HC Deb 05 March 1998 vol 307 cc1178-80
2. Mr. Cohen

What reforms she proposes of the export credits guarantee system. [31126]

The President of the Board of Trade and Secretary of State for Trade and Industry (Mrs. Margaret Beckett)

The Export Credits Guarantee Department's support is vital in helping exporters of capital goods and projects win valuable business overseas. It seeks continuously to improve the services it offers and does this in partnership with its customers—exporters and banks. I believe this approach works well.

My noble Friend the Minister for Trade announced on 11 February a review of the arrangements for providing finance for capital goods and project exports. A consultation paper has been issued seeking comments over a two-month period. Copies of the document have been placed in the Library of the House.

Mr. Cohen

Would my right hon. Friend concede that there is a lot wrong with the export credits guarantee scheme? Is not the £800 million Iraqi debt an example? Is not the contract in Malaysian ringgits—which, because of the devaluation of that currency, has cost the British taxpayer millions of pounds—another? Can she say something about that? Is there not too much emphasis on defence exports, which some of the countries concerned can ill afford, and not enough emphasis on the export of domestic goods? Is it not time for reform?

Mrs. Beckett

With great respect to my hon. Friend, I have to say that, on balance, the ECGD system works well. I understand some of the concerns that he identifies. Obviously, devaluation has an impact to some degree, although payments continue to be made up to date. Some of the ECGD cover in Malaysia is ringgit-related, and so was not affected by the changes that he identifies. On defence exports and defence cover, although there are fluctuations from time to time—depending on the flow of contracts—he will find, on balance, that an average of only 14 per cent. of the cover that the ECGD supplies is for defence.

Mr. Alan Clark

Has the DTI made any estimate of the number of British jobs supported or the amount of foreign currency earned over, say, the period since the hon. Member for Leyton and Wanstead (Mr. Cohen) came into the House, when he has criticised the ECGD?

Mrs. Beckett

Not in so many words. We have not calculated the number of jobs in relation to my hon. Friend's most worthy tenure in this House. I recognise the value of much of the work that the ECGD does, and the right hon. Gentleman may be aware that so successful has it been of late that this year that it has returned more than £400 million to the Treasury.

Mr. Barry Jones

I acknowledge the excellence of the system and of the ministerial leadership, but may I draw to my right hon. Friend's attention the extreme difficulties of a great British exporter—British Steel? The pound is highly valued and it is proving difficult to export against tough competition. Is there any way in which British Steel and like companies may have assistance?

Mrs. Beckett

I know of the strong support that my hon. Friend has shown to British Steel over the years. The Government understand the concerns of exporters at this time. He will know that my right hon. Friend the Chancellor has taken steps which we believe will lead to a stable but competitive pound in the longer term. I know that some exporters are effective in certain markets—those whose markets are dollar-controlled, for example, have not been affected in the same way—but that many efficient exporters such as British Steel are doing what they can to expand their markets in other countries.

Mrs. Gillan

Does the President of the Board of Trade agree that at the moment countries such as France, Spain and Italy do not show any great eagerness to dismantle their public sector support for their exporters? Does she also agree that if we implement changes to the ECGD unilaterally, we will be in danger of going out on a limb and handicapping United Kingdom exporters in the world market? Therefore, will she give us an undertaking that following the consultation no changes will be made to the ECGD regime before it can be clearly demonstrated that other Organisation for Economic Co-operation and Development countries are making similar changes to their regimes, as a failure to do so could disadvantage UK exporters?

Mrs. Beckett

I understand and share the hon. Lady's concern that we should do nothing that could disadvantage British business, but the whole purpose of the consultation is to hear from British business what it believes will give it a further competitive edge, so it is inconceivable that it is likely to advise us to do something that would damage its concerns and we would certainly not want to take any such steps.

On a note of caution to the hon. Lady, I understand the concern that lies behind her question—she is asking us not to do something unilaterally that would be disadvantageous—but one of the reasons for the review is to find out whether there are steps that the ECGD could take, unilaterally or otherwise, that would give British exporters a competitive edge. I am sure that she would not want us to wait for other people to do that.