Export Control Bill

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Mr. Key: I have great sympathy with the principle of accountability and transparency in such areas, but I have also seen Governments operating in very strange, difficult circumstances. I can, therefore, see the case for a Government having some freedom in this area. The matter touches deep constitutional issues. Our Government can go to war on the basis of the royal prerogative, without reference to Parliament—in theory, we could refuse supply, but only after the event. The constitutional position of the royal prerogative changes matters.

To take a practical example, I do not know whether the hon. Gentleman has been to Kosovo. If he did, he might see a situation in which the British military has gone in first, backed up by Ministry of Defence police in the place of the gendarmerie that any other country would have, then backed up by all the non-governmental organisations, doing amazing work for people and rebuilding an economy. In those circumstances, there is only a law based on the principles of international law and United National resolutions that, with luck, might be relevant. However, HM forces and sometimes their agents—what were Crown agents—are doing deals, employing people, buying equipment, renting buildings and doing other things that are covered time and again in the Bill, for which the Government have no contract written down anywhere and nothing to be scrutinised. My fear, therefore, is that if we are not careful we shall make it not merely difficult but impossible for the Government to move into a Kosovo-type situation and carry on in the way that they have done so successfully in the past.

I really do not know which way to jump on this one. I find the question very difficult, and I shall listen carefully to what the Minister says. I sympathise with the vision of the hon. Member for Twickenham, but I am worried about the practicality faced by squaddies, the military police, the Ministry of Defence police and Crown agents in situations such as that in Kosovo.

5 pm

Mr. Gerald Howarth: I feel slightly more strongly than my hon. Friend does about the matter. This is perhaps an example of the Liberal Democrats failing to understand and appreciate the real world. I find that attitude surprising from the hon. Member for Twickenham, given that he has spent a long time in the oil industry. He mentioned the Al Yamamah contract, which was a defence export and oil-related deal with the kingdom of Saudi Arabia. The fact is that some countries will undertake military contracts on a government-to-government basis only. They will not, for example, contract with BAE Systems; they wish to contract only with the British Government. On the other hand, other countries are perfectly happy to engage in commercial contracts.

I should preface my remarks by saying that I understand the hon. Gentleman's desire to put private industry on the same footing as the Crown. That is a perfectly laudable aim, but I should caution him that, because of the unique nature of defence contracts involving countries that prefer to do business directly with the British Government, there is a downside to making the requirement mandatory. As I understand it, the Al Yamamah contract with Saudi Arabia is such a contract.

The hon. Gentleman and other members of the Committee should not be under any illusion as to the importance of the Al Yamamah contract. It was the most significant defence contract ever secured by British industry. It helped not merely to ensure economies of scale in the production of Tornado aircraft; it also served to cement the relationship between the United Kingdom and the kingdom of Saudi Arabia—a purpose to which I have drawn the Committee's attention in the past. The United Kingdom has derived enormous benefit from a relationship that proved itself in the Gulf war and is proving itself now. It is one reason why President Bush and the Prime Minister have been able to build a coalition. In part—I make no wild claims—the pre-existing relationship involving the kingdom of Saudi Arabia, the United States and the United Kingdom derives from our partnership in the provision of defence equipment to Saudi Arabia under the Al Yamamah contract.

I believe that the wording in the Bill, which is permissive and enables the Government to make an order ``binding the Crown'', is the right way to go about matters. I hope that I have explained to the satisfaction of the hon. Member for Twickenham, and to others who are perhaps doubtful, that that is the best way to proceed in the circumstances. To act in any other way would be profoundly damaging not just to British defence industries, but to the British Government in their pursuit of a foreign policy that needs to be built over time. The fact that a relationship of trust between ourselves and the kingdom of Saudi Arabia has been built up over many years, not just a few months before a conflict, has enabled our Prime Minister and the President of the United States to build that important coalition.

Nigel Griffiths: I should like to consider what is involved in Government exports, because we shall see that there is little point in applying a licensing regime to the Government. Our exports tend to be items of essential equipment used by our armed forces or in connection with important international collaborative defence projects such as peacekeeping projects in Kosovo and Macedonia. Items are also exported for international development purposes such as mine clearance. The Government of the day must carry out their various operations in pursuance of their announced policy efficiently, effectively and in conformity with the principles underlying the purposes set out in the schedule. It makes no sense for the Government to license their own exports for defence and other essential purposes. To impose such a requirement would create unnecessary bureaucracy and in some cases, as I am sure that all hon. Members will appreciate, could hamper our ability to respond quickly. The Government make information available in annual reports, which provides Parliament with the opportunity to scrutinise export decisions. I hope that that safeguard will enable the hon. Gentleman to withdraw his amendment.

Dr. Cable: I shall respond first to the point that has been made about Kosovo-type problems--the hon. Member for Salisbury calls them strange and difficult circumstances--when the Government must respond quickly and appropriately to new situations. Liberal Democrats have never argued that there is anything fundamentally wrong with providing military assistance or military hardware in some circumstances, and it may be part of a British aid programme to provide added security in an environment such as Kosovo. That has never been a problem and the amendment does not undermine the purpose of the clause. One purpose of the procedural aspects of the Bill is to provide flexibility with deferred affirmative action procedures and negative action procedures and to enable the Government to move rapidly and to change the licensing regime in response to changing circumstances. The amendment would not prevent the Government from responding quickly to a changed circumstance such as Kosovo, which would have the full support of the House.

The hon. Member for Aldershot was closer to the point. The meat of the matter is the big Government-to-Government contracts. Some Governments --Saudi Arabia is a good example --prefer to deal with the British Government because they view those contracts in a highly politicised way. Money may not be the object and they may want the security of the British Government's backing, so there may be a strong political element in the contract. That is all the more reason for having some safeguard on Crown activities.

In the case of Al Yamamah, there may have been good reasons for licensing the equipment, but circumstances could arise in which a Government Department or a Minister overseeing a particular contract might want to act outside the purpose of the Bill as defined in the schedule. Such circumstances may be hypothetical, but we should be aware that Governments do not always act in a righteous and proper way and there should be safeguards on their behaviour as there are on the private sector. That is the reason for the amendment.

We may wish to return to the matter, but I do not want to delay the Committee and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7, as amended, ordered to stand part of the Bill.

        Further consideration adjourned.--[Mr. Pearson.]

        Adjourned accordingly at nine minutes past Five o'clock till Thursday 18 October at half-past Nine o'clock.

The following Members attended the Committee:
Benton, Mr. Joe (Chairman)
Baird, Vera
Cable, Dr.
Griffiths, Nigel
Hendry, Mr.
Howarth, Mr. Gerald
Jones, Mr. Kevan
Joyce, Mr.
Key, Mr.
Laxton, Mr.
Liddell-Grainger, Mr.
Marris, Rob
Pearson, Mr.
Savidge, Mr.
Starkey, Dr.
Tynan, Mr.

 
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