UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 178-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

COMMITTEES ON ARMS EXPORT CONTROLS

 

 

STRATEGIC EXPORT CONTROLS

 

 

Wednesday 21 January 2009

IAN PEARSON MP, MR JOHN DODDRELL and MS JAYNE CARPENTER

Evidence heard in Public Questions 1 - 62

 

 

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Oral Evidence

Taken before the Committees on Arms Export Control

on Wednesday 21 January 2009

Members present

Roger Berry, in the Chair

Mr Adrian Bailey

John Battle

John Bercow

Malcolm Bruce

Richard Burden

Mr David Crausby

Mike Gapes

Linda Gilroy

Sir John Stanley

________________

Witnesses: Ian Pearson MP, Economic and Business Minister, Department for Business, Enterprise and Regulatory Reform (BERR), Mr John Doddrell, Director, Export Control Organisation, Department for Business, Enterprise and Regulatory Reform, and Ms Jayne Carpenter, Assistant Director, Export Control Organisation, Department for Business, Enterprise and Regulatory Reform, gave evidence.

Q1 Chairman: Good morning and welcome. May I start with a question on where the Government has reached in its consideration of extra-territorial controls. As you know, we very much welcome the Government's decision to extend extra-territorial controls to cover small arms, MANPADS, cluster munitions but our main concern, as we have repeatedly stated, has been to bring within legal control activities which, if they had taken place in the UK without a licence, would be criminal activities; that is that all items on the Military List effectively should be brought within extra-territorial controls. We are aware that there have been discussions between the NGOs and the industry stakeholders. My first question therefore is: what has the progress been in relation to those discussions?

Ian Pearson: The first thing I would like to say is that I think there have been a number of significant successes in general terms over the past year or so. We have introduced significant changes to controls in high risk areas where stakeholders have been calling for change for some time: new controls on sting sticks that were introduced in April, the introduction of a new three-category trade control structure with stronger controls on cluster munitions, small arms and MANPADS, which you have just referred to, which were announced in October 2008, stronger trade controls on light weapons. I think the review that has been undertaken, which undoubtedly we will get into as well, is one of a number of achievements over the last 12 months. With regard to the specific question that you raise on extra-territorial controls, as you know, controls are already in place on a wide range of goods, as I have indicated and as you are very well aware. In April 2009, those will be extended further to cover light weapons - again a not insignificant development. You rightly point out the fact that stakeholders are currently working to produce a joint proposal in relation to any further extension. I have to say that further measures need to be based on evidence of risk; they need to proportionate and workable; and target activities of real concern in an effective way. We are not at the stage yet where there has been a consensus in terms of taking these matters forward. We still want to continue to work with stakeholders to come up with proposals for any further extensions which we believe are workable.

Q2 Chairman: It is always said that you have sub-contracted this job to the NGOs and the defence industry. We have made the very simple case, and year by year you have given us a bit more, so as the years have gone over you have extended extra-territorial controls. The Government has territorial controls in other areas of public policy. Do you not think that the Government ought to be leading on this rather than leaving it to the NGOs and the industry stakeholders to come up with a solution?

Ian Pearson: I believe we have a shared responsibility. There is a process underway, as you are aware, that started well before I was appointed Economic and Business Minister. In the time that I have had to look at it, it really fits quite well with my view about how policy is best made. I happen to believe that we ought to be doing more of what you might call co‑production of policy, working with outside groups, trying to build a consensus on the best way forward. My understanding is that is exactly the sort of process that we are trying to follow in this place. I think that that co-production method is a good one and we ought to look to see if there is consensus about how we take things forward. Ultimately, of course, if there is not going to be any agreement, then it will be up to Government to make a decision as an arbiter of where the balance of advantage lies.

Q3 Chairman: Finally on this, as you are aware, it took years for this Committee and others to persuade the Government to include small arms and light weapons in the category of equipment that is subject ---

Ian Pearson: Yes, and we have responded.

Q4 Chairman: Minister, you have. I am delighted, as I said at the very beginning, and I always want to praise where praise is due. Do you not think that at the end of the day the logic of this is that all the groups on the Military List should be within your new Category B in the export control order?

Ian Pearson: I do not necessarily accept that that is the logic because I think you need to look at whether that would impose a disproportionate burden on industry. As I say, we need to look at evidence of risk; we need to look at proportionality; we need to look at what is workable as well. I think the co-production methods that I am talking about, getting stakeholders to discuss this, is the best way if consensus can be reached. If consensus cannot be reached, then, as I have said, it will be you to Government to form a view.

Chairman: Thank you very much. It was worth a try.

Q5 Malcolm Bruce: I am sure all of us will welcome the fact that we have a ceasefire in Gaza and hope to God that that will continue without provocation or response to it from either side. There has been a lot of concern about the conduct and the proportionality of the Israelis forces on what they have and have not done. There are specific points. In the past we have been concerned about the equipment in the cockpits of the F-16s. We had evidence in 2006 from the British Embassy that confirmed that F-16s, to which we had supplied equipment, had been used in incursions to Lebanon and Gaza, which would appear to be in breach of the stated policy. Just to finish on the conflict, the Hermes system which we applied has also been reported to have been used in ways which may or may not contravene international agreements and our own policy. The specific question is: what is being done to assess whether or not the policy has been broken by Israel in terms of our supply, although I would have to say, Minister, I think there is a very strong view of public opinion that the easiest way to resolve this is to stop supplying Israel with anything that could conceivably be used in this way.

Ian Pearson: Firstly, I share your view, and I think it is a very widespread view as well, about the sense of relief that Israel has withdrawn. We hope that negotiations continue and will bring a long and lasting settlement. The first thing that I want to say in response is that, as I am sure you are aware, Israel has for a long time been a very complex and difficult country to deal with from an export licensing perspective. As a government, we have always acknowledged that Israel has a right to defend itself, but at the same time we have been very mindful of concerns about human rights and in particular also regional stability. Our policy on Israel has not changed. All applications are assessed, as the Committee is aware, in the light of all the available information. We will not issue a licence where we have human rights or other concerns under the consolidating criteria. That has been an established policy for us as a government. The extent to which licence applications are refused or approved, which is determined by the circumstances at the time of the application, will of course change over time. That obviously brings particular difficulties. With regards to the recent action by Israel in Gaza, I am advised that it is not yet completely clear which equipment has been used. Since the introduction of the criteria in 2000, we have issued licences against risks of goods being used aggressively in military operations. Where we have identified a clear risk, we have refused to export equipment. As you would expect, we will want to take into account the recent conflict when making future licensing decisions and the conduct of the Israeli defence force in our assessment of licensing applications in the future. As part of that process as well we will want to examine exactly what had happened with previous licensing decisions and whether equipment has been used contrary to the consolidating criteria.

Q6 Malcolm Bruce: That was my follow-up point. I will finish with this question. If the British Embassy confirmed that F-16s were used in Gaza in 2006, it seems highly probable in a much more sustained and larger incursion they will be used again. What I am asking is: proactively what are we doing to investigate that? We have also seen a situation where in 2002, 84 licences to Israel were refused; this had fallen to 13 in 2004. The figures show that exports in value have gone up this year. We were told when we protested in the past and others protested by Jack Straw was that the importance of the exports and the UK's trade relationship with the US outweighed concerns against the consolidated criteria. I am putting to you, Minister, that the British public would not find that a very satisfactory justification if we find that these weapons that we have equipped have been deployed in Gaza in this most recent conflict.

Ian Pearson: Firstly, I do not want to go into detail about the way in which we have taken information about how military equipment may or may not have been used, but there are obvious ways in which we can ascertain that information. With regard to licence applications, as the Committee will be aware, the UK has refused a number of licence applications to Israel over the years. On the figures, in 2002 we refused 84 standard individual licences and since then the annual figures have fluctuated between 9 and 26. Israel regularly features in three destinations with the highest numbers of refusals. I think the figure for last year is that 13 C‑lists were refused. We will always look at these things on a case-by-case basis, based on the consolidated criteria. There is a point that I want to make that not all of the licences granted for Israel involve exports which will remain there because Israel does actually systems integrate and incorporates a number of British exported good into larger equipment for onward export to third countries. You will be aware of Israel's role in that way. We will of course continue to monitor the situation in Israel extremely closely. I agree with him in his views about the British people and how people in Britain see this. This is an area where we need to proceed extremely cautiously. If we have information from any source that UK equipment is being misused, then this has to be factored into future decisions when it comes to making licence assessments, and indeed will I think probably undoubtedly be raised with the Israeli Government as well.

Q7 Chairman: The question about the F-16 issue was raised. With respect, I think we need to have an answer. Everyone knows that F-16s amongst other weapons of conflict were used in Gaza. We know that in 2002 the Government shifted its policy specifically to allow head‑up display units to be exported to the United States to be put in F-16s that could then be exported to Israel. The question that Malcolm is raising is: is there not some sort of conflict between our knowing that is what is going on and the state of government policy that arms exports to Israel only take place when there is no significant risk they will be used in the Occupied Territories? Is there not a fundamental conflict between those two policies?

Ian Pearson: I understand that the decision on head-up display units was taken some time ago. This is a piece of equipment that is put into the F-16 fighter plane. My understanding is that the decisions were taken on that at the time by Ministers looking at the consolidated criteria. I have no doubt that this was a finely-balanced decision at that time.

Q8 Chairman: With respect, the Foreign Secretary at the time said very specifically that the reason was our economic relationship, our defence industry relationship, with the United States. That was the reason given for changing the policy. It does not sound particularly finely-balanced to me. My question was to the Government, and maybe I am not going to get a further answer, and that is no criticism of you, Minister: is there not a fundamental conflict within the stated the policy that is supposedly applied in ordinary circumstances, namely that licences are not granted if there is a significant risk that the equipment will be used in the Occupied Territories or aggressively, whereas in the F-16 case we do knowingly export head‑up display units for F-16s to be used in Gaza. That is Government policy.

Ian Pearson: I do not accept that there is a fundamental conflict in policy. I do repeat that Israel is a complex country and a difficult one to deal with. Our policy has always been that Israel has a right to defend itself, but we have also always been very mindful about concerns on human rights and regional stability, and we have been particularly concerned with human rights, given the recent conflict in Gaza. These are difficult decisions, as I am sure the Committee is very well aware.

Q9 John Battle: On a point of fact, because I think the focus is on Israel, we need to keep that focus and that needs we need to do more particular work. There are calls on the Order Paper in the Early Day Motions listing all the types of weapons sold to Israel. The particular question is: in the whole of 2007 there were 7.5 million recorded exports to Israel, but in the first three months of 2008 there were 19 million, a massive increase. You may reply to me that the evidence shows that this was for radio communications; that may have been radio communications for use on naval vessels. The whole of that complex system was applied for late in 2007; it was granted early in 2008, so it went through at rapid speed. I would be prepared to put together an argument to say that the military terms in the present conflict would not have been possible without the back-up of that extremely complicated, sensitive equipment that keeps the whole communications systems operational from offshore to cover the whole of a small area. We could put together an argument to say that we created the conditions for conflict by those sales; in other words, unless we are checking much more rigorously and keeping a much closer account of what is going on, we are just making future conflict more possible, not less.

Ian Pearson: I am not sure that I accept the arguments that you put there, John. I think that dramatises the situation. I repeat the fact that we look at any potential export licences to Israel extremely carefully and extremely thoroughly. A great deal of mention has been made of head-up display units. As I think the Committee is aware, no licence applications have been granted for them since 2002. I think that that needs to be borne in mind by the Committee. We will continue to assess the situation when it comes to future licensing decisions. We will want to factor in how the previous export licences for equipment have actually been used in practice. I can assure the Committee that that will be part and parcel of the rigorous assessment process that we will continue to make on these matters. I think the Committee is aware of the basic process about how decisions are reached on this.

Q10 Chairman: Before I forget it, you are saying that no licence has been granted for the export of head-up display units since 2002?

Ian Pearson: Yes, that is my understanding.

Q11 Chairman: Have any been applied for and rejected? Perhaps you could drop us a note on that. That is a relevant question. It is an important point.

Ian Pearson: We would be happy to drop you a note on that.

Q12 Richard Burden: Could I establish on this issue whether or not the trade relationship with the US outweighs the consolidated criteria. You say, Minister, that you do not think it there is necessarily a conflict between the UK's trade relationship with the US and other consolidated criteria. It was very specific in 2006. The foreign Secretary then said that the trade relationship outweighed the consolidated criteria. My first question is this. In the light of what has been happening over the last three weeks and arguably for longer than that, which comes first now? Do the consolidated criteria come first or does the trade relationship with the US come first?

Ian Pearson: I am not going to contradict the Foreign Secretary and what the Foreign Secretary said. Richard, you will be very aware of how supply chains work from the fact that you are an expert in the automotive industry and you understand how there are integrated supply chains in the aircraft industry as well. I think we need to bear in mind some of that in terms of the practicalities. Government will continue to assess applications on a case-by case basis against the consolidated criteria.

Q13 Richard Burden: Will they be the pre-eminent consideration? That is a matter of policy. They are either going to be the pre-eminent consideration or they are not.

Ian Pearson: Yes, they are. May I read out what the then Foreign Secretary actually said in July 2002? "The Government will continue to assess such applications on a case-by-case basis against the consolidated criteria, while at the same time having regard to, inter alia, the following factors: (a) the export control policies and effectiveness of the export control system of the incorporating country; (b) the importance of the UK's defence and security relationship with the incorporating country;" - and that is the point I think the Committee are making - "(c) the materiality and significance of the UK-origin goods in relation to the goods into which they are to be incorporated, and in relation to any end-use of the finished products which might give rise to concern; (d) the ease with which the UK-origin goods, or significant parts of them, could be removed from the goods into which they are to be incorporated; and (e) the standing of the entity to which the goods are to be exported." The then Foreign Secretary was very clear that the overriding concern would be that the Government would continue to assess such applications on a case-by-case basis. He gave a number of different criteria. I think it is very clear from what he said that the consolidated criteria are important.

Q14 Mr Crausby: I hear what the Minister says about a case-by-case basis and I completely accept, as many do, that Israel has the right to defend itself. I think the real issue is this. Is not killing hundreds of children outside its borders just a bit beyond defending itself? Can we not get back to the issue that when we look at that point of hundreds of dead children in Gaza as a result of Israel's actions, we have to think a little bit beyond a case-by-case basis. It is all right being dragged off into the detail of this. It seems to me that the question really should be: should we not have a new, fresh and overall look in the circumstances that we have just experienced? It seems to me that in a conflict of this extent they are pretty well bound to have used almost everything that we have sent to them.

Ian Pearson: I think we are all horrified about the loss of lives and in particular of innocent children in Gaza during the recent conflict that has taken place. That sense of outrage has been expressed clearly in the House and you will have heard the statement made by the Foreign Secretary only very recently on these matters. Of course, given these incredibly distressing recent events, we will need to re-assess the situation when it comes to any future licensing applications for the export of goods to Israel. You would expect us to do that; that is exactly what we will do. We will want to factor in all the information we have available about how possibly previous equipment has been used. As I say, we do not yet have a clear picture of that, but we will certainly want to factor that sort of information into any future export licensing decision.

Q15 Sir John Stanley: Minister, you said earlier that in your view there has been no change of government policy towards arms for Israel. I must put it to you that that is factually, over a timescale at least going back to the previous Government, simply incorrect. The policy that was followed, made up by the previous Conservative government, and I have first-hand ministerial experience of implementing it, followed by the previous Labour government before that as well, was that arms exports were not made to areas of conflict or potential conflict. That was the policy and it was very carefully adhered to. I put it to you that that policy has changed profoundly, as has been brought out in the questioning so far. It has been changed to allow arms sales to be made to Israel and, contrary to the impression that you might have left with some members of the Committee and possibly to the wider public that head-up display is some sort of minor piece of kit, the head-up display on an F-16 is the key piece of targeting electronics. The F-16 is the key ground attack aircraft used by the Israeli Air Force. I put it to you, Minister, that it is in my view an absolute certainty, though if you wish to deny it that would be most interesting, that British head-up displays were in place in the F-16s that have recently been bombing Gaza and been responsible for the death of over 1300 innocent civilians. Do you deny that British equipment was used in those F-16s?

Ian Pearson: We do not have a complete picture about whether British equipment was used. As far as head-up displays is concerned, my information is that no licence applications have been approved since 2002 for that. Israel does have a right to defend itself, but we do have very great concerns when it comes to human rights issues and also the stability of the region. We have a settled policy when it comes to the consolidated criteria and how we judge on a very rigorous case-by-case basis whether to grant or not export licence applications. Israel is one of the countries where we have most cause for concern and where we refuse a significant number of licence applications. Obviously decisions are taken over a number of years and in some cases licence applications are granted. They will be granted because at that time, following a thorough assessment at an official level and, if there is any disagreement, by ministerial agreement, it is appropriate to do so, given the consolidated criteria and all the concerns that are built into the criteria, of which the Committee are fully aware.

Q16 Sir John Stanley: Minister, I put it to you that the issue of the Government not licensing any more F-16 head-up display units since 2002 is irrelevant to the point I am making. The point I am making is that as a result of the change of policy which the Government made, announced by the then Foreign Secretary Jack Straw, under which head‑up displays were licensed, those displays will have been exported to Israel; they will have been installed in the Israeli Air Force's F-16s. I ask you, Minister, when you have completed your assessment, if you will provide confirmation to this Committee that the F-16s that were in use over Gaza over the last three weeks that have been responsible for the deaths of 1300 plus innocent Palestinians did incorporate within them British head-up displays?

Ian Pearson: I am happy to see what further information I can make available to the Committee about the use of head-up displays. As I repeat, my advice is that at the moment it is not completely clear what equipment has been used. Clearly, there will be further information available in due course as we and other governments look at these matters. I will happily endeavour to make information available to the Committee. Can I just say, Mr Berry, that this is very clearly an incredibly difficult situation. Certainly the UK Government never wanted to see the action that has taken place in Gaza. We have been resolute in condemning that action and calling for an immediate ceasefire. We will continue to work and do what we can to promote peace and stability in that part of the region.

Q17 Sir John Stanley: Finally, Minister, if it does transpire - and in my own view it is a well nigh certainty - that British head-up displays were in use in the F-16s that have been responsible for the civilian deaths in Gaza, if that transpires to be correct and I believe absolutely certainly that will be shown to be correct, is the Government willing to revert to the previous policy in this area in particular in Israel and the Occupied Territories of no British arms sales into this area?

Ian Pearson: I think the hon. Gentleman with respect is trying to paint a different picture to what happened under previous administrations to that which I understand to be the case. I do not want to go there and make this party political; it is far too serious for that. What I do want to say to the Committee is that we will want to factor in all relevant information when it comes to making future decisions about export licences of equipment that could be used in Israel.

Q18 Mike Gapes: I have two specific questions. Firstly, I received an email from a Dr Wilson in Lichfield, Staffordshire, who says that people in the Lichfield area, concerned about the situation in Gaza, had read in the national press that UAV engines produced in a factory in Shenstone were being used in the drone aircraft deployed over Gaza in the course of bombing missions. Minister, ski that correct?

Ian Pearson: My understanding is that we have spoken to this exporter and they have confirmed what we already know from our own database, namely that whilst they do export UAV engines to Israel, the engines are a particular variant which is not used in Israel but is incorporated into UAVs for onward export so that they would not have been involved in the current conflict.

Q19 Mike Gapes: That is what you understand. Do you have any information from Gaza or Israel as to whether that is true?

Ian Pearson: I would make the point that Israel has a very significant UAV industry and many of the UAV-related exports to Israel are subject to further work or incorporation there and then re-exported to another country. We believe that we made the sort of normal rigorous checks that we would have done before agreeing to the export licence in this case. Jayne Carpenter may want to add to that.

Ms Carpenter: Our licensing database shows that we have only issued licences for those particular engines for incorporation in Israel and then onward export to a third destination. If the engines had stayed in Israel, then that would be a contravention of the licence condition and that would be an offence. Whilst we cannot categorically confirm that we physically checked that the engines have been incorporated, we have only licensed them for incorporation in Israel and onward export to another destination.

Q20 Mike Gapes: Perhaps you could give us more information, if you have it. That takes me to my second question. On 7 October, our then Clerk wrote to the Foreign and Commonwealth Office on the Quarterly Report on Arms Exports requesting a reply and received a reply from the parliamentary team dated 20 November. The question we asked, and this was in October and the reply came on 20 November, was: We would be grateful for a note on the Israeli naval and land blockade of Gaza and whether the Government is prepared to export arms that can be used to enforce the blockade. The reply said: We would be grateful for further time to formulate a detailed response. We will aim to respond to the Committee by 8 December. We are still waiting; seven weeks after 8 December this Committee has still not received the information that was requested at that time. That information is very pertinent because the upsurge of the conflict began in December. Clearly the blockade and the naval aspects of it are a very important part of what has been happening over the recent weeks. When are we going to get that reply? More importantly, will we have a more prompt response to our request for information about what has been happening during the actual conflict than waiting several weeks or perhaps months before we get that information?

Ian Pearson: Mike, you have made your point. It is up to the Foreign Office to reply. You are Chairman of the Foreign and Commonwealth Office Select Committee. I am sure you are taking it up with them.

Q21 Mike Gapes: Minister, that is not good enough. The Foreign Office does not reply just in and of itself; there are government departments involved. They have to get the information from the Ministry of Defence and from your own department and they need to co-ordinate the response. You know very well that they respond on behalf of the Government collectively, so it is no good trying to pass the buck on to another government department. This is a serious issue.

Ian Pearson: If I had a chance to finish what I was saying, it is that it is the Foreign Office's responsibility to lead in producing a reply on this. I will personally chase it up with them and see that you get a reply as quickly as possible.

Mike Gapes: We would like a response on the other issue quickly as well, please.

Q22 Linda Gilroy: This is a general point following on from what Mike has just raised. You said in response to the first question on this series of questions that apart from the fact that there were some obvious ways in which you would be proactively monitoring what has been happening in a very distressing conflict of recent times, you were not prepared to share openly with the Committee exactly what the nature of that would be. Clearly we all need a very high level of confidence that that is going to be done on almost a case-by-case audit of every licence that has been issued in recent times under the consolidated criteria. Would you be prepared to share with the Committee more detail of how that will be done on a private basis, if necessary?

Ian Pearson: We always seek to be as open and transparent as we can in providing information, in particular information to the Committee. We do have a number of sources, including intelligence sources, where it might be difficult to actually put that information into the public domain, but we will do as much as we sensibly can to make sure that information is available to the Committee. Certainly I can guarantee that we will look at all the sources at our disposal and make sure that we factor those into licensing decisions and that those licensing decisions remain consistent with the consolidated criteria.

Q23 Richard Burden: Minister, could you clarify something that has been bothering me. The argument you have been advancing is that whilst Israel has the right to self-defence and it would perfectly acceptable within the consolidated criteria to supply arms equipment for self‑defence purposes, on a case-by-case basis you want to be assured that those arms are not being used for internal repression or external aggression. What I do not understand is that if that is the position in relation to Israel, why is it that in relation to the Palestinians there is an arms embargo and that this week the Prime Minister has said that without exception any arms going into Gaza should be intercepted even with the use the Royal Navy to help with that. Why is it not said in relation to the Palestinians that arms that might be used for self-defence, for example small arms or maybe something to stop a tank coming into Gaza, might be licensed but arms that could involve rockets being fired into Israel would not be licensed? Why the difference? Surely if there is an arms embargo on one side, there should be one on both sides, should there not?

Ian Pearson: The difference, as I understand it, is that there is a UN resolution which has been agreed upon and the UK acts in accordance with supporting UN resolutions. You will be aware of that. It is something that the FCO lead on rather than my department. There is a difference. I understand how we might have difficulties with this but I do not think anybody is suggesting that the UK Government as a matter of policy should be arming Hamas.

Richard Burden: I am not suggesting that. I am just suggesting that if there is an arms embargo on one side, should there not be an arms embargo on both sides?

Chairman: We have had quite a lot of discussion on this issue. I think the concerns of members of the Committee of all parties have been clearly expressed. The only other thing I would say is that obviously we would appreciate as quick a response as possible to the specific questions that have been asked.

Q24 Mike Gapes: I want to switch the focus to broker registration. Mr Doddrell, in evidence to our Committee, said that the Government was not yet fully convinced at that stage of the benefits of a registration system and that although in principle you are not objecting to it, there is still no proposal for such a register. Why are you not yet convinced, or was that last year and are you now convinced?

Ian Pearson: There are a number of things I want to say on this, and John can obviously speak for himself. The first thing I want to say is that the responses to the consultation document for the 2007 Review of Export Controls were quite mixed - some strongly in favour of a scheme and others opposed or cynical about the value of actually having a register. The second thing I want to do is to make a distinction between a register and a pre‑licensing registration system. In practice, we already have a register of traders because we have a comprehensive database and can use it at any time to show who is using trade control licences. We can use this information to direct our awareness-raising or compliance‑visiting activity. What we do not have is a pre-licensing registration system under which traders have to be vetted before they can be registered. I have looked at this. At the moment, I am not fully convinced that a pre-licensing registration scheme at this stage would be the right way to go and whether it would justify the additional bureaucratic burdens that would be involved in doing this, particularly in view of some of the other steps we are taking at the moment. I would prefer us to look at how well the initiatives that we are currently pursuing are working, such as clamping down on those who misuse open licences and focusing our awareness activity on traders at work, before considering this further. I am not saying that I would rule it out but at the moment I am not convinced that it is absolutely necessary.

Q25 Mike Gapes: You mentioned bureaucratic burdens. Are these bureaucratic burdens on the Department because you would have to have more people monitoring this or is it business burdens?

Ian Pearson: It would be both but there certainly would be burdens on legitimate businesses that would have to comply with this, and we would have to see whether we think it is proportionate or not to place those additional burdens on them.

Q26 Mike Gapes: Have you done any assessment of what kind of burdens you are talking about or is this just some unquantified fear which has not really been assessed?

Ian Pearson: John Doddrell might want to say something on that in detail. If you are going to have some sort of pre-licensing registration system, it clearly is going to involve some additional burden on companies. I would really like to see how some of the other measures that we have announced and are taking forward are going to work out before deciding whether it is important.

Mr Doddrell: The difficulty about a register is that it is another hoop which an exporter has to go through before they can apply for a licence. There are detailed questions that need to be worked out about what the registration process involved, what the requirements would be on information to be provided by the trader or the exporter in order to become registered. All of those sorts of things would need to be looked at very carefully. There is a question of how far you draw the register. Is the register to be limited to traders and brokers or is it to be extended to exporters as well? Even if you limit it to traders and brokers, you are not only catching the people who are doing the illicit arms dealing or are verging on the edge of the grey arms market; you are catching a lot of very legitimate businesses with rather big names like potentially Rolls-Royce or British Aerospace who are involved in moving arms equipment around from one country to another. So potentially you are talking about a significant burden here on business. We as a department would need to be absolutely convinced that that was justified before going ahead with the register.

Ian Pearson: Just to labour the point, we do have a de facto registration scheme at the moment for companies that have applied for licences.

Q27 Mike Gapes: If you have that, then surely you just need to add some kind of vetting system on to your existing SPIRE system, and that therefore does not put extra burdens necessarily on business; it just requires you to put some more resources up to carry out this necessary process.

Ian Pearson: In effect, we assess every licence application anyway, do we not?

Q28 Mike Gapes: The question is how rigorously?

Ian Pearson: I would maintain that we have a thorough examination of each and every licence application. We should not forget here that in the UK we have one of the best and strictest export control licensing arrangements that would be found anywhere in the world. While it is absolutely right for the Committee to want to probe us and to press us to strengthen it, we should not underestimate the very real strengths of the UK system at the moment. We can hold our heads up high compared with other countries.

Q29 Chairman: Given that the Department has said in the past that it can see clear advantages into such a system, this is still under consideration, is it not?

Ian Pearson: It is under consideration. As I have said, we have not ruled it out but officials would need to convince me that it is a proportionate thing to do and that the advantages of doing it would exceed the disadvantages in terms of the burdens that would be imposed on businesses.

Q30 Chairman: Officials recognised that there is the case here some months ago. They are still looking at it?

Ian Pearson: Yes.

Q31 John Bercow: I listened to Mr Doddrell's response to Mike a moment ago and it did strike me as an absolutely impeccably sound-free response, if I may say so, and I do not mean that discourteously. It did strike me as a response in which the only words not stated but were implicit were "long grass". I gained the very distinct impression that any such idea was heading for or had already arrived at the long grass. My concern is just for a degree of clarity and specificity. If the situation is that quite frankly you think the whole thing is not worth it, that it is too expensive and it is going to upset business and it is not worth the candle, that may well dissatisfy the Committee but a blunt statement to that effect would at least have the advantage of candour. If the reality is that you want to preserve the fiction that the matter is under review, you are always open to persuasion and you are listening to the arguments, what I really want to know is this, Minister or from Mr Doddrell: is active work on the complexities being undertaken? Is work being done by officials looking at what Mr Doddrell described as the range of operational details that would need to be covered in order to draw a full model of how such a system might work in practice? Is such work going on or not?

Ian Pearson: Yes, it is going on. My understanding is that officials will, at the appropriate time, produce a submission to me and I will take a view as to whether I think it is worthwhile pursuing or, as you say, can it and say that we are not going to do it.

Q32 John Bercow: Therefore at a subsequent meeting if the same question were posed, we would be advised of some more detailed work that had been undertaken and precisely what conclusions could be drawn from it? We would get the impression at that point, would we, that the decision was not in abeyance or relegated to the long grass but distinctive and probably final?

Ian Pearson: Yes, work is going on. As I have indicated, I would like to see how some of the other things that we are doing actually pan out because that would affect our decision as to whether we think that there is a balance of advantage in having a pre-licensing registration scheme or not. If we think that there are other policy instruments that can obviate the need for something like this, then obviously you would expect us to take those into consideration.

Q33 John Bercow: The work currently under way, and I am quoting Mr Doddrell, has been under way since 2007 but it is so immensely onerous and burdensome and long term that in 2009 a conclusion has not been reached. Will a conclusion have been reached by this time next year?

Ian Pearson: Possibly.

Q34 John Bercow: I said "long grass", Minister. It is extremely long grass!

Ian Pearson: Can I explain why I say "possibly"? I do want to ensure that there is sufficient time for us to assess the impact of us putting some small additional resources into this area so that we can clamp down on those who misuse open licences and those sorts of areas will have effect as a policy. You cannot simply say: we will assess this in one month or two months. You need to give it a time period.

Q35 John Bercow: You are in no danger, Minister, of being accused of excessive haste in this.

Ian Pearson: Thank you for that, John, but, as you know, I have always believed in confronting decisions and making them and I will be perfectly prepared to make a decision in this area. Some of these things have a natural timescale in which it is appropriate to make a decision. When it is the appropriate time, I will not shirk it; I will make it.

Chairman: We have had to wait in some other areas for decisions. We prefer the right decision and a little waiting than to have the wrong decision tomorrow morning. Thank you for that.

Q36 John Battle: I am afraid mine is that question: is work going on, and I am tempted to say is real work going on, to quote the Prime Minister, and, rather than just looking at an in‑tray, are things moving on? The reason is that as a Committee in our last report we have welcomed the Government's intention to introduce end-use controls through the EU if possible. I gather that has not proved possible. The Government did suggest that they could be introduced independently in the UK. Could you update us on the EU negotiations? Have they fallen fallow now and are you making preparations to introduce a system into the UK? Are you looking at it and are people working on another monitoring system and preparing industry for it? How far has all that shifted?

Ian Pearson: As a Government, we have always taken the view that the best thing to do is to go down the EU route because that ensures there is a level playing field and that we have other countries involved in doing the same thing. We do need to get this right. We have been working on a proposal to extend the scope of the EU military end-use control that was introduced in 2000. Once finalised, this will be put to the Commission and other Member States. John or Jayne may want to say something about how the particular work that we have been doing internally has been taken forward. I would say that getting agreement in Europe is not a simple or straightforward process in many of these areas, but it is our preferred route. We would certainly consider introducing a national control if we were convinced that going down the EU route was very unlikely to be able to produce the sorts of results that we would want to see in the short to medium term, but for the moment I think our view is that this is still worth engaging on. Jayne will say more about the detail of this.

Ms Carpenter: There are two potential end-use control issues that we are pursuing in Europe: one is the military end-use control and the other is the torture end-use control, as you know. The position on end-use is slightly different from the torture end-use control. We have actually had some discussions within Europe which have been generally supported. In fact, there was a meeting in Brussels last week where we raised this with other Member States. We have begun the process of trying to get support within Europe. Initial indications are that there is a good deal of support but, as you know, the European process is fairly slow-moving, so we need to let that urn for at least some time before we take a decision as to whether it is an alternative. On the military end-use control, again we are pursuing that in Europe but we are less far forward with the specific proposal on that than we are with the torture end-use control. That is really because in looking at the ways in which we might propose enhancing the military end-use control, it has become evident that there is quite a lot of complexity in terms of the sorts of goods that we would need to cover, the sorts of destinations that we would need to cover and the sorts of end-use we would need to cover. Broadly speaking, what we are proposing to do is to put forward a proposal which builds on the current military end-end use control by including whole pieces of equipment, whereas the current military end-use control only covers components and production equipment for military items. That would, for example, enable us to catch whole vehicles, which would not otherwise be controlled. The current control does not cover police and paramilitary use or use by security forces, so we would be seeking to extend its coverage to those end-users as well. We are also looking at the possibility of extending the use of end-use control beyond embargoed countries to which it is limited at the moment. That is, very broadly speaking, the sort of proposal we are looking at.

Ian Pearson: May I add one point to this in that I think there has been a significant amount of focus on this since the issue arose of Land Rovers that were then militarised and exported from Turkey to Uzbekistan. We are all familiar with that. I was asking officials if they could tell us about other instances that we need to be aware of. In general, I believe that we ought to be looking at where the problem is and how do we provide a solution, rather than providing theoretical solutions to problems we are not sure exist. I have agreed to give the Committee information. If the Committee has information about where it thinks that there are particular problem areas, I think that would be very helpful to us because we are not aware, as far as I understand it, of significant problems that have been raised since that episode. We would welcome any information that is available, whether it is from the Committee directly or from others who hear our proceedings.

Q37 John Battle: Just to follow that through, we were promised information on Europe, for example, which we now have, by the end of 2008. I think the information you have given is helpful and it creates a little bit of a sense of a conversation of things moving on a bit. I appreciate the difficulties involved in Europe but we need the updates; we need a better feed-back to create a sense of dynamism in the whole thing. As a last point, you mentioned the military, you mentioned torture, but there was also going to be a report back to us on end‑use controls of non-military goods. You were going to have a consultation on it and report back to the Committee before the end of the year and again suggest a system for those as well. I know there is consultation in progress. How is that going?

Q38 Mr Bailey: Could we cover the issue of re-exports. Basically the position in this Committee, as you know, has been in favour of such restrictions. I think it is fair to subscribe the attitude of the ministers and former ministers as being that they have genuflected in the direction of that but will not make a decision to alter current policy. The former foreign secretary said that it might have been desirable and another minister said, "I am seriously thinking about the practicalities of this," but it has not happened. What are the legal or practical difficulties that have prevented them from taking this decision? Why are those practical or legal difficulties not relevant to the other 11 EU countries that to a greater or lesser degree do have restrictions on re-exports?

Ian Pearson: First let me say something in terms of the Government's view and then address directly the problems that you raise in terms of answering the question what are the legal difficulties. The Government's view has always tended to be that any risks posed by a country of ultimate disposal or end user will be factored into our risk assessment under the licence application. We have not necessarily believed that we need specific re-export clauses because we can and do, in fact, refuse applications because of concerns about re-export. Our view has always been as a government that the introduction of a no re-export clause on licences is not necessary or feasible and would be onerous to operate and virtually impossible to enforce. The comments that you quote from some government ministers reflect that there is I think a commonsense view that this would be a desirable thing to do but in practice there are some very serious practical legal barriers. You mentioned a number of countries that do have a no re-export clause. I would say in response that I would be interested to see any assessment about how legally effective they think they are and how operationally useful they think they are as policy instruments compared with the sort of policies that we have at the moment. Our view is that the key difficulty in including a no re-export clause as a licence condition is determining, first, to whom it would apply and, second, against whom any action would be taken. If it is to the exporter, then it would be wholly exporters responsible for events outside their control. If it was to the overseas customer, then the obligation would be unenforceable as it would be beyond the UK's legal jurisdiction. Both those instances present really quite difficult obstacles to having an enforceable clause. If the Committee thinks those difficulties could be overcome, we would be interested to hear the practical ways in which they think it would be possible to do so.

Q39 Mr Bailey: I accept that it would be quite an interesting exercise to see how, if you like, this process works with other countries, but I do not want to be sidetracked down that particular path. As of this moment it might be interesting to know, given the fact that you have said these issues are factored into the granting of an export licence, what monitoring is done to ensure that once that export licence has been granted there has not been, if you like, re-export of the items in question. Can you give any sort of figures or at least outline what process is carried out to ensure that this does not happen?

Ian Pearson: On the first point, we do pay particular attention to some countries where we have strong concerns of the possibility of re-export. Indonesia might be one example we would cite of a country where if we were to export goods to a company in that country we would have concerns. That is why, where we have those sorts of heightened concerns, we have to factor them very closely into account in terms of the decisions that we take. We will also use the information that we have available on the nature of the company and the past practices of the company in question to which export is being made, and, I repeat, we can and do refuse applications because of concerns about export. On the second point in terms of monitoring previous decisions, perhaps I could ask Jayne or John to say something about the detail.

Ms Carpenter: Before the licence is issued, it is part of the assessment process to ask UK diplomatic posts overseas to comment on the applications. That can include asking them to check the accuracy of the information in the application, looking at the documentation, and physically going to see where the end-user entity is and what sort of operation they have set up. All those checks are already done as part of the assessment process. The use of military equipment overseas in destinations of concern is also monitored by UK diplomatic posts, so people from the embassy keep an eye on the equipment that is being supplied from the UK and how it is being used in that destination and they report back to the FCO on that. We also take account of a variety of different reporting mechanisms on end use which include NGOs, human rights organisation reports, media reporting, intelligence reports. Posts overseas have standing instructions to report to us or to the FCO any misuse of UK-supplied equipment, so there is a certain amount of end-user monitoring being done. Given that we issue 10,000 or 12,000 licences a year, there is a limit in practical terms to the extent to which we can monitor the end user of every exported item, but there is some end-use monitoring already being done.

Q40 Mr Bailey: In effect, it is very difficult to have a totally comprehensive monitoring process.

Ian Pearson: It is not necessarily very difficult but it would be hugely expensive and, again, I think you would want to look at the proportionality of doing that. 

Q41 Mr Bailey: Have you in recent years revised your policy towards either a company exporting or a country as a destination for these exports?

Mr Doddrell: Yes, we have.

Q42 Mr Bailey: That would imply at least that it had been got wrong, to put it crudely, in a previous assessment.

Mr Doddrell: I will try not to sound like Sir Humphrey this time. Not necessarily. Situations change over time and we continuously update and revise our policy towards particular exports to reflect the circumstances of the time.

Q43 Chairman: Would it be possible to let the Committee have a note of some examples here. If for whatever reason you are absolutely convinced it needs to be strictly confidential, of course we can deal with that. We do that all the time. A note of some examples on this would be quite useful.

Ian Pearson: One of the key things to point out as well is that when we are assessing export applications, we will look at the destination and the export licensing regime of the country to which the goods are going to be exported and, also, that country's record on a range of issues from human rights to meeting international obligations as well. There are some countries obviously about which we would not have any strong concerns.

Q44 Chairman: Of course, but it is a question about changes in policy. The qualitative data in the annual report is a snapshot of where we are at some point in time. This question raises a very interesting point about shifts in policy as a result of experience. I dare say there is some limitation for what can and cannot be said in public about examples, but, either way, I know colleagues would be interested in a few examples and perhaps a brief note might help on that.

Mr Doddrell: I am very happy to provide that. I am thinking particularly of diversionary destinations, where, as we close off one diversionary route, countries find another way of getting what they want. This is an example of the sort of thing I am referring to and I would be very happy for the minister to write to you on that.

Ian Pearson: As an alternative, if you would like it on an informal basis, it is my understanding that it has been round about 18 months since the Committee visited the Export Control Organisation, and if you wanted to have a further visit and a session where these issues could be discussed, I would be happy to arrange that.

Chairman: We would appreciate that. Perhaps the note could be done and we could then think about fitting a visit into our programme - which would be keen to do.

Q45 Sir John Stanley: Minister, I hope we can agree at least on this: do you agree that if a British arms exporting company was able to establish licensed production for a particular arms reference overseas and from that licensed production facility overseas was able to export arms to destinations that would not be approved of if they had been exported from the UK that would represent a serous breach of arms control policy?

Ian Pearson: I certainly agree with you that this is an important area. The extent to which we could or should control licence production overseas, as you know, featured very strongly in the 2007 review, and in the Government's response we concluded that there was not a convincing case for enhancing controls on the export of controlled goods specifically in relation to licensed production. There is a stronger case for enhancing controls on the export of non-controlled goods and the cases of overseas production where issues have arisen have all related to goods for military end use, which were not controlled when exported from the UK, in embargoed or other destinations of concern. This is an area where you will appreciate there are some practical difficulties. To attempt to directly control the activities of overseas concerns and, in effect, treat them as if they were based in the United Kingdom is not legally viable and would be impossible to enforce under international law. There are some very real practical limitations here but within the limitations that do exist clearly we want to make sure that our export controls policy is followed.

Q46 Sir John Stanley: I myself cannot accept that the difficulties to which you are referring are in any way insurmountable or, indeed, in any way necessarily unprecedented. The Committee's recommendation was quite clear, that the Government make export licences for suppliers with licensed production facilities or subsidiaries subject to a condition in the export contract preventing re-export to a destination subject to UN or EU embargo. That is a recommendation which is perfectly enforceable as a condition of the Government granting the licence for production overseas. It stipulates that that particular contract has to be coupled with an undertaking from the recipient of the licence that they will not export from the licensed facility overseas items to an area which is subject to a UN or EU embargo. There is nothing difficult contractually about making that a condition of the granting of a licence.

Ian Pearson: I think there is a difference between the extraterritorial controls that we have over UK citizens and seeking to have extraterritorial controls over companies. We have discussed Military End Use Control and our priority is to take forward that as an issue. With regard specifically to the Committee's recommendation, we are still considering whether including conditions relating to contracts on the licence would add anything to the Military End Use Control. I have to say that our current view is that it would potentially add significant extra burdens without providing real additional control. The finished goods, you have to remember, would still be outside the UK's control. I have to say that I do think there are some practical international law difficulties here that we need to recognise, while not disagreeing with you about the practical purpose of what we are trying to achieve here.

Q47 Sir John Stanley: Minister, perhaps you need to take some further legal advice. We are talking here solely about UK domicile businesses. The proposition is a very simple one: if it is a UK-domiciled business, just as the Government was announcing yesterday, the Government is perfectly able to make a particular agreement with a UK-domiciled business subject to particular conditions. We are asking that you make the granting of a licence to such companies who have licensed production overseas subject to your particular requirements about output not going to countries that have a UN or EU embargo. There is nothing legally difficult about it at all. I have to say that the answer you are giving, with the greatest of respect, sounds to me like pure bureaucratic mumbo-jumbo.

Ian Pearson: I disagree with that entirely. Let me have another go and then I will let John say something from his perspective. If you are talking about UK-domiciled businesses that have a licensing agreement in a foreign country, then there is the potential under UK law to be able to stipulate some requirements that need to take place. But I have to point out as well that the business that is operating in the third country will be subject to that country's laws. The legal and ownership structure of the rules would be quite easy to circumvent in many respects. I just have to say that I think there are some practical, legal, company law difficulties in terms of trying to apply UK company law to companies in other territories.

Mr Doddrell: The only point I would like to add to that, if I may, is that we should not underestimate the extent of the controls that we currently have. If a company wishes to set up a production facility in a country overseas to make particular goods, weapons say, they would need to export technology to that country, they would probably need to export equipment for the manufacture in that country, all of which would be controlled under the licensing arrangements as they stand. If we have any reason to believe that that production facility overseas would be used to supply countries where we would not want the goods to go, then we would refuse the licence for the transfer of the technology.

Sir John Stanley: With respect, it is not a question of refusing a licence; the issue is once the licence has been granted. The Committee is saying that it is a condition of the grant of a licence. The Government includes in the conditions the power to revoke the licence - which is the key point: to revoke the licence - if there is transit of goods from the licensed production facilities to countries that are subject to an EU or UN embargo destination. It is very simple. The key lever that the Government has is to build into the original conditions pertaining to the licence the ability to revoke the licence if that particular requirement is not met.

Q48 Chairman: We seem to be getting: "Yes, we can," "No, we can't". Sir John has made an argument, a very clear one I think, that he can see no legal impediment to doing this. Could you perhaps write to us, Minister, explaining what your advice is on what is wrong with that argument?

Ian Pearson: Following on from what Sir John has said - and I appreciate the strength of feeling about this issue but also the argument that he makes - let me take it away and look at it again.

Q49 Chairman: Thank you very much. Minister, your predecessor told us that any changes arising from the review of export controls would be implemented by April this year. Is that still the case?

Ian Pearson: Yes, my understanding is that that still is the case. We are on track to do that.

Q50 Chairman: Thank you for your letter, by the way, but we will not go there.

Ian Pearson: I am sorry if there was some feeling that we did not give as much time as possible to matters.

Chairman: Yes. We will go on to dual use.

Q51 Malcolm Bruce: It has obviously been of concern to the Committee the extent to which we can ensure that both the licence system and the potential exporters are really connecting on the potential for abuse of products which could be converted. That is well rehearsed. You have set up a working group to consider the EU Council Regulation and the Government's position has been that you did not think it would require domestic UK regulation. What is the current state of that review? If it has finished, as we are told it has, are you of the view that it could be incorporated simply in the EU and that it does not require legislation?

Ian Pearson: Dual use is certainly an area where there is EU regulation under the EU dual-use regulation. You are right to say there has been a Council Working Group review. I think there was some hope that during the French Presidency it would come to conclusions, but that has not been possible. On the Council Working Group, as I understand it, the latest information is that you will need to consider a Commission proposal of 5 January this year. The Commission propose introducing licences to a range of destinations for low value shipments, export after repair or replacement, temporary export for exhibition, computers, chemicals, telecoms and information security. The Working Group will also need to consider its input into the new lines for action by the European Union in combating the proliferation of weapons of mass destruction and their delivery systems which was endorsed by the Council on 8/9 December. There is still some more work for the Council Working Group to do and we are playing our full part in that.

Ms Carpenter: As to the question of the need for UK legislation, the dual-use regulation has direct effect in Member States and so it is not necessary to enact legislation on top.

Q52 Malcolm Bruce: In terms of the desire to ensure that we do not have embarrassments such as we have had in the past, are you satisfied that the regulations will be clear enough and give the necessary guidance to UK exporters? Are you also satisfied that our own domestic arrangements will be able to use it effectively?

Ian Pearson: We want to continue to play a leading role in the discussions to ensure there are improvements to the dual-use regulations. Obviously they are still being discussed at the moment, so we do not know what the outcome is likely to be, but I can certainly assure the Committee that the UK will play an active part in those discussions.

Q53 Malcolm Bruce: Presumably it remains an obligation on Member States once these regulations are in place to provide effective means of communication.

Ian Pearson: Yes.

Q54 Malcolm Bruce: We have had deliberate abuse, but I think that has been so well publicised that it is not likely to happen again, but it is the inadvertent, na´ve, middle-ranking supplier who gets caught up in it and does not quite know. I want to ensure that this regulation and this process has reduced the risk of that happening and is an effective means of ensuring that it does not happen.

Ian Pearson: I agree with you that those are sensible objectives and those are the sorts of things that we would like to see as outcomes, because we want to see a proportionate dual-use regulation that is fit for purpose and that we agree on.

Q55 Chairman: We had a bit of difficulty, as you know, in terms of understanding what was happening in relation to the average time for dealing with SIEL applications and arising from the fact that collectively the department was using the word "average" to mean two different things - and I am tempted to slip in a third, the mode, as well as the median and the mean. Because one answer to a parliamentary question gave the mean figure and the other data we had was the median figure, it looked like things were getting worse. I am happy to accept totally that the figures are not in terms of the time for dealing with these applications, but it would be a good idea if people stopped using the word "average" and just said whether it was the mean or the median, or, indeed, the mode - a slightly techy comment, but GCSE stats and all that!

Ian Pearson: I think we have clarified any misunderstanding between ourselves.

Q56 Chairman: Yes, but we have a script for interrogating you on this point.

Ian Pearson: We will try to make sure that we are very clear and precise in terms of our use of language in the future.

Q57 Chairman: Thank you. In terms of the searchable database, is that still on course?

Ian Pearson: Yes, it is.

Q58 Chairman: I think we are going to have a briefing on it.

Ian Pearson: Yes. It is on course. In response to the Committee I can say today that we have accepted its recommendation and we will be taking it forward. We hope that the database will be available for public use later this year. We have not yet settled on some of the detailed issues.

Q59 Chairman: Do we know what is meant by the end of this year?

Ian Pearson: Certainly sometime in 2009.

Q60 Chairman: That will also go down as a "Bercow comment".

Ian Pearson: I am told that we are aiming for April, so that is going to be pretty quick, but obviously we wanted to seek to consult with people to make sure that it is helpful in terms of those who want to use it as well.

Q61 Chairman: Thank you. My final question is that the Committee have on a number of occasions suggested that the Government carry out some research on the effectiveness of the export control system, purely as good practice. The last time we suggested this, the Government's response to the Committee was that the Government was still considering commissioning a study but was basically looking into that. Is that still under consideration? Are there any terms of reference? Where are we now?

Ian Pearson: Yes, it is under consideration. I would like to see it happen. I have discussed it with officials in the run-up to appearing before you today and I think there is a good case that this is an acceptable use of public funds. There are some figures that get bandied about at the moment in terms of non compliance which worry me, because I do not think that they reflect the reality. On specific facts and figures, because I think it might be helpful to the Committee, Her Majesty's Revenue and Customs regularly retain dual-use goods at the frontier to establish whether the necessary licences are in place, and in 2007, on the figures I have, HMRC detained goods at port on 969 occasions. On 88 per cent of these occasions goods were found not to require a licence at all, but of those that did require a licence only 25 per cent or three per cent of the overall total required a dual-use licence. These figures suggest a much smaller problem than some of the figures that have been bandied around previously. When it comes to the specific point, I do think that it would be a sensible use of public money to have a study that looked at non compliance in the dual-use sector. Whether the Committee were thinking about a wider study I do not know, but specifically with regard to the dual-use sector I think this is an area where we should be commissioning some research.

Q62 Chairman: Thank you very much indeed, Minister. I would like to thank you, Mr Doddrell and Ms Carpenter for coming to our Committee. We have raised a number of questions and there will be other questions no doubt that we will wish to write to you about. Particularly on the earlier discussion, you will appreciate the concerns that the Committee has about the Government's policy in that area and so any response on those issues as quickly as possible would be very much appreciated.

Ian Pearson: We will certainly endeavour to do all that we have said we will do during this Committee Stage. Thank you, as always, for the courteous way in which you have probed me and my officials in this area. As I say, just as a parting comment, I do believe that we have one of the best export control regimes to be found anywhere in the world. That is not to say that it cannot be improved. I think through scrutiny these things can be improved, and we appreciate the work of this Committee and its predecessor the Quadripartite Committee in helping us do just that.

Chairman: Thank you.