House of Commons Hansard Debates for 22 Jan 1991


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It is clear that the arguments of my hon. Friends, reinforced by gentle queries from Government Back Benchers, are correct, and that the case against the Bill is overwhelming.

The Financial Times article pointed out that the service of ISG in Cardiff is particularly valued by exporters in high risk countries. No hon. Member would deny that there are too many high risk areas in the world in which we have to compete if Britain's export record is to be restored from the dismal levels to which it has sunk under the Governnment. The Financial Times accurately reflects the views of the Labour party, of those who work in the ECGD and of exporters in the United Kingdom.

My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins), in a characteristically thoughtful contribution, referred to the need for regional networks. Of course, the ISG has that network and a strong contact with all parts of the United Kingdom. Those of us who have battled locally against the Government's neglect of the regions will endorse his remarks wholeheartedly.

The hon. Member for Hereford (Mr. Shepherd) gave a series of warnings to the Minister and approached the question of competition within Europe in a sober and considered manner, much in contrast with the confidence shown outwardly by Ministers. He rightly identified the insistence of Ministers on not answering questions as highly suspicious. I suspect that their refusal to answer questions is more in their nature than in the brief. I do not think that it is fair to blame the civil servants. It is Ministers who have been refusing to answer straight questions put to them, not only today but in written questions, in discussions and in private meetings ever since the privatisation measure was first considered.

The hon. and learned Member for Montgomery (Mr. Carlile), who represents a part of Wales with relatively small industry and where Government help and support are much needed, did an excellent demolition job on the Government's case. Like many of us, he wants to know why the Government are responding to EC signals which are as covert as a smuggler's lamp, but from Back Benchers and Government alike, answer comes there none.

I state it simply : Europe has not pressed the Government to change in the way set out in the Bill. State-supported operations, such as those in France, have not fallen foul of European law or regulations. Time and again in parliamentary questions, Ministers have been offered opportunities to provide evidence for their claim that Europe is pushing us in that direction, but they have been no more successful than the hon. and motley Member for Teignbridge in producing the faintest iota of fact to back that claim. I shall be most surprised if the Minister, in his reply, does more than skirt around that attitude. It is a simple question. Let him, if he can, give us a simple answer.

The Minister, intervening on my hon. Friend the Member for Gateshead, East (Ms. Quin), asked what we would say if the Government failed to take action in good time. If they did that we would say that they were wrong, neglectful and stupid, but it is not what is happening with this Bill. I must again insist that Ministers, encouraged by Back Benchers of an extreme disposition, are jumping like lemmings when no one with any interest in encouraging exports is pushing them to take the actions outlined in this Bill.

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It is a matter of fact that almost 80 per cent. of the insurance cover with existing customers is with customers having a turnover below £1 million a year. That is an extremely important part of our export industry. I draw the House's attention to the large number of jobs created in recent years--often not acknowledged by the Secretary of State for Wales, the Secretary of State for the Environment or the Secretary of State for Trade and Industry--through joint enterprises, work by local authorities, joint enterprises with private industry, such as the Cardiff and Vale enterprise in my own constituency, to build up the economy and help people start up in business, stay in business and expand. In the last two years, ECGD has been constrained by the Government to make swingeing increases in the premium rates it charges to businesses with £1 million turnover or less. That situation will be much worse after privatisation and the Government are wrong to place those businesses and the business that they bring to this country at risk.

The hon. Member for Surrey, North-West (Mr. Grylls) expressed concern that over 70 per cent. of businesses do not currently export. He was right to express that concern. The Minister's response that it would be useful for those firms to insure with one body is mischievous nonsense. These are just the types of businesses which need the security and confidence that come from a Government-backed institution and need an efficient public service to support them in their intitiatives and provide them with fresh encouragement to that end.

Mr. Sainsbury : In his very categorical statement the hon. Gentleman has said there would be, definitely, swingeing increases in premiums for small businesses. He says that small businesses have to have Government- backed insurance. Does that apply to all their other insurances? Can he produce facts to justify those allegations?

Mr. Michael : I can certainly state categorically, as I did, that there have been swingeing increases for small businesses which insure through ECGD. We know from the views of private industry, which have been expressed on the business of reinsurance, that this is an unpopular area which they would not take on board without increases in the insurance. That is far less of a surmise than the load of waffle that we have had from the Government Benches, both ministerially and from Back Benchers, since the beginning of this debate. If the Minister is so keen to be challenging on this issue, let him answer the simple question that I have asked him again and again : where is the evidence of EC regulations that bring about the requirement for any change? I see that he does not wish to. In a written answer last week, the Secretary of State stated two principles. He said :

"The Government continue to attach great importance to United Kingdom project and capital goods exports and to maintaining a viable and stable framework of ECGD support."

Secondly, he said :

"the international debt crisis, and more recently the events in the Gulf, have shown the risks which are assumed by ECGD to be potentially very significant." [ Official Report, 14 January 1991 ; Vol. 183, c. 359.]

That is important. The problem is that the second one is so important that it is overriding the first one in the Government's mind, not because they want to help industry but because they are worried about the financial commitment involved in giving support to private

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industry. I regret that the Ministers seem to have lost their battle with the Treasury in seeking to balance those priorities. I point again to the confirmation in the Kemp report that there is no pressure from the United Kingdom exporting community or from the commercial sector generally for this changing status in any part of ECGD. The Kemp report also showed that the private sector does not and cannot provide services equivalent to those currently provided by that department.

Kemp also said--this is directly relevant to the question that the Minister asked me a moment ago :

"It was also stated frankly by some brokers that small policy holders, were not commercially interesting to them and that there was no prospect of the private sector providing the counselling and service that such policy holders received at present through the ECGD regional organisations."

Not only will there be increases in premiums over and above those forced by the Government's dogma, but the service will deteriorate. The hon. Member for Leeds, North-West rightly challenged the Government's view that the private sector is waiting in the wings to take the risk. He was equally right to discuss the partial view that the hon. Member for Cannock and Burntwood put forward. No sound business case exists for this privatisation. The decision to privatise is purely political. We accept that there would be increased competition for ISG services but consider that it would best be met by extending the scope of ECGD's activities so that it could insure exports from other EC countries and possibly United Kingdom domestic trade.

If implemented, as my hon. Friend the Member for Cardiff, West said, the privatisation of the ISG would directly affect more than 600 civil servants based in Cardiff and the regional network. At this stage, the proposal is for transfer to the Government company to be voluntary, but the most likely outcome, as he rightly said, is that insufficient staff will volunteer and coercion will prove necessary. Their transfer would be covered by the Transfer of Undertakings (Protection of Employment) Regulations 1981, which merely impose the offer by a purchaser of an overall employment package which is no worse than that available in the civil service. All that that means is that those conditions apply on day one. There is no guarantee for employees on day two.

Why break up an efficient and successful operation? Why remove the conditions and security that employees have? Why attack morale in a department and an operation important to our national interest? Those questions must be answered, but have not been answered in this debate.

My hon. Friend the Member for Cardiff, West made a modest plea for staff in Cardiff. The hon. Member for Nottingham, South (Mr. Brandon-Bravo) offered a promise, which he asked the Minister to reinforce, that staff conditions will not be adversely affected by the change. I share his hope that the Minister will clear that up but, even better, we shall hold the hon. Member for Nottingham, South to his promise when we consider these issues in Committee and seek to improve the protection of staff. There is no change on day one, but change on day two and thereafter offers no guarantee of hope for the future of those staff.

The right hon. Member for Chertsey and Walton (Sir G. Pattie) emphasised that he was not a whingeing exporter and underlined the importance of backing our

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exporters. In effect, he agreed that there is no evidence of competitor countries rushing in the same lemming-like way to undermine their industrial capacity to export.

We know that there has been a renewed wrangle in Government in recent weeks, with the Chancellor wanting a clear break with no future commitment for finance from the Government on activities with which competitor countries are helped by their Governments. We know that small exporters are angry that the Government propose to hand political risk insurance to the private sector, making it less likely that United Kingdom manufacturers will be able to get protection for contracts where there is political instability. It is difficult to imagine circumstances which more graphically illustrate the importance of political risk insurance than the situation today, when our country is at war and when the political situation in eastern Europe and many other parts of the world offer a major challenge to our economy.

I highlight the comments of the Select Committee on the Treasury and Civil Service on the autumn statement. It underlined again and again the importance of exports to our economy. Paragraph 22 of its report stated :

"Exporting may become increasingly difficult. An economic recovery based on increasing the growth of exports in the second half of 1991 is therefore far from assured. If the United Kingdom's export performance should falter, in the absence of some offsetting support from other components of domestic demand, the forecast for resumption of non-oil economic growth will not be achieved."

That is put at risk by the venture on which the Government are foolishly embarking. They were warned by the Select Committee that the outlook for the next year is, if anything, even more uncertain, with the consequence that potential errors could be greater than those implied by the average of past errors. We appeal to the Minister not to compound those errors by pressing ahead with this legislation.

We ask the Minister to defend British interests. He must surely accept the progression of events which will be inevitable once the Bill becomes an Act. He must accept that important issues need to be addressed. He must tell us how the Government will continue to meet their obligation to encourage United Kingdom trade once ECGD is privatised this year. Currently that is part of the work of ECGD. Has the Minister taken full cognisance of the recommendation of Ernst and Whinney in which it said that it

"would not advocate the sale of ISG into the private sector in the absence of historical financial information. The absence of that information makes the raising of capital in the private market at best difficult at present, and could, in any case, significantly reduce the sale proceeds obtainable by Government for the business"? That was a warning given by Ernst and Whinney. The Government have not responded by providing the House or those who are anxious about the future of ISG and our export industry with the financial facts. I suspect that that failure will be compounded by the Minister failing to give an answer today.

I urge the Minister to accept that, if he fails to defend British interests as we seek--especially in view of the Treasury's intransigence--it will be only a matter of time before decisions are taken on purely financial grounds and no attention is paid to public policy or national interest. Then it will be only a matter of time before overseas ownership dilutes still further the increasingly tenuous link

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between our national interest and our export trade. It will then be only a matter of time before the pressures of commercial logic squeeze out trade which involves risk but is important to our national economy. It will be only a matter of time before jobs become less secure, high-quality senior staff in the ISG move elsewhere, conditions of work deteriorate and an important national asset is wasted.

Like the leech in the middle ages, the Government's cure is more painful than the condition that they seek to cure. The reasons put forward sound remarkably similar. The hon. Member for Cannock and Burntwood suggested that ECGD was not dying but going to another place. That sounds mealy- mouthed. Misplaced faith is the main characteristic of the No Turning Back group, a breed which seems to be a curious cross between a lemming and a rottweiler.

I urge the Government to accept that privatisation is a high-risk strategy. It is a sobering thought, but it is a fact, that if the insurance services group had been privatised two or three years ago, it could have been made insolvent purely as a result of the stock market crash of October 1987.

The hon. Member for Leeds, North-West said that industry wants a Government who care about its difficulties and about exports. He is right. We need a Government who want a fresh strength in British industry and who care about our manufacturing base and our need for future success in export trade. For that, and for a determination to return to common sense on the issues debated today, British exporters will have to wait for a Labour Government. The Opposition will vote against this ill-considered and short-sighted legislation. 9.32 pm

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh) : We have had an interesting debate on this important legislation. Several points were raised and I shall try in the time available to answer the main questions. I shall reply in writing to any points that I cannot answer because of time constraints.

I apologise if I cannot reply to everything that the hon. Member for Cardiff, South and Penarth (Mr. Michael) said in his machine-gun delivery. I am sorry that he thinks that I am a cross between a lemming and a rottweiler. I like to think that I am rather a gentle sort. But I shall disappoint him in one respect. Contrary to his suggestion, I have not decided at this stage to withdraw the Bill. I have made that decision for good reasons.

As my hon. Friend the Member for Teignbridge (Mr. Nicholls) said--he has apologised for the fact that urgent business elsewhere has unfortunately taken him away from the closing speeches--we all have a common aim. If we disagree on everything else in the debate, I hope that we can agree that our aim is to improve the services to our exporters. That is the key point in the debate. I assure my hon. Friends the Members for Hereford (Mr. Shepherd) and for Epping Forest (Mr. Norris) that our aim is simply to speed up the response rate and efficiency of ECGD.

In closing the debate, I should first make absolutely clear what the Government propose to privatise and why we believe it to be necessary. As my hon. Friend the Minister for Trade explained, ECGD's operations fall into two distinct categories. My hon. Friend the Member for Nottingham, South (Mr. Brandon-Bravo) emphasised

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that distinction. First, there is the insurance of project exports, such as aircraft, process plant and construction projects, involving credit terms of a least five years and often as long as 10 years. Secondly, there is the insurance of mainstream exports--anything from confectionery to cars--where credit risks of not more than six months need to be insured.

The first category of business, averaging more than £2 billion of exports each year, is handled by ECGD's project group based in London. Let me assure my right hon. Friend the Member for Chertsey and Walton (Sir G. Pattie) that the Bill will not affect in any way ECGD's support for project exports. I also assure my hon. Friend the Member for Leeds, North-West (Dr. Hampson) that there is no wish among Treasury Ministers to weaken ECGD's contribution to the support of project exports.

Support for such business requires ECGD to underwrite large value payment risks, usually in developing countries, which can persist for as long as 20 years. Clearly, that requires some extremely difficult judgments to be made about the future. There is obviously a risk that, despite using the best information and best efforts to arrive at a right decision, events sometimes do not turn out as well as anticipated and ECGD has to face a claim.

Of course we want to support our exporters, contrary to what the hon. Member for Gateshead, East (Ms. Quin) suggested in her opening speech. No one involved in the financing of international trade predicted that we would have a debt crisis as severe as that which arose in the early 1980s. ECGD shared that experience, and the results have shown up in the large deficits that have emerged in its financial results during the past few years.

I can tell the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) that privatisation has nothing to do with ECGD's deficit, which is due entirely to the project business.

Dr. Hampson : Is it not fair to say that ECGD has done considerably less badly than most of our competitor countries' systems?

Mr. Leigh : Yes, it is fair to say that. Clearly, we are in a difficult position, a point that I know my hon. Friend the Member for Leeds, North-West made most powerfully in his speech. The aim of the system that we are introducing is to address a problem that undoubtedly needs solving.

The experience of the debt crisis in the world prompted the initiative that resulted in the announcement by my right hon. Friend the Secretary of State for Trade and Industry last week of the introduction of the portfolio management system. My hon. Friend the Minister for Trade dealt with that in some detail in his opening speech.

I accept that the portfolio management system contains some elements that our exporters would prefer not to see, which is unremarkable. As my hon. Friend the Minister for Trade said, ECGD's support for project exports has, in recent years, proved to be an expensive business for the taxpayer, largely as a result of the debt crisis. However, by no stretch of the imagination can our policy response in the face of the mounting cost of that support be characterised, as some have tried to do in the debate-- particularly the hon. Member for Gateshead, East--as its effective withdrawal. My hon. Friend the Member for Thurrock (Mr. Janman) made that clear today.

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We have not withdrawn support, because we recognise that, without it, our exporters' prospects of winning business in the face of fierce international competition would be seriously damaged. But we also recognise that, even if others should want to do that, there is no point in supporting exports that stand little chance of being paid for-- a point made in the Financial Times article today. It is all a question of trying to draw a sensible balance that recognises not only the competitive needs of exporters but also the risks of the taxpayer. PMS is simply the risk-analysis framework that helps us in that task. There is nothing sinister about it. It does not take decisions for us ; that difficult task will quite properly rest with my hon. Friend the Minister for Trade.

Mr. Colin Shepherd : Can my hon. Friend confirm that the understanding of the ECGD itself is that premium rates in the United Kingdom are higher than those of major overseas competitors?

Mr. Leigh : Rates vary from market to market, but I can confirm that, on average, United Kingdom rates are high. I hope that my hon. Friend accepts that one advantage of PMS is that it will result in higher risks requiring higher premiums, and in lower risks requiring lower premiums. That seems to be entirely sensible. My hon. Friend, in his contribution, raised some very interesting questions. I hope that he will accept that, given the debt crisis, we had to introduce PMS for the sake of the taxpayer as well as of the exporter. The first fruits of PMS have been to demonstrate, first, the risk posed for the ECGD scheme of its being unduly exposed on high-risk markets and, secondly, the extent to which its current premium rates are not sufficiently matched to the risk. In response to the latter point, the ECGD will be increasing its rates on the higher-risk markets. Overall, its premium income is expected to rise by about 10 per cent. This must be seen as a minimum response to the problem, and to represent it as an unnecessary or serious blow to our exporters' competitiveness is both to mislead and to exaggerate.

Mrs. Elizabeth Peacock (Batley and Spen) : I have been listening carefully to the Minister's reply. Can he assure the House and the large textile companies, particularly those in Yorkshire, that what the Government are proposing will not adversely affect the ability of those companies to export throughout the world?

Mr. Leigh : Textile exports will be covered by Insurance Services, but I have noted my hon. Friend's question.

I reassure my hon. Friend the Member for Leeds, North-West that there is no question of short-termism, that premium rate subsidies will be eliminated only on the basis of multilateral international agreement. My hon. Friend the Member for Hereford said that we must not go down the road of unilateralism. We have no intention of so doing.

I should like to deal now with individual markets. Decisions on the volume of ECGD cover on individual markets are both more difficult and more important. Clearly, given recent experience, it would be quite irresponsible of the Government not to adopt a prudent and disciplined approach to arriving at these judgments. However, this does not mean that, on the more difficult markets, cover will be withdrawn. I can give that assurance to my hon. Friend the Member for Leeds, North-West,

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who also raised the point. What it does mean is that we shall need to look more carefully at the balance between national interest and risk.

The starting point will obviously be a wish on the part of the Government to help our exporters to win worthwhile export contracts. The constraint will be the assessment of the financial risk in doing so. There will be extremely difficult judgments to make, but we are confident that the result will be ECGD's continuing to give our exporters the support they need to compete successfully for overseas projects that represent a not unreasonable credit risk.

The suggestion that the Government are not committed to support for project exports is simply not borne out by the facts. The suggestion that more could be done and that PMS should be abandoned is beguiling and may win friends in some quarters, but it is an irresponsible denial of the hard lessons of the recent past and the debt burden that we face. I believe that the difficult decisions we have taken represent the only way forward and a good deal for our exporters.

Mr. Gerald Howarth : My hon. Friend knows that successive Governments have come under enormous pressure from contractors and others engaged in projects overseas for support from the taxpayer--from ECGD--on account of the fact that certain countries do not represent a good long- term risk for the contractors. Is it not the case that the Government, throughout their lifetime, have solidly demonstrated their maximum support for industry--particularly through the aid and trade contingency provision when exporters claim that they are up against unfair competition, especially from the French? This provision was designed by the Government to ensure that exporters would be able to go out and win contracts.

Mr. Leigh : I am glad that my hon. Friend for Cannock and Burntwood (Mr. Howarth), who is a banker and knows about these things, has had an opportunity to make the point that he has been waiting to make all day.

By contrast, the second category of the ECGD's business--exports on short- term credit totalling some £14 billion each year handled by the insurance services group in Cardiff--presents underwriting risks that can be managed much more effectively, and where the meeting of a given financial objective is much more achievable. Hundreds of thousands of export transactions are involved each year and about 75 per cent. of this business concerns commercial risks in the EC and OECD countries. It is already run by ECGD as a commercial activity and without Government subsidy. Even if there were not overriding reasons to want to change its current status, it would be a strong candidate for privatisation.

I emphasise that the prime motivation for privatisation arose from an assessment in an expert and independent review commissioned in 1988 by the then Secretary of State, and known as the Kemp report, which has been referred to several times. It concluded that, if Insurance Services were to be able to continue to provide our exporters with the service they need, it simply had to go through a change of status.

I make it clear, in response to a point raised by the hon. and learned Member for Montgomery (Mr. Carlile), that,

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according to the Kemp report, a financial track record should be established. This track record can be created retrospectively out of Insurance Services' past activities. This is being done so that investors will immediately have relevant information. Therefore, early privatisation is both possible and desirable for that reason. My hon. Friend the Minister for Trade referred to the competitive and legal challenges confronting Insurance Services and the risk that, without a change of status, these challenges could deprive the ECGD of the best 75 per cent. of its business. It would clearly be a denial of the Government's responsibility both to our exporters and to the taxpayer to allow a situation to develop where the short-term business of this fine organisation was reduced to the status of an insurer of last resort, focusing only on exports to the developing countries.

I must repeat that these are the considerations that have led us to the conclusion that privatisation is essential and that maintaining the status quo is simply not an option. The other benefits that we can expect to flow from privatisation in terms of greater flexibility are icing on the cake. I shall deal now with some more specific issues. Some have played down the competitive pressures to which the insurance services business is subject. They have also challenged the Government's view that, even if it were a credible option on other grounds, which it is not, maintaining the status quo for the insurance services business will, in due course, become an option that will face serious legal challenge from Brussels.

The competitive challenge was mentioned in particular by my hon. Friend the Minister for Trade. We know, although some Opposition Members seem not to accept this, that competition is vital, and we cannot pretend that it does not exist. That is a luxury in which business managers cannot afford to indulge, and they certainly do not wait until they have lost their best customers before deciding that, yes, they do have a bit of a competitive problem about which they should do something. I accept that, at present, Insurance Services is the dominant supplier of short-term export credit insurance in the United Kingdom, but only a few years ago it enjoyed a virtual monopoly. This process of greater competition can only accelerate as the single market becomes a reality.

Mr. Gerald Howarth : My hon. Friend is on to a good point. New entrants from the continental and American markets are already in the market in the United Kingdom and the ECGD no longer enjoys a monopoly. It has 70 per cent. of the market, and is under threat. Therefore, the Bill will provide the ECGD with an opportunity to restructure so that it can meet the challenge.

Mr. Leigh : That is absolutely right. My hon. Friend knows about the competitive environment in which the ECGD exists, and is right to emphasise that point. British companies will cease for credit insurance purposes to compartmentalise their business into domestic, EC and OECD work. They will see, indeed are seeing, the advantages of a single insurance policy covering all their needs. They will be able to look at a wider range of insurers--companies throughout Europe which have been freed from the insurance directive to market their services throughout the community.

Where will Insurance Services be in all this if we do not change its status? Almost certainly, it will be struggling to maintain market share against a tide of new competition

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with one hand tied behind its back. This would be disastrous for the business, its customers--our exporters--the staff and the taxpayer. A privatised insurance service will be able to compete fairly and equally.

The legal challenge was lightly dismissed by the hon. Member for Gateshead, East (Ms. Quin). Although the Kemp report was written some years ago, increasing attention is being paid in Brussels to the problems associated with the single market and state subsidy of export insurance. We recognise that this work is being carried out. It is right to address that problem and to act in good time. As my hon. Friend the Member for Epping Forest said most clearly, the treaty of Rome says all that is needed on the subject. Where state involvement distorts competition, article 92 makes it clear that this would represent state aid, which is incompatible with the Common Market.

Ms. Quin : I have article 92 in front of me. There are several exceptions in the article, which makes it quite clear that aid can be granted in specific areas and areas which can be agreed at any point by the European Council of Ministers. Would the Minister also accept that there is a tremendous variety of levels of state aid given in the European Community? In fact, both Germany and Italy give more than we do, and those aids are deemed compatible with the Common Market. Therefore, to rely on article 92, as the Minister and his hon. Friends have done, is a delusion in this case.

Mr. Leigh : It is not a delusion. If the hon. Lady reads article 92, she will see that those exceptions do not apply to exports to EC and OECD countries. Therefore, her point does not apply. There is almost universal recognition within the relevant expert working group in Brussels that much short-term export credit insurance is an area of genuine competition between private sector and state insurers, and that the latter enjoy advantages which make for unfair competition under the treaty of Rome. Discussion is centering on how to make the playing field level, but while the debate goes on, virtually all EC Governments are considering steps to distance their official agencies from the state as far as cover for short term export credits is concerned.

Examples were quoted, particularly by the hon. Member for Warrington, North (Mr. Hoyle) about what is happening in other European countries. In Germany and in the Netherlands, the structure which we are trying to achieve, involving a private company handling short-term business but benefiting from Government backing in respect of the more difficult risks, already exists. In France, state reinsurance of the bulk of short-term political risks has been transferred to the commercial reinsurance market.

Denmark is considering the privatisation of its official agency. Portugal is moving partially to privatise its agency, and we know that the Belgians are reviewing the status of theirs. If that is not a picture of our competitors in the EC taking action to address his problem, I do not know what is. I do not believe that we could accept a halfway house. It is dangerously misleading to suggest that there is some safer, no-change haven which the Government are deliberately trying to ignore.

Some myths have been perpetrated in this debate. First of all, let me deal with exporters. At every stage in the process culminating in this Bill, there has been

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overwhelming endorsement by all interested parties of the Government's analysis of the threats confronting insurance services. Contrary to the impression given by the hon. Member for Gateshead, East, the response has been overwhelming. I hope that exporters listen to the facts and are reassured. I cannot emphasise enough that the motivation behind the exercise has all along been a desire on the Government's part to ensure that the ECGD was placed in the best position to meet exporters' needs after 1992.

The truth about the alleged lack of interest is that some parts of the press, particularly The Guardian , have speculated and got it badly wrong. The fact is that serious interest has been and continues to be shown-- [Interruption.] It is a pity that Opposition Members are not listening. Serious interest has been and continues to be shown in buying the business on the part of a good number of institutions from a variety of backgrounds. That should hardly be a surprise, given the expertise and experience of the business which is on offer. It is more surprising that the more pessimistic scenario should be given any credibility. Perhaps it suited the book of those opposed to privatisation to peddle such myths.

On staff implications, I pay particular attention to the comments made by the hon. Members for Warrington, North, for Dundee, East (Mr. McAllion) for Cardiff, South and Penarth and for Cardiff, West (Mr. Morgan). First, I emphasise the importance that the Government attach to maintaining the commitment and skills of the staff concerned. That is vital for the company's future success. The new owners will readily understand that when offering the transferring staff terms and conditions of employment to replace those that they currently enjoy in the civil service.

Mr. Michael : Will the Minister give way?

Mr. Leigh : I still have some points to make, so I must continue. [Interruption.] The hon. Gentleman asked for certain assurances. To the extent that the Government can do so through the Bill and other arrangements, they will give staff the reassurance that their terms and conditions would be at least as good as their present ones. Once a final package has been negotiated with the new owners--

Mr. Michael : Will the Minister give way?

Mr. Leigh : No. I should have thought that the hon. Gentleman would have liked to have the assurance that I am now giving to the staff of the ECGD.

Once the final package has been negotiated with the new owners, the staff will be given a clear month in which to assess it and to state their final preferences as to whether they wish to join the new company or to remain in the civil service. It has throughout been the Government's intention that the eventual allocation of staff to the company and the ECGD should reflect the final preferences--I emphasise those words--expressed by staff, where that is consistent with the business needs of the new organisation.

Mr. Michael : Will the Minister give way?

Mr. Leigh : No.

In this debate, my hon. Friend the Minister for Trade and I have succeeded in showing that the impetus for the measure has not been imposed from above as a matter of

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ideology. It has come up from below, to meet the competitive challenge facing the industry and because of the legal position facing our exporters.

During the past 10 years, the Government have transformed the economic climate for our exporters. We in this Department are determined to ensure that the demands of society are met by the business environment. We have made that business environment possible by cutting taxes, by privatisation measures and by deregulation. Contrary to what has been explained and claimed in the debate by Opposition Members, there has been an enormous interest in the privatisation measure. We must not disappoint those people who are interested in buying what will be a successful first-rate company and a major private institution standing up for Britain and for our exporters.

The Labour party's do-nothing approach is typical, but it ignores the real world. It simply will not wash. It ignores the legal and competitive challenge facing the industry. We are used to the Labour party doing the wrong thing for the wrong reasons, but it seems to be suggesting today that we should be doing the wrong thing for no reason at all.

The Government are determined to create a business environment in a changing export world where our exporters are fully supported. We intend to see the Bill through to its conclusion, and I commend it to the House.

Question put , That the Bill be now read a Second time. The House divided : Ayes 283, Noes 223.

Division No. 43] [10 pm

AYES

Adley, Robert

Aitken, Jonathan

Alexander, Richard

Alison, Rt Hon Michael

Amess, David

Amos, Alan

Arbuthnot, James

Arnold, Jacques (Gravesham)

Arnold, Sir Thomas

Aspinwall, Jack

Atkinson, David

Baker, Nicholas (Dorset N)

Baldry, Tony

Banks, Robert (Harrogate)

Batiste, Spencer

Beaumont-Dark, Anthony

Bellingham, Henry

Bendall, Vivian

Bennett, Nicholas (Pembroke)

Benyon, W.

Bevan, David Gilroy

Biffen, Rt Hon John

Blackburn, Dr John G.

Blaker, Rt Hon Sir Peter

Body, Sir Richard

Bonsor, Sir Nicholas

Boscawen, Hon Robert

Boswell, Tim

Bottomley, Peter

Bottomley, Mrs Virginia

Bowden, Gerald (Dulwich)

Bowis, John

Boyson, Rt Hon Dr Sir Rhodes

Brandon-Bravo, Martin

Brazier, Julian

Bright, Graham

Brown, Michael (Brigg & Cl't's)

Bruce, Ian (Dorset South)

Buchanan-Smith, Rt Hon Alick

Burt, Alistair

Butterfill, John

Carlisle, John, (Luton N)

Chapman, Sydney

Chope, Christopher

Clarke, Rt Hon K. (Rushcliffe)

Colvin, Michael

Conway, Derek

Coombs, Simon (Swindon)

Cope, Rt Hon John

Currie, Mrs Edwina

Davies, Q. (Stamf'd & Spald'g)

Davis, David (Boothferry)

Dicks, Terry

Dorrell, Stephen

Douglas-Hamilton, Lord James

Dykes, Hugh

Eggar, Tim

Emery, Sir Peter

Evans, David (Welwyn Hatf'd)

Evennett, David

Fairbairn, Sir Nicholas

Fallon, Michael

Favell, Tony

Fenner, Dame Peggy

Field, Barry (Isle of Wight)

Finsberg, Sir Geoffrey

Fishburn, John Dudley

Fookes, Dame Janet

Forman, Nigel

Forsyth, Michael (Stirling)

Forth, Eric

Fowler, Rt Hon Sir Norman

Fox, Sir Marcus

Franks, Cecil

French, Douglas

Fry, Peter

Gale, Roger

Gardiner, Sir George

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