§ Mr. Sainsbury
I beg to move amendment No. 20, in page 6, line 42, leave out from beginning to 'and' in line 43 and insert'or any person acting on behalf of the Crown has a legal interest in them'.This is one of those celebrated technical amendments which, I am happy to say, we have not come across quite so often in the Bill as we sometimes do in other legislation.
Clause 10(4)(a) is designed to ensure that any shares in a vehicle company which are contracted to be sold to the purchaser of the Insurance Services Group before those shares are created and issued are treated as a Crown holding for the purposes of subsection (4) of clause 10. That requires all the shares in a vehicle company to be held by the Crown as a condition of the Secretary of State acquiring any shares in it or making loans to it. If the shares are contracted to be sold before they are issued, there is concern that the purchaser might be treated as the beneficial owner of the shares and they would not, therefore, qualify as a Crown holding.
The amendment redrafts the subsection to cover the normal practice whereby shares, which are sold or transferred soon after issue, are often issued and registered in the name of a nominee for the vendor, usually his solicitor or accountant, before they are transferred to the purchaser. The amendment ensures that a temporary holding of shares in a vehicle company by one of the Secretary of State's advisers, following the practice that I have described, will rank as a Crown holding for the purposes of subsection (4) of this section.
§ Amendment agreed to.
§ Mr. Michael
I beg to move amendment No. 29, in page 6, line 46, at end insert'(6) A vehicle company under this clause shall have its headquarters located within the Cardiff area. For the avoidance of doubt, this subsection shall apply to the initial and to any subsequent transfer.'.The amendment seeks to ensure that a vehicle company shall have its headquarters located within the Cardiff area. It also states that, to avoid doubt, the subsection should apply to the initial and any subsequent transfer.
I hoped—I know that my hon. Friend the Member for Cardiff, West (Mr. Morgan) shares my hope—that all four Cardiff Members would be here to argue that that source of major employment should remain in the Cardiff area. I recall that in Committee we discussed the importance of Cardiff to the Export Credits Guarantee Department, although not on this amendment—the reasons for that will be clear in a moment. In responding to that debate, the Minister—who unfortunately is not with us now--made several comments which were helpful to the case made by my hon. Friend the Member for Cardiff, West and me. He said:I see no reason why the new company should wish to move from Cardiff where it has operated more successfully during the past 10 years than at any other period in its history.That is a correct reference to the encouragement that the department was given on its arrival in Cardiff and throughout the period since then. The Minister went on to say: 98None of the organisations that has expressed an interest in owning the company and bidding for it has suggested moving from Cardiff.However, he also said thatthe ultimate location of the privatised company must remain a decision for the management and owners of that company.That is not the case. There is no "must" about it. It is the Government's choice to leave that liberty in a way that they do not seem, from today's debate, interested in doing, with the employees of the department. It is perfectly proper for the Government to accept the amendment and to ensure that the employment of those people stays within the Cardiff area.
When the Minister summed up his remarks in that debate, he warmed to his theme. He almost waxed eloquent, saying:What are known as campus offices on the edge of town —they are spread out and provide good parking facilities— are often attractive. They may be just beyond the city boundary, yet be the most convenient place to which to attract staff. It would be inappropriate to include the amendment because it would be binding for ever."—[Official Report, Standing Committee H, 6 March 1991; c. 346–47.]Our amendment in Committee sought to limit the location of the headquarters of the privatised company within the boundaries of the city of Cardiff. In putting forward our amendment today, we have helped the Minister to accept our amendment. Clearly, he understood the principle upon which we based our argument in Committee. The amendment states:A vehicle company under this clause shall have its headquarters located within the Cardiff area.There is no difficulty with that in English law—I use that phrase advisedly as I believe that we are not allowed to speak of Welsh or British law—because the test of what is reasonable comes in. For instance, it would not be within the Cardiff area were the headquarters to be relocated in Glasgow. It would be in the spirit of the amendment were the company to be relocated a short distance outside the boundary of Cardiff in south-east Wales, from which employees are now drawn.
The arrival of the Insurance Services Group and the employees of the Export Credits Guarantee Department in Cardiff was not an accident. It was a choice to bring such employment to the area, as we in Cardiff suffered the effects of high unemployment and of the closure of some of our heavy industries. The gradual build-up in which some of us participated—my hon. Friend the Member for Cardiff, West was involved in economic development and I was very much involved in those spheres in local government—encouraged the development of financial services and modern forms of employment within the Cardiff area. It would be a sad day were that employment to drift away from Cardiff.
The amendment seeks to make the Government recognise the validity of the Minister's words in Committee. They should recognise that it is reasonable for employees to be reassured that their jobs will remain in Cardiff, to recognise that it is reasonable for private companies bidding for ISG to be on a level playing field, knowing that the headquarters will be required to stay in Cardiff, and to have the matter dealt with once and for all.
Having taken to heart the Minister's comments in Committee, I hope that the Under-Secretary of State for Industry and Consumer Affairs, who, during the Committee proceedings, seemed to have taken a vow of Trappist silence, will respond with enthusiasm and will accept the amendment. That would be in the interests of 99 the service that will be provided, the stability of staff and the security of the future of the privatised company. We do not seek to move the ISG into the private sector, but, if it must go there, we want it to be stable so that it continues to provide the service to exporters in which the Government seem to have less interest than ourselves.
§ Mr. Morgan
I shall merely add a few words to what my hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) said. He mentioned the principle that we are required to comply with English law. If we were writing the legislation in compliance with the principles of Welsh law, the amendment would read:A vehicle company under this clause shall be garaged within the Cardiff area for the sake of the lower insurance rates.However, we cannot do that, but must stick to the turgid language to ensure that the legislation provides, and continues to provide, 700 jobs in the Cardiff district.
Ministers have said 50 times if they have said it once that the Bill deals with the retention in the business, but under different owners, of the 700 people who live in Cardiff and the immediate surrounding commuting district who have provided high-class service to exporters since the business was transferred to Cardiff from London in 1977, leaving the project group in London. Originally, there were some doubts among people who said that there would be loss of face-to-face contact and talked of the greenness of the local labour force when they were hired rather than staff being transferred from London on civil service terms. It was questioned whether local people would have the experience of the financial services industry and the specialised forms of insurance. People asked whether they would pick up the skills. They did pick them up and have continued to provide a high-class service.
As there is easier recruitment in the south Wales district, everyone is more than satisfied with the results. The employees are satisfied because they have, effectively, had a higher standard of living through lower house prices. The exporters are happy because there has been greater commitment to the job—perhaps because there is less choice of employment and people pitch in that little bit extra and yield that extra commitment to the job because they know it really counts in south Wales, whereas such jobs in the London district might be ten a penny, given the proximity of the City.
Those people deserve not to be messed about—one could say, not to be messed about for a second time in less than 15 years—simply because the Government want to effect a transfer of ownership out of the public sector into the private sector, so is effectively putting jobs and careers on the auction block without guarantees about what will happen afterwards. That is particularly true since we now learn that one of the bidders on the list of the half a dozen presented to us in that peculiar hole-and-corner fashion in the closing days in Committee has dropped out. Now, three of the bidders are foreign and two are British.
Therefore, there is now more than a fifty-fifty chance that employers may well finish up working for a non-British private sector company. That naturally increases their fears that a company based in Belgium, Amsterdam or Trieste may want a base in London, where much of the private insurance is located. Such foreign 100 companies might not see the advantage of continued employment in Cardiff in the way in which a British company would because it would know the difference in supply and demand for labour in the financial services industry in Cardiff compared to London. Such advantages might not be so readily apparent to the majority of the bidders—three out of five of them come from other European countries. One way to overcome the natural fears of people in the Cardiff district, try to smooth the transfer and make the Government seem less hard-hearted and utterly ruthlessly ideological in their approach would be to write in a guarantee clause to show that the Government will bind the successful bidder to the continuation of the operation in Cardiff.
As my hon. Friend the Member for Cardiff, South and Penarth said, the Minister said that he agreed with us in spirit but did not like the wording because it was too specific as to the city of Cardiff and its boundaries. He does so all the time; whenever we propose any amendment, he says that he would love to be able to help us, agrees with us 100 per cent., but our wording does not do the trick and will cause all sorts of doubts and complications. We have come up with a wording that overcomes those difficulties, but I know that he will refuse the amendment. We have heard weasel words from start to finish. The Committee stage was full of weasel words from the Minister—as is the Report stage. As we have a change of Minister, will the hon. Gentleman for once try some badger or frog words —any words but weasel words—and give some reassurance to the 700 employees whom we represent in the absence of the two Cardiff Conservative Members of Parliament?
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)
I am grateful for the comments of the hon. Members for Cardiff, South and Penarth (Mr. Michael) and for Cardiff, West (Mr. Morgan). However, I have to disappoint them tonight because the privatised company's ultimate location must remain a decision for its management and owners. To place on them such a restriction would inhibit their freedom to manage the business as they see fit, and would be likely to prejudice the sale prospects and the proceeds. It would certainly be a most unusual, if not unique, restriction on a commercial company. I say that in answer to a point made by the hon. Member for Cardiff, South and Penarth. Presumably it would be possible to put such a suggestion in a statute, but it would be most unusual, if not unique, to do so.
Subject to the owner's views, the present insurance services management intention is that the company's headquarters should remain in the Cardiff district. I see no reason why the company would wish to move away from a location where it had operated so successfully for 10 years—indeed, from where it has operated more successfully than ever before in its history, and where costs are considerably lower than in other areas, especially the south-east of England. That must be the answer to the argument advanced by the hon. Member for Cardiff, West.
In any service business such as the Insurance Services Group, the staff are its major asset. It is a pleasure for me to reiterate the praise heaped upon the staff of the ISG by the hon. Member for Cardiff, West. It is the understanding of the members of that staff of the needs of exporters and 101 their knowledge of overseas markets that exporters are selling on which the business is built. That is the primary strength of the business.
In the past few years there have been significant improvements in the speed of the service that is provided to the ISG's customers. That has been brought about by the use of new information technology systems. As hon. Members will know, the full benefits of these systems are realised only with a fully trained work force of the type that is to be found in Cardiff. It is testimony to the skill and dedication of the ISG staff that more than 80 per cent. of credit limit applications from overseas buyers are processed within 24 hours. It is difficult to imagine any reason the owners of the new company could have for risking their most important asset by moving their operations away from the Cardiff area. None of the organisations which has expressed an interest in the possibility of owning the company has indicated any wish to move from Cardiff.
An amendment with a similar intention behind it to that which we are now discussing was moved and debated in Committee. I have taken the opportunity to re-read the report of the debate, and I refer to columns 345 to 349 of the Hansard report of the Committee's ninth sitting. That amendment was withdrawn after a full discussion, and reference has been made to that discussion this evening. It was said in that discussion that ultimately these are matters for management to decide and are not appropriate for statute. I return to the original contention that it would be almost unique to decide such matters by statute. I hope that Opposition Members will feel able to withdraw the amendment.
§ Mr. Cousins
Having listened carefully to the Minister, I ask him to clarify, both in the context of Cardiff and elsewhere, what the Government's policy is towards the disposal of the property assets in which the Export Credits Guarantee Department is based. The assurance that he has given about the future of the department at Cardiff would be greatly reinforced if it were known that the property assets in which the activities are located will form part of the sale.
§ Mr. Leigh
The main property is held on lease. Nothing that I have said affects that. The hon. Gentleman, as a member of the Committee that considered the Bill, will know that there has to be a move from the present offices. That is accepted. I think that it has been made known locally that the move will take place and that a period of grace of three years has been given to the ECGD. We are not looking for any instant moves. It is clear that the department will have to move from its offices, and nothing that I have said affects that.
§ Mr. Cousins
Perhaps the Minister will let me know later, if not now, what the policy is on the disposal of the property assets in which the department is situated.
§ Mr. Leigh
I do not think that that issue is relevant to the debate. We are discussing whether the location of the company should be in the Cardiff area. I have heard what the hon. Gentleman has said, as has my hon. Friend the Minister of State. If we can provide him with further elucidation by letter, we shall do so.
§ Mr. Michael
Perhaps I can help by referring to the generosity of Cardiff city council in working to keep employment within the city by relaxing covenants, as the 102 Minister has said, despite the council's opposition to the privatisation, to allow the privatised company time to find a new location within Cardiff or the immediate area.
I think that I begin to understand why the Minister kept quiet in Committee. He was almost over-enthusiastic in replying to this debate. Tributes to Cardiff, to the department's staff and to improved services were building up to a crescendo. There were references to skill and dedication to the extent that we thought that the hon. Gentleman was about to accept the amendment. Unfortunately, he let us down in the end.
Just as the Minister sought an excuse in Committee for not accepting the amendment, he has not accepted the amendment today, even with the obstacle which his hon. Friend identified removed from it. We are sad because the amendment which we debated in Committee was withdrawn on the basis that the location could not be limited so tightly within the city boundary. That is why we have come back with this constructive amendment tonight. It is clear that the Government do not intend to accept it, even in the spirit that was demonstrated in Committee. We were offered merely words, not a real promise to retain the headquarters in the Cardiff area.
I am sure that I can speak for my hon. Friend the Member for Cardiff, West (Mr. Morgan) in saying that the attractions of Cardiff as a location and the quality of the staff there are strengths on which we can depend. It is unfortunate that the Government have not sought to turn that good chance into certainty. With sadness, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Ms. Quin
I beg to move amendment No. 12, in page 7, line 9, at end add—`(8) The Secretary of State shall not dispose of any shares in or securities of a vehicle company unless the purchaser of such shares or securities has given an unequivocal and binding guarantee to the Secretary of State that the purchaser will at all times operate with the objective of encouraging or facilitating, directly or indirectly, the supply by persons carrying on business in the United Kingdom of goods or services to persons carrying on business outside the United Kingdom.'.The amendment places on the new privatised company an obligation to operate with the objective of encouraging or, if appropriate, facilitating directly or indirectly the export of goods and services. The Minister will remember that in Committee we expressed our great anxiety over the fact that the commitment to encourage exports that appeared in the earlier Bill was not repeated in this Bill. We discussed that commitment to encourage exports in relation to the continuing ECGD.
We feel that it is important at this stage to ascertain from the Minister whether the newly privatised company will have a statutory commitment to encourage exports. I imagine that the Minister will say that the new privatised company will obviously want to promote and encourage exports. None the less, he will be aware that exporters were worried that the phrase "encouragement of exports" was omitted from the Bill. They will wish to be assured that both the continuing ECGD and the privatised ISG will have a strong commitment to encourage exports.
In Committee we had an interesting discussion about the relative strengths of the words "facilitate" and "encourage". The Minister will see that the amendment contains both expressions so that there can be no doubt about the extent of the commitment of the new company to promoting exports. The amendment would ensure that 103 ISG is not tempted to turn away business simply because it is not immediately or obviously profitable even though it may lead to good long-term prospects for British industry in overseas markets. We are worried that short-term export credit insurance may not be available for many overseas markets and that export premium costs might rise steeply.
If there is a statutory commitment to the encouragement of exports, the company will have an additional objective to the simple one of dealing with profitable markets. There will be a wider commitment to the health of United Kingdom exporters and the United Kingdom economy as a whole. We would like to hear the Minister's response to the amendment and we hope that he will look favourably on it.
§ Mr. Sainsbury
The hon. Lady asked for my response to an amendment that is well-intentioned but, as is so often the case with such amendments, so vaguely worded that, were we to include it in the Bill, I do not know how we could ever determine whether a purchaser had operated at all times with the objectives set out in the amendment. I do not know of any criteria or test that one could apply to determine, with sufficient accuracy for something included in a statute, whether a requirement had been met.
There is a much better way to ensure that that requirement is met—I appreciate that it is a way that the Opposition find hard to accept and even harder to understand—and that is competition, which is an effective test of whether a company is providing a good service. If it is not, the customer can take his business somewhere else.
The amendment completely overlooks the fact that the Insurance Services Group of the Export Credits Guarantee Department is already operating in a competitive market. There are other providers, and there is every sign that the number of providers and the degree of competition will steadily increase.
In addition, the commitment to ISG's business and to its existing customers has already been a key factor in selecting the shortlist of those invited to tender. That arose out of earlier discussions with potential bidders. As I have already said, that commitment—not only a commitment but an understanding—and the resources necessary to carry out the work of ISG will be a major factor in determining the final purchaser from the shortlist.
Examination of the shortlist of bidders will confirm that the Government are negotiating with parties who clearly understand the market and are committed to it. I am totally confident that a purchaser, to meet the competition that the Insurance Services Group will encounter, will endeavour to provide a quality of service to its customers that will persuade them to continue coming to the ISG for export credit insurance.
Therefore, privatisation will be good for exporters, not only because of the competitive element but because it will enable privatised business to provide a more flexible service, combining export and domestic credit insurance where that is appropriate. It certainly seems to be required by a number of existing customers.
104 In summary, one could say that as the amendment is misguided, unnecessary, inappropriate and impractical, it should be rejected.
§ Ms. Quin
The Minister often criticises our amendments as being too vague or too precise. It seems that we are not able to please him at all with the ideas that we have suggested. I am perfectly well aware of the importance of competition and of market forces. Competition can be healthy and can have a healthy effect. Nonetheless, throughout the passage of the Bill, the Minister has demonstrated the wildly over-optimistic belief that somehow everything will be successfully sorted out by this policy of privatisation and competition. The two may not work in harmony because one of the problems that we mentioned in Committee was that in certain cases privatisation might reduce rather than increase competition. That argument has not been dealt with by the Minister.
We are also aware that the climate in which competition takes place may not always be conducive to balanced economic growth, which explains some of our previous amendments—for example, that on regional networks. Also, within the European Community—our focus with the privatisation of the ISG—there can be many substantiated claims of unfair competition.
Part of the wording that the Minister objects to is already in legislation—for example, that on the encouragement of exports. For that reason, I do not believe that the amendment is as inappropriate or as misguided as he suggests. The evidence shows that exporters have been able to live happily with the wording in existing legislation and so his comments on the amendment are not justified. However, once again I am sure that the importance of encouragement to export will form part of the deliberations in another place. Therefore, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.