Examination of Witnesses (Questions 100
TUESDAY 10 NOVEMBER 1998
R HEATHCOTE AND
MR A MANTLE
100. Is it correct that this is one of the areas
where we are at odds with the EU, in the sense that their guidelines
do not cover equipment of this nature?
(Mrs Roche) No, that is not my understanding. We are
not unique, as I understand it, as far as the UK is concerned
in having our export control regulations covering defensive equipment.
(Mr Mantle) There are items of defensive equipment
on the military list and the military list is the international
agreement on things which are controlled to which the Minister
was referring earlier. We are not alone. The other question is
that just because a thing is controlled does not mean to say it
is always going to be refused.
101. You have been kind enough to supply us
with the percentage of export licences which you are completing
within the ten days for the ones which do not have to go outside
the Department and 20 days for ones which do. The target is 70
per cent, which in itself is not particularly ambitious, but it
is not being met and in some cases it is not being met by a mile.
Can you tell us why this is and whether you think there are any
realistic prospects in the near future for this improving? In
particular, within the 20-day one, which is by far the worst one,
you are down below 40 per cent. Do the other departments to which
you circulate these licences have their targets for responding
to you? Patently they seem to be missing them if they do.
(Mrs Roche) First of all on those cases which do have
to be circulated to other advisory departments, the latest set
of figures which you do not have because they came after the memorandum,
show us doing rather better. You are quite right when you talk
about our target of 70 per cent. The latest figures on the non-circulated
cases show that we have actually exceeded our target and we are
now just over 78 per cent of those, so we are exceeding those.
That does not mean to say I am complacent on that and I should
like to see us doing better and certainly my officials want to
see us doing better. What we have done is to put more resources
into this area of the Department's work and to increase our staff
complement as far as that is concerned. As far as the circulated
cases are concerned, the latest figures show that overall we are
doing better on that. On those latest figures they have gone up
to just over 50 per cent. The difficulty we have had recently
on those figures isand we have highlighted this with youthat
the recent nuclear tests in India and Pakistan and the recent
statement which the Foreign and Commonwealth Office made there
as to how we would now process licence applications, means that
there have been some delays but we are, together with our advisory
departments, getting on top of that. Obviously we have to wait
for the other departments for advice on this before we can progress
the licensing procedure. We are now expecting, apart from a few
difficult cases which we are still dealing with, to improve our
targets on this. They have targets as well.
102. Do they publish?
(Mrs Roche) They would have a 20-day response on that.
(Dr Heathcote) Ten days.
(Mrs Roche) It is 20 days for us and ten days for
them on the circulated cases.
Mr Morgan: It might be helpful if we could get
some of these figures as well from the other departments.
103. I wonder whether you have any information
or if not whether it would be possible for the Committee to get
it. How many contracts have been lost because of Department delays?
(Mrs Roche) It would be difficult to put any figure
on this at all. Let me say to you that we work with the industry
closely, we keep in close touch with them. We endeavour, as far
as we are concerned, to give as speedy a response as possiblebut
you would expect us as a government to give that responsewith
every possible proper consideration. Clearly we have to circulate
it to our advisory departments. Where we have a situation, as
we did with those nuclear tests in India and Pakistan, very special
care had to be taken. I could not possibly put a figure on it.
What I do say to you is that we are moving as speedily as we possibly
can with our other departments.
104. If you could not put a figure on it, could
you let us know how many complaints you have received?
(Mrs Roche) We could certainly give you a figure on
that. For as many complaints that we get, we also get congratulations
on other parts of the system.
105. Let us have those as well.
(Mrs Roche) I shall let you have them because perhaps
the other figure I should have given you, apart from the increased
figures on the circulated cases of just over 50 per cent, if you
look at our Rating Advisory Service, is the figure there of 90
per cent. So we are doing pretty well on that. We shall certainly
give you some figures on complaints; we shall be delighted to
106. And the good news as well.
(Mrs Roche) Yes.
107. Some disappointment has been expressed
from some of the written submissions which we have had about the
lack of any sort of substantive proposals to improve and beef
up the end-user controls. What sort of measures are you thinking
of in this regard? Are you attracted to any of the catch-all type
of arrangements which could be applied?
(Mrs Roche) This is a very important issue and not
an easy one either and probably a very, very difficult one. We
have of course featured it in the White Paper and we are considering
responses. We are working with others in the EU as far as end-user
control is concerned and certainly we have looked at the responses
which have come in, particularly of course from industry, but
also from the NGOs, as far as the overall catch-all is concerned.
This is some work which we are taking forward; certainly it is
work which the Foreign Office are very concerned in as well and
we are taking this forward with our other EU partners. I should
not want to pretend to you that this is an easy area of work;
it is not, but we are absolutely committed to taking it forward
and we will examine what the NGOs have said to us very seriously
108. Do you have any sort of view on what the
prospects are, for example, of being able to introduce an end-user
process which would be relatively standard across the EU?
(Mrs Roche) Difficult to say at this early stage.
In the process we are examining it with other countries in the
EU but what I would not want to do is to say to you that there
is any easy answer to this or any easy solution. It is an area
of work which we will take forward. Clearly the Foreign Office
have a very, very key role here in this work and with them we
are working very closely on this.
109. May I press you on the Foreign Office role?
Do you ever get the reverse pressure where you might be minded
to turn something down and the Foreign Office say no, it would
be unhelpful and they actually want you to approve it?
(Mrs Roche) In a sense it is a fairly consensual process.
May I tell you what I think my role is and the role of my Department
because perhaps that would be helpful? I regard myself, if it
is not too grandiose to say so, as the custodian, the guardian
on behalf of the Secretary of State, of the process. That is my
role. My role is not to substitute my judgement for the expert
advice which might be given by the FCO or the MOD. My role is
an almost quasi-judicial one: it is to make sure the process has
been gone through, it is consistent, so that we are being consistent
with licences, between all the licences, and we are adopting the
process in the most fair and transparent way. That is in a sense
110. That does not quite answer my question.
I am asking you whether your Department ever gets some sort of
pressure from the Foreign Office saying they want to support this
particular regime, it would be helpful if you granted them a licence,
even though your own judgement and that of your officials might
go a bit the other way.
(Mrs Roche) In a different way that is trying to say
what our role is and that is not my role. My role is to be the
guardian of the licensing process. It is the Foreign Office's
role to set the overall framework with the criteria. They have
the advice of our posts abroad who give them the advice as to
why it is they should come to the decisions they make; obviously
Ministers then make the overall decisions. My role in the process
is to look at it and ask whether we are being consistent. Is this
what we have done before? Is the integrity of the process protected?
That is my role. The departments work very, very closely together
111. The process may be harmonious but it is
not consensual, is it, in fairness? What actually happens is if
your officials have concerns that there is a case which needs
to go out to the MOD, or the Foreign Office, it goes to those
Ministers and if Ministers, usually at Minister of State level
within those departments, say no, that is it really, is it not?
(Mrs Roche) What happens is that as with any other
Government decision, at one level officials discuss and then at
another level Ministers discuss and then an overall decision is
arrived at, like in any other area.
112. I am not attacking on this, I just want
to understand the process. How often in fairness have you discusseddiscussed
as opposed to your officials or sending written submissions to
Ministers in other departmentshow often have you had cause
to discuss export applications with colleagues in other departments?
(Mrs Roche) From time to time. Of the proportion which
Ministers see and it is about three per cent which actually goes
to Ministers, of that three per cent, there is a very, very small
number in that three per cent which needs further discussion between
Ministers to make sure that the process is correct.
113. Can you think of any instance during your
time where if a Foreign Office Minister has said no, that has
not effectively been the final decision?
(Mrs Roche) It is never finally a no. The end is when
the overall Government decision is made. There will always be
discussions between Ministers, between myself and the Foreign
Office Ministers involved and the MOD Ministers involved about
a particular licence. We will continue to discuss it until we
are agreed on a particular outcome. When it actually gets to ministerial
level and you have some added discussion, that is a very, very
small number of cases indeed. Quite rightly you and the Committee
would expect us to give it that proper consideration.
114. I hear what you say. I hear what you say
on that. Unfair in a sense because you did not hear the evidence
of the Defence Manufacturers but any objective observer listening
to their evidence would say they were expressing very considerable
concerns about delays. It seems we have a slight dysfunction here
in that there seem to be very few refusals, very few appeals,
but seemingly quite lengthy delays in the process throughout.
Clearly there are some cases which are quite difficult. Is it
not possible to devise a system whereby one separates out those
which are difficult and ensures that the bulk of those which clearly
are not refused get through much more speedily than they do at
the present moment?
(Mrs Roche) I wish it were that simple. Quite clearly
there are many licence applications where it is very straightforward
and on some aspects of the system, the Ratings Advisory Service
as I have already mentioned, when you get exporters formally coming
to us and asking what the rating is and whether it is even licensable,
we are bang on target. There are many things we are getting through
with a very quick response indeed. There are always going to be
cases which are difficult, where we need to have technical advice
and of course, because of the particular circumstancesI
have already mentioned India and Pakistan recentlywe will
need to circulate that. That does not mean to say that I am complacent
about those delays. I have already said that we want to see an
improvement and that is indeed why we have put more resources
into this area. I know as well that my colleagues in the MOD and
in the FCO want to make sure on the circulated cases as well that
we get the time down. We are working to do that and certainly
the latest set of figures which we have had are encouraging in
this direction. There was bound to be quite a problem after the
incidents in India and Pakistan, but I believe we are on the right
115. India and Pakistan were hopefully very
much one-offs and quite recent one-offs. I do not think the witnesses
whom we were hearing today were expressing particular concern
about that. What they were expressing concern about was what they
saw, within the process, as endemic delays, very often what they
saw as very straightforward applications. Is there anything you
think the manufacturers could do to help themselves in the process?
Is it a question of coming to officials earlier with information
(Mrs Roche) Clearly the more information we have the
better and sometimes there may be something on the form which
requires us to make sure that we have investigated it properly.
As you will know, we are introducing the new computer system,
which we very much hope will be something which will help exporters
because it will enable them to communicate with us in electronic
form and eventually we hope that when the new system comes into
place and it beds down that will be something which will help
them. Our responsibility as a department is that when we circulate
cases we are obviously dependent on our advisors in other governmental
departments in the process. We do understand what exporters and
what defence manufacturers say to us. Certainly for our own part,
we want to make sure that we are increasingly meeting our targets.
Certainly we see the new computer system as being something which
will be a great help in this area.
116. May I press you on that point? One of the
things which the DMA said to us quite frequently was that there
was a problem sometimes that your own people did not understand
the nature of the request which was being put to them and perhaps
they did not have the necessary technical expertise to make an
assessment. Is that fair? Do you possess the technical expertise?
(Mrs Roche) I am rather surprised to hear that because
we certainly pride ourselves on our technical expertise. As far
as the DTI is concerned, as far as my officials are concerned,
we actually have highly regarded, and if I may say so not just
highly regarded domestically but highly regarded international
experts who are members of the licensing department and they are
our in-house resource, particularly on the very difficult issues.
In addition to that we rely on technical expertise from the MOD
as well and the relationship between our technical experts and
the technical experts from the MOD is very, very good indeed.
It is an extremely regular contact. I am slightly surprised to
hear that but of course if there are any specific cases where
there has been a problem and if anybody would care to write to
me on that, I should very happily investigate that.
117. Perhaps the problems occur on the rather
more mundane items?
(Mrs Roche) That may well be. If that is the case,
if there is any misunderstanding, please, we should be delighted
to hear and we shall look at it. We have put more resources into
this section of the Department of Trade and Industry, so what
we want to do is to give a good service to those who come to us.
118. Under the new proposals a lot of concern
has been expressed by academia and exporters on the proposal to
make export of information by intangible means subject to the
same controls as if exported on paper or disk. How serious is
the problem with which these proposals are trying to wrestle?
On page 24 of the White Paper you say that "it is difficult
to make an accurate assessment of the extent to which UK firms
may be exporting technology intangibly without consulting the
Government". Realistically how are you going to be able to
police the transfer by e-mail or fax or word of mouth?
(Mrs Roche) As you say, not an easy issue. There is
clearly an anomaly there. For example, export controls cover the
export of technology by computer disk because that is something
which exists physically. If you were to export the technology,
either by for example say a fax or indeed by e-mail, that would
not be controlled. We are actually talking about the method. There
is a gap there and what we are doing in the White Paper is catching
up in terms of what was not possible in 1939. We have and are
looking at the responses which we have received; particularly
on this we have received responses from industry and from the
academic world. We want to look at it very carefully. Clearly
in what we do, we do not want to operate anything in an unreasonable
way or in any way which puts a regulatory burden either on industry
or on academic research. There clearly is a gap here which does
need to be plugged and we want to do that. This is an issue we
are considering very carefully as a result of the White Paper
119. Is there a problem or are you just trying
to create a problem?
(Mrs Roche) We do not know.