HC Deb 22 October 1991 vol 196 cc811-27

Lords amendment: No. 1, in page 7, line 14, at end insert— ("(1A) The Secretary of State shall from time to time determine, in relation to such classes of risk determined by him as might be insured by him under section 1 of this Act, whether it is expedient in the national interest for him to exercise his powers under that section to make arrangements for reinsuring persons providing insurance for risks of that class.")

Read a Second time.

4.15 pm
Ms. Joyce Quin (Gateshead, East)

I beg to move amendment (c) to the Lords amendment, in line 7, at end add— 'In the exercise of this power the Secretary of State shall be guided by the duty imposed on him under the old law of encouraging British exports'. Amendment (c) is important because at issue is the extent to which the Government will be obliged to take into account the need to promote and encourage British exports when considering whether to provide reinsurance facilities. The 1978 law used the expression "encouraging British exports". The Opposition believe that that commitment should be at the forefront of the Secretary of State's mind when he decides to what extent reinsurance should be provided.

Amendment (c) would strengthen the hand of a future Secretary of State, especially if other Departments, such as the Treasury, which has a reputation for cost-cutting in export promotion, take a negative view of the reinsurance facility. The amendment would allow the Secretary of State to tell the rest of the Government and the Treasury that he is obliged to encourage British exports. It repeats an obligation under the old law, which operated satisfactorily until the Government decided to repeal it with this ill-thought-out Bill.

The encouragement of exports is vital. Unfortunately, under the Bill, the service to British exporters—a service that is inferior to that enjoyed by our competitors—is likely to suffer. The Government's purpose is simply to cut costs and to reduce the extent of services that are available to exporters.

I imagine that the Minister will say that we should be well aware from previous debates, especially the debate on clause I, that the word "encouraging" was felt to be more restrictive than facilitative. However, I do not believe that that argument applies to this amendment.

This part of the Bill deals with the reinsurance facility. We say that, whenever the Government decide to provide top-up or national interest reinsurance, they should be motivated by the consideration of encouraging exports. We therefore believe that the Minister's objection to the word "exports" does not hold good.

Amendment (c) would retain the spirit of the old law, which exporters believe served them well, and by accepting it the Government would send exporters a welcome signal at a particularly difficult time for them. We have been made aware today of the extent of the Confederation of British Industry's criticisms of the Government's industrial and manufacturing policy, and it is true that manufacturing industry relies particularly on the services of the Export Credits Guarantee Department. If the Government accept our modest amendment, it would at least give some reassurance to industry that some of their difficulties are being taken into account.

This month's trade statistics, which were issued today, show that there is an alarming manufacturing deficit. The manufacturing companies that use the ECGD's services see the ECGD as an important weapon to reduce that trade deficit, but they are worried that, under present proposals, it will not be available to the same extent as it was in the past.

Amendment (c) would give exporters the impression that we will be active in some of the new markets in which we need to be involved, especially those of eastern Europe and the Soviet Union. Exporters have repeatedly given me the impression that British industry is falling behind because it is not getting the Government support that is available to many of our competitors. They have been worried about the lack of ECGD cover for the Soviet Union and the countries of eastern Europe. If amendment (c) is accepted, exporters will be encouraged by the thought that some of the difficulties under which they have been labouring in trying to export to those new markets will perhaps be overcome.

Amendment (c) would send out the right message to those many exporters who fear that, if the Bill is passed in its present form, we will be at a disadvantage compared with our major competitors, especially in the European Community. Widespread concern was expressed in the other place about the lack of a level playing field in terms of export support and promotion.

When the Government introduced the Bill in the other place, only the Minister spoke in favour—all other speakers on the Government and Opposition sides expressed either reservations or outright hostility. They included various captains of industry, two former Cabinet Ministers and two former Trade Ministers who had had specific responsibility for export credit, including the previous Minister for Trade, Lord Trefgarne, the predecessor of the hon. Member for Hove (Mr. Sainsbury). That shows the extent of the concern.

Last week, Lord Trefgarne said in the other place that he was worried that our exporters using the services of the preferred purchaser, the Dutch company NCM, would be at a disadvantage compared with Dutch exporters using the same service. Lord Trefgarne was perturbed at the fact that, throughout the discussions last week and this week in the other place, he did not obtain a satisfactory answer from the Government spokesman. That shows how worried people are about whether this part of the Bill will provide for comparable services for exporters throughout the European Community. The Opposition will continue to monitor events closely in the coming months, because we want to ensure that our exporters who use the services of the new purchaser of the ECGD will have available to them the same services as are available to Dutch competitors and exporters in other parts of the European Community.

If amendment (c) is accepted, exporters will be reassured about the way in which the Government will operate this reinsurance facility. That facility has two parts, one of which is the top-up facility. The Government hope—they have not yet provided any proof—that within three years that facility can be taken over entirely by the private sector.

Although there is no time scale in the Bill, I understand that the Government are sticking to their foolish belief that somehow, by magic, the private sector can absorb the reinsurance facility within three years. There is much concern that the Government are proposing to apply arbitrary limits to the amount of reinsurance under the top-up scheme over the next three years, and that is also something to which I should like the Minister to respond.

Exporters are worried that the Government's policy will effectively cap the amount of top-up support provided in the next three years, and that the amount of support will progressively be reduced. The Government still insist that, at the end of three years, they expect that facility to be taken over by the private sector, no matter what the economic circumstances, the trade deficit and the position of our major exporters may be at that time. I should like the Minister to comment on that.

We are also worried about the Government's intention about the national interest reinsurance facility to which the clause refers. We want to know how the Government propose to define that facility—how widely or how narrowly.

Many exporters are rightly worried that there are many markets for which they will be unable to obtain such support in future. That fear was expressed well in another place and has also been expressed to me only this week by many exporters and exporting associations. The Minister has a duty to them and to us to say how he proposes to operate the national interest reinsurance facility in the future. Will it be operated in a way that encourages British exporters or will cost be the only consideration?

The Bill contains no timetable for either the top-up scheme or for the national interest reinsurance provision. Therefore, there is no guarantee that they may not cease after the three years, which, I understand, is still the Government's policy on the top-up facility.

I hope that I have outlined some of our main concerns and those of the exporting community. Our point of view has been widely supported in industry, and if the Minister cannot give us the necessary reassurance and is unwilling to accept the amendments, industry's concerns about the legislation will continue in the weeks and months ahead. The amendment would partially rectify our worries about the measure, and would go some way to allaying exporters' fears. We hope that the Government are willing to accept it.

The Minister for Trade (Mr. Tim Sainsbury)

I fear that the hon. Member for Gateshead, East (Ms. Quin) will he disappointed, because I cannot recommend the amendment to the House. Indeed, I shall go further and say that it would be unhelpful, not only in terms of this excellent Bill but to Britain's exporters.

One reason for opposing the amendment is factual. There is no duty in the Bill—nor was there in the Act that the Bill replaces—for the Secretary of State to encourage trade. There is no duty—I stress that word, which is the word used in the amendment.

In the Bill and in the Act, the Secretary of State is given permissive powers to encourage trade and to facilitate supplies. There would be serious doubts about how to determine in legal terms whether a duty to encourage had been discharged, and I foresee great problems in the courts if that issue were to be brought before them. So, the first but substantial reason for rejecting the amendment is that, under both pieces of legislation, the Secretary of State is given only permissive powers.

The hon. Lady reminded us that we debated the issue at some length not only in Committee, but on Report. The matter also came up in another place. On each occasion, we pointed out that the word "encourage" was open to some challenge and threw doubt on what the total powers were. It seems logical to say that one cannot encourage something that has already happened. One can make it easier for it to take place. One can facilitate an export by providing all sorts of things, such as transport and insurance, but one can scarcely encourage it if it has already taken place.

The old words of "encouraging exports" were less helpful to British exporters than the new formula that we have used, which refers to "facilitating the supply". The new formula allows the ECGD to give assistance where it is currently statutorily debarred from doing so.

4.30 pm

The same objection, which we went through in Committee and in another place, holds in the context of reinsurance. Reinsurance is not there as an end in itself; it is there to facilitate exports. One may try to encourage exports, but how does one encourage something that has already happened? It is clear that the word "facilitating", which we have used, is a far better word. Unlike the hon. Lady, we do not want to restrict the help that the ECGD can give British exporters. It would be extremely difficult to determine whether it was practical to have a duty to "encourage".

I want to confirm that the competitive position of British exporters is one of many aspects that the Government will take into account when determining the national interest case for providing reinsurance. Trade and diplomatic aspects need to be considered as well. ECGD's primary objective will remain helping British exporters by giving export credit and investment insurance. I hope that that is apparent from everything that we have said about this excellent Bill throughout the proceedings.

Mr. Peter Thurnham (Bolton, North-East)

Is my hon. Friend aware of a major exporter in my constituency, Beloit Walmsley, which has a large inquiry from Iran and is interested in having ECGD cover for Iran? Can he say anything that would be helpful at this stage? The inquiry is at an advanced point commercially. The firm has been told by the Iranians that it is the best bidder, subject to clearing up the question of ECGD cover.

Mr. Sainsbury

I am well aware of the case to which my hon. Friend refers and of the energetic steps that he has taken to help his constituency company to obtain what would be a valuable order. I am sure that he is also aware of the particular difficulties associated with that market. I remind him that ECGD cover for short-term credit is available for exports to Iran. Medium-term cover is under review. The review is taking account of significant export opportunities such as the one to which my hon. Friend referred. The review also needs to take account of political developments, some of which have been helpful recently.

I cannot tell my hon. Friend when the review will be completed or what the outcome will be, but I can tell him that I am reasonably optimistic that we shall reach a conclusion in the very near future. I will bear in mind what my hon. Friend has said about the export opportunity for the company in his constituency.

I am sure that the House will recall that lengthy debates took place in Committee and on Report about the provision of reinsurance support by the Government for the new company after privatisation. On Report, the House decided not to agree to certain amendments, partly on the ground that they gave rise to significant legal and technical difficulties.

The debate continued in another place, and the issues arose again. In response to the further debate and to the suggestions put forward, parliamentary draftsmen were able to draw up new amendments which meet the concerns expressed in both Houses while avoiding the legal and technical difficulties inherent in the previous amendments that we rejected and which were tabled in another place.

Lords amendment No. 1 imposes a permanent—I stress "permanent"—obligation on the Secretary of State to determine from time to time whether a national interest case exists for him to use his general enabling powers under clause 1 to provide reinsurance to insurers who provide direct insurance for the same classes of risk as those in respect of which the Secretary of State himself might otherwise directly provide under the provisions of clause 1.

The new obligation that the amendment would introduce into the Bill is widely drawn and therefore relates to all types of reinsurance, including reinsurance of the kind to be provided under the so-called transitional top-up national interest facilities to which the hon. Member for Gateshead referred and which the Government are committed to providing to the privatised insurance services group. The amendment imposes no restriction on who may be the recipient of the reinsurance.

The amendment reflects the desire expressed in both Houses for the ministerial assurances given at various stages to be reflected in the Bill, while at the same time avoiding the pitfall that had arisen in the context of other similar amendments considered in both Houses.

Ms. Quin

Will the Minister confirm that he intends to phase out the top-up facility after three years, and will he respond to my question whether there will be a reducing element in the amount of support in the top-up facility over the three-year period?

Mr. Sainsbury

I had intended to come to that point later, but perhaps I may do so now.

The hon. Lady refers to the top-up facility, which, as she knows, has been debated at some considerable length. Since the announcement in 1989 of the decision to privatise the insurance services part of ECGD, there has been continual work on the issue of reinsurance, because we recognise that it is an important part of the total package. The Government have recognised throughout that, at the outset, there might be a small shortfall—I emphasise "small"—between the company's full requirements for reinsurance and what the market could provide.

That was foreshadowed in the statement made on 18 December 1989 by my right hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), then Secretary of State for Trade and Industry. My right hon. Friend announced the Government's decision on privatization and referred to the need for a continuing reinsurance link between the ECGD and the privatised insurance services. We said that that top-up reinsurance facility would exist for three years, and it would be looked at in the light of requirements and in the light of the take-up in the market.

We have discussed the issue on a number of occasions, and I have been able to assure the House and the hon. Member for Gateshead that the market's response to the request for reinsurance has been positive. That is a tribute not only to the capacity of the market but to the ability of the ECGD and its advisers to obtain reinsurance.

The second type of reinsurance —

Ms. Quin

Before the Minister deals with the second type of reinsurance, will he say clearly what I think he was saying—that the top-up facility can continue beyond three years?

Mr. Sainsbury

I was saying that the top-up facility was due to continue for up to three years, in the light of the requirements—in the light of the gap between what the market provides and what the company needs. As I have just said, the market has shown a great willingness to take the reinsurance requirement, and that is why we are confident that, within that period, there will no longer be a need.

The second type of reinsurance relates to the high-risk —

Mr. Michael Morris (Northampton, South)

I understand the market to be helpful at the moment, but none of us can forecast what the market will be in a year or 18 months. Will my hon. Friend therefore clarify two points—first, that the sum is not a capped sum, and, secondly, whether the requirement is that it "shall" be phased out within three years or that it "may" be phased out within three years?

Mr. Sainsbury

I have given a commitment several times that the requirement would be met for up to three years. At the moment, the expectation is that it will not even be needed for all that time, because of the market's response. While I appreciate what my hon. Friend the Member for Northampton, South (Mr. Morris) says about not being entirely certain about markets, there is a fair predictability about the behaviour of markets and reinsurance markets to a portfolio risk which does not differ greatly in its overall make-up or size. The reaction of many experts confirms that, as the market becomes more familiar with the quality of portfolio risks presented to it, the spread of risks and the quality of management of the insurance services group, so it will be more ready to absorb the cover that is required.

Even before the company exists—and given that element of uncertainty—it is remarkable that the market has shown itself willing to undertake to provide so much reinsurance that there is only a very small gap between what the market is prepared to take and the total requirement.

There is no time limit on the other form of reinsurance, which is now called the national interest reinsurance facility. There may be some confusion here. When I refer to the ECGD in this context, I mean the continuing ECGD —that part of the ECGD that exists at the moment and which will continue in existence as part of the Government. The ECGD will provide 100 per cent. reinsurance to the new company on the small handful of higher risk countries. That facility will not be time-limited.

In order to meet concerns expressed by hon. Members that the facility might be withdrawn prematurely, I assured the House that the requirement for the facility would be kept under close review, and that it was the Government's intention that, subject to it 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. Lords amendment No. I deals with that point.

Lords amendment No. 1 also imposes a permanent obligation on the Secretary of State to determine from time to time whether a national interest case exists for him to use his general enabling powers under clause 1 to provide reinsurance to insurers. As that is permanent, the reinsurance arrangements that we have announced will ensure that, in the aftermath of privatisation, there is no sudden or sharp reduction in the level of facilities available to our exporters.

Lords amendment No. 1 will ensure that the need for that kind of reinsurance will be kept under permanent review. The amendment makes even better what was already an excellent Bill. It will ensure that our exporters, as the first beneficiaries of the privatisation, will receive a service from the new company and from the continuing ECGD which will be better matched to their immediate and future needs and better placed to meet the challenges and opportunities of exporting in the single European market and throughout the 1990s. I commend the Lords amendment to the House and urge it to reject the imperfectly drafted, but I believe well intentioned, amendment to it, tabled by the hon. Member for Gateshead, East.

4.45 pm
Mr. George Howarth (Knowsley, North)

I support the amendment to the Lords amendment and I want to participate in the debate because a company called Cross Europe in my constituency has a problem. Cross Europe is part of an American-based multinational company called Cross and Trecker. Having seen what has happened at Cross Europe and having listened to the Minister today, I believe that the Government stand accused of stunning complacency. When exporters around the country face terrific difficulties with the schemes, to claim that everything in the garden is rosy and is getting better does not reflect the experience of Cross Europe. I have seen press reports which confirm that that company's experiences are not unique.

I will give the facts about. Cross Europe because I am sure that that will prove the case for the amendment to the Lords amendment tabled by my hon. Friend the Member for Gateshead, East (Ms. Quin). Cross Europe won an order in the summer of 1990 to supply equipment for differential case and axle tubes—in effect, machine tools —for the new Moskawitch engine programme to be supplied by a company called Ishevsk. Cross Europe won that contract in the face of extremely effective competition from Germany and Italy and it obtained a very successful £5 million order.

There was subsequently some discussion about the method of payment for the scheme. Between August and December, the contract was negotiated and submitted to Midland Montagu and ECGD for inclusion under line of credit and approval respectively.

Therefore, the method of payment had been agreed in December. The company planned the order into its work programme, and the negotiated contract was signed on 19 December 1990. In January 1991, after the company had geared up for the order, it was told that there was to be a review of the ECGD coverage with the USSR in general and that special contracts, Cross Europe's included, were to be pulled out for special treatment.

Between January and February, there were frequent contacts between Midland Montagu and ECGD, and Cross Europe and ECGD. The company was told that the issue would be resolved by March 1991, but it was not. In May 1991, Cross Europe contacted me. The company was anxious not to create any publicity. It simply wanted to unsnarl the red tape and get on with the order which, by that time, it was manufacturing.

I wrote to the Secretary of State for Trade and Industry on 31 May 1991. I will not quote the whole of that letter, but two paragraphs are important. In one, I wrote: As I understand it, Ricardo, based in Brighton and Lamb, based in Mildenhall, have subsequently taken steps to fulfil their contracts through sister companies in Canada and Germany, since they were able to get the necessary export guarantee schemes there. However, Cross Europe have actually already started work on the project within the UK and, therefore, are seriously exposed if they are not allowed the necessary export guarantee cover in the very near future. In the other paragraph, I wrote: Since all of the original five companies"— the companies that were caught up in the review— have taken their business elsewhere and I have no knowledge of the other two, it is quite possible that Cross Europe are the only company remaining with this difficulty. In any event, even if the other two are still in the same situation, allowing for both of them having contracts to the value of say £10 million each, the amount of risk to which ECGD will be exposed would in terms of its total operations be very small indeed. On 28 June, the Minister for Trade was kind enough to reply to my letter. The final paragraph of his letter reveals all about the Government's attitude to these problems. He wrote: I regret" — we have all heard those words before — that I cannot say how long the review will take or pre-judge its outcome. I can assure you, however, that we will complete it as soon as we reasonably can. I shall ensure that you are informed of the decision. In the meantime, I would suggest that the company contact David Wyatt (Head of ECGD's East European Projects Branch"—

it gives the telephone number — in order to keep abreast of developments. I have heard no more. Cross Europe is certainly in weekly contact and sometimes more than weekly contact with ECGD, as was suggested by the Minister, but the Minister appears to have washed his hands of the matter —so much so that, in September of this year, Mr. Normal J. Ryker, the vice-chairman and chief executive officer of Cross and Trecker Corporation, wrote to the Prime Minister. As far as I know, there has been no response to the letter.

If I may read just one paragraph of Mr. Ryker's letter to the Prime Minister, it will even further illuminate the House in respect of the inactivity of that Government Department in its dealings with exports. Mr. Ryker says: The machine tool industry in general and our UK Subsidiary has suffered through a depression for an extended period of time and the financial position of the UK branch would deteriorate substantially with far reaching consequences both for our British workers and in other areas of the company if the delay would continue beyond the aforementioned shipment date. The machinery in question is specially designed for the customer and cannot be utilised for other customers and only a small percentage of material would be available for salvage. Therefore, £5 million-worth of equipment, which was built by the company in good faith on the basis of an order and understandings with the Midland bank and unaware that a review was about to take place, is standing crated up on the shop floor of Cross Europe in my constituency, and the Minister sits on the Government Front Bench as though there is nothing wrong with the export credits guarantee scheme. He sits there with smug complacency, pretending that there is no problem.

I followed up that letter by writing to the Prime Minister on 10 October. I still have not had a reply from the Prime Minister. I have long since given up any belief that any contact that I could possibly have with the Department of Trade and Industry, which seems to be almost detached from exports and encouraging industry, would produce anything. The company has made that decision and it is dealing directly with the Prime Minister, who himself does not seem able to reply to that letter. I have even taken to writing directly to the Prime Minister.

That £5 million of equipment was made in good faith, is now ready to be exported, and awaits the necessary agreement from the ECGD and the intervention of the Government for which Mr. Ryker asks. I should imagine that Mr. Ryker is no great supporter of the Labour party, as he is a serious American industrialist. He and his managers in my constituency say that that inactivity does not happen in Germany, France, or the United States, but it is happening in this country. The bottom line is that nearly 200 jobs in my constituency are now at risk because of that inactivity. That company was opened in Knowsley in 1970, interestingly enough by Lord Wilson of Rievaulx, who was then the constituency Member. That company may end up closing down because the Government have left it financially exposed.

When I became involved in May last year, the company had already been told that the review would be completed in March of that year. That date had passed. We still have not had a decision from the Government's review of the Export Credits Guarantee Department and its dealings with the Soviet Union. How much longer is that inactivity and complacency to continue? We are supposed to be an exporting nation. Why are we constantly losing manufacturing capacity? It is because of the incompetence and bungling of the Government in export orders and manufacturing. Let us support the amendment and let us start encouraging exports, which is what the amendment would do.

Mr. Sainsbury

With the leave of the House. I am sure that the whole House sympathises with the position in which Cross Europe finds itself, but I hope that nobody sympathises with the synthetic indignation and allegations of the hon. Member for Knowsley, North (Mr. Howarth). I should have thought that even those who do not make a great habit of reading the newspapers or even of watching television would have noticed that there are problems connected with the Soviet Union for which any exporter and any export credit agency must have regard.

Mr. Howarth

I conceded precisely that point in a letter to the Secretary of State, to which the Minister of State replied, and I also conceded it in a recent letter to the Prime Minister. Everybody worldwide recognises the serious problem. France, Germany and the United States are still successfully trading and guaranteeing trade with eastern Europe and the Soviet Union. Why cannot we do the same?

Mr. Sainsbury

I can appreciate that perhaps the hon. Gentleman does not understand the nature of export credit insurance. Export credit insurance for short terms has been available for the USSR, and it is available not only for the USSR but for all the countries of central Europe. The hon. Member for Gateshead, East (Ms. Quin) spoke as though it was not so available. That is an important point. Medium-term cover is available for Hungary and Czechoslovakia.

We are talking about the Export Credits Guarantee Department; it has nothing to do with privatisation, and nor has the case to which the hon. Member for Knowsley, North referred. The hon. Gentleman is seeking medium-term cover which would be provided by the continuing ECGD—still a Government Department. We are not concerned with privatisation.

If the hon. Lady is suggesting that that Department should provide cover, regardless of the risk, regardless of its exposure in a particular market, and regardless of political developments—I do not know whether the hon. Member for Knowsley, North has noticed that there is a continuing difficulty in the Soviet Union—I am not surprised that the review of the wisdom of continuing cover is still continuing, because —

Ms. Quin


Mr. George Howarth


Mr. Sainsbury

I shall not give way again to the hon. Member for Knowsley, North. The hon. Member for Gateshead, East wants to intervene. I shall let the hon. Lady have her chance first.

There is continuing economic uncertainty in what I think I must refer to as the former Soviet Union, and particularly as regards the economic arrangements between the central authority, the former Soviet Union authority, and individual republics.

Ms. Quin

Does the Minister agree that it is absurd that we did more trade with the old Soviet regime than we are doing with the new, reforming Soviet regime? Will he confirm that we have effectively been off medium-term cover for the Soviet Union for more than a year and that that differentiates us from most other developed countries?

Mr. Sainsbury

The hon. Lady will find that nearly every country is now off medium-term cover for the Soviet Union in view of the disturbed state of the economy and the lack of clarity of the economic arrangements, for instance, between the Ukraine republic, the Russian republic and the central authority. That must be reflected in the ECGD's decisions on cover. I stress that short-term cover has been available and is still available to all the countries of central Europe.

The hon. Member for Knowsley, North suggested that we were saying that everything in the garden was lovely, and then went on to suggest that, quite to the contrary, everything was a total disaster. Such allegations come frequently not only from the Opposition Front Bench but from all parts of the Opposition—for example, that Britain's manufacturing is a total disaster and is doing very badly.

That is more than surprising when we consider the facts. In August of this year, output was 17 per cent. higher than the average level for 1980, export volume was up by two thirds, and productivity was 60 per cent. higher. The most recent figures, which were announced this day, show that manufacturing exports, a matter about which the Opposition are expressing much concern, in the last quarter are 7.5 per cent. up on the same period last year.

I congratulate British manufacturing exporters on that achievement, because they have succeeded in increasing exports by that significant amount against a background of difficult world trading conditions. Instead of knocking our exporters and our manufacturing, the Opposition should recognise and praise achievements. I am sorry about Cross Europe, but I hope that even the hon. Member for Knowsley, North will understand that it is because the situation in the Soviet Union is so uncertain that we have to keep our medium-term credit provisions under review.

5 pm

Mr. Rhodri Morgan (Cardiff, West)

We are now considering the last Act of the overspill period of the fourth year of this Parliament, so I should like to take the opportunity of telling the Minister how frustrating he is to deal with. He is frustrating for us as an Opposition and exceedingly frustrating for those in British industry. He has done nothing more this afternoon than to repeat his performances in Committee when, every day, he wrote a PhD in hair-splitting and nit-picking. Even today, he has managed to send to sleep the hon. Member for Windsor and Maidenhead (Sir A. Glyn), who is notorious throughout the House for the attention that he gives to such matters.

Mr. George Howarth

I am grateful to my hon. Friend for allowing me to intervene briefly, because the Minister would not do so. As I want to raise a point that he did not answer, perhaps my hon. Friend could press it for me. Cross Europe signed an agreement to provide the Soviet Union with equipment in December 1990. The ECGD review, with which Cross Europe is now caught up, did not start until January 1991. That is an important point, which has not been answered.

Mr. Morgan

I cannot do better than say that I am sure that Cross Europe's frustrations when dealing with the Government's lack of support for industry and its exports to critical markets is repeated across the country. That experience is not restricted to that one outstanding machine tool company in my hon. Friend's constituency. There are hundreds of similar examples. Indeed, much of what the Prime Minister was talking about at the G7 meeting—about increasing exports to the Soviet Union, providing it with model farms, model food distribution systems and even food this winter—may be vitiated by the DTI's lack of action and decision making.

The hon. Member for Hove (Mr. Sainsbury) is one of the Ministers who is responsible for not doing anything. The DTI has not been able to decide how much backing British industry needs in those critical markets. He was unable to answer his hon. Friend the Member for Bolton, North-East (Mr. Thurnham) who asked him about the Beloit Walmsley's proposed paper mill contract with Iran. We have not had any decisions or replies except for: "We are carrying out a review. Hang on, we'll come to a decision in perhaps a month or two and we hope that the contract will still be available then."

That is a classic example of what is wrong with the DTI's non-involvement in the process of providing support for British exports, and that is what has made this such a depressing Bill for the Opposition as well as for British industry. We have had to become the defenders of British industry's interests in this House, because Ministers—

Mr. Sainsbury


Mr. Morgan

I see that I have stung even the Minister into action, and he stirs up apathy wherever he goes. I shall be glad to hear his intervention.

Mr. Sainsbury

Although we are used to quite a lot of inaccuracy from the hon. Member for Cardiff, West (Mr. Morgan)—we became very familiar with it in Committee —his suggestion that the DTI is not helping exporters deserves some rebuttal. About 2,000 people worldwide in 150 overseas posts, plus those at our regional offices and headquarters, work exclusively to help our exporters. Many others, including the Prime Minister and the heads of our Missions, spend a lot of time helping them. I wish that the hon. Gentleman would recognise that and pay tribute to the success of our exporters.

Mr. Morgan

Speaking as a former DTI civil servant, I can well appreciate that people who are trying to do a good job to support British exports actually do so, despite an extraordinary lack of ministerial involvement. Ministers need not listen to me on this point, and I do not ask them to accept my word for it—they will never accept that I am an objective guide. All they need do is read the headline on page 1 of today's Financial Times and consider what the Confederation of British Industry has said. Now that I have found my spectacles, I shall read the direct quote to the Minister. Speaking on behalf of the CBI working party on manufacturing industry, Sir Colin Chandler, the managing director of Vickers, said: We need a powerful voice sitting around the cabinet table speaking up for industry. Is that supposed to be a vote of confidence in the current regime at the DTI from Britain's major exporters as represented on the CBI's three-person working party by the heads of Vickers, Vauxhall Motors and British Aerospace? Only rarely at the end of a Session have British industry's large-scale exporters and those at the cutting edge of technology expressed such a lack of confidence in the DTI. That does not happen at the end of every Parliament, but it has been happening regularly during the past six months. When presenting their annual reports, the chairmen of our large firms have begun to express a degree of disillusionment with this Government. That happened with British Aerospace and Pilkington, and it has now happened with the CBI working party that represents the other heavyweights.

When the other place discussed the amendments, the Government were isolated. They did not have a single friend. That is why we have taken great pleasure in attempting to fortify the Lords amendments by tabling our amendments which seek to take the process a little further than the Government were willing to do when they were finally forced to table amendments to try to reconcile the views of the two Houses, and that is why we are discussing these provisions now. We are trying to ascertain how we can carry the process forward. The Government tried simply to buy off the opposition in the other House. We know that the Government are trying to climb down, so we are seeking to give effect to what the other House would have liked to do. We want to express our firm commitment to and to encourage our British exporters.

One senior captain of British industry, who would be most embarrassed if I were to name him, attended a recent private meeting with Labour Members at which he said, "What the present Government do not understand is the difference between support for British industry and intervention on behalf of British industry." British industry needs support, but it is not getting it. It does not want to return to old-fashioned interventionism, but it does want the same degree of support that is given to French and German industry by their Governments and to Japanese industry by its Ministry of International Trade and Industry. British industry has been left with a lot of half-baked Thatcherite claptrap at the Department of Trade and Industry, and we have seen more of it this afternoon.

Although I am pleased to be speaking as the House considers the final Act of this Session, I speak also with some regret, because I have a strong constituency interest in the Bill. More than 700 people work for the ECGD in Cardiff. Most of them will find that their work is to be privatised, although some will remain civil servants and will work in a sort of halfway house, continuing to provide a service for the ECGD which itself will be privatised and given into the ownership of NCM, the Dutch exporting insurance combine, which appears to be the favoured tenderer for taking over most of the ECGD's Cardiff operations.

We are not happy about that, but I am sure that the Secretary of State for Wales will claim it as a major success for his drive to bring foreign investment into Wales. The simple fact is that no British companies were interested in taking over the ECGD's insurance services group, and when some foreign bidders dropped out, the only realistic bid remaining was from NCM. It is a highly professional organisation, but I do not know whether it is the best organisation to handle the reinsurance of Britain's exports. We must bear in mind the fact that we are talking about the United Kingdom's national interest, not the Dutch national interest.

The Government's hypocrisy goes even further. I should like to draw the House's attention to what the Secretary of State said in his much-praised speech to the Conservative party conference. I must admit to enjoying reading it. The Financial Times of 11 October reported: Stating an intention to 'intervene for British industry abroad' Mr. Lilley nonetheless said he did not believe in intervening at home. Which category does export credits reinsurance fall into? Is that intervening for British industry abroad, in which the Secretary of State does believe, or is it intervening in British industry at home? The constituents of my hon. Friend the Member for Knowsley, North (Mr. Howarth) might have a word or two to say about that.

The Secretary of State's speech was much praised. I am told that it was praised because it contained self-deprecating jokes or, to paraphrase Churchill on Attlee, because he is a self-deprecating little man with much to be self-deprecating about.

The CBI report shows how extraordinarily remote the Government have become from what used to be thought their natural constituency in industry. It is their natural constituency no more.

That is why we shall press the amendment to a vote this afternoon. We must ensure that British exports are encouraged. The Minister has made an extraordinarily nit-picking attempt to counter that argument today, repeating more than half a dozen times what he said in Committee. The Minister's claims will have no effect at all in the face of the way in which British industry will view the Bill without our fortifying amendments.

I hope that I can persuade the Government to add this amendment to the climb-downs from original Thatcherism that we have already seen with the poll tax and, more lately, with the Secretary of State for Health's opposition to tax relief on private health insurance for the over-60s. Let the Government make that three by accepting this amendment, so that the message can go out to British industry that the Government have at last started to see the light, that non-intervention does not always work and that they should be doing for British industry what the German, Japanese and French Governments do for their industry.

Question put, That the amendment to the Lords amendment be made:—

The House divided; Ayes 173, Noes 202.

Division No. 233] [5.11 pm
Adams, Mrs Irene (Paisley, N.) Darling, Alistair
Allen, Graham Davies, Rt Hon Denzil (Llanelli)
Alton, David Davies, Ron (Caerphilly)
Archer, Rt Hon Peter Dixon, Don
Armstrong, Hilary Dobson, Frank
Ashdown, Rt Hon Paddy Dunwoody, Hon Mrs Gwyneth
Ashley, Rt Hon Jack Eadie, Alexander
Ashton, Joe Eastham, Ken
Banks, Tony (Newham NW) Evans, John (St Helens N)
Barnes, Harry (Derbyshire NE) Ewing, Harry (Falkirk E)
Battle, John Fearn, Ronald
Bellotti, David Field, Frank (Birkenhead)
Benn, Rt Hon Tony Fisher, Mark
Bennett, A. F. (D'nt'n & R'dish) Flannery, Martin
Benton, Joseph Flynn, Paul
Blair, Tony Foot, Rt Hon Michael
Bray, Dr Jeremy Foster, Derek
Brown, Gordon (D'mline E) Fraser, John
Brown, Ron (Edinburgh Leith) Fyfe, Maria
Bruce, Malcolm (Gordon) Garrett, John (Norwich South)
Caborn, Richard Garrett, Ted (Wallsend)
Callaghan, Jim Golding, Mrs Llin
Campbell, Ron (Blyth Valley) Gordon, Mildred
Campbell-Savours, D. N. Gould, Bryan
Canavan, Dennis Graham, Thomas
Clark, Dr David (S Shields) Griffiths, Nigel (Edinburgh S)
Clarke, Tom (Monklands W) Griffiths, Win (Bridgend)
Clelland, David Hain, Peter
Clwyd, Mrs Ann Hardy, Peter
Cohen, Harry Hattersley, Rt Hon Roy
Cook, Robin (Livingston) Haynes, Frank
Corbett, Robin Henderson, Doug
Cousins, Jim Hinchliffe, David
Crowther, Stan Hogg, N. (C'nauld & Kilsyth)
Cryer, Bob Home Robertson, John
Cummings, John Howarth, George (Knowsley N)
Cunliffe, Lawrence Howell, Rt Hon D. (S'heath)
Cunningham, Dr John Hoyle, Doug
Hughes, John (Coventry NE) Pendry, Tom
Hughes, Roy (Newport E) Pike, Peter L.
Hughes, Simon (Southwark) Powell, Ray (Ogmore)
Ingram, Adam Prescott, John
Janner, Greville Primarolo, Dawn
Jones, Barry (Alyn & Deeside) Quin, Ms Joyce
Kaufman, Rt Hon Gerald Radice, Giles
Kennedy, Charles Randall, Stuart
Kilfoyle, Peter Redmond, Martin
Kinnock, Rt Hon Neil Reid, Dr John
Kirkwood, Archy Richardson, Jo
Leadbitter, Ted Robertson, George
Leighton, Ron Rogers, Allan
Lewis, Terry Rooker, Jeff
Litherland, Robert Ross, Ernie (Dundee W)
Livingstone, Ken Rowlands, Ted
Lloyd, Tony (Stretford) Ruddock, Joan
Lofthouse, Geoffrey Salmond, Alex
Loyden, Eddie Sheerman, Barry
McAllion, John Sheldon, Rt Hon Robert
McCartney, Ian Shore, Rt Hon Peter
Macdonald, Calum A. Short, Clare
McFall, John Skinner, Dennis
McKay, Allen (Barnsley West) Smith, Andrew (Oxford E)
McKelvey, William Smith, C. (Isl'ton & F'bury)
McLeish, Henry Smith, J. P. (Vale of Glam)
McMaster, Gordon Snape, Peter
McNamara, Kevin Steinberg, Gerry
McWilliam, John Stott, Roger
Madden, Max Strang, Gavin
Mahon, Mrs Alice Straw, Jack
Marek, Dr John Taylor, Mrs Ann (Dewsbury)
Marshall, David (Shettleston) Thompson, Jack (Wansbeck)
Marshall, Jim (Leicester S) Vaz, Keith
Martin, Michael J. (Springburn) Wallace, James
Martlew, Eric Walley, Joan
Meacher, Michael Wardell, Gareth (Gower)
Meale, Alan Wareing, Robert N.
Michie, Bill (Sheffield Heeley) Watson, Mike (Glasgow, C)
Morgan, Rhodri Welsh, Michael (Doncaster N)
Morley, Elliot Williams, Rt Hon Alan
Morris, Rt Hon A. (W'shawe) Williams, Alan W. (Carm'then)
Morris, Rt Hon J. (Aberavon) Winnick, David
Mullin, Chris Worthington, Tony
Murphy, Paul Wray, Jimmy
Nellist, Dave Young, David (Bolton SE)
O'Brien, William
O'Hara, Edward Tellers for the Ayes:
O'Neill, Martin Mr. Eric Illsley and
Orme, Rt Hon Stanley Mr. Thomas McAvoy.
Patchett, Terry
Adley, Robert Buck, Sir Antony
Alison, Rt Hon Michael Burt, Alistair
Allason, Rupert Butler, Chris
Arbuthnot, James Carlisle, Kenneth (Lincoln)
Arnold, Jacques (Gravesham) Carrington, Matthew
Ashby, David Carttiss, Michael
Aspinwall, Jack Cash, William
Atkins, Robert Chalker, Rt Hon Mrs Lynda
Atkinson, David Channon, Rt Hon Paul
Baker, Nicholas (Dorset N) Clark, Rt Hon Sir William
Barnes, Mrs Rosie (Greenwich) Clarke, Rt Hon K. (Rushcliffe)
Beaumont-Dark, Anthony Coombs, Anthony (Wyre F'rest)
Bellingham, Henry Coombs, Simon (Swindon)
Bendall, Vivian Couchman, James
Bennett, Nicholas (Pembroke) Currie, Mrs Edwina
Bevan, David Gilroy Davies, Q. (Stamf'd & Spald'g)
Bonsor, Sir Nicholas Davis, David (Boothferry)
Boswell, Tim Day, Stephen
Bottomley, Peter Dickens, Geoffrey
Bottomley, Mrs Virginia Dicks, Terry
Bowden, A. (Brighton K'pto'n) Dorrell, Stephen
Bowden, Gerald (Dulwich) Dover, Den
Bowis, John Durant, Sir Anthony
Brazier, Julian Eggar, Tim
Bright, Graham Evans, David (Welwyn Hatf'd)
Brown, Michael (Brigg & Cl't's) Farr, Sir John
Bruce, Ian (Dorset South) Fenner, Dame Peggy
Finsberg, Sir Geoffrey Morrison, Rt Hon Sir Peter
Fishburn, John Dudley Moss, Malcolm
Fookes, Dame Janet Moynihan, Hon Colin
Fowler, Rt Hon Sir Norman Neale, Sir Gerrard
Fox, Sir Marcus Nelson, Anthony
Franks, Cecil Neubert, Sir Michael
French, Douglas Newton, Rt Hon Tony
Fry, Peter Nicholls, Patrick
Gale, Roger Nicholson, David (Taunton)
Gardiner, Sir George Onslow, Rt Hon Cranley
Gilmour, Rt Hon Sir Ian Oppenheim, Phillip
Glyn, Dr Sir Alan Owen, Rt Hon Dr David
Goodlad, Alastair Page, Richard
Goodson-Wickes, Dr Charles Paice, James
Gorman, Mrs Teresa Pawsey, James
Gorst, John Porter, David (Waveney)
Grant, Sir Anthony (CambsSW) Price, Sir David
Greenway, Harry (Ealing N) Raffan, Keith
Greenway, John (Ryedale) Raison, Rt Hon Sir Timothy
Gregory, Conal Renton, Rt Hon Tim
Griffiths, Peter (Portsmouth N) Rhodes James, Sir Robert
Grist, Ian Riddick, Graham
Grylls, Michael Ridley, Rt Hon Nicholas
Hannam, John Roberts, Rt Hon Sir Wyn
Hargreaves, Ken (Hyndburn) Rossi, Sir Hugh
Harris, David Ryder, Rt Hon Richard
Hayhoe, Rt Hon Sir Barney Sackville, Hon Tom
Hayward, Robert Sainsbury, Hon Tim
Heathcoat-Amory, David Sayeed, Jonathan
Higgins, Rt Hon Terence L. Scott, Rt Hon Nicholas
Hill, James Shaw, David (Dover)
Hogg, Hon Douglas (Gr'th'm) Shelton, Sir William
Hordern, Sir Peter Shephard, Mrs G. (Norfolk SW)
Howard, Rt Hon Michael Shepherd, Colin (Hereford)
Howarth, Alan (Strat'd-on-A) Shepherd, Richard (Aldridge)
Howarth, G. (Cannock & B'wd) Smith, Tim (Beaconsfield)
Howell, Ralph (North Norfolk) Smyth, Rev Martin (Belfast S)
Hughes, Robert G. (Harrow W) Speller, Tony
Hunt, Rt Hon David Spicer, Sir Jim (Dorset W)
Hunt, Sir John (Ravensbourne) Spicer, Michael (S Worcs)
Hunter, Andrew Squire, Robin
Irvine, Michael Steen, Anthony
Jack, Michael Stevens, Lewis
Jackson, Robert Stewart, Allan (Eastwood)
Janman, Tim Stewart, Andy (Sherwood)
Jessel, Toby Stewart, Rt Hon Sir Ian
Jopling, Rt Hon Michael Sumberg, David
Key, Robert Summerson, Hugo
King, Roger (B'ham N'thfield) Taylor, Ian (Esher)
King, Rt Hon Tom (Bridgwater) Taylor, John M (Solihull)
Kirkhope, Timothy Taylor, Sir Teddy
Knight, Greg (Derby North) Temple-Morris, Peter
Lawrence, Ivan Thompson, Patrick (Norwich N)
Leigh, Edward (Gainsbor'gh) Thorne, Neil
Lester, Jim (Broxtowe) Townend, John (Bridlington)
Lightbown, David Tracey, Richard
Lloyd, Sir Ian (Havant) Twinn, Dr Ian
Lord, Michael Viggers, Peter
MacGregor, Rt Hon John Walden, George
MacKay, Andrew (E Berkshire) Walker, Bill (T'side North)
Maclean, David Waller, Gary
McNair-Wilson, Sir Michael Wardle, Charles (Bexhill)
Mans, Keith Warren, Kenneth
Marland, Paul Wells, Bowen
Mates, Michael Wheeler, Sir John
Maxwell-Hyslop, Robin Widdecombe, Ann
Mayhew, Rt Hon Sir Patrick Wilkinson, John
Miller, Sir Hal Wilshire, David
Mills, Iain Winterton, Mrs Ann
Miscampbell, Norman Wood, Timothy
Mitchell, Andrew (Gedling) Woodcock, Dr. Mike
Moate, Roger Young, Sir George (Acton)
Molyneaux, Rt Hon James
Montgomery, Sir Fergus Tellers for the Noes:
Morris, M (N'hampton S) Mr. Sydney Chapman and
Morrison, Sir Charles Mr. Irvine Patnick.

Question accordingly negatived.

Lords amendment agreed to.

Mr. Terry Lewis (Worsley)

On a point of order, Mr. Deputy Speaker. You will recall that there has been some controversy in the last day or two over an invitation by the North-West regional health authority to Conservative Members to briefings on how to minimise political damage in the marginal constituencies in the north-west. It has been said that Labour Members from the north-west were also invited. The chief executive of the North-west regional health authority said on the radio at 5 o'clock that north-west Labour Members of Parliament have not responded to letters. That is a downright outrageous lie.

Mr. Deputy Speaker (Mr. Harold Walker)

Order. That has nothing to do with me.

Mr. Lewis

I wonder whether the Minister—

Mr. Deputy Speaker

Order. It has nothing at all to do with me.

Mr. Tony Lloyd (Stretford)

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

I hope that it is.

Mr. Lloyd

It is, and it is directed at you. In matters of parliamentary privilege, where, for example, the authority of Parliament, its Ministers and through them the civil service are being used in a partial manner with respect to some hon. Members —Conservative Members vis-a-vis Labour Members—have you the power to demand that a Minister comes to the House to explain why his civil servants and appointees have behaved in a cavalier political fashion?

Mr. Deputy Speaker

The well established procedure for dealing with matters of privilege is triggered by writing to Mr. Speaker.

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