Export Credits Guarantee Department (Hansard, 31 January 2001)

§ Mr.Timms

The Government, in their response to the Trade and Industry Committee's report on the future of ECGD, noted that it intended to commission a follow-up, independent report to assess progress in addressing the recommendations made by KPMG in 1999 [Cm 4792]. I announced the Terms of Reference for this follow-up review to the House on 30 November 2000. KPMG have been re-engaged for this review which is to be undertaken in two stages. The first stage is now complete and I have placed a copy of KPMG's report in the Library of the House. KPMG's conclusions were as followsA significant volume of work has been undertaken in addressing the recommendations set out in the original KPMG report. Most of the recommendations have been addressed, although there are still some areas outstanding. However, in most cases, the implementation of the proposals made to address the recommendations is still in course. As a result, the majority of steps taken to address the recommendations could only be reviewed through studying the so called Product Papers relating to each area of the Action Plan, and the practical effectiveness could not be reviewed. Many of the findings of this report have, therefore, stated a requirement for further review in Phase 2 of the review. In many cases, it will be necessary for ECGD to revise the processes proposed by the Action Plan Products to fit the PMS3 framework and this is likely to involve a considerable volume of work. Therefore, as regards Section 5 of the original KPMG report, we believe that there is a need for ECGD to formally monitor the implementation of the Product Papers and their associated recommendations, in order to maintain the momentum required to ensure full implementation in advance of Phase 2 of the review. As regards Section 4 of the original report and progress towards capitalisation, there was found to be a high degree of commitment within ECGD to the development of the PMS3 framework. There has been considerable progress in the high level design of the constituent elements of a capitalisation framework comparable to best practice in the commercial sector. However, in most cases, the detailed design of the various elements is still in course and was not therefore ready for review. The high level review of the elements in place revealed that significant progress has been made towards the development of the PMS3 framework, but that there is also a great deal more work to be completed for ECGD to successfully meet the April 2001 implementation date. This is particularly the case regarding 212W the development of the operational framework within which PMS3 will work. It is recommended that fulfilment of the criteria set out in Annex B of this report should be reviewed in Phase 2 to more fully assess the potential effectiveness of the PMS3 framework. Overall, therefore, whilst we believe that significant progress has been made in addressing the recommendations, it is clear that there is still a considerable amount of implementation work to be completed before the operating environment will be appropriate for the delegation of full operational autonomy to ECGD and the adoption of the purely strategic relationship proposed in Product E4 of the Action Plan".