Arms Exports and Arms Control

Debate between Michael Fallon and Ann McKechin

Thursday 21st November 2013 Westminster Hall

[Michael Fallon]

I was referring to the two licences issued in January 2012 and, as my right hon. Friend will know, no shipments were actually made under those licences.

Let me now turn to the licences that my right hon. Friend is concerned about—the five licences granted under the previous Government, between 2004 and 2010, before the current conflict in Syria began, for the export of sodium fluoride for the manufacture of toothpaste. Those licences were no longer extant at the time of the revised sanctions, but I do have to say to my right hon. Friend that we have no evidence of any diversion to any different end use.

[Ann McKechin]

The Minister will be aware that his Department has disclosed the end-user recipient in Syria and that a number of years ago there were press reports, in The Scotsman and other papers, that that company was a front company for the Assad regime; it is well known that a number of companies that have operated for a considerable time in Syria are front companies for the Government.

On the specific issue of the end user, given that there were those press reports and that I anticipate the Government would have intelligence about that company, why were the export licences granted?

--- Later in debate ---

[Michael Fallon]

I am happy to write to my right hon. Friend on that, but it is my understanding that the licences are being used for anti-piracy measures, in which we all have an interest. However, if I am wrong about that, and if I can give him further particulars about the use of machine guns in anti-piracy work, I will of course do so.

Finally, on the countries that have been mentioned, let me turn to Israel. A number of Members have asked about the single licence that accounted for nearly £8 billion of cryptographic equipment. The licence was for “equipment employing cryptography” and

“software for equipment employing cryptography”

with a value of £7.7 billion.

The licence was granted in the first quarter of 2013, and it permits the export of equipment and software for building public mobile phone networks in residential areas and for small businesses. Those items are subject to export control because of their encryption—information security—capability. That capability, it must be said, is a standard feature of the mobile phone network. The goods are for purely commercial end use.

Again, we assessed the application against the consolidated and the national criteria. A licence would not have been issued where there was a clear risk that the proposed exports might be used for internal repression or to provoke or prolong internal conflict, or where they could be used aggressively against another state.

I appreciate that the value of the licence appears extremely high and may not represent a realistic goal on the part of the exporter. The exporter has confirmed to us that the value of the licence was based on an expectation of a large number of orders over the two-year validity period of the licence. Given the nature of the goods and the end use, that was not considered to be a particular concern.

Let me turn now to the arms trade treaty, which is a notable achievement; I am grateful to those Members who referred to it as such. It is not an achievement simply of the past year; it has required long and challenging effort, involving work by two successive Governments over seven years. It was a significant achievement for not simply the United Nations, but the United Kingdom—it was an effort that the United Kingdom led.

The treaty will introduce robust, effective and legally binding controls, which will begin to constrict flows of unregulated or illegal weapons. It will require Governments to block transfers of weapons that pose unacceptable risks and to take strong steps to prevent weapons from being diverted into the illegal market. Authorisations of exports will be reported and arms brokering will be regulated. At the same time, the legitimate trade in arms, vital for national defence and security, will be upheld.

For the United Kingdom, the treaty will be relatively straightforward to ratify because we already have a highly developed export control system. The Government hope to complete the ratification in the next few months. We also hope that the treaty will soon achieve the 50 ratifications that it needs to be brought into force. We and our partners are actively lobbying other Governments to encourage them to sign and ratify it as soon as possible. We are providing funding to support states that need to introduce new legislation or regulations to bring their export controls up to the higher standard required by the treaty.

The performance of the Export Control Organisation in the past year is also— albeit on a more local scale—an important achievement to note. Until recently, the ECO worked to two main targets for processing export licence applications: a primary target to turn around 70% of standard licence applications within 20 working days, and a secondary target of completing 95% of those applications within 60 working days.

Year-to-date performance to the end of October on the primary target is 80.2%, which is a further improvement on the 71% achieved in 2012. However, we listened to industry concerns that, although the old secondary target of completing 95% of licence applications within 60 days was being met, that still left a sizeable number—about 850 a year—taking longer than three months to get a decision. In March I therefore announced a new, more ambitious, secondary target of completing 99% of cases within 60 working days, with the aim of further improving the efficiency of the system. Those additional cases, of course, tend to be more difficult and often require additional scrutiny because of their destination, but the performance since July, when the new target came into effect, stands at a very encouraging 98.4%.

Several Members, including the hon. Member for Glasgow North, mentioned transparency. We remain committed to greater openness and transparency in licensing as that provides the means for Committees, the House and the public to hold us to account. At the same time, in generating more information for disclosure, we should not create unnecessary red tape for businesses.

In the most recent initiative, we have sought to increase transparency by requiring exporters to provide us with information about their export and trade activity under certain open licences. While the final preparations were being made for that, it became clear that we had not struck the right balance between the twin objectives of increasing transparency and avoiding unnecessary bureaucratic burdens.

In particular, the Government became concerned that the proposed reporting of each export would put our exporters at a disadvantage in relation to exporters from other countries, notably the United States. Clear evidence emerged that the proposed rules might lead to some of our companies relocating some operations overseas, with negative consequences for British jobs.

[Ann McKechin]

I refer the Minister to the Government’s feedback of July 2012:

“Exporters generally accept the rationale for this initiative and are generally supportive provided that the administrative burden is kept to a minimum and that what they consider to be truly sensitive information is protected.”

The point is the quality, not the volume, of the information, so that people can know accurately what has been sold. Where is the evidence that exporters in the United Kingdom have said at any point that they will take their business elsewhere?

[Michael Fallon]

I am happy to write to the hon. Lady with more evidence to back up what I have said about the fear that some operations might be relocated overseas. She has challenged me on that, and I am happy to write to her in detail.

The Government announced in Parliament on 18 July that we had decided to dispense with some proposals relating to quarterly reporting. As a result, users of open-general and open-individual licences will be required to make reports on their use of those licences annually, rather than quarterly as originally envisaged. They will still have to provide information on the destination country, the type of end user and the number of times the licence has been used for that country and end user type.

Those revised reporting requirements will apply from 1 January 2014, with the first year’s data being published in 2015. All that information is additional to the existing quarterly and annual reports. We are not reducing the overall level of reporting—quite the opposite. We will be publishing considerably more information about the use of open licences than is currently the case.

I think it was my hon. Friend the Member for Beckenham (Bob Stewart) who raised the matter of the register of arms brokers. My right hon. Friend the Secretary of State for Business, Innovation and Skills has decided that now is an appropriate time to look again at the issue of a pre-licensing register of arms brokers. We will therefore be launching a public consultation to help in gathering the necessary evidence to allow the Government to decide whether to introduce such a register. There will, of course, be an emphasis on the relative costs and benefits, alongside the likely effectiveness of such a register. The public consultation is now planned for early next year.

My hon. Friend the Member for Beckenham and, I think, the hon. Member for Llanelli (Nia Griffith), asked about brass-plate companies. The existing legislation would, in certain circumstances, allow enforcement action to be taken against those and their officers, but sufficient evidence is necessary to justify such action. We continue to pursue with other relevant agencies the possibility of using other legislation to discontinue the UK registration of such companies on public interest grounds. I hope that that is helpful. It is a complex issue, which raises difficult questions about the nature of any evidence that may be disclosed in any proceedings. We shall, of course, update the Committees when firm conclusions have been reached.

I was asked by the hon. Member for Edinburgh South about risk profiling. I reassure him that licence applications are reviewed by officials in a number of Departments and agencies. We take account of all the available relevant information. As I have said, we look at the goods, the end user and the risk of diversion. We will of course not grant a licence if that would breach the consolidated criteria. Risk is integral to everything that we do on export licensing.

I was asked about the paragraph 46 ambiguity, and I am anxious not to add to it. I am assured that if there is any confusion, criterion 2 is the policy, but I am happy to write more formally to my right hon. Friend the Member for Tonbridge and Malling on that issue.

Oral Answers to Questions

Debate between Michael Fallon and Ann McKechin

Thursday 7th February 2013 Commons Chamber

[Michael Fallon]

That was a most ingenious formulation in support of the bid from the Swindon and Wiltshire local enterprise partnership in wave 2 of city deals, which is under consideration at the moment. I will ensure that the use of redundant land is one of the aspects that we consider.

[Ann McKechin (Glasgow North) (Lab)]

11. What assessment he has made of the effect on consumer behaviour of Government advice on debt.