Export Credit Insurance (Hansard, 19 April 1993)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield)
My Lords, the Government are considering representations made to them by the major credit insurers for the transitional reinsurance arrangements between ECGD and the privatised successor, ECGD's Insurance Services Group, which expire in 1994 to be replaced by a more permanent arrangement. No decisions have yet been made.

§ Lord Jay
My Lords, since not only major exporters but also the private insurance firms concerned are convinced that if the Government withdraw, as planned, from reinsurance of those 1244 short-term political risks, the private industry will not be able to cover the gap in time and serious damage may be done to exporters, will the Minister reassure us that the matter is being reconsidered carefully and sympathetically?

§ Baroness Denton of Wakefield
My Lords, I am delighted to reassure the noble Lord, Lord Jay, that it is indeed being considered seriously.

§ Lord Boyd-Carpenter
My Lords, can my noble friend say whether the intention to withdraw the facility will be persisted in unless it is quite clear in advance that the British export trade can stand the strain?

§ Baroness Denton of Wakefield
My Lords, I am delighted to advise my noble friend Lord Boyd-Carpenter that there is no evidence that export trade is suffering from the new arrangements. Export volume, excluding oil and erratics, are at record levels—4 per cent. higher than in the previous quarter and 5.5 per cent. higher than a year earlier. There is no evidence that the system has resulted in any competitive disadvantage in either cost or availability of cover.

§ Lord Peston
My Lords, I was interested to hear the answer given by the noble Baroness. When she says that there is no evidence, does that mean that her department has looked for evidence and cannot find it, or that the evidence has not walked into her department and said, "Here we are, we are the evidence"? At the level of talking to individual exporters and also reading what they say in the Financial Times, there seems to be a lot of evidence that the exporters believe that they are extremely disadvantaged. Can the Minister say what she means by "no evidence"?

§ Baroness Denton of Wakefield
My Lords, as the noble Lord, Lord Peston, knows, in this market we are dealing with people who are not slow to come forward to tell us of their problems. We listen to their problems and where it is necessary in the national interest to provide cover, we provide cover. But we bear in mind that we are writing the risk with taxpayers' money and there comes a stage at which the benefit to exporters must be balanced against the risk to the taxpayer.

The Earl of Halsbury
My Lords, is our export credit guarantee scheme the best in the world? If not, why not?

§ Baroness Denton of Wakefield
My Lords, the support and the commitment of this Government to exporting is the best in the world. In areas where the risk is higher we are sometimes beaten by other countries; in areas where the risk is lower we cannot be beaten.

Lord Bruce of Donington
My Lords, following the reply of the noble Baroness to her noble friend Lord Boyd-Carpenter, can she give the House an assurance that her replies have taken into account the possibility of Her Majesty's Government pursuing a lunatic policy of returning to the ERM?

§ Baroness Denton of Wakefield
My Lords, it seems that every time I answer a Question at the moment I am asked to make Treasury statements. I regret that I still have to say that I cannot do that.

§ Lord Jay
My Lords, quite apart from the ERM, can the noble Baroness assure us that on the matter of export credits she will at least represent to her right honourable friend the various anxieties about this on more than one side of the House?

§ Baroness Denton of Wakefield
My Lords, I am certain that my right honourable friend is as aware as I am that there are concerns. However, there should be recognition of the importance we attach to this matter because if we look at the new premia and the £1.3 billion extra cover which was given in the Budget there can be no doubt about our commitment and concern.

The Viscount of Oxfuird
My Lords, is my noble friend aware that during the mornings I work for a company which exports well over 60 per cent. of its production? At present we are coming up against problems in the decision-making areas of ECGD. Will my noble friend have a look at this, particularly regarding short-term credit?

§ Baroness Denton of Wakefield
My Lords, I am delighted to tell my noble friend that we are indeed in the process of looking at this and trying to speed up decisions. We are well aware of the importance of speed to industry.

§ Lord Williams of Elvel
My Lords, does the noble Baroness recall that the Government's commitment to support short-term export credit for a limited period, particularly in view of the problem of political risk, was given in this House? Does she further recall that at the time the Government expressed themselves confident that they would be able to arrange a political risk reinsurance line in the market and thus be able to withdraw from the support which they themselves give? Is the noble Baroness now saying that that confidence was misplaced and that there is no market for short-term political risk in the commercial market?

§ Baroness Denton of Wakefield
My Lords, I am sure the noble Lord knows as well as I do the difficulties the reinsurance market has faced in the past three years. We are saying that it is important that our exporters should get support. In the case of the national interest facility, the Government have already indicated that they would in principle be prepared to consider looking at suitable applicants in the benefit of our trade.

§ Lord Williams of Elvel
My Lords, does the noble Baroness not agree that the national interest facility is not what this Question is about? The Question is about the short-term insurance of political risk.

§ Baroness Denton of Wakefield
My Lords, I thought I had made it quite clear in my original Answer that we are looking at the requests we receive in the short-term area. If we were to say that we would not look at them I cannot imagine that the noble Lord would be satisfied either.