§ Mr. Nicholas BennettTo ask the Chancellor of the Duchy of Lancaster if he will review the Export Credits Guarantee Department tender to contract scheme, in view 443W of the rates and conditions offered by the foreign exchange market for currency options and the minimal take-up rate for the scheme in the past three years.
§ Mr. Alan ClarkThe tender to contract scheme has been reviewed twice in recent years. In view of the heavy losses incurred under the scheme in 1984 premium rates were raised, the minimum contract value was increased to £10 million and it became a requirement that applicants should demonstrate a genuine need to commit a firm foreign currency tender. Although the reduction in applications is probably partly due to these changes, it also reflects the worldwide decline in project business.
Following a further comprehensive review in 1986, I concluded that the scheme could still play a useful role in helping exporters compete for new business and that experience indicated that the terms of the scheme were sound if the remit to contain costs was to be met. That remit was endorsed by the Committee of Public Accounts in its second report for the 1987–88 Session which followed the transfer of the scheme to the public expenditure account. However to meet a major criticism of exporters, from 1 April 1987 the non-refundable initial premium paid when cover is issued was halved.
The scheme is a minor one supplementing the protection available from the foreign exchange market and of some value to British exporters. However, it is important to continue to contain potential claims on public expenditure. In view of this, I do not consider that a further review should be carried out, although of course the scheme will continue to be monitored.