Register of Arms Brokers Bill [HL]

Lord Stevenson of Balmacara Excerpts

Friday 10th June 2016 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, this has been a very good debate and I, like others, congratulate the noble Baroness, Lady Jolly, on coming so high in the ballot that she has been able to introduce this Bill. In private conversation with me before today she mentioned that she was doing this because it was a sort of stick to try to encourage the Government—perhaps she had in mind a herd of cattle, but that would be an unkind thing to say about the Government—towards a solution for which they already have the powers but which they seem reluctant to take forward. In a sense, that was the tone she set with her speech. It was not a speech of high rhetoric or overzealous comment but made a measured and good case which, as I understand it, seeks to seal up a little more securely our procedures in this rather difficult area. All the speeches we have heard so far have been along these lines, with a touch of emotion from my noble friend Lord Judd—but justifiably so from his experiences, which bring us back to the rather important point that the Bill deals with death and destruction, not fluffy toys. We should always have that at the back of our minds as we go forward to consider it.

My concern here is not so much to re-emphasise the well-made points about how the Government appear to be standing out against what is becoming a common approach in the world. That is not only to provide a detailed examination of those companies and individuals who wish to participate in this trade but to do so in the context of a wider understanding of the market, and thus necessarily having a pre-licensing procedure. It is not at all clear to me why the Government have taken their view. I will come back to that point but I also wish to put it in a wider context and will therefore start my remarks with a rather broader take on this issue.

From this side of the House, we accept that developing and maintaining a thriving global trade in goods and services, including defence materiel, is a vital component of modem life and that it underwrites our economic and social benefits. We should be very careful about attacking it. However, the direct impact of the operation of individuals, companies and states has not always worked to protect human rights, nor afforded protection to those affected by acts of commission or omission by those involved in these trades. Increasingly, we hear the argument that respecting human rights is good for business. We are grateful that it is gaining wider acceptance but it is still not the default position. Indeed, it is not uncommon to hear it argued that there can and should be a policy trade-off between business on the one hand and human rights on the other. That is simply not the case.

I accept that the UK now has one of the toughest export regimes in the world, particularly in defence materiel. The previous Labour Government were part of that process. However, the sales of military equipment have always raised moral and ethical issues, as my noble friend Lord Judd mentioned, and recent experiences such as the Arab spring and the fallout from it have pointed out difficulties even with our existing systems. If we are to make progress on this, we not only have to focus on the broader policy context but continue to work with companies to make the case for a respect for human rights in what they do. In preparation for a previous role in the party, while trying to develop a broader context for business and human rights and the relationship with how trade operates, I talked to companies which understand that by involving themselves in human rights, they will help to protect and enhance their brand as well as protect and increase their customer base, as customers are increasingly seeking out ethical companies. It also helps the companies themselves attract and retain good staff, contributing to lower rates of staff turnover and therefore higher productivity, which we desperately need. It reduces risks to operational continuity resulting from conflict inside the company itself, such as strikes or other labour disputes, or with the local community or other parties with which they might wish to trade. That goes under the common term “social licence to operate”, which is very important and increasingly so these days. It appeals to institutional investors, including pension funds, which are increasingly taking ethical factors, including human rights, into account when making their investment decisions.

This is a trend which we need to anticipate and work with. Government has a role to provide clear policy statements around this, and where the Government fall down at a particular level, that will interrupt the progress that we are seeing. Companies have told us that they need policy coherence and clear and consistent policy messaging from the Government. Where that consistency is faulty, there are problems.

I have looked at the Government’s recent consultation on this, which has already been mentioned. I am very confused about it. It is easy to criticise government consultations: sometimes the methodology is strange, while sometimes it is not so much the methodology but the reporting that is difficult. In this case, it is both the methodology and the response. This was a six-week consultation carried out in April and May 2014. It was not a very large one, as it was admitted in the government response that it would not be.

It admits from the very start—I would be grateful if the Minister could comment on this when she comes to respond—that there were two completely different viewpoints. A group of people from the industry responded—some 70 or so responses were received from industrial companies—who were broadly against any further red tape or burden of regulation. Well, they would be, wouldn’t they? A smaller number of respondents—in my view, probably equally vociferous—wanted to make the case that we have heard today, advocating the benefits of a comprehensive registration system based on thorough vetting, eligibility and an assessment criteria in order to act as a preventive measure to guard against undesirable broking activity.

It does not take a very long time to come to the conclusion that where you have a bifurcated response, you are not going to find a consensus, so it is not unreasonable for the Government to respond that it was not possible to find any consensus view. They say that there were,

“no … sufficiently powerful arguments in favour of implementing a comprehensive register”,

but they do not give the detail of what those arguments would be. It is a little unfair of a Government to say that they had a vision in mind of a comprehensive response to the question they were asking, but that since it did not come—or nobody actually wrote it out in the terms that they had envisaged it—the argument was not sufficiently convincing. I do not think that that is sufficient for a government response.

The Government go on to say that they have concluded that,

“introducing a register would not be sufficiently beneficial so as to justify additional regulation of legitimate UK businesses”.

Again, however, they do not give the details of what would be sufficient.

They then fall back into the problem, which I think we have heard about, that assessing on a case-by-case basis does not give the broader context that other countries and partners of ours seem to feel is necessary and so distances us from them. The Government respond with what I think must be the weakest argument I have ever seen:

“continuing to maintain the status quo of case-by-case licensing assessment is compatible with Article 10 of the Arms Trade Treaty, which requires countries to regulate arms brokering but does not stipulate the means of doing so”.

Well, that is great. That is such a terrific tick in the box. It did not stipulate it, therefore we do not have to put it down. The response continues:

“The Government is not convinced that the introduction of a pre-licensing register would substantially enhance the enforcement of brokering controls and that it would place considerable extra burdens on legitimate defence companies”.

Well, we did not get those, and we do not know what those extra burdens would be. Indeed, the argument has been made today—which we should listen to—is that, yes, there are additional burdens, but regulation of itself is not bad. Good regulation makes markets fair, opens up issues for consumers and makes our commercial operations better than they would otherwise be. We must be mature about this and not simply have the knee-jerk reaction that regulation must be bad. It is not always bad; it can be very good. The case I have heard today has been utterly convincing that this is a good set of regulations which would be appropriate for this situation. If your Lordships have any doubts at all about why this might be appropriate, they should look at the list of respondents in the government response. There were 78 responses to the call for evidence, and of those, fewer than one-third were prepared even to have their names listed as having submitted evidence to the consultation—which, as I said, was not exactly the most searching examination.

A pre-licensing system seems to me to be a missing link in an otherwise pretty good system, but as we have heard, there are gaps. We would only be moving to the point where other countries have already moved to, and we would be responding to those of us, particularly people such as my noble friend Lord Judd, who feel that the present arrangements, although good, are not reaching out as far as they could do in a way that would make this a more effective system even than it is at present. Good companies should not fear transparency. If they are already supplying in other parts of the world, they are probably already doing this with other Governments. We should not be seduced by the idea that this is somehow an exceptional burden. As I have said, even if it is a burden, we must avoid the knee-jerk reaction of saying that regulation is bad. I wish the Bill well.