§ Mr. MorganTo ask the President of the Board of Trade what consultations he has had with organisations representing British exporters concerning the provision of public funds for insuring exports against political risk.
§ Mr. NeedhamMy right hon. Friend the President of the Board of Trade and I have had frequent consultations on political risk insurance with organisations representing British exporters and banks.
§ Mr. SalmondTo ask the President of the Board of Trade (1) what representations he has received, and what discussions he has had, concerning the planned discontinuation of export reinsurance for political risk in 1994; and if he will give details;
(2) if he will make a statement on the Export Credits Guarantee Department's capacity to provide export reinsurance, particularly for political risk;
(3) what was the total level of export reinsurance provided by the Export Credits Guarantee Department in each of the last 10 years; and what proportion specifically related to reinsurance for political risk, in each export sector and for Scotland, Wales, Northern Ireland and England;
(4) what assessment his Department has made of the likely effect of the planned discontinuation of export reinsurance for political risk, in 1994, for United Kingdom exports, exporters and the balance of trade, in each export sector and for Scotland, Wales, Northern Ireland and England.
§ Mr. NeedhamThe Export Credits Guarantee Department is able to provide reinsurance, subject to Treasury consent, under the terms of the Export and Investment Guarantees Act 1991.
The ECGD currently supplements the private sector reinsurance treaties, for both commercial and political risk, of the privatised successor of the insurance services group. This support will be available for up to December 1994 in order to give time for the new company to arrange to source its full reinsurance requirement from the private market. The new company is working to achieve this outcome. Over 90 per cent. of its needs are currently being met by the private market.
Quite separately, the Export Credits Guarantee Department provides the new company with 100 per cent. reinsurance of the risks arising on certain higher risk markets for which no capacity has been made available by the private market. This facility is not time limited. Subject to satisfactory financial performance, it will continue for as long as the Government consider it essential to meet the reasonable needs of United Kingdom exporters.
I believe that the combined effect of these arrangements will be to maintain a good level of short-term export credit insurance support for United Kingdom exporters.
These reinsurance facilities have only been available since December 1991 and apply to less than 10 per cent. of the new company's reinsurance exposure for standard short-term business. The Export Credits Guarantee Department reinsurance is provided on a global basis and it is not possible to provide a breakdown between the risks, goods or geographical location of exporters reinsured.
Representations have been made to me by interested parties about the likely adequacy of the reinsurance 669W market to meet future demand and any implications this may have for Government policy. I am considering these representations.