HL Deb 14 October 1991 vol 531 cc944-55

2.58 p.m.

Report received.

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 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 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 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
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.
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.
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 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 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 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 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 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 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: 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: 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 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.

Back to