmative resolution procedure for orders made under clause 11(4), which can modify the schedule of purposes, but we do not believe that it would be sensible for that procedure to apply to orders made under subsection (2) of new clause 1.

The object of the new subsection (2), which is currently part of clause 3 of the Bill, as amended in Committee, is to allow the Government to respond to emergency situations by imposing controls with immediate effect that, exceptionally, would not or might not clearly fall within the purposes set out in the schedule. As I said in Committee, the reason for that is that the Government will sometimes have to introduce specific controls under that subsection to deal with unforeseen emergency situations. In such situations, the Government would be required to act without delay and it would not always be possible to achieve parliamentary approval in time. However, no one should be in any doubt that it will ultimately be left to Parliament to decide by the end of 40 sitting days whether to allow the Government to continue to exercise those controls.

That in itself will always be a significant influence on any Government exercising powers over that short period. I also point out that any order introduced under new clause 1(2) that was approved by Parliament within the 40-day period could not remain in force for more than a year without the further express approval of both Houses of Parliament.

To sum up, I consider that the Bill is a significant and desirable improvement on the existing legislative framework for export controls. That framework does not provide for any proper parliamentary scrutiny of secondary legislation, but the Bill does. As I said in Committee, it is important that we have the right tools for the right job. Accordingly, where the fundamental objectives of the Bill are involved, we have provided for the affirmative resolution procedure. We have also provided for scrutiny by the negative resolution procedure in all other cases.

Given what I have said, I hope that the hon. Member for Salisbury (Mr. Key) will withdraw amendment (a), and amendments Nos. 30 and 31.

I shall speak to amendments Nos. 36, 32 and 33 together, as they address similar issues. Amendments Nos. 36 and 33 would ensure that orders could be imposed to prevent an adverse effect of a type specified in any of the criteria of the European Union code of conduct on arms exports. I assure the House that the schedule of the Bill will allow us to impose controls on any goods or technology that we need to be able to control in order to meet our obligations under the EU code of conduct.

Like other member states, we impose controls on military items. Dual-use items, of course, are subject to control under the European Community regulation. Such items are the goods and technologies whose export we need to control in order to meet our obligations under the EU code of conduct. They are the goods and technologies that the schedule allows us to impose controls on, but it would not be appropriate to refer to the code in the schedule, as the amendment would require. The purpose of the EU code, and of our consolidated criteria that incorporate it, is to set out the basis on which licence applications are assessed. That is different from the purposes for which controls may be imposed.

I can best illustrate that by referring to the criterion in the code that refers to the risk of diversion to undesirable end-users. That risk is an extremely important factor in making any licensing decision. However, the risk of diversion is not associated with any particular category of goods or technology. So allowing diversion to be included as a factor for which orders could be imposed would theoretically allow the Government the power to control any goods of any description whatsoever.

It is not the purpose of the Bill to enable the Government to be able to control any goods whatsoever. Using the power would also conflict with our commitments to international and EU trade arrangements.

Amendment No. 32 would introduce into the schedule a reference to the risk that goods might have one of the consequences listed in the table contained in the schedule through cumulative effect. I believe that those of my hon. Friends who tabled the amendment had the primary intention of ensuring that the Bill allows the cumulative effect of arms exports on the sustainable development of recipient countries to be taken into account in licensing decisions.

I shall address the issue of cumulative effect more generally. The schedule describes the purposes for which the order imposing export controls or transfer controls can be made. The function of the schedule is to govern the making of orders that specify the goods and technology, or classes of goods and technology, that are to be subject to export controls.

Paragraph 4 of the schedule allows controls to be imposed on types of goods without reference to quantities. A particular item of equipment—a machine gun, for example—may be brought under control, and an export licence would be required for any exports of machine guns, irrespective of the number of guns that it is proposed to export.

There is nothing in the Bill, or in the current orders, that would prevent the Secretary of State from considering the number of other goods of that type—or of other types of arms exported by the recipient—when reaching a decision on an export licence application, where that is a relevant consideration. Such considerations form a normal part of the assessment of whether the proposed end use is reasonable, and in assessing the degree of risk, for instance, of diversion or of aggressive use against neighbours.

Similarly, decisions on individual licences are considered under the criterion on a case-by-case basis. The cumulative effects of the purchase of arms by recipient countries may well be a relevant consideration in the assessment of a licence application under criterion 8.

As many hon. Members will be aware, criterion 8 of the consolidated EU criteria obliges Ministers taking decisions on export licences to look carefully at the compatibility of any proposed arms export with the technical and economic capacity of the recipient country. In view of that explanation, and of the explanations that I shall give later, I hope that, in due course, those of my hon. Friends who have tabled amendments Nos. 36, 32 and 33 will agree to withdraw them.

I turn now to amendment No. 38. This would clarify the phrase "weapons of mass destruction" and ensure that it refers to

"nuclear, chemical and biological weapons."

I believe that the amendment is unnecessary and that it could be counterproductive, as I shall explain. The amendment would restrict the purposes for which orders could be imposed to activities related to nuclear, chemical or biological weapons. However, it is possible that other current, and future, weapons could cause mass destruction but would not fall into any of those categories.

For example, radiological weapons constructed of conventional explosives combined with radioactive material are not considered to be nuclear weapons, but they could of course have devastating results. That is why the phrase "weapons of mass destruction" allows the possibility of controlling activities related to such weapons, or to any other types of such weapons that may arise in the future.

I hope that the explanation satisfies those hon. Members who tabled amendment No. 38, and that they will agree to withdraw the amendment in due course.

I shall speak to amendments No. 39 and 34 together, as they address similar issues. The effect of each amendment would be to allow the risk of there being an adverse effect on the sustainable development of a country to be the purpose for which the orders could be made imposing controls on goods and technology. In addition, amendment No. 39 would allow the risk of there being an adverse effect on the economic capability of a country to be a purpose for which such orders could be made.

We believe that the amendments are unnecessary, because the concerns that appear to lie behind them are already fully addressed elsewhere in the Bill. Sustainable development concerns are already taken fully into account under the consolidated EU criteria and the national arms export licensing criteria, which we announced to Parliament on 26 October 2000. The criteria were framed by EU member states precisely to cover the range of issues that ought to be addressed in licensing decisions, and they included the issue of sustainable development.

Criterion 8 of the consolidated criteria obliges member states taking decision on export licences to look carefully at the compatibility of any proposed arms export with the technical and economic capability of the recipient country. It further states that any Government must take into account whether the proposed export would seriously undermine the economy or seriously hamper the sustainable development of the recipient country.

All the consolidated criteria will remain the basis for export licensing decisions under the legislation. To remove any doubt about that, we have made explicit provision in clause 7 for all the consolidated criteria—including criterion 8 on sustainable development—to continue to be taken fully into account when decisions are made about export licences.

Moreover, as I explained in connection with amendments Nos. 36 and 32, the schedule will allow us to impose controls on any goods or technology that we need to be able to control in order to meet all our obligations under the EU code of conduct. Adding the provisions of criterion 8 to the schedule is not necessary because we are able, under the Bill as it stands, fully to take into account all the criteria, including the criterion on sustainable development. Clause 7 underlines, for the first time in legislation, the status of the consolidated criteria.

In conclusion, for the reasons that I have outlined, I urge the House to accept the Government amendments.

Robert Key (Conservative, Salisbury)

I suspect that we are in for a long afternoon on a highly technical group of amendments. We shall have an extremely important series of debates this afternoon. All the hon. Members who are present have track records and experience in such matters, so this series of debates will be very well informed.

The Opposition have broadly welcomed the Bill, as have British industry, non-governmental organisations and many individuals, but all of us have certain reservations, hence the large number of amendments. Of course, because we broadly agree, detailed scrutiny is even more important, and that will be the House's function this afternoon, following on from very interesting debates in Committee. It was unfortunate, of course, that half of Standing Committee B's sittings took place in July and the other half in October, because the intervening period allowed a number of changes, one of which was for myself to be parachuted into my current position, which was a great pleasure. I suspect that various changes occurred on both sides of the Committee.

Grateful though I am to the Minister for his courtesy and to his officials for theirs, it was something of a surprise to discover on Tuesday that the Government had rewritten a very large proportion of the Bill. The Minister has very courteously explained why they did so, and he wrote to hon. Members on 6 November, sending official Government notes on the amendments that he was proposing. However, in all my 18 and a half years as a Member, it was the first occasion on which I can recall such a sweeping rewrite to primary legislation so close to Report and Third Reading—a mere two working days.

That lack of time made things very difficult for a lot of people. For instance, it made it very difficult for the Clerks to get the business in order and for the Opposition parties to adjust to the proposed amendments, because it was suggested that certain clauses should be deleted, but many of us wanted to propose amendments to those clauses. We therefore had to work out where those bits of the Bill would be by the time Thursday arrived. It was very difficult for the public and the non-governmental organisations, charities and pressure groups to follow all the changes.

We all now recognise what the Government have done, and I repeat that I am grateful to the Minister for his courtesy and his explanation of the changes. I am also grateful to his excellent officials in the Department of Trade and Industry, who have been sitting at the end of telephone lines waiting to offer help. I certainly took the Minister's advice and used that facility, and I am very grateful to him because it certainly helped us to make a more coherent response to the changes that the Government had announced. It would be helpful, however, if the Minister could explain why they decided to propose this very big change at the last minute.

I understand the Minister's argument—I follow his logic, and I accept it—but I am bound to ask why he and his officials did not think of the change some months earlier; it would have been helpful if they had. Flattered though we all are that the Minister suggested that the change had something to do with what occurred in Committee, it really would be a first if we had such a large proportion of a Bill rewritten on those grounds. In addition to his courtesy in explaining why he has proposed the change, it would be much appreciated if he could have another go at saying why it had to be left quite so late.

On new clause 1 and the related amendments, much of the debate in Committee focused on the orders that would be laid before the House and whether that should be done under the affirmative or negative procedure. That is a touchstone argument, and it has arisen time and again. Indeed, paragraph 4 of the DTI's explanatory notes to the Bill, which we all received, state:

"The Scott Inquiry . . . identified a number of limitations in the 1939 Act, including the lack of parliamentary scrutiny of secondary legislation made under the Act and the absence of any indication of the purposes for which export controls may be imposed."

I acknowledge that the Government have gone a long way in seeking to meet those criticisms, and we are very glad that they have, but they have not gone nearly far enough. That is why I decided that we must pursue the issue a little further.

I shall briefly explain what the amendments that I have tabled would do. The Minister has given us a summary, but under the proposed change, temporary orders would require prior affirmation by the House before they could take effect. The Bill, as drafted, makes provision for Parliament to approve temporary orders, but only within 40 days of their taking effect. The Secretary of State could conceivably issue a temporary order to have effect for less than 40 days, which would escape parliamentary scrutiny, so the importance of such secondary legislation would not be recognised.

Of course, the Quadripartite Committee was a tremendous innovation in itself—four Select Committees worked together on this extremely important Bill. We all welcomed that remarkable achievement, as we did its report; it helped us to understand one another. The work of Select Committees is often compartmentalised and there is inevitably a lot of overlap, and I am glad to see Government Members nodding. I hope that that innovative procedure will be used again.

The Quadripartite Committee says in its report:

"The Bill is largely an enabling Bill. The meat of the proposals being made will be in the secondary legislation to be made under the Bill."

Quite so. In Committee, we therefore proposed a number of changes in the guidance on parliamentary approval, but the Government rejected them.

There is a fundamental point at stake, and we must insist that Parliament should retain more control than it will be allowed under the Bill. Furthermore, the concern was expressed in the other place by the Delegated Powers and Regulatory Reform Committee that the Secretary of State will be given unusual discretion to impose temporary orders under new clause 1(2). We all understand what the Minister said about emergencies, and we do not doubt that, but I have never yet encountered a situation in which the Government have found themselves unable to make the necessary emergency moves, if necessary by introducing primary legislation.

On one occasion during my time as a Member, an emergency Bill passed all its stages in the House in three minutes, so I do not accept that the Government cannot move quickly if they really need to do so. We propose that new clause 1(2) should be amended so that any temporary order must first be subject to approval by both Houses of Parliament, in the same way that Parliament must approve any changes proposed by the Secretary of State to the schedule of purposes.

As the hon. Member for Twickenham (Dr. Cable) said in Committee, that is not an ideological or policy issue; it is about parliamentary prerogatives and control over the Executive. The House is now going through a very interesting phase, to say the least—it is losing authority to the Executive, and I should like to resist any further losses.

The other amendments follow the first. As was pointed out on Second Reading on 9 July, the Government would be able, under the negative resolution procedure, to decide whether Parliament would be able to debate export control orders. We want to amend the Bill so that any orders—except temporary orders—made under clauses 1, 2, 4 or 5 are subject to the delayed affirmative resolution procedure. That requires a complementary amendment.

Governments often give a standard response to any suggestion. They say that the time of Parliament would be wasted and that the business of the House and the Government would be slowed down by the consideration of minor procedural or technical changes. That is not a substantial argument and, when changes are significant, Parliament must be given the opportunity to consider them. We must also consider what is or is not significant.

There was a good debate in Committee in which the hon. Member for Aberdeen, North (Mr. Savidge) moved excellent amendments on orders. He said:

"It is clearly in the interests of good government that we should have the most thorough parliamentary scrutiny. That is not just in the interests of Back Benchers of whatever party, but is in the interests of the Executive, provided that the Opposition do not cause inordinate delay or unreasonable instruction."

When he wound up the debate, he said:

"Given the strong feeling on both sides of the Committee that we want the fullest possible scrutiny, I ask the Department to give the fullest possible consideration on Report to whether aspects of secondary legislation could be given fuller parliamentary scrutiny. On that basis, I beg to ask leave to withdraw the amendment."—[Official Report, Standing Committee B, 18 October 2001; c. 137-140.]

That was significant moment. On the basis that a Minister would, on Report, take the opportunity to repone the issue, a Labour Member said that he would withdraw his amendment. However, the Government have not done what he suggested. The Minister has merely told us that he will reject our amendments. We must take that fact seriously.

It was an extraordinary moment, because I do not recall a similar instance in any Standing Committee on which I have served. A Labour Member sought to withdraw an amendment, but I said that we should not and insisted on a Division. Everyone who had spoken in favour of the amendment, including the hon. Member for Aberdeen, North, had to vote against it. That was no doubt an interesting experience for all the Labour Members concerned.

We are considering amendments that are so complex and diverse that I am sure that we shall have a long debate on this group. However, I wish to comment on the definition of sustainable development.

Tony Lloyd (Labour, Manchester Central)

Before the hon. Gentleman moves on to his next point, will he consider the point about urgency? I have considerable sympathy for what he says about parliamentary scrutiny. It is fundamental and, if I catch your eye, Madam Deputy Speaker, I hope to speak to one of the new clauses that touches on the subject. However, the need for the Government to be able to act with extreme urgency is a real issue. I can think of circumstances in the past when the Government had to act against goods that had not previously been subject to controls but, if they had been exported, could have affected the lives and well-being of British forces. Does he accept that, under those circumstances, the Government must act and must be seen to act immediately? It would be difficult to support any provision that would prevent them from being able to do that. Will he explain why my view of his amendment is misplaced?

Robert Key (Conservative, Salisbury)

I am grateful to the hon. Gentleman for that interesting and instructive intervention. The House would be very interested in hearing from him how he resolved such problems when he was a Foreign Office Minister. Clearly Governments face such problems, so perhaps he could tell us how they responded when he was a Minister. My contention is that they can always find a way of doing something. In emergencies, the Foreign Office and the Ministry of Defence might be able to act under the royal prerogative.

Emergency legislation is available to the Government and they can use it without the need to return to the House. However, it would help the debate if the hon. Gentleman, who has considerable experience on this matter, explained what happened in, say, the case of Sierra Leone—where there might have been such examples—or Rwanda. I look forward to hearing from him later.

I do not want to hog the Floor, because many Members wish to speak on this complex subject. I have explained why I think that we should press our amendment. The Government have failed to come forward with any further suggestions despite the invitation of the hon. Member for Aberdeen, North to do so. I shall listen with great interest to the remainder of the debate,

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Technically the debate on this group of amendments is taking place on the question of whether new clause 1 be read a Second time. I will call the hon. Gentleman to move amendment (a) formally at the appropriate time.

Tony Worthington (Labour, Clydebank and Milngavie)

I am pleased to take part in this debate on an important Bill. I enthusiastically support it except in one respect. I wish to speak to amendments Nos. 32, 33 and 34. Amendments No. 32 and 33 deal with the same theme, but amendment No. 34 is slightly different in its purpose.

Amendments Nos. 32 and 33 would bring our legislation automatically into line with the European directive on sustainable development. The gap between the EU directive and the Bill derives from the fact that the Bill does not cover sustainable development whereas the EU code of guidance does. My amendments would ensure that, if the code of guidance is changed, it would automatically be incorporated into British law. If, with our consent, the EU thought that other grounds existed to make it necessary to forbid the sale of arms or other services, we would not need to introduce primary legislation in the House.

Amendment No. 34 would simply ensure that sustainable development is covered by the Bill. The Minister owes us an explanation—[Interruption.] If the Minister will listen, I shall repeat my view that he owes us the explanation that was not forthcoming either from the Secretary of State on Second Reading or from other Ministers in Committee. We need to know why sustainable development as a ground for banning an export was dropped from the Bill.

In an earlier phase of Government thinking, both the EU code of guidance and the Bill agreed that sustainable development should be a consideration. It was accepted that we should not give approval to activities that would increase poverty, and that provision was in the Bill. However, without explanation the Government removed it from the Bill, which means that the export of arms and inappropriate technology cannot be banned on the basis of sustainable development. That is odd.

My central point relates to what the Minister said in Committee. In trying to allay suspicions about why sustainable development was not included in the Bill, he said:

"We have always made it clear that our national criteria and the EU code of conduct on arms exports, which we played a key role in drafting... would remain the basis for export licensing decisions."

I do not understand how that can be so when it is only that which is explicitly banned in the schedule which can be the grounds for stopping exports.

Jenny Tonge (Liberal Democrat, Richmond Park)

Does the hon. Gentleman agree that it is also difficult to understand the Minister's reasoning when the EU code of conduct for arms export is not legally binding, so no Government will be bound by it anyway?

Tony Worthington (Labour, Clydebank and Milngavie)

Yes, that is absolutely the case. The code of conduct is simply guidance. The Minister said in Committee that if the Government were to ignore sustainable development when making a decision, that could be subject to judicial review, but I doubt whether that is so.

The non-governmental organisations that are interested in this subject and form the United Kingdom working group on arms—Amnesty International, the British American Security Information Council, which is known as BASIC, International Alert, Oxfam and Saferworld—took legal advice on the Minister's comments. It asked whether he was right and the advice the group received from Matrix chambers was that he was wrong. Indeed, judicial review could be called for by a firm if an export is refused on the grounds of sustainable development because only those criteria that are set out in the schedule are relevant. Given that legal advice, which I can make available to him for no fee, I hope that he will reconsider his case.

The Minister also said in Committee:

"They are ignoring the fact that we signed up to the EU code of conduct. We shall not withdraw from it, and a future Government will have to be bound by clause 8(4)."—[Official Report, Standing Committee B, 17 July 2001; c. 47-48.]

That is not true. The code of conduct offers advice; it has no binding power. Will he also reconsider that, and bear in mind that it goes against Scott's sensible recommendation that the law should contain all such advice. He did not think that we should have to look to advice from elsewhere. He was clear about that.

I have one example in particular on which I should like the Minister to comment. The Department of Trade and Industry is considering an application by a British firm to supply Tanzania with $40 million of air traffic control radar equipment. As that has a substantial military component, it has to receive approval from the Department. The World Bank has condemned the proposal for being needlessly expensive and it says that what Tanzania needs could be obtained for $10 million. The proposal has also been turned down by the International Monetary Fund.

The UK has formed a relationship with Tanzania, one of the world's poorest countries, to help it to wipe out its huge debt. However, at the same time there is a risk that the Government will increase that debt by $40 million. If the criterion of sustainable development is not included in the Bill, that application could be approved, but if it is altered by my amendments, it could not be approved.

The inherent conflict must be causing problems in the Government. The Department for International Development is surely against the proposal because if the project goes ahead poverty would probably increase in Tanzania, so its support is inconceivable. It is also unlikely that the Treasury is in favour of the proposal. The idea of going to Dar es Salaam to negotiate debt reduction and then agreeing to something that adds $40 million to that debt does not sound like prudence, does it? So who does support the proposal, which has been around for a long time? It can only be the DTI.

I am suspicious because the sustainable development criterion has been removed from the Bill and without it we cannot be sure that poverty will be taken into account. I hope that the Minister can explain that omission and assure me that if he cannot alter the Bill today, he will do so in another place.

Jenny Tonge (Liberal Democrat, Richmond Park)

Liberal Democrat Members broadly welcome the Government and Conservative new clauses and amendments in this group. We are also delighted that many of the issues that they address were raised by Liberal Democrat Members in our amendments in Committee. As the Minister rejected our amendments as unnecessary at the time, it is good to see them returning as Government amendments.

I want to speak to the amendments tabled by me, my hon. Friend the Member for Twickenham (Dr. Cable) and the hon. Members for Moray (Angus Robertson) and for Meirionnydd Nant Conwy (Mr. Llwyd). Amendment No. 36 deals with the need for the Bill to provide for thorough consideration of the cumulative impact of arms exports.

The Government's policy is that exports are assessed case by case. Although that is appropriate in most instances, there are situations in which it is vital that the Government assess the cumulative impact of arms exports on a country or region. The need for such an assessment is especially acute when considering the implications of exports for sustainable development, which I shall speak about at some length, as the hon. Member for Clydebank and Milngavie (Tony Worthington) did.

No licence has ever been refused under the sustainable development criterion, largely because it is almost impossible to prove that any single licence will damage development. However, although it may be true that one licence taken in isolation may be of little concern, the combined effect of a number of licences could well have an adverse effect on development.

Perhaps it is necessary to spell this out again to the Minister, as we did in Committee. Developing countries often get into debt, and they are often encouraged to do so by the United Kingdom, which grants them export credit guarantees to buy arms. They spend far too much on the arms sector while spending far too little on health and education, which they neglect. As I said in Committee, education is crucial to the economic and overall development of any country. Development issues have been neglected because of spending on arms. Although one export may not highlight that fact, a series of exports may do so.

A series of exports may be a factor also when evaluating the impact of arms exports on a particular region. Perhaps one export of arms will not have an immediate impact on the country to which it is made, but it may affect overall regional stability. It is therefore crucial that the Bill provides for the consideration of the cumulative effect.

Perhaps the Minister will refer us to other provisions in the Bill, or to other schedules, guidance or other criteria, all of which can be so confusing. If the issue is addressed in all those places, why can we not simply state in the Bill how to address it? I do not know what Ministers are running away from. A provision requiring an examination of the cumulative impact of arms sales would make it so much simpler to interpret the Bill's intent.

On amendment No. 38, I understand the Minister's point on the desirability of substituting the words "mass destruction" for

"development, production or use of nuclear, chemical and biological weapons."

However, as recent events have shown, a weapon of mass destruction could encompass almost anything. I therefore believe that we have to be careful when addressing that issue. Perhaps we should be legislating for the possibilities that we can understand and not for any old thing that may take the fancy of future terrorists. I ask the Minister to reflect on that issue.

Amendment No. 39 takes us back to sustainable development—however defined—which is my favourite subject, and the favourite subject of the hon. Member for Clydebank and Milngavie. Yesterday, we had a very interesting debate in the House on the definition of sustainable development and on whether we should accept the Brundtland definition or the Government's own definition in the International Development Bill. Nevertheless, whichever definition we choose, the Bill surely must address the issue.

In the Export Control Bill, sustainable development is the only one of the eight consolidated criteria that the Government will consider before granting an export licence that is not included in the schedule of purposes for export control. Instead, the sustainable development criterion is referred to indirectly in the clause on guidance. In Committee, however, the Minister said:

"The Bill confirms and underlines the status of consolidated criteria, all aspects of which are important."

He also said that the Bill had been so structured as

"a matter of clarity and convenience".

We believe that that sends the very clear political message that the Government do not regard protecting sustainable development as of equal importance to the other purposes. The Minister said that the Bill says it all, but in his statements he has clearly excluded sustainable development as a purpose of equal importance.

The omission of sustainable development was raised in Committee. As the hon. Member for Clydebank and Milngavie said, legal advice has been taken from Matrix chambers by a group of non-governmental organisations. I prefer to read out the relevant sections of the advice that we have received. It is important that we have that advice on the record as it has been given, because I could not put it in the correct legal terms if I tried to paraphrase it.

The advice identifies three reasons why it is important to include sustainable development in the schedule of purposes. It states that the purposes can be changed only under the affirmative resolution procedure, so a Government could change them only with prior parliamentary approval, whereas the guidance can be changed without reference to Parliament other than it being informed at some unspecified time after the event. The DTI has stated that sustainable development will be protected as it is one of the criteria in the EU code of conduct on arms exports, and in Committee the Minister said:

"Even if a future Government tried to withdraw guidance issues under clause 8"—

which, post-Committee, has become clause 7—

"the EU criteria would continue to apply".—[Official Report, Standing Committee B, 17 July 2001; c. 47.]

However, Matrix chambers advises that, on the contrary,

"it would be hard to maintain this argument in the face of an express decision to remove the Code from the guidance"

especially as

"even at the EU level the Code does not have legal force."

That is most elegantly put.

Secondly, as an export order or transfer order can be made only for a purpose as elaborated in the schedule, excluding sustainable development from the schedule means that an order could not be made for the purpose of sustainable development. Our advice states:

"However much other matters have to be taken into account, they cannot justify making an order for a purpose which is not listed in the Schedule."

That means that it would not be possible to introduce specific secondary legislation under the Bill to control more tightly exports that could hamper sustainable development, whereas, for example, the Government could introduce orders laying out a more detailed definition of what constitutes internal repression, or any of the other purposes in the schedule. Thirdly, the current arrangement of including sustainable development only under guidance does not satisfy the recommendation of the Scott report that any guidelines or guidance issued by the Government must operate inside the law, not alongside it.

In conclusion, the legal advice suggests that removing sustainable development from the schedule places it in a weaker position than other criteria under law. The omission denies a future Secretary of State the power to introduce controls to protect sustainable development, even if he or she wants to do so. It also means that he or she could remove sustainable development altogether as a consideration, with minimal parliamentary oversight. I thank the House for allowing me to read that advice, as it is important that it is on the record.

We should not have to keep on spelling out the importance of sustainable development. Yesterday, the House debated the International Development Bill: sustainable development, whatever definition is used, is central to that Bill and dear to the hearts of the Secretary of State for International Development and her junior Minister. That Bill was given its Second Reading without encountering any dissent from hon. Members, so it is abundantly clear that sustainable development is close to the hearts of all parties.

Sustainable development is on the face of the International Development Bill. If the Government believe in Departments working together, and if they believe in the joined-up government about which we hear so much, those words must appear on the face of the Export Control Bill, to ensure that no future Secretary of State can interpret the guidance in a different way and bypass crucial sustainable development.

Vera Baird (Labour, Redcar)

I support the amendments tabled by my hon. Friend the Member for Clydebank and Milngavie (Tony Worthington). I emphasise in particular my support for amendment No. 34 on sustainable development. I do not propose to repeat the arguments advanced by hon. Members on both sides of the House in respect of that amendment; instead, I will make two minor further points.

It is my view—I invite the Minister to consider it—that the existence of the words "sustainable development" in the consolidated criteria, together with the fact that sustainable development is the only one of the consolidated criteria that is left out of the statutory schedule, make it next to impossible to imply into the schedule a power to legislate to protect sustainable development. It is all too clear that it has been deliberately, obviously and openly omitted. I suggest that seeking to imply it back in by an indirect mechanism will not work.

I ask the Minister to note that that is not only the view of Matrix chambers, well known and important as it is. It is also the view of the researcher who produced the paper in connection with the schedule, which is in the Library. It states that if there is not a reference to sustainable development in, then it is wholly out and cannot be implied in. The researcher says that the schedule sets out the purposes of export control in legislation, and it limits controls to those purposes and no others.

There is also the argument—it is exactly the argument advanced by the Minister—that is now propounded in support of amendment No. 34. My hon. Friend put it forward against amendment No. 38. He talked about that amendment setting out a list of nuclear, chemical and biological weapons, and that being a dangerous course because if such a list is put into the Bill, anything that is left out cannot be covered. That argument applies exactly to leaving out sustainable development from the list in schedule 4.

I do not like the term "hoist by one's own petard", and it is not appropriate in this instance, but will my hon. Friend seriously reconsider the matter and provide an explanation? If he will not seriously reconsider the position, why is the obvious need for the term "sustainable development" to appear in legislation not to be recognised? It is clearly the Government's intention to have regard to it. They have put themselves in an inextricably complex position. The simple way out is to add the phrase to the schedule.

Vincent Cable (Liberal Democrat, Twickenham)

Many of the key points have already been made by Members on both sides of the House, so I will not delay the House. I shall merely make a few additional points.

I speak in support of the Conservative amendments, which are important and echo a theme that ran throughout our discussions in Committee. Whatever our views about the arms trade and necessity for controls—there are different views about those matters—parliamentary scrutiny is essential. Later, we shall discuss the core issue of prior scrutiny. In the absence of prior scrutiny, the point has been made by the Members representing all three parties that were represented in Committee that there would be considerable merit in escalating the level of parliamentary scrutiny generally. It was thought that the negative procedure is too weak, and where possible it should be replaced with delayed action; and where there is delayed action, it should be replaced with affirmative action. That is the substance of the Conservative amendment, which is a useful one, and I hope that the hon. Member for Salisbury (Mr. Key) will pursue it.

I move on to cumulative effects, which are taken up by amendment No. 36. My hon. Friend the Member for Richmond Park (Dr. Tonge) made the point well. The current crisis underlines the necessity for having such criteria built into legislation. We are on the brink of at least one new arms race between India and Pakistan. Under current proposals, every export application would be considered individually. However, the problem when there is an arms race is knowing precisely when the cumulative effect is getting out of control.

An individual contract taken in isolation may be beneficial or neutral in its impact, but the exporting country might want to say that the point was being reached where the arming of Pakistan or India, or both, was getting out of control. The cumulative effect is what we must consider.

Similarly, the economic environment is changing rapidly. If there is a major economic shock leading to falling commodity prices, the effects of deteriorating international economic conditions will quickly undermine the conditions under which, for example, the heavily indebted poor countries have had debt relief. The position of many western hemisphere countries, including those in Latin America, is precarious. Only yesterday, I saw figures showing that the debt service to export ratio of many of those countries is close to what it was before the defaults of the 1980s. Adverse international economic conditions could well precipitate a crisis in both groups of countries. If that is the case, we need to consider not just individual export contracts in isolation, but the overall effect of large volumes of arms exports going through the process and destabilising countries' economies. The cumulative impact therefore needs to be built into the language of the Bill.

We have had a detailed exposition of the legal advice on sustainable development that is now available, but was not available in Committee. "Sustainable development" has become a buzz phrase. I was involved in writing the Brundtland report, so I have a vested interest in its interpretation of sustainable development. The key point is not whether or not we accept that definition, but that sustainable development is becoming institutionalised. The International Development Bill builds sustainable development into our legislation. We have passed the point at which it is simply an issue to be discussed by people involved in development; it is now becoming part of public law, and should be recognised as such.

The core point about sustainable development is that if, in future, Ministers wish to introduce export controls on the grounds of sustainable development, they will not be able to do so under current legislation; there are no powers for such action. If, on the other hand, they were succeeded by other Ministers who had little interest in the subject or, indeed, held it in contempt, those Ministers could simply dismiss any sustainable development criteria with perfunctory parliamentary scrutiny. Sustainable development should therefore be built into the Bill. It is inexcusable that the Government should have difficulty with that phrase; indeed, it is inexplicable. I suspect that someone in the Department decided that they did not want woolly-minded environmentalists getting in the way of hard business decisions on arms exports, and decided to strike sustainable development from the Bill. Having done so, they have landed the Minister not only with political, but legal, problems. I hope that he will think about that again.

Tony Worthington (Labour, Clydebank and Milngavie)

Is not the situation even worse than that? Sustainable development was included in the draft Bill, but the Government decided that it should not become a ground on which exports were banned. In fact, the European Union code of guidance on sustainable development is utterly worthless because it cannot be taken into account at all as the result of the Government changing their mind between the draft Bill and the present Bill.

Vincent Cable (Liberal Democrat, Twickenham)

The hon. Gentleman makes the point eloquently and better than I did. I sincerely hope that the Minister will listen to his own Back Benchers. He may feel that we are creating difficulties for the sake of doing so; I assure him that we are not. I am sure that he will hear strong, sincere opinions from them, and I hope that he will take account of them.

Tom Clarke (Labour, Coatbridge and Chryston)

I always find the hon. Member for Twickenham (Dr. Cable) convincing; perhaps he should not have been quite so modest. I share the view of my hon. Friend the Member for Clydebank and Milngavie (Tony Worthington). Indeed, I was persuaded to put my name to amendments Nos. 32, 33 and 34, which he and my hon. Friend the Member for South Swindon (Ms Drown) tabled. Echoing the arguments of my hon. Friend the Member for Redcar (Vera Baird), it is important that the matter is aired.

I raise that with some trepidation because, whenever I am puzzled or in intellectual difficulty, almost invariably I go to my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), the Minister for advice. Almost without exception, he removes my doubts. I am sure that that reputation will be consolidated today.

It is in that questioning mode that I express to my hon. Friend the great concern that exists about the sustainable development issue in the context of a Bill that is otherwise extremely welcome. We are seeking to help my hon. Friend remove what seems, in the absence of any other explanation, to be a flaw.

Sustainable development is extremely important. The spirit of the Scott report suggested that Scott was far from happy, because in his view the purpose of export controls was not set out in legislation. That is what the amendments seek to achieve. I am a little surprised that that needs to be done from the Back Benches. From the draft Bill that was considered previously, our understanding was that sustainable development would be part of the final Bill to be put before the House. I am not entirely sure why it was taken out of the eight criteria considered by the Government.

Admirably, all the other export criteria in the draft Bill, such as the need not to export weapons that could be used for internal repression or human rights abuses, have been included in the final Bill. That is both right and welcome, but it raises the question why there is at present a gap between those on the Front Bench and many hon. Members on both sides in respect of sustainable development.

My hon. Friend the Member for Clydebank and Milngavie explained clearly that if we accept the Bill as it stands, we are being asked to rely not on legislation—not on the schedules—but on guidance. We have seen in the past where guidance has taken us, not least during the Scott inquiry. We want to move forward more positively than that.

Under the Bill, if there were a change in policy, Parliament would not have a say. That becomes particularly worrying when we consider that we may not always—optimistic though I am about the future—have Ministers of whatever political party who are of the calibre of my hon. Friend. If those Ministers change their minds, where does that leave us in terms of legislation? Not, I suspect, where we want to be. As has been pointed out, the EU code is entirely advisory. We want to make matters clearer and the provision mandatory.

Reference has been made to the excellent debate in the House yesterday on the Second Reading of the International Development Bill. Not only is sustainable development at the heart of that admirable Bill, but it was mentioned time after time in speeches in that debate. Most importantly, sustainable development appears in the Bill. It is not for me to speak for the Department for International Development, which we all agree is an excellent Department, but there seems to be a hiatus between the thinking of the Department of Trade and Industry as reflected in the Bill, what we heard in the debate yesterday, and what appears in the International Development Bill. In support of my hon. Friend the Member for Clydebank and Milngavie, I am seeking to close that gap.

The Government have been highly persuasive in assuring the House of their commitment to sustainable development, but it seems contradictory that sustainable development is the only one of the consolidated national and European Union export criteria that is not in the Bill.

I read carefully what my hon. Friend the Minister had to say in Committee, through which he piloted the Bill with great confidence. He said:

"We have always made it clear that our national criteria and the EU code of conduct on arms exports, which we played a key role in drafting, accepted in full and consolidated last autumn, would remain the basis for export licensing decisions."—[Official Report, Standing Committee B, 17 July 2001; c. 47.]

That is excellent, but we would still like to see it in the Bill. In that same column, my hon. Friend gave some legal arguments. As we have heard today, however, those appear to have been contradicted by Matrix chambers. Many of us would, perhaps, give more weight to Matrix chambers than to, say, Matrix Churchill. In any event, that legal definition that I put to my hon. Friend must be clarified today, because the absence of such a definition would detract quite unnecessarily from what is otherwise an extremely comprehensive and positive Bill.

Mark Francois (Conservative, Rayleigh)

I apologise to the Minister for coming into the Chamber mid-way through his speech. I can only say in my defence that I have come hotfoot from having some dental work done. I earnestly hope that the novocaine has now worn off and that I shall not slur my words. I am conscious that a number of hon. Members wish to speak in this debate, so I shall adopt that most worrying of parliamentary phrases: "I intend to keep my remarks quite brief." I shall make only three points.

First, it is legitimate to register concern about the considerable degree of rewriting of the Bill that has taken place in a comparatively short space of time. As a broad rule of thumb, it does not inspire confidence when a Department suddenly has to turn round and rewrite so much of its Bill so late in the day. That gives a number of us pause for thought, and it is worth placing it on the record to reinforce the point that was made earlier on this side of the Chamber.

Secondly, I share the concern expressed by my hon. Friend the Member for Salisbury (Mr. Key) about the further trend towards the erosion of the powers of parliamentary scrutiny and influence, be that through the ever-increasing stream of European directives and regulations with which Parliament has to deal, or through the growing tendency of Ministers to ask for powers which negate the requirement for future areas of policy in their domain to be approved by both Houses of Parliament. Our amendments simply seek to retain a greater degree of parliamentary scrutiny over important measures, and they are genuinely worthy of consideration on that basis.

Thirdly, I want to make a brief point about the industry that the regulation, as amended, would affect. The defence industry, which employs more than one third of a million people in this country, is—on one level at least—an important guarantor of our security. On a day when so many hon. Members are, quite rightly, wearing poppies, it is worth remembering that, had there not been a defence industry in 1940, this debate would not be taking place at all. I urge fellow hon. Members to keep that at the back, if not at the forefront, of their minds as we continue our deliberations this afternoon.

Bob Blizzard (Labour, Waveney)

I want to speak briefly about the amendments relating to sustainable development.

The hon. Member for Salisbury (Mr. Key) said that Members were present who were very experienced and knowledgeable in regard to these matters, and had taken an interest in them for some time. I have to say that I am not one of those Members; I am new to the Bill, and relatively new to this subject. It strikes me, however, that it is not necessary to think too long before reaching the obvious conclusion that it cannot be right to sell arms to countries that have no means of affording them other than depriving their own people of budgets that sustain the basics of life, such as health and education.

I wanted to speak because some of my constituents have expressed their concern to me. I hope that my hon. Friend the Minister will help me to explain to them why sustainable development is the only one of the consolidated national and European Union export criteria not to be included in the Bill. He has said that the question is unnecessary, having been fully addressed elsewhere in the Bill; but if that is the case, why not underline it by including sustainable development in the schedule of purposes? That would remove any doubt, it would wipe away any concerns, and I think that it would answer questions raised by other Members about the difference between the draft Bill and this one. I feel that, of necessity, the concept of sustainable development must embrace that of the cumulative impact. The latter is surely implicit in the former.

Perhaps my hon. Friends can also help me to explain to my constituents how we can rely on the EU code of conduct when it has no legal force. That, in fact, is one of our reasons for proceeding with the Bill. The Government have done an awful lot by helping to drive the code through when none existed, but we are going further today, and I think we need to go further than the code of conduct.

I shall ask a final question. If an export or transfer order can be made only for the purposes elaborated explicitly in the schedule, why are we excluding sustainable development from it? Does it not follow that we shall be unable to make such an order?

I should be very grateful if my hon. Friend could help me explain those points to my constituents.

Angus Robertson (Scottish National Party, Moray)

I shall briefly reiterate the position of the Scottish National party and Plaid Cymru, the party of Wales.

We consider this to be an important Bill that tightens up an important area of legislation, and in general we support it, especially because it takes on and responds to so many points made in the Scott inquiry. We also consider it to be a significant step forward because it tries to prevent the transfer of arms by United Kingdom companies and citizens to conflict or human rights crisis zones. We welcome the closing of loopholes, as described by the Minister, and the enhanced scrutiny procedures.

I hope that the Minister will take what I say in the spirit in which it is meant—one of general support. I think that my comments are in line with the overwhelming view of the majority of those who have spoken so far. We in the SNP and Plaid Cymru agree that a number of factors have been identified which, if not addressed, could undermine the Bill's effectiveness. We share the concern felt by many in the House and elsewhere that the draft Bill's reference to the need to consider the consequences of arms exports on sustainable development has been dropped from the final legislation. That point has been made repeatedly this afternoon. That is why the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) and I have joined the hon. Members for Richmond Park (Dr. Tonge) and for Twickenham (Dr. Cable) in tabling amendments Nos. 36, 38 and 39.

Apart from sustainable development, all other export criteria, such as the need not to export weapons that could be used for internal repression or human rights abuses, have been included in the Bill, and rightly so. The Government have justified the omission on the ground that a new provision that gives the Secretary of State powers to issue guidance for consideration during the licensing process covers development issues. However—this point has been made, but it is crucial—although Parliament would have to be fully consulted when changes to the schedule of purposes were made, no such requirement exists for changes to the guidance. It is conceivable that, in the lifetime of the legislation, reference to the need to consider the impact of arms exports on sustainable development could be removed by the Government at any time, without any consideration by Parliament.

Sustainable development as a concept is already becoming recognised in United Kingdom legislation. The International Development Bill received its Second Reading in the House of Commons yesterday. Many hon. Members in the Chamber today who were present yesterday will know that that Bill explicitly refers to and defines sustainable development. I agree with the point made in yesterday's proceedings by the hon. Member for Ceredigion (Mr. Thomas) that the Brundtland definition of sustainable development would have been preferable. None the less a sustainable measure is included in that Bill.

During the Committee stage of the Bill, the Government repeatedly stressed the importance of the issue. It seems contradictory that sustainable development is the only one of the consolidated criteria not in the Bill. I endorse the point made by the hon. Member for Clydebank and Milngavie (Tony Worthington) with regard to Tanzania. The schedule of purposes should contain explicit reference to the need to ensure that arms transfers do not have any adverse effect on the economy or sustainable development of a country.

Government policy is based on assessing licence applications on a case-by-case basis. Although that is appropriate in most circumstances, there are concerns—we have heard many of them this afternoon—that that approach may be too narrow when considering the implications of arms transfers on sustainable development. One contract may not be significant on its own, but if part of a pattern of large-scale procurement its may contribute to a cumulative undermining of the development potential of the recipient state. That should be taken into account in the licensing process.

In the Bill as currently drafted, sustainable development is the only one of the eight consolidated criteria, which the Government consider before granting an export licence, not to be included in the schedule. It is instead referred to indirectly in the clause. That is despite the fact that, according to the Minister:

"The Bill confirms and underlines the status of consolidated criteria, all aspects of which are important."

Earlier, he stated that the Bill had been so structured as

"a matter of clarity and convenience."—[Official Report, Standing Committee B, 17 July 2001; c. 47.]

Indeed, it sends a clear political message that the Government do not regard protecting sustainable development as of equal importance to the other purposes, such as preventing internal repression.

The hon. Member for Salisbury (Mr. Key) made many valuable points about the issue of scrutiny. I suggest to him and to any other hon. Members who are interested in the matter that they have a second look at the scrutiny regime in Sweden, which is of particular interest. The Swedes, who brought in legislation not that long ago, have an interesting principle on which to base scrutiny procedure:

"The overriding principle dictating licensing policy is that licences may only be granted if there are security or defence policy reasons for doing so and it does not conflict with Sweden's foreign policy."

Interestingly, it also includes, implicitly, that export licences should not be granted if the recipient state

"is involved in an armed conflict with another state

is involved in an international conflict that may lead to armed conflict

is subject to internal armed disturbances

has perpetrated extensive and serious violations of human rights."

That is particularly relevant when we consider the defence systems and equipment international exhibition that was held in this country on 10 September this year. A number of repressive regimes and countries fighting on opposing sides in Africa were invited to that event. There were representatives from countries currently involved in the conflict in the so-called Democratic Republic of Congo, including representatives from Angola and Uganda. I hope that the Minister will take this opportunity to explain whether the updated legislation would allow exports to such countries to continue. I, and many other hon. Members, would be concerned if arms from the United Kingdom could be used in such conflicts.

Amendment No. 36 goes back to the case-by-case assessment outlined earlier. I welcome the fact that the Minister signalled in his opening remarks that that would be taken into consideration. In the spirit of cross-party co-operation, I hope to get some clarification on why that amendment is not acceptable.

Amendment No. 38 deals with the question of different weapons technologies. I am rather confused and would welcome an explanation from the Minister.

Nigel Griffiths (Labour, Edinburgh South)

I can perhaps help end some of the confusion. Does the hon. Gentleman know that he is wrong to say that sustainable development is the only criterion not included in the schedule?

Angus Robertson (Scottish National Party, Moray)

I bow to the Minister's wisdom, but that does not detract from the case for including it in the legislation. I am happy to continue debating that if the Minister thinks that it is important.

The Minister argued that amendment No. 38 should not be incorporated because it highlights existing and not future or emerging technologies. That is rather confusing because such a proposition would affect much if not all legislation. I do not claim to have a crystal ball that would enable us to produce legislation to anticipate all possible future technological and weapons systems development, but surely we should deal with existing threats and be open to updating legislation as necessary.

I hope that the Minister will respond to the points that have been made by hon. Members from all the parties that have participated in the debate. I look forward to hearing the Minister deal with many of our concerns.

Tony Lloyd (Labour, Manchester Central)

Some hon. Members have mentioned sustainable development, and I want to put a simple question to the Minister to which I hope that he will respond later.

The House is in favour of sustainable development being caught within the concept of this legislation. Hon. Members have pointed out that the EU code—I have some responsibility for the promulgation of that code—is not legally binding and was never accepted as being so at European level.

Is my hon. Friend the Minister convinced that if sustainable development were used as a criterion for refusal of a licence, it would stand up against judicial review instigated by an exporter facing such refusal? That is a fundamental consideration. Ministers are entitled to protection in using a criterion for the refusal of licences and to know that they can do so without others seeking recourse to the law. Like hon. Members on both sides of the House, I am not yet convinced that it would not be better for the provision to be both extant and in the Bill, so that it is clear not only to the House but to those who implement the legislation and are subject to it.

I turn to amendment (a), which was tabled by the hon. Member for Salisbury (Mr. Key). He asked me a little about my experience of Sierra Leone. My recollection is that I had very little to do with arms going to Sierra Leone—despite my reputation over the years. It is rather ironic if the purpose of the amendment is to allow the Government to act in a way that is consistent with the spirit of the legislation—the establishment of a licensing system that not only allows the legitimate export of arms, but controls and prevents arms sales that we do not want to occur—because there are some circumstances in which it is necessary for the Government to act, not simply quickly, but effectively and immediately.

It is true that, as United Nations embargoes would be implemented by Order in Council, they would fall outside the provisions of the Bill. However, there are other circumstances to consider, such as the present conflict in Afghanistan. Whatever hon. Members' views on that, it was not foreseen well before the event and could not easily have been planned for.

I can think of other such circumstances. After a period of prolonged but uneasy peace, Ecuador and Peru edged in a matter of days towards war. I also recall the situation in Indonesia with respect to East Timor. I went to East Timor for the referendum on independence. The European Union was faced with a mounting crisis in Indonesia and in relations between Indonesia and East Timor, and at very short notice imposed an embargo on weapons sales to Indonesia.

There are times, therefore, when it is necessary to allow Governments to act instantly. It is right and proper that there should be parliamentary control—in many instances I would be at the forefront of those saying, "Let's not trust Ministers"—but amendment (a) would shackle the Government, preventing them acting in ways consistent with foreign policy objectives and maintaining the security of our fighting troops.

I hope that my hon. Friend the Minister will resist pleas to alter the definition of weapons of mass destruction. He is right in the example that he cited. Technology moves very quickly and we may not be able to foresee future weapons of mass destruction. It would be ridiculous for us to define downwards our capacity to control such technology, which we ought to be restricting. I therefore urge him to leave the words "weapons of mass destruction" in the Bill.

Malcolm Savidge (Labour, Aberdeen North)

The hon. Member for Rayleigh (Mr. Francois) apologised for being delayed at the dentist. I apologise for being delayed while working in my office and for therefore following on television the speeches of the Minister and of the hon. Member for Salisbury (Mr. Key), who courteously referred to the amendments that I moved on 18 October and to some of the remarks that I made at the time.

It is true that I said that thorough parliamentary scrutiny is in the interests of good government, and that that is in the interests of not only Back Benchers of whatever party but the Executive—provided that it is not an opportunity for inordinate delay or unreasonable obstruction. I hasten to emphasise the words "unreasonable obstruction", because it was not until I heard the hon. Member for Salisbury that I realised that Hansard had recorded me as saying "unreasonable instruction". May I say immediately that I absolve the Opposition from ever being guilty of unreasonable instruction? I have occasionally suspected that they had an unreasonable lack of instruction, but never unreasonable instruction. He also referred to my comments in withdrawing the amendment, when I said that I hoped that my hon. Friend the Minister would take account of the expressions from both sides of the House that the fullest scrutiny of secondary legislation was desirable.

However, the hon. Member for Salisbury did not quote what I said immediately before that, when I indicated that, in relation to the negative resolution procedure, the Minster made the point in responding to my probing amendment that this procedure would deal purely with technical matters, such as minor changes in detailed lists. That seemed to me to be perfectly reasonable.

On clause 3(2), I recognised that, in the case of emergencies, the delayed affirmative procedure might be the most appropriate procedure, particularly since the Minister had indicated that it would relate mostly to technical matters. I say to the hon. Member for Salisbury that I cannot see the advantage of trying to use something like royal prerogatives in these circumstances, as the procedure to which I have referred would be preferable. On 18 October, I stated that my amendment was intended purely as a probing amendment and that it was my intention to withdraw it. I felt that the Minister had answered a number of points satisfactorily and my amendment, as worded, was not appropriate to be pressed. I was slightly disappointed that some Opposition Members felt it appropriate to seek to deny me the opportunity to withdraw the amendment.

The amendment tabled today by the hon. Member for Salisbury still does not take sufficient account of the Minister's response and raises the suspicion that, in this case, inordinate delay and unreasonable obstruction might be the intention behind it. The hon. Member for Salisbury showed good judgment on many occasions in Committee; I compliment him on his good judgment if he feels that his own party has a vested interest in the position of Opposition parties for some considerable time into the future. However, inordinate delay and unreasonable obstruction may be in the interests of Opposition sometimes, but they are not in the interests of good government. Therefore, I would not be proposing to vote for the amendment.

David Heath (Liberal Democrat, Somerton and Frome)

I have not contributed so far to discussions on the Bill, although I had some part in its genesis when I served on the Foreign Affairs Committee, which considered the matter at an early stage and formed part of the Quadripartite Committee, on which I served for a short time.

I agree with almost everything that the hon. Member for Manchester, Central (Mr. Lloyd) said; many of us have a great deal of respect for what he did when in office. One of the principal reasons for that was his advocacy of the EU code of conduct, which was an important advance. But, as he said, it has no force in law. It is a matter of agreement between the EU member states, but it does not fall within our statutes. That is why it is so important that we get the Bill right.

I wish to refer to the question of whether sustainable development should be a criterion and whether it should be in the table in the schedule. The Minister will have some difficulty in persuading many of us that it should not be there, for this reason. First, the argument against it being included might be that it fettered the discretion of Ministers. Clearly, it does not; it extends the discretion of Ministers to apply what Members on both sides of the House have agreed is a desirable criterion.

The second reason might be that the criterion is otiose because the matter is covered elsewhere. If that argument is to be pursued—that the measure is unnecessary because the guidance can be relied upon entirely to give Ministers the discretion they need to make decisions without fear of judicial review or challenge in the courts—we must ask what the court's interpretation of the absence of that criterion from the list would be and whether it is more likely that it would evince a challenge from those who had had an export licence refused on those specific grounds, if it were on the face of the Bill or if it were not. My answer to that, not as a lawyer but as a layman, would be that it is inevitable that a court would be more easily persuaded that the Minister was acting beyond the express powers given in the legislation, if he was relying on guidance notes that were not on the face of the Bill than he would if he were relying on an express commitment and an inclusion in the schedule.

Therefore I believe that the Minister needs to persuade the House, at the conclusion of the debate, that there is a good reason for not including that criterion in the list. It seems to me that many Members on both sides of the Chamber are not yet persuaded of that fact, and if that is the case he would be well advised to accept the advice that has been proffered, not least by some hon. Members on his side of the Chamber.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I welcome the Bill. It is an important new weapon in our armoury to restrain the merchants of death. However, having read the Standing Committee report, I am in confusion as to exactly who and what would be captured by the scope of the technical assistance provisions, so I should like to speak, if I may, to Government amendment No. 4. If you will bear with me for a short while, Madam Deputy Speaker, I should like to use a concrete example of a situation where I believe that we would all like arms dealing to be captured, but I am not quite sure whether it would be, and would appreciate the Minister's advice.

I welcomed the assurances that the Minister gave in Committee that the Bill had sufficient scope to cover what some might call mercenary activities of United Kingdom nationals, but which might more broadly be called military support activities of UK nationals abroad; I very much look forward to the long overdue Green Paper on mercenaries. Some doubts were nevertheless raised that the courts might not uphold orders placed on such nefarious people, as the language of the Bill is not sufficiently precise. Therefore it is important in this debate to state that it is the will of Parliament that, as far as possible, such traffickers in death be captured by the Bill.

At this time of the terrible conflict in Afghanistan, it is important that we do not forget other regions of the world where irresponsible arms dealing, against the will of the international community, is leading to death and destruction. I am thinking particularly of the terrible civil war in the Congo, where other African states that should know better are systematically looting a country that is already on its knees. Zimbabwe is one of the vultures at that feast—or rather, Robert Mugabe's henchmen are profiting while that war bankrupts their own country.

It is a little known fact that the main arms supplier to Zimbabwe and its adventure in the Congo is a UK resident, who runs his huge business empire from the royal county of Berkshire—from genteel Ascot and Windsor, to be precise. I should like to use his example to illustrate why the House should support the Bill, and to place in context my request for clarification from the Minister of the Bill's precise scope.

Outside the sports pages, hon. Members would not find much reference to that gentleman, Mr. John Bredenkamp, in the UK press. With a fortune estimated at £400 million, he has deep pockets, expensive libel lawyers and a dangerous reputation. He is also extremely clever and careful, and does not readily leave end-user certificates lying around. Therefore it is safer for the press to chronicle his handling of sports stars—including Ernie Els and Francois Pienaar among many others—through his sports agency, Masters International, than his handling of arms. However, Mr. Bredenkamp has long had form of a distinctly unsporting kind, and he is exactly the sort of person based in this country whom the Bill should tackle.

A former tobacco farmer, captain of the Rhodesian rugby team and member of Rhodesian special forces, Mr. Bredenkamp was a key figure in sanctions busting, so long ago, for Ian Smith, and when the regime changed he quite simply changed his allegiance. In 1994, the activities of Mr. Bredenkamp's then company, Casalee, were exposed by a courageous Channel 4 "Despatches" programme.

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

Order. I remind the hon. Gentleman that we are actually discussing, in this group of amendments and the new clause, the general restriction on purposes of control orders. It may be more appropriate for the speech that he is currently delivering to be made at Third Reading.

Paul Farrelly (Labour, Newcastle-under-Lyme)

I wanted, Madam Deputy Speaker, to deal with the scope of the orders that might be made under the technical assistance regime, which I understood to be part and parcel of the Government amendments.

Sylvia Heal (Deputy Speaker, Halesowen and Rowley Regis)

I am concerned about the extent of the detail that the hon. Gentleman is giving.

Paul Farrelly (Labour, Newcastle-under-Lyme)

In that case, Madam Deputy Speaker, I shall try to skip some of the detail, and get to the nub of my argument.

The activities of Casalee have been well documented but, although he denies it, Mr. Bredenkamp is one of the major suppliers of arms to Mr. Mugabe. He is a key backer of ZANU-PF, and of a potential successor to Robert Mugabe. His companies are reliably believed to have supplied arms and equipment used by the Zimbabwean army, the Interahamwe, and the Mai-Mai tribesmen in eastern Congo. Many of those arms subsequently have found their way back to war veterans, and have been used in attacks on white-owned farms.

In return, Mr. Bredenkamp has been a major beneficiary of Mr. Mugabe's largesse in Zimbabwe and the Congo. He is a major mover and shaker in southern Congo, and he has been awarded valuable diamond, cobalt and other mineral concessions. He has recently come to the attention of the United Nations panel investigating profiteering from the war in the Congo.

My hon. Friend the Minister has rightly said that the Bill should complement international co-operation between the UK, Europe and the UN in curbing arms dealing in world trouble spots. However, the matter of the scope of the technical assistance provisions in the Bill is relevant in connection with the very clever way in which Mr. Bredenkamp has structured his African involvement.

Mr. Bredenkamp runs his master company, Breco Services, from Berkshire. His African activities are run through several separate companies based in Harare, in particular through one called ACS International. Mr. Bredenkamp therefore appears to break no UK laws, embargoes or restrictions—however formal or informal—by ostensibly keeping all his African arms-dealing activities offshore. Although UK policy is not to license arms sales to Zimbabwe, Mr. Bredenkamp is clearly able freely to subvert that policy.

I should be grateful for an assurance from my hon. Friend the Minister that the Department of Trade and Industry, by means of the Bill, will have the necessary powers, in conjunction with the Home Office and the Foreign Office, to investigate empires such as Mr. Bredenkamp's. I hope that it will use those powers to take such measures as are necessary to curb organisations that are structured in the same clever way.

I hope too that my hon. Friend the Minister will assure the House that the relationships between Mr. Bredenkamp and any similar organisation will also be allowed to be examined under the Bill, as will the role of any UK company, including British Aerospace, in the supply of arms and military logistics to world trouble spots. The House will remember the controversy regarding the sale of Hawk aircraft parts to Zimbabwe by British Aerospace.

Finally, there is one further twist with regard to Mr. Bredenkamp on which I should appreciate my hon. Friend's learned advice. Mr. Bredenkamp has rights of residence in the UK, but I understand that he is not a British passport holder. Instead, he holds Zimbabwean and Dutch passports. Is he caught under the definition of the Bill as a United Kingdom person who would then be subject to the technical assistance provisions?

I should appreciate advice on that question, as I am sure that the House would agree that the Bill should be able to rein in precisely those activities that I have described—activities that mean that merchants of death use our country as their base, to the detriment of peace and stability in the rest of the world.

Roger Casale (Labour, Wimbledon)

I spoke on Second Reading in support of the Bill, and I am grateful for the opportunity to make some brief comments about Government amendments Nos. 39 and 44, which would remove direct reference to sustainable development from the Bill.

My hon. Friend the Minister said earlier that that reference was unnecessary because the issues connected with sustainable development were addressed in other parts of the Bill. I should welcome further reassurance that that is the case, but other hon. Members from all parties have emphasised their concerns and advocated that the Bill should expressly cover the matter of sustainable development.

Reference has also been made, and rightly, to yesterday's Second Reading of the International Development Bill. The question of sustainable development formed a central part of that debate, one of the features of which was the recognition that definitions of sustainable development were themselves subject to political debate and to change over time.

In the 1980s, the Brundtland report defined sustainable development as development that did not prejudice the ability of future generations to meet their needs. However, one of the issues that has arisen from international development debates is that, when we talk of sustainable development, we should also talk about economic development that allows the society involved to sustain itself for many years to come. So sustainable development is not a clear concept; it is itself subject to change.

The hon. Member for Salisbury (Mr. Key), who speaks for the Opposition, said that it is necessary to balance the needs of the Government to be able to govern and take decisions with those of Parliament to provide effective scrutiny of the Government's actions. That important balance has to be struck, and it should concern us all, but this issue does not necessarily fit the schema of striking a balance between the Government and Parliament. I suggest that the balance that needs to be struck in considering how to refer to sustainable development is that between our ideals and aspirations and what is practicable and workable in the real world.

We should remember that the last time that a Bill to control arms exports was introduced in the House was 1939. Whatever legislation we pass today will need to last for a very long time, so we must at least consider whether terms that are not as robust as they might be to sustain changes in their definition over time perhaps need to be deleted from the Bill.

Some people will find it curious, perhaps even ironic, that we might remove reference to the adverse impact on sustainable development as a ground for restricting arms exports, while talking about introducing more joined-up thinking into government and while strengthening our commitment to sustainable development under the International Development Bill.

I have tried to consider both sides of the argument, and I may be minded to accept the Government amendments, but before doing so, I should like the Minister to give further assurances that the commitment to sustainable development runs as a golden thread through the Bill and the work of the DTI, the Department for International Development and the Treasury, as well as all our attempts to improve the condition of people across the world.

Ian Liddell-Grainger (Conservative, Bridgwater)

I must apologise for turning up late for this debate—unfortunately, in the best words of any film, I was unavoidably detained.

Having served on the Committee, I am interested in two important aspects of the Bill, the first of which is the way in which the long-term scrutiny will be carried out. We discussed the importance of timing at great length. What shall we do if the Government are unable to hit their targets in the scrutiny period? Assuming that 57 per cent. of the applications are considered and that the rest are not in the time allocated, how do we then manage to bring into play the longer-term licence applications? That may be a problem because they cannot be considered retrospectively—people will have to look ahead.

Many of those issues will hinge on the movement of technology. We now discover that some companies' computer software can be bought for £5 in Hong Kong. That shows that technology develops extremely quickly in this country and throughout the world. One of the problems that must be considered is whether the amendments can be held up in law, given that we discovered in Committee that they cannot in many cases. Given the supersession of Europe, it is very difficult to understand how we as a Parliament can consider such matters in the longer term.

Longevity is central to the Bill; it needs to be sustainable for as long as possible. Although the Bill is overdue, it has been superseded by human rights and other legislation.

In Committee, we even discussed the export of cows in formaldehyde. I think that they should be exported, but that is a personal view. How does one give a licence for a work of art? For example, Greece seeks the return of the Elgin marbles, but could we scrutinise such an export licence in such way that the best interests of the United Kingdom remain at the forefront of people's minds?

Although many of the amendments have merit, it is up to Parliament to scrutinise each one of them so that we can police and monitor the Bill. Will the House have the time and the ability to scrutinise complicated issues so that they are examined properly? The answer is probably no. It worries me that the Government want to be able to pass measures as quickly as possible without their receiving the necessary scrutiny.

In Committee, the hon. Member for Redcar (Vera Baird) made an interesting point about East Timor and Hawk jets. I have not quite got to the bottom of the difference between a Hawk 100 and a Hawk 200, but would a licence cover the point that those jets are a dual-purpose piece of kit? The jet can be used as a trainer or as a fighter and bomber, and I do not understand how the House will be able to consider those points in the depth that is necessary for us to be able to take a decision. I am not an expert in chemistry but dual-purpose kit from chemicals is another of the biggest problems that we face. We have had our fingers burned so often that we need a usable and sustainable Bill that Governments will be able to stand by for a long time to come. If they cannot, that suggests that the Bill will be flawed even before it comes into force.

For the longer term, we need to consider the points that I have raised about technology, dual-purpose kit and the way in which licences are introduced. If we do not get the Bill right, we shall suffer for a long time and, especially, under European legislation. Such legislation will be draconian if we are not careful.

Robert Key (Conservative, Salisbury)

The House has heard a number of firsts in the debate. My hon. Friend the Member for Bridgwater (Mr. Liddell-Grainger) may have been unavoidably detained, but he was a loyal attender in Standing Committee. He has scored a first. As far as I am aware of, he is the first person to have mentioned the export of works of art in the debate. I congratulate him. We should not forget that the Bill is also about the export of works of art.

The hon. Member for Aberdeen, North (Mr. Savidge) scored another first. He is a doughty man of Surrey, a good grammar school boy and he has made many contributions in the debate. However, it is absolutely astonishing that he should pop into the Chamber to say that he has been watching us on telly and to make a derogatory speech before popping back to watch us on telly again. If he is out there, let me tell him, "We are still at it. How's the tea break?" That was a first, and I congratulate the hon. Gentleman on his sheer audacity.

However, the hon. Gentleman hit a nail on the head when he talked about unreasonable instructions and interventions. The point is that technical and minor provisions in the Bill matter most. There have been some brave words spoken on both sides, but those brave words might lead to lawyers' paradises if we are not careful. [Interruption.] Ah, I welcome the hon. Member for Aberdeen, North back to the Chamber. I am envious of his opportunity to take a tea break or whatever it may have been that detained him in his room.

The problem of defining the small print and the detail has been repeatedly mentioned. It is always a pleasure to hear from the hon. Member for Newcastle-under-Lyme (Paul Farrelly). I used to read him assiduously when he was business editor of The Independent on Sunday and The Observer. I have a feeling that his case was a continuation of previous investigations. The hon. Member for Wimbledon (Roger Casale) put his finger on the button when he said that the problem was getting the balance right between the ideals and aspirations, and what is practical and workable.

The Minister must explain why sustainable development is not mentioned in the Bill when it was included in the draft version. I am going to throw him a lifeline: I suspect that the DTI has been framed by other Departments. The right hon. Member for Coatbridge and Chryston (Mr. Clarke) and I, as former Ministers, recognise when a Minister has been framed. I suspect that the Minister and his officials were told to remove the reference to sustainable development before other Departments realised that they, too, had a problem. It is tempting for the Opposition to row in with those who want to cause serious trouble, but I shall resist that if the Minister gives a credible explanation of why it is not mentioned.

It is important that the Minister recognises our disappointment in Committee when he did not give us a word of explanation for that decision, even though I made a gentle request for it when I said:

"I should be very grateful for a brief explanation as to why that clause disappeared from the draft Bill".—[Official Report, Standing Committee B, 18 October 2001; c. 148.]

If the Minister can give us a convincing answer to that, I will be the first to be pleased because I recognise the Government's difficulty.

The hon. Member for Moray (Angus Robertson), who has, I think, also caught an early plane back to the north, made an interesting point about the Swedish system. There are problems with it, because that system did not stop Sweden exporting fighter aircraft to South Africa as part of a multinational arms deal, so I am not sure that it has much to commend it.

The hon. Member for Ceredigion (Mr. Thomas) was a little wide of the mark, however, when he said in last night's debate that the answer lies in Brundtland. He stated:

"I am sure that the Minister is familiar with the Brundtland definition, which states that sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their needs. That has been accepted as the standard international definition of sustainable development for many years."—[Official Report, 7 November 2001; Vol. 374, c. 319.]

My goodness, if that is a legally watertight definition that the Government are expected to include in the Bill, I am in the wrong profession; I should definitely have been a lawyer. The Brundtland definition is full of aspiration and miles away from practicality. If the Government are being urged to adopt that, I have great sympathy with them.

In last night's debate on Second Reading of the International Development Bill, I read with great interest the explanatory notes that had been prepared by the Department for International Development. Paragraph 19 states:

"The terms 'poverty', 'sustainable development' and 'welfare' are not defined in the Bill. It is considered that to do so might reduce the United Kingdom's ability to offer assistance. Subsection (3) of clause 1 ensures that the Secretary of State will not be bound to take a view of sustainable development that is exclusively or excessively economic on the one hand or exclusively or excessively environmental on the other."

Clause 1(3) of that Bill states:

"'sustainable development' includes any development that is, in the opinion of the Secretary of State, prudent having regard to the likelihood of its generating lasting benefits for the population of the country or countries in relation to which it is provided."

It sounds as though the Secretary of State for International Development has had a chat with the Chancellor of the Exchequer, as prudence was cited in the definition as an important reason why Ministers should or should not act. I can see why people believe that such a broad definition is not acceptable.

Moreover, in reply to yesterday's debate, the Under-Secretary of State for International Development, the hon. Member for Leeds, Central (Hilary Benn)—whose credentials on the issue are surely impeccable—said:

"I think that we have to ensure that the concept"—

of sustainable development—

"is not captured either by those who take an entirely economic view of sustainable development or by those who see it principally as an environmental concern—something that I learned very forcefully when I was in Indonesia, where the economics of sustainable livelihoods in a forest community are about trying to balance those two sometimes competing demands. I think that clause 1(3) is not so much a definition as a safeguard against the narrowing of that concept by anyone who has a particular definition favouring one concept or the other."—[Official Report, 7 November 2001; Vol. 374, c. 335.]

As I said, the Opposition are offering the Minister a lifeline. We do not wish to oppose new clause 1 or to support amendments that would tie his hands to a definition of sustainable development from which only lawyers could benefit and which would detract from the judgment of the relevant Secretary of State. The matter now rests very much with the Minister. The House is owed an explanation of why the Government left out the paragraph on sustainable development from the table to the schedule, and I hope that the Minister will be able to put us right.

Nigel Griffiths (Labour, Edinburgh South)

One of the great pleasures of being a Minister is the opportunity to listen and respond to the many thoughtful and well-informed speeches made by colleagues who take a great interest in the issues under debate. We have heard a number of such speeches today. We have also heard comments expressing our constituents' concerns about these issues. I shall address some of the issues that have been raised in the debate, almost in the order in which they were raised.

Some hon. Members mentioned the time factor in the tabling of some of our amendments. I think that I have explained fairly clearly that, in Committee, certain aspects of the structure were unclear. Hon. Members suggested that the schedule should be applied to clauses 4 and 5. Taking those concerns on board with the Government's own concerns about the Bill's structure creating the risk of a loophole in the control powers, we concluded that it was necessary to amend the Bill as we are proposing in new clause 1.

There is no question of the Government trying to rush through amendments at short notice. I wrote to members of the Standing Committee to explain that the new clause had been tabled partly in response to concerns that were expressed in Committee. I believe that the new clause is a necessary simplification and clarification of the Bill.

I thank the hon. Member for Salisbury (Mr. Key) for his kind offer of a lifeline. I shall not be taking him up on that offer, but I will allow him to save the lifeline for the Conservative party, which will have more need of it than I do. I also did not license the parachute that he mentioned in his opening remarks.

I want to make one thing very clear on sustainable development. This Government have done more than any previous Government to promote the interests of the third world, both by spearheading the international campaign to relieve third-world debt—which has had a tremendous impact—and by providing a lead in writing off debts. We have led the drive to ensure that the people of the third world have a right to health, education and freedom from poverty. It is with that in mind that I should like to deal with some of the comments that just do not stand up.

It is not true that sustainable development is not fully covered in the Bill. It is clearly included in the criteria against which applications are considered. It is not true that the Government cannot refuse an export licence on grounds that are not included in the schedule. I hope that my colleagues are reassured on that point. It is not true that sustainable development could not be a factor in a judicial review. My hon. Friend the Member for Manchester, Central (Mr. Lloyd), for whom I have great respect, put to me the direct question: would the use of sustainable development as a basis for the refusal of a licence stand up to judicial review? The answer is yes, it would.

There are legal opinions on this issue, but I do not have to remind the House, which is replete with lawyers, that an opinion is exactly that. An opinion is not a legal fact, otherwise cases would never reach court.

Vincent Cable (Liberal Democrat, Twickenham)

Has the Minister seen the contrary legal opinion? Before reaching a firm conclusion, is he willing to review it?

Nigel Griffiths (Labour, Edinburgh South)

I have seen the opinion. The NGOs who commissioned it did me the great courtesy of coming to my office to discuss it with me. I am not a lawyer and so cannot pass legal judgment on it, but the opinion has been seen by the Government lawyers and it is that which has allowed me to respond so robustly and, I hope, helpfully. I am grateful to my hon. Friend the Member for Manchester, Central for having raised that issue and enabling us to put our position clearly on the record.

Tony Worthington (Labour, Clydebank and Milngavie)

I am not convinced by the Minister's argument. There is clearly a difference of opinion, so it would seem sensible for the Government to put the matter beyond all doubt by adding sustainable development to the criteria, so that we have no court problems in future. One of the benefits of scrutiny by parliamentarians is that we can get rid of the ambiguities that the Minister admits remain.

Nigel Griffiths (Labour, Edinburgh South)

No words spoken in the House and no Act of Parliament put anything beyond doubt. We know that from the plethora of court cases that arise. It is important that hon. Members respect the fact that when direct questions are put to me and I answer yes or no, we put beyond doubt the issues raised and we make clear our opinion on a legal opinion. The world is replete with legal opinions.

Many hon. Members raised the question of sustainable development, and rightly so. Several pointed out, wrongly—I am sure that that was because they have misread briefings or the Bill—that sustainable development is the only one of the consolidated EU criteria that is not included in the Bill.

Vincent Cable (Liberal Democrat, Twickenham)

Will the Minister give way?

Nigel Griffiths (Labour, Edinburgh South)

No. I have given way once to the hon. Gentleman and I want to make some progress. I do not know whether he was one of those who said that—we will check Hansard—but several hon. Members did, and at least one is willing to admit to having done so.

Let us be clear. Another of the criteria that is not listed in the schedule is criterion 7, which covers diversion. I explained that if diversion were to be listed in the schedule, it would give us the power to impose controls by order solely on the grounds that the goods might be diverted, which would in effect allow us to control all exports of any goods because any goods might be diverted. That goes to the heart of the distinction between the schedule, which allows us to impose controls, and clause 7, which requires us to take the criteria into account when taking licensing decisions.

Nothing in the Bill will affect one jot the Government's current ability to take criterion 8—sustainable development—fully into account. The Bill makes it clear that matters in the schedule are not the only matters that can form the basis of a licensing decision. The purposes essentially determine the reasons for which controls can be imposed on particular goods and technology.

Another issue was raised in that context.

Roger Berry (Labour, Kingswood)

Will my hon. Friend give way?

Nigel Griffiths (Labour, Edinburgh South)

I shall finish what I was saying and then give way.

It has been said that no matter how benign, effective or otherwise I am as a Minister, or the Government are, a future Government may choose to ignore the EU criteria because they are not in the schedule. Even if a future Government tried to withdraw or water down the guidance on the criteria in the Bill, the EU code of conduct on arms exports would continue to apply until specifically withdrawn by the EU in its common foreign and security policy formation. I see no prospect of that happening. If anything, the direction of continuing discussions within the EU is to strengthen the code.

Roger Berry (Labour, Kingswood)

Does my hon. Friend not accept that there will be less doubt if sustainable development is one of the criteria in the Bill?

Nigel Griffiths (Labour, Edinburgh South)

There may also be less flexibility. It is important to ensure that the EU code of conduct on arms exports is applied throughout the EU and is strengthened. We have been at the forefront of that process.

The issue of Lord Scott's opinions has been raised. The Bill clearly addresses his criticisms by setting out in the schedule the reasons for which controls may be imposed on the export of goods, the transfer of technology, the provision of technical assistance and trade in goods, and further by making it clear in clause 7 that the consolidated criteria will continue to inform day-to-day decisions on export licences.

Angus Robertson (Scottish National Party, Moray)

Will the Minister clarify whether he is asserting that the EU code of conduct is legally binding?

Nigel Griffiths (Labour, Edinburgh South)

The Government are taking into account, and must do so, the consolidated criteria in the EU code of conduct. We have done that, and are continuing to do so. I have made it clear that the possibility of a future Government changing the policy and trying to duck their responsibilities is virtually non-existent.

My hon. Friend the Member for Newcastle-under- Lyme (Paul Farrelly) referred to some specific examples, but as he knows, I cannot comment on individual cases. However, he raised an important point of principle on which I think the House will want to have the Government's views on record. I can assure my hon. Friend and the House that the Bill will give us the power to control UK citizens and anyone operating in the UK, which I think was the point that he was making. He was concerned about someone who was not a UK citizen who was a trafficker and broker in arms to arms-embargoed destinations such as Zimbabwe. Such people will be caught. That is important.

I shall ensure for the benefit of the House—

Andrew Lansley (Conservative, South Cambridgeshire)

Will the Minister give way?

Nigel Griffiths (Labour, Edinburgh South)

No. I want fully to answer the point that my hon. Friend made. No doubt will be created by the current formulation in the Bill. The code is not legally binding, but there is no realistic prospect of any Government withdrawing from it. It is a political commitment, and one that causes me to urge on the House acceptance of the Government's amendments and the rejection—

Andrew Lansley (Conservative, South Cambridgeshire)

rose—

Nigel Griffiths (Labour, Edinburgh South)

No, I will not give way to the hon. Gentleman because he has not been in the Chamber throughout the debate.

I ask the House to reject the amendments that have not been tabled by the Government for the very good grounds that I have set out.

Question put and agreed to.

Clause read a Second time.

Amendment proposed to the proposed new clause: (a), in line 4, leave out from "order" to end of line 6 and insert—

'(a) has been laid before and approved by a resolution of each House of Parliament, and

(b) provides—

(i) for the order to expire, or

(ii) for the provision imposing them to cease to have effect,'.—[Mr. Key.]

New Clause 2 — Exercise of licensing power under control orders

Nigel Griffiths (Labour, Edinburgh South)

I beg to move, That the clause be read a Second time.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this it will be convenient to discuss the following:

New clause 3—Licence revocation and end-use controls—

'(1) The Secretary of State may revoke, suspend or amend any licence issued under any of the powers conferred by this Act where any of the parties referred to in the relevant licence fail to honour their export licence obligations.

(2) The Secretary of State shall revoke any licence issued under any of the powers conferred by this Act where the execution of the licence:

(a) results in any of the consequences referred to in the Table in paragraph 4 of the Schedule, or

(b) results in consequences which contravene any of the consolidated criteria relating to export licensing decisions announced to Parliament by the Secretary of State on 26th October 2000.

(3) For the purpose of sub-section 1 "export licence obligations" will include, but not be limited to, end-use undertakings stipulated in the relevant licence or end-use documentation.

(4) Upon the revocation of a licence, all future exports of goods, transfers of technology, provision of technical assistance or trade in controlled goods authorised by or relating to the licence shall be cancelled.

(5) The Secretary of State may by order make provision for follow-up monitoring of the use made of goods exported, technology transferred, technical assistance provided or goods traded, in order to establish whether the end-use commitments entered into as a consequence of applying for an export licence (required by an order under section 1, 2, 4 or 5) are being honoured.'.

New clause 4—Prior parliamentary scrutiny—

' As part of the licence application process required by an order under section 1, 2, 4 or 5, the Secretary of State may take advice from a Parliamentary Select Committee.'.

New clause 6—Prior parliamentary scrutiny—

' The Secretary of State may consult with any Select Committee of the House of Commons or the House of Lords before a determination regarding an application for a licence required by an order under section 1, 2, 4 or 5 is completed.'.

New clause 7—Revocation of licences—

'(1) Any licence or Community Licence granted under this Act, or having effect as if so granted, may be amended, suspended or revoked by the Secretary of State at any time and in such circumstances and on such terms as she thinks fit by serving notice to that effect on the holder of the licence or Community Licence.

(2) For the purpose of this clause "such circumstances" and "such terms" will include, but not be limited to, breaches of the end-use undertakings stipulated in the relevant licence or end-use documentation.

(3) With immediate effect from the date of revocation,—

(a) any further exports of goods, transfers of technology, provision of technical assistance or trade in controlled goods authorised by the licence, and

(b) the provision of further equipment, technology, training, transport or technical, promotional, or financial assistance in support of goods, technology or technical assistance already supplied under the relevant licence shall be cancelled.'.

Nigel Griffiths (Labour, Edinburgh South)

New clause 2 is a Government new clause, and I shall explain why it is necessary. I shall also explain why I consider that new clauses 3, 4, 6 and 7 should be withdrawn.

New clause 2 follows as a consequential amendment to the group of amendments relating to new clause 1. In effect, it replicates the second half of the current clause 3 relating to the reasons that may be taken into account in decision making on export licences. I urge hon. Members to accept it.

New clauses 3 and 7 deal with licence revocation and end-use controls. Both would give the Secretary of State the power to revoke, suspend or amend any licence issued under the Bill. They also allow revocation where obligations under end-use undertakings were not honoured, and require the Secretary of State to revoke the licence if its execution had any of the consequences listed in the table of the schedule or contravened the consolidated criteria.

New Clause 3 would allow the Secretary of State to make provision by order for end-use monitoring of any exports under the licence; new clause 7 to cancel the provision of various goods or services in support of any goods, technology or technical assistance already supplied under a licence with effect from revocation. The new clauses are unnecessary, because the Government already have powers to revoke, suspend and amend export licences. Those powers will be carried forward in the new Bill.

It might be helpful if I explained the present position, and the position under the new Bill. Under the Import, Export and Customs Powers (Defence) Act 1939, the Secretary of State has power to revoke, suspend or amend any form of licence, whether open or individual. Those powers apply to licences themselves. Details of revocations are included in the annual reports on strategic export controls. Revocation might take place when there is clear evidence that an undertaking given by the end user is likely to be broken because the situation in the recipient country changes significantly after a licence is issued. Revocation might also apply when new information comes to light after a licence has been issued that would have led to the refusal of an application.

If we had reliable evidence of a past breach of an end-use undertaking or the risk of diversion in relation to a specific destination, those factors would certainly be taken into consideration in the assessment of any future licence applications involving that end-user destination.

As for the new Bill, the dummy orders with which we provided the Committee contain revocation, suspension and amendment provisions. The dummy orders on the export of goods, the transfer of technology and the provision of technical assistance—all of which are mentioned in the new clause—provide for the revocation of licences in article 10(5) on page 10. The dummy order on trade in controlled goods provides for revocation under article 5(2)on page 4. The example we have provided of a dummy order giving effect to an embargo includes revocation in article 4(2) on page 2.

The circumstances in which revocation would be considered are the same under the Bill as in existing legislation. The power of revocation, suspension and amendment follows the well-established precedent established in the 1939 Act, in which related secondary legislation also contained the revocation provisions. As for the Exports of Goods (Control) Order 1994, a copy of which we supplied to the Committee before the recess, article 7(1) mentioned the revocation control. Decisions to revoke licences are made by the Secretary of State on a case-by-case basis, in the light of all the relevant information.

As I have said, if there were reliable evidence that an end-use undertaking was about to be breached, revocation would be considered. If new information came to light that would have led to a refusal against the consolidated criteria, revocation would be considered. If circumstances changed significantly in the end-use destination, revocation would be considered.

Revocation is of course a serious step, with significant consequences for the exporter as well as the UK's reputation as a supplier. All such decisions to revoke need to be assessed carefully. Revoking a licence will prevent the export of any as yet unexported items covered by the licence. What the consequences would be for other non-licensable items related to items exported under the licence would be a matter for the relevant contract, which is of course a legal and commercial matter between the exporter and the customer, rather than the licence. Rather than imposing an obligation to revoke licences in the event of any of the consequences listed in the table of the schedule, or contravention of the consolidated criteria, we should take those factors into account at the licensing stage. We already do that.

Failure to take the relevant factors into account in either case would open the decision to possible successful legal challenge. Imposing an obligation to revoke licences in certain circumstances would also impose an obligation on the Government to carry out end-use monitoring of every export. The Government do not believe that the end-use monitoring issue needs to be addressed in new primary legislation. Of course, it is important that arms exported from the UK should not be misused or diverted to any undesirable end-users. Although it is difficult to see what the measure could practically do to minimise the risk of that happening, the Government have already shown that they are ready and able to monitor the end use of defence exports in circumstances where that can make a genuine contribution to our efforts to prevent diversion or misuse and, as I have explained already, we possess the power of revocation.

John Battle (Labour, Leeds West)

Can my hon. Friend tell me whether that power has ever been used?

Nigel Griffiths (Labour, Edinburgh South)

Yes. I assure my hon. Friend that the power has been used. It is one of the criteria that I as Minister and my predecessors have taken into account. I will send him the section from the annual report that we produced that shows a number of licences that have been revoked for that purpose. I am grateful to him for giving me the opportunity to explain that clearly to the House. It is a real power: a power that has been used, not a power that has perhaps lapsed or is ineffective. The key is that the Secretary of State possesses the necessary powers. The Bill itself does not need to include detailed provisions about that matter, and I invite hon. Members not to press the new clause.

New clauses 4 and 6 on prior parliamentary scrutiny provide for the Government to take advice from a parliamentary Select Committee on export licence applications in advance of licensing decisions. The Government's response to the Quadripartite Committee in July this year set out the reasons why we believed that such a system of prior scrutiny would not be right in principle, and could not be made to work in practice without having a significant adverse impact on the efficiency and effectiveness of the export licensing process. The Government have made it clear that they see Parliament's role as one of scrutinising decisions after they have been taken and inputting it into policy, not taking part in the decision-making process itself.

Martin O'Neill (Labour, Ochil)

I am intrigued by the impact that prior scrutiny would have on the efficiency and good working of the export licence department. My colleagues in the Select Committee on Trade and Industry have considered the matter over the previous two Parliaments and will probably return to the issue in this one. Over the years, we have found it very difficult to see what additional problems could be visited on the poor civil servants in that department. Perhaps my hon. Friend could be explicit as to which sections, which areas and which difficulties are likely to create extra work for those poor civil servants who have been grossly burdened over the years. The fact is that the improvements have increased efficiency. I would like to know how there will be a regression in the service as a consequence of prior scrutiny.

Nigel Griffiths (Labour, Edinburgh South)

I would be happy to take my hon. Friend on a tour of the department to give him a number of examples, but to answer his point directly, it is vital that there should be no delays when decisions are taken on licences. We have set targets to clear decisions in 20 days, but as he and the House know, consultations will take place, especially on those licences where we are determined to ensure that there is no risk of diversion of end use, where we are determined to avoid an embargo, and indeed where circumstances have changed in the country. We are determined to ensure that the input from colleagues at the Ministry of Defence, the Foreign and Commonwealth Office and indeed the Department for International Development are firmly taken into account. Having considered the Quadripartite Committee's evidence, we have concluded that further delays would be introduced. I do not have to tell my hon. Friend about the necessity of convening a Committee and supplying papers to its members so that it could meet to consider them. It is interesting that very few legislatures have any form of prior parliamentary scrutiny. My hon. Friend nods in acknowledgement. I have some criticisms of those that do. It is vital that Parliament has the ability to hold the Government to account and in my remarks I do not mean to underestimate either the concern or the need to ensure that there is proper scrutiny.

Ann Clwyd (Labour, Cynon Valley)

My hon. Friend mentioned other Parliaments. The largest arms exporter in the world is the United States and it has a system of prior scrutiny, which some of us have had an opportunity to study at first hand. If the largest arms exporter in the world does not find it a problem, why should this Government?

Nigel Griffiths (Labour, Edinburgh South)

I know that my hon. Friend has real concerns about this. Let me refer her to some of the key briefings that we have had on this matter. One of them freely acknowledges that the United States has prior parliamentary scrutiny, but says that enforcement is ineffective in far too many cases. That is one of the key problems of the American system and anyone who prays it in aid.

We want an effective system and that is why we have taken key decisions in the Bill to ensure that we have the most practical and tough regime. Parliamentary scrutiny at the appropriate stage is important. Our annual reports on strategic export controls have opened up the Government's export licensing policy and brought about unprecedented scrutiny and debate. I know that hon. Members have widely welcomed the reports and that industry and other non-governmental organisations have been complimentary.

I am pleased that the Bill will make the publication of an annual report a statutory requirement. In view of all that, I ask hon. Members not to press their new clauses. For the reasons that I gave, I commend new clause 2 to the House.

Robert Key (Conservative, Salisbury)

It is not my intention to oppose Government new clause 2, but I need to concentrate on it for a few minutes because it has changed significantly the wording and the Government's message in this legislation. I need to understand exactly what the Government mean.

In Committee, there was an interesting exchange between the hon. Member for Richmond Park (Dr. Tonge) and the Minister. The hon. Lady said:

"I must dispute the Minister's claim that subsection (4) covers actual people. We are talking about people who are training to be mercenaries and to fight, perhaps with their bare hands. We are not talking about goods and services or technology of any description."

The Minister replied:

"I should not have to tell the hon. Lady that mercenaries need equipment and technology; they thrive on it. They do not generally go around using their bare hands; they are well armed. It is clear from the examples that we have been given of websites and from advertisements that people will not train in America without the equipment that the hon. Member for Salisbury mentioned. It is important to note that people provide services, and mercenaries provide a despicable service that requires an infrastructure."—[Official Report, Standing Committee B, 16 October 2001; c. 99.].

That is significant because new clause 2 refers to paragraph 4D of the schedule. Paragraph 4D says that regard shall be had to

"(a) acts threatening international peace and security".

New clause 2(2) says

"nothing in paragraph 4, 4A, 4B or 4C of the Schedule limits . . .

(b) the matters to which regard may be had in the exercise of any licensing power under a control order."

I ask for clarification because there seems to have been a change. In the interests of their legislation, the Government needed to change the wording.

I drew attention in Committee to the European Union June 2000 agreement on the control of technical assistance related to weapons of mass destruction, and pointed out that it embodied important principles. In paragraph 45 of command paper 5091, technical assistance is defined thus:

"Technical assistance, as defined in the joint action, means any technical support related to repairs, development, manufacture, assembly, testing, maintenance, or any other technical service and may take forms such as instruction, training, transmission of working knowledge or skills or consulting services and includes oral forms of assistance."

The hon. Lady knew that the EU had included people in its documentation and that the Bill, as drafted at that time, did not. However, the new wording seems to include people. If that is so, I warmly welcome the fact, but must therefore assume, unless it is explained otherwise, that that covers the problem of mercenaries.

I perceive that although we signed up to that EU document, there is a gap in the Bill concerning mercenary activity. The Foreign Enlistment Act 1870 prevents British subjects from serving against countries with which the UK is at peace. However, there has been no successful prosecution under that Act since its introduction more than 130 years ago.

The Government's lack of power to regulate mercenaries was demonstrated in December 1989, when the United Nations General Assembly adopted the international convention against the recruitment, use, financing and training of mercenaries. According to the former Foreign Office Minister, the hon. Member for Manchester, Central (Mr. Lloyd), whom I am glad to see in his place, the Government had no plans to sign the convention. In a written answer in 1998, which I do not for one moment expect him to remember, he said:

"We have no plans at present to sign and ratify the International Convention against Recruitment, Use, Financing and Training of Mercenaries. We have doubts concerning its legal enforceability in the United Kingdom. We are looking at options for national domestic regulation of military companies."—[Official Report, 15 June 1998; Vol. 314, c. 16W.]

Then we had the Legge report on the Government's handling of the situation in Sierra Leone and the activities of Sandline International. At that stage, the Foreign Office promised:

"To issue within 18 months a Green Paper on mercenary activity, taking account of discussions with our partners in the UN, the EU and other international fora. The Paper will address both the international and the UK context."

That was in the second report from the Foreign Affairs Committee, session 1998-99, on Sierra Leone, Cmnd. 4325. The Green Paper has yet to emerge.

On 6 April 2001, in a written answer at column 298W, the then Minister of State, Foreign and Commonwealth Office, the hon. Member for Leeds, West (Mr. Battle), whom I am also delighted to see in his place—I would not for one moment expect him to remember what he said all that time ago either—expressed his regret that the Green Paper expected in November 2000 had not been published.

I then raised the matter with the Home Secretary during a statement on terrorism a few weeks ago. Since then, we have been told that the Foreign Office is making some progress on the matter. On 29 October, the Financial Times reported:

"The Foreign Office said yesterday: 'Work on the green paper is now well advanced and we hope to be able to inform parliament about its publication soon.'"

My hon. Friend the Member for North Wiltshire (Mr. Gray) has received a written answer this afternoon from the Foreign and Commonwealth Office that said that progress was being made and that it hopes to have something to report soon.

We all want to address the problem of mercenaries; we are agreed on that. Is this an opportunity for mercenaries to be brought into the scope of the Bill? The Minister was clear in his courteous and detailed explanation why they were not included previously. My sole purpose in raising the question is to get an answer in this debate to the query about mercenaries.

Roger Berry (Labour, Kingswood)

In speaking primarily to new clause 7 and the issue of revocation, I do so in the spirit of my speech on Second Reading. I warmly welcome the Bill. Together with other Government measures taken over the past four years, we now have a policy on arms exports and an attitude to controlling exports that did not exist previously. That contrasts sharply with the regime prior to May 1997. [Hon. Members: "Hear, hear."] I thought I had better get the "Hear, hears" at the beginning.

It is in that spirit that I wish to say that friends and supporters of what my hon. Friend the Minister is doing feel that we have a responsibility to point out ways in which the Bill can be improved. With other colleagues, I tabled new clause 7 in that spirit. I believe that the Government should have the explicit authority to revoke licences where end-use undertakings or other licence obligations have been broken. That should be an explicit authority in the Bill.

I heard what my hon. Friend the Minister said; namely, that the Government already have the power to revoke licences and that the new clause was unnecessary. If we look at past experience, we can see why some of us feel that the Minister is perhaps being slightly optimistic. With others, I had the pleasure of serving from the beginning on the Quadripartite Select Committee and we looked at recent experience. When I am told that the Government have no problems in revoking licences, I think of some examples that the Committee looked at in depth—in particular I think of Hawks spare parts, Indonesia and Zimbabwe.

First, I wish to refer to Indonesia. In July 1997, the Government announced new criteria to be applied to arms exports. These were warmly welcomed by all those who felt that it was time to get the trade under firmer control. I very much welcomed the criteria announced at the time. The Government said also at the time that it would be neither realistic nor practical to review existing export licences. The one area where that caused most concern was the existing outstanding licences for arms exports to Indonesia.

In May 1997, the Labour Government inherited 125 active export licences for Indonesia. I will not explain how we got into that position; others may wish to comment. As hon. Members know, there was particular concern about the export of Hawks to Indonesia, given the human rights violations in East Timor. The Government's view was that it was not realistic or practical to review existing licences. The Quadripartite Select Committee interviewed Ministers and produced a report that commented on the matter.

The Committee did not think it impractical to review 125 licences, but we made a note that the reason the Government felt that it was not realistic was based on legal advice about the potential for legal action by exporters if individual licences were revoked. We requested sight of that advice and, perhaps for perfectly understandable reasons, the Government declined to respond to that invitation. That is one example of where there is doubt about the Government's ability to revoke export licences if they so wished. In that case, we had a change of Government and a change of policy. That new policy was applied to new export licence applications—and full credit to the Government for applying it—but the Government felt that they could not review existing licences for fear of legal action.

The second example is much more recent. There were similar concerns about end-use and contractual obligations regarding the transfer of Hawk spare parts to Zimbabwe in February 2000. I shall briefly quote the relevant part of the Quadripartite Committee's report of July 2000:

"On 24 February 2000 the seven outstanding licence applications for Hawk spares were granted. It is not disputed that Hawks have been used in the intervention in the DRC, and there remains a clear risk that they might be used again. Without these spares it has been widely reported that two of the Hawks would be unable to operate . . . The particular difficulty seen by the Government in the case of the Hawk spares arose from the contractual obligation on BAE Systems to facilitate the supply of spares for 15 years after delivery of the aircraft."

As it happens, that contractual obligation was subsequently overridden by a ministerial licensing decision and an arms embargo was announced in May, but in February the argument was, "Gosh, we cannot go ahead with what we would like to do—restrict spares supplies to Zimbabwe because the aircraft are being used in the Democratic Republic of Congo—because of legal obligations". In the report of the Quadripartite Committee published in July 2000, that discussion was noted word for word.

The key issue is that when the Government are deciding whether to revoke an export licence due to, for example, a breach in end-use undertakings, the Government must not be compromised by the risk of legal challenge by the exporter. The Minister, in good faith, has said that he does not believe that that situation need occur, given the Government's existing powers. I have provided him with two examples—there are others, but I shall keep my comments brief—where real concerns were expressed by Ministers at the highest level to the Quadripartite Committee about the Government's existing legal powers. By amending the Bill to include the power to revoke licences for breaches of export licence obligations, the Government would lessen the likelihood of legal challenge and send a clear signal that problems associated with end use were taken seriously.

I am pretty sure that there is no disagreement on that. In article 10(5) of the dummy order on export of goods, transfer of technology and provision of technical assistance, the following statement appears:

"Any licence or Community Licence under this Order, or having effect as if so granted, may be amended, suspended or revoked by the Secretary of State at any time and in such circumstances and on such terms as she thinks fit by serving notice to that effect on the holder of the licence or Community Licence."

Those words happen to be the same, word for word, as the first subsection of new clause 7.

Roger Casale (Labour, Wimbledon)

Will my hon. Friend clarify his argument? Is he saying that, in the instances that he has mentioned, the licences should have been revoked simply because there had been a change of policy and a change of Government, or had there been material changes in the use to which those arms were being put and the circumstances in which they were being used?

Roger Berry (Labour, Kingswood)

Because of legal considerations, the Government felt under some obligation to supply spare parts that was contrary to the stated aims of the Government's arms export policy. That is the concern: that there was a conflict, arising from the fact that the Government did not believe that they could interfere with existing licences. For example, in the case of the supply of spare parts for Hawks in Zimbabwe that were used in the DRC, the company had an inherited legal obligation to supply spare parts, so the Government felt that, despite the fact that it was contrary to their policy, they could not act.

Given that the words that form the bulk of new clause 7 are already in the dummy order that the Government have published, how about another cut-and-paste job?

Given that the dummy order makes it clear what powers my right hon. Friend the Secretary of State wants and will take, I do not understand why those powers cannot be specified in the Bill. A similar argument arose in the previous debate, but we must not forget that problems have arisen in recent times over the revocation of licences. It is not entirely accurate to say that the Government have all the powers that they need, as the Select Committee evidence makes clear.

The power to revoke licences is vital, and should be included on the face of the Bill. 4.30 pm

Vincent Cable (Liberal Democrat, Twickenham)

I wish to speak to new clause 3, which goes over much of the ground with regard to revocation set out so authoritatively by the hon. Member for Kingswood (Mr. Berry), and to new clause 4, which deals with the separate and important issue of price scrutiny.

With regard to new clause 3, many hon. Members are struggling to understand how the Government can use the excuse of legal difficulties to explain what they could not follow through on licences, yet at the same time assure people that no legal problem existed. My hon. Friend the Member for Richmond Park (Dr. Tonge) pursued the question of the Hawk aircraft and Indonesia, and the Zimbabwe case has also been mentioned. Until the hon. Member for Leeds, West (Mr. Battle) intervened a few minutes ago, I had not been aware that the revocation powers had been used successfully. I should be interested to know in which cases those powers had been used, as the impression given in the past was that serious legal difficulties attended their use.

However, the legal difficulties do not affect only those seeking to impose controls. The industry is naturally concerned about its reputation, but any export control system will mean that licences will be revoked occasionally. That is the nature of the industry, as I am sure that those involved are well aware. We believe that clarity in this matter would aid both the industry and those who want to impose controls. Therefore, we should set out clearly and explicitly what revocation means, and under what circumstances it can be invoked.

Regardless of one's views about specific cases or the merits of tougher controls, clarity is to be preferred to the rather mysterious and opaque processes that the Government appear to favour. That is why new clause 3 sets out the circumstances in which the Government would have discretion to revoke licences, and the circumstances in which licences must be revoked. When the breaking of end-use undertakings leads to revocation, the new clause specifies what effect that revocation would have. It would also give the Secretary of State specific powers to follow up and monitor the use made of exports. New clause 3 would therefore make the process much less opaque, and that greater transparency would be more satisfactory for everyone involved.

I am not a lawyer, but the non-governmental organisations have sought advice about the legal implications of the Bill. They have been told that the law is difficult, and that it is becoming more so. That is because more precedents have been established in which abuse of power is cited as grounds for disputing Government actions. That approach is becoming increasingly entrenched in the courts, where it is argued that the legitimate expectations of private persons often can be overridden where statutory duties or overriding policy interests are involved. It will become increasingly difficult for the Government to use their legal powers—such as they are—unless that problem is taken account of properly.

In normal circumstances, the Government would argue in a legal action that there had been a material change of circumstances, but that may not be adequate to allow the Government to enforce their authority in this regard. We want the Government to explain more clearly what their legal powers are, and they should give the House some examples of how those powers have been imposed successfully without causing serious friction.

I should also be grateful for a description from the Minister of how the Government are taking account of the way in which the law is developing. That development and the scepticism of judges are, arguably, making it more difficult for the Government to introduce powers such as those needed for revocation.

New clause 4 involves prior scrutiny—an important issue. I shall not speak at length about that because other hon. Members who have chaired Select Committees or served on the Quadripartite Committee have studied that issue in detail. I shall summarise the key arguments, as I understand them. There has already been something of a game of ping-pong—the Quadripartite Committee reported in July and advocated prior scrutiny and the Government responded to that suggestion, and in a second round the Quadripartite Committee addressed the concerns that were expressed. An iterative process has already taken place, and many of the Government's objections to prior scrutiny have been very carefully considered. I hope therefore that the debate will be somewhat more advanced than those in the earlier stages.

As Labour Members have said, precedents for prior scrutiny exist in the very different political environments of the United States and Sweden. The Government keep arguing that because holes exist in the American system, we should not learn any lessons from it. I have never understood the logic of that argument. There may be holes in the American control system, but that probably has nothing to do with prior scrutiny, which is intended to serve other objectives.

I shall briefly summarise the three arguments that the Government have adduced for not ceding prior scrutiny, the first of which is constitutional. They argue that Parliament, acting in its legislative capacity, may duplicate or conflict with the Executive's role. People who specialise in public and constitutional law have given their advice and they see absolutely no problem with that. Perhaps the Government will explain in a little more detail why they view that as an immovable barrier. That is not at all clear to the lawyers, let alone to the generalists.

The second issue is commercial confidentiality. At the very worst, the integrity of Members and their ability to maintain secrets is being questioned, but perhaps that is not what the Government are worried about; they are probably worried about inadvertent leaks of confidential information. That issue has been argued through before and several key points have been made. First, a good deal of what might be viewed as important commercial information is already released in advance of a licence being agreed. I understand that the publisher of Jane's catalogues already has a process whereby information is exchanged. Codes of conduct and protocols have been developed, and there is not necessarily a problem.

Many of the issues that matter most to business involve the financial details of contracts. There is no reason why prior scrutiny should necessarily involve Members of Parliament considering those details. In any event, the flow of information is controlled by Her Majesty's Government and by the Minister, so MPs involved in scrutiny do not have unlimited access to all the information. If the process can be managed, with those necessary safeguards, most of us are far from clear why Members who serve on the Quadripartite Committee cannot be entrusted with safeguarding the necessary commercial information.

The third argument that is adduced is that the process causes unnecessary delay. Again, it is far from clear why that should be so. The hon. Member for Ochil (Mr. O'Neill), who is Chairman of the Trade and Industry Committee, has already defused that argument in his witty way.

The scrutiny process operates in parallel to that in the civil service, so we are not talking about additional time; there is no inherent reason why we would add to the 20-day process, and those applications that are, in any event, highly politically controversial will not be completed within the 20-day rule. Most of those arguments have already been addressed by the Quadripartite Committee, which, as the Minister knows, is an all-party Committee of respected Members from both sides of the House. I simply hope that he will deal with that all-party wisdom slightly more sensitively than he did during the debate on the previous group of amendments and that we can make progress.

Martin O'Neill (Labour, Ochil)

I take on board the point, made by the hon. Member for Twickenham (Dr. Cable) about the ping-pong process that we have undergone. The issue has been lobbed over the net, one way and another.

I want to speak to new clause 6, and it is fair to say that the experience abroad is variable to say the least. I do not necessarily think that we should pray in aid precedents from elsewhere.

Sweden has a sanitised committee made up of the great and the good and it is chaired by a member of the royal family who may or may not have expertise in such matters. I have been a great supporter of things Swedish and certainly the great traditions of the Swedish Social Democrat Governments of the past. However, on this issue, the Swedish experience is not particularly valuable or one that we should replicate in the United Kingdom. The committee there does not enjoy much confidence from Swedish non-governmental organisations.

In the United States, the Senate Foreign Relations Committee is very much under the control of its chairman. When we were in the United States, the committee had a Republican chairman, Jesse Helms, at the time of a Democrat presidency. To say that the committee became a political football is an understatement.

We must also recognise that the Foreign Relations Committee has a high financial threshold. I think that it examines only those contracts worth more than $14 million, which is a pretty large sum. However, that means that many small, nasty contracts can be swept under the table without anyone knowing about them. The scale of the American task, and the manner in which it is applied, does not lend itself to the type of prior scrutiny that we seek.

As a Quadripartite Committee, we do not seek the power to instigate inquiries. In some sensitive contracts, it would be to the advantage of all concerned to have a broader degree of scrutiny and consultation.

Before the election, we gained the impression that we were beginning to make progress. Indeed, paragraph 33 of the Quadripartite Committee's report of 1 May said:

"We were pleased to have the Secretary of State's assurance that the proposals for parliamentary prior scrutiny we had made in our March 2001 report could indeed be introduced without primary legislation. We continue to recommend strongly that they should be so introduced."

Previous Secretaries of State for Defence, for Trade and Industry and for Foreign and Commonwealth Affairs were of a different cast of mind to the new lot. I realise that my hon. Friend the Minister does not have the final word on all these matters in the high levels of government. Our friendship of more than 25 years will not be prejudiced if I say that he has to run around collecting the money while someone else winds the organ.

Many of us are disappointed that the Government have stepped back from dealing with the issue in the way that we had hoped. In their response to the Select Committee—in Cm 5141—they go over the top. In responding to a point about "Principle", a sentence begins with the word "However". It was obviously not written by my hon. Friend the Minister; he went to a good Scottish school and we were always told never to start a sentence with "however". I shall ignore that small point.

The response to the Quadripartite Committee's report says that

"the Government strongly believes that bringing the Committee into the export licensing process, regardless of the formal status of the Committee's recommendations to Ministers, would in practice be bound to blur this responsibility. The Government therefore remains of the view that, as a matter of principle, it would be wrong for Ministers to be required to consult Parliament before taking decisions in individual cases."

The truth is that the Executive do not wish to share responsibilities with the legislature.

The Government went on to identify several arguments. The hon. Member for Richmond Park (Dr. Tonge) touched on confidentiality. Select Committees are consulted on a variety of matters. They are regularly consulted on a need-to-know basis on security, foreign affairs and defence. Cynics might say that hon. Members are put on a Committee only once they have received security clearance and dubious candidates are not successful, although I am not certain of that.

On commercial confidentiality, the Select Committee on Trade and Industry takes evidence and is sometimes given sight of documents that are commercially sensitive. That privilege is not abused.

John Battle (Labour, Leeds West)

Many applications resemble what in local government terms would be called outline planning permission. They are not detailed applications. Would not it be appropriate for outline plans to be considered by Committees? That would resolve many problems that are presented as obstacles to prior scrutiny.

Martin O'Neill (Labour, Ochil)

My hon. Friend makes a good point, which I shall return to in a moment.

On confidentiality, the Intelligence and Security Committee comprises several hon. Members and representatives of the other place. It is a hybrid Committee, but it deals with matters of great sensitivity. At least two of the participating Departments in the export licence procedure are regularly involved in it. We could be precious and say that the Government's position is insulting to the integrity of hon. Members, but it would be better to explain that we are already involved in the process. There is no need to make a major change to our responsibilities.

We heard that legal concerns are important and that we will create uncertainty for exporters. Any hon. Member who has been confronted by a business in their constituency which is trying to get an export licence will know that they are not innocents abroad. Sometimes they do not prepare themselves as well as they might, but they are aware of the legal uncertainties. It is a bit rich for the Government to accuse us of adding to those.

The other argument is that prior scrutiny will make subsequent scrutiny more difficult, but we would probably not need to give the matter further consideration. We also heard about the old sore of processing delays. That is plumbing new depths in civil service cynicism. If there is sensitivity or difficulty, the DTI et al will move with glacial speed. Weeks become months and months become years. A coup can be followed by a counter-coup, the bad guys become the good guys, and we are not sure whether our enemy's enemy is still our friend. Some of us were involved in defence debates when the late Alan Clark was the Minister who sold everything to everybody, although I accept that he did that at the highest possible price. We recognise the pre-Scott days. Tactics are available if people want to use them.

The argument about resource implications is even worse than the argument about delays. I think it was a Victorian academic who promulgated a list of reasons for not doing what one does not want to do. I think that unripe time was the only cliché omitted from the list.

The Government are missing a serious opportunity. We hear much about the exclusiveness of the Executive, but the Executive now have an opportunity, on a sensitive subject, to share some power and influence with the House, the legislature. We are not demanding that the Executive consult. We are simply saying that they "may consult"; there is no obligation. We are not even saying that they should consult with the Quadripartite Committee; they could consult any of the Committees with the relevant expertise. New clause 6 would provide Ministers with the maximum possible flexibility. It is a very modest amendment.

I would like to think that this discussion will continue. Although we rightly praise the Government for their openness and transparency in so many aspects of the export licensing process, it is becoming ever more apparent that there will always be sensitive issues. There are not many such issues; as we heard, on current reckoning, they number about 50. As my hon. Friend the Member for Leeds, West (Mr. Battle) said, many of those issues can be addressed essentially as outline planning permissions, as applications about applications. For those reasons, I believe that the Government are missing an opportunity.

Some of my colleagues on the Trade and Industry Committee and I have been nominated for the Quadripartite Committee. Some of us will be suggesting that one of the early items on the agenda should be to invite to the Committee assorted Secretaries of State and others, such as my hon. Friend the Under-Secretary of State for Trade and Industry, to justify the nonsense that was given in the July reply and which I have been trying to highlight.

Although I do not think that the issue is worth pressing to a vote now, I think that it will continue to engage the House. We have got our teeth into the issue and we are not going to let go. We also require much better arguments than the ones we received in the Government's July reply, which was disappointing and unnecessarily heavy handed. We could have reached a better compromise and it would not have greatly undermined the Executive's authority. As we say about devolution, power shared is often power, and authority, enhanced. I hope that my hon. Friend will take that message back to his colleagues in the Departments and Ministries. As I said, the issue will not go away.

Ian Liddell-Grainger (Conservative, Bridgwater)

One of the points that the Minister may be missing is that it should be up to Parliament to decide whether an export licence should be granted for an item of national importance—I dare not mention the cow in formaldehyde again. If this Government or a future Government decide to export an item of national importance and they get it wrong, they will be held to account. However, if they allow a proper debate in the House on granting a licence, the House itself will have to decide whether to allow the item to go overseas. The House should be able to make such decisions, as the issue encompasses not only arms but technology, works of art and a plethora of other items for which you as a Minister—

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. The hon. Gentleman is a relative newcomer to the House, but he must use the correct parliamentary language.

Ian Liddell-Grainger (Conservative, Bridgwater)

I apologise, Mr. Deputy Speaker.

Dual-purpose items are another aspect of the debate. Turkey, for example, has a licence to make Land Rover vehicles. Most people think that Land Rovers can do anything, but they may not appreciate that the vehicles have a dual purpose as a weapons base. If we had a problem with Turkey, how could we revoke that licence? Turkey is a NATO member and has many other ties to the United Kingdom. Would the Government be able to revoke its licence? The Minister may be able to sort out the issue, but I do not think that he can. I think that he will discover that the United Kingdom would be placed under enormous pressure by Land Rover and those using those vehicles to continue the licence. I believe that some of the new clauses in this group would provide for greater scrutiny in granting overseas licences. One cannot license a dual-purpose piece of kit in one way and then revoke the licence in another. For the House not to have the chance to scrutinise such matters is a great shame. We should be able to do so.

Ann Clwyd (Labour, Cynon Valley)

This afternoon, I have listened to a lot of sensible comment and heard a lot of nonsense as well. I do not see where the export of art comes into the Bill—perhaps I have missed something. Hon. Members: "It is there". Oh is it? I find it strange that art comes into an arms export Bill. Perhaps my hon. Friend the Minister can explain.

I rise in the spirit of assisting the Bill and the Minister. All of us who served on the Quadripartite Committee—we expect to do so in future—heard all the arguments over a period of months. With my hon. Friend the Member for Ochil (Mr. O'Neill), I visited Sweden and the United States. We were less impressed by the Swedish system of prior scrutiny than by the US system. Certain committees in the United States told us that they could pull the plug on a licence at any time, without fear of penalty—indeed, if they found that conditions in a certain country had changed, they could do so rapidly. That is what I am going to suggest to my hon. Friend the Minister.

For many years, I sat in the Chamber listening to arguments in support of the export of arms to Iraq. If the hon. Member for Bridgwater (Mr. Liddell-Grainger) had been a Member of Parliament at the time, he would have been as frustrated as many of us here today were then. We knew that exporting arms to Iraq in the 1980s and through to 1991 was a ridiculous thing to do—everyone knew the political and human rights situation in that country. I strongly believe that if Parliament had been given the opportunity to vote on the export of those arms, they would never have been exported.

Wisdom does not rest solely in Whitehall. My hon. Friend the Minister should see that our suggestion might serve him in future as a means of getting himself off the hook. All Governments make mistakes selling arms to certain countries—Labour Governments are no exception. Under the Conservative Government, the great scandal was the sale of arms to Iraq at a time when all informed Members knew that the regime could not and should not be sustained.

Forty Back-Bench Members drawn from all three major parties served on the Quadripartite Committee, which encompassed four Committees, as the House knows. After months of careful examination and visits to two countries that operate a system of prior scrutiny, they concluded unanimously that it was both possible and highly desirable to establish a system of prior parliamentary scrutiny in this country. It is worth noting that the Quadripartite Committee included former Defence Ministers.

Initially, we were disappointed by the negative response from the four Secretaries of State, but when the former Foreign Secretary, my right hon. Friend the Member for Livingston (Mr. Cook), appeared before the Committee—I think it was at his last appearance—he said that the Government were listening and that there was an open door. He gave us the strong impression that the Government would support our recommendation. We took on board some of his concerns and objections and in March we offered a refined proposal to the Government. That is the background to the amendment.

The introduction of prior scrutiny would enhance ministerial accountability and would improve the system of checks and balances in the arms export licensing regime. My hon. Friend the Member for Kingswood (Mr. Berry) mentioned Indonesia. I was much involved in questioning the Conservative Government on the export of arms to Indonesia. They ignored human rights abuses that were taking place in East Timor, Jakarta, Aceh, Irian Jaya and many provinces of Indonesia. There was the attempt by East Timor to assert itself as a separate country.

Despite the repeated assurances that were given to the UK Government over the years that UK-supplied equipment would not be used in East Timor, of course it was used. It was used in the water cannons that were used on the streets of Jakarta to spray the students who were demonstrating with red dye so that they could subsequently be picked up by the military and the police. Hawk jets flew over Dili twice. They were used as part of the intimidation of the people of East Timor at a time when they were striving peacefully for independence.

As my hon. Friend the Member for Kingswood said, the Government continued to supply spare parts. I remember well a conversation with the then Foreign Secretary, when we asked what his reasons were. He said that he had legal opinion. We also had legal opinion, and the opinions did not coincide. We have never had sight of the then Foreign Secretary's legal opinion, as my hon. Friend said, not even in the Select Committee. We believe that that opinion could have been challenged. If it had gone to some form of judicial review, the Government would have been in a spot of bother.

One of the powers of the United States is the ability to pull the plugs at any time. I am pleased to hear the Minister say that it is possible to revoke licences if circumstances change. However, would anyone in the House now be sending arms to Israel, for example? If Members had been asked whether they would agree to send arms to Israel, I do not believe that more than a handful would have agreed that it was a good idea. Nevertheless, two export licences were issued for components for combat helicopters and related technology to Israel in 1999–2000. Two open individual export licences are currently in force for the same equipment.

My hon. Friend the Member for Ochil mentioned the objections that the Government had to prior scrutiny. The legal advice that we have had is clear. It is that there is no constitutional impediment to prevent Parliament legislating so as to give itself a role in scrutinising arms export licences. Sub-delegation of the decision-making function need not be an issue as long as explicit reference is made in the Bill to the fact that such a role would be advisory only. The wording in new clause 6 is careful. It makes it clear that the role will be advisory only.

Much progress has been made in opening up the UK export licensing system to parliamentary and public oversight. However, it is entirely retrospective; it is taking place after licences have been granted. There is obviously a role for a parliamentary Committee to scrutinise export licensing decisions before they are granted so as to provide advice to Ministers in difficult cases.

We are talking of only a few contentious licences, not 12,000. We are talking of perhaps 80 to 100 in a year, and perhaps even fewer. The Government spelt out their objections to the first report of the Quadripartite Committee, but they subsequently moved the goalposts. They objected to a certain aspect of the recommendations, but when we responded, the goalposts were moved again. Many of my hon. Friends have knocked the question of commercial confidentiality on the head. We are constantly shown commercially confidential material; it has not leaked from the Quadripartite Committee, for example. Representatives of the defence industry have admitted that commercial sensitivities typically concern pricing data and detailed technical specifications. Beyond requiring information on approximate value, where there are concerns about impacts on sustainable development, that type or level of information would be largely irrelevant to a Select Committee giving prior scrutiny to contentious arms licences.

My hon. Friend the Member for Ochil talked about commercial competitiveness, and my hon. Friend the Minister raised the possibility of a delay. Giving Parliament an advisory role in reviewing licences would not delay the process beyond the target of 20 days per application by adding 10 days to processing. Applications for licences that are most likely to be of concern to Parliament already exceed the 20-day target. I am therefore afraid that the argument about delay must be knocked firmly on the head.

If prior scrutiny causes undue delays, as some argue, as well as damage to the defence industry and harm to bilateral relations, why do the United States Government not feel that it is an issue? As I said earlier, the United States is the largest arms exporter in the world. Whatever the presidency, it is mindful of its defence industry, bilateral relations and operating efficiently. If prior scrutiny is not a problem for the United States or Sweden, I do not understand why it should be a problem for us. I hope that, in due course—perhaps even tonight—the Minister will clarify his reasons for believing that the United Kingdom is a special case.

Tony Lloyd (Labour, Manchester Central)

I, too, had not realised that the Bill controlled the export of artworks and was fascinated by the concept of dual-use Picassos. I was also fascinated by the remarks of my hon. Friend the Member for Ochil (Mr. O'Neill) about the role of the royal family in export licensing. In this country, we are considering the role of our royal family in judging hospital architecture; perhaps that is a comment on the relative values of the Swedes and the British.

New clause 6 goes to the heart of the debate about the relationship that we as a society want with the Executive through a democratically elected Parliament. As the Minister knows, I am one of a number of Members in the Chamber—my hon. Friend the Member for Leeds, West (Mr. Battle) is another—who have engaged in the art of licensing. Of course, practical issues are involved, but we must consider whether prior scrutiny is desirable and helpful. I have enormous respect for the Minister, and urge him to consider the fact that Ministers themselves may be advantaged by that form of engagement with parliamentary colleagues. That point is profoundly important. My hon. Friend the Member for Leeds, West will remember the lonely Tuesday nights and Wednesday mornings that he spent as a Minister; perhaps, at 3 am, he had a red box full of all manner of things and was under enormous pressure to issue or refuse export licences. Ministers are under genuine pressure.

I shall comment briefly on the arguments against prior scrutiny. One of the issues is confidentiality, which is extremely important for Government. It is not the role of Government to breach confidentiality. It is vital that the position of trust assumed by Government is reflected by those in the parliamentary domain who engage in scrutiny. Ironically, in almost every case in which controversy has arisen, information was leaked into the public domain not by the Government, but often by aggrieved manufacturers with an interest in seeing the matter go forward.

My hon. Friend the Member for Ochil noted that through the Intelligence and Security Committee, we already entrust parliamentary colleagues to examine some of the most detailed and secret aspects of Government activity. We could replicate that level of trust by allowing a Committee of trusted Members of both Houses to engage in prior scrutiny. Confidentiality is not a problem that need detain us.

Delay is another issue that has been mentioned. I know from experience that when the Labour Government came to power in 1997, we were faced with an enormous backlog of licensing decisions from the previous Government, who had under-resourced that system which, to be brutally honest, may have operated a little more cavalierly in the near past. The strong improvement that the Labour Government made in the process by tightening controls had a knock-on effect. I pay tribute to those in the various Departments responsible, who faced extraordinary levels of work.

Delays were rarely caused by Ministers, because they would have the relevant paperwork for a relatively short time. I see no reason, either in logic or in the process, why the same time frame would not allow a Select Committee to examine licence applications on their way to the Minister concerned. The problems are not insurmountable and are not a serious limitation on the viability of such scrutiny.

Only a limited number of export licences are genuinely controversial or difficult. They can be difficult for Ministers even if they are not controversial, because they may not be widely known. I know that it would be greatly to the advantage of Ministers, who after all are politicians and represent the political system, to have the advice of trusted and senior colleagues. I have wrestled with such decisions myself and I have known how difficult it is to come to a firm conclusion, sometimes because complex information and uncertainties or unknowns are involved.

In such circumstances, I would have greatly welcomed the opportunity for an exchange of information or an exchange of view with others who also recognised the need for public accountability. The one difference between a Minister and the civil service is that, in the end, a Minister must be prepared to account for every one of those decisions in this place and in the public domain. Parliamentary colleagues understand that, and it is not the role of the civil service to second-guess that job.

I urge my hon. Friend the Minister to give the matter serious consideration. I do not expect him to come to the Dispatch Box tonight and tell us that there has been a change of thinking. I am aware that the issue must also be considered by various members of the Cabinet. However, the argument will not go away. I am convinced that ultimately there will be prior scrutiny through the parliamentary system. That is desirable, and I believe that it will come. I ask my hon. Friend not to close the Government's mind to the matter, and to tell us that he recognises the force of the arguments that have been heard, which was recognised by the former Foreign Secretary. We must keep the debate firmly open. If it is not opened by the Government, it will be kept open by Members of Parliament.

Nigel Griffiths (Labour, Edinburgh South)

I should like to respond to a number of the points that have been raised. First, I shall deal with the issue of mercenaries. Seeking to control mercenaries would go significantly beyond the scope of the Bill, and it is not our intention to do so. The hon. Member for North Wiltshire (Mr. Gray) has received a response on that matter today from the Foreign and Commonwealth Office, the lead Department on that issue, and I hope that that will be satisfactory.

My hon. Friend the Member for Cynon Valley (Ann Clwyd) raised a number of points and I shall touch on the most germane of them. Cultural exports and strategic export controls come under the Import, Export and Customs Powers (Defence) Act 1939. As we are replacing that Act, the Bill has to replace its export control powers in full and needs to cover both those categories. We have decided, mainly for reasons of clarity, that the annual report on cultural exports should be separate from the annual report on strategic export controls.

My hon. Friend the Member for Manchester, Central (Mr. Lloyd) made a powerful speech from the heart, which I commend to hon. Members. Those hon. Members who have not dealt with arms control issues as Ministers—those who have can only ever be a small minority—do not realise the soul-searching and scrutiny that Ministers and civil servants put into the work. That includes those who are making assessments of diverted end use, inquiring into previous use, and going into the real detail of the licences. It is a difficult job, often done under great pressure at all stages.

I am fortunate never to have found myself having time constraints; I have always been able to give due and detailed consideration to the licences. I know, however, that I come in at the end of a long process during which the licences have been scrutinised by colleagues in the Foreign and Commonwealth Office and the Ministry of Defence. In defence of other Ministers before me, I do not believe that all Ministers took the view of our late colleague Alan Clark. Many Ministers from both parties have taken this issue very seriously.

This gets to the heart of the reasons that the new clauses have been tabled. I have thought seriously about the new clauses, but I urge hon. Members to reject them. We are wrestling with the emotive issue of sending arms to countries that have been the subject of controversy, but which are not the subject of United Nations or European Union embargoes. In some cases, of course, the UK imposes its own embargoes, so we do not rule that out. As hon. Members have hinted, however, this can leave the market open for others with less scrupulous controls than ours to move into it. Those people would also not have a report such as this annual report, which has been commended in Europe as almost a showcase report on how to list the strategic controls and the licences granted. There are important issues here, and they impinge on some of the individual cases that have been raised. I know that my colleagues are aware of that, and I do not want to comment on them further.

My hon. Friend the Member for Ochil (Mr. O'Neill), the distinguished Chairman of the Select Committee on Trade and Industry, raised more doubts than I had had about the two regimes that had been commended to me, Sweden and America. I will not add to his comments on Sweden, but in America applications are notified only after a contract has been signed. Here, we advise exporters before they sign a contract as to the likelihood of their getting a licence. That is a useful addition.

As my hon. Friend pointed out, in America only major contracts are covered. Using a telling phrase, he said that it was the small, nasty contracts that could be swept under the table. Certainly, small—possibly not nasty—contracts may require even more scrutiny. They may require disproportionate—but that should not be taken literally!—scrutiny and other work on the part of those responsible for vetting licences.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

Order. May I gently remind the Minister that he must face the Chair?

Nigel Griffiths (Labour, Edinburgh South)

I humbly apologise, Mr. Deputy Speaker.

One of the complexities that caused us to reject the recommendation of the Quadripartite Committee is the fact that we would have to decide what threshold would catch the small, nasty contracts that my hon. Friend said the Americans did not catch. I have served on one of the most senior Select Committees, and I have seen the Clerk scrambling around to secure a quorum for a meeting to quiz top civil servants and others on billion-pound budgets. I fear that some £10,000 contracts that might be seen as controversial could go to what could be seen as a hotspot.

John Battle (Labour, Leeds West)

I tend to want a world in which we would emulate those who formed Arsenal football club in 1886. They worked at the Woolwich arsenal. Each of them put in 6d to back the football club; their works factory has now shut down. I feel that if people did other things rather than making arms it would make for a better world.

I also think that those in East Timor, for instance, might say, "As we form a new country and a new Government, we need the means to defend ourselves against a possible future engagement with Indonesia."

I think that the problem here relates to the word "prior". I do not think that the real issue relates to Ministers going through red boxes late at night; I think that it arises at the other end of the process. The pressure is coming from the arms companies. I want them to think twice. I want them to think seriously about the whole process, and not put in speculative bids as they often do. Prior scrutiny would push the process a further stage back, and people would know where they were. I think that that could be done, and would send a very healthy signal through the system.

Nigel Griffiths (Labour, Edinburgh South)

I am sure that the industry will note my hon. Friend's comments. I certainly have.

Martin O'Neill (Labour, Ochil)

I have listened to my hon. Friend with great interest, but he was not specific on one point. What would he expect to be the volume of work required? We have been given estimates of 40 to 50 cases, up to a maximum of about 100. Not all those cases would necessarily be referred at the Minister's discretion. Given the timing of such matters, it would probably be possible to arrange several meetings each year of a group that would examine them. I do not think that the volume would be as great as the Minister suggests, but I may have got it wrong. Perhaps the Minister could be a little more specific, as it seems that Government thinking has changed.

Nigel Griffiths (Labour, Edinburgh South)

I have no more up-to-date information than my hon. Friend.

The hon. Member for Twickenham (Dr. Cable) asked about legal difficulties in the revoking of licences. There are no such difficulties where circumstances have changed significantly since the issuing of a licence. The difficulties would arise if a country's circumstances had changed, or new and relevant information was available to the Government.

Let me return to a point I made earlier. The annual report sets out the reasons for refusals and the statistics. The hon. Member for Twickenham raised that matter, too. On page 15, the report makes clear the cases where revocation took place, so it is clearly set out.

I believe that the proposals that we have put before the House are the practical ones, and I urge the House not to press the other new clauses to a vote.

Question put and agreed to

Clause read a Second time, and added to the Bill.

Clause 1 — Export controls

Clause 2 — Transfer controls

Clause 3 — Purposes of orders under section 1(1) or 2(1)

Clause 4 — Controls on provision of technical assistance overseas

Clause 5 — Controls on trade in controlled goods

Clause 7 — Guidance

Robert Key (Conservative, Salisbury)

I beg to move amendment No. 28, in page 5, line 27, after "function;", insert—

'(bb) the time necessary to process applications;'.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this it will be convenient to discuss amendment No. 35, in page 5, line 33, leave out subsections (3) and (4) and insert—

'(3) Any published guidance relating to export licensing, which is capable of applying in relation to the exercise of functions under an order under section 1 or 2, shall be treated as guidance under this section.

(4) The consolidated criteria relating to export licensing decisions announced to Parliament by the Secretary of State on 26th October 2000 shall be included in the guidance referred to in subsection (3).

(5) Changes to any guidance issued under subsection (4) shall not take effect until laid before and approved by a resolution of each House of Parliament.

(6) Changes to any guidance issued under subsections (1) or (2), or under subsection (3) which does not contain any guidance made by virtue of subsection (4), shall be laid before Parliament and published within 40 days.'.

Robert Key (Conservative, Salisbury)

Many hon. Members on both sides of the House have companies great and small in their constituencies that produce goods for export, and some of them require export licences. Many hon. Members present today can tell their own tales of letters to Ministers, telephone calls, parliamentary questions and debates concerning delay in granting export licences to companies.

We have heard some passion about the great companies in this country that do so much to create wealth, which is therefore taxed, from which we all benefit. We have heard a lot of good sense. We have heard one or two over-the-top comments about the merchants of death—over the top in my view, anyhow. I suggest that the hon. Gentleman who made that comment finds out how many people in his constituency who vote for him are involved in defence industries. Nevertheless, one of the perennial problems—the Minister and two former Ministers present have commented on it at some length—is the care that is taken in assessing the value and disbenefits of any export licence application.

The officials who carry out the scrutiny before the decisions go to Ministers have themselves found that their departments have been understaffed and that extra burdens have been put on them. Under this Government, a new department was set up in the Foreign Office to secure a particular Foreign Office input to the ethical dimension. I am not arguing about that, but whatever mechanism Government create to handle the issue, it should be efficient and not unnecessarily disadvantage British industry where it is pursuing lawful objectives in the interests of this country and of their employees, our constituents.

As long ago as 10 May 2001, my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) asked the then Secretary of State for Trade and Industry

"what the (a) average and (b) maximum length of time taken to process export licences was in 2000."—[Official Report, 10 May 2001; Vol. 368, c. 305W.]

The answer came back that in 2000 the mean length of time was 26.5 working days, the mode was 15 working days and the median was 17 working days. A lot of other statistics were given, but the basic message was, "Too long."

My amendment is concerned with the fact that the Government have failed to introduce time limits in granting licences in this Bill, which provided a very good opportunity to do so. That is essential to help competition. It would mean that manufacturers could guarantee a time scale for the production and delivery of goods. The 20-day average causes anxiety to businesses, great and small. We heard some interesting ideas from the hon. Member for Leeds, West (Mr. Battle) about the equivalent of an outline planning permission being put in by some large companies to try it on with an export licence. That is not the norm; it is the exception.

Many of the difficulties have arisen with small and medium-sized enterprises and, sometimes, very small family-based engineering companies in our constituencies. For example, I learned recently of a small family-run civil engineering company near Manchester. It specialises in high-quality, low-volume production of orders made to high specifications. Some of its orders are involved in defence. For example, it makes parts of a periscope for tanks as well as all sorts of bits and pieces, such as fins, for aircraft and, on occasion, missiles.

Anyone who knows anything about the engineering industry knows that, although there are the big boys, most of the work takes place in small firms in our constituencies that might employ only a dozen or so highly skilled engineers. They are the hardest hit by delays in export licensing.

That particular company in the north-west was approached to make a piece of equipment. It quoted, got the order and immediately put in a licence application. It went ahead, produced the goods and finished production on time but could not release them and so lost the order. It had done the work, but because three Departments could not process the application in time, it lost the order and was not paid.

On 9 July this year, my hon. Friend the Member for Buckingham (Mr. Bercow) asked a question of the Secretary of State for Trade and Industry. He congratulated her on her appointment and asked what she would do about the issue of the 20 working days. In a straightforward answer she said:

"Like him, I am worried about the delays and our failure to meet the target for dealing with all the applications on time. However, I am sure that he acknowledges that some of the applications raise complex and difficult issues on which a careful judgment must be made."—[Official Report, 9 July 2001; Vol. 371, c. 543-44.]

We all understand that; it is inevitable. However, many issues are not complex. For example, a company in my constituency has made marine flares for the best part of half a century. It had a repeat order from Turkey—a member of NATO. It lost the order. It did not get the export licence in time because someone had decided that they suddenly did not want Turkey to receive flares any more. It was not even a new order. That is another frustrating example. There are many more, but I will not bore the House.

It is important to flag up this problem and for the Opposition to try to be constructive. Let us put target times in the Bill to encourage industry and give Ministers and officials an extra incentive. It is not that Ministers are being idle, not doing their boxes or failing to do their duty. I know what it is like; I have been there too. The boxes pile up and woe betide anyone who does not get them back. I admire enormously colleagues who tell their private secretaries that they are not taking boxes home. There are some who do that, but I never managed it. At 7.15 every Saturday morning the boxes arrived, never fewer than three, often as many as five, and that was the weekend gone. We know the feeling. It is not that Ministers or officials are failing to do their jobs properly but the system needs more discipline if we are not to disadvantage British companies. The purpose of the amendment is to introduce such discipline.

The Secretary of State said that she would do everything possible to speed up decision making, but that the Government would not risk making wrong decisions. I agree that they should not risk that. I shall table a written question in a few minutes asking what initiatives the Export Control Organisation is taking to reduce the processing time of licence applications because that touches on the livelihoods of some 400,000 people in this country. If the Government's objectives for the success of British industry are to be realised, export licensing must be an important part of that process. That is why I encourage the Government, through amendment No. 28, to consider inserting a specific sub-paragraph on the time necessary to process applications.

Vincent Cable (Liberal Democrat, Twickenham)

I should like to say a few words on amendment No. 35, which is on a theme rather different from that of amendment No. 28. It tries to bring together the two streams of argument current throughout this afternoon's debate. One is that there should be a new way of tackling the issue of appropriate parliamentary scrutiny. Opposition Members accept that the Government's business must be done and that small procedural questions must be dealt with speedily. That is why in many cases the lowest level of parliamentary scrutiny is appropriate. However, in other cases, stricter parliamentary scrutiny is required.

That leads me to the second theme: sustainable development. A successor Minister might wish to change the export criteria, and that should be taken seriously and subject to proper scrutiny. Now that the Minister has had an hour or so to cool down, he might accept that his part in that debate was not his finest hour in Parliament. Perhaps he will respond, therefore, to our helpful suggestion in the amendment that he tackle the problem, which is recognised on both sides of the House, in a different way. We suggest that a distinction should be drawn between narrow procedural problems, which are properly dealt with by the most limited form of parliamentary scrutiny, and changes to the consolidated criteria, which are very important and require proper parliamentary oversight.

I remind the Minister of his comments in the earlier debate on sustainable development that might make him think again about facilitating a separate bite of the cherry and providing a different way of safeguarding parliamentary scrutiny. He said that sustainable development was not the only exception to the consolidated criteria that he had not included in the schedule. I endeavoured to intervene to tell him—he was not willing to accept the point—that when he first introduced the Bill, he explained that the concept of diversion had not been included because it was a totally different idea. In fact, that was not a good reason for excluding sustainable development, which is conceptually very similar to issues such as internal repression. When he reflects on that, he will realise that his arguments were weak.

A difficulty was also made of the fact that there are different ways of interpreting sustainable development. I have since in the past hour had an opportunity to check the way in which different Departments deal with the matter. One Department has several definitions, all of which are consistent and relate to the Brundtland criteria. I mention those points because, when the Government reflect on the day's work, I think that they will realise that they did not handle the matter well. There are other ways of safeguarding the criteria from future changes by any Minister who might wish, perhaps capriciously, to ignore the will of Parliament. By splitting the guidance criteria into two, we have suggested a neat legislative way of doing so.

Peter Luff (Conservative, Mid Worcestershire)

It is a pleasure to have the opportunity to speak briefly on an issue that has been of some concern to me in the past in two capacities, one more recent than the other. In the 1980s, I had the privilege of being a special adviser at the DTI. I formed a deep admiration for the work of its officials, but felt that they were generally more concerned with policy than its implementation. Inventing a new policy is a wonderful thing, requiring a great deal of intellectual exercise and agility. Going through the rather dreary process of making sure it works in practice is slightly less appealing.

When it came to export licensing, there was perhaps a tendency to relegate the importance of that part of the Department's work. What my hon. Friend the Member for Salisbury (Mr. Key) had to say was very important, as it reminds officials that it is as important to deliver a policy speedily as it is to invent a marvellous policy. I commend what he said and hope that the Government will reflect that it would do no harm to accept this important amendment.

More recently, I had experience of this problem as a constituency Member. It was a particularly strange occurrence. A company in my constituency that had been actively encouraged by the DTI to export to Pakistan—and had received great assistance from the export promotion wing of the Department, for which it was grateful—then found that the export of the piece of machinery concerned was frustrated by the export licensing regulations. The machinery was impounded at the dock and it took weeks and weeks for the Department to make a decision on the granting of the licence.

We had a bizarre situation, in which the company had been encouraged to export a product by one part of the Department but the export of that piece of kit was frustrated by another part of the Department. Eventually, the Department decided that it should not be exported at all, so all the work of the export promotion part of the DTI was entirely wasted. Now, the same company is being encouraged by the Department to export the same kit to China. Will it get an export licence in reasonable time for the export of that piece of kit? It is odd to see a Government who boast of joined-up government not being able to join up the work of one Department of State.

It would be a generous and wise act to accept the amendment to ensure that there was some pressure on the export licensing function of the Department to act speedily in the interests of British business.

Gerald Howarth (Conservative, Aldershot)

I rise to support my hon. Friend the Member for Salisbury (Mr. Key) and amendment No. 28, which would make a vital contribution not only to the efficient working of the system, but to reassuring companies up and down the country. Many of these companies are small. They are not necessarily located in the major centres of defence manufacturing, but in constituencies across the country. Their concerns ought to be taken into account.

I cannot see the harm in adding to the Bill this modest amendment. It is not specific in terms of the number of days within which the Department should make a decision, but it puts in the Bill the need to provide a timetable as guidance to officials. That would provide industry with a degree of certainty. Despite being, generally speaking, favourably disposed towards the Bill, industry sees an element of uncertainty in it. Industry does not like uncertainty; it likes to be certain about the conditions that apply to its operations.

The amendment would send out to industry a strong signal that the Government understand their concern that they must expeditiously handle applications for defence export licences. It is in the Government's own interests to accede to my hon. Friend's suggestion. It would be beneficial to them not only in their relations with industry but from a macro-economic point of view because, as the Minister—and I believe the House—knows, I believe strongly in defence exports. They are vital to the success of Britain's aerospace and defence manufacturing industry, which employs 350,000 people, and absolutely essential to ensure economies of scale in our manufacturing for our own forces. Therefore, anything that we do to enhance those exports, within a system of licensing, must be good news for Great Britain generally.

Therefore it is important, at a macro-level, that we should be perfectly clear in our mind of the merits of including, on the face of the Bill, guidance to impose on the Government an obligation to specify conditions regarding the time scale for the granting of licences.

I shall not cite any specific instances, but I know that my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) informed the House earlier in the year of a case in his constituency, and my hon. Friends the Members for Mid-Worcestershire (Mr. Luff) and for Salisbury have told the House of cases in their constituencies. I am sure that the Minister knows that there are many other cases around the country. I hope that when he responds to the debate he will seize the opportunity to tell the House that he accepts the amendment—there is still an off-chance that he might, but I suspect not. I hope that, in the event that he does not do so, he will take the opportunity to tell the House, and through the House British industry, that the Government do understand that if the system of licensing is to work, they must ensure that departmental officials take seriously the need to handle these export licence applications expeditiously, because if they do not, they will lose British business its export markets.

Finally, I shall refer to some comments by the Defence Manufacturers Association which, as the Minister knows, represents the smaller businesses in the defence manufacturing field. In a submission at the time of Second Reading, it said:

"A delicate balance must be achieved between the introduction of controls which are so vague as to be ineffective and easily circumvented by unscrupulous proliferators, and controls which are so stringent as to strangle UK Industry and make exporting by responsible firms almost impossible. Already we are aware of a number of companies who feel that the situation on export controls in the UK is so unhelpful and obstructive that they are either getting out of the business altogether or talking of doing so."

I hope that the Minister will be able to say that the message from Her Majesty's Government tonight is, "We recognise that in the past there have been delays. You can take it from us that we will give this undertaking to the House, and to industries across the country: we will ensure that these applications are handled expeditiously, and that when a company says that if it does not get a decision within the next 48 hours it will lose the order, Ministers will ensure that action is taken to ensure that that company does not lose the order."

Mark Hendrick (Labour/Co-operative, Preston)

I also represent a constituency where thousands of workers work in the defence industry, and I also am keen to see that many of the brilliant aircraft that are produced in and around my constituency are exported to many other countries. Is the hon. Gentleman assuming that if a time limit—a deadline—is set for the Department to determine a licensing application, the outcome will be more likely to be positive than negative? It would appear to me that some civil servants—and Ministers—may err on the side of caution when an attempt is made to accelerate the decision-making process. Does the hon. Gentleman agree that rigour may be more important than speed?

Gerald Howarth (Conservative, Aldershot)

I am grateful to the hon. Gentleman for that intervention, which enabled me to adjust my dress to be appropriately attired for the Chamber.

Peter Luff (Conservative, Mid Worcestershire)

For the record, I assure the House that the article of dress to which my hon. Friend referred is the poppy in his lapel.

Gerald Howarth (Conservative, Aldershot)

I am grateful to my hon. Friend for that. My poppy fell off earlier when I was visiting the field of remembrance.

Robert Key (Conservative, Salisbury)

I always carry a spare.

Gerald Howarth (Conservative, Aldershot)

My hon. Friend would make a marvellous Minister for defence procurement, as he always carries a spare. I shall convey that message to those involved in exercise Saif Sareea 2.

The hon. Member for Preston (Mr. Hendrick) makes a valid point. I am not seeking to alter decisions, but I noted earlier that industry prefers certainty. The House has heard that export orders have been lost because of delays in Government decision making. Business wants decisions to be made quickly so that orders are not lost. It is no good for a Minister to come along 10 days after an order has been lost and say that an export licence has been approved. Indeed, companies could reap an advantage if they knew at the outset that they were not going to get export licences for particular contracts. They would not then waste their time trying to pursue a contract.

The amendment does not specify a time limit on the consideration of applications. The power would be permissive in that, if the amendment were accepted, the Bill would state that a Minister "may" issue guidance with regard to the time scale for applications. That is a modest and fair way to proceed.

Nigel Griffiths (Labour, Edinburgh South)

Amendments Nos. 28 and 35 relate to the guidance to be published under clause 7, and I shall explain why neither is appropriate. First, however, it may be true that civil servants were undervalued when the hon. Member for Mid-Worcestershire (Mr. Luff) was a special adviser at the Department, but I assure him that no one values civil servants more than I do.

Peter Luff (Conservative, Mid Worcestershire)

There is no question—civil servants were not undervalued at that time. I hope that the Minister heard me praise their talents and abilities.

Nigel Griffiths (Labour, Edinburgh South)

I am glad that the hon. Gentleman has had a chance to put the record straight. I assure him, the hon. Member for Aldershot (Mr. Howarth) and other hon. Members that there has been an improvement in the delivery of the service. More of the 20-working-day targets are being met now than in the recent past, and that shows that the Government take the issue seriously.

Amendment No. 28 would provide for the publication of guidance about the time necessary to process applications under clause 7. That publication would not be mandatory, so I am pleased to tell the House that it is possible to publish such guidance under clause 7. The Government already publish targets for processing standard individual export licence applications.

The amendment, however, raises important issues to do with the time taken to process licence applications. The Government recognise the difficulty that any delay in processing an individual export licence application can cause the exporter concerned. We aim to ensure that the controls are applied efficiently and impose minimum burdens, but the objective of giving every applicant a decision as quickly as possible cannot outweigh the need to give every application careful assessment against the relevant criteria. That can take time, especially if the application is particularly complicated or if there are concerns about the destinations involved. In an uncertain world, the international status of a destination country can change overnight, and what was an acceptable export last time may thus cease to be acceptable.

The Government are working hard to reduce the time taken to assess export licence applications. We have set demanding targets for processing standard individual export licence applications. In most cases, it is necessary for such applications to be circulated to other Government Departments. Our aim is to provide a substantive response to 70 per cent. of applicants within 20 working days.

Those targets are set out in a service and performance code, which is published by the Department's export control organisation. Information on performance against those targets is already published in the Government's annual reports on strategic export controls.

Amendment No. 28 is not practical, and I assure the House that the Government are doing all that they can to improve the efficiency and effectiveness of the licensing system.

Amendment No. 35 would do two things. Proposed new subsection (3) would provide that all guidance published relating to the exercise of licensing functions for export or transfer controls would constitute guidance under clause 7. Proposed new subsection (6) would require all such guidance to be laid before Parliament and published within 40 days. In effect, any guidance on export licensing would have to be laid before Parliament and published within 40 days. Under the Bill, the Secretary of State will be obliged to lay before Parliament guidance issued under clause 7.

Let me outline why we do not consider it sensible that all guidance, including practical guidance on procedure, should have to be laid before Parliament. The Export Control Organisation publishes on its website a range of guidance for exporters, which is updated constantly—if necessary, on a daily basis. To lay that material before Parliament every time it was updated or changed would unnecessarily overburden the procedures for laying documents before Parliament. That would be unnecessary, because that material is accessible to all Members and the public on the DTI's website or on request from the Export Control Organisation. Moreover, in the Government's view, it would be inappropriate.

We believe that clause 7 should be used to lay before Parliament key guidance documents—for example, where new international commitments have been entered into—and, of course, the consolidated criteria. Proposed new subsections (4) and (5) would require that changes could only be made to the consolidated criteria with Parliament's approval.

The House will not deny the Government credit for making public and transparent the criteria against which licence applications are assessed. We have gone further, pressing the EU to adopt a similar code of conduct for arms exports to ensure that common standards apply across the EU. No one is in any doubt about the importance that we attach to the existence of the consolidated criteria and the EU code, and the Bill will, for the first time, make reference to the criteria in legislation. The consolidated criteria are based predominantly on that code of conduct.

It is quite proper to obtain parliamentary approval for new legislation, but this matter does not require new legislation to be made. If changes to the criteria were made, the Government would, of course, announce them. Parliament or parliamentary Committees could consider any change in the usual way, but it would not be appropriate for such changes to be subject to formal parliamentary scrutiny of the kind that applies to new legislation. In view of the explanations that I have given, I invite the hon. Member for Salisbury (Mr. Key) to withdraw the amendment.

Robert Key (Conservative, Salisbury)

I am grateful to the Minister for that explanation. I believe that the message has been taken, and it will be transmitted around Whitehall, no doubt. In good faith, therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 8 — Annual Reports

Nigel Griffiths (Labour, Edinburgh South)

I beg to move amendment No. 9, in page 5, leave out lines 43 to 45 and insert—

'(1) The Secretary of State shall lay before Parliament in respect of each year—

(a) a report on the operation during the year of any order under section 1 so far as relating to the export of objects of cultural interest; and

(b) a report on other matters relating to the operation of this Act (and any order made under it) during the year.

(2) A report required by subsection (1) shall be laid as soon as practicable after the end of the year to which it relates.'.

Michael Lord (Deputy Speaker, Central Suffolk and North Ipswich)

With this it will be convenient to discuss the following: Amendment No. 29, in page 5, line 45, at end insert—

'( ) Such reports shall list the other member countries of the European Union and shall show in respect of each such member country any information known to the Secretary of State regarding the granting of a licence within that country in respect of an essentially identical transaction refused or regulated within the United Kingdom.'.

Government amendments Nos. 11 and 27.

Nigel Griffiths (Labour, Edinburgh South)

I shall explain why Government amendments Nos. 9, 11 and 27 are necessary. I shall also explain why amendment No. 29 should not be pressed to a Division.

Under Government amendments Nos. 9, 11 and 27, we simply seek to ensure that the current practice of publishing separate annual reports on cultural and strategic export controls can continue after the Bill comes into force—an issue to which I referred earlier. At present, the DTI, Ministry of Defence and Foreign and Commonwealth Office produce the annual report on strategic export controls. The Department for Culture, Media and Sport produces a separate report on exports of objects of cultural interest.

Given that the audiences for those two reports are likely to be different, it makes sense to publish them separately. Separate publication also ensures that the cost to members of the public of obtaining the information in which they are interested will be kept to a minimum; and we ensure that the annual report on strategic exports is available free from the Foreign and Commonwealth Office website.

Under amendment No. 29, an obligation would be imposed on the Secretary of State to publish information on decisions by other EU member states to grant licences for essentially identical transactions refused or regulated by the United Kingdom in the Government's annual reports on strategic export controls. We make every effort, including through the exchange of information on licensing decisions, to promote a multilateral approach to export control. We promote harmonisation between our partners in the European Union and in the international non-proliferation regimes.

Before any EU member states grants a licence that has been denied by another member state or states for an essentially identical transaction in the last three years, it is required first to consult any member state that issued the denial notification under the provisions of the EU code of conduct on arms exports. If, following the consultation, the member state nevertheless decides to grant a licence, it will notify the member state or states issuing the denial notification, giving detailed explanation of its reasoning.

The EU code stipulates that such exchanges between member states are to be treated as confidential and are not to be used for commercial advantage. The Government intend to observe that confidentiality in dealing with denial notifications and consultations to ensure that the code can continue to be the basis of free exchanges of information between member states. For that reason, the Government oppose the amendment.

The EU already publishes information on the number of licences issued, denial notifications, and bilateral and multilateral consultations initiated in the annual report on the EU code of conduct for arms exports. Thus information that can be put in the public domain is already put in the public domain at EU level.

At the same time, the Government continue to urge all member states to match the benchmarks for transparency in arms exports that we have already set out in our annual reports on strategic export controls. The decision to transfer or deny the transfer of any item is a matter of national discretion, and the Government recognise that there are differences between member states' policies towards certain countries, as reflected by the existence of national embargoes or other restrictions.

In view of the explanations that I have given, I invite Members to support amendments Nos. 9, 11 and 27. I ask those who tabled amendment No. 29 not to press it.

Amendment agreed to.

Clause 9 — Interpretation

Clause 11 — Orders

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

Nigel Griffiths (Labour, Edinburgh South)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

John Whittingdale (Conservative, Maldon and East Chelmsford)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Nigel Griffiths (Labour, Edinburgh South)

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

John Whittingdale (Conservative, Maldon and East Chelmsford)

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

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

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

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

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

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

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

Martin O'Neill (Labour, Ochil)

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

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

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

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

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

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

Jenny Tonge (Liberal Democrat, Richmond Park)

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

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

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

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

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

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

Members may remember the incident. I continued:

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

In replying, the Minister said:

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

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

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

Roger Casale (Labour, Wimbledon)

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

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

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

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

Gerald Howarth (Conservative, Aldershot)

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

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

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

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

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

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

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

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

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

Question put and agreed to.

Bill accordingly read the Third time, and passed.