HC Deb 10 July 1975 vol 895 cc272-3W
Mr. Higgins

asked the Secretary of State for Trade how the limitations on the cost escalation scheme which he announced on 20th February, covering export contracts which involve a manufacturing period of at least two years, will be operated by his Department.

Mr. Deakins

One of the qualifying criteria for access to the new scheme of cost escalation cover is that a contract must take at least two years to manufacture. The precise calculation of this period in practice will depend upon the circumstances of each individual contract. Normally it will run from the date of signature to the date when manufacture is expected to be complete and the goods ready for export. Where the exporter's contractual responsibility extends for a reasonable period to cover installation or commissioning of the goods, some account may be taken of his United Kingdom costs in this further period provided that these costs represent a significant proportion of the overall United Kingdom costs.

Mr. Stainton

asked the Secretary of State for Trade what representations he has received to extend the cost escalation scheme operated by the Export Credits Guarantee Department above the present ceiling of 20 per cent. in view of the 50 per cent. or more increases in steel, other raw materials, and shipping costs, plus escalating wages, in the face of fixed price contracts demanded in the Middle East and Eastern Europe.

Mr. Deakins

My right hon. Friend has received a number of representations about the scheme from the Confederation of British Industry, trade associations and exporting companies. We are considering these with our colleagues and hope to reach early conclusions. We are not, however, convinced of the need at this stage for major changes in the arrangements which my right hon. Friend announced on 20th February. Exporters already have the option of running the band of cost escalation cover from a higher starting point than the 10 per cent. minimum threshold; they can thus raise the ceiling of cover above the minima of 20 per cent. for credit contracts and 25 per cent. for cash. These percentgages, which relate to annual rates of increase, apply to those United Kingdom costs which qualify for cover.