§ '( )-(1)—The Secretary of States may make arrangements for insuring any person providing insurance with a view to facilitating, directly or indirectly, supplies by persons carrying on business in the United Kingdom of goods or services to persons carrying on business outside the United Kingdom against risks of losses resulting directly or indirectly from war, expropriation, restrictions on remittances and other similar events.
§ (2) Arrangements under this section will be made and would last at least for three years from the date of coming into force of a scheme made under section 8 of this Act. After such a minimum period, the arrangements will be subject to an annual review.
§ (3) References in subsection (1) above to a person carrying on business in the United Kingdom and to the insured include any company controlled directly or indirectly by him.'. —[Ms. Quin.]
§ Brought up, and read the First time.
§ Madam Deputy Speaker (Miss Betty Boothroyd)
With this it will be convenient to take Government amendment No. 16.
§ Ms. Quin
The issues raised in new clause 2 and in the Government's amendment have emerged as the key concerns of exporters. The Government's approach to political risk reinsurance is the single most powerful reason why so many exporters distrust the Bill and distrust the Government's intentions for the future of the continuing ECGD and for the future of the insurance services group under a private owner.
All hon. Members have been lobbied about political risk reinsurance. They have been lobbied by firms in their own constituencies, by individual firms, by large firms, which may sub-contract to many smaller firms, and by associations of firms, such as the British Exporters Association, the London chamber of commerce and the British Electrotechnical and Allied Manufacturers Association.
I received today a letter from the president of the BEAMA, from which I shall quote. The letter is important and shows vividly the reactions of industry to the Government's approach on political risk reinsurance. In the letter, Sir Robert Davidson says:Industry has been concerned by the nature of this Bill right from the beginning. There is a real question mark over the willingness and ability of a private sector export insurance endeavour to provide the range and depth of cover after privatisation which exists at the moment through the Insurance Services Group of the Export Credits Guarantee Department. Whilst the Bill was in Committee, Members of 46 the House raised this point specifically, and tabled an amendment which gave legislative guarantees that the Government would retain an involvement with the insurance or reinsurance of political risk for a period of at least three years after privatisation; this amendment was agreed by the Committee. This seemed the very least that could be done to allay the fears of Britain's exporters.Yesterday the Government tabled an amendment which, if passed, would simply delete from the Bill the previous statement which guarantees this continued involvement. I find it extraordinary that the Government should choose to send this negative message to industry at a time of severe recession. Some £13 bn of the United Kingdom's £8 bn export business is currently underwritten by ECGD Cardiff, so uncertainty of the kind caused by this action has a potentially disastrous consequence for the confidence of Britain's exporters.Those are strong statements from BEAMA, and they have been reinforced by many other firms and by many other commercial associations while the Bill was in Committee and in the few days before Report. The Government are winning no friends in industry by their attitude.
I am rather surprised to see so few Conservative Members in the Chamber at present given that it was a Conservative member of the Committee who tabled the original amendment. He received support from some of his colleagues, but unfortunately he did not receive support from the Government. I am surprised that the author of that amendment is not here, as he was a member of the Committee. Perhaps there is a good reason why he is not here to defend his proposal.
§ Mr. Peter Thurnham (Bolton, North-East)
The hon. Lady has commented that few Conservative Members are present. Will she now turn round to see that even fewer Labour Members are present?
§ Ms. Quin
Indeed. However, some of those who seemed most to support the original amendment, which the Government now seek to overturn, are not here to defend their stance in Committee. I know that many Conservative Members were pleased with the original amendment, which was passed in Committee with strong support from the Opposition, so we are rather surprised that so few of them seem to be prepared to defend the amendment, which is under threat from their own Government. All the Conservative Members who are not Ministers to whom I have spoken seem to favour the original amendment because they know that it was popular with exporters and with British industry, and they know the real difficulties that British exporters face at present.
The new clause is slightly stronger than the original amendment. However, to try to promote agreement throughout the House on the issue, it is not as strong as the amendment that we tabled in Committee in which we sought an open-ended Government commitment to provide political risk reinsurance facilities to the new privatised company. The new clause refers to reinsurance being available for three years and for it to be subject to an annual review after that. That goes some way towards meeting the Government's feelings on the issue. Given that the new clause fits in quite well with the original amendment, we hope that the Minister will accept it.
47 5.15 pm
On reflection, it may be even better to set up a rolling programme. I know that exporters are interested in the idea of a rolling programme to allow reinsurance facilities to continue fairly smoothly. That would also allow reinsurance facilities to be reviewed, rightly and properly, by the Government of the day in the light of the circumstances.
There is a clear difference of opinion between the Minister and almost the whole of British industry about whether it is likely that the private market will be able to take up the reinsurance business. The Government seem to feel that, after the magic period of three years, the private sector will have no difficulty in taking on the whole of the reinsurance facility that is presently provided by the Government. None the less, all exporters have told us that they fear that the private sector will not properly take up the facilities. Exporters are worried that at the end of three years they will be left high and dry. Will the Minister let us know a little about his discussions with exporters on the subject? Will he tell us whether any of them share the Government's optimism about the private market and reinsurance?
What are the Minister's current feelings about the three-year period which is on offer by the Government? Does he expect the amount of reinsurance provided by the Government to reduce systematically over the three years, or does he expect it to remain at current levels and suddenly to be cut off at the end of three years? Many people are worried about that. The Committee accepted the amendment tabled by the hon. Member for Leeds, North-West (Dr. Hampson) and it commanded widespread support. It is disgraceful that the Government are trying to reverse that amendment today.
There seems to be a difference of view between the Department of Trade and Industry and the Treasury on the issue of political risk reinsurance. Will the Minister enlighten us on the discussions between himself and his colleagues in the Treasury? It has been widely reported that there is considerable wrangling between the two Departments over the thorny issue of reinsurance. We want to know what the current state of play is, and whether there is proper agreement between the two Departments or whether disagreements continue to prevail.
Will the Minister tell us how much of a problem the lack of Government commitment to provide reinsurance is in the minds of the bidders for the ISG division of the ECGD? I imagine that all the bidders are anxious about the Government's commitment to provide political risk reinsurance. In Committee, I referred to the difference between the treatment of British exporters and the treatment of Dutch exporters if the Dutch company NCM were the successful bidder and if the British exporters with which it would deal via the privatised ISG did not have the access to reinsurance facilities that Dutch exporters dealing with the same company in Holland would have as a result of the Dutch Government's commitment. The Minister gave an astonishingly complacent reply—that there will always be differences in the export credit facilities offered by different countries. That will not tackle the problem of discrimination.
Are the other bidders concerned about the Government's policy on reinsurance? I understand that they are all concerned that the Government's commitment will be phased out within three years, with no guarantee 48 thereafter. I should be surprised if they were not worried about the Government's intention to reverse the amendment agreed in Committee.
The Minister may say that there are technical or legal difficulties with the amendment that was passed in Committee—I understand that he said something along those lines to exporters—and if so we need a firm commitment, and preferably something in the Bill, to ensure that exporters know that some political risk reinsurance will be available after the three-year period. It would not be satisfactory if the Minister said, "There are technical difficulties and in any case we will phase out political risk reinsurance after three years."
The Government are optimistic that the private sector will take up the market, but, as far as I am aware, no one else is. The overwhelming majority of exporters who expressed their views to hon. Members highlighted that as their main concern. The Government's attitude is an acid test of their approach not only to exports but to our economic recovery generally.
§ Mr. Thurnham
I did not serve on the Committee and, although I do not wish to delay the House, I have been asked by a large engineering company in my constituency, Beloit Walmsley, which makes papermaking machinery, to make representations. In addition, a large steel construction company in the constituency of my hon. Friend the Member for Bolton, West (Mr. Sackville), Watson's, has also expressed concerns.
I shall be grateful if my hon. Friend the Minister will comment briefly on political risk reinsurance for four countries—Iran, Russia and China, which are of interest to Beloit Walmsley, and Indonesia, which is of particular interest to Watson's as it is negotiating a large contract there. Beloit Walmsley has received inquiries from Russia and China and an inquiry about an order worth between £175 million and £200 million from Iran. It would be pleased if the Government were to regard that major business opportunity as a unique case, rather than leaving it while a general review of arrangements is undertaken.
The inquiry is from the Karun Pulp and Paper company in Tehran, which is in the Islamic Republic of Iran. Given the developing relationship between Britain and Iran and the difficulties with Iraq and the fleeing Kurds, does my hon. Friend the Minister believe that we will have a more positive relationship with Iran? Adequate insurance for the inquiry would help to cement the relationship between Britain and Iran, to the benefit of both countries and particularly to employment in my constituency.
My constituents have pressed me to say that that case should be regarded as unique and not subject to review so that Beloit Walmsley can further its negotiations with Karun Pulp and Paper with the support of the Government. I should be grateful if my hon. Friend the Minister will comment particularly on the possibility of that contract being treated as a unique case with which the Government can help, and in general on inquiries from Russia, China and Indonesia.
§ Mr. Cousins
The hon. Member for Bolton, North-West (Mr. Thurnham) went to the heart of the problem. The Government resemble one of the creatures in "The Adventures of Dr. Doolittle"—the Pushmi-pullyu, which tried to look the same at the front and the back and which faced in both directions. The hon. Gentleman gave a good 49 example of a Pushmi-pullyu at work. The face at the front, led by Ministers, is urging exporters to the Gulf to take on trading and commercial obligations with politically risky countries, but in the calm and comfort of Westminister the same Department is undoing provisions of the Bill that would offer exporters the assurance that they need—that they will be covered for their political risks. It is an extraordinary situation. The Government urge exporters to take on commercial obligations and do business with politically risky countries, but undermine the new clause and, by their amendment, negate the amendment that was moved in Committee by the coalition forces.
The Minister must consider his position. We can all bandy around the fact that in Committee and in this debate Labour Members have quoted the CBI to support their case, but the point is serious: the CBI's mind is made up and it regards the amendment that was passed in Committee as essential. It regards the guarantees that were given to exporters to politically risky countries as fundamental to the conduct of sound business and the expansion of British exports. The statement that it issued made it perfectly clear that it believes that the honour and integrity of Ministers' comments are on the line. It reminded its members—this point was made many times by members of the Committee—of the assurances that were given by the then Secretary of State when he announced the privatisation of the Export Credits Guarantee Department in December 1989. He was clear that political risk reinsurance would be guaranteed for three years. That direct and explicit undertaking was given to the House and to the commercial world. The Government amendment undoes the worth and value of that. By so doing, it signals a lack of commitment to underpin commercial exports to politically risky countries, which will do considerable damage to the honour and reputation of the Government and to British business men and women in their work in other countries.
What will other countries make of this debate? What will they make of the assurances of a Government who try to undo the value of an undertaking that was given by a previous Secretary of State in December 1989?
The hon. Member for Leeds, North-West (Dr. Hampson) successfully moved the amendment in Committee that the Government are now seeking to undo. He said that he hoped his hon. Friend the Minister would accept the amendment because it would constitute, to use his ringing phrase,the Sainsbury guarantee".It is clear this afternoon that neither the Ridley guarantee given in December 1989 nor the Sainsbury guarantee, to which the hon. Member for Leeds, North-West drew attention when he moved his amendment, has been honoured. That is shameful and bad. It will go against the interests of British exporters at a time when they badly need Government assistance in seizing the opportunities that they now have in many politically risky situations round the world.
§ Mr. Sainsbury
I start by sending a positive message to British exporters and emphasising the importance that the Government attach to promoting British exports and providing support to British exporters.
As I hope that the hon. Member for Gateshead, East (Ms. Quin) recognises, it is necessary not just to say that we want to provide support, but to provide it sensibly, 50 practically and realistically. It is insufficient to say that words in a Bill are adequate because the intention behind them is good. Her new clause 2 would not help exporters although I realise that that is her intention. We must recognise that her proposal would have statutory force. Similarly, clause 4(2), which amendment No. 16 would delete, would not be as helpful as my hon. Friend the Member for Leeds, North-West (Dr. Hampson) intended.
The new clause and amendment deal with a complex aspect of export credit insurance. That may explain some of the misunderstandings about the national interest reinsurance facility that have arisen, and that, it is clear from our debate, regrettably still exist.
It is important that the House should recognise that these complex arrangements deal with the insurance and reinsurance arrangements for less than one half of 1 per cent. of Britain's non-oil visible exports. As of now, only the insurance and reinsurance arrangements for less than that tiny percentage would be the subject of what we seek to define as political risk reinsurance.
It may be helpful if I put the insurance arrangements for this small fraction of our exports in the context of the overall level of Government support for exporting. The promotion of British exports and the provision of support to exporters is an important part of the work of my Department. We are committed not just to maintaining that work but to constantly seeking ways to improve the service that we and other parts of Government provide to exporters.
Most recently, on 14 March I announced the merging of the export divisions of the Department of Trade and Industry and of the Foreign and Commonwealth Office to form a new joint directorate, which will be responsible for the development of export promotion policy. It will improve the coherent and consistent delivery of export services. Exporters will now find that, whether they are seeking help from the regional office of the DTI or from a post overseas, the export promotion arms of both Departments will be operating under the name of Overseas Trade Services.
Overseas Trade Services will deploy more than 2,000 staff worldwide, all of whom will be committed to providing a wide range of advice, information and assistance to British firms seeking business overseas. Their help will extend to every stage of the exporting process —for example, in finding an export representative, in attending promotions and fairs overseas, in going on overseas missions, in providing export intelligence services about export opportunities, and in export marketing research schemes to look at the opportunities for a particular market for a particular product. A whole range of services will be available from the Overseas Trade Services arms of the DTI and FCO to help exporters.
The efforts of the DTI and FCO staff are supported by many others, most notably my right hon. Friend the Prime Minister. Like all other Ministers, he takes every opportunity to speak up for British goods and services and to promote British exports.
At overseas posts it is not just the staff who are committed full time to working for Overseas Trade Services—the commercial staff—who are involved in helping exporters. Throughout the world in all our overseas posts the head of the mission regards it as an important part of his task to look for opportunities to help British exporters, as do all his staff. In Britain, in addition to those whose full-time job is working in Overseas Trade 51 Services, all the staff of the regional offices of the DTI regard helping exporters as part of their overall responsibility.
In addition, several other Departments, for example, the Ministry of Agriculture, Fisheries and Food, the Department of the Environment, the Department of Employment, the Department of Transport, the Department of Energy and the Ministry of Defence, through its Defence Export Services Organisation, provide help to the industries with which they are involved. In addition, my right hon. Friend the Secretary of State for Trade and Industry and I receive valuable advice from the British Overseas Trade Board and its network of area advisory groups, which bring in expert advice on export opportunities from no fewer than 180 senior business men with a great deal of experience.
The support available to exporters through the ECGD's project group, which will remain in the public sector, is substantial.
§ Mr. Barry Porter (Wirral, South)
I have been listening with great interest to everything that the Government and the Departments do to assist exporters and I congratulate them, but I am puzzled. If the political risk reinsurance is so insignificant as a percentage of our visible exports, why are the Confederation of British Industry and individual firms, as well as everybody who has written to me, kicking up such a fuss?
§ Mr. Sainsbury
My hon. Friend raises a good point. Despite all the assistance, there is a great deal of misunderstanding. The remarks of the hon. Members for Gateshead, East and for Newcastle upon Tyne, Central (Mr. Cousins), who has drifted from where he was a moment ago but who is still in the House, show that that confusion still exists. I am sure that my hon. Friend accepts that the manpower, time and resources committed to helping exporters are considerable. We are committed to continuing to provide that support as effectively as we possibly can.
§ Mr. Alun Michael (Cardiff, South and Penarth)
The hon. Member for Wirral, South (Mr. Porter) asked the Minister to explain why everybody except the Minister regards this approach as sensible and why only the Minister is convinced of the rightness of his course of action. Given the intense debate in Committee and the press criticism of his action, has the Minister sat down and examined in his own mind whether he might be wrong?
§ Mr. Sainsbury
I am sorry that the hon. Gentleman is joining the gang of the confused, alongside the hon. Members for Gateshead, East and for Newcastle upon Tyne, Central. It was only too evident, during the discussion in Committee and in correspondence that I have had with several people since, that misunderstanding remains about the reinsurance arrangements that the Government intend to provide for the new company after privatisation. Therefore, it is not only helpful but vital that I describe them in more detail. I again emphasise that we are talking about political risk reinsurance—the reinsur-ance arrangements for less than one half of 1 per cent. of the non-oil visible exports from the United Kingdom.
§ Sir Robert McCrindle (Brentwood and Ongar)
Before my hon. Friend explains the rationale of his case in a little 52 more detail to those of us who fully confess to be mildly bewildered, perhaps he could explain one thing. If we are dealing with such a small percentage of British exports, does my hon. Friend accept that by seeking to nullify the effects of the amendment successfully moved by my hon. Friend the Member for Leeds, North-West (Dr. Hampson) he risks sending the wrong message to the great majority of exporters? The amendment offered a relatively small concession and I believe that any attempt to nullify its effects would waste a great deal of the Government's valued reputation as an assistant of exporters without any great advantage.
§ Mr. Sainsbury
The last person in the House to be confused on matters of insurance is my hon. Friend, as he is an acknowledged expert on the subject.
I want to send a positive message to exporters, even those concerned with that small fraction of overall British exports. I want that message to be helpful, but if the Government accepted the new clause or the well-intentioned amendment tabled by my hon. Friend the Member for Leeds, North-West that would not be helpful and would not achieve the purpose that that amendment was designed to meet. As I develop my argument I hope that my hon. Friend the Member for Brentwood and Ongar (Sir R. McCrindle) will see that I am seeking to give reassurance in the most effective way.
§ Mr. Peter Bottomley (Eltham)
The proportion of exports is not insignificant. We are not particularly concerned with those transnational companies that switch goods between Britain, France, Germany and Spain because that trade does not carry much political risk. I doubt whether we are that concerned about the import and export of gold and diamonds, as people can arrange to be paid without much delay. My guess is that our biggest concern is for those in the manufacturing industries, including engineering, when there may be some time between the dispatch of a consignment and receipt of payment. I suspect that the reassurance that the Minister will seek to give will be addressed to that group rather than to those who are not subject to a serious risk.
§ Mr. Sainsbury
I believe that I shall give a positive reassurance on the issue to which my hon. Friend has drawn attention.
The longer-term exporters are the exporters whose exports are covered by the project group of the ECGD. That part of the ECGD will continue as a Government Department and therefore there is no requirement for the political risk reinsurance, which is the subject of the new clause and the Government's amendment. The new clause and my amendment are addressed to the political risk reinsurance that will be provided for the Insurance Services Group, which covers short-term—up to 180 days —exports. They will be covered by the privatised organisation that will take over the work now done by the Insurance Services Group.
After privatisation, the Insurance Services Group will be able to provide a more flexible and comprehensive service to its customers. It will enjoy the freedoms, but also be subject to the competitive pressures, that are the features of business in the private sector. The Government, through the continuing ECGD—I emphasise that it will continue to provide export credit insurance to long-term project exporters—will also provide to the new company that will take over the business of the Insurance Services 53 Group of the existing ECGD two different types of reinsurance to support and assist it in its transition into the private sector.
The two different types of reinsurance have caused confusion and still seem to be causing confusion among Opposition Members.
The first type of reinsurance will be ECGD provision of support to supplement the reinsurance that the new company will be securing in the private reinsurance market. It will cover both commercial and political risks. That temporary facility will be available for up to three years after privatisation. That type of reinsurance is not only normal but essential for an insurance company, which has to avoid the need for an unnecessarily large market capitalisation. I am sure that my hon. Friend the Member for Brentwood and Ongar is well aware of that.
In the run-up to the issue of the invitation to tender for the shortlist of likely bidders for the insurance services business, the Government's major priority has been to develop, with the private reinsurance market, a package of reinsurance support to be available to the privatised company immediately it begins operations. I am glad to say that the market has responded extremely positively to the new company's needs and I am confident that the vast bulk of the new company's reinsurance needs can he met by the private market immediately upon privatisation.
The placing in the private market of the Insurance Services Group's portfolio of risks is probably a unique event in the market's experience. We are talking of the risks attaching to more than £13 billion of United Kingdom exports annually. By any measure, that is an enormous amount and it is a credit to the skill and flexibility of the market and to ECGD and its advisers that the capacity has been found to meet virtually the whole of that requirement. However, there could be a small shortfall and the Government intend to fill that through the continuing ECGD becoming, in effect, one of the reinsurers of the new ISG.
I must make it clear that it is that "top-up" support that is transitional. It will be available to the company for up to three years after privatisation. Given the expected successful placing of the vast bulk of the company's requirements in the market even before it starts its operations, I am sure that the House will understand why the Government are confident that, once the market has familiarised itself with the new company and its management, it will be able to meet the company's full needs for quota and excess of loss reinsurance within those three years.
The confusion between the second type of reinsurance and the first type that I have just described has given rise to some of the unnecessary worries that have been expressed. The second type of reinsurance is the "national interest" facility that I announced on Second Reading. The need for that arises because there are a few countries in which ECGD facilities are at present available, but where the management of ISG considered that to have offered the risks on those countries to the reinsurance market now could have prejudiced the market's response to the total book for business put to it. By definition, those are countries where the company and private market reinsurers are not at present happy with what they see as the political and commercial risks. Therefore, to avoid any sudden and sharp reduction in the facilities available to 54 our exporters in the immediate aftermath of privatisation, the Government will provide support to enable some cover to be given on exports to those markets.
In order not to prejudice wider diplomatic and commercial sensitivities, I shall not specify precisely the markets concerned. My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) mentioned four markets—Iran, China, the USSR and Indonesia. It is likely that the possible business to which my hon. Friend referred would be project business—longer-term export business—in those markets. Cover is already available for Indonesia and China, but cover for the longer-term markets in the USSR and Iran is at present under review. I assure my hon. Friend that I shall ask ECGD to look urgently at the Beloit Walmsley case in Iran to which he referred. Meanwhile, the companies concerned might like to contact their regional office or ECGD contact.
The countries that are regarded as requiring political risk reinsurance are few. Press speculation about the identity of those markets has been wide of the mark. The proportion of ISG business at present involving exports to those markets—not the proportion of total British exports—is still less than 2 per cent. of the total business insured in 1990–91. That is still a worthwhile amount of exports—about £300 million worth—but it is a small proportion of the total insurance book of ECGD and a fractional proportion of the total non-oil visible exports from Britain. Nevertheless, it still represents a valuable proportion of our exports. So although this is not a major facility, it is one of importance to some exporters.
The intention is that this national interest cover should be delivered through the continuing ECGD giving 100 per cent. reinsurance to the privatised company. It could well be—I hope that it will be—that most of these national interest markets will become reinsurable in the private market so that the need for this facility will fall away. The likelihood of this is, though, rather less clear than it is for the top-up arrangements for the company's more general reinsurance requirement.
It may help, at this point, if I say a little about the nature of the reinsurance market for credit insurance risks. This will, I hope, help to clarify the developing relationship between private reinsurers and the Government and explain some of the uncertainties. A key point is that this is a complex market and this complexity is compounded by the fact that it is a rapidly changing market.
The ECGD has, therefore, quite properly used the services of a specialist broker. The placing of Insurance Services' more than £13 billion of risk has obviously been a challenging task. There have been some suggestions from some quarters that it would simply not be possible to place Insurance Services requirement in the market because of the amount and degree of political risk inherent in the portfolio. Despite statements which I have made to the House and in Committee, some doubts still seem to exist; indeed, they were echoed in some of this morning's newspapers.
There are two important points to be made about the relationship between ECGD's Insurance Services and the reinsurance market. First, three quarters of Insurance Services' business is with the OECD markets; secondly, the ECGD is negotiating a package deal. Thus, for reinsurance purposes, non-OECD business is being packaged with the bulk of OECD business.
I have already explained that these negotiations are meeting with considerable success. The market has already 55 indicated its readiness to accept the vast bulk of the new company's reinsurance arrangements. The balance will be supplied by ECGD joining the reinsurance group under the transitional top-up arrangement, while a small balance —just 2 per cent. of the total—will be dealt with under the quite separate national interest reinsurance facility.
But that is today's picture. Every element in it is subject to change. It is necessary to understand that the reinsurance market is international; indeed, many non-United Kingdom players occupy a central place in it. The market already provides reinsurance to some of ECGD's counterparts in both the public and private sectors. However, meeting the reinsurance requirement for the Insurance Services Group will represent a step-change for the market but such rapid development is, as we all know from the changes which this Government have fostered through deregulating the financial markets in London, becoming a more common fact of life. Further changes will arise in future. The capacity and experience of the private reinsurance market is clearly expanding. The performance of Insurance Services as a new company will demonstrate its competence to the market. The economies of the importing countries and the political risks that the market perceives in them will change over time, as will the needs of British exporters.
§ Ms. Quin
The Minister has said that the situation is changing and will continue to change. Given the difficulty with predicting exactly what will happen, and when, why have the Government fixed on this period of three years by when the facility to which the Government has alluded will be phased out? Why should the Government stick to this magical figure?
§ Mr. Sainsbury
I am sorry that the hon. Lady is still confusing the two types of reinsurance. The three years refer to the top-up or quota reinsurance being provided by the ECGD joining the market, covering more than 90 per cent. of the total portfolio of Insurance Services Group. What we are examining now and separately—this goes for the new clause as well—is the balance, the 2 per cent. of Insurance Services group's portfolio which is not being offered to the market because of the perception of the political risk inherent in the countries involved.
This has been a trail-blazing operation which reflects great credit on the skill and flexibility of ECGD and its advisers. In recent years there have also been changes in the make-up and direction of our exports and in the economies of many importing countries. All these factors bear crucially on the nature of the facilities which exporters will require from ECGD in the future. No one can predict with any certainty what the next changes will be, when they will occur and how they will alter credit insurance needs.
The new subsection, which amendment No. 16 seeks to remove, could have the unfortunate effect of requiring the Secretary of State for a period of at least three years—the subsection mentions these three years as well as the other three relating to the quota top-up reinsurance—to provide political risk cover, short, medium or long-term, in respect of any proposition put to him—irrespective of its merits or the degree of risk involved. I am sure that the House will recognise that such an obligation would be extremely unreasonable. Neither the project group nor Insurance Services has ever had such a statutory obligation to provide cover regardless of risk. It would oblige the 56 Secretary of State to insure the sort of risks which were rather accurately described as long ago as 1949 by the then President of the Board of Trade, now Lord Wilson of Rievaulx, as undulyhazardous or quite crazy".The subsection would expose the ECGD to a degree of financial risk that could not be in the interest of exporters.
So, although I sympathise with the intentions of my hon. Friend the Member for Leeds, North-West— intentions which led him to propose his amendment—I do not believe it possible to find appropriate words which would fulfil them to include in what will become an Act. On the one hand, there is the rigidity of requiring the Secretary of State to cover any risk regardless of the destination or of the nature of the exports involved, which might even be arms. On the other, it is impossible to specify the detail of the arrangements, referred to in the new clause and in the new subsection, which the Secretary of State would be required to arrive at. For instance, would they be arrangements at a stated premium, or with or without a letter of credit, or with a confirmed letter of credit? We cannot specify in the Bill what they would be.
I do appreciate, however, that some exporters, together with the CBI and the hon. Member for Gateshead, East, are worried. I can assure hon. Members that the national interest facility for the second type of reinsurance that we have been discussing will be kept available after privatisation, and we shall keep the requirement for the facility under review. It would be the intention that, subject to its performing satisfactorily as an ECGD trading facility, it would continue for as long as the Government considered it essential to meet the reasonable needs of exporters.
So we are faced with three reasons why the new clause and the subsection which I am seeking to remove would not help exporters in the manner in which they were intended to. First, it is not possible to define with the accuracy appropriate and necessary for inclusion in an Act what the arrangements should be. Secondly, even were it possible to come up with a satisfactory definition, all the wording that has been suggested would require the Secretary of State through ECGD to provide reinsurance for any such risk regardless of how bad a risk it was. I hope the House will recognise that it is unacceptable to remove entirely the exercise of discretion in these matters.
Thirdly, in view of developments in the reinsurance market and the changing political and economic situations which lead to the need at any time for a country to be considered a particularly bad risk for the reinsurance market, it seems inappropriate to include a time limit. That is because Government-backed reinsurance may not be needed for that period and any time limit implies an arbitrary cut off point. That is far less appropriate than saying, as I have said, that the matter will be kept under review. I urge the House to reject the new clause and, on the basis of my assurances, to accept amendment No. 16.
§ 6 pm
§ Mr. John McAllion (Dundee, East)
I have listened carefully to the Minister's arguments, which seem to fall into three broad categories. First, he tried to argue that the Opposition do not have the judgment to understand the complexities of export credit insurance dealt with by the new clause and by clause 4(2). He said that they covered such a tiny percentage of British exporters that it did not 57 matter whether the new clause was accepted or clause 4(2) was deleted. He ran into some hostile flak from his own side when he tried to put that argument.
§ Mr. McAllion
He did, and it caught him.
Even if a small percentage of our exporters were affected, that still accounts for a large number of British companies. Those companies depend on exports for profits and their workers' jobs depend on such exports.
I was confused by the Minister's final argument against the new clause and the amendment which was carried in Committee. He said that it would be impossible to find appropriate words adequately to cover the matters that we should like to see in legislation. That is a strange notion, because if they were given the proper instructions civil servants could come up with words that would give effect to the arguments that we seek to substantiate.
The Minister said that the amendment carried in Committee would have obliged the Government to give cover for any risk regardless of the financial consequences to the Treasury. Such detail can easily be dealt with by skilled civil servants. They could find phrases that would not allow the Government to be pinned in that corner and at the same time would provide the cover that many exporters seek from the Bill.
The Minister ducked the major argument advanced by my hon. Friend the Member for Gateshead, East (Ms. Quin) and by some of his own hon. Friends. That argument dealt with the range and depth of cover of political risk reinsurance that is provided in the Bill. Despite the Minster's reassurances, as he called them, he is sending out to British exporters the negative message that the Government are not prepared to back them in the way that other European Governments back companies that compete with ours. That is unfortunate.
I was impressed by some Conservative interventions because the hon. Member for Leeds, North-West (Dr. Hampson), whose amendment was accepted in Committee, found it convenient not to be here for the debate on that amendment during which we heard that the Government intend to delete it from the Bill. It will seem strange to those outside who take an interest in our proceedings that some hon. Members have the courage of their convicitions in Committee where they take brave stands in defiance of the Whips and their party leadership but that their courage fails them on Report. It will be interesting to see how those hon. Members vote on the new clause.
§ Mr. Peter Bottomley
During the term of the last Labour Government—and there is not much prospect of having another one very soon—members of the Tribune group used to calculate how many of them could vote against the Government while still making sure that the Government won.
§ Mr. McAllion
That is one the serious reasons why I did not renew my membership of the Tribune group, which I joined when I first came to the House. I am in favour of standing up for the things in which I believe in whatever way I find possible.
We are dealing with areas that are generally described as less secure export markets. There has been much academic discussion about the ins and outs of whether a 58 Bill can technically express that concept, but no one has come to terms with substantive examples. Let us look at Iraq which, by any standard, must be considered a less secure export market. The Minister seems unsettled.
§ Mr. Sainsbury
I remind the hon. Gentleman that the United Nations embargo on exports to Iraq is still in force.
§ Mr. McAllion
It is in force at the moment, but I should like to examine what has happened over the past 10 years in Iraq. The Minister will remember that over that time that country experienced the horrors of the Iran-Iraq war. In 1988, the Kurdish rebellion was suppressed by resort to chemical weapons by Saddam Hussein who then invaded Kuwait and suffered the consequences of the Gulf war. He is now being subjected to further Kurdish rebellions in Kurdish and southern Iraq, and we all know about the tragedies in the mountainous areas bordering Iran and Turkey.
Throughout that tumultuous period Ministers continued to foster British trade with Saddam Hussein's regime. A succession of Secretaries of State for Trade and Industry traipsed through Baghdad in search of contracts for United Kingdom exporters, and in 1988 that culminated in the announcement of £340 million worth of export credits for trade with Iraq. It is not the purpose of the debate to question the morality of such behaviour by Ministers and the ECGD. However, it is relevant to note that Ministers and a Government-owned agency were underwriting British business in a very unsecure export market. Only the Government were prepared to take the kind of risks which we now know were involved in trade with Iraq.
Since Ministers and a Government Department issued export credits to underwrite trade with Iraq, that country has suffered at the hands of the west perhaps the heaviest air bombardment ever inflicted on a modern state. It has been invaded and occupied by foreign troops, its cities and infrastructure have been devastated and its very survival is threatened by the famine and disease which have followed the war. The prospects for its economic recovery have been blighted by United Nations demands for reparations to Kuwait. Iraq is now engulfed in a bloody and dreadful civil war, the consequences of which we do not yet fully understand.
The notion that private sector insurance would be prepared to underwrite business with a country such as Iraq is unbelievable. The Minister said that there is no problem, even with short-term insurance cover provided by the ISG being provided by the private sector in the long term, but that is not facing reality. Iraq may not be typical of the markets that we are debating in terms of the scale of the horrors to which Iraq has been subjected in the past 10 years, but it is typical of the nature of the risks in such markets.
Political instability is found in many parts of the world, and the Government will have to come to terms with that if British exporters are to be assisted in trading with politically unstable countries. It is disingenuous of the Government to say that nothing can be written into the Bill so that the Government cannot be tied down to a prerequisite of the sort of cover that will have to be offered. We are told to leave it to the Government's judgment and that for politically high-risk markets cover will continue to be funded by the Government through the newly privatised ISG and that it will be 100 per cent. for an 59 undefined period. When we asked the Minister to list the countries and the markets for which the Government will give a commitment he dried up. It seems that it is not possible to tell the House or British exporters the markets for which the Government will provide 100 per cent. cover.
Nor is the Minister prepared to say how long the Government will provide such cover. It will be provided until the Government decide that it can no longer be provided. The fact that the Minister will not make a commitment is unsatisfactory to hon. Members and to British exporters.
Four markets were specified but the Minister's commitment was vague. He recommended to one hon. Member that he should tell the companies in his constituency to raise the matter with ECGD and write to the Minister concerned because he was not prepared to make the commitment that Ministers should make in dealing with such an important subject.
Elsewhere in Europe, competitors of British exporters receive reinsurance back-up from their Governments that is denied to British exporters. The Government are determined not to make the same commitment to British exporters as is made elsewhere in Europe. The Minister must come to terms with the fact that the world is becoming more unstable. More markets are becoming subject to political unrest and instability and we do not know what the future may hold for some countries. If markets are uncertain, returns from investment in those markets are even more uncertain. British exporters need to know that their Government will support them if the worst comes to the worst and their contracts fall through. They need to know that if the Government of the country concerned refuse to honour the contracts in which they have invested, the Government will be prepared to back them up fully.
So far in this debate, the Minister has made it clear that the Government are not prepared to give that support to British exporters because of the costs involved. It seems therefore that they are prepared to place British exporters at a disadvantage to others in Europe. That is unsatisfactory and disgraceful.
§ Mr. Michael Grylls (Surrey, North-West)
As a member of the Standing Committee, I put my name to the amendment before the new clause was added to the Bill. Alas, when it was debated I was unable to be in the Committee. Had I been there, I would have voted for it, but as it happened, the amendment was passed anyway. My hon. Friend the Member for Leeds, North-West (Dr. Hampson) did the House a service in moving the amendment. It has driven the Government to look at the clause anew, even if the new clause is flawed. We know that it is not perfect but most Back-Bench amendments are not perfectly drafted because we have fewer resources than the Government.
Many exporters and organisations have written to hon. Members. The hon. Member for Gateshead, East (Ms. Quin) quoted extracts from correspondence showing the concern about the apparent gap in cover. When those concerned read the Official Report of the debate and my hon. Friend the Minister's speech, they will be "greatly reassured", to coin the Minister's expression.
I am not one to stand up in the House against a privatisation. The experience of most of us during the past 60 12 years has been that various industries and businesses previously run and owned by the Government are much better in the private sector. I believe that the transfer of this industry into the private sector will be beneficial. It is proving to be a special animal because it is privatisation with a couple of "buts"—it has a couple of legs of support from the Government, albeit temporarily, because of the special difficulties of reinsuring political risk. My hon. Friend the Minister's description of those legs should reassure exporters.
Although the Opposition may poke fun at the way in which the amendment was made by Conservative Back Benchers against the wish of a Minister—that is part of the political fun—the Committee stage involves the serious business of trying to improve a Bill. Conservative Back Benchers have as much right to try to improve a Bill as any other Committee member, and it is perfectly reasonable for us to do so. However, the two legs that have appeared for support from ECGD to supplement commercial and political risks for up to three years—reinsurance being leg no. 1, and leg no. 2 being the national interest facility of further support for reinsurance by the Government—are a strong arrow in my hon. Friend the Minister's quiver in defending the clause and seeking, more importantly, to assure exporters that their position will be taken care of. Although we may have had a bit of fun over the amendment, there is a consensus on both sides of the House that exporters must be given maximum support.
The Small Business Bureau, in which I have an interest, has stood up for small and medium-sized firms over the years. Larger firms do not need much help, but smaller and, more relevantly, medium-sized exporters are important. My hon. Friend the Member for Eltham (Mr. Bottomley) mentioned engineering firms, but many of those will be covered by long-term finance with ECGD and will be fully covered by that part of the service which is still run by the Government. Thousands of those exporters—small engineering firms—follow contracts given to large exporters such as GEC and bring thousands of minnows in their wake, and it is important that they be looked after.
§ Sir Robert McCrindle
Like my hon. Friend, I am mainly concerned about the needs of small to medium-sized exporters and believe that the large ones can look after themselves. Like him, I think that they will be reassured by my hon. Friend the Minister's comments. Does he agree that, unfortunately, towards the end of my hon. Friend the Minister's speech, he said that, because it was impossible to find an appropriate form of words, he could not take on board the point made by my hon. Friend the Member for Leeds, North-West (Dr. Hampson)? Can my hon. Friend the Member for Surrey, North-West (Mr. Grylls), who has been in the House for the same time as I have, recall any occasion when a Minister has said that it was not possible to give a reassurance that he wished to give because his civil servants had been unable to evolve an appropriate form of wording? Would not it be better for my hon. Friend the Minister to try again, perhaps in another place?
§ Mr. Grylls
My hon. Friend and I may have been in the House for the same length of time, but my memory is becoming worse and worse. I am sure that what he recalled must have happened on many occasions. Those words 61 have been spoken in the House and, as the Americans say, they are on the record and should be taken seriously. The two legs exist to back up what my hon. Friend the Minister said. He did not simply give a vague assurance that everything will be all right on the day, but offered the addition of those two top-up legs.
I welcome the Minister's comments about general help to exporters and the bringing together of services under one arm. That is important one-stop shopping for medium and smaller firms, particularly outside London, so that they know where to go for services and to encourage them when they are seeking markets, agents and market research. I welcome that change, as it will provide flexibility for exporters.
I welcome the privatisation, because of the ability of the private insurance sector to offer the cover that firms need when they trade under different circumstances throughout the world, and I believe that the British insurance market will respond to it. Perhaps they will not respond totally from day one. My hon. Friend the Member for Brentwood and Ongar (Sir R. McCrindle) will know more about that than I do. It will take time for the insurance market, particularly the reinsurance market, to understand its market and know what it must develop to respond to the needs of all our exporters. That cannot be done immediately—the privatisation has not yet taken effect.
I am prepared to give the Government the benefit of the doubt, with the assurance that the two supporting legs have been offered and the market will develop and be able to provide in a much more flexible and general way than any Government service can do. It is difficult to be sure and know that, in a foolproof, belt and braces way, we have the system totally right. Having listened to the Minister's speech, my judgment, for what it is worth, is that the House would be wise to give him and the Government the benefit of the doubt, and accept that they have tried to meet the real worries rightly expressed in Committee. The House should believe that the proposals will fulfil the needs of most of our exporters. Some 0.5 per cent. of our exporters may not be satisfied, but certainly the generality of them will, in the long run, be better off through the transference to the private sector.
§ Mr. Morgan
Since the hon. Member for Surrey, North-West (Mr. Grylls) rose to speak, the hon. Member for Leeds, North-West (Dr. Hampson) has arrived in the Chamber. It was like the United States fifth cavalry arriving at the last minute to defend to the death the amendment that he successfully steered through Committee with the support of the Opposition. We noticed a sort of legislative eternal triangle between the Minister, the Parliamentary Private Secretary and the successful rebel Back Bencher going into action straightaway. The hon. Member may have been successfully anaesthetised by a dart between the shoulders in the meantime. Perhaps before this debate ends he will say what his intentions are.
Before the hon. Member for Leeds, North-West, and possibly you, Mr. Deputy Speaker, arrived in the Chamber, the Minister said that he sympathised with the aims of the successful amendment tabled in an act of rebellion in Committee and supported by Labour Members. The hon. Member for Brentwood and Ongar (Sir R. McCrindle) also referred to that fact. It seems odd, therefore, that the Minister voted against the amendment in Committee but now, at least, agrees with its purpose.
62 The Minister said that there was an unfortunate lack of words in the English language with which to express the intentions of the Opposition, the hon. Member for Leeds, North-West and his colleagues, some of whom are ranged here—and that was despite the vast resources of the Department of Trade and Industry. Personally—and I am probably speaking for 90 per cent. of hon. Members—I believe that when a Minister makes such a statement, he is not to be believed. The lack which he says means that intention cannot be transferred into legislative reality is a lack that exists in the Minister's mind, not in Chambers dictionary.
Will the Minister try replacing the word "shall" with the word "may" in line 1 of the amendment of the hon. Member for Leeds, North-West? He suggests that the amendment, which is contained in the Bill and would be wiped out by Government amendment No. 16, would cause problems because it would imply that, without any payment of premium, everyone would have a right of access to full political risk insurance against every form of earthquake in an earthquake zone, revolution in a revolution zone, and failure to remit in a country with foreign exchange difficulties. That is nonsense because no one is suggesting a premium-free service—it would obviously contain appropriate premiums. The Minister's suggestion that the amendment of the hon. Member for Leeds, North-West implied the ultimate exporter's free lunch, with a premium-free form of insurance or reinsurance, is the ultimate in weasel words.
We all listened carefully to the Minister's brief, which was evidently carefully prepared for him and from which he did not depart except when hon. Members made interventions, for the obvious reason that he must convey the message clearly. It was a damage limitation exercise, attempting to give some reassurance to exporters. He will be aware that, in spite of his efforts, the overwhelming impression given and the message that has got through to a typical, middle-sized, common or garden, British backbone exporter is that the No Turning Back group has hijacked the Department of Trade and Industry—not in the person of the Minister, but in the persons of the previous and present Secretaries of State—and has decided that what British industry needs, whether when exporting or manufacturing goods for use in this country, is another dose of the great cold shower of 1979–81. The group believes that if 20 per cent. of companies go out of business, as they did between 1979 and 1981, it will probably be a good thing because they were not efficient, otherwise they would have survived. It believes that a bit more of the cold shower in relation to export assistance in the form of insurance and reinsurance will be healthy because it will take out the softies who cannot live within the No Turning Back group's concept of a true free market world.
That is the message that exporters have received, why they have been writing to hon. Members and why the Government have attempted to produce the sort of retrospective reinsurance to meet some of the aims of the amendment successfully tabled by the hon. Member for Leeds, North-West. That is why we, on behalf of exporters in this country, still maintain that the proper way for the Government to act would be to retain political reinsurance as a generalised, but not premium-free, right for common-or-garden exporters, whether involved on the 63 project side or in short-term insurance requirements, until we see what other countries are also disarming themselves of the right to provide political insurance.
This country needs more exporters. Not all markets are stable—those in eastern Europe are rapidly changing their characters. The Minister said that the very fact of change is an argument against generalised political risk reinsurance. We say that it is a strong reason for providing it because otherwise British exporters will continue in their sad pattern—compared to Japanese or German exporters —of being exporters to small, back-street operations instead of high street ones. In order to get into the high streets, a company must have confidence when the market opens up, otherwise it will be the seventh or eighth exporter in the list, export only at boom times and never really become established.
From where we stand, Britain stands and Britain's balance of payments deficit stands, the idea that this country can do without political risk reinsurance during the next five or six years unless all other countries in the world give it up in legislation to be passed tomorrow or within the next five years is absolute nonsense. It would be a complete dereliction of duty by the House were it even to consider doing that—in spite of the Minister's weasel words.
§ Dr. Keith Hampson (Leeds, North-West)
I apologise to the Chair, the House and my hon. Friend the Minister for arriving late. I expected that the Opposition Benches would be crammed with keen and eager Members who would pursue new clause 1 excessively, as they did in Committee. I thought that I might just about be in time for the start of the debate on new clause 2.
In Committee, I offered my hon. Friend the Minister the opportunity of accepting the amendment and thought that I might go down in fame and glory as being the originator of the Sainsbury amendment. Unfortunately, I gather from an excellent, quick briefing from my hon. Friend the Member for Kensington (Mr. Fishburn) that the Minister gave some firm assurances and expressed sympathy with the aims that we were seeking to pursue. The hon. Member for Cardiff, West (Mr. Morgan) put his finger on the crucial point—although many of the other European countries with which we compete are moving towards privatising the short-term business, they all automatically assume that the political risk markets will be supported by their Governments. It seems essential that, as long as that belief prevails among our competitors, the British Government must support British industry and not place our companies at a disadvantage.
I entered the Chamber in time to hear some of the remarks of my hon. Friend the Member for Surrey, North-West (Mr. Grylls), who knows so much about small and medium businesses. It seems that a particular sector of concern is those niche players with special products—the smaller companies going into difficult markets. Indeed, they are pathfinders in those markets in terms of other contracts that may ensue. As the amendment which was accepted in Committee was geared to sending a signal to British industry that the Government were behind it, there is a genuine belief within British business that the Government will maintain the reinsurance facility, although it will be under review. That is reasonable 64 provided that the Government can guarantee that the facility will continue for as long as it is needed and not only as long as the Treasury feels that it can afford it.
Perhaps the Treasury is at the heart of the problem. Perhaps that is why we are being approached by industry. The Treasury produced various memoranda that subsequently appeared in the public arena, and evidence was provided for the Select Committee on Trade and Industry. The attitude or mentality of the Treasury was entirely clear. I am not speaking of the Treasury now because this has been a long-standing Treasury view. British industry has always been somewhat jaundiced—I think rightly—about the rather dead hand of the Treasury in industrial matters. It tends to adopt a narrow, blinkered and short-term approach that is concentrated on the bottom line.
For some years the Treasury has been saying that the reinsurance business and export credit insurance are costly exercises because a good deal of money is being lost. Although the political risk market in short-term business is a tiny part of the sector, British industry has still felt that the Treasury would like to pull out from it.
I do not know what some would-be buyers have said to my hon. Friend the Minister. I read the newspapers, however, and as my right hon. and hon. Friends will know, the general flavour of press reports over the weekend was that at least some potential buyers are looking rather more uncertainly at purchases if there is not the guarantee of reinsurance in political risk areas. I have been told that the reinsurance industry does not believe that within three years it will be able to pick up all the pieces.
It is right to have an ongoing review because some political risk areas may become better risks than others which seemed at one stage to be quite good but which deteriorated. That is all right provided that there is a firm guarantee. That is all that I was seeking to provide for in introducing the amendment which was carried in Committee by my hon. Friends, with the help of Opposition Members.
I am nine-tenths reassured by the remarks of my hon. Friend the Minister and so I shall not grieve if the terms of my amendment are removed from the Bill. I merely ask my hon. Friend to pause for one moment. It is to be assumed that the Government will carry the new clause and so remove the terms of my amendment, and as I am not a lawyer I must bow to the legal opinion that is offered to the Government. It may be, however, that the Bill will embrace many countries in which the political climate is such that we would never wish to engage in reinsurance facilities. If it is stated that the Secretary of State shall make arrangements, it seems that he will have to act in any market in which an exporter wishes to do business. In education legislation there is often a broad-brush approach—I have not seen this in any Department of Trade and Industry legislation—with details being left to subsequent regulations. It is stated that the Secretary of State shall make arrangements as appropriate. If that approach is adopted and it is considered that it is not appropriate to embrace countries such as Libya, the Secretary of State will not have to make the arrangements. If he wants to make arrangements for other countries as appropriate, so be it.
If the new clause is agreed to, my hon. Friend the Minister might like to think about including words such as 65 "the Secretary of State shall make arrangements as appropriate … for a minimum of three years." If such words were adopted, British industry would be reassured by the Government and would have greater self-confidence. It would feel that the Government were behind it. I ask my hon. Friend the Minister to consider placing some such words in the Bill. However, I accept the generous way in which he has expressed sympathy for the intent behind my amendment.
§ Mr. Den Dover (Chorley)
I, too, have been reassured by my hon. Friend the Minister. I ask, however, that the other place gives consideration to changing "shall" to "may". In that sense, I fully support the hon. Member for Cardiff, West (Mr. Morgan). If the new clause is accepted and the subsection is deleted, I hope that those in another place will give careful consideration to the issues involved. We must ensure that firms, especially small and medium-sized undertakings, have some support while the whole of the Export Credits Guarantee Department is privatised.
§ Mr. Michael
We have had an interesting debate during which Tory Members' concerns and worries have been made manifest, even though they have been expressed in half-hearted and, in some instances, almost sycophantic terms. I am pleased to be able to welcome the hon. Member for Leeds, North-West (Dr. Hampson) belatedly to the debate. I do not understand why he thought that we, the Opposition, would drag out the debate to cover his late arrival. I hope that he will be rather more convincing when he casts his vote at the end of the debate.
The hon. Member for Leeds, North-West said that he will not grieve if the amendment which we accepted in Committee is removed from the Bill. That is all very well, but it is clear that exporters will be less half-hearted and will grieve. It is clear also that considerable reassurance is needed for exporters and that that is not to be made available in the Bill.
§ Dr. Hampson
It is unfair to suggest that I expressed myself as baldly as that. I said that I would not grieve in the light of the expression of intent to deliver what exporters are wanting from my hon. Friend the Minister.
§ Mr. Michael
I take it that the hon. Gentleman will, in effect, support the amendment which he proposed and which Opposition Members supported in Committee when the House divides so that the small percentage of dissatisfaction that he says he still retains is thereby assuaged.
It is interesting that several Conservative Members seemed during the debate to awaken for the first time to the dangers that are inherent in this pointless piece of privatisation. The hon. Member for Bolton, North-East (Mr. Thurnham) asked several questions. I recommend that he reads the reports of the proceedings in Committee with some care. The Opposition pressed the Minister, as did exporters and the CBI, yet it appears that the Minister takes the view that he is the only person who is in step. He has said that the matters referred to by the hon. Member for Bolton, North-East probably involve long-term projects. What if they do not? Why not give the reassurance which was sought in Committee and which has been requested this evening?
The question that should be at the forefront of our minds is how we can protect, encourage and reassure our 66 exporters. I must tell Conservative Members who are new to these discussions that the lack of justification for the Bill was exposed in Committee, along with the lack of reassurance that has been forthcoming from the Minister.
The Insurance Services Group within the Exports Credit Guarantee Department has received universal praise for the efficient and effective way in which it undertakes its work. The hon. Member for Wirral, South (Mr. Porter) said that he was puzzled that the Minister seemed to be standing on his own. He asked why everyone seemed to disagree with his hon. Friend. The answer is that the Minister has it wrong. He has again sought to diminish the importance of the insurance services element within the Department's work overall. He told us that it is only about 2 per cent. of the overall business. I suggest that a reasonable piece of advice to the Government is that they should look after each 1 or 2 per cent. more effectively than at present so that the 100 per cent. with which they have dealt so disastrously over the past few years may look after itself more successfully. In other words, the Government should give more effective support, encouragement and reassurance to exporters so that we can move out of the dire situation in which the Government have put us.
The Minister sought to persuade us that he wishes to give a positive message to exporters. Given the way in which he has dealt with matters that have arisen during our consideration of the Bill, the only way in which he could give a positive message to exporters would be to resign from his present position. He told us that he must consider the words in the amendment, but hon. Members on both sides of the House have made it clear that that is not true. He could perfectly well have recognised the fears and promised to introduce an amendment worded to meet the fears of exporters. He spoke of the support that the Department is giving to British exporters, but his speech about his activities more or less rearranged the deckchairs on the Department of Trade and Industry as if it were some latter-day Titanic. It was irrelevant to the debate.
Before this privatisation measure was introduced, my hon. Friend the Member for Cardiff, West (Mr. Morgan) and I met the then Secretary of State, the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley). It became clear in our discussion that there was no justification for the measure. However, throughout the Committee and again today, we have sought to improve the measure and to suggest constructive changes.
The hon. Member for Surrey, North-West (Mr. Grylls) urged the Minister to listen and reassure exporters, but he said that he wanted as much privatisation as possible. I argue that the Government went too far in privatising the water industry and it is difficult to find anyone who wants this privatisation or believes that it will help in any way. Today, or, failing that, in the later stages of the Bill, we need reassurance from the Government.
The Committee accepted an amendment which gave legislative guarantees that the Government would retain an involvement with the insurance or reinsurance of political risk for at least three years after privatisation. At the conclusion of this short debate, I remind the House of the words of the British Electrotechnical and Allied Manufacturers Association, which were quoted by my hon. Friend the Member for Gateshead, East (Ms. Quin). It said:This seemed the very least that could be done to allay the fears of British exporters.67 It complained that the timing of the Government's amendment had left little room for manoeuvre. In other words, the attempt to remove the guarantee from the Bill was sprung on the House too late for elements in industry to gear themselves up to object. BEAMA complained:uncertainty of the kind caused by this action has a potentially disastrous consequence for the confidence of Britain's exporters.Those are serious words. I draw attention to the way in which the same objection was expressed by the Confederation of British Industry:CBI Members continue to doubt the Government's future commitment to provide political risk insurance or reinsurance for short term exports to 'difficult' markets following the transfer of ECGD's Insurance Services business to the private sector.Again, we have references to insecurity and mistrust and doubt of the Government from elements of the industry. After our experience in Committee, that seems justified.
The nature of the doubt of people in the export industry is clear. We could get rid of the doubt by accepting new clause 2. It would not only provide for the three years after privatisation but ensure that the new company would value, consult and work with exporters on whom we depend. Our new clause originally said:The Secretary of State shall consult with the relevant trade and exporting associations to determine whether those arrangements should be continued for a further year and, if it is considered equitable in the national interest that those arrangements should be continued for a further year, they shall be so extended.We address the interests of exporters and the national interest in a way that the Minister does not.
We have had a debate in which doubts about the Government's intentions have been expressed clearly. We shall set aside the temptation to press new clause 2 in order to seek the greatest consensus in the Chamber by voting on Government amendment No. 16 at a later stage. We set a test for Conservative Back-Bench Members who have expressed concern during this short debate. If any Conservative Member cares about exports and the fears expressed in the export industry, he or she will vote with us in the Lobby to retain the amendment agreed in Committee.
§ Mr. Sainsbury
With the leave of the House, may I say that I shall not detain the House long because I set out the position at some length earlier. The hon. Gentleman referred to doubt. If the new clause or the amendment tabled with the best of intentions by my hon. Friend the Member for Leeds, North-West (Dr. Hampson) were accepted, the doubt would be increased, for the reasons that I set out.
I fear that the hon. Member for Cardiff, South and Penarth—is that right?
§ Mr. Michael
Uncharacteristically, the Minister has got one thing right—the name of my constituency.
§ Mr. Sainsbury
How nice to be congratulated, even so obliquely.
The hon. Member for Cardiff, South and Penarth (Mr. Michael) did not listen to what was said. The drawback of the amendment is clear. The arrangements are not specified. Every piece of business involving exports to wherever and whatever the nature of the goods to be 68 insured would have to be accepted. That would be a foolish measure to impose on the Secretary of State. Certainly it would not help exporters. It would increase doubt.
The best way to reassure our exporters, whom we seek to support in every possible way, is to say, as I have already said, that the national interest facility will continue to be available after privatisation. We shall keep the requirement for the facility under review. My hon. Friend the Member for Leeds, North-West asked us to keep it for as long as it was needed. Subject to it performing satisfactorily as an ECGD trading facility, we intend to retain it for as long as the Government consider it essential to meet the reasonable needs of exporters.
§ Motion and clause, by leave, withdrawn.