Lords Sitting of 14 October 1991

Preamble
Reassembling after the Summer Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Manchester.

"The Citizen's Charter"
Lord Molloy Lord Molloy asked Her Majesty's Government:
What is the estimated cost of publishing and distributing The Citizen's Charter, including administration, advertising and public relations.
The Minister of State, Department of Transport (Lord Brabazon of Tara): My Lords, the final costs are not yet available, but the estimated cost is likely to be in the order of £916,000.
Lord Molloy: My Lords, I thank the Minister for that Answer. But is he aware of the grave anxiety of the 600 consultants who signed the advertisement and who were supported by many doctors? Is he further aware that they have the support of all the royal colleges and that great compassionate organisation, the Health Visitors' Association? Indeed, there are reports that senior government health experts also believe that within three years the hospital trusts will be private. Does the Minister accept what has been said or does he deny it all?
Lord Brabazon of Tara: My Lords, the noble Lord appears to be confused about the Question being asked. The Question that I have answered relates to the cost of publishing and distributing The Citizen's Charter and has nothing whatever to do with the National Health Service.
Baroness Platt of Writtle: My Lords, in publicising The Citizen's Charter, of which I am in favour, will the Government also publicise the other side of the coin— the need for the citizens of this country to exercise their duties and responsibilities in their work and one to another in order for the charter to be a success, as I hope it will be?
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for asking that question. She is quite right.
Lord Mellish: My Lords, is the Minister aware that the cost does not matter; the essential issue is whether it is worth it?
Lord Brabazon of Tara: My Lords, it is worth it.
Lord Stoddart of Swindon: My Lords, can we be assured that the Citizen's Charter will work, in particular among Ministers and civil servants? Is the Minister aware that in July I tabled two Questions to which I have not yet received an answer? Perhaps this House needs a citizen's charter.
Lord Brabazon of Tara: My Lords, that is a different question to the one on the Order Paper. I am sure that if the noble Lord contacts the Minister responsible for answering his questions he will receive a satisfactory reply.
Lord Molloy: My Lords, does the Minister agree that any citizen's charter will be looked on by the mass of ordinary people as useless unless there is a guarantee that our National Health Service will always remain free at the point of requirement?
Lord Brabazon of Tara: My Lords, that may well be the case and certainly the Government have made clear the status of the National Health Service. However, that question has nothing whatever to do with the one on the Order Paper, which relates to the costs of producing the document.
Lord Peston: My Lords, I must first apologise because I can no longer remember what The Citizen's Charter is. Can the Minister tell the House in broad terms what it covers and what the £1 million is paying for that anyone would like to have?
Lord Brabazon of Tara: My Lords, if the noble Lord does not have a copy of The Citizen's Charter I shall be most happy to ensure that he receives one. It contains numerous proposals for better service to the public in many areas. In addition it proposes some legislative changes.
Lord Boyd-Carpenter: My Lords, does not the last question indicate how sensible it is of Her Majesty's Government to make known to the public, including members of the public who can read it, what the proposal is?
Lord Brabazon of Tara: My Lords, my noble friend is right. The situation is slightly unfortunate in that the noble Lord, Lord Peston, can obtain a copy of The Citizen's Charter free of charge while a member of the general public will have to pay up to £8.50.
Lord Peston: My Lords, the noble Lord must have misunderstood. I did not say that I do not have a copy of the charter, nor did I say that I have not read it. But having looked at the document I am still trying to discover precisely what it does for me as a citizen. Will the Minister tell me whether it has any substantial content?
Lord Brabazon of Tara: My Lords, of course it has. If the noble Lord cares to read it again he will find many substantial contributions.
Lord Mackie of Benshie: My Lords, in view of government policy will the Minister tell the House whether the work was put out to tender in order to reduce the cost of £1 million?
Lord Brabazon of Tara: My Lords, there are various aspects of the cost which I outlined in my original Answer. For example, media space was bought at an overall discount rate of 50 per cent., which shows how well we did in that area.
Lord Cledwyn of Penrhos: My Lords, is it not the case that during the 12 years of Conservative

939
government the standard of public services has declined sharply? Is the Minister aware that £900,000 will not tackle the problem? Will he explain the policies of the Government designed to raise the standard of public services? If such standards do not rise, the Citizen's Charter will be nothing more than a gimmick.
Lord Brabazon of Tara: My Lords, the Citizen's Charter is not a gimmick. I do not accept the noble Lord's comment that public services have declined during the past 12 years. Furthermore, the proposals within the Citizen's Charter are designed to improve public services. The noble Lord should not confuse the cost of producing the documents involved, which is the figure that I quoted, with the cost of the implementation of the charter.
Lord Hailsham of Saint Marylebone: My Lords, is it not time that the silly season came to an end?

London Minicabs: Working Party
2.42 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes asked Her Majesty's Government:
What plans they have to control minicabs in London.
Lord Brabazon of Tara: My Lords, the Government are aware of anxiety expressed about the operation of minicabs within the capital and have set up a working party to make recommendations on the framework needed to ensure the safety of users of minicabs and taxis in London. I hope it will be able to report in April 1992. As part of its work, it will consider whether a licensing regime for minicabs is now required in London.
Baroness Gardner of Parkes: My Lords, I thank the Minister for that reply. Is he aware that legislation to introduce the licensing of minicabs in London passed through all its stages in this House? However, it was later rejected in the other place. Since then, in December 1990 the black taxi operators produced a document which states:
"It also recognises that the mechanism which currently exists for licensing London taxi drivers would be totally inadequate to consummate the partnership"—
that is, the partnership between minicabs and black cabs. Such a partnership is necessary to give safety and protection to people throughout all parts of London including the parts where black taxis are unable to provide a service.
Lord Brabazon of Tara: My Lords, I recognise, as my noble friend says, that there is a change of attitude of some substance by the black cabs towards the operation of minicabs. Black cab operators are represented on the working party to which I referred in my original Answer. I hope that they will contribute towards making recommendations as to the framework needed to ensure that users of both taxis and minicabs in London can travel in reasonable safety.
Lord Thomson of Monifieth: My Lords, I declare an interest as chairman of the Suzie Lamplugh Trust which commissioned the inquiry into minicabs in London. Is the Minister aware that the figures which emerged from that were deeply disturbing? Will he ensure that following the welcome establishment of the working party, the Government will take immediate and urgent action to put right the situation?
Lord Brabazon of Tara: My Lords, I agree that the Suzie Lamplugh Trust report led to the establishment of the working party and it is represented on it. I hope that it will make a contribution to what is evidently regarded as a problem. I hope that when the answers come from that report, it will be possible, where necessary, to legislate.
Baroness Hollis of Heigham: My Lords, given that outside London minicabs and private hire vehicles are inspected, regulated, licensed and controlled by the local authorities in the interests of their citizens, can we not hope and expect that London citizens should enjoy the same protection as is enjoyed currently by those living outside London?
Lord Brabazon of Tara: My Lords, thanks to the noble Baroness, citizens outside London will be better off than they were previously as a result of the Road Traffic Act which has just been passed. The situation in London is and always has been different as regards minicabs. We must await the results of the working party's report.
Lord Underhill: My Lords, does the noble Lord recall that this matter arose during the passage of legislation in the past 12 months? The Government then resisted suggestions that, as my noble friend said, what applies outside London should apply to London. As regards the establishment of the working party, is the Minister aware that the Transport and General Workers' Union taxi cab section has drawn up a blueprint for this provision to apply to London? Will he contact the union and secure a copy of those guidelines?
Lord Brabazon of Tara: My Lords, the noble Lord will be pleased to know that that union is represented on the working party.

Housing Associations: Dwellings
2.47 p.m.
Baroness Fisher of Rednal Baroness Fisher of Rednal asked Her Majesty's Government:
Whether housing associations with funding from the Housing Corporation are meeting the shortfall in social housing previously supplied by local authorities.
Viscount Astor: My Lords, housing associations are meeting the majority of housing needs although there are shortages in some areas. Public resources for housing associations are set to rise to over £2 billion by 1993–94. Together with associations' new ability to

941
use private investment, this will enable their output to increase from 21,500 dwellings last year to around 40,000 by 1993–94.
Baroness Fisher of Rednal: My Lords, does the Minister agree that the figures mentioned by the noble Viscount are nowhere near sufficient to rehouse all those people on local authority housing registers up and down the country? Homelessness is a national scandal in this country. Is the Minister satisfied that housing associations can take the place of local authorities in trying to rid this country of homelessness?
Viscount Astor: My Lords, I believe that the amount of money being spent will go a long way towards solving the problem but it is not the only action which the Government are taking in trying to solve the housing problem. Capital expenditure on housing investment by local authorities and housing associations is expected to be over £4.5 billion in 1991–92. Housing revenue subsidy is £3.7 billion and Housing Corporation expenditure will increase. There is also more money for low cost rural housing and estate action, and extra money to help the homeless in London and the South East.
Lord Jenkins of Putney: My Lords, is the noble Viscount aware that under Macmillan, 300,000 houses were built in one year? Have the present Conservative Government and their predecessors managed to equal that in the past 10 years?
Viscount Astor: My Lords, house building depends on housing need. The introduction of the right to buy in 1980 has helped over 1 million families in this country to become home owners. Most of those people who bought their homes are extremely happy in them.
The Lord Bishop of Manchester: My Lords, does the Minister accept that all those working in the vitally important social field of providing housing, whether in housing associations or in local government, need encouragement and support, not denigration? They also need adequate resources.
Viscount Astor: My Lords, I agree with the right reverend Prelate. Those people need support and adequate resources, which they receive from this Government.
Lord Mellish: My Lords, perhaps I can clear up one anomaly. From what has been said in the past, I understand that the money realised from the sale of council houses and flats, which I support, cannot be used for housing by the councils which receive it. Is that correct? If so, it is a ridiculous situation.
Viscount Astor: My Lords, the noble Lord is not correct. Local authorities are free to spend 25 per cent. of he using capital receipts on new capital expenditure, the remaining 75 per cent. going to help pay off their debts.
Baroness Nicol: My Lords, will the Minister give some indication of his department's commitment to
942
co-operative housing? For example, has his department ever considered setting a target for capital allocations for housing co-operatives? They perform a valuable service in the housing sector.
Viscount Astor: My Lords, that is a technical area and I cannot give the noble Baroness an answer. However, I shall look into the matter.
Lord McIntosh of Haringey: My Lords, the Minister spoke of housing need and boasted that the output of the housing associations was to increase from 21,000 to 40,000. How do those figures compare with the fact that 170,000 families—that is 500,000 people of whom half are children—were accepted by local authorities last year as being homeless? Is it not the case that both by that measure and in the light of the fact that council housing is at its lowest level since 1914, the Government are going nowhere near far enough to meet housing needs?
Viscount Astor: My Lords, that is not the only action we are taking. We announced a pilot scheme using housing associations to manage the properties of private landlords to encourage them to increase the rentals of their properties. We are spending money on a number of matters to bring houses onto the market, including houses that are empty at the moment, whether owned privately or by local authorities.
Baroness Fisher of Rednal: My Lords, I thank the Minister for the figures he has given us this afternoon. Can he say how many individuals and families from local authority lists were housed by housing associations through Housing Corporation finance?
Viscount Astor: My Lords, I do not possess the exact figures. However, I shall look into the matter and write to the noble Baroness.

Crossbows
2.52 p.m.
Lord Redesdale Lord Redesdale asked Her Majesty's Government:
Whether they have any plans to introduce legislation to control the use of crossbows.
The Minister of State, Home Office (Earl Ferrers): My Lords, there is no evidence to suggest that the existing legislation is inadequate to deal with crossbow misuse.
Lord Redesdale: My Lords, I thank the noble Earl for his reply. However, is he aware of the power of crossbows that one can buy in this country? The other day I bought the least powerful crossbow and loaded it with a pencil. I fired it into a phone book and it pierced up to 300 pages. Is that not a frightening weapon to be readily available without restriction?
Earl Ferrers: My Lords, there is no doubt that crossbows are powerful weapons when used inappropriately. However, the effort required to register or license those weapons is not in proportion to their misuse.
Lord Hailsham of Saint Marylebone: My Lords, were not the longbow mark IV used at Agincourt and

943
even the longbow mark I used at Hastings, in spite of a higher trajectory, infinitely more accurate and dangerous than the crossbow?
Earl Ferrers: My Lords, I have no reason to disagree with my noble and learned friend. But I cannot see what that has to do with the licensing of crossbows.
Baroness Ewart-Biggs: My Lords, can the Minister say how many casualties or accidents have been caused by the misuse of crossbows? Can he say also whether one is able to buy crossbows by mail order?
Earl Ferrers: My Lords, the answer to the last question of the noble Baroness is yes. With regard to her first question it is difficult to give accurate numbers because the statistics available do not accord with her question. However, the number of crossbows referred to the forensic science service following serious offences against the person were six in 1986, eight in 1987, eight in 1988 and 10 in 1989.
Lord Morris of Castle Morris: My Lords, can the noble Earl tell the House how many prosecutions have been brought under the 1987 Act and how many of those resulted in convictions?
Earl Ferrers: My Lords, I do not possess that information. If I can find it I shall advise the noble Lord.
Lord Monson: My Lords, does the noble Earl agree that the modern crossbow appears to be as lethal as a 410 or 28-bore shotgun, if not more so? Logically therefore it should be subject to the same restrictions as the shotgun.
Earl Ferrers: My Lords, crossbows are mainly used for recreational practice. The amount of police time required to register or license those weapons would be disproportionate to the savings made. I do not believe that that would be practical.
Lord Mackie of Benshie: My Lords, what does the noble Earl think shotguns are used for if not for recreational purposes?
Earl Ferrers: My Lords, the noble Lord, Lord Mackie, is correct. Crossbows are used for recreational purposes. However, they also have a more nefarious purpose. As the noble Lord is aware, it is necessary to license both shotguns and firearms. Crossbows do not fall into the same category for the reasons I gave.
Lord Morris of Castle Morris: My Lords, is the noble Earl aware that in 1987 the Home Office estimated that around 200,000 people in this country owned crossbows, of whom only 3,000 belonged to crossbow shooting clubs? Has the Home Office collected any evidence as to why the other 197,000 people want crossbows?
Earl Ferrers: My Lords, to provide the answer to that question would be more time consuming than licensing the crossbows.

Business
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Brabazon of Tara will, with the leave of the House, repeat a Statement that is being made in another place on the Channel Tunnel rail link.

Export and Investment Guarantees Bill
2.58 p.m.
Report received.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 1:
Page 1, line 10, at end insert:
("( ) The Secretary of State may from time to time make arrangements under this section where similar arrangements are not made by any transferee under Part II of this Act.").
The noble Lord said: My Lords, we return again from what I hope has been a profitable and relaxing Recess to discuss the thorny matter of export and investment guarantees. I was expecting—I shall be perfectly frank—that the Prime Minister would declare an election in November and that the noble and learned Lord and I would not need to cross swords again on the Bill. Had an election been declared the matter would certainly have been dropped. However, given the difficulties in which the Conservative Party finds itself we must go through some of the issues—only some of them—which we debated in Committee before the Recess.
There remain some important outstanding issues. We must recognise that the Bill will receive Royal Assent and that the Insurance Services Group of ECGD will, in the course of time, be privatised. I shall return to what that course of time may now be during the Report stage. We must look at what will happen and what will be the conduct of the privatised ISG after the Bill receives Royal Assent and after the Act has been implemented, firstly, by way investment and, secondly, as a result of what we believe will be a sale to one buyer.
The Insurance Services Group of the ECGD, as presently constituted, gives short-term cover to exporters throughout the world supporting the longterm cover given by the Export Credits Guarantee Department. As was said time and again, both at Second Reading and in Committee, the ISG is an organisation on which exporters in this country have learnt to rely. We have to make sure, as a House of Parliament, that exporters can continue to rely on similar services being available even though the ISG may be in the private sector. I do not believe that any of your Lordships differ from me on that proposition.
At the moment we do not know to whom the ISG is to be sold. The noble and learned Lord and I have corresponded during the long Recess, and I shall return to that at a later stage of this debate. Nevertheless, it is clear that the ISG is to have private shareholders. For the purpose of my argument, whether it is one or more shareholders makes no difference. Private shareholders are bound to operate their company in the interests of the shareholders.
They are bound to operate for commercial reasons. The ISG is the primary insurer of short-term export credits and will remain so under private ownership.
I accept that there are certain arrangements that the Government are proposing to put in place which may help the ISG on reinsurance of its direct insurance arrangements; but it is perfectly possible, and even likely, that the privatised company will seek those markets to insure which are most profitable and of least risk. I say that simply because if, as an insurer, you insured doubtful markets you would need to reins are. In my view the premium for reinsurance will be high enough (at the moment it is high enough) to ensure that the ISG as privatised will adopt the commercial realities of its position and let go those markets which are of doubtful risk. In other words, in our view the privatised ISG will restrict the cover that it offers to low risk, easily profitable markets. That is to say, it will be happy to insure the OECD markets but unhappy to insure high risk markets, where its services will be needed.
I am sure that the noble and learned Lord the Lord Advocate will reply to the effect that the Government will stand behind the ISG in the high risk markets if it is in the national interest so to do. I understand that. But that is not enough. The primary decision will be taken by the company itself. Reinsurance is only a facility on which the company may be able to draw. The company may decide not to ask for that facility. Under those circumstances our contention is that if industry demands it but the privatised ISG refuses high risk primary cover and reinsurance on high risk markets, and that it is in the national interest for us to export, then the old remaining public sector side of the ECG D should be in a position to offer that cover. That seems a sensible arrangement which I hope will be acceptable. It is not compulsory. I am not asking for the ECGD to be a competitor to the privatised ISG. I am simply saying that, where the privatised company believes that to offer primary insurance is not in its commercial interests the ECGD should be allowed to do so.
We have a second problem. What if the ISG goes bust" What if this new privatised entity to which we are all now committed goes broke? There would be no primary insurance of short-term credit immediately available. Again I argue that the Secretary of State should have the opportunity to require the ECGD to step in to fill that gap. No one knows who is to run the ISG. We do not know what the quality of its management will be. We do not know what the quality of its financial controls will be or the sort of risks in which it will be prepared to engage. We have no knowledge of those matters. It seems only right for your Lordships to consider the possibility that there may be failure and that our exporters will be thereby severely disadvantaged compared with the exporters in other countries.
Finally, the top-up reinsurance that the noble and learned Lord has promised us for the ISG finishes after three years. At the end of three years the Government wash their hands of the ISG except in those circumstances where private reinsurance is in the national interest. It is vitally important that continuity
946
be maintained. We cannot have a deadline whereby the Government support the ISG but after three years that is the end of it.
I hope that your Lordships will very carefully consider the amendment. I do not believe that it is outside the spirit of the Bill. As I said, I believe that the Bill will receive Royal Assent and that the ISG will be privatised. But we on this side of the House are determined to make sure that exporters in this country, under no circumstances which we can at present envisage, should suffer from privatisation. That is why I am moving this amendment. I hope that your Lordships will agree to it. I beg to move.
Lord Ezra: My Lords, the noble Lord, Lord Williams, has raised some very important points. I ask the noble and learned Lord, Lord Fraser of Carmyllie, to say to what extent, if any, the points raised will be covered under the terms of any scheme or schemes for the transfer referred to in Part II of this Bill. If not, will he then consider an amendment on the lines of that moved by the noble Lord, Lord Williams?
Lord Peyton of Yeovil: My Lords, before my noble and learned friend replies perhaps I may intervene briefly. Personally I have never found any great enthusiasm for enabling measures from whatever source they were introduced. In this particular instance we are dealing with a matter which is very important to the export industry. As yet we have no idea to whom will pass the responsibilities for making these arrangements. It is to be assumed that whoever eventually takes on these duties will wish, as the noble Lord, Lord Williams, said, to make a profit for the shareholders.
I would find myself in a very difficult position if the Government cannot accept this residual provision that, should the worst come to the worst, the Secretary of State must be in a position to step in and fill the gap that has been left. I hope that my noble and learned friend will be able to accept what seems to be a very modest measure. It is one which I look on with some favour despite the amusing words with which the noble Lord, Lord Williams of Elvel, introduced it.
The Lord Advocate (Lord Fraser of Carmyllie): My Lords, the amendment that the noble Lord, Lord Williams, has advanced is not outwith the spirit of the Bill, and I shall explain to him why nevertheless I do not consider it to be necessary. Perhaps I may say at the outset that what he has accurately said in law, that there is as yet no purchaser of the insurance services business, is because the Bill has yet to complete its passage through Parliament. Final contracts are signed only thereafter. I think the noble Lord is aware that an indication has been given by the Secretary of State that the Dutch company NCM is the preferred purchaser.
The anxiety expressed by the noble Lord is that the privatisation of this part of ECGD's business should not result in a change in the level and quality of support currently available to the customers of insurance services—that is to say, United Kingdom exporters. The proposed amendment therefore seeks to ensure that the Secretary of State has clear powers

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to make arrangements to remedy any perceived deficiencies in the facilities offered by the new company.
My first point is that we have every confidence that the privatisation will not leave UK exporters with a shortfall of facilities. Indeed, the privatisation is in a large part designed to allow the business to develop into areas which would otherwise have remained unavailable to it had it remained in the public sector. The Government remain confident that the vast bulk of insurance services businesses can be accommodated by the private sector reinsurance market, thereby minimising the necessity for supplementary reinsurance support from government.
Secondly, the Government have made abundantly clear their willingness to provide supplementary reinsurance support to the company in order to ensure there is no sudden or sharp deterioration in the level and range of support available to UK exporters after privatisation. Following lengthy debate (as some of your Lordships will recall) during an earlier stage of the Bill, the Government themselves tabled an amendment which is now to be found in Clause 11(2). That imposes an obligation on the Secretary of State to determine whether a national interest case exists to offer reinsurance to supplement that which is available from the private sector market.
The most important observation that I have to make is that Clause 1(1) of the Bill as it stands at present and as a draft already gives the Secretary of State the necessary powers envisaged by the proposed amendment. It requires no supplement to achieve the desired effect. I entirely understand and share the anxiety of my noble friend Lord Peyton. However, the Bill is in such a form that further amendment and addition is not necessary. Indeed, I go a little further and say that because the proposed amendment is so specific, as a matter of drafting it arguably has the effect of making Clause 1(1) more restrictive than would otherwise be the case.
With that explanation, I hope the noble Lord will withdraw his amendment. I am sure he is familiar with the difficulty that if one has a widely ranged power and adds something like this to it, far from providing a particular emphasis to what one might achieve unintentionally, it in fact restricts what is proposed.
Lord Williams of Elvel: My Lords, I am most grateful to the noble and learned Lord the Lord Advocate. His response concentrated in the main on reinsurance. I accept that we shall debate reinsurance further. However, reinsurance is not the problem here. The problem is direct insurance. On reading Clause 1(1), I do not find the wide power under powers of ECGD as opposed to powers of transferee that the noble and learned Lord sets out. The power is a wide power. On the other hand, the powers of the transferee are also set out at a later stage in the Bill, and they have been set out in debates in your Lordships' House.
What I am seeking to achieve is very simply that ECGD in the public sector should be allowed to fill the gap that may be left by the transferee in the private sector. I believe that that should be specified on the face of the Bill. Unless it is, nobody will know at what
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point the Secretary of State may use whatever powers he has under Clause 1(1). He has general powers to make arrangements but those are powers which are subject to all sorts of things which come later on in the Bill. I see no narrowing in the powers of the Secretary of State because, in my view, the amendment I am suggesting complements the powers that the Secretary of State has under Clause 1(1). That is the major point. It would also be an enormous reassurance—rather than reinsurance—to those who will or will not benefit, as the case may be, from the services of a privatised company if they can be sure that the Secretary of State will step in if ISG goes bust or removes cover. That is the vital point which I do not think is covered in the Bill as drafted. That is my advice. Clearly it is advice which may be different from that of the noble and learned Lord. I believe that this amendment should be included in the Bill.
3.17 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 67; Not-Contents, 144.

Division No. 1

CONTENTS

Ampthill, L.

Jenkins of Putney, L.

Ardwick, L.

John-Mackie, L.

Aylestone, L.

Judd, L.

Beaumont of Whitley, L.

Kilbracken, L.

Birk, B.

Leatherland, L.

Blackstone, B.

Llewelyn-Davies of Hastoe, B

Blease, L.

Lockwood, B.

Boston of Faversham, L.

Mackie of Benshie, L.

Broadbridge, L.

Milner of Leeds, L.

Bruce of Donington, L.

Mishcon, L.

Carter, L.

Molloy, L.

Cledwyn of Penrhos, L.

Monkswell, L.

Clinton-Davis, L.

Morris of Castle Morris, L.

David, B.

Nicol, B.

Desai, L.

Peston, L.

Donoughue, L.

Richard, L.

Ewart-Biggs, B.

Rochester, L.

Ezra, L. [Teller.]

Sainsbury, L.

Falkland, V.

Seear, B.

Fisher of Rednal, B.

Sefton of Garston, L.

Fitt, L.

Serota, B.

Gallacher, L.

Shackleton, L.

Galpern, L.

Soper, L.

Gladwyn, L.

Stedman, B.

Graham of Edmonton, L. [Teller.]

Stoddart of Swindon, L.

Strabolgi, L.

Hanworth, V.

Taylor of Blackburn, L.

Hatch of Lusby, L.

Taylor of Gryfe, L.

Hilton of Eggardon, B.

Thomson of Monifieth, L.

Hollis of Heigham, B.

Tordoff, L.

Howie of Troon, L.

Turner of Camden, B.

Hunt, L.

Underhill, L.

Jay, L.

White, B.

Jeger, B.

Williams of Elvel, L.

NOT-CONTENTS

Alexander of Tunis, E.

Blatch, B.

Allenby of Megiddo, V.

Blyth, L.

Arran, E.

Borthwick, L.

Astor, V.

Boyd-Carpenter, L.

Astor of Hever, L.

Brabazon of Tara, L.

Auckland, L.

Brightman, L.

Balfour, E.

Brigstocke, B.

Barber, L.

Brougham and Vaux, L.

Belhaven and Stenton, L.

Butterworth, L.

Beloff, L.

Caithness, E.

Birdwood, L.

Caldecote, V.

Blake, L.

Campbell of Alloway, L.

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Campbell of Croy, L.

Malmesbury, E.

Carnegy of Lour, B.

Mancroft, L.

Cavendish of Furness, L.

Manton, L.

Cayzer, L.

Margadale, L.

Chelmer, L.

Marlesford, L.

Clanwilliam, E.

Marsh, L.

Cockfield, L.

Merrivale, L.

Coleraine, L.

Mersey, V.

Colnbrook, L.

Milverton, L.

Constantine of Stanmore, L.

Montgomery of Alamein, V.

Cottesloe, L.

Morris, L.

Craigavon, V.

Mountevans, L.

Cullen of Ashboume, L.

Mowbray and Stourton, L.

Davidson, V. [Teller.]

Munster, E.

De Freyne, L.

Murton of Lindisfarne, L.

Denham, L.

Nelson, E.

Denton of Wakefield, B.

Norfolk, D.

Effingham, E.

Norrie, L.

Ellenborough, L.

Nugent of Guildford, L.

Erroll of Hale, L.

O'Cathain, B.

Faithfull, B.

Orkney, E.

Ferrers, E.

Oxfuird, V.

Flather, B.

Palmer, L.

Fraser of Carmyllie, L.

Park of Monmouth, B.

Fraser of Kilmorack, L.

Perry of Southwark, B.

Gardner of Parkes, B.

Platt of Writtle, B.

GrantChester, L.

Porritt, L.

Greenway, L.

Portsmouth, Bp.

Gridley, L.

Reay, L.

Hailsham of Saint Marylebone, L.

Rodney, L.

Romney, E.

Halsbury, E.

St. Davids, V.

Hamilton of Dalzell, L.

Shannon, E.

Harmsworth, L.

Shaughnessy, L.

Hayter, L.

Slim, V.

Henderson of Brompton, L.

Soulsby of Swaffham Prior, L.

Henley, L.

Strange, B.

Hesketh, L.

Strathclyde, L.

Hives, L.

Strathmore and Kinghorne, E.

Hood, V.

Strathspey, L.

Hooper, B.

Sudeley, L.

Howe, E.

Swansea, L.

Hylten-Foster, B.

Swinfen, L.

Ironside, L.

Terrington, L.

Jeffreys, L.

Teviot, L.

Johnston of Rockport, L.

Thomas of Gwydir, L.

Joseph, L.

Thorneycroft, L.

Killearn, L.

Tombs, L.

Kimball, L.

Trefgarne, L.

Kintore, E.

Trumpington, B.

Kitchener, E.

Ullswater, V.

Knollys, V.

Vaux of Harrowden, L.

Lauderdale, E.

Waddington, L.

Lloyd of Hampstead, L.

Wade of Chorlton, L.

Long, V.

Waldegrave, E.

Lucas of Chilworth, L.

Westbury, L.

Lyell, L.

Wharton, B.

McColl of Dulwich, L.

Whitelaw, V.

Mack ay of Ardbrecknish, L.

Wise, L.

Mackay of Clashfern, L.

Wynford, L.

Macleod of Borve, B.

Resolved in the negative, and amendment disagreed to accordingly.
3.27 p.m.
Clause 5 [Provision of services and information]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 2:
Page 3, line 23, at end insert ("including any person carrying on business outside the United Kingdom").
The noble Lord said: My Lords, in view of the narrowness of the majority in the first Division I now move Amendment No. 2 in my name and that of my noble friend Lord Clinton-Davis. This probing amendment seeks to illustrate the problem that the Government appear prepared to accept ECGD providing services to overseas customers, including
950
banks which will support overseas exporters, but are not prepared to allow the privatised Insurance Services Group to provide services to exporters from the European Community. In other words, there will be different ground rules for ECGD, as it will subsist after privatisation, and the privatised Insurance Services Group. If the noble Lord, Lord Henley, can satisfy me that my fears are not justified I shall be happy to withdraw this probing amendment. I beg to move.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, the noble Lord, Lord Williams, referred to Amendment No. 2 as a probing amendment. As I understand it, Clause 5 is purely a contingency clause relating to the further powers of ECGD and is not related to the successor company for the Insurance Services Group. I can assure the noble Lord that the words in Clause 5 in regard to "any person" will certainly include any person carrying on business outside the United Kingdom. In other words, the words are inclusive and the words that the noble Lord wants included in the Bill are not necessary in regard to Clause 5. The noble Lord asked me to go somewhat further in relation to what the successor company can do and asked whether it can provide services for foreign companies. Yes, that is the case.
Lord Williams of Elvel: My Lords, I am grateful to the Minister. However, I understood—and I hope that the House will give him leave to reply to the point that I am about to make—that, so far as concerns short-term credit insurance, the Government have consistently insisted that, when privatised, the Insurance Services Group should not be allowed to insure exports from other European Community countries. That is my clear understanding. Moreover, if I had a moment or two I would quote some of the words used by the Government Front Bench on the matter because the Government do not want competition—and I understand exactly why. But, if I am wrong in that view, perhaps the Minister can reassure me.
Lord Henley: My Lords, I hope that the noble Lord will bear with me because I am in a state of some confusion. This is not what Clause 5 is about. As the noble Lord knows, Clause 5 is the contingency clause which allows the ECGD sufficient flexibility to provide certain extra services in addition to its normal export and credit investment services. Obviously for those, yes, it can include other nationals, as it were. However, it is restricted to encouraging United Kingdom exports. For example, it cannot support French exports except, say, when they form a minor part of a United Kingdom project. The new company will be free to support export credit insurance from whatever country it wishes just as any insurance company can.
Lord Williams of Elvel: My Lords, I am most grateful to the Minister. I apologise if I have abused the Report stage procedures. I have no wish to do so. However, again with the leave of the House, can the noble Lord answer a simple question: will the rules for

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the ECGD, which remains in the public sector, be identical to the rules for the ISG, which is going to the private sector? If the Minister can say yes, I shall be happy to withdraw the amendment.
Lord Henley: My Lords, I suspect that we are talking at cross-purposes. I am trying to get over to the noble Lord, with the leave of the House, the fact that the ECGD is restricted to encouraging United Kingdom exports. Clause 5 offers something extra; it is a contingency clause which allows the ECGD sufficient flexibility to market certain extra services in addition to its normal export and credit investment insurance facilities. In relation to those extra services provided under Clause 5, which were discussed in Committee, yes, it can provide those for other countries.
Lord Williams of Elvel: My Lords, unless there is anything further that the Minister wishes to add, I think that we will have to return to the matter on Third Reading. I do not think that the ground rules for the ECGD and the ISG have yet been cleared up. That is what I propose to do. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 [Reports and returns]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 3:
Page 5, line 8, leave out ("as soon as practicable after 31st March 1991") and insert ("no later than 30th November 1991").
The noble Lord said: My Lords, this amendment also stands in the name of my noble friend Lord Clinton-Davis. The Bill started its passage through Parliament, it now seems, quite a long time ago. We are now coming to the end of its passage through your Lordships' House. As regards the reports which are stipulated under Clause 7—that is, the reports that the Secretary of State shall make annually
"on the discharge of his functions"
under Sections 1 to 5 of Part I of the legislation and which should be made
"as soon as practicable after 31st March in each year"—
it must now be true, presumably, that the first report is pretty well ready. I very much hope that a report will be ready for issue immediately following Royal Assent—I am not asking for it to be available before Royal Assent—so that we can see how, in relation to the debates which have taken place in your Lordships' House and in another place, the Secretary of State has exercised his functions under Part I of the new Act; indeed, under the old Act as it then was.
The suspicion—and it is a suspicion which will surface from time to time—is that the Secretary of State has increased premiums to exporters for insurance under the ECGD facilities in a manner which is inconsistent with the duty of a Secretary of State to promote and encourage British exports. If that is the case, we should know. However, if that is not the case, no doubt the Secretary of State will have no difficulty at all in explaining to Parliament exactly how he has fulfilled the responsibilities laid upon him
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under the old Act, and he will do so under the provisions of the new Act when it receives Royal Assent. I beg to move.
Lord Henley: My Lords, the amendment of the noble Lord relates to Clause 7(4) which refers to the
"first return under this section";
that is, the return mentioned in subsection (2) and not, as I think the noble Lord is implying, the "annual report" mentioned in subsection (1). It may help if I set out the position in a little more detail.
Until the Bill becomes law, the Secretary of State is still required by the terms of the Export Guarantees and Overseas Investment Act of 1978 to produce quarterly returns of commitments incurred. These quarters fall on the 31st March, 30th June, 30th September and 31st December every year. Therefore, assuming that the Bill receives Royal Assent at the end of this Session, the last such quarterly return will be that relating to the three months ending 30th September of this year.
It is the Government's intention that the annual returns to be made under Clause 7 should report the position as at 31st March in each year. Those are the returns specified in subsection (2). That will be consistent with the reporting period for all other Government accounts, including the ECGD's own trading accounts and annual report. Under these circumstances, the next return should be the annual return required by the new Act and relating to the position as at 31st March 1992. As the period between the two returns will not in any case be extensive, but would be a matter of only six or seven months, there would seem to be little to be gained by requiring an additional return before this date.
If we were to require, as proposed by the amendment, that the first annual return should be made
"no later than 30th November 1991",
the only such return which would be appropriate would be that showing the position as at 31st March 1991. As the new powers conferred on the Secretary of State by the Bill were obviously not available to him on that date, the return would in fact do no more than repeat the information given in the existing quarterly report on that same date. That would be of no help to anyone.
However, I accept that it is implicit in Clause 7(4) that such a return will be made. I suspect that the noble Lord may have discovered a provision in the Bill which is perhaps not entirely essential—I refer to subsection (4)—or which indicates a possible anticipation on the part of the draftsman of a speedier passage of the Bill than has in fact been the case. In response to the noble Lord's amendment, I am prepared to consider whether subsection (4) could be deleted. But, in the interim, I hope that he will feel able to withdraw the amendment.
Lord Williams of Elvel: My Lords, I am most grateful to the Minister. He is right—I apologise to the House—he pulled me up and said that I had referred to Clause 7(1) when I should have been referring to Clause 7(2). On the other hand, he also accepted that I had noticed a small difficulty in the

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drafting of subsection (2) which mentions a date that presupposed that the Bill would have passed through Parliament rather quicker than in fact it has done.
I make only two points: first, I happily accept the Minister's assurance that subsection (4) could be deleted from the Bill. My second point, and this is fundamental to the whole debate, is that the Secretary of State must, at an early stage, set out how he discharged his functions, even under the old Act, because, as I know the Minister is aware, many concerns have been expressed on all sides of your Lordships' House that ISG premiums are Treasury-driven rather than trade-driven. We want to be absolutely certain that that is not the case and that the Government have not been led in that direction. That is why a report is so important. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 [Transferred staff]:
Lord Clinton-Davis Lord Clinton-Davis: moved Amendment No. 4:
Page 6, line 17, at end insert:
("(c) he shall be allowed, on his request, to re-enter the service of the Crown within three years of the commencement of his employment by a transferee.").
The noble Lord said: My Lords, the background to the amendment and to all amendments up to Amendment No. 9 is, as my noble friend Lord Williams of Elvel said in Committee, that the staff of the ECGD were worried about the situation. Our information is that they remain worried, and hence the amendment. We shall listen with interest to what the Government say in response. I should like to know the Government's estimate of the numbers of staff who are likely to volunteer, if the Minister has that information.
Under current Civil Service rules, staff who leave the Civil Service voluntarily enjoy the right to seek reinstatement in the Civil Service for up to five years following their departure. The amendment would give transferred staff, many of whom will be transferring merely because there is no alternative, security with the right to be able to return to the Civil Service within three years following their transfer. It would provide a safety net for staff should the company prove unsuccessful; should it be forced to reduce the complement of its staff; or even cease trading. I beg to move.
Lord Fraser of Carmyllie: My Lords, the Government expect that the new company will be stand almost entirely, if not wholly, with volunteers. As of today's date, I am advised that about 590 members of staff have volunteered. Any secondees would remain civil servants in any case.
Before staff were asked whether they preferred to join the new company or to remain in the Civil Service they were given full details of their terms and conditions and information about the new company's plans. It is on that basis that this significant number of staff have volunteered. If the amendment were accepted it would not allow the new company the stability necessary to run its business efficiently if all its workforce had the right to opt to move to secure jobs elsewhere at any time. It is on that basis that I hope that the noble Lord will withdraw the amendment.
3.45 p.m.
Lord Clinton-Davis: My Lords, the Minister has dealt only partially with the worries that have been expressed. He has not dealt with the anxieties that may well arise because the company, at least in this country, is inexperienced in this field. It has no track record and may find it extremely difficult, especially in the light of current economic circumstances, to operate in the the way that the Government imagine. If the worst scenario were to arise there would be no safety net. The Government say that these people will have no right to return to the Civil Service in a period that I believe to be reasonable. The Minister blithely ignores the staff who are in ISG at the moment. The Minister said that he is not prepared to offer any compromise. In the circumstances it might be right to test the opinion of the House, and that I now propose to do.
On Question, amendment negatived.
Lord Clinton-Davis Lord Clinton-Davis: moved Amendment No. 5:
Page 6, line 17, at end insert:
("(c) he shall receive from the Treasury a single lump sum payment, the amount of which shall be determined in consultation with the accredited representatives of the relevant trades unions, in compensation for his loss of civil service status.").
The noble Lord said: My Lords, staff who transfer from ECGD to the new company will loose the relatively high level security that Civil Service employment provides. They will enter the commercial world as part of a new company which, as I said a moment ago, has no experience here and has no track record. They will not be part of a large nationwide pool of employment with extensive opportunities to transfer geographically or for variation in work type and promotion. The terms and conditions of employment offered by NCM, although undoubtedly improved as a result of the negotiations that have taken place with the trade union side of ECGD, will fall short of those available in the Civil Service and which the disappointingly low salary increases offered in the new company will do little to compensate.
In addition, it is an historic fact that is historic, that civil servants have been regularly offered lower annual salary increases than comparable private sector staff on the basis that their lower pay is compensated for by security of employment.
The privatisation of ISG is a clear indication that such security is a myth. The amendment would allow payments or compensation to be made to staff transferring to the new company. I beg to move.
Lord Boyd-Carpenter: My Lords, is there any precedent for what the noble Lord proposes?
Lord Clinton-Davis: My Lords, there is no precedent for what the Government are doing.
Lord Fraser of Carmyllie: My Lords, as the noble Lord, Lord Clinton-Davis, clearly appreciates, as a result of the negotiations and discussions that have taken place, those who are transferring to the privatised company will know that their terms and conditions will be even better overall than those that they enjoyed as civil servants. They include the terms

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of the company's pension arrangements and the calculations of any redundancy payment in the unlikely event of redundancy arising. They will also have continuity of service with their time in the Civil Service counting alongside that in the new company in the unlikely event of redundancy. Thus there is no detriment to them on transfer which could possibly justify his unusual proposal that they should immediately receive any lump sum compensation, bearing in mind what they will receive once they transfer.
Lord Clinton-Davis: My Lords, such concessions as there have been are not as advantageous as the Minister described because they do not take account of the considerations to which I have referred. The improvements achieved have been won largely by the negotiating skills of the trade union side of the ECGD.
I have listened with care to what the Minister said. We shall determine whether we shall come back to the issue later. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Channel Tunnel Rail Link
3.50 p.m.
Lord Brabazon of Tara: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Transport on the Channel Tunnel rail link. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement on the choice of route for the new railway line between the Channel Tunnel and London.
"Investment planned by British Rail of £1.4 billion will provide high quality, attractive and competitive international passenger and freight services once the Channel Tunnel opens. Upgrading of existing routes and the new international passenger station at Waterloo are well advanced. But British Rail believes that there will come a point at which additional capacity in the form of a new line will be needed.
"The House will recall that in June last year my predecessor announced that the proposals submitted by a joint venture between British Rail and Eurorail to build the Channel Tunnel rail link were unacceptable. He said that he was not satisfied that the partners had found the best solution and that he was asking British Rail to complete its studies with the aim of maximising the benefits to international passengers and commuters, concentrating on the options for the route from the North Downs to Waterloo and King's Cross.
"British Rail spent almost a year undertaking a thorough review. It considered many options and also developed those put forward by Ove Arup, Rail Europe and the London Borough of Newham, in association with the proponents of those ideas,
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so that fair comparisons could be made with their own southerly route option. It also compared variants to each of the main options.
"British Rail submitted its report to me in early May and a wealth of additional information has followed since. I have placed in the Library a copy of its report and supporting information, which it has made generally available. The Government have taken account of all the relevant considerations, including regional planning, the environmental impact, and the effect on property as well as transport objectives. We have also been very concerned to minimise uncertainty and blight. We have reached the following conclusions.
"The Government expect that as demand for rail services through the Channel Tunnel builds up, a new railway line between the tunnel and London will be needed at some stage. We therefore wish to provide a secure basis on which planning can go ahead.
"We accept British Rail's advice that a second London international terminal will be needed to complement Waterloo. We also agree with British Rail's proposal that it should be at King's Cross. King's Cross would provide excellent connections to many places beyond London, particularly in the Midlands, the North, and Scotland, so that they would gain more of the benefits of the Channel Tunnel. It is also a convenient location for destinations in and around central London.
"Secondly, we have decided that a route on the lines put forward by Ove Arup which approaches central London from the east via Stratford is to be preferred. It would satisfy our transport objectives by providing additional capacity when it is needed. Moreover, it would minimise the impact of the line on the environment and on residential property. British Rail estimates that 38 kilometres will be in tunnel on the easterly route as against 25 kilometres on the southerly route; only two domestic properties would be acquired and none demolished as against 127 acquired and 24 demolished on the southerly route; only five properties would be within 100 metres of the line and 115 within 200 metres against 1,900 and 5,900 respectively on the southern route. The impact on the landscape too would be less, with fewer kilometres of the easterly route in ancient woodland, on the surface in areas of outstanding natural beauty or in green belt. Not surprisingly, therefore, BR's own environmental consultants found when comparing the two routes that the southerly route 'has greater long term impacts on landscape, ecological and cultural resources and greater potential for disturbance to residents from construction and operation'.
"Finally, in preferring a route on the lines put forward by Ove Arup we recognised the substantial potential it offered for development along the east Thames corridor. The new line could serve as an important catalyst for any plans for the regeneration of that corridor that may stem from the study which my right honourable friend the Secretary of State for the Environment announced last week he was commissioning.

957
"The alternative proposal for an easterly route put forward by Rail Europe is less advantageous in a number of respects. It could not be used at all by those international passenger trains which would continue to run to Waterloo. All those services would have to continue to use existing lines, without the prospect of any reduction in journey time. The route is planned to terminate at Stratford, which—although it will become an increasingly important interchange for journeys within London—offers poor connections to the rest of the country.
"In environmental terms too the Rail Europe route is inferior. It impacts more on sites of special scientific interest; it passes through one designated special protection area under the EC directive on wild birds, and through another area that is likely to be so designated; it would affect much more domestic property; and, due to the length of tunnelling involved, more than twice as much spoil would need to be disposed of as from the other routes that were studied.
"All further work will therefore be based on Ove Arup's route. Our decision takes account of British Rail's advice some weeks ago that to develop it to the same stage to which it had taken the southerly route would take about nine months. I have accordingly asked the chairman of British Rail to develop the route to a standard at which I can safeguard it, and to carry out a full environmental assessment. This work will involve publishing plans as a basis for consultation with local authorities, developers, and other interests and the public. The implications for freight will be one of the matters to be considered further. Safeguarding will trigger compensation arrangements, but I have also asked British Rail to consider what voluntary purchase arrangements may be necessary, and when.
"Inevitably the start of construction is still some way ahead, but so is the need for the line. British Rail's own forecasts are that the capacity of the existing network is expected to be sufficient to meet demand until around 2005. It will be possible to take account of the actual demand for rail services through the Channel Tunnel once it opens. Overall, the choice of the eastern route rather than the southern route will not have any material effect on when the new line might come into operation. Suggestions that a decision has been taken not to begin construction before 2000 are incorrect. No such decision has been taken.
"I have also told the chairman of British Rail it is the Government's intention that the rail link should be taken forward by the private sector. As to the precise financial arrangements, this will be for the Government to decide in the circumstances at the time.
"Given our preference for the easterly route I shall shortly make a direction varying the existing safeguarding directions for the route which British Rail had proposed between Cheriton and Upper Halling in the North Downs. The effect of the direction is to exclude from the safeguarded route the section west of Detling, where the Ove Arup
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route diverges from the existing safeguarded line. I have also asked British Rail to withdraw its voluntary purchase schemes for homes in the Warwick Gardens area of Peckham in South London and along the formerly proposed route between Swanley and Detling, and to dispose of the property it has acquired there while minimising damage to the local housing markets. The safeguarding and property purchase scheme at King's Cross will remain in place.
"In summary, our decision means that the line will be built through East London where the prospect is welcomed for the economic regeneration that it will bring. It will involve minimal blight for people's homes, and its environmental and conservation benefits, in comparison with the southern route, have been welcomed by the Council for the Protection of Rural England and other environmental interests.
"It is also a decision which has been welcomed in the North, in the Midlands and in Scotland and will help ensure that the benefits of the Channel Tunnel will be shared throughout Britain. I commend it to the House."
My Lords, that concludes the Statement.
3.59 p.m.
Lord Clinton-Davis: My Lords, the House will be indebted to the Minister for having repeated the Statement which was long and important. I therefore have a number of questions to pose to the Minister, quite apart from the pronunciation of the name "Ove Arup". That is unimportant and I am not sure which is the correct pronunciation.
Is the Minister aware that there is considerable cynicism about the Government's motives? Is it not clear that this decision owes far more to the Government trying, rather forlornly, to save a number of Tory marginal seats than to any clear thinking about environmental and transport criteria? Why has it taken so long for this decision to be made, particularly as regards the environmental consequences? Was it not abundantly plain long ago that these consequences would occur? The Minister has indicated that they are detrimental consequences. Is it not a fact that the Bill was passed in 1987 and that the French will open their link next year whereas ours will have to wait until the year 2005? Is this not truly a case of l'escargot anglais?
Is the Minister aware that in the document Moving Britain into Europe issued by the Labour Party quite a long time ago, we argued the case for the East London, Stratford and King's Cross route? If the Government had followed our advice, much valuable time would have been saved. When is it now anticipated that construction will begin and the first trains will run? All the Statement says is that no decision has been made and that the routes will not open until the year 2005. What is the likely cost of the scheme compared with British Rail's preferred scheme? Will the Government now seek to change Treasury rules which inhibit British Rail from obtaining private funding? Do the Government contemplate repealing Section 42 of the Channel

959
Tunnel Act to enable public funding, either in whole or in part, to be made available to finance the link? Incidentally, that provision was introduced more to satisfy pure ideological humbug than for any other reason.
How do the Government now judge the prospects of attracting private investment as a result of their chaotic approach to the whole situation? Will the Minister now spell out the benefits of what he has outlined as the Government see them, in terms of local communities as well as in terms of environmental advantages? What is to happen to the 1,000 homes that are estimated to have cost British Rail no less than £100 million already? Is compensation to be paid for the blight which has arisen over several years as a result of the mishandling of this situation? How will British Rail, in concert with the Government, go about taking into account the depreciation in prices that has affected so many of the people involved?
What are the details concerning the Stratford link? Will it stop at Stratford or will it continue to King's Cross? Will the Ove Arup route accommodate freight? The Minister was coy about that point. He said he did not know yet whether the route would accommodate freight. Does the Minister not agree that the point is absolutely crucial if the benefits of the link are to be realised? Would it not be wholly absurd if freight had to travel through inner London and then return to Stratford?
How far will the link go? Will it go only to London or, as we have suggested, further north, at least to Rugby? As regards the shape of the Bill, will the Minister inform the House whether it is to be a hybrid, private or public Bill? What will now happen to the King's Cross Railways Bill, which has been subject to record breaking deliberations for a private Bill in another place as a result of the invalidation of many of the points advanced by British Rail?
As regards environmental impact assessment, is the Minister aware that the European Commission is now challenging the transposition by this Government of the directive on environmental impact assessment of 1985? Is the Minister further aware that that could well lead to litigation in the European Court of Justice? What advice are the Government now offering in the light of that development? Would it not be timely—as the Opposition have recommended—for the Government to appoint a commission to make an independent assessment of the road and rail transport corridor infrastructure needs of Britain covering the next two decades with the aim of procuring rapid access to the new Europe and thereby averting in future the chaotic situation and the transport mess which have arisen under this Government?
Lord Tordoff: My Lords, we on these Benches are grateful to the Minister for repeating the Statement. Before I go further, it may be an appropriate moment to say how much I personally am saddened—I am sure this applies to noble Lords on all sides of the House—by the loss of Lord Attlee who would normally have taken part in this discussion today. That loss will be felt when we are discussing this and other transport
960
matters. I must also express my regret at the loss of Lady Burton of Coventry. I am quite sure that the Minister will sleep quietly in his bed at night but I am sure the news of her death will not have pleased him. Her death is a great loss to the House.
We must thank God that the Government have at last made up their mind on this matter. That is the best thing that one can say about the Statement. We have been awaiting the decision for a long time. We understand, of course, that it was not possible to produce the Statement before the Recess as the Government had to wait for the Tory Party conference before issuing it. Nevertheless, we are grateful to receive the Statement today.
As the noble Lord, Lord Clinton-Davis, suggested, there are many unanswered questions. The Minister has said that when Cecil Parkinson announced proposals for a joint venture between British Rail and Eurorail to build a Channel Tunnel link, the proposals were unacceptable. As I remember the position, the proposals were unacceptable partly on the grounds of cost. Perhaps the Government will let us know whether the new route will cost less or more than the original proposals submitted by British Rail and Eurotunnel.
The Statement records that British Rail was asked to complete its studies with the aim of maximising benefits to international passengers and to commuters. I should have thought from the reaction of Sir Bob Reid that the interests of commuters are not best satisfied by this route compared with the original route proposed by British Rail. However, I am open to correction.
The noble Lord, Lord Clinton-Davis, suggested that the purpose of changing the route is to save a few marginal seats in South London and beyond. I have no doubt the Government will refute that suggestion with all the vigour at their command. However, having seen the look of delight on the face of the honourable Member for Chislehurst at the Tory Party conference, I had the feeling that there may have been an element of saving marginal seats in the decision-making process.
According to the Statement, the Government have been concerned to minimise uncertainty and blight. Heaven help us if the Government ever decided not to be interested in minimising uncertainty and blight. There has been more uncertainty and blight over this project than has been the case with almost any other project I can remember. As the noble Lord, Lord Clinton-Davis, rightly pointed out, many people around the Warwick Gardens area—I am not just talking about the immediate hinterland but about the whole area where no compensation was available—have suffered blight for many years at a time when house prices have been falling. One wonders what compensation they will receive.
We are told that the Government expect that a new line will be necessary as demand for rail services through the Channel Tunnel builds up. I should have thought we need that line as soon as possible. The line is of a totally different dimension to anything we now have. I am open to correction but, as I understand it, it is intended to build the line to Berne Gauge, or at

961
least to a gauge that will take Berne Gauge rolling stock right through to King's Cross. It is that aspect as much as any other that necessitates that we act urgently. For several years the French have been building these lines at a great rate of knots, but we are still dragging our feet in spite of the Statement.
Is it intended that the King's Cross project will be constructed on the same scale as was planned in the original scheme? I hope that it is, because it seems to me that otherwise the necessary links to the North and Scotland will not be fully developed. As I have said so often in your Lordships' House, the real virtue of the Channel Tunnel is the ability to shift freight from the North of England and the industrial areas of this country into the markets of Europe. Everything must be done to facilitate that as fast as possible. It has been suggested that there will be a delay until the year 2005. That has been discounted by the Minister, but in slightly equivocal terms. He does not say that it will not Like until 2005. He says:
"Suggestions that a decision has been taken not to begin construction before 2000 are incorrect".
It may be that the decision not to begin construction will be made at a later stage. We should like to know when the decision will be made so that the project can get off the ground very quickly.
Finally, in relation to freight, the Ove Arup route was originally to have two tracks into Stratford and King's Cross. Later, two additional tracks were added for freight. Can we have an assurance that those two extra tracks are included in the proposals which the Government have been discussing?
We welcome the fact that there has been some progress. But, for heaven's sake, let us make it real progress and not drag out this terrible saga for another decade.
Lord Brabazon of Tara: My Lords, I am very grateful for the remarks of the noble Lords, Lord Clinton-Davis and Lord Tordoff. The noble Lord, Lord Clinton-Davis, asked me a record number of questions on the Statement. I shall do my best to answer all of them but if I cannot I shall have to write to the noble Lord in due course.
The noble Lord began his response to the Statement by saying that this route had been chosen purely to save the marginal seats of certain Conservative Members of Parliament rather than for environmental or other reasons. I can only say to the noble Lord, as he would expect, that that is not at all the case. The reasons for choosing this particular route were made very clear in the Statement which I have just repeated.
On the question of timing the noble Lord and the noble Lord, Lord Tordoff, wished that we could proceed a good deal faster. The noble Lord, Lord Clinton-Davis, went on to propose a commission to assess the role of road and rail for the next two decades. I can hardly imagine anything more like a recipe for further delay. We have said that the line should be built when the capacity is needed. Therefore I cannot give a clearer indication than was given in the Statement as to when that might be.
It has taken a considerable time to reach a decision because further options were put forward by British
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Rail, Ove Arup and others, which have been considered carefully. It is the job of the Government to consider all these matters carefully and not to take snap decisions on such important matters. Development benefits have been taken on board which were not covered in all the initial submissions. British Rail will consult with local authorities and interested parties on the sale of the properties, which the noble Lord, Lord Clinton-Davis, mentioned, to ensure that the property market is not depressed by a flood of houses on to the market.
As I said in the Statement, the line will go to King's Cross. It will not stop at Stratford. The noble Lord, Lord Clinton-Davis, asked me to confirm that, and I can do so. That is better for the existing high-speed infrastructure and will spread the benefits of the new line to the Midlands, the North, and Scotland, as was said in the Statement.
Both the noble Lord, Lord Clinton-Davis, and the noble Lord, Lord Tordoff, raised the question of cost and comparisons of the cost of the two routes which I mentioned. The estimated capital cost of the new route and the stations is around £4.5 billion, including the cost of an intermediate station at Stratford amounting to about £250 million. The cost of the southerly route which has been rejected was about £4 billion; so the difference is about half a million pounds.
The noble Lord, Lord Clinton-Davis, referred to Section 42 of the Channel Tunnel Act. We have consistently said that we have no plans to amend Section 42 of the Act, which prohibits government subsidy for international services. However, we continue to be prepared to consider subsidy for any non-user benefits such as the relief of road congestion arising from the use of the Channel Tunnel rail link by commuter services.
The noble Lord, Lord Clinton-Davis, and the noble Lord, Lord Tordoff, mentioned freight, which is very important. We have endorsed a two-track passenger line. Ove Arup has said that its route will allow continental-gauge traffic to be carried as well as passenger traffic. That will have to be examined as part of the further work which needs to be done. The question of a further network of continental-gauge traffic depends on what conclusions are drawn about using the Channel Tunnel line to London for freight and what the private sector judges to be the commercial viability of investing in such lines. I can confirm to the noble Lord, Lord Tordoff, that the passenger line proposed will be of the continental gauge.
So far as concerns the future timetable and the statutory processes, to which the noble Lord, Lord Clinton-Davis, referred, there is much to be done before we reach that stage. British Rail's immediate task is to develop the route to the point at which it can be safeguarded and British Rail and the Government must first concentrate on that issue. We have taken no decision on what type of Bill may be necessary. The promoter will no doubt have views on how the necessary powers should be obtained.
Both noble Lords referred to the future of the King's Cross Railways Bill. It is for Parliament to

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decide whether the provisions in the Bill are the right ones. I hope that the removal of uncertainty over the route of the new line and the location of its terminus will enable Parliament to consider the issues raised by the Bill so that the Bill can proceed more rapidly.
The new route will be capable, as was the southerly route, of taking up to 12 express commuter services an hour in the peak period. It will benefit commuters in Ashford and East Kent, along the North Kent line and in the Medway towns. Journey times to King's Cross could be about 36 minutes from Ashford and 21 minutes from a Medway Parkway station. Journey times to Stratford will be about six minutes less. Some trains from the Southend and Tilbury line may also be able to use the line at its London end.
The noble Lord, Lord Tordoff, expressed regret that Lord Attlee and Lady Burton of Coventry, were no longer with us to take part in this debate. I very much endorse what he said.
I have no doubt that I shall have to follow up some of the questions with letters but I hope that I have answered at least some of the questions put by the noble Lords.
4.18 p.m.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that there will be great relief in many areas, particularly in Kent and among people concerned with preserving the amenity of the countryside, that the southern route has now been abandoned? That is the essence of the Statement. It is certainly the aspect of the Statement which public opinion outside will be most interested in and most gratified by.
Is my noble friend aware that many of us feel that it will be impossible to assess what, if any, additional capacity is required until the tunnel is open and operating? There are more views than one as to the amount of traffic—freight and passenger—which the tunnel will attract. It surely is sensible to wait and to see how many people use the tunnel, either as passengers or for freight, before deciding to indulge in the construction of additional capacity in this country in order to serve it.
Is my noble friend aware that, in all the assessments that have been made, it is accepted that the greater part of freight movement in and out of this country will continue to be by sea and that one is therefore concerned in respect to the tunnel with only a minority, although perhaps a significant minority, of the traffic? Is he also aware that, as regards passenger traffic, it is possible to give too much importance to the speed of passenger movement inasmuch as there are excellent air services between Europe and this country which can be and will continue to be used by all those people to whom time is vital? Will he therefore suggest to his right honourable friend that a certain caution in moving towards further decisions involving large expenditure should certainly be observed at least until we see how many people want to use the tunnel?
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for his remarks. He is right in saying
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that the abandonment of the southern route will be much welcomed, particularly by those in Kent and South London. As I said in the Statement, the number of properties and people affected by the new easterly route is far fewer than would have been affected by the southerly route. That is important.
As I also said in the Statement—I endorse what my noble friend said—it will be possible and necessary to take account of the demand for rail services through the Channel Tunnel once it opens before we decide when the new route needs to be constructed. My noble friend is right to say that a considerable volume of freight will continue to move by sea to this country, but we have great hopes of transferring a great deal of freight from the roads on to rail when the Channel Tunnel is opened, without necessarily having the impact of a new link straightaway which will help environmentally. My noble friend is also right that air services will continue to offer a speedy alternative to rail travel—a point which I, in my present capacity, endorse.
Lord Howie of Troon: My Lords, is it not a little surprising that this announcement was made in a northern resort and not in the Parliament of Westminster where we would have expected it to be made, at least in the old days when I was involved in these matters? However, I shall let that pass because I dare say that things have changed.
I ask the Minister this question: is this not a decision not to take a decision? Is not the BR route available and fully worked out, or almost fully worked out, whereas the Ove Arup route is not? The House knows that I am an engineer and that I yield to no one in my admiration for Ove Arup, but its route is not fully worked out, as the Minister and the profession know, whereas the British Rail route is. Does the Minister agree that the decision to make a fast link between the tunnel terminus and London has been put off until about 2005, or thereabouts?
Perhaps I may say something which I think will hearten the Minister. Does he agree that it would be wrong to adopt the proposition of my noble friend on the Front Bench, Lord Clinton-Davis, to set up a commission? It is far too late for that. The decision should have been taken 10 or 15 years ago and there is no point in putting it off any further. Does the Minister also agree that the latest decision, or decision not to decide, has quite properly made us a laughing stock in France and on the rest of the Continent? Recently I asked a very old friend of mine—the French wife of a British consulting engineer not involved in either Ove Arup or British Rail—whether she would go to the Gare du Nord or the Gare Saint Lazare and buy a ticket to Stratford. She fell off her chair laughing.
Lord Brabazon of Tara: My Lords, I agree with the noble Lord, Lord Howie of Troon, that, as I have already said, the proposal to have another commission on this subject would be a waste of time, but I must disagree with the statement that this was a decision not to decide. This is a firm decision on a particular route.

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The noble Lord said that it would take even longer to get this route through as all the work had already been done by British Rail on its southerly route. The development of the southerly route was more advanced. British Rail estimated that it would take nine months to bring the easterly route—the route that have described today—up to the same stage of development, so that is not a great difference in time when we are talking about something that will probably not be built for a number of years. Nine months is all that it will take to get the new route up to the same state that exists for the southerly route.
Lard Mackay of Ardbrecknish: My Lords, does my noble friend the Minister realise that this Statement will be widely welcomed in the North of England and in Scotland—a fate, it must be said, not common with Government statements of policy? Those of us in the North look to the Channel Tunnel as a means of obtaining quick and easy access for our freight into European markets so to have the terminal in King's Cross looks to us to be eminently sensible and welcome.
While on the general subject of freight movement from Scotland to the Channel Tunnel, will my noble friend urge on British Rail that it should make a speedy decision on where it intends to site the freight terminal in Scotland to line up with the Channel Tunnel?
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend for his remarks. He is correct to say that the decision will be widely welcomed in the North of England and in Scotland. The fact that the London terminal is to be at King's Cross—and it would have been with either the British Rail southerly route or this route, but not with the other ones that I have mentioned—will mean that it has good connections with services to Scotland and the North.
As regards the provision of the freight terminal in Scotland, I shall certainly pass on my noble friend's anxieties about that. I understand that British Rail has chosen seven out of the nine freight terminals elsewhere in the country and that there is to be one in Scotland, the exact location of which is to be announced shortly.
Lord Thomson of Monifieth: My Lords, will the Minister help public opinion by making available to the general public all the material and information about the merits and demerits of the Ove Arup and Rail Europe scheme? While we wait for 2005, or thereabouts, will he provide British Rail with the resources to get ahead with the international station at Ashford rather than putting up with the pitiful substitute of a lot of Portakabins?
Lord Brabazon of Tara: My Lords, as I said in the Statement, all information which can be provided will be made available to the general public, including the rather bulky report of the British Railways Board, which has now been placed in the Library.
As regards Ashford station, that is not affected by the Statement that I have repeated today. It is a separate issue. We are still considering British Rail's proposals, but they are very expensive. Meanwhile,
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British Rail is examining a suggestion by Eurotunnel for a station that might be brought into use by mid-1993 as a temporary measure.
Lord Sefton of Garston: My Lords, the Minister referred three times to Scotland, the Midlands and the North. When people refer to the North, I am never certain just how much of the North they are referring to. He also said that an impetus would be given to development and investment on the east coast, particularly east of London. I should like to ask him a simple question: when dealing with those matters, did the Government consider the effect on North Wales and the North West and, if they did, will they publish their comments and their estimates of the retrograde effect that the decision will have on those two areas?
Lord Brabazon of Tara: My Lords, obviously when I referred to the North I included the North-West with which the noble Lord, Lord Sefton of Garston, is concerned. I have no doubt that the development of the Channel Tunnel will bring benefits to all areas of the country including the North West. A moment or two ago I referred to the proposals for a freight terminal in Scotland, about which my noble friend asked. As he will be aware, a terminal in Merseyside is to be announced soon. A terminal in Trafford Park has already been announced. The North-West will benefit from those developments.
The development east of London must go ahead whether or not it affects development in North Wales and the North-West. The need is a clearly identified one. That is why the local authorities in Stratford have so much welcomed the proposals for development in that area.
Lord Sefton of Garston: My Lords, I asked about the possibility of impetus being given to development and investment in the east and whether or not the Government had considered the effect of that upon the two areas I mentioned of North Wales, including Holyhead, and the North-West; in particular, the west coast.
Lord Brabazon of Tara: My Lords, the Statement I made referred only to development in East London around the Stratford area in which one of the terminals is to be located.
Earl Lloyd-George of Dwyfor: My Lords, perhaps I may try to persuade the noble Lord to follow the compass round a little further to the west. The North, Scotland and the Midlands have given this route their support. However, the South Wales industrial belt has an enormous potential for Europe and yet there is no mention of any support being given to that area. Furthermore, the Brunel line to the west has all the in-built advantages of the old broad gauge which makes it the easiest line in Britain to convert to the continental loading gauge. Will the Government bear that in mind and give some encouragement to the South Wales industries?
Lord Brabazon of Tara: My Lords, British Rail has announced its proposals for a freight terminal in Cardiff which I hope will do something for the

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industrial base of South Wales. The problem, as the noble Lord may be aware, is that there is no proposal for a route going to anywhere other than King's Cross or Stratford; the choice is simply not there.
Lord Morris: My Lords, was any advice received by British Rail—not least by government—as to the wisdom of buying up residential or commercial property along its preferred route before a definitive decision was taken as to what the route would be? Bearing that in mind, will my noble friend assure the House—it is very important—that the taxpayers, either directly or indirectly, will not have to pay for any loss which may accrue from this unfortunate decision?
Lord Brabazon of Tara: My Lords, my noble friend makes an important point. The question of blight and the point at which one should or should not start buying property is always a difficult one. I am afraid that without notice I cannot give my noble friend the assurance he seeks.
Lord Greenway: My Lords, does not the noble Lord agree that Section 42 of the Channel Tunnel Act was originally written into that legislation at the behest of the ferry companies who were worried about unfair competition? If that is so, does not the Minister agree that the Statement he repeated this afternoon that the Government have no intention of repealing Section 42 will be very much welcomed by the ferry interests?
Lord Brabazon of Tara: My Lords, the noble Lord is quite right. Having taken the Channel Tunnel Bill through the House five years ago I can confirm that that was indeed the reason. It was certainly not a matter of dogma, as described by the noble Lord, Lord Clinton-Davis.
Lord Ezra: My Lords, I should like to revert to the concern already expressed about the length of time taken to reach this decision and the costs incurred in the process. It is very similar to the situation I experienced in regard to the Vale of Belvoir when I was chairman of the National Coal Board. We found coal there and spent a long time working out how we could mine it. We bought up a lot of land in the area but after a year-and-a-half the Secretary of State for the Environment (who happened to be the same as the present incumbent) turned the proposal down because he did not consider the Vale of Belvoir to be a suitable place for the mining of coal. That strategic decision could have been reached right at the start and saved considerable costs.
Why could not a similar strategic decision have been reached about the route to be taken by the high-speed line and saved British Rail from all the costs incurred, including buying all the houses which they will now have to unload, presumably at a considerable loss?
Lord Brabazon of Tara: My Lords, the noble Lord, Lord Ezra, does not make a valid comparison. He is comparing the question whether a particular coalfield should or should not be developed with the present
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more difficult question on the choice of routes proposed. The point is that it takes time to decide on the best route. It is not a question of whether or not the route should be developed but which route should be chosen.
Lord Teviot: My Lords, perhaps the noble Lord should be aware that my family motto is "sero sed serio"—late but in earnest. Does he agree that one is very happy with the present route because it will cause the minimum of disruption, that it will provide absolutely the right employment in the right areas and will be very successful? If it takes a year or two to come about but is the right decision it does not matter.
Lord Brabazon of Tara: My Lords, I am grateful to my noble friend. I do not agree that the decision is late but I agree that it is in earnest.
Lord Desai: My Lords, it has been said that we are going to wait until current capacity is used up before we undertake any new construction. I should like to urge that that is exactly the wrong thing to do on such an important matter. This is the sort of high technology challenge where we must anticipate future demand. To wait until the demand arrives will cause further delays and once again we will have missed a good opportunity to advance towards the new Europe, which we badly need to do.
Lord Brabazon of Tara: My Lords, I am afraid I cannot agree with the noble Lord. As my noble friend Lord Boyd-Carpenter said, it is important to see what is the likely demand from the opening of the Channel Tunnel before somebody commits large sums of money to a new route.
Lord Clinton-Davis: My Lords, perhaps I may say to the Minister straight away that the purpose of introducing the question of a commission was certainly not to defer this project. There are other major infrastructure projects which need to be undertaken and we cannot risk this sort of pusillanimity in the future.
Does the Minister agree that there is a need for a major debate in this House on this issue at the earliest opportunity? Very important issues have been raised and need to be pursued further.
Lord Brabazon of Tara: My Lords, I can but give the usual answer to that question. It is a matter for the usual channels.

Export and Investment Guarantees Bill
4.38 p.m.
Consideration of amendments on Report resumed on Clause 9.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 6:
Page 6, line 17, at end insert:
("( ) No person shall be seconded to the employment of a transferee unless—

(a) he has previously consented in writing to such a secondment; and

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(b) he has received a written undertaking from the Secretary of State that suitable employment will be offered to him in the service of the Crown on the termination of that secondment; and

(c) he has received a written undertaking from that transferee that any permanent employment subsequently offered to him by the transferee will be on no less favourable terms than those applying to equivalent permanent employees of that transferee.").

The noble Lord said: My Lords, I beg to move Amendment No. 6 standing in my name and that of my noble friend Lord Williams of Elvel.
The NCM is very reluctant to state exact figures but has indicated its intention to set up the new company with 590 permanent staff.
I understand that that number will include some 200 secondees drawn from the clerical trades—the Minister can, if necessary, put me right on the figures later—and that the purpose in seconding staff is to allow flexibility: to reduce the complement as new working practices are introduced and if the new company's insuring of United Kingdom domestic business is not as successful as NCM expects.
Secondment, as it comes within the NCM offer, is not a very good option for the staff of the ECGD. At the outset, they will be given no idea of the period for which they will be seconded. My understanding is that that could be anything from six months to three years. Absolutely no guarantee is provided that posts will be available for them once the company decides to return them to the Civil Service, particularly in view of the progressive reduction in staffing in most government departments. Should they be offered permanent posts in the new company during their period of secondment, those posts will be offered on less favourable terms than those which apply to staff occupying permanent new company posts from the outset.
As I understand it, the ECGD management is presently analysing the results of an exercise in which staffin Cardiff and regional offices were asked to opt to join the new company or remain in the Civil Service. They were asked to indicate whether they were prepared to join the company as secondees. I believe the Minister said that 590 staff had volunteered. The amendment seeks to ensure that no ECGD staff will be forced to accept secondment, that suitable Civil Service posts will be found for returning secondees and that any new company posts offered to secondees will be on the same terms as those offered to the original permanent staff.
I look forward to hearing the Minister deal with the specific points that I have raised. In those terms I beg to move the amendment.
Lord Fraser of Carmyllie: My Lords, I must immediately make sure that we have our figures right and that I understand what the noble Lord seeks to ascertain from me. I should indicate that it is anticipated that the number of staff required by NCM would be around 600 initially. As the noble Lord subsequently appreciated, the figure of 590, which I intenvened to give, is the number of existing ECGD staff who have volunteered to transfer to the new company. It is unlikely that there will be secondments
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on any scale because that figure of 590 does not include secondments; it represents volunteers for permanent transfer.
If secondees were needed, preference would be given to those who had already expressed an interest. However, we cannot rule out entirely that some non-volunteers might be needed to go on secondment to the new company. They would remain civil servants attached to ECGD and in due course would return to that department. If the return of secondees generated a surplus of people in ECGD, then ECGD would do its best to find jobs for them in other departments, if possible near their homes, but no guarantees can be given.
It would be wrong to give any section of ECGD's staff preference for jobs over the rest, as the second part of the amendment suggests for secondees. All should be considered equally, whether or not they have been on secondment. If the new company wishes to offer a permanent job to anyone on secondment, the terms and conditions of employment would be a matter for discussion and agreement between them at the time. There could be no compulsion on the secondee—who, as I said, would be a serving civil servant at the time—to accept what is offered by the private company if he or she were to consider that what was on offer was not satisfactory.
In those circumstances and with that explanation, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Clinton-Davis: My Lords, I have listened with care to the Minister. However, I shall need to study further what he said. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.45 p.m.
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 7:
Page 6, line 17, at end insert:
("(3) No person shall cease to be employed in the service of the Crown and become employed by a transferee unless he has previously consented in writing so to do.
The noble Lord said: My Lords, this amendment stands in my name and that of my noble friend Lord Williams of Elvel. It may be for the convenience of the House if we deal with Amendment No. 8 at the same time.
Subsection (3) seeks to ensure that there is no question of compulsion so far as concerns ECGD staff in terms of being required to transfer to the new company. It is very specific in its terms. The purpose of subsection (4) is to prevent the management of ECGD from invoking what is known as the mobility clause, under which a civil servant of executive grade or above may be obliged either to transfer to a government department in any United Kingdom location if management deems that to be right, or be deemed to have resigned from the Civil Service.
In view of the fact that a number of ECGD staff in Cardiff—perhaps this situation may also apply to regional offices—have evidently opted to remain in the Civil Service rather than transfer to the new company, ECGD can be expected to need to place surplus staff in other government departments or force

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transfers to the residual ECGD based in Cardiff or in London. The difficulty experienced in placing surplus staff following the regional office review in 1989 indicates that suitable vacancies are not readily available in those locations. The situation is likely to be better in Cardiff where the surplus is expected to be greater. Four regional office staff are still unplaced following that review and in one case the mobility clause has been invoked.
I hope that the Minister will view these amendments with sympathy. I beg to move.
Lord Fraser of Carmyllie: My Lords, it has been and remains the intention of ECGD and the preferred purchaser NCM that the new company should be staffed by volunteers from ECGD staff so far as possible. To that end undertakings have been given to ECGD staff that their own preferences will be taken into account and honoured wherever possible, having regard to the business needs of ECGD and the new company. Now that staff have expressed their final preferences, it appears likely that, broadly speaking, the new company will be staffed by volunteers. However, I have to say that until all the responses have been analysed and matched against the jobs to be filled, we cannot be certain that in every area we shall be able to exclude the possibility that one or two non-volunteers may be needed. Again I stress that both organisations will seek to avoid that.
To pass the amendments would impose a requirement which might prevent the new company from operating efficiently. As for the requirement in Amendment No. 8 that anyone who has refused to volunteer must be found another Civil Service job near his home, here too ECGD will try to achieve that wherever possible but we cannot be certain that it can be done in every case. It remains to be seen whether there will be a surplus of people not needed by the new company or by ECGD. If there is one, ECGD will approach other departments in search of vacancies for everyone concerned. However, if they cannot be found locally, people in mobile grades may be asked to move to where jobs are available. The amendment also appears to seek preference for those who had refused to volunteer over those, if any, who might have done so but could not be found a post in the new company or in ECGD. That would clearly be inequitable. On that basis I invite the noble Lord to withdraw his two amendments.
Lord Clinton-Davis: My Lords, again I listened carefully to what the Minister said but I express some concern about his ambivalence (albeit, as he said, there is perhaps a small number of cases) that the possibilities which I envisaged in my earlier remarks may not be avoided. That will give rise to a great deal of concern on the part of the staff. The Minister considers that limited numbers will be involved. Nonetheless each individual case has to be viewed with concern against that background.
I find it difficult to appreciate the arguments as to why the Minister has been unable to accept these amendments. I cannot accept the argument that the
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amendments would make it difficult for the company to subsist and would impose a blight upon it. That argument does not bear up to any examination.
I understand that the employees have received legal advice to the effect that under the TUPE regulations any staff occupying ISG posts at the time of transfer will automatically become new company staff. I should have asked the Minister about that matter and would be happy to give way to enable him to answer now. The issue is highly relevant.
Lord Fraser of Carmyllie: My Lords, I believe that matter arises more happily in relation to Amendment No. 9 which deals specifically with TUPE.
Lord Clinton-Davis: My Lords, very well. I shall consider with my noble friend what the Minister has said in order to determine whether to return to the matter at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
Lord Clinton-Davis Lord Clinton-Davis moved Amendment No. 9:
Page 6, line 17, at end insert:
("( ) Where, by reason of the operation of the Transfer of Undertakings (Protection of Employment) Regulations 1981 in relation to a transfer of property, rights and liabilities by virtue of a scheme under section 8 of this Act, any selection is made of persons to cease to be employed in the service of the Crown and become employed by a transferee such selection shall only be made in consultation with the accredited representatives of the employees' trades unions.").
The noble Lord said: My Lords, I understand that preference questionnaires were sent to members of staff at Cardiff and the regional offices. They were asked to exercise the option of joining the new company or staying in the Civil Service. The questionnaires were required to be returned by staff on 4th October and are now being analysed by the management. The Minister has already given a flavour of the results of the questionnaires.
NCM has said that the initial requirement of the company is for approximately 400 permanent staff and an additional 200 secondees. However, approximately 590 people have volunteered of whom 500 are permanent staff. Therefore, a selection must be made from the people who have volunteered to join the company as permanent staff. I understand that the management of the ECGD has not made reasonable arrangements for the trades unions to be consulted about the selection. If I am wrong I shall be happy to withdraw the remark because we are not in a position to know the exact up-to-date situation as regards the consultations. I understand that in that regard no consultation has taken place. However, it is for the Minister to inform the House of the current position.
I believe that some level of consultation is wholly appropriate and I should be surprised if the Minister were to demur from that. The trades unions wish to ensure that the consultations on this matter will be early and full. Perhaps at this stage the Minister will take on board the question that I asked in an earlier debate. I beg to move.
Lord Fraser of Carmyllie: My Lords, in an earlier debate the noble Lord raised the question of

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entitlement under TUPE. I can advise him that staff in post immediately before the transfer can argue legally that they are transferred under TUPE to the new company. However, that is likely to arise only if the person concerned has volunteered and has not been taken.
The noble Lord asked about the requirement for permanent staff and appreciated that the figure used was 400. That figure is currently under review by NCM in the light of the 590 volunteers and other developments.
I turn to Amendment No. 9. The noble Lord will appreciate that TUPE places certain obligations on the transferor—in this case the Secretary of State—which will be discharged in this area by ECGD. ECGD staff have now returned their final preference forms and the process of the selection of staff for transfer on vesting day to the new company can begin. The preferences are being analysed and the next stage will be to determine the method of selection of staff to take account of those preferences. I assure the noble Lord 'bat ECGD's trades union side will be consulted about those methods. ECGD is expected to contact the trades unions about the matter in the near future. I am pleased to give the noble Lord that assurance and hope that on that basis he will withdraw his amendment.
Lord Clinton-Davis: My Lords, I am grateful for that assurance as I am sure will be members of the staff. I hope that the consultations will prove to be reasonable and full. In those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Vehicle companies]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 10:
Page 6, line 38, leave out paragraph (d).
The noble Lord said: My Lords, this is a probing amendment which we moved and discussed in Committee. I shall return to the question of whether the bidding for ISG should be re-opened. I do not wish to address that matter in relation to this amendment. Nevertheless, there arises the question of the terms and conditions under which the transferee will acquire the future operations of ISG. As drafted, the Bill will allow the Government to offer a facility to NCM if at the end of the day NCM is the chosen acquirer. It will be in 1he form of a loan, the conditions, term, maturity and interest rate of which we know not. Under the terms of the Bill as drafted it will be possible for the new organisation that is to be acquired by NCM—if NCM is to be the acquirer—to be sweetened by the Government, if I may use that rather indelicate expression.
During the Committee stage in this Chamber the Government left the matter to be considered at the end of the day by the National Audit Office after the sale is complete. I am not sure that that is right. A study carried out by the National Audit Office at that time—even if it acquitted the Government of any impropriety in the matter, as I am sure that it would—would be far too late to ensure that proper value for
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the business had been obtained. The whole question revolves around the terms and conditions of the sale of the new company which is to be privatised.
I should be grateful to the Minister if he would give the House an indication of the kind of terms and conditions and the price for which the Government will be looking from NCM, assuming that NCM is the only chosen bidder. I beg to move.
5 p.m.
Lord Fraser of Carmyllie: My Lords, this amendment seeks to remove the power of the Secretary of State to finance by way of loans the companies to be privatised.
The inclusion of this provision follows, as I am sure the noble Lord is well aware, the precedent which was set in earlier privatisation legislation. It is premature to speculate whether this provision should be used as that will depend on the terms of the sale contract which has yet to be finalised.
The noble Lord has sought to discover from me exactly what are the terms of the negotiations currently taking place. He will appreciate that those matters are still being discussed with the preferred purchaser. Therefore, it would be inappropriate for me to reveal any of the detail of that as the negotiations continue.
The precise arrangement for capitalising the insurance company has yet to be settled; for example, one option may be for the Government to capitalise the insurance company by way of loan rather than by a direct cash injection.
Lord Williams of Elvel: My Lords, I apologise for interrupting and I do not wish to abuse Report procedures. However, is the noble and learned Lord seriously considering a cash injection into the business before sale?
Lord Fraser of Carmyllie: My Lords, I was indicating to the noble Lord one of a number of options. I said that one option may be for the Government to capitalise the insurance company by way of loan rather than by a direct cash injection. That is another option.
Well established parliamentary controls on expenditure exist to check the use of spending or lending money by a government Minister. Any anxieties as regards whether the Secretary of State has acted wisely or correctly in making use of Clause 10(2) should be dealt with by those means.
The noble Lord was deeply suspicious before we rose for the Summer Recess and, in spite of the break, he remains as suspicious as he was at that time. Quite apart from those well established parliamentary controls on expenditure, he will appreciate also that the sale must be cleared with the State Aids Directorate in Brussels and any anxiety which he has that the provision may be used to convey hidden sweeteners is unfounded. The Government are seeking a fair market price for the business as a going concern. That is being achieved by competitive tender and proper commercial negotiations.

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In Committee I gave an assurance that there is no question of a sweetener being given in this case and I take the opportunity to repeat that assurance.
I revert briefly to the noble Lord's anxiety that a direct cash injection may be an appropriate option. The company must exist as a properly capitalised insurance company before privatisation, but if it is to be transferred to NCM—if one takes that to be the preferred purchaser—it will have to pay back the capital which has been injected.
Lord Williams of Elvel: My Lords, I am grateful to the noble and learned Lord. He is right about one point; namely, that I left this House for the long Recess deeply suspicious of the Government's motives and after that long Recess I return still deeply suspicious of the Government's intentions.
As regards Brussels, although the formalities will require it, I cannot see that the Commission will have any say in the sale of ISG. I do not believe that Brussels would intervene if there were any sweeteners as happened, for example, in the Rover case. I mention the Rover case for reasons which the noble and learned Lord knows well. We are deeply suspicious about how the Government wish to privatise organisations which they wish to sell to their preferred bidder.
That leads me to the second point mentioned by the noble and learned Lord. I believe he said that the sale would be made by competitive tender. As I understand it—and we shall come to this matter later—there has been no competitive tender. There is one preferred bidder. The one preferred bidder has been in negotiations with the Department of Trade and Industry and the trade unions. I understand that it has been extremely sensible and accommodating as regards trade union involvement. There is no question of competitive bidding at this stage although there may well be in the future. That is a point to which I shall return.
On the capitalisation of ISG in its future incarnation, the making of loans to the future company does not affect the capitalisation of the company: it merely imposes an obligation on the company to repay those loans. That is what the Government did, for example, in the case of British Gas. I agree that there are precedents. However, that does not increase the equity capitalisation of the business; it merely imposes an obligation on the business to repay. In the case of British Gas, there was a sale price. The Government deemed that that sale price did not give enough money to the Treasury—possibly quite rightly, I know not—and they loaded British Gas with debentures which had to be repaid and which were repaid, thereby increasing the return to the Treasury.
If that is what the Government are going to do in this case, why do they not say so honestly? If the Government are proposing to sell ISG as a fully capitalised operation with a debt-free balance sheet which would allow the new ISG, under whatever control, to gear itself up, why do they not allow my amendment and say that they will not use this
976
provision to extract more money from the privatisation? Why do they not say that they wish this to be a successful, fully operational business, properly capitalised with equity?
I have serious doubts about the intentions not of the noble and learned Lord but of the Government. We are now in another situation in which the Government may well say, "Well, we got £20 million for the business because that was the price. However, we loaded it with £30 million of debt which must be paid back so the return to the Treasury is £50 million". The result is a cash flow deficit for the new company, which will disadvantage British exporters.
I recognise that this is a technical, financial argument. However, I hope that the noble and learned Lord understands that I am arguing this point seriously. This is a probing amendment which I do not wish to press to a Division. If the noble and learned Lord will seek the leave of the House to respond to what I have said, I should be most grateful.
Lord Fraser of Carmyllie: My Lords, I do not wish to add to what I said. I understand well what the noble Lord says as regards the approach which may be taken by way of a loan rather than a direct cash injection. I sought to emphasise that at this stage I shall not indicate which route may be followed. However, it seems to me appropriate that, as has been done in the past in privatisation legislation, the options should be left available to those who must take the decision.
Lord Williams of Elvel: My Lords, we have now clarified one point; that is, that the Government do not have a serious intention to sell ISG properly capitalised with equity and therefore they open the doors to loading ISG with debt. Having established that fact I understand where they stand. It is wrong. It is disadvantageous to British exporters. However, if that is what the Government want, no doubt that is what they will receive. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 11:
Page 7, line 12, at end insert:
("( ) Any property, rights or liabilities transferred by virtue of a scheme under section 8 of this Act shall be retained by the transferee for a period of not less than five years from the date of transfer unless the Secretary of State has given his written consent for a subsequent transfer to be effected.").
The noble Lord said: My Lords, Amendment No. 11, which stands in my name and that of my noble friend Lord Clinton-Davis, seeks to investigate certain aspects of what has become known as the "invitation to tender" document. As I understand it, that document, although I have not officially received a copy, precludes the subsequent sale of ISG within three years without reference to the Secretary of State. However, after that three-year period there would be nothing to prevent the purchaser—which the Government insist will be NCM—from selling the privatised ISG to a non-European Community buyer. If I am wrong, no doubt the noble and learned Lord will correct me. Not only may it be a non-European

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Community buyer; it may be an enterprise without experience in the field of export credit insurance. That gives rise to insecurity for exporters.
Thy: amendment seeks to delay any subsequent sale, under the conditions I spelt out, for an additional two years. I should like to know whether the Government consider it fair and proper that the future of short-term insurance for UK exporters should be left to the motivation of a private sector insurer.
The Government will do well to consider my amendment on the grounds, first, that there is no security to guard against anyone of any description after three years buying the business. Secondly, the future of export credit of a short-term nature is not properly ensured. It is an important amendment.
We have not seen the "invitation to tender" document. I suppose we never shall see it. When it came to your Lordships' House we asked for all kinds of details in regard to the articles of association and so on. We did not receive them. I hope that the Government will be able to give us the reassurance we need in order to ensure that the interests of UK exporters in short-term insurance will be protected and will not be sold off after three years. I beg to move.
Lo rd Fraser of Carmyllie: My Lords, the purpose of this privatisation is to convey the business of insurance services into the environment where it can best flourish and respond to the needs of its customers in the context of the single market. Given that purpose, perhaps I can say, reverting to our last brief debate, that the noble Lord referred somewhat pejoratively to the idea that the Government may wish to put the company into the private sector "loaded with debt". I want to make clear that the loan to which I referred was one of a number of possible mechanisms to provide the capital of the company. If it were to be adopted, the repayment of the loan would take place at the time of the purchase by the preferred purchaser, if that were the one to be concluded.
The environment is the private sector. It is the requirement of that environment that businesses should respond dynamically and commercially to the ever-changing demands of the market place. As we have discussed before, the market for credit insurance is already highly competitive and will become more so as it becomes increasingly international.
Against that background, it would not be appropriate to launch insurance services into the private sector with its hands tied. And yet the effect of the proposed amendment would be to require the company's management, over a period of five years and through the company's new owner, to obtain the Secretary of State's written permission each and every time i t wished to take action to dispose of any of the property, rights or liabilities transferred to the company on privatisation. That would slow down the business process, introduce delay and uncertainty into the planning process and create an unnecessary further layer of bureaucracy within government.
Lord Williams of Elvel: My Lords, I apologise to the noble and learned Lord for intervening. Can he say to what property, rights or liabilities he is referring?
Lord Fraser of Carmyllie: My Lords, the ones to which the noble Lord refers in his amendment. The amendment states:
"Any property, rights or liabilities transferred by virtue of a scheme under section 8 of this Act shall be retained by the transferee for a period of not less than five years from the date of transfer unless the Secretary of State has given his written consent for a subsequent transfer to be effected."
I was simply taking up the language introduced by the noble Lord in his amendment. That is not my approach. I hope that I have clarified the matter.
Before the intervention, I was asking what was the intended purpose. Is it likely that the Secretary of State will be in a better position to judge the commercial requirements of the situation than the company's management and its owners? Even, therefore, if there were any justification for the amendment, it is almost certain that it would be ineffective. It would be tantamount to privatisation of ownership while leaving control in the public sector. That would clearly be unacceptable and the business could not be realistically sold on such a basis.
Lord Ezra: My Lords, perhaps the noble and learned Lord will clarify one point arising out of the remarks made by the noble Lord, Lord Williams. Is there a condition laid down in the invitation to tender that the purchaser shall retain the business for three years? If so, are we arguing about the difference between three and five years?
Lord Fraser of Carmyllie: My Lords, I shall come to that matter because it is a point I wish to elaborate.
On the other hand, the proposed amendment may reflect a fear that the business might be sold to an entity which was solely interested in asset stripping for a short-term profit. However, within the sale process the Government have gone to great pains to avoid such a scenario. There has been extensive and fair competition among interested trade purchasers and consortia. The Government's selection of preferred purchaser has taken into account such important factors as understanding of, and commitment to, the business, including its existing customer base, as well as the price. NCM, the preferred purchaser, is one of the largest and most experienced private credit insurers in the world. It is a specialist institution and plainly committed to the business. Its selection as preferred purchaser was greeted by the British Exporters Association as "excellent". Its stated intention to develop the business from its existing base is clear and assurances have been obtained in that regard.
As I have already indicated, the great majority of the staff working in the Insurance Services Group have indicated their willingness to join the new company on an entirely voluntary basis. It was either the noble Lord or his noble friend who indicated that there has been some appreciation of the open and constructive stance that has been adopted by NCM. If it has not persuaded him, it is clear that a very significant proportion of the staff are prepared to volunteer to transfer to this company. It seems unlikely that they would adopt such a course if they

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were truly anxious that all that the firm was likely to engage in was the process of unacceptable asset stripping.
I now come to the point raised by the noble Lord, Lord Ezra. In the sale negotiations it is the Government's intention to ensure that the buyer may not dispose of his interest in the business within a period of three years without the prior written permission of the Secretary of State. In the view of the Government that is likely to prove a much more effective and workable safeguard than the approach envisaged by the proposed amendment. It is one that can be negotiated without a detrimental impact on the sale itself.
Lord Williams of Elvel: My Lords, I am most grateful to the noble and learned Lord for what he has said. I have three points to make. First, I referred to the property rights and liabilities. In the process of privatisation these are transferred, first, to the transferee company, and then they are sold on to the bidder. Therefore, we have to use the expression shown in the amendment. There is a second stage when the new owner of the business might be able to sell all kinds of things which we have tried to describe. That is why I pulled up the noble and learned Lord. Some of these things may not be shares.
Secondly, I understand that the Government are committed to NCM as the preferred bidder. I do not want to make any pejorative remarks whatever about that company. The noble and learned Lord is right in that NCM has been very open with the trades unions in the negotiations to date. However, to describe it as a competitive tender simply because the Secretary of State designates one firm, does not seem to justify allowing that designated bidder to sell off whatever portion of the business he likes after three years.
Thirdly, I do not wish to get into a wrangle with the noble and learned Lord the Lord Advocate on the question of whether the bidding should be reopened. I shall return to this matter as regards Amendment No. 17 which seems to be the appropriate place to do so. Nevertheless, I accept that the noble and learned Lord has taken a position on behalf of the Government. As he well knows, there is a difference of philosophy between us on this matter and a difference of political ideology. I accept that he had a convincing majority earlier, thanks to his Whips. Therefore, if that is what the Government want, then that is what they will get. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
Clause 11 [Reinsurance of ECGD risks]:
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 13:
Page 7, line 26, at end insert:
("( ) In exercising his duty under subsection (2) above the Secretary of State shall pay particular regard to the position of persons carrying out business in the United Kingdom as compared with their competitors outside the United Kingdom.").
The noble Lord said: My Lords, I do not apologise for returning to a theme which has dominated our discussions throughout the passage of the Bill. The theme is quite simple; namely, whether United
980
Kingdom exporters are going to have the same treatment and operate on the same level playing field and not be disadvantaged by competition with their counterparts in the EC as regards the provision of reinsurance by host governments to the national credit insurer covering their countries' short-term exports.
The noble and learned Lord has mentioned NCM a number of times. We have been through the position of that company as regards the Dutch Government, what that government does and how NCM acts as an agent for the Dutch Government. They reinsure the political risk that NCM undertakes. We are anxious to ensure that UK exporters are not prejudiced by anything that the Government are doing under the privatisation arrangement. I want a further assurance from the noble and learned Lord that that is to be the case. I beg to move.
Lord Trefgarne: My Lords, before my noble and learned friend replies to this amendment, I must tell him that this is a point on which I, too, have had some anxiety. During the course of the Summer Recess I have corresponded with my honourable friend the Minister for Trade. I received a letter from him quite recently which those of your Lordships who are interested will no doubt have seen because I presume that a copy was placed in the Library, as is the procedure. As I understand it, the preferred bidder for the Insurance Services Group is required, by the statute under which it operates in its own country, to give priority to Dutch companies.
We are duty bound to ask my noble and learned friend to explain quite clearly that it is required to treat British companies on all fours with the other companies with which it does business. After the passage of the amendments which the Government proposed and which were agreed during Committee stage, it occurred to me that it would have been wise for the Government to have considered reopening the competition in order to see whether the passage of those amendments affected the views of those British companies which had earlier expressed an interest in acquiring the Insurance Services Group but which in due course had not felt able to make a proposal.
To my regret my honourable friend was unable to agree to that. He was not even able to say that he had further informally contacted the companies concerned to see whether the position had changed. I regret that. My honourable friend referred to the views of the Government's advisers in this matter which were not particularly convincing. My noble and learned friend must assure your Lordships quite plainly that if the Dutch company, which is said to be the preferred bidder for the Insurance Services Group, becomes the owner in due course, it will be in a position to treat British companies in exactly the same way as it treats every other company with which it does business. This is an important point. I hope that my noble and learned friend can give the necessary assurances.
Lord Fraser of Carmyllie: My Lords, this is an amendment which seeks to require that, when the ECGD determines the provision of reinsurance for the benefit of companies operating in the United Kingdom, it should pay special regard to the facilities

981
enjoyed by overseas competitors. I note carefully the wording that the noble Lord has introduced into the amendment—that is to say, "particular regard". It is noted that it is not to be the dominant or sole factor or any thing of that kind. I recall that during our long and sometimes vexed debates on what is now Clause 11(2) the noble Lord clearly appreciated then that there could be no requirement imposed on a Secretary of State to take up reinsurance in the national interest regardless of what the risk or the cost might be to the taxpayer. Accordingly, I approach the matter appreciating that it is not the noble Lord's intention that it should be the sole or dominant factor in making the assessment.
It seems to me that there are many factors that ECGD needs to take into account when determining the provision of reinsurance support. For that reason it would be invidious to emphasise only one particular aspect in statute. Perhaps I may refer the noble Lord to the statement I made in Committee on 16th July at col. 119 of the Official Report. I said:
"I am sure that one consideration"
for the Secretary of State when determining the national interest case for reinsurance
"will have to be whether the terms on which reinsurance is available from elsewhere—if it is available at all—are so onerous, that they would place the UK exporters at a significant competitive disadvantage. I do not see how the national interest [case] can be judged without such an assessment being made, but I see no need for that to be specifically included in the Bill."
My noble friend Lord Trefgarne has raised a number of points which concern him about the preferred purchaser, NCM. With respect, I would say to him that while there are a number of other amendments which we shall come to and which may deal with the anxieties that he has, at this stage we are dealing with the position that the Secretary of State should adopt when he is having regard to the reinsurance that he may take up as a long-stop.
The passage I have quoted from what I said at Committee stage I hope clearly demonstrates the Government's view that when determining the nation al interest case an important factor which the Secretary of State will take into account will be the competitive position of UK exporters. I am sure that position will be welcomed on all sides of the House. I am happy again to confirm that position. There will be other factors. One can think of aspects on diplomatic trade and industrial fronts as well as the financial risk to the taxpayers. However, I hope that your Lordships will agree that it is inappropriate to single out any one of these for special mention. They are all likely to carry greater or lesser significance at different times and in various circumstances. The alternative of defining all the factors which the Secretary of State should take into account would not only be extremely difficult but would also risk the exclusion of factors which we cannot at present foresee but which might well become very important in the future.
As has been the case under Section 2 of ECGD's current enabling legislation all in all it seems much more sensible that the factors to be taken into account and the weight to be given to them in determining the
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national interest should be a matter for the Secretary of State to decide. With that explanation I hope that the noble Lord can withdraw his amendment.
Lord Trefgarne: My Lords, may I have the permission of the House to make another brief intervention concerning this matter? I do not agree with my noble and learned friend that this is not the right place to raise the point to which I referred earlier. There are only four more amendments on the Marshalled List. If my noble friend can indicate which one he thinks will be more appropriate for the topic I have just raised than the one to which we are now addressing ourselves, I shall be greatly obliged to him. In the meantime, I again ask him to give a much clearer assurance on the issue that I have raised, and the issue on which I have corresponded with his honourable friend, than he has been able to give so far. As I said, my honourable friend wrote to me during the Recess. However, I do not regard the letter as satisfactorily meeting the point which I raised and I ask my noble and learned friend for a better assurance.
Lord Fraser of Carmyllie: My Lords, with the leave of the House I shall try again. The noble Lord may think that this is the appropriate moment but I have to say I have some difficulty in seeing that. Nevertheless, if the matter has been raised we might as well deal with it now and, I hope, satisfy my noble friend. Indeed, NCM do have a reinsurance relationship with the Dutch Government to support Dutch exports where those risks are uncommercial. The new company under NCM ownership would have a similar relationship with Her Majesty's Government under the national interest reinsurance facilities. I hope that that is what the noble Lord is seeking. There is a relationship in Holland between NCM and that government and once Clause 11 is in place there will be a similar relationship.
For commercial risks there is no reason for NCM to have, or to want to discriminate in favour of its Dutch customers as opposed to its UK customers. I should emphasise that NCM is a private company. It is certainly not controlled by the Dutch Government, as is sometimes misunderstood due to the relationship which exists between that government and the company. Nevertheless, the company is not controlled by the Dutch Government and is not constrained in the way it deals with its various customers. I therefore assure my noble friend that there will be a future relationship and that it will look very much like that between the Dutch company and the present Dutch Government.
Lord Williams of Elvel: My Lords, before the noble and learned Lord sits down—again, I hesitate to abuse Report stage procedures—I do not think that he has quite answered the point made by his noble friend. NCM has a duty to encourage Dutch exports. It has certain relationships as agent for the Dutch Government on political risk insurance. There is no guarantee whatever that when NCM takes over ISG

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that the obligation that NCM has will be modified or mitigated in any way unless the noble and learned Lord tells us so today.
Lord Trefgarne: My Lords, perhaps I may have your Lordships' permission to speak a third time on this matter. I apologise for seeking leave to do so. I am looking for a plain and unvarnished assurance from my noble and learned friend that British exporters will be treated in exactly the same way as are Dutch exporters by NCM. What will happen when NCM is faced with requests for cover from both British and Dutch companies for a single project? Which company will have preference? Will it be the Dutch one or the British one?
Lord Fraser of Carmyllie: My Lords, I confess to being somewhat concerned that while noble Lords have indicated that they have no wish to abuse the process of Report stage we are getting pretty close to it. The answer to my noble friend, as I think he appreciates, is that in such circumstances it depends upon the assessment of the risk. If it is a commercial risk that is being assessed there is no reason why that company—and I understand that it is regarded on the Opposition Benches as a very well established and well respected company internationally—should discriminate against British Companies. Where it is a matter of an uncommercial risk, then we pass to what, so far as concerns the United Kingdom, is to be found in Clause II. We have been over this ground fairly extensively. It will then be for the Secretary of State to determine whether it is expedient in the national interest for him to exercise his powers to make arrangements for reinsurance.
Lord Williams of Elvel: My Lords, I shall not abuse Report stage procedures further. I shall wind up the debate. I say in all friendliness and in good spirit that I do not think that the noble and learned Lord has really answered the point that we have been pressing. That point is that there should be no conflict of interest at all; that whoever purchases ISG should have some sort of obligation to encourage UK exporters in exactly the same way, and without any prejudice, as they may encourage exporters of their own home country. From what the noble and learned Lord has said, I do not get that impression. If NCM is the final purchaser—we shall come to that—a conflict of interest will be set up. It is that conflict that will disadvantage United Kingdom exporters.
We have had an interesting debate on this matter. I have no doubt that the noble and learned Lord will respond to further interventions from the noble Lord, Lord Trefgarne, on amendments which are perhaps rather more suitable. I believe that Amendment No. 13 was the most suitable one for the noble Lord, Lord Trefgarne, to raise the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 14:
Page 7, line 26, at end insert:
("( ) The Secretary of State shall make arrangements with any transferee under which all companies carrying on
984
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.").
The noble Lord said: My Lords, a number of exporters have expressed concern over what they regard as the expected loss of access to Ministers should ISG be sold to a private buyer. In that context one of the main issues which is normally raised quite properly with Ministers by United Kingdom exporters is, for instance, the non-availability of cover for particular markets. We discussed that question earlier today, but it would be particularly relevant were ISG to be privatised and if the new company stopped providing cover for certain markets. It would only be right for United Kingdom exporters to be able to go to Ministers to say that they were disadvantaged.
Another issue raised is the non-availability of cover for a particular piece of business. I recognise that this is unusual for ISG, which on the whole has taken the risks which one would have expected, but nevertheless it is a possibility under a privatised organisation. A third issue is the conditions of cover if the privatised ISG imposed conditions of cover such as guarantees by state central banks, irrevocable letters of credit or other instruments which would protect its risk. Fourthly, there may be a question of premium rates where a privatised ISG is charging premium risks which are over and above those which the United Kingdom finds acceptable.
In moving the amendment I recognise that the great majority of representations which companies make to Ministers relate to the longer-term business of ECGD. However, we have yet to experience the performance of the privatised short-term ISG. It would be a mistake to remove the possibility of exporters being able to go to Ministers to say that something is wrong, that the system is not working, that the premiums are too high, that they are not being given cover and that a central bank guarantee is being required. It would be sensible of the Government to allow access to Ministers on a statutory basis in order to ensure that the privatised ISG does exactly what the Government are now saying it will do. I beg to move.
5.45 p.m.
Lord Trefgarne: My Lords, I do not go along with the noble Lord, Lord Williams, on this amendment. If we decide to privatise a function, to leave it still possible for representations to be made to Ministers or for questions to be asked in Parliament would not be a very happy way to proceed. Either we privatise, or we do not. If we privatise, as is the intention of this measure, it is probably better that Ministers no longer have their fingers in the pie and that Ministers are no longer able to dig up the plant to examine the roots. Be that as it may, my noble and learned friend may think this a more appropriate moment to give me the kind of assurance that I was seeking on the previous amendment. If, perchance, my noble friend Lord Henley is to answer instead, perhaps he will be able on reflection to consider the points that I made on the earlier amendment and to give me an assurance—I ask only for a simple assurance—that British exporters

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will be treated in exactly the same way as Dutch exporters by this new enterprise owned by a Dutch company.
Lord Ezra: My Lords, before the Minister replies, perhaps I may, in pursuance of that point and of what the noble and learned Lord the Lord Advocate said earlier, be quite clear that, in the case of the Dutch Government in relation to NCM, we have been advised that the kind of support it gets would be entirely in line with what is here proposed in Clause 11(2). May I be quite clear that once Clause 11(2) is put into effect the position of the two governments in relation to this company would be entirely the same and that it would follow that whether the client happenred to be in Britain, Holland or another country he would not be in a beneficial position regarding one country or another.
Lord Henley: My Lords, my noble friend Lord Trefgarne will be unhappy that my noble and learned friend is not responding to this amendment. My noble and learned friend will certainly consider whether he wishes to give the assurance sought by my noble friend when he deals with some of the later amendments.
Perhaps I may begin with possibly the most obvious point in relation to this amendment. To the extent that any individual, company or representative body wishes to make representations to Ministers, either directly or through a Member of Parliament, about government policy towards the provision of official support for export credits in the wake of privatisation of the insurance services, they will remain perfectly free to do that. No statutory provision is necessary to preserve those rights.
Perhaps I may make one or two other points in response to the noble Lord's amendment. The first and most obvious one to make is that the privatised group will have to comply with the requirements of the Companies Act and the insurance company will have to be authorised by the Secretary of State under the Insurance Companies Act. As the Secretary of State is responsible for the administration of this legislation, anyone is free to make representations to him about issues arising under it without any special arrangements being made.
The amendment apparently seeks to go further than that by facilitating rights of access to the Secretary of State about the company's operational activities. In relation to companies taking credit insurance or other assistance from the group, these activities will be carried out under commercial contracts freely entered into. The normal commercial and legal remedies would be available to customers who had differences with the privatised company about I he performance of those contracts. It is not the Secretary of State's function to interfere or to act as a source of appeal or arbitration between parties to commercial contracts.
The amendment does not take into account the keen competition that exists in the credit insurance market. Privatisation of the insurance services business has become necessary to meet the increasing competitive challenges of the single market. If an exporter is not satisfied with the service offered in the
986
private sector or its terms, he is quite free—the noble Lord, Lord Williams, shakes his head—to take his business elsewhere. I think that that is a much more effective discipline than rights of appeal to my right honourable friend the Secretary of State.
Finally, I believe that to make special arrangements in the legislation to that effect would be to discriminate against the privatised company in a manner which could inhibit its freedom to operate in the best interests of its shareholders, its staff and, obviously, its customers at large. To do so would also distort the competitive nature of the credit insurance market. I hope, therefore, that the noble Lord will feel able to withdraw the amendment.
Lord Williams of Elvel: My Lords, I am most grateful to the noble Lord, Lord Henley, for his response. I did not hear him reply to the question put by his noble friend Lord Trefgarne. Perhaps, with the leave of the House, he would like to make a further contribution.
Lord Henley: My Lords, with the leave of the House, I should point out that if the noble Lord had listened to my response carefully he would have heard my reply. My noble friend asked for further assurances from me. I said that I would leave the matter to be considered by my noble and learned friend when he came to respond later to further amendments.
Lord Williams of Elvel: My Lords, very good. We have indulged in a game of ping-pong between Ministers on the Front Bench. I have no doubt that, sooner or later, the noble Lord, Lord Trefgarne, will receive his reply. However, it will need the help of a few carrier pigeons before that happens.
I do not wish to pursue the matter. I am most grateful to the noble Lord, Lord Henley, for his exposition of the Government's position. I shall take the matter away and think about it. I accept the fact that there is always a case for companies going straight to the Secretary of State or through their Members of Parliament. I very much hope that the companies will read in Hansard what the noble Lord said. I say that because, if anything goes wrong with ISG in the future, that may be the right avenue for them to seek redress. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 [The Export Credits Guarantee Department and the Export Guarantees Advisory Council]:
[Amendment No. 15 not moved.]
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 16:
Page 8, line 14, at end insert:
("( ) The basis of the charges to be levied by the Export Credits Guarantee Department in relation to any arrangements made under sections 1 to 3 of this Act shall be reviewed annually no later than 31st March in each year.").
The noble Lord said: My Lords, we return here to a problem which we discussed during earlier stages of the Bill. I refer to the problem of ECGD charges. At present, as I believe noble Lords on all sides of the House have specified previously, the ECGD charges

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significantly higher premiums for medium and long-term business than other export credit agencies in the European Community; in other words, United Kingdom exporters are disadvantaged. I shall quote examples of premium rates charged by the main export credit agencies in the Community for project business across a range of markets. I stress that they are across a range. The figures are: France 2 per cent., Italy 2.3 per cent., and Germany 3.2 per cent. The figure for the United Kingdom is 5.3 per cent.
We return again to the question of whether UK exporters are disadvantaged, in this case for medium and long-term business. Those high rates will certainly result in business being lost by United Kingdom exporters to their European Community competitors. In our view, such rates should be reviewed annually with the objective of keeping them as low as possible and at least not disadvantaging our exporters. I beg to move.
Lord Fraser of Carmyllie: My Lords, as we go through the last rally in this game of ping-pong over the relationship of NCM to the Dutch Government and British exporters, perhaps I may invite my noble friend to read what I say about the reinsurance relationship with the Dutch Government. He approached the matter on the basis that there was a general obligation upon NCM to encourage Dutch exporters. The relationship entails support for Dutch exports where the risks are uncommercial. I have been seeking to emphasis to him the fact that once we have NCM—if it is to be the actual purchaser—and Clause 11 in place, there will be a similar relationship between that company and the British Government through the Secretary of State with regard to uncommercial risks.
However, where it is a matter of commercial risks, I find it difficult to understand on what possible basis this company would wish to discriminate against British exporters in favour of Dutch ones. I do not believe that any real example has been given to me. At any rate, the special relationship which has been emphasised is only in the area of uncommercial risks.
I am grateful to the noble Lord, Lord Williams of Elvel, for at least prefacing his remarks with a matter that I know he understands. However, it is good to hear him being explicit about it. The problems that concern him about the ECGD's premium rates do not flow directly from the provisions in the Bill which allow for the privatisation of insurance services.
The effect of this amendment would be to impose an obligation upon the Secretary of State to carry out an annual review of the ECGD's premium rates. While I understand the intention behind the amendment, I have to tell the noble Lord that I consider it to be superfluous.
Perhaps I may stress first that there has been no general increase in medium-term premium rates since 1984. Moreover, during that period, the ECGD claims on such project business—I have given this figure before—have been about eight times the level of premium income. I should also like to stress that PMS is a forward looking system and that no attempt is being made to recover past losses. My noble friend may snigger, but I believe that it is important for
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exporters to appreciate that fact. Clearly, the Government cannot ignore such losses, especially since claims on project business have resulted in the ECGD now having a deficit with the Consolidated Fund of over £billion. The Government have to strike a balance between the needs of the exporters and, on the other hand, the risks involved and thus the interests of the taxpayer. The inescapable fact is that exports that are not paid for where the risks are high are of dubious value whatever competitor countries do. The Government have embarked upon a vigorous campaign internationally to focus attention on premium rates on medium-term business. The campaign is taking place in the EC and the OECD. It was specifically referred to during the last ministerial OECD meeting. The campaign has got off to a good start; for example, it is worth noting that last week there was a significant increase in Japanese premium rates for medium-term business.
As part of its own internal business planning arrangements the ECGD has for many years now carried out annual reviews of the financial performance of its trading activities in order to determine the accuracy or otherwise of its premium rates. The ECGD is now required, under Treasury guidelines for all departments, to carry out an annual financial review on all aspects of its activities. The results of the annual review will continue to inform both ECGD's parliamentary estimates and public expenditure survey requirements and the basis of its framework of premium charges and cover availability for the forthcoming year. In addition, the annual report which Clause 7(1) of the Bill requires the Secretary of State to prepare on ECGD's activities will deal with a variety of financial aspects relating to its performance. In other words, the obligation to carry out a review of the kind proposed by the amendment already exists and, accordingly, there is no need to repeat it.
6 p.m.
Viscount Weir: My Lords, I have the greatest sympathy with the amendment. I wish only that it had gone further and not merely sought a review but sought that the review be published. The noble Lord, Lord Williams of Elvel, gave modest statistical examples of the disadvantages our exporters suffer as compared to their continental competitors. Mexico, for example, has clearly made a most remarkable recovery from a dreadful economic situation. Most forward looking exporters would consider it a place in which there were many reasons to try to build up their businesses.
Recently I was told that on a typical medium-term credit, UK premiums are 10.5 per cent., Italy 4 per cent., Germany 3.25 per cent., and France 3.5 per cent. I am aware that your Lordships weary easily of statistics, but I am equally aware that you all realise that the difference between what our continental competitors are charged by their government organisations and what we British exporters are charged, which in this case is something like 7 per cent., comes off the exporter's profit margin if he wants to compete. I do not know how many British

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exporters there are who find it easy to make a 7 per cent. profit in such a market. Those figures speak very much for themselves.
When the issue of relative premiums is raised we continually have from the Government what I suppose one might call "crying poor": "Oh well, we have a £3 billion deficit piled up here or there on this account, but somehow we as a country always imply that we suffer more than other exporting countries". That is not the case.
If we look at the book of ECGD's business, and take what are called the "good markets", we find that it has 39 per cent. of its business in "good markets". That is a far larger percentage than Japan, Germany, France, the United States or Italy. There is no justification to "cry poor" so to speak.
If we then look at British exposure to the worst-debtor countries, we find an equally illuminating statistic. We find that in terms of millions of dollars ECGD exposure is 14, which is half the average of France, Japan and Germany. I shall say no more because those figures speak for themselves and they deserve an answer.
Lord Trefgarne: My Lords, at the outset of his remarks my noble and learned friend sought to explain—I hope that I understand him aright—that the assurance I had sought was not necessary and so he saw no reason to give it to me. I did not hear the assurance in the terms for which I had asked. My noble and learned friend has risen to high and distinguished office in the legal profession, and rightly so. He may have less experience in exporting. I do not have much either, but I have been busy in that field for the past year or so. One of the things that I soon learned was that it is a dirty business. Contracts are sometimes—indeed often—awarded merely upon the basis of the credit terms available, which in turn are often wholly responsive to the provisions that can be made by the state credit insurer concerned.
The new company that is to acquire ISG may occasionally have to judge between British and Dutch exporters. British exporters are entitled to ask for an assurance from the government that they will be treated on all fours the same as their Dutch competitors. If there is any chance that the new owner of ISG will find itself in a position of being able to favour one country or another, British exporters should be clear that it will not always be the Dutch. The assurance that I have sought is a simple one. I hope that on reflection my noble and learned friend will be able to go further.
Lord Williams of Elvel: My Lords, the noble and learned Lord does not, as I understand it, wish to seek the leave of the House to intervene further, and so I shall wind up. I shall be less strong than the noble Viscount, Lord Weir, on the disadvantages to UK exporters in international markets of ECGD premiums merely because I have not been in that market for six years. I spent 15 years trying to negotiate export credits as a banker. I have not done that for the past six years, so over the past six years the figures that I was quoting may have been replaced by the figures given by the noble Viscount.
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Like the noble Lord, Lord Trefgarne, I have been involved in financing exports as a banker, but for rather longer than the noble Lord. It is a dirty, unscrupulous, underhand, scurrilous business. The Government do not start to understand what people have to do. I have done it myself. I have travelled for six weeks throughout the United States, Mexico, Guatemala and Peru, staying night after night in a different hotel, trying to sell my clients' exports and financing them for a bank. I have personal experience of that. I do not believe that the Government collectively understand what the whole business is about. That is why we object to their approach. It is not a question of a free market ideology, and all the rest of it, but of getting out there and doing the business; staying in dirty hotels when the rain is pouring down, when one has no breakfast because one has to take the morning plane to the next place. That is what it is all about.
Our exporters should be encouraged, not delivered lectures about the market saying this and that, and, "We are sure that the Dutch would not benefit Dutch exporters over and above United Kingdom exporters". I can tell the noble and learned Lord that they jolly well would, and so would the French and so would the Germans.
Lord Trefgarne: My Lords, and so would we!
Lord Williams of Elvel: My Lords, yes, and so would we if we had half a chance, and quite rightly so. We are not in the same debate. Nevertheless, we must get on with the Bill. I believe that the Government's attitude to exports and export credit guarantees is, as I hear it from the noble and learned Lord—I make no personal attack on him—quite pathetic. I believe that they will pay the price. I beg leave to withdraw the amendment.
The Deputy Chairman of Committees (Lord Ampthill): My Lords, is it your Lordships' pleasure that the amendment be withdrawn?
Lord Trefgarne: My Lords, no.
6.10 p.m.
On Question, Whether the said amendment (No. 16) shall be agreed to?
Their Lordships divided: Contents, 42; Not-Contents, 92

Division No. 2

CONTENTS

Ailesbury, M.

Halsbury, E.

Ampthill, L.

Hampton, L.

Aylestone, L.

Hughes, L.

Bonham-Carter, L.

Jenkins of Hillhead, L.

Brookes, L.

Jenkins of Putney, L.

Carmichael of Kelvingrove, L.

Judd, L.

Carter, L. [Teller.]

Kissin, L.

Cledwyn of Penrhos, L.

Lockwood, B.

Clinton-Davis, L.

Mallalieu, B.

Donoughue, L.

Mason of Barnsley, L.

Dormand of Easington, L.

Merrivale, L.

Ezra, L.

Morris of Kenwood, L.

Foot, L.

Nicol, B.

Galpern, L.

Pitt of Hampstead, L.

Graham of Edmonton, L. [Teller.]

Sefton of Garston, L.

Serota, B.

Grey, E.

Stoddart of Swindon, L.

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Taylor of Blackburn, L.

Underhill, L.

Taylor of Gryfe, L.

Weir, V.

Thomson of Monifieth, L.

White, B.

Tordoff, L.

Williams of Elvel, L

Trefgarne, L.

NOT-CONTENTS

Arran, E.

Kenilworth, L.

Astor, V.

Kimball, L.

Auckland, L.

Kinnoull, E.

Balfour, E.

Lauderdale, E.

Blatch, B.

Lawrence, L.

Blyth, L.

Lindsey and Abingdon, E.

Boardman, L.

Long, V.

Borthwick, L.

Lyell, L.

Brabazon of Tara, L.

Mackay of Ardbrecknish, L.

Brougham and Vaux, L.

Malmesbury, E.

Butterworth, L.

Margadale, L.

Caithness, E.

Marlesford, L.

Caldecote, V.

Mersey, V.

Campbell of Croy, L.

Montgomery of Alamein, V.

Carnegy of Lour, B.

Morris, L.

Carnock, L.

Mountevans, L.

Cavendish of Furness, L.

Munster, E.

Cochrane of Cults, L.

Napier and Ettrick, L.

Colville of Culross, V.

Nelson, E.

Colwyn, L.

Norfolk, D.

Constantine of Stanmore, L.

Norrie, L.

Craigmyle, L.

O'Cathain, B.

Crickhowell, L.

Orkney, E.

Davidson, V. [Teller.]

Palmer, L.

Denham, L.

Park of Monmouth, B.

Denton of Wakefield, B.

Pender, L.

Derwent, L.

Peyton of Yeovil, L.

Dilhorne, V.

Portsmouth, E.

Ferrers, E.

Reay, L.

Flather, B.

Saint Albans, D.

Fraser of Carmyllie, L.

St. John of Bletso, L.

Gardner of Parkes, B.

Seccombe, B.

Glenarthur, L.

Shannon, E.

Gray of Contin, L.

Soulsby of Swaffham Prior, L.

Gridley, L.

Strange, B.

Grimston of Westbury, L.

Strathcarron, L.

Harmar-Nicholls. L.

Strathclyde, L.

Harmsworth, L.

Strathmore and Kinghorne, E.

Henley, L.

Sudeley, L.

Hesketh, L. [Teller.]

Swinfen, L.

Hives, L.

Thomas of Gwydir, L.

Holderness, L.

Trumpington, B.

Hooper, B.

Ullswater, V.

Howe, E.

Waddington, L.

Hylton-Foster, B.

Wise, L.

Jeffreys, L.

Wynford, L.

Resolved in the negative, and amendment disagreed to accordingly.
Clause 14[Expenses]:
6.18 p.m.
Lord Williams of Elvel Lord Williams of Elvel moved Amendment No. 17:
Page 8, line 22, at end insert:
("(3) Before the transfer of any property, rights or liabilities under Part II of this Act, the Secretary of State shall prepare a report on the financial expenditure incurred and income to be received as a result of that transfer.
(4) The report prepared under subsection (3) above shall include details of any expenditure incurred by the Export Credits Guarantee Department in preparing for and effecting the said transfer.
(5) This report shall be scrutinised by the National Audit Office and the findings of that office, together with the report, shall be laid before Parliament before any transfer is effected.").
The noble Lord said: My Lords, we now come to the last amendment at Report stage which is in many ways one of the most important with which we have to deal. Its aim is to ensure that the whole process of the
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sale of ISG and the net gain or loss to the taxpayer are open to parliamentary scrutiny and are also made public before the sale is effected.
The noble and learned Lord and I have corresponded during the long Recess on whether the bidding for ISG should be reopened. I shall resume a long argument relatively shortly. During the Committee stage the Government acceded to requests that there should be a political risk re-insurer of last resort. I hope that I do not misinterpret the Government's intention. Government amendments were moved and carried in Committee which achieved that purpose. As I understand it, the Government were convinced by the arguments that were put forward by Members of another place and by your Lordships and by the hostility that this Bill met on its Second Reading.
The tender procedure was opened before those government amendments came before your Lordships. It was on the basis of no political risk reinsurance of last resort that a number of UK companies which were initially interested in purchasing ISG dropped out. Even some continental companies dropped out. NCM stuck there in the hope that there might be some change in the Government view on that matter. There was a change. I believe that the value of the business—I say this as clearly as I possibly can—that is to be sold has been materially changed by the Government amendments that were passed in Committee. Under those circumstances it seems to me self-evident that the bidding procedure should be re-opened. I have written to the noble and learned Lord the Lord Advocate, requesting the Government to do that.
At the moment I am not concerned whether the company in question should be a Dutch company, an Italian company, a British company or a company of any other nationality. I am simply concerned that if the taxpayer is to sell public property to a private enterprise the taxpayer should be properly remunerated for that sale. I cannot see how the argument can be sustained that the value of the business has not changed. Dealing in short-term credit insurance without any political risk reinsurer of last resort is quite a different prospect to dealing in short-term credit insurance with a political risk reinsurer of last resort. That is a material change in the business and a material change in the value. As I have written in a letter to the noble and learned Lord, either the Government amendments tabled in Committee mean something in the sense that there is a fallback position of political risk reinsurance—in which case the value of the business changes—or they mean nothing. If the latter case is the position, the noble and learned Lord will no doubt wish to explain to us why the amendments mean nothing as we were led to believe that they meant something.
In introducing this amendment, which I believe is of fundamental importance, I urge the Government to think again about reopening the tendering procedure. The memorandum on which the tenders were based is no longer true. It no longer presents a true and fair appreciation of what the business is that is to be sold. I therefore invite the noble and learned Lord not

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necessarily to accept this amendment but to give the House an assurance that the Government will reopen this procedure so that British companies who refused initially to enter this matter on the basis that there was no political risk reinsurance, and therefore they could not possibly engage their shareholders' funds, might be given a prospect of tendering. I beg to move.
Lord Ezra: My Lords, if in the passage of this Bill through its various stages a material change has been made in the conditions under which the transferred company would operate, I believe there would be strong support for the point which has just been expressed by the noble Lord, Lord Williams. What we really need to know from the noble and learned Lord the Lord Advocate is whether he considers there has been such a material change. It would certainly appear that there has been such a change as the noble Lord, Lord Williams, has described. In that case I should have thought that reopening the tender procedure would be a fair and proper way to proceed.
Lord Fraser of Carmyllie: My Lords, when we first cantered round the course on this issue I repeated on Second Reading what had been said by my honourable friend the Minister in another place responsible for trade. I said that the Government were willing. to provide political risk reinsurance and that that fact had been known from an early stage. I indicated then that I hoped the ministerial assurance given my honourable friend was sufficient. Noble Lords on the Opposition Front Bench and some of my noble friends behind me asked why, if the Government were prepared to give such an assurance, they were so reluctant to state that on the face of the Bill. I understood that noble Lords were suggesting such a step would have satisfied everyone. Everyone would have been satisfied that the Government could not retreat from that position.
Those arguments were advanced forcefully from both sides of the House and it was on the basis of those arguments that an amendment was eventually tabled Therefore, to that extent, a material change did occur i n as much as that amendment appeared for the first time on the face of the Bill. I accept that that was the case. However, it must be appreciated that the Government's commitment to the provision of transitional reinsurance and to the national interest facilities was embodied in the Government's original invitation to tender to all the shortlisted bidders. There is therefore no reason to reopen the tender process. If the bidders had entered the tender process unaware of any commitment from the Government, I could readily understand the force of the comments of the n able Lord, Lord Williams. However, the commitment was in place at the time the shortlisted bidders were invited to tender.
Noble Lords will appreciate that I have indicated on behalf of my right honourable friend the Secretary of State that NCM is the preferred purchaser. As I said, the policy commitments contained in the invitation to tender are consistent with the Bill as amended. Accordingly, it appears to the Government that there is no need or intention to issue a revised invitation to tender. The noble Lord will be aware
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from the fairly detailed correspondence that has been entered into that neither the Government nor their advisers have any reason to believe that the shortlisted bidders would wish to reconsider their position in the light of the Government amendment. Certainly none of the shortlisted companies have approached the Government or their advisers with such a proposition.
The noble Lord will appreciate that this Bill will pass. If the privatisation is to occur it is as well for those who are employed by ECGD at present, and who are possibly volunteering to transfer, that there should be as much certainty in this matter as possible. There is no question of the Government being willing to make the sale at any price. Value for money will be of central importance. That has been the case and will remain so in all future stages of the negotiations.
The amendment relates specifically to the introduction of NAO and parliamentary scrutiny into the sale process. While the noble Lord is concerned about the more general issue of reopening the bidding, perhaps I may point out to him in answer to his amendment that the involvement of the National Audit Office on the basis proposed is neither necessary nor appropriate since it could effectively make NAO part of the executive process and potentially prejudice its subsequent position as auditor. NAO will be free at a later date to examine details of the financial expenditure incurred by ECGD and income received as a result of the transfer. In accordance with normal practice, the Comptroller and Auditor General has already advised ECGD of the NAO plan to conduct a value for money study of the privatisation of insurance services. Financial details in respect of the sale will be reported to Parliament after the sale has been completed.
With that explanation, and in view of what was discussed in correspondence during the Recess, I hope that the noble Lord can now withdraw his amendment.
6.30 p.m.
Lord Taylor of Gryfe: My Lords, I have followed these discussions with great interest from the Second Reading through all the subsequent stages of the Bill. It is a matter in which I have a little experience and a good deal of concern. Will the Minister confirm the sequence of events and that the companies which were invited to tender did not know at the time of tendering that political risk would be underwritten? I seem to recall that while a verbal assurance had been given, the companies decided not to tender and that it was only subsequently that the Minister announced that that would be included in the Bill.
The noble and learned Lord may say that ministerial statements were made in another place. However, if one is making a bid and undertaking a substantial responsibility in business one hopes to see in the relevant prospectus a firm commitment that that particular risk is covered. As I understand it, that was not so at the initial stage when invitations were issued to the three or four companies which might have been interested.
The Minister said that he is very anxious that we should receive value for money. Would it not provide

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an additional assurance that we are getting value for money if the new provisions of the Bill were advised to the companies which might show interest? A very limited number of companies are interested now and it might be possible for the British companies to look at the matter once again.
What is the great hurry? What is the great urgency which does not permit the Minister to open up the matter and look at it again? This week television licences will be discussed. Companies were given specific terms of reference for bids. There would be an outcry if changes were to be made in the terms of the bidding and any amendment or adjustment to those terms were to be announced after bids had been refused or after people had decided not to bid.
I suggest that it might make sense to accept this reasonable amendment. It would give some assurance to the taxpayer that we are concerned about getting the best bargain.
Lord Fraser of Carmyllie: My Lords, for the last time, with the leave of the House perhaps I may attempt to respond. I should be grateful if the noble Lord would look at what I said in my previous intervention. I said then that the Government's commitment to the provision of transitional reinsurance and the national interest facilities, as stated in both Houses of Parliament, remained consistent with the terms of the Bill as amended. There is a material change, because that commitment is no longer a ministerial commitment but it is set out in statute.
The complete answer to the noble Lord is that I further indicated that that is the precise commitment which was embodied in the Government's original invitation to tender to all the shortlisted bidders. The situation is not that a material change was introduced at a later date: the shortlisted bidders knew what the Government's commitment was when they were first invited to tender.
Lord Williams of Elvel: My Lords, I believe that we have reached the end of the debate for the time being. However, I have to say to the noble and learned Lord that all the contributions to our Second Reading debate on the Bill from his side of the House were concerned with political risk reinsurance. Nobody on that side of the House believed that the Government were acting as political risk reinsurer of last resort.
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Furthermore, British companies dropped off the tender list precisely on that point. Nobody believed what had been said in another place. That is why the noble and learned Lord had such a difficult Second Reading debate.
The fact that ministerial assurances of one form or another may have been made in one or other House of Parliament is not a matter which binds the courts, as the noble and learned Lord knows much better than I. It is only what is in the Act which binds the courts.
The noble and learned Lord has failed to point out to your Lordships that the material change, which he accepts, was not just a question of, "We shall put it in the Bill but it makes no difference at all." It was a question of satisfying all noble Lords on Benches opposite, who were so concerned about political risk reinsurance that they gave the noble and learned Lord a roughing up at the Second Reading of the Bill. It is all very well for the noble and learned Lord to say that there has been no material change. All those noble Lords opposite have vanished and there has been no opposition, except on one or two minor points. The basic issue has been resolved by the government amendments.
The parliamentary approval of the Government's position should now be made clear in a new tender document. I believe that if such a tender document were issued the Government would find that British companies would be interested, and we should not need the further assurance which the noble Lord, Lord Trefgarne, sought. I believe that that is what the Government should do. If they do not, I can tell them that the Public Accounts Committee of another place and the National Audit Office will be looking at the matter with great seriousness. I am sure that the noble and learned Lord understands that. I believe that the Government are selling a different ball of wax from the one they started off with. That is why I believe that they should re-tender.
I do not want to go on with this matter. I shall come back to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

London Docklands Railway Bill
Committed to an Unopposed Bill Committee.
House adjourned at twenty-one minutes before seven o'clock.