Select Committee on Environmental Audit Eleventh Report


4  Transparency

33. A lack of transparency lies at the root of a substantial part of the criticism directed at the ECGD during the course of our inquiry. WWF described the ECGD as 'fundamentally and indefensibly untransparent',[62] while the JNCC noted, more charitably, that 'the current levels of disclosure by ECGD are not sufficient to avoid criticism of its procedures'.[63] The amount of information disclosed by the ECGD on its sustainable development impacts and the projects supported by the agency is sometimes inadequate. There is a need for review of the ECGD's approach to transparency and the disclosure of information.

34. Any move to increase transparency and disclosure will need to be reconciled with the exporters' needs of commercial confidentiality. The CBI and SBAC cautioned against placing excessive disclosure burdens on exporters.[64] These concerns were supported by the British Exporters Association: 'it would be regrettable if a move for more transparency were to jeopardise exporters' willingness to use ECGD support because of their unwillingness to have details of their contracts published against either their, or their customers', wishes'.[65] There is, admittedly, a risk that higher levels of disclosure by the ECGD could discourage certain exporters from dealing with the agency, and may lead them to undertake arrangements with less scrupulous or demanding lenders and insurers. However, it remains the case that the ECGD's use of public funds demands greater levels of transparency.

35. We do not believe that the ECGD has struck the appropriate balance between protecting commercial confidentiality and ensuring due transparency. The ECGD provides support from public funds and exporters must therefore recognise that this facility should necessarily entail certain conditions to ensure adequate disclosure and scrutiny of funding decisions. In 2003, our predecessor Committee recommended that 'requests for confidentiality should be tested against rigorous criteria to ensure that only such information as might genuinely compromise clients' commercial activities is withheld. A high degree of disclosure should become a condition of ECGD support.'[66] We reiterate this recommendation.

36. Due disclosure of information on ECGD-supported projects and assessments is vital to ensure that the ECGD can be held to account for the use of its funds and facilities. A key issue is that details for medium and low impact projects are not released until after the guarantee has been awarded, making it difficult for applications to be assessed and challenged.[67] WWF, the Corner House, and the JNCC all called for basic project information and assessments to be made available as a matter of course.[68] The ECGD needs to ensure that project information is disclosed at a stage in the assessment process where any challenge to the case could still be taken into account. The ECGD should make the disclosure of basic project information (name, involved parties, and a brief description) a pre-condition of its appraisal process, for all categories of project. As further assessments of the project's economic, social and environmental impacts are made, these too should be made publicly available. In 2003 the Government rejected the recommendation of our predecessor Committee to publish information for medium impact potential cases under consideration, on the grounds that these cases 'are not generally controversial and attract very little public interest'.[69] We do not believe that this represents adequate grounds to exclude disclosure for these cases.

37. Equally important is the disclosure of information relating to the decision-making process within the ECGD. Without information to explain and support the ECGD's decisions, it is difficult for Parliament and outside parties to assess whether or not these decisions are appropriate. A key example raised during the inquiry was the decision to classify an export related to the Shin Kori nuclear development as low impact, when exports related to nuclear power are advised by the ECGD usually to be rated as medium or high impact. The ECGD revealed in oral evidence that this decision was taken because the export related to components for a diesel-fired standby generator, something considered incidental to the main development.[70] Had this explanation been made available previously, significant speculation and concern could have been avoided. Mr Crawford accepted that disclosing more information in general about ECGD decisions could improve confidence in ECGD procedures: 'I appreciate that building confidence in our decision making equal to that which we hold internally would be useful'.[71]

38. The current shortcomings in the ECGD's information disclosure procedures breed suspicion and misunderstanding, often exposing the ECGD to unnecessary criticism. By failing to disclose a wider range of information as a matter of course, the ECGD has directly contributed to the negative perception of its sustainable development policies.

39. Where decisions are taken that appear contrary to the information available in the public domain (for example in the classification of projects into impact categories) the ECGD should publish an explanation of their decision and provide further supporting material as necessary. This will increase confidence in the ECGD's procedures and make it easier for Parliament and interested parties properly to assess the ECGD's decisions.

40. There is also room for improvement in the area of general reporting of project progress and impacts. In particular, several witnesses raised the need for clearer reporting of the achievements and shortcomings of the ECGD's constructive engagement approach. The NAO demonstrates in its study that the ECGD's constructive engagement approach can be effective, but if this is the case then any successes are not being adequately communicated outside the agency. The NAO states 'the BPU does not attempt to measure or quantify the impact of its work in terms of such improvements to projects and, in any case, it could be very difficult to do so with any degree of objectivity'.[72] Although it may be difficult to prove exactly what improvements were a direct result of ECGD activity, there should still be a demonstration that the required standards have eventually been met. Where the ECGD conditionally agrees to support a project that does not meet all of its standards, it should publish a document clearly setting out where the project falls short; why the ECGD remains prepared to support the project, and what actions the ECGD will take to ensure that the project is brought up to standard. The ECGD must then demonstrate that these standards have been achieved. Faith in the ECGD's constructive engagement approach depends on the disclosure of information.


62   Ev 6 Back

63   Ev 72 Back

64   Ev 65 and Ev 68 Back

65   Ev 64 Back

66   Environmental Audit Committee, Seventh Report of Session 2002-03, Export Credits Guarantee Department and Sustainable Development, HC 689, para 30.  Back

67   Ev 7 Back

68   Ev 7-8; Ev 20; Ev 72 Back

69   Environmental Audit Committee, Seventh Special Report of Session 2002-03, Government Response to the Committee's Seventh Report 2002-03 on ECGD and Sustainable Development, HC 1238, page 3. Back

70   Q 108 Back

71   Q 109 Back

72   Ev 90 Back


 
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