§ Ms. Quin
I beg to move amendment No. 30, in page 7, line 10, leave out from beginning to 'under' in line 11 and insert'Any transferee shall be obliged to consent to make, if so requested by the Secretary of State, arrangements with the Secretary of State'.This is a probing amendment. Clause 11, as drafted, would enable the Secretary of State to establish an arrangement with the privatised company under which it would provide reinsurance for the insurance business underwritten by the ISG before privatisation—in other words, in respect of insurance policies that are still to run off.
We wonder whether a problem might occur if the privatised company refused to reach such an arrangement with the Secretary of State. The amendment is intended to oblige the privatised company to agree to the arrangement, if the Secretary of State wants one. Its aim is really to get at the reasoning behind the wording of the Bill.
§ Mr. Sainsbury
I understand from what the hon. Member for Gateshead, East (Ms. Quin) has said that we are dealing with a probing amendment. I have noted the number of occasions on which Opposition Members have 105 asked leave to withdraw their amendments on the ground that they wish to leave further deliberation to another place. A remarkable degree of enthusiasm for the work of the other place seems suddenly to have been generated, and Opposition Members appear to be almost anxious to add to its work load by not taking a decisive view of any of their amendments. None the less, I appreciate that this is a probing amendment.
It may be helpful if I remind hon. Members that clause 11 enables the Secretary of State to transfer to the new company the bulk of the insurance service business that exists on the date of privatisation. The transfer will be achieved through the company providing reinsurance to ECGD in respect of existing and future risks under policies issued by the ECGD after 31 March 1987. Although it will be the reinsurer, the company will continue to administer the risks on behalf of the ECGD, which will remain the primary insurer.
This method of transferring a business is not uncommon in the insurance market, and avoids any complications that may be involved in directly transferring liabilities under insurance policies to a new insurer.
Given the circumstances, the amendment is unnecessary. Furthermore, it would not be appropriate for legislation to dictate the detailed terms of a sale contract that is yet to he negotiated. As has already been made clear, the intention is to privatise the Insurance Services Group as a going concern. The invitation to tender sets out the Government's proposals for an arrangement that enables the bulk of the existing credit insurance business to be transferred to the new group.
The draft new contracts are in the invitation to tender —a copy is available in the Library. They provide a way of putting that into effect. Bidders, however, are not precluded from submitting alternative proposals for consideration. It would be disadvantageous to the sale process if we imposed, by means of the amendment, detailed terms on bidders. Therefore, we should not accept the amendment. It would be better to leave the opportunity for another method of transfer to be accepted, if that should prove advantageous.
§ Amendment, by leave, withdrawn.
§ Mr. Cousins
I beg to move amendment No. 13, in page 7, line 14, at end insert—`1(A) The Secretary of State shall make arrangements with any transferee under which all companies carrying on business in the United Kingdom for whom the tranferee will provide export credit insurance or similar assistance, not confined to the arrangements set out under section 1(4), shall have the right of access, and the opportunity to make representations, to the Secretary of State in relation to, any aspect, of the conduct and operations of the transferee.'.
§ Madam Deputy Speaker
With this we may take amendment No. 31, in page 7, line 14, at end insert'(1A) The Secretary of State shall make arrangements with any transferee under which all companies carrying on business in the United Kingdom for whom the transferee may make available export credit insurance or similar assistance shall have the right of access, and the opportunity to make representations to, the Secretary of State in relation to any aspect of the conduct and operations of the transferee.'.
§ Mr. Cousins
The amendments are intended to ensure that, if and when the concern is privatised, the range of businesses—many of them small—whose export credit 106 insurance will be conducted privately will continue to have access to the Secretary of State. The Minister made much of the markets. It is an inevitable fact of life that the markets reflect the power of the various actors in those markets. With the privatisation of the Insurance Services Group, we are dealing, on the one hand, with a very large insurance company and, on the other, with a mass of exporters, many of them small, who rely on that insurance company for short-term insurance. Inevitably, therefore, the power of the markets may work very much to the advantage of the supplier of the insurance facility and very much to the disadvantage of those who depend upon it. That point has been made time and again during the discussion of this issue by bankers and companies, both large and small.
It is significant that the major clearing banks are concerned about that aspect. They are worried that their customers in other parts of the commercial world will become dependent upon a monopoly insurer for that critical part of their business. They are also worried about its consequences for premium rates, the availability of cover for particular markets, access to cover for particular deals, additional conditions that may be imposed, or the withdrawal of cover facilities from certain companies or individuals. That is what may happen if there were a major supplier of an insurance facility and a mass of small to medium-size enterprises that depended upon it.
The amendments would introduce a statutory right of access to the Secretary of State by small and medium-size companies. It must be reasonable, even to someone who is absolutely committed to the workings of the market, that a fail-safe provision should be included in the Bill. A survey into the changes was carried out by the Export Credits Guarantee Department on behalf of the Government. A key question was put to 400 companies in the survey. The Minister will recollect his doubts about surveys, but this one was carried out on behalf of the Government. Those 400 companies were asked whether the proposed change in the ECGD's status to that of a trading company would result in a better service to exporters. The majority had no view to express and did not know what to say. Their doubts about what the future may hold for them would be dealt with by the acceptance of amendments Nos. 13 and 31.
§ Mr. Sainsbury
I am delighted that my right hon. Friend the Secretary of State for Trade and Industry is here while we are discussing this amendment. The hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) has a touching faith in the powers of Secretaries of State. I know that my right hon. Friend shares my view that competition and the opportunity to take one's business elsewhere is a much better choice for the consumer than an appeal to a Secretary of State—even one as able as my right hon. Friend. The amendment fails to grasp the realities of the market, which provides competition, and it also fails to understand the purpose of the Bill.
To provide a means of appeal to the Secretary of State on the activities of a private sector company seems to me to go against what we know works and what we know is effective. It is yet another example of the Labour party seeking to impose Whitehall interference and excessive regulation on industry. The normal commercial and legal remedies would be available to customers of the privatized 107 Insurance Services Group who had difficulties with the privatised company about the performance of any contracts. That goes without saying.
Of course, the privatised company will have to comply with the requirements of the Companies Acts, and the insurance company will have to be authorised by the Secretary of State under the insurance companies legislation. The Secretary of State is responsible for the administration of the legislation. Anyone is free to make representations to him about issues arising; no special arrangements have to be made.
I urge the House to reject an amendment that, once again, seeks to introduce Whitehall regulation as a substitute for competition.
§ Ms. Quin
If the sale of ISG were to result in the existence of only one major short-term credit insurer in the United Kingdom—a virtual monopoly—would the Secretary of State be willing to receive representations from exporters concerned about rises in premium rates or about the possibility of the withdrawal of facilities? Does the Minister accept that regulation is important? The Government have told us that they are rather keen on regulation as a framework within which private companies operate. That makes our amendment seem very reasonable.
§ Mr. Sainsbury
I have already made it clear that the regulatory arrangements to which I have referred will certainly apply. As the hon. Lady knows, the market is becoming steadily more competitive, and there is every indication that whoever is chosen from the short list of those invited to tender for the purchase will continue that trend. If the purchaser—who might well at any time have a large part of the United Kingdom market—were to become uncompetitive, there would be no shortage of people willing to take on the business at more competitive rates. There would be no shortage of other suppliers of export credit insurance to whom customers could turn.
There would be no point in the purchaser's taking advantage of his customers. In a competitive world, that is not the way in which people go about their business. Business men seek to keep their customers—indeed, to build up their trade. That is why competition works, and why regulation—actually, interference and intervention —by Whitehall is not nearly such an effective means of giving the customer what he wants.
§ Mr. Cousins
The Minister's reply is mystifying. These amendments do not suggest any right of appeal in any sense that would be recognised at law; nor do they create any regulations or machinery that could produce regulations. They seek merely to guarantee a right to consult the Secretary of State in the event of difficulty.
The Minister talks glibly about how competition works. With the privatisation of the Insurance Services Group, we are dealing, on one hand, with a very large and commercially powerful supplier of financial services, and, on the other hand, with a range of often quite small businesses. No one doubts that a large, sophisticated multinational company, such as GEC, would readily be able to find alternative sources of insurance. It is very unlikely that the same would apply to a far less 108 sophisticated business, working in a particular market and providing a very narrow range of products, outside the major commercial centres of Britain. Such a business will be extremely vulnerable to the withdrawal of insurance facilities in respect of either some range of its activities or some of its markets.
I should have thought that the Minister could accept these amendments as a means of providing Government access to knowledge about the workings of the insurance market. It is astonishing that the Minister not only does not seek to welcome the right of access to such knowledge, but regards it with contempt. It is a pity that Ministers should take that view about the representations that might come to them from smaller businesses. No doubt they will have picked up from the tone of tonight's debate just in what regard the Minister places them.
I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.