HC Deb 10 January 1977 vol 923 cc1039-40
19. Mr. Frank Allaun

asked the Secretary of State for Trade if he will make it his policy to assist British exporting firms by relaxing the terms of the three main forms of export guarantee, as suggested to him in correspondence by the hon. Member for Salford, East (Mr. Allaun).

Mr. Meacher

I assume that my hon. Friend is referring to his letter of 15th December in which he raised problems faced by exporting firms which are unable to recover time-expired tender and performance bonds. He will by now have received my hon. Friend's letter of 6th January. I have asked ECGD to make further inquiries into these problems and to discuss them with the companies concerned.

Mr. Allaun

I thank my hon. Friend for that reply. Why should ECGD performance guarantees be confined to contracts amounting to over £1 million when most contracts are for a smaller sum? Secondly, will the Minister examine the evidence in many countries that British bank guarantees can be called upon long after the expiry date? Is he aware that that situation is causing serious difficulty at the Sir James Farmer Norton & Co. Ltd. engineering firm, and that other firms have had difficulties in obtaining guarantees?

Mr. Meacher

I understand that the commercial bond market can satisfactorily handle bonds below £1 million in value. We have had no sustained pressure to reduce the ceiling. Up to June 1975 the ceiling was £20 million, the figure then dropped to £2 million, and in November 1976 it went down to £1 million. I do not think there is any pressure to reduce it further. The banks have indicated that they can handle these matters satisfactorily. I appreciate that there is a problem because of the reluctance of clearing banks to regard bonds as expired unless they are physically returned to them. There is some doubt about the ability of overseas beneficiaries to make calls on the bonds if the figure has expired. I believe that the unfair calling cover introduced in November last year is relevant, and it is now available for all contracts regardless of size. We intend to discuss the matter with the firm mentioned by my hon. Friend.

Mr. Hal Miller

Will the Minister say what has happened to the promised review of the cost escalation cover provided by the ECGD, and in particular regarding the £2 million limit and the impossibility of aggregating several large units within that figure, although the contract price may be over £2 million, as in the case of the contract providing for the supply of turbines to Ontario?

Mr. Meacher

Cost escalation cover is a different matter from the tendering of performance bonds.