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Lord Dormand of Easington: My Lords, some of the recent developments in the region are welcome.

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But is the Minister aware that the northern region has the highest level of long-term unemployment in the country outside Northern Ireland? Is he further aware that some parts of the northern region have very high unemployment indeed because of their history and structure? When a pit is closed--and all the pits in the northern region are now closed--as many as 2,000 men may be put out of work. Does he believe that present government policies are dealing with that problem?

Viscount Goschen: My Lords, the noble Lord is quite right to highlight the recent positive developments in the region, particularly in the field of inward investment, where the region has attracted some £4 billion worth of inward investment, which is clearly very good news indeed. Of course the region has suffered historically from its changing industrial base. That is why we have put considerable efforts into regeneration and into addressing the specific problems caused by the closure of the coal-mines. Through the work we have done with the TECs, British Coal Enterprise and English Estates, we have developed a wide range of policies to address specifically the problems caused by those changes.

Lord Elliott of Morpeth: My Lords, does my noble friend appreciate that those of us who live in the northern region are fully aware of its transformation caused by the influx of new industry and investment encouraged by the Government in recent years? Will he accept that at this time there are more young people than ever before doing some form of training in the northern region? Will he accept also that unemployment continues to fall, even though I recognise that it is still too high? Finally, does he appreciate that Newcastle United Football Club is at the head of the premier division?

Viscount Goschen: My Lords, I rely on my noble friend for my sporting information. On the more serious points, training is a very high priority and that area has been targeted through the TECs. Unemployment continues to fall in the region, and that is very good news indeed. My noble friend's remarks reflect the optimism that has been caused by that major injection of inward investment. There really has been a terrific boom in the region which attracts more inward investment than any other area in Europe.

Lord Haskel: My Lords, will the Minister join me in complimenting the local councils, which have been most instrumental in attracting inward investment? I should point out that most of those councils are Labour controlled.

Viscount Goschen: My Lords, local authorities, in partnership with the Conservative Government, have succeeded in attracting those considerable levels of investment into the region. I believe that our overall enthusiasm for attracting such investment transcends even party boundaries. We feel that there is a strong feeling of partnership involved, and that is something upon which we have been working extremely hard.

Lord Peston: My Lords, I was a little disappointed to hear that the noble Viscount believes that the

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performance of Newcastle United is of minor importance. In fact, there is a fair amount of research evidence which shows a positive correlation between the performance of football teams and the local economy. However, that is an incidental point.

The Question actually refers to "additional proposals" rather than just proposals. Therefore, does the Minister agree that the persistence of long-term unemployment suggests that at least something more needs to be done? Aside from the excellent feelings about inward investment, that obviously does not greatly assist with long-term unemployment, which will often occur among older men for whom something additional is required. Do the Government have anything to say on that aspect of the matter?

Viscount Goschen: Yes, my Lords; clearly inward investment is extremely important. However, it is only part of the story. The other efforts that we have been making have been towards regeneration. We have been targeting funding through the single regeneration budget, with some £240 million allocated to projects in the north east to date. That is the largest allocation for any region outside London. The urban development corporations have also carried out extremely good work, and we have been pursuing the City Challenges, with six approved challenges in the north east and some £37.5 million guaranteed public support. In addition, there are enterprise zones. Indeed, there is a wide range of policies. The key challenge for the region now is to face the competitiveness agenda and to ensure that it takes forward its competitiveness into the next century.

Lord Dormand of Easington: My Lords, in his reply to me the Minister mentioned the TECs. However, is he aware that it was revealed over the weekend that three of the TECs in County Durham are now in the red? Surely something ought to be done about that situation. Further, and on an equally important matter, does the Minister accept that the Northern Development Company has a crucial role to play in the regeneration of the region, especially as it consists of the employers, the trade unions and the local authorities? If the noble Viscount agrees with that view, will he give the House an assurance that its government grant will not be reduced next year?

Viscount Goschen: My Lords, I should point out that TECs are extremely important in terms of training. The noble Lord and the House will be aware of the efforts that have been put into them to achieve the training objectives that we have set for the region. Indeed, they are extremely important. As regards the noble Lord's specific question, I shall endeavour to find the information and, if he will permit me, I shall write to him. On the question of development corporations--

Lord Dormand of Easington: The Northern Development Company.

Viscount Goschen: Again, my Lords, if the noble Lord will permit me, I shall look into the specific issues in terms of the funding of the development company. I understood him to be referring to the development corporations, which of course have been a tremendous

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success, have performed the time-limited role, and, indeed, have benefited from the noble Lord's services over a number of years.

Scott Report

3.2 p.m.

The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie) rose to move, That this House takes note of the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq (HC 115).

The noble and learned Lord said: My Lords, I very much welcome the opportunity for a measured debate to consider the report of Sir Richard Scott, now that your Lordships have had the opportunity to study it. That was why, as indicated at the time of publication, the Government deliberately allowed 10 clear days to elapse between publication and debate.

We welcome the central conclusions of the report that there was no plot to arm Saddam Hussein secretly and no attempt to suppress documents which could have led to a miscarriage of justice. Those issues were central to the inquiry, and are now behind us. But today I want to look forward. I want to look in detail and with care at Sir Richard Scott's recommendations and criticisms, as he asked the Government to do.

Sir Richard's report rightly focused on the serious and defamatory charges that had been made and of which the Government now stand acquitted. But, in the Statement that I repeated 10 days ago, care was taken to draw attention both to the criticisms of Sir Richard and to his conclusions and recommendations on which I should like today to indicate more of the Government's thinking.

Mistakes were made. There are lessons to be learned. The Government have accepted the inquiry's criticisms concerning the distribution of intelligence material and have already taken action to improve it. We have accepted the criticism about export controls and licensing procedures and have already undertaken to publish a consultation paper on that, as recommended by Sir Richard Scott. We have already undertaken further to consider, and most carefully, his comments on the use of wartime export control legislation. We accept the principle of the need now for greater supervision by the office of the Attorney-General of Customs and Excise prosecutions in relation to export control matters--I shall say more on that--and we also accept many of Sir Richard's other recommendations.

I should like to turn now to those recommendations and, in particular, to those questions of openness in government and accountability to Parliament.

As the President of the Board of Trade said in his Statement, there is a continuing line of criticism running through the report of the conventions, long-established, whereby successive governments have undervalued, as Sir Richard sees it, the public interest in the disclosure of information.

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This Government have a good record in improving openness in government; and the debate on how much further openness in Parliament might go should be seen in that context. For example, we have introduced or supported numerous measures opening up for the first time specific areas of government, even the most sensitive, as with the Intelligence Service Act 1994. More generally, we published the first White Paper on Open Government in 1993 and the code of practice it proposed a year later. As a result of all this and of other Citizen's Charter initiatives, there is now much more information released, whether on the background to government decisions, on medical and other records, or on school, hospital and local government performance data. Over 48,000 previously confidential public records have now been released.

We have avowed for the first time the Secret Intelligence Service and put it on a statutory footing and subject to a statutory Oversight Committee.

The Government have also published detailed lists of ministerial Cabinet Committees and Questions of Procedure for Ministers.

Closer to the issues of foreign policy and export controls, in 1991 the present Secretary of State for Social Security, Mr. Peter Lilley (then at the DTI), took the unprecedented step of publishing the detailed lists--70 pages in all--of the exports licensed for Iraq between 1987 and 1990.

However, despite that good record of government, we hope that we can go further down the route of open government. Indeed, further, as we have already gone, than in the traditional answers to questions on defence sales when answered by the Labour Government in the 1970s when, for example, Mr. Peter Shore stated:


    "It has been the policy of successive Governments not to reveal information on the supply of arms to individual countries".
Moreover, Mr. Michael Meacher had this to say:


    "The list of recipient countries is not published because defence purchases are regarded as confidential".

Erskine May sets out a number of subjects on which successive Administrations have declined to answer questions on grounds of public policy. These include discussions between Ministers or between Ministers and their official advisers; the proceedings of Cabinet or its Committees; security matters; operational defence matters; and details of arms sales to particular countries.

Here I come to the particular point that Sir Richard Scott raised in relation to parliamentary Questions on the sale of arms or defence related equipment. He said that that long-standing practice should be re-examined. This the Government are content to do. The Chancellor of the Duchy of Lancaster has today placed in the Library of another place a document setting out the current position in relation to informing Parliament on the export of arms, together with an explanation of how that practice has evolved. I have arranged for the same document to be placed in the Library of this House.

I hope that your Lordships will find that document a useful basis on which to take forward the discussion. There are serious issues here. The Government's policy

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on defence sales is based on a respect for the right of other countries and sovereign states to protect their independence and to exercise their right to self-defence. That right is recognised explicitly by Article 51 of the United Nations Charter. The countries to which we export arms have a legitimate right to maintain the confidentiality of the strength of their Armed Forces and the equipment they have available. Strategically the export of defence equipment benefits our own defences through reducing the overall cost of equipment. At the same time the export of defence equipment is vital to the health of the British economy. Total defence expenditure, including overseas sales of equipment, provides employment for more than 400,000 people in industry in this country.

But despite our economic interests this Government maintain a strict policy on the control of defence exports, stricter indeed than any other country, even though this involves denying to British firms valuable overseas markets involving not just the sale of weapons for defence, but also non-lethal equipment, potentially dual-purpose goods, and with a knock-on disadvantage to purely commercial, civilian export opportunities, all of which our international competitors have no hesitation in exploiting.

Sir Richard has recognised the potentially divergent and conflicting policy objectives in relation to employment and trade as well as foreign policy and humanitarian considerations. These are conflicting issues with which all governments have to wrestle. Sir Richard himself recognises that the moral case for refusing to allow defence exports to a particular country has to be set against the damage to British economic interests. However, as the publication of the document placed in the Library shows, the Government are willing to play their part in public debate about the issues raised and would welcome the views of all who are interested in this issue, including in particular those of the Opposition parties.

Thus, in addition to being content that the parliamentary convention that the Government do not answer questions about exports of arms and defence related goods should be reviewed in the light of modern circumstances, as Sir Richard recommends, the Government are also willing to consider positively Sir Richard Scott's wider views about ministerial accountability and responsibility. This approach, taken with the significant decision announced in 1985 to inform the House of the guidelines on defence exports, established to assist Ministers and officials in appraising export licence applications against the uncertain and ever changing background of Iran and Iraq in the 1980s, is already in marked contrast to the approach of previous governments.

A major step forward in making ministerial accountability transparent was taken by the Prime Minister in 1992 when he decided to publish the guidance for Ministers known as Questions of Procedure for Ministers. It is worth reminding your Lordships that this had been a classified document under previous administrations. The section of Questions of Procedure for Ministers to which Sir Richard Scott refers states that, Ministers have the duty to give

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Parliament, including its Select Committees and the public, as full information as possible about the policies, decisions and actions of the Government. There are, and have long been, a number of conventions and accepted reasons why full information cannot be made public and therefore cannot be given to Parliament. As Sir Richard Scott says in his report,


    "It is generally accepted, and rightly so, that there have always been and always will be some subjects in respect of which full information, or sometimes any information cannot be given".
These include, inter alia, matters that are sub judice, commercially confidential information, and sensitive security and foreign policy matters. I doubt whether those exceptions would be seriously challenged in your Lordships' House.

I turn to what he has to say about the role of Customs and Excise. He first addresses in his report the possible changes to the Customs and Excise Management Act 1979 to clarify various powers and definitions. In addition to these and other specific legal provisions, Sir Richard Scott recommends a number of other changes to internal Customs and Excise procedures. As he recommends, there will be a review of the relationship between the Customs Solicitors' Office and the Customs Investigation Department. Sir Richard's recommendations relating to Customs' legislation and internal procedures are largely accepted by the Government, subject only to further consideration of some detailed technical legal matters.

Sir Richard also considered the position of the Customs and Excise as an independent prosecuting authority; a role that has remained unchanged for many years. He recommends the introduction of a formalised system of supervision by the Attorney-General of export control prosecutions. At the same time he affirms the important constitutional principle that a prosecuting authority should be independent and free from political direction. He considers the analogy with the Crown Prosecution Service and the Director of Public Prosecutions, both of whom are subject to the superintendence of the Attorney-General, whereas the Customs and Excise, as a prosecuting authority, is not. Sir Richard notes that acting in this capacity, the Attorney-General exercises a quasi-judicial role and does not act as a Cabinet Minister; his actions and decisions are not, for example, subject to Cabinet collective responsibility.

While the analogy Sir Richard draws with the Crown Prosecution Service and with the Serious Fraud Office is not an exact one, the Government nevertheless accept that there are benefits in Sir Richard Scott's recommendation that in future the role of the Attorney-General should include the exercise of increased supervision of Customs and Excise prosecutions in relation to export control matters. The Government are urgently developing proposals on the precise nature and scope of this increased supervision, and I understand that the Attorney-General will be reporting further in another place on this as soon as possible.

In relation to the use of intelligence by government departments, Sir Richard makes it clear that he does not feel qualified to make recommendations as to how the

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various systems and procedures might be improved. He acknowledges that a number of improvements have been made and sets out a number of areas in which he considers that problems existed. Since 1992 major reviews have taken place in the Foreign and Commonwealth Office, the DTI, the Ministry of Defence and Customs and Excise. As a result, modern information technology systems have been introduced and new internal distribution arrangements adopted. In addition, the requirements of users are now more fully reflected in the intelligence gathering process.

Sir Richard also makes a procedural recommendation, which he has not published for security reasons, concerning intelligence personnel, which will be discussed with the chairman of the Parliamentary Intelligence and Security Committee. The Government also propose to inform the committee, chaired by Mr. Tom King, of other improvements which have been made. I have no doubt that this committee, which was specifically set up to deal with such matters, will want to satisfy itself, and in due course to reassure Parliament, that an adequate response has been made to Sir Richard's observations.

One of the key areas was, of course, that of prosecution procedures and PII certificates. The opening words of Sir Richard Scott's final chapter on PII certificates are,


    "The law on public interest immunity in civil and in criminal trials is judge made. I do not believe that legislative intervention is necessary or, at present desirable".
The decision in 1994 in ex parte Wiley, Sir Richard Scott describes as providing,


    "a sensible practical guide that any Minister or Official trying to decide whether or not a PII claim should be made ... can easily follow".
With that observation I respectfully agree. However, the criticism in his report of the actings of the Attorney-General are not that he ignored or misunderstood that sensible practical guide which came, after all, some two years after the Matrix Churchill case, but that he effectively misunderstood the law as it then was.

In the course of the last 10 days I have had to set against the view of Sir Richard Scott that the law in 1992 was effectively no different from the present law, not only my own understanding of a range of prominent decisions but also the views of a current Lord of Appeal in Ordinary, the Master of the Rolls, my noble friend Lord Alexander of Weedon, a number of distinguished judges who were Treasury Counsel, prominent Silks who advised the Attorney-General at the time and three of the counsel who represented the defendants in the Matrix Churchill trial. I accept that others, in expressing their opinion, have gone the other way. However, the Government have good cause to believe that the preponderance of settled legal opinion at the time favoured the Attorney-General's view.

Sir Richard Scott may wish that the authoritative statement in Wiley had come sooner, but it would be a novel proposition to castigate the Attorney-General for failing to anticipate the evolution of the law some years before it was declared. Indeed, it would have been perverse if he had sought to do so.

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It is now time to look to the future. There is, happily, little disagreement on the present law. The Wiley decision has had the effect of introducing into current practice a number of points made by Sir Richard. As a result of that decision, Ministers can now disclose PII documents without the prior approval of the court when they consider that that is in the overall public interest.

There is a further point on PII that I should like to make. PII claims have been made in criminal cases, both before the Matrix Churchill trial and since, and both on a contents and class basis. Sir Richard recommends that in future PII claims in criminal cases on a class basis should not be made. I understand from observations made 10 days ago that the Opposition would support that. If the public have been bewildered or bored by the apparent sterility of the legal wrangle, I trust that they will now be engaged in a coherent debate over what that might entail.

There could be a real risk of prosecutions having to be abandoned in, say, terrorist cases or in those related to drugs or weapons in prisons, where the issue was one of informants. Moreover, it should be appreciated that PII does not only apply to government documents and to confidential police information but also to the important work of other agencies such as the National Society for the Prevention of Cruelty to Children in relation, for instance, to child abuse cases.

The law on public interest immunity is made by the courts, but the Government will consider Sir Richard Scott's recommendations in the light of developing case law, particularly given his view that the time is opportune for a collective reappraisal by Ministers. As part of that consideration, as the Attorney-General has announced this afternoon, the Government would welcome views on future developments in the use of public interest immunity certificates.

Sir Richard devotes two chapters of recommendations to export control powers and licensing procedures. However, before I come to his recommendations I should like to cover our policy regarding the export of defence equipment to Iran and Iraq.

Our policy was to remain neutral in that war. As Sir Richard recognises, no lethal weapons were sold to either side and the Government took vigorous measures to prevent the export of non-lethal goods which could have prolonged or intensified the conflict. A set of guidelines was introduced to assist the application of that policy, which was far stricter than those of our main international competitors. The guidelines were exactly that: they were guidelines, essentially for internal use, to assist officials in dealing with export licence applications. They had no legal basis and were not intended to set out a complete policy. As Sir Richard Scott acknowledges in his report:


    "I would readily accept that, in relation to defence sales to Iran and Iraq, the Guidelines were not, and were never intended to be, an exclusive exposition of Government policy".

As the author of a different guide wrote about guidelines:


    "They must not be allowed, by an over-rigid application that fails to take into account the consensus of each case, to become a constraint on effective and sensible case management".

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Those words were penned last year by Sir Richard Scott himself in the preface to the Chancery Guide.

I turn now to Sir Richard Scott's recommendations. The Government accept that the current export control powers and procedures should be reviewed and that there should be wide consultation in the course of such a review. That review will take into account the points made in the report. We shall then produce a consultation paper covering those points, as Sir Richard Scott recommends. I should make it clear at this stage that the Government are committed to an export control system which is easy for business to use and understand yet which allows the Government to take restraining action where that is necessary for wider policy reasons.

There is one further point that I should like to pick up now. That relates to the extent of parliamentary scrutiny of export control orders. I should like to make it clear that the Government have no difficulty with the proposition that, if the current export control Act, which reflects the 1939 legislation, is replaced future legislation on export control should include provision for parliamentary scrutiny. The Government had previously indicated to the inquiry that they would expect to see that achieved through making export control orders subject to the negative resolution procedure. That would be entirely in keeping with the Government's approach of enhancing the transparency and openness of their activities where that is appropriate.

Sir Richard Scott's report contains some 50 pages of recommendations. He has repeatedly enjoined not only the Government but all those who wish to comment on the matter not to do so in limited soundbites. I have sought to lay before your Lordships' House that the Government accept that the report contains criticisms as well as the important vindication to which I have already referred. The Government have indicated that, in addition to those recommendations on which they have already taken action, they will consider carefully and positively Sir Richard's other recommendations. Not all of them are for the Government alone to consider. However, even where it is for others, including Parliament, to reach a view, the Government have been prepared to give a lead, as our placing of a document in the Library relating to informing Parliament about exports demonstrates clearly.

We are committed to pursuing the issues raised by Sir Richard's recommendations in a positive, detailed and co-operative spirit. We look to others to adopt a similarly constructive approach. I beg to move.

Moved, That this House takes note of the Report of the Inquiry into the Export of Defence Equipment and Dual-Use Goods to Iraq (HC 115).--(Lord Fraser of Carmyllie.)

3.28 p.m.

Lord Richard: My Lords, I begin by congratulating the Minister. It was a not inconsiderable achievement to spend some 26 minutes discussing the Scott Report without once mentioning the name of Mr. Waldegrave. His tactics were fairly predictable: he declared an acquittal in the first second and, having declared the

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acquittal, then spent the rest of the 25 minutes talking about something else. His Back Benches were enthralled by the pungency and vigour of his defence to the attack that is being made on the Government. If the Government think they can get away with that they underestimate the sense of outrage felt by the public outside.

I propose to talk about the Scott Report and the allegations that have been made and to try to put those allegations into context. There is no doubt whatever in my mind, having now read every word of the Scott Report, that Mr. Waldegrave misled Parliament deliberately, designedly and intentionally, not once but 38 times, in ministerial letters and in answer to many parliamentary questions. It is, frankly, breathtaking that he remains in office.

What I want to try to do today is to look at the facts. I think that they can be quite simply stated. Three Ministers--two of whom, Mr. Alan Clark and the noble Lord, Lord Trefgarne, (I am glad to see that he is to give us the benefit of his special knowledge in the course of the debate today), are no longer in the Government--decided to change the policy on the sale of equipment to Iraq. Having so decided, they then determined that the matter should be concealed from Parliament and the public. They drafted a revised form of the old guideline (iii) which was intended to incorporate that change of policy. In answer to many Parliamentary Questions and 38 letters from Members of Parliament and Members of your Lordships' House, they decided on a form of words that should be used in reply. That form of words was false.

I will, if I may, quote from some parts of the report--not just one half sentence of what Sir Richard Scott may have said at a press conference but perhaps a little more--so that before the House this afternoon is the full flavour of the consideration that Sir Richard Scott gave to the whole affair. It is important that we get the record straight.

First, was there a change in policy? What does Scott say on that? He concludes in unequivocal terms that there was. He says this:


    "Whatever subsequent events might show to be the result of the changes that were being discussed, the contemporary documents make it impossible, in my opinion, to quarrel with the expression 'a more liberal policy' as being a fair and accurate description of what the players, including Mr. Waldegrave, had in mind at the time... the words, 'a more liberal policy', describe in ordinary and simple language the reality of what he and his colleagues were discussing".
Later in the report, after an exhaustive analysis of the documents, and having heard the evidence--one should not forget that he is the only person who heard all the evidence--he concluded:


    "The viewpoint"--
that there was no change--


    "is one that does not seem to me to correspond with reality ... To describe [the] revised formulation as no more than an interpretation of the old, is, in my opinion, notwithstanding the many advocates who espoused the thesis, so plainly inapposite as to be incapable of being sustained by serious argument".
On the following page he says:


    "But, however the agreement reached by the junior Ministers be described, if the substance of the agreement was to change the criterion that would be applied to applications for licences to export

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    defence equipment to Iraq, they were, in any ordinary use of language, agreeing on a change of policy. I regard the explanation that this could not be so because the approval of the senior Ministers and the Prime Minister had not been obtained as sophistry".
An acquittal, my Lords? An acquittal in the way that the noble and learned Lord described in the opening part of his speech? Some acquittal!

There are two further pieces of evidence in the report which have not been quoted quite so often but which seem to me to amount to massive corroboration of the conclusions reached by Sir Richard. On page 423 of the report there appears a minute written by Sir Timothy Daunt, then Deputy Under-Secretary of State for Defence at the Foreign Office, and sent to the Foreign Secretary's private secretary. The minute reads thus:


    "It is now much clearer that in late 1988/early 1989 the three Ministers of State concerned ... spent a lot of time discussing changes to policy on exports to Iraq. They agreed to change the guidelines to take account of the cease-fire; and at the same time that their application"--
the application of the guidelines--


    "would be relaxed. They also made a conscious decision ... not to make any announcement. Their reasoning appears to have been that any announcement, however carefully drafted, would upset somebody".
It most certainly would have, and that is why none was made.

Later Sir Timothy Daunt says:


    "Much of the revision"--
that is the policy resulting from revision to the guidelines--


    "had clearly been implemented for the past 18 months and not announced".
That seems to me to be fairly powerful corroboration. However, if one wants a little more, there is an answer given by the noble and learned Lord, Lord Howe, who took part in this affair. He was examined in detail by Scott. He admitted this to the inquiry in a damning but little noted answer on Page 476. The report states:


    "And, in answer to the question: 'The guidelines were reformulated were they not?' Lord Howe replied: 'Yes I think for practical purposes they were, but there was no disclosure of a reformulation. That was the last thing that people wanted to do'".
So that is the answer to the first question. The evidence establishes beyond doubt that there was a clear agreement to change government policy which the proposed new guideline (iii) was intended to enshrine. Policy thereafter proceeded on the new, not the old, basis and it is that new policy which matters, not merely the drafting of guidelines.

Not unnaturally, your Lordships may think, Members of Parliament and Members of your Lordships' House were concerned at what seemed to be happening. A stream of Parliamentary Questions and letters followed. Many of those are set out in the report. I do not propose to weary your Lordships with over-quotation. However, let us take the letters first. There were in all not one but some 38. How were they dealt with? The report states:


    "A form of response to be incorporated in the letters sent to the MPs in question was settled in the FCO. The response included the following two sentences (or the gist of them):

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    'British arms supplies to both Iran and Iraq continue to be governed by the strict application of guidelines which prevent the supply of lethal equipment or equipment which would significantly enhance the capability of either side to resume hostilities. These guidelines are applied on a case by case basis'".
That was the agreed form of answer. In many of the letters the formula was preceded by the statement that:


    "The Government have not changed their policy on defence sales to Iraq or Iran".
In one letter there was even a reference to,


    "our firm and even-handed position over arms sales to Iran and Iraq".
Scott concluded in these words:


    "The reference in each of these letters to the criterion that governed the supply of non-lethal defence equipment to Iraq was not accurate ... The inaccuracy should have been noticed by Mr. Waldegrave, who had been one of the midwives at the birth of this new formulation".
Later he states:


    "The statement in the letters that 'The Government have not changed their policy on defence sales to Iraq or Iran' was untrue".
There then follows these damning sentences:


    "Mr. Waldegrave knew, first hand, the facts that, in my opinion, rendered the 'no change in policy' statement untrue ... The proposition that the Government's position over 'arms sales to Iran and Iraq' was 'even-handed' had been untrue ever since the decision, taken as a consequence of the Rushdie affair, to 'return to a more strict approach to Iran'".

In the face of those findings of fact, how can it be maintained that they did not know? Is there any corroboration? Let us look elsewhere, other than the parties directly concerned and their immediate documentation. Is there any corroboration that they did in fact know? Mr. Mark Higson was the desk officer in the Foreign Office dealing with Iraq. Of his evidence Lord Justice Scott wrote:


    "Mr. Mark Higson, who gave evidence to the Inquiry, was, from 23 March 1989 until January 1990 when he left the FCO, the desk officer for Iraq within MED. One of his duties was to prepare drafts of the letters to be sent by FCO Ministers answering queries relating to Iraq".
Therefore he drafted some of the letters, and in particular one to Dame Elaine Kellett-Bowman.


    "In his oral evidence to the Inquiry on 15 July 1993, Mr. Higson made clear that he regarded the 'no change in policy' statement contained in the letter as untrue".
So are we supposed to accept that the desk officer knew that the answers were untrue but that the Ministers who signed the letters did not? Are we asked to believe that Sir Timothy Daunt knew that there had been a change but that the Ministers who initiated and implemented the change did not know that there had been one? Are we asked to accept that Mr. Waldegrave genuinely believed in the truth of a statement of government policy which Sir Richard Scott characterises as:


    "incapable of being sustained by serious argument"?
It really will not wash. I should be somewhat ashamed of putting such arguments on behalf of a defendant before an Old Bailey jury and, if I did, I think I would know what the jury would think of the arguments. Exactly the same applies to Parliamentary Questions. Sir Richard concludes that the answers given to Questions were neither adequate nor accurate.

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And so it goes on until we come to the final judgment of the report:


    "The answers to [Parliamentary Questions], in both Houses of Parliament, failed to inform Parliament of the current state of Government policy on non-lethal arms sales to Iraq. This failure was deliberate and was an inevitable result of the agreement between three junior Ministers that no publicity would be given to the decision to adopt a more liberal, or relaxed, policy, or interpretation of the Guidelines, originally towards both Iran and Iraq and, later, towards Iraq alone".
Finally, the report states:


    "In the circumstances, the Government statements in 1989 and 1990 about policy on defence exports to Iraq consistently failed, in my opinion, to comply with the standard set by paragraph 27 of the Questions of Procedure for Ministers and, more important, failed to discharge the obligations imposed by the constitutional principle of Ministerial accountability".
Some acquittal! However one looks at it, this is a damning indictment. It is frankly not good enough for the Government to allege that nothing is wrong because Mr. Waldegrave thought there was nothing wrong. Common sense, if nothing else, tells us that Mr. Waldegrave must have known that his answers were inaccurate and misleading. If he did, his actions are culpable; if he did not, his actions are incomprehensible, save on the basis that somehow he convinced himself of the truth of that which he already knew to be false. It is not merely the change in the wording of the guidelines that matters. It is the change of policy that matters more. To say that they believed that it had not changed when they knew that it had, when it was they who had engineered and implemented that change, is just impossible to accept.

Someone in the Government is responsible for this mess. We cannot just forget about it in the way that the noble and learned Lord invites us to, as if it were merely some trivial, inconvenient episode now to be put behind us. This misleading of Parliament was deliberate and prolonged. If Mr. Waldegrave and his other two colleagues were not responsible, who on earth was?

I turn now to the position of the Attorney-General. I shall not give way.


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