§ Mrs. BrowningTo ask the President of the Board of Trade if he has completed the review of ECGD arrangements for allocating claims recoveries to exporters.
§ Mr. HeseltineAs a result of a review of its IT systems, it became clear that ECGD was applying different interpretations of similar terms in different guarantees when allocating recoveries to its policyholders. The Cardiff office, which handled short-term guarantees, interpreted ECGD's legal rights differently in a particular respect from the London office which handles medium and long term guarantees, the Cardiff interpretation being in certain cases more generous to the exporter than the London interpretation. When this emerged ECGD at once put a hold on the further allocation of certain categories of recovery and sought legal advice on what has proved to the an exceedingly complex matter.
I have now received considered legal advice on all aspects of this matter. It is now clear how the relevant provisions of the guarantee should be interpreted and all future recoveries, including those currently held by ECGD, will be allocated between the exporter and ECGD in accordance with the London interpretation. This will mean that some policyholders will receive a lower share of recoveries than they had in the past. The hold on payments to its customers which ECGD has imposed while the review has been in progress will now be ended.
ECGD has estimated that the amounts which it has paid to policyholders since 1975 which are in excess of what is now considered to be the correct legal entitlement could total up to £83 million.
Given the complexity of this issue and the difficulty and cost of establishing the case of recovering these excess payments from a large number of exporters the Government have decided not to pursue their legal right to seek restitution of these excess payments. I believe that this represents a realistic balance between the interests of the taxpayer and of the exporter.