HC Deb 25 March 1987 vol 113 cc420-2
7. Mr. Greg Knight

asked the Secretary of State for Trade and Industry what information he has on the extent to which the private sector is providing cover for export credit insurance; and if he will make it his policy to encourage this development.

Mr. Alan Clark

There are no published figures. Our impression from a variety of sources is that private sector credit insurers cover a very small, though growing, proportion of United Kingdom exports. I welcome any cost-effective developments which benefit our export trade.

Mr. Knight

Is it not a sign of the Department's inefficiency that in 1985–86 it employed 1,769 people to write just over £15 billion worth of business, whereas over the same period the private sector dealt with a greater volume of work and employed fewer than 400 people in connection therewith? When will the Department be instructed to allow United Kingdom exporters to have the choice of placing all their business in the private market? Is not the present monopoly on some work indefensible?

Mr. Clark

There are absolutely no constraints whatever on United Kingdom exporters placing their insurance wherever they wish.

Mr. Tony Lloyd

I am pleased to hear the Minister's response. Will he confirm that the Government intend to maintain the present system, recognising its importance to many United Kingdom manufacturers, such as GEC, which simply could not compete in world markets without the existing Government-sponsored insurance scheme?

Mr. Clark

The Export Credits Guarantee Department has an obligation to break even, and that exercises a discipline on its judgments. However, there are, of course, certain sectors of the insurance market and certain policies which the private sector—to which my hon. Friend the Member for Derby, North (Mr. Knight) referred — simply will not touch. In those sectors, if British exporters are to have a reasonable level of assurance, the ECGD is the only recourse available to them.

Mr. Cockeram

Is my hon. Friend aware that he is not quite correct to say that there are absolutely no restrictions? The ECGD operates restrictions in that it deals with the basket of an exporter's insurance needs, whereas in the private sector the exporter can choose to insure with different companies for different markets. The ECGD will not permit that.

Mr. Clark

I think that the difference between my hon. Friend and me is only one of semantics. The ECGD has to exercise the comprehensive principle, but if an exporter does not like the basket approach, to which my hon. Friend referred, he has the clear option to withdraw his custom and place what insurance he can where he can.

Mr. Robin Cook

Has the Minister seen the illuminating document, "Export Goods Not Jobs" published today by the Society of Civil and Public Servants on behalf of its members in his Department? Will he confirm that, under this Government, the Export Credits Guarantee Department has been obliged to double its premiums and that, as a result, it has lost one third of its share of the market? Will he confirm that, in the same period, the number of export support staff in his Department has fallen by two fifths, and that the number of overseas commercial officers in the Foreign Office has fallen by one seventh? Is it any wonder that exports are rising at one third the rate of imports, when the Government have been so busy pulling the rug from under the feet of British exporters?

Mr. Clark

I doubt very much whether the comparative import and export rates — to which I have already referred and which we would all like to be in better balance — have anything to do with difficulties in getting insurance cover. They certainly have very little to do with it. I am afraid that I have not seen the document to which the hon. Gentleman referred—he said that it was only published this morning — and comment on it will therefore have to wait until I can communicate with him personally.

Mr. Watts

Does my hon. Friend share my concern that the ECGD lost nearly £55 million last year on covering commercial risk, whereas the private sector manages to provide cover on commercial risk at a profit? Does that not suggest that we need to examine closely the manning levels and cost structures of ECGD, to stem the haemorrhage of taxpayers' money?

Mr. Clark

The losses to which my hon. Friend refers may relate to some extent to the internal arrangements of the ECGD, and when I went to Cardiff a few weeks ago I was very impressed by the changes that were taking place in that regard. Nevertheless, as I said earlier, we have to make available a service to British exporters to cover the sectors which, for one reason or another, the private sector flinches from entering. There are restraints, there are some sectors in which even the ECGD will not provide cover, although they are marginal. It is perfectly justifiable that some public money should be at risk in this area.