Register of Arms Brokers Bill [HL]

Lord Stevenson of Balmacara Excerpts

Committee: 1st sitting (Hansard): House of Lords
Friday 18th November 2016 Lords Chamber

[Lord Swinfen]

I am quite happy for the noble Baroness to answer my query when we come to the second group. I shall wait patiently to hear what she has to say.

[Lord Stevenson of Balmacara (Lab)]

One does not often hear those words in the House. It was very gracious of the noble Lord to agree to reorganise his speech in order to get the answer that he wants from the noble Baroness.

We have gone back slightly over ground that was raised at Second Reading and I do not want to carry on that trend. We should focus on the amendment. As has been said, this amendment has been recommended by the Delegated Powers and Regulatory Reform Committee and it is entirely appropriate for the noble Baroness, Lady Jolly, to bring it forward for the Committee’s consideration today.

Having said that, I feel very strongly that this is a gap in an existing and strong system, as was referred to by the noble Baroness in her introductory remarks. We have a strong regime that deals with these difficult areas, and we have licensing and registers already in place. The additional work required is very small, but it fills a lacuna in our existing arrangements, which is very important, in that we do not currently focus on the agents or people in the supply chain, as she says. I recommend the amendment to the House.

[Baroness Mobarik (Con)]

My Lords, I start by congratulating the noble Baroness, Lady Jolly, for steering her Bill into Committee today. I know that there was an interesting and thoughtful debate at Second Reading, during which my noble friend Lady Neville-Rolfe expressed some of the Government’s reservations about the Bill.

I will pick up on one or two points before I commence my remarks. On the vetting of trade control licence applicants, presently only the eight elements of the consolidated EU and national arms export licensing criteria are considered when granting or refusing export or trade control licences. The Government have no plans to introduce any further changes to those criteria.

The noble Baroness mentioned the need for greater transparency. The UK already publishes one of the most comprehensive reports concerning strategic exports. This includes reference to all our international reporting requirements, as well as information on export licences issued, refused or revoked by destination, including the value and type—for example, military—and a summary of the items covered by the licences.

The straightforward amendments in this first group, which stem from recommendations made by the Delegated Powers and Regulatory Reform Committee in its fifth report, seek to clarify the Bill’s order-making power. The amendments simply change the type of subordinate legislation the Bill provides for so that it is in line with the other powers conferred in the Export Control Act. It remains the Government’s view that this power is not necessary to introduce a register along the lines of that being proposed by the noble Baroness.

Section 4 of the Export Control Act already confers a power on the Secretary of State to introduce trade controls on the acquisition, disposal and movement of goods, and activities which facilitate or are otherwise connected with these actions. As such, we already have the means to implement further controls, such as a register, via secondary legislation if the Government consider it to be in the public interest to do so.

[Lord Stevenson of Balmacara]

It was very helpful of the noble Baroness to explain some of the Government’s thinking on this matter, but she has highlighted one of the key questions, and I am sure that if I do not stand up and press this, the noble Baroness, Lady Jolly, will. If the Government already have the powers under the existing legislation, will she explain concisely why it is they will not act on what is so clearly a lacuna?

[Baroness Mobarik]

I wonder whether I might get back to the noble Lord on that point.

[Lord Stevenson of Balmacara]

Of course. I look forward to receiving a letter on this point. Perhaps the word “lacuna” has caught the noble Baroness unprepared and I should explain a little further—I am not entirely sure myself whether I have got the right word.

The noble Baroness made it very clear that the powers exist, and indeed we discussed that at Second Reading. However, there is a reluctance in the Government’s mind, as I have detected from what she said, around whether or not it is necessary to do so. You do not have to be a reader of lurid fiction or even have an imagination to recognise the sort of people who populate the world in which this activity goes on. Many firms are of high regard and good standing, but there is a penumbra —I am sorry, I must stop using these complicated words; there is a shadow—in which other people operate.

It would be helpful to the progress of this Bill and more generally to the world at large if the Government could be a little more forthcoming about the reasons why they do not support this. In addition to the licensing and registers already in place and the complicated processes that are gone through in government to ensure that licences are properly awarded, they should be able to focus on the people concerned.

[Baroness Mobarik]

One cannot get into the mindset of such people, but we have such a thing as brass-plate companies. They operate in name only. They are shell companies that have no presence other than a brass plate. Therefore, the kind of people that the noble Lord is talking about will operate under the radar regardless. The existing legislation is adequate, according to the Government, in controlling such behaviour as far as we are able to.

--- Later in debate ---

[Lord Swinfen]

I am most grateful to the noble Baroness for saying that she will have a look at this point, and I look forward to hearing what she decides on it at a later stage.

[Lord Stevenson of Balmacara]

My Lords, I am tempted to say that we probably all want to be sure those who are caught by the broad definitions which have been read into the Bill by the noble Lord, Lord Swinfen, are indeed fit and proper persons. I hope that Ministers would not object if that was a test which was applied to them, although the idea that it might be applied by civil servants to their incoming Ministers might be a bit of a shock to those who aspire to high office. I will not perpetuate that myth any further, and I am sure that the point can be dealt with as we move forward to the Report stage.

Again, the noble Baroness has done a good job in producing a better set of words to try to capture the issues that are in play in the Bill. A further point that she might want to consider before we reach Report is that it might be worth also looking at the recent report from the UN Human Rights Council, which has brought out the principles under which international trade should be regulated in order to make sure that human rights are not breached. Obviously, it is a tricky area and she has acknowledged that the people who operate in this world are often registered outside UK territorial reach and therefore we are not able to pursue them through the British courts or other areas. This is exactly the point raised by the UN Human Rights Council. It is about the need for us all to work together to try and make sure that any gaps in the system are not left unfilled. But these are broader issues than the context of this Bill and I therefore support the amendment as it is framed.

[Baroness Mobarik]

My Lords, this amendment would remove references to the consideration of criminal history and tax status to leave the determination of who is a fit and proper person to guidance that would be issued by the Secretary of State. Any fit and proper person test as a prerequisite for inclusion on a register would need to apply to all categories of applicant, including businesses, individuals, non-governmental organisations and other entities, and be robust enough to hold up to legal challenge if necessary. The Government, who remain committed to better regulation where it is necessary, consider the existing control regime to be sufficiently robust and fully in line with our obligations under the international Arms Trade Treaty. Requiring brokers to register in the way proposed would make the system considerably more complex.

I will pick up on a couple of points the noble Baroness made. The first we referred to earlier, which is brass-plating. Existing legislation would, in certain circumstances, allow enforcement action to be taken against brass-plate companies and their officers. However, there needs to be sufficient evidence to justify any such action. On her other point on tax evasion, HM Revenue & Customs considers all credible information regarding potential breaches of UK strategic export and trade controls, and takes a range of enforcement action based on the particular factors of each case.

I will refer to something that the noble Lord, Lord Judd, raised on human rights issues. Risks around human rights abuses are a key part of our assessment. We do not export equipment where we assess that there is a clear risk that it might be used for internal repression, would provoke or prolong conflict in a country, or would be used aggressively against another country.

Each licensing decision is currently considered on its own merits against the consolidated EU and national arms export licensing criteria, known as the consolidated criteria. This provides a thorough risk assessment framework and requires us to think hard about the impact of providing or brokering arms and equipment and their capabilities. These are decisions we never take lightly.

I should make it clear that the UK operates one of the most robust and transparent export and trade control systems in the world. We are confident that, by considering all applications against the consolidated criteria, we employ a thorough risk-based approach to determine whether to grant a licence to a particular end-user or broker.

Finally, we are proud of the fact that the UK has been at the forefront of addressing concerns on arms brokering by introducing controls that apply not only in the UK but extraterritorially. That was the point that the noble Lords, Lord Wallace and Lord Stevenson, made. It is quite a technical issue and I can write to noble Lords to clarify further. As I said, it applies not only to the UK, but extraterritorially to UK persons overseas. This signifies our clear intention to prevent UK persons escaping brokering controls by simply operating outside the UK.