House of Commons Hansard Debates for 22 Jan 1991

Mr. Hoyle : I said that not only did I think that the Government were making a change for the sake of it, but that the exporters did not want such change. It is not a matter of dogma on our side or on your side. It is you who insist on instituting such a change against the advice of those who use the service.

Mr. Deputy Speaker : Order. It is not my dogma.

Mr. Hoyle : Of course, Mr. Deputy Speaker. You never believe in dogma. You are very fair.

Mr. Nicholls : There are no dogmatic or doctrinaire attitudes on the Conservative Benches, either.

Once again, the Opposition raised the terrible bogey man of what would happen if some foreign country were to take over. It is remarkable that, despite the Opposition's communautaire policy which leads them to go to Rome and, in a spirit of enthusiastic surrender, yield themselves up to European union, the moment that there is a possibility of a foreign company having an interest in Britain, the Opposition are prepared to go to the barricades about it. Export is a two-way street. The idea that we can have some mad, potty world in which all we have to do is to export our goods, industries and services without making provision for the import of services and goods is unreal. Whether a Dutch or any other company were to have such an interest in a reinsurance firm within the private sector, at the end of the day it would be acting for the reason that business men always will act --to make a profit. It is that word again. The idea that some private company would try to so construct its insurance arrangements as to make it virtually impossible for Britain to export in such a situation to do themselves some good is a marvellous idea, an exercise in a certain type of xenophobia, but at the end of the day it is completely unreal. The hon. Member for Gateshead, East (Ms. Quin) had a pile of papers a great deal larger than mine and I was waiting for her to read them, but I am happy to say that that did not happen. One of those papers was pink and it occurred to me that it might be today's Financial Times. Picking up a theme that I have heard so many times from the hon. Member for Ashfield (Mr. Haynes) I thought that the hon. Lady, knowing of commentaries which are quite

Column 206

against the position that she has adopted, would bring them to the House, almost as one would do in a court of law, and say that although she has come up with ideas, as one would expect, some of the evidence was against her.

Perhaps the hon. Lady will refer to the Financial Times when she replies instead, but I suspect not, and one can see why.

In today's Financial Times there was a lengthy critique entitled "Breaking Cover at ECGD". Because the paper's name sounds vaguely capitalistic, some might have the idea that it is a rabid tabloid which panders to the worst fantasies of the right of the Conservative party. But that optimistic view, which I should like to think was true, is not borne out. Anyone who has had any acquaintance with the Financial Times, especially on employment matters, and has seen the way in which they are handled, will know that it writes with great knowledge and with some considerable skill, not automatically from a pro-Government point of view.

Today's Financial Times has a number of things to say about the Bill and what our attitude to it should be. It picks up exactly the point made by the hon. and learned Member for Montgomery a few moments ago. It starts by reviewing at some length the sort of difficulties in and objections to the Bill. It makes the point that the Kemp report, if not all things to all men, certainly has something for everybody. But it then goes on to say :

"None of these is ground for abandoning a sale whose original motive remains valid."

It continues :

"Without new freedoms ECGD will lose ground to UK and continental competitors."

That is exactly right. The Financial Times has no axe to grind. That is its reading of the situation. It goes on :

"Admittedly, privatisation has not yet been forced on the government by the European Commission. Simply changing ECGD's charter might allow it scope to compete in the single market."

Then it comes to a point which is obvious to anybody who has had any contact with Europe, whether within or without government, in terms of the real world. It says :

"But Brussels is looking much more closely at subsidies implicit in export credit insurance. Privatisation is much the cleanest approach."

That is what is being said. That is not the situation that existed 10 years ago, or even five years ago. That is what the Financial Times says today about this measure--that privatisation is by far the cleanest approach ; that we should not take comfort from the fact that the European Community has not done it yet ; and, most important of all, we should recognise there are difficulties but we should not make the mistake of thinking that those difficulties are insurmountable.

On employment prospects, I was extremely pleased to see that the duty regulations are there so that provisions relating to redundancy will be continued and that there will be continuity of employment. Some people may claim that that is the minimum requirement, but there is not just the standard protection of the regulations ; there is also protection for the enhanced redundancy payment as well. The point has been made very forcefully that transfer will have to be voluntary ; that there will be no compulsion. The terms and conditions will be at least as good. Clause 9 provides quite specifically for the Transfer of Undertakings (Protection of Employment) Regulations in the way that I have described. It could be asked whether that gives total protection. Could the Minister or anyone else absolutely guarantee

Column 207

that the position of the civil servants who transfer will be precisely the same so that their jobs are secure? Of course not. Surely we have moved away, have we not, from the idea that there is any such thing as total security in employment?

If you, Mr. Deputy Speaker, were working in the ECGD and were concerned about your job prospects, would you feel safer in a structure which takes account of the changing times and of the fact that one cannot continue in the old ways for ever, but at the same time says that as far as possible the previous conditions enjoyed in the civil service regime will be replicated under the new regime? That is not a guarantee because there is no such thing, but it is really the very best deal that can be obtained in the circumstances. Yes, there can be problems in setting up a structure in this way. As in any legislation, one is trying to look into the future on the basis of the best information that one can get. If we look at what is happening in Europe today and at what exporters need and if we look at the Kemp report in the light of where we are now, not back in 1988, we realise that this Bill and the policies in it are the right ones for our exports. That is why the House should support this Bill. 6.23 pm

Mr. Alex Carlile (Montgomery) : In the part of Wales where I live, it is normal at funerals to spend a little time praising the deceased. Therefore, I think it is right to start my speech by saying that the Export Credits Guarantee Department has done an excellent job for many years and that many industrialists, and other people who are beginning their business lives as entrepreneurs building up manufacturing industries, view with some alarm the change that they see taking place, the consequences of which they are unsure of. Change for change's sake cannot be justified ; but if the change is to produce a more beneficial export environment for potential exporters, the Government will have succeeded in their aims, whether these are brought about by dogma or on empirical grounds.

Mr. Gerald Howarth : The hon. and learned Member should make it perfectly clear that ECGD is not dying ; it is going to a better place.

Mr. Carlile : It is a bit of a mixed bag, because part of the ECGD will continue to survive. This is a form of medicine that we have yet to apply to human beings. Part of it is possibly going to some other place, and the hon. Member has a particular interest in that place, which he has frankly declared ; that is probably why he thinks it is better.

This Bill emanates from a Government Department which has become renowned for the political and economic dryness of its Ministers. They are dry and proud of it--drier than those in any other Government Department. Indeed, it is a Department in which those copies of the former Prime Minister's Bruges speech which are not framed are heavily dog-eared through repeated reading, in an effort to check that what is being done fulfils the requirements of "Brugesism". It follows that this anticipatory obedience which the Department of Trade and Industry wants to show to a possible future interpretation of article 92 of the treaty of Rome is a little uncharacteristic. I have been trying to

Column 208

think of an analogy, and the best I can come up with is that of the footballer who rushes up to the referee during the first half and says, "Excuse me, ref, but I anticipate committing a professional foul in the second half, so would you please show me the yellow card now to try to stop me doing it then?"

That is certainly not a characteristic approach by this Government and one is tempted to the view that, although dogma may sometimes be logical--it may be the best basis for a decision if it is right--there is nonetheless more than a suspicion of dogma in this early progress by the Government to privatising the insurance services group of ECGD.

Mr. Norris : The hon. and learned Gentleman referred to the attitude to Europe of Ministers in the Department of Trade and Industry. As the only wet ever to have survived in the Department--and that was not for long--I cannot comment on that. If there is a cynicism among some people in this country about Europe and the difference between what is said and what is done in Europe, it is precisely because in Britain it is clear that progress towards the single market, which is the single greatest manifestation of something practical that can happen in Europe, is much further advanced than elsewhere, where there are many more interventions by state organisations than in the United Kingdom.

While I do not want to interrupt the flow of the hon. and learned Gentleman's argument or his interest in Gazza analogies, may I suggest that it is entirely proper that this Government should now be addressing the question of anticipatory legislation in the right spirit--that is, believing in the single market and wanting to see it completed as soon as possible.

Mr. Carlile : As ever, the hon. Member for Epping Forest (Mr. Norris) makes a very interesting point. However, I am slightly puzzled by the logical analysis he makes, because it seems to me that, in the decision they have taken in this Bill, the Government are running the risk of putting British potential exporters at a disadvantage compared with some of their European competitors, whereas in some other respects, such as going enthusiastically for 1992, they are trying to put British industry at an advantage compared with some other countries which may in certain respects have been a little slow.

I believe that it is contradictory to the future practical prospects of the export credit guarantee systems, and of exporters, to privatise the insurance services in this way and at this stage. It would have been far better for detailed discussions to take place within the European Community, so that we would have a clear picture ofthe way in which other member states were likely to react to the possible breach--it is only a possible breach--of article 92. The phrase "level playing field" has already been mentioned often in this debate. It is important that our exporters should not find that, as a result of a Government decision the motive for which is privatisation, they are at a disadvantage because other countries have not only failed to move as quickly towards obedience to the interpretation of article 92 in relation to 1992, but have no intention whatsoever of doing so. Our anticipatory obedience to article 92 is a clear potential disadvantage for British exporters.

Column 209

Insurance--particularly export credit insurance, which is a form of factoring--is a high-risk business, as I am sure the hon. Member for Cannock and Burntwood (Mr. Howarth) who declared an interest in Trade Indemnity, would readily acknowledge. It is therefore a business in which the initial profit discount, or premium, must be fairly high. There is a danger that a company in the private sector will be forced in certain transactions to set its premiums so high that smaller companies will be unable to manufacture goods or to provide services and sell them at the net price that they will receive.

That is not a criticism of companies such as Trade Indemnity. In the ordinary commercial sphere, they provide an important service--for example, in respect of straightforward commercial factoring--but it is one generally taken up by companies that are in the growth phase of their existence and not in their early stages, nor in their later stages either.

Mr. Gerald Howarth : The hon. and learned Gentleman makes a fair point about a matter of some concern to small and medium-sized businesses. However, he may agree that an important point of principle is at issue in respect of reinsurance. The strength of reinsurance is the test of availability of cover. Those who oppose the Bill argue that the strength of reinsurance provided by the Government's bottomless pit--that is, the taxpayer--represents strong reinsurance cover and that it has to be demonstrated that similar cover will be available in future.

Mr. Carlile : The hon. Gentleman makes an important and valid point, and it is well taken. However, at this stage in my argument I am more concerned about the initial situation, when a potential exporter tries to obtain a guarantee. If I were a small manufacturer of goods for which I saw export potential in, for example, a South American country, I would be concerned not so much about the reinsurance aspect as about the amount of money that either ECGD or Trade Indemnity, or whoever, will take off my price, and how much profit I will be left with at the end of the day. I believe that there is a genuine fear--which I hope will prove unjustified-- that small companies will find it difficult to trade in exports to risk countries if they are confronted with the high premiums which I anticipate. The Kemp report did not recommend that the Government should aspire to withdrawing their support completely. It stated :

"This would be a very high risk policy and would be strongly opposed by industry. It is unlikely that the private sector would adequately supply cover against political risk, for small businesses, or provide supporting advice in the way in which ECGD does at present."

That shortfall, foreseen by Mr. Kemp, will remain ; and will continue to exist as a consequence of the Government's decision to privatise in a hurry.

When the Minister replies, perhaps he will explain why the Government decided to reject the option in Mr. Kemp's third recommendation, that four to five years should be allowed before introducing private capital. Ministerial statements have developed in response to that recommendation. When the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) was Secretary of State for Trade and Industry, he spoke of

"converting insurance services into a company and the injection of private capital quickly thereafter."

Column 210

That was something closer to Mr. Kemp's third option than the measure now before us.

By 26 July last year, the then Minister and present Secretary of State said in a written answer :

"I have decided that the short-term business of ECGD should be sold by means of a competition"

and that the sale should be completed

"as soon as possible thereafter."--[ Official Report, 26 July 1990 ; Vol. 177, c. 410. ]

That is, after April 1991. It would be genuinely helpful to know why the Government decided to accelerate that process in a way that is inconsistent with both the objective and the carefully researched views expressed by Kemp.

That action is not consistent either with the wishes of British commerce and industry. Earlier, there was a contentious reference to a report by the credit insurance brokers Sedgwick James, the results of which were summarised in the Financial Times on 10 October 1990. So that the Minister will not leap to his feet and savage me, I concede immediately that only 55 replies were received to the 92 copies of the questionnaire that were distributed--which, on the face of it, is a very small sample.

However, as the hon. Member for Gateshead, East (Ms. Quin) fairly pointed out, although some of those invited to reply were large-scale exporters, others were organisations representing large numbers of exporters in general. Bodies such as the London chamber of commerce carefully collate and cautiously analyse their members' views before expressing anything that could be remotely described as a collective opinion. Although I concede the sparsity of the sample in that survey, I hope that the Minister will recognise that at least the opinions given were informed opinions, based on careful consideration of the issues.

I should add that it is the best evidence we have. I am not aware of any other survey, or of the Government having sought to collate the type of information carefully obtained by Sedgwick James. Of the respondents to that survey, 71 per cent. said that they would review their business strategy if British export credit facilities ceased to be competitive with those of other countries, and nearly half--and this is a shocking feature-- replied that they would switch productive investment and procurement to other countries having better export credit arrangements. Some companies even said that they would cease to export to certain markets, which is understandable.

This hasty legislation has been cobbled together to produce a piece of privatisation of a less contentious nature than others, one that would not attract so much public notice, to fill part of a thinnish parliamentary timetable. I suggest that at best the Bill is premature, and that at worst it is, on its merits, wrong.

6.38 pm

Dr. Keith Hampson (Leeds, North-West) : An hour ago, I thought for a moment that, for the first time in 17 years, I would be called to speak before 6 o'clock. However, right hon. and hon. Members have been so gentlemanly and polite today in allowing many interventions that the time has moved on. Nevertheless, I am glad to be of assistance to the Treasury Bench in making an early and extended speech, rather than a late and short or squeezed contribution. I hope that my hon. Friends on the Treasury Bench will not take the hint and pursue it in Committee.

First, I must declare an interest as I am a consultant for a company which is an adviser to GEC.

Column 211

Some of my remarks will reinforce those made by my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie). The hon. Member for Warrington, North (Mr. Hoyle) and I wrote a letter to The Times , as we are both members of the Select Committee on Trade and Industry. However, I think that our views diverge from there on, because he made certain remarks about the economic cycle, whereas it is my view that, if there is a complaint to be made, it is that the Bill should have been put before the House a year ago during the 1989-90 session--as indeed it would have been, but for a somewhat unseemly dispute between officials at the Treasury and at the Department of Trade and Industry.

I would certainly argue in favour of the merits of that part of the Bill, on the basis of the evidence heard by the Select Committee and contained in the Kemp report. I was impressed that the Kemp report did not commit itself absolutely to a long period as a Government holding company before bringing in private money. Other options are considered and some of the evidence, for example that from Rolls-Royce, suggested that the ECGD had become more commercially oriented in recent years. As a result, there had been positive benefits and it was putting together more imaginative packages. Confiscation insurance was cited as an example. The evidence also suggested that privatisation would maintain progress, at a time when there is growing demand in Europe. That is what it is all about. We were unnecessarily restricting one of our major financial industries, at a time when the European financial services market was growing. I fully support privatisation. Nevertheless, as was pointed out in the Financial Times, British industry is "whingeing" about it. Let me put it another way, it is not at all happy about some of the other aspects ; that is where I agree with my right hon. Friend the Member for Chertsey and Walton. GEC is the largest client of the ECGD, spending more than £1 billion per year in insurance. There are about 12,000 accounts. However, ECGD is not really about insurance. It has the single statutory duty of encouraging British exports, and it is in that context that British industry is expressing its unhappiness, because we have never needed exports more than we need them now. Competition has never been more fierce and there have never been such opportunities, especially those in eastern Europe at present. That being said, if one is not careful one can come to conclusions which do not stand up, by assuming that other countries always do things better, and more generously than we do. For example, if one studies some of the evidence to the Committee about the situation in eastern Europe, it does not show that the German or Italian credit agencies were offering anything other than short-term cover, on much the same terms as the ECGD, in the Polish market.

As stated in the letter which I signed with the hon. Member for Warrington, North, my first criticism is the lack of detail during the sale, both for potential buyers and for those hon. Members who take an interest. One could argue that more information would have been available from a private company than has been available from a state operation.

A more central criticism--I am seeking further reassurance about this--is how the high political risk markets will be handled. I understood my hon. Friend the Minister, in his opening remarks, to be giving a key reassurance that there would be a period during which the

Column 212

new privatised company would gain reinsurance from the retained ECGD Government operation. British industry will want to know our intentions as regards the length of that period. Will it be three years, or will it be abandoned in less time? Could it run beyond three years? I think that British industry will take the view that there should not be an artificially imposed time limit.

Many people think that the private sector would not be able to pick up suitable premiums in many difficult political markets to enable smaller and medium-sized companies to get the right price for their products. Therefore, we should not abandon that principle of reinsurance, and I recommend to my hon. Friend the Under-Secretary that we keep the situation under review and wait to see at what stage, if any, in the near future the EC produces a directive. If, as the years go by, industry can show that there remains a real need for it, we should continue to supply back-up.

There is special concern about that aspect and the Guardian newspaper released some Departmental papers about it. The Treasury wrote to the Secretary of State's private secretary as follows : "As for the short-term business, the Chief Secretary is very concerned about your Secretary of State's proposals for continuing large-scale Government support for the privatised company" Anyone reading that will realise that those remarks take us directly back to the zero option. Has the Treasury given up the zero option proposals? We all assumed that it had given them up for long- term projects, but that Treasury mentality seems to remain. That sort of evidence of the Government's intentions is what has been disturbing British business. We should wait and see how the situation develops.

Some of the gentlemen who gave evidence to the Committee on 4 July 1990, when asked what the ECGD's premium rates were like compared with those of our competitor countries, replied that the ECGD rates are sometimes higher by a factor of two, and occasionally more. If that situation is maintained, there will be be a level playing field.

As the letter which the hon. Member for Warrington, North and I wrote to The Times yesterday states, it is vital that we give an assurance to British industry that, so long as the playing fields are not even, we will use some mechanism--the reinsurance aspects of the privatised company--to enable our companies, especially small and medium-sized businesses, to have access to those markets. That is what the ECGD has always been about. It was created so that we could lower premiums and establish level playing fields.

GEC sent some comments to members of the Select Committee last week, in which it stated :

"There is no evidence that our overseas competitors are being subjected to the same changes through a withdrawal of Government support for exports."

So, will Ministers give a commitment today that, until such time as there is evidence of similar changes for our overseas competitors, there will be a commitment to maintain support in political high-risk markets? As the GEC document points out, if one does not

"Whereas Government has a role in trying to boost export activity, a commercial agency"

primarily has as its goal

"the maximisation of its returns",

Column 213

and therefore is either not likely to take the risk of insurance or would substantially raise its premiums. That is a major concern. As regards the Treasury's attitude to long-term projects, page 98 of the Kemp report states :

"As there is absolutely no prospect of a world free market, without interventions or support by governments, being established, the use of export credit agencies by competitors, within the scope of the rules of the OECD Consensus, is a fact we must take into account when deciding our own policy".

Will my hon. Friend the Minister give a complete commitment that that view is Government policy, and that no change is planned? If we are not careful, the Treasury's thinking on industrial policy will prove to be the worst form of "short-termism" that British industry faces. The Treasury memorandum on the ECGD caused great alarm in the Select Committee, as we said in our report. According to the memorandum, the reason for the lack of private sector interest in export credit insurance was

"the existence of Government schemes. The withdrawal of such schemes should stimulate the introduction of private sector alternatives".

I do not accept that that has been proved. The memorandum also stated :

"The withdrawal of subsidies will have a beneficial effect upon the rest of the economy which is relieved of the burden of paying for them.'"

We encounter that sort of attitude all too often. Understandably, every Treasury has an intrinsic dislike of subsidies, and of any assistance that involves taxpayers' money. Notwithstanding that, all Exchequers in all industrialised nations provide subsidies to some extent, as they always have done in this country.

Mr. Gerald Howarth : My hon. Friend is right, of course, but surely our objective should be to get rid of such subsidies across the board, so that taxpayers throughout Europe can stop financing the export of goods for which no one can pay.

Dr. Hampson : That is precisely my point. I have urged repeatedly that we should not proceed too far in the present direction. Although I accept that a privatised company will need some assistance in certain markets until the grand design has been achieved, no one who has examined the position sees any evidence that we are anywhere near that stage. I represent a textile-producing area, and I have come across the same attitude in that context--the belief that, if textile subsidies are withdrawn, consumers will instinctively buy imports because they are cheaper, and will therefore have more money in their pockets to boost other aspects of the British economy. That view is contained in the Silberston report.

The answer is that, although consumers might spend in other sectors and increase growth rates in the new service industries in the south-east, they would not necessarily spend in a way that would create or maintain jobs in the north. What that short-sighted, short-termist attitude overlooks is the "cascade effect" : if the major players in the game are not assisted, all the small sub-contractors and suppliers will suffer as well. It was absurd bottom-line thinking on the part of the Treasury to predict a short-term loss of £1.5 billion per year as a result of the ending of long-term project help. The Treasury did not

Column 214

take into account the way in which major companies enter new markets, open them up and establish longer-term business contacts for both themselves and their suppliers.

Although I welcome unreservedly the privatisation of the short-term insurance services group, British industry undoubtedly needs reassurance that the remaining ECGD will continue to assist the new privatised company in especially politically difficult markets. We need reassurance, too, about Treasury thinking on the long-term project group. Above all, we need to create a climate in which British industry feels that it is wanted and encouraged by Government, rather than an alarmist state of mind. I believe that the British Treasury has gained far too strong a position in industrial policy making, and that that is the reason for the reaction of British industry.

6.54 pm

Mr. John McAllion (Dundee, East) : Let me join other hon. Members in declaring an interest. I act as parliamentary consultant to the National Union of Civil and Public Servants, many of whose members will be directly affected by the privatisation. I am proud of my association with the union, but, naturally, I receive a consultancy fee. I assure the House that I donate the whole of that fee to my local Labour party in Dundee. If any Conservative Members feel particularly guilty about any consultancy fees that they may receive, I recommend the same course to them. I will give them the name and address of the treasurer of my local party ; we need the money more than they do.

At least one faction of the ruling Conservative party has long nourished an obsession with privatisation. The faction to which I refer is, of course, the No Turning Back group--or, as I heard a Conservative Member describe it, the No Coming Back group ; no coming back after the next general election. The tragedy is that the supporters of that faction have risen to the highest levels in the present Government : I understand that the Secretary of State for Trade and Industry is an erstwhile supporter. Indeed, he seems to support it still, for he has brought to the Department not only his own obsession with privatisation but his No Turning Back fellow-traveller, the hon. Member for Gainsborough and Horncastle (Mr. Leigh), who is now Parliamentary Under-Secretary of State for Industry and Consumer Affairs.

What I know of the background of both men convinces me that the only rationale behind the Bill is that privatisation obsession. Why else should it not only unite Opposition Members--not always an easy task--but attract to the same anti-Bill coalition representatives of the trade unions, the Confederation of British Industry, the British Exporters Association and many chambers of commerce? No doubt some Conservative Members find that an even more unlikely coalition than the one that has formed in the Gulf over the past few weeks, but I can tell them that its members had been united by the Government's failure to provide any justification for the measures contained in the Bill.

Mr. Gerald Howarth : I know that the hon. Gentleman did not intend to mislead the House when he included the CBI in his list of the Bill's opponents. However, according to a CBI brief which I have here, that organisation supports the Bill in principle. Perhaps the hon. Gentleman has information that he has not shared with the rest of the House--or was he himself misled?

Column 215

Mr. McAllion : Not only is this information that I have not shared with the House ; it is information culled from the newspapers, which were reporting the CBI's opposition to the Bill long before it came to the House.

Conservative Members will always try to point to a consistency of purpose in the Government, which they will claim has led logically to this Bill. They will cite the launching of the "next steps" agencies initiative and to the Kemp report, which arose from that initiative and which recommended the privatisation. One hon. Member even described it as a bible for hon. Members. It has been

asked--rightly--why Kemp's advice has been ignored. Kemp recommended that a state-owned company be created for a period of three to five years before privatisation.

Mr. Michael : Perhaps I may be of some assistance to my hon. Friend the Member for Dundee, East (Mr. McAllion) who has referred to the CBI. The hon. Member for Cannock and Burntwood (Mr. Howarth) appears to feel that the CBI was supportive of the principles of the Bill, but the CBI also called for

"a statement that the Government will continue to provide support for exporters on terms at least comparable to those afforded to their international competitors, including that support provided in the national interest' ".

That goes to the heart of our criticisms of the Bill.

Mr. McAllion : My hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael) is right : it is that kind of support which is completely missing. This explains the united coalition in this country against the Bill and the Government's proposals.

Kemp recommended that in the first stage there should be a state-owned company for at least three to five years before moving on to privatisation, and so far no convincing answer has come from the Government Benches to the questions raised by Opposition Members. We can, however, be certain that it has something to do with the Government's determination to rush the Bill through the House before the next election and before the people put them out of office and this Bill out of existence.

One of the key arguments has been the assertion that the requirements of the single market in 1992 will exclude state credit agencies from the insurance market. We are also told that increased competition within the single market requires a level playing field on which private sector insurance will not be placed at a disadvantage to public sector insurance. Both these arguments are no more than free market dogma, and an uninformed dogma at that. First, there is no evidence whatsoever that the European Community is about to introduce, or even intends in the short to medium- term to introduce, legislation that would directly affect the operation of the ECGD. The Kemp report itself reached that conclusion. Hon. Members on the Government Benches have said that this development is inevitable, and one of them referred to a report in the Financial Times ; but they are very selective when they refer to reports in the Financial Times. If they referred to a report on 10 January they would find that the Government line that private reinsurers would quickly step in to fill the gap was hotly disputed in the market place, where withdrawal of support was seen as unilateral export disarmament. That is what the Financial Times said recently, yet none of the hon. Members on the Government Benches have referred to that kind of argument.

Column 216

In the absence of any substantial evidence to the contrary, the Government have a clear responsibility to explain why they are rushing this Bill through even before they know that there will be any such legislation or what form it may take. Those of us who are more cynical might suggest that not only is it expedient to rush the Bill through before a general election but that there is no better time than now to try and rush it through when the country's time and the attention is elsewhere and when the eyes of the media are diverted ; there is no better time to slip through this unloved and shoddy measure in the hope that it will receive scant attention from anyone outside the House.

Let us take the question of the level playing field. Level for whom? Certainly not for British exporters who will be almost alone in having no kind of Government promotion for trade and exports compared with their European competitors and in having no public support for high-risk and politically difficult markets. Our exporters will thereby be weakened in comparison with exporters elsewhere in Europe. The Government justify this weakening of our exporters' position by reference to a level playing field and some imaginary state of capitalist perfection where we have a wholly free and unregulated market. It exists only in the minds of the No Turning Back group, but it is on the point of doing serious damage to our exports, to our balance of trade and to our national interest.

Another real cause for concern is the impact on ECGD itself and on its work force, who for more than 70 years have provided an invaluable service to exporters in this country. They have rightly been described as the world's most experienced credit insurers. They have given something like £250 billion in support to United Kingdom exporters, and they assist some 6,000 exporters every year. They have an insight into the problems facing exporters which is unrivalled and an expertise that underpins the export drives on which this country's future depends, and yet they are now to be subjected to break-up, privatisation and massive changes--changes unsolicited by them, about which they have not been consulted by Government and which I have no doubt they wholly oppose.

Earlier in the debate, an hon. Member said that this was a case of radicalism versus the status quo. There is radicalism and radicalism. There is the kind which is change for the worse and the kind which is change for the better. The radicalism advocated by hon. Members on the Government Benches is change for the worse, and that is why Opposition Members oppose the measure tonight. Perhaps in replying to the debate the Minister will tell us what support for the Bill exists among the experts in the ECGD themselves and how, if they had the vote, they would cast it at the end of the debate, for or against this particular measure.

What is certain is that the Government's proposals have met with almost universal hostility from those who represent the ECGD work force--the trade unions, who carried out a very successful lobby of the House today. They have raised a whole series of legitimate questions and worries with the Government to which they have so far had no satisfactory answers.

The Minister will know that the privatisation of the insurance services group will affect some 600 civil servants based not only in Cardiff but in the regional network. When it comes to redundancies, they want to know if at any stage there will be compulsory redundancies after the concern has been privatised. I understand that some in the

Column 217

regional network have already been threatened with redundancy, even before the Bill came before the House tonight. Will the Minister give a commitment to investigate these allegations of redundancy threats in the regional network and report at least to the Committee, if not to the whole House, the outcome of those investigations?

I also want to know what guarantees the Minister will give that privatisation now will not mean compulsory redundancies for the work force at some future date.

There is also the question of the terms and conditions of workers in a privatised concern. In opening the debate the Minister referred to the TUPE regulations of 1981 which require the offer by the purchaser of an overall employment package which is no worse than the civil service's employment package. I think he used the term "broadly comparable". What do "broadly comparable" and "no worse" mean? They are open to interpretation. I suggest to the Minister that the employers and the Government are in a better position to interpret what these words mean than are the employees.

Moreover, what is not open to interpretation and what has been confirmed by the Minister earlier is that pensions will be excluded from the TUPE regulations : workers who have contributed throughout their lives to an index-linked pension scheme, who have paid for them, are to have that agreed scheme stolen from them by Government diktat. The Minister says that this is fair. What guarantees has he given? The statement made by the Minister at the opening of the debate was less than clear. Does he guarantee that exactly the same pension rights will be available to the workers after privatisation as before privatisation ; exactly the same kind of index-linked pension scheme?

Will the Minister confirm for the benefit of the House that the TUPE regulations cover only the position on day one of the transfer, and that on day two the new employer will be free to make whatever changes he wants to the terms and conditions of employment of the workers he has taken over?

Will the Minister further confirm that the transfer from the civil service to the new company will continue to be on a voluntary basis or say whether there will be a shift to compulsion? I understand that it is voluntary at present, but if insufficient people are convinced about the new company will the Government conscript civil servants at ECGD into the new private sector company that replaces it? If they do so, will he confirm that those who transfer will have exactly the same rights relative to their civil service status as they have at the moment? The Minister said that he would secure existing rights to redundancy and so on, but what about future rights? Will they be guaranteed? Will rights in the privatised concern be the same as they were in the public sector? I hope that the Minister addresses those points in his reply to the debate.

Will the Minister consider why the CBI and the British Exporters Association have lobbied against the measure? A privatised insurance group will not provide credit and insurance in high risk markets, particularly where there is political instability. The ECGD works under a break-even requirement on a yearly basis, but after privatisation the position will change and it will be required to make a profit. There will be a new balance between profit and risk taking, and risk taking will be the loser. There will be less

Next Section

Home Page