Vince Cable

My right hon. Friend the Foreign Secretary announced to the House on 13 October 2011 the conclusions of his review of defence and security export policy in the light of events in the middle east and north Africa.

It concluded that there were no fundamental flaws with the UK strategic export licensing system. We share this view. However, the review did identify areas where our system could be further strengthened. To this end, he announced a package of proposals that included the introduction of a mechanism to allow the immediate suspension of pending licence applications to countries experiencing a sharp deterioration in security or stability, and a commitment to continue to work to improve public information on defence and security exports, including enhanced transparency of routine export licensing decisions and how we respond during a crisis.

We have worked closely in developing the suspension mechanism, and are pleased to report that this suspension mechanism is now in place. As a result of this change the Government have ensured that export licensing policy is now more responsive to rapidly changing circumstances overseas.

The new suspension mechanism will allow the Government to quickly suspend the processing of pending licence applications to countries experiencing a sharp deterioration in security or stability. Suspension will not

be invoked automatically or lightly, but triggered for example when conflict or crisis conditions change the risk suddenly, or make conducting a proper risk assessment difficult. A case-by-case assessment of a particular situation will be necessary to determine whether a licensing suspension is appropriate.

Any decision to suspend will be taken by the Licensing Authority based on advice from relevant Government Departments and reporting from our diplomatic posts. Parliament, industry and the media will be informed of any suspension.

Suspension will be tailored to the circumstances in play and will not necessarily apply to all export licence applications to a country, but may instead be for applications for particular equipment (for example crowd control goods), or for applications for equipment going to a particular end-user.

If a decision to suspend is made, work on licence applications in the pipeline will be stopped and no further licences issued pending ministerial review. Once the suspension is lifted, applications will not be required to be resubmitted.

The Ministry of Defence will apply any licensing suspension decision to MOD Form 680 applications, for which it is the Government authority, and to the assessment against the consolidated criteria of gifting cases, which it co-ordinates on behalf of the Government.

Suspension will be lifted (or partially lifted) where the Licensing Authority considers it appropriate to do so.

Transparency is also crucial because confidence in the workings of the export licensing system needs to be shared by Parliament and by the public. The system should not just be working properly; it should also be seen to do so.

I am therefore announcing today a number of proposals to improve the transparency of the export licensing system. These proposals build on my right hon. Friend's review, and we intend to seek the views of interested parties, including the representatives of exporters and non-governmental organisations, on how they will work.

The first proposal is to insert into all open export licences a provision requiring the exporter to report periodically on transactions undertaken under these licences. The Government will then publish this information.

The second proposal concerns information contained in standard export licence applications. Currently all such applications are made in confidence, which makes it difficult to make public any more information than is already disclosed in the Government's annual and quarterly reports. The Export Control Organisation considers that certain additional information contained in licence applications could be made public without causing concern to exporters. I will explore ways of making this additional information public while protecting any sensitive material.

The third proposal is to appoint an independent person to scrutinise the operation of the Export Control Organisation's licensing process. The role of this independent person would be to confirm that the process is indeed being followed correctly and report on their work.

In considering these proposals we intend to consult the various interested parties to reach an outcome which achieves the Government's objective of increased transparency while at the same time imposing the minimum additional burden on exporters.

We will, simultaneously, be pursuing further changes to the strategic licensing system to make it more efficient and customer-focused, whilst maintaining the integrity of the process. Working together, my right hon. Friend and I remain committed to robust and effective national and global controls to help prevent exports that could undermine our own security or core values of human rights and democracy; to protect our security through strategic defence relationships; and to promote our prosperity by allowing British defence and security industries to operate effectively in the global defence market.

I intend to make a further announcement to Parliament, setting out the Government's conclusions and plans for implementing any further changes, before the summer recess.

I think my ministerial team have given an extremely good account of the many things that we are doing in that area, starting with an extraordinary cut in the amount of red tape, which I think is the issue that most concerns my hon. Friend.

There is no question of renegotiation. The Indians have had a pre-selection process, from which the French bid has gone ahead on the basis of price. There is a lot of experience of contracts being reconsidered at the final stage, and at that stage BAE Systems has a very good case to make as part of its consortium. We will support it thoroughly.

As the hon. Gentleman will know, because I have visited his constituency and discussed these issues with him, the steel industry is going through an extremely difficult time not just in the UK, and steel makers have made losses. We are helping them through energy intensive support, and there are other forms of help such as the regional growth fund and enterprise zones. We are doing what we can to help steel areas that are affected by the current contraction.

Of course we have discussed those issues extensively with the Ministry of Defence, and if the hon. Lady actually reads the statement, she will see that it is absolutely clear that in defence, as in other areas, public procurement will operate on a strategic, long-term basis, not as it did under the last Government when narrow contractual arrangements involved purchases off the peg.

I can confirm the first part of the hon. Gentleman's question: the £3 billion is fully committed to and there are no mixed messages. On borrowing, it is not merely a question of the date, but of the fiscal position of the country.

Those were certainly not the allegations Rio Tinto Alcan made to me when I met representatives of the company. They made it clear that this was part of a global downsizing of their operations and that many countries are affected by it. I have visited the site and met the hon. Gentleman to discuss this. We are concerned about the future of the labour force, and we sought to help the company through the support for energy-intensive industries. Now that the company has decided to go ahead with closure, we will see what we can do to help the people in the area.

My colleague, the Minister for Universities and Science, has already given a very full answer on this issue. When I spoke about it earlier, I should have made it clear that Mr Lester had accepted a pay cut, not a tax cut. In addition, there will shortly be an urgent question on the matter, when any further details can be pursued. As for the wider policy questions, we made it very clear last week that we believe that our reforms of executive pay will radically reduce the rewards for failure and mediocrity in business.

As was explained earlier, the Prime Minister, the Trade and Investment Minister, I and others have made strong representations to the Indian Government on the merits of BAE Systems for this contract. The hon. Gentleman will know that the contract was narrowed down to two companies on the basis of quality. The Indian Government appear to have made a narrow decision based on price, but this is by no means the end of the process. BAE Systems will have plenty of opportunities to restate its case on quality and life-time costs and we shall reinforce it.

My Department has a key role in supporting the rebalancing of the economy and business to deliver growth while increasing skills and learning.

That infrastructure fund, which relates specifically to small projects, has proved very valuable and the local enterprise partnerships have an important role in working up those projects. There are set criteria, of which they are well aware, that they must meet.

This Department certainly does wish to promote the renewables sector and the supply chains. However, given the history of this problem, the hon. Gentleman will know that the level of subsidy-which I think his Government fixed-was totally unsustainable, and action had to be taken to cap it.

I am aware of the difficulties associated with that project, which relate to the fact that we are trying to integrate two separate bidders. My hon. Friend knows the practical difficulties, but we will certainly do the best we can to expedite the project.

I am very surprised that the hon. Lady gives apprenticeships as the central example of failure, given that apprenticeship numbers have risen by 50% and apprenticeships are extremely popular with young people and employers. This is a success story, and I am surprised she is denigrating it.

Perhaps I should also point to the most recent indicators, which were published yesterday. In the manufacturing sector, which is absolutely critical for recovery, the purchasing managers index suggests a significant recovery in the short run.

As I noted earlier, the independent Office for Budget Responsibility forecasts that the UK economy will grow at 0.7% this year and 2.1% in 2013. The OBR states that the intensification of the European sovereign debt crisis has

"doubtless helped to reduce confidence".

Of course there is a continuing issue with the scale of bonuses in RBS, but they are vastly reduced from their former level. We are conscious of the issues involved. Many of those people are American traders operating in the United States, but we are conscious that every amount that goes out in bonuses is money that could otherwise have gone to small businesses.

Yes. I have talked extensively to Will Hutton about that. In the proposals that I will bring forward next week, we will introduce the principle of a clawback; that clawback can operate in different ways, and we are certainly looking seriously at one of the ways that Will Hutton has recommended.

Those two individuals are symbolically very important, but what is much more important is that we have a proper system governing executive pay over the long term, and that is what my proposals were designed to achieve. Bonuses in the banking sector as a whole are now running at roughly a third of the level at which they operated at the peak of the boom when Labour was in power. As for the state-owned banks, my right hon. Friend will know that a set of disciplines is being introduced through United Kingdom Financial Investments Ltd.

Last week I announced a comprehensive package of measures to tackle the disconnect between executive pay and company performance. These proposals will increase simplicity and clarity, give shareholders more effective power through binding votes, increase the diversity of boards and remuneration committees, and encourage employees to be more engaged.

My colleague is right to stress the importance of the food sector, including food manufacturing. We often talk about advanced manufacturing, but some of the most sophisticated industries are often in those traditional product areas. He is right about the important of opening barriers. In the European Union context, my team is actively pursuing trade liberalisation with a variety of Asian countries, the Mercusor countries and others. We hope that those agreements will be delivered soon.