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House of Lords

Monday, 8 June 2009.

2.30 pm

Prayers—read by the Lord Bishop of Liverpool.

Export Credits Guarantee Department


2.36 pm

Asked By Lord James of Blackheath

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills & Cabinet Office (Baroness Vadera): My Lords, as of 31 March, ECGD’s total outstanding loans were £13.3 billion. ECGD aims to recover any money that it pays in claims and, over the past 20 years, has been cash-positive across its portfolio. As announced by the Secretary of State in New Industry, New Jobs, we are looking at existing and potential support offered by ECGD to ensure that the organisation plays a significant role supporting UK exporters through the recovery and beyond. ECGD is currently consulting on a letter of credit guarantee scheme and will launch a consultation on a credit insurance scheme for exporters by 19 June.

Lord James of Blackheath: My Lords, I thank the Minister for that response. However, will she please comment on the announcement in the Pre-Budget Report 2008 that a £1 billion allocation specifically to support small business finance would be channelled through the ECGD, and the later report in this April’s Budget that consultations on the subject would start soon? Given the sheer importance of this £1 billion to small business finance, how has it taken eight months before even consultations can begin? Can she also please assure the House that there is absolutely no assumption that the £1 billion is any form of rescue or lending-ratio adjustment for the ECGD itself?

Baroness Vadera: My Lords, I am very happy to clarify that the £1 billion was then converted into £10 billion and was launched in January as the working capital scheme, which is now current; £5 billion of that is for trade credit insurance, which is now current and being implemented, and £1 billion is set against the lending agreements signed by RBS and the Lloyds group, which are also current. So that scheme is being launched. As part of that, in anticipation of potential market failure, there is a consultation on letters of credit.

Lord Razzall: My Lords, does the noble Baroness agree that the environmental groups are extremely concerned by proposals possibly to expand the ECGD’s

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remit so that more taxpayer money supports more overseas deals such as the recent sale of 72 Eurofighters to Saudi Arabia? Will she undertake to ensure that projects that infringe UK human rights standards and the environment will not be supported?

Baroness Vadera: My Lords, I am very pleased to confirm that we would not support projects that do not meet environmental standards or are an abuse of human rights. On taxpayer funding, as I said in responding to the Question, ECGD has been self-financing over the past 20 years.

Lord Eden of Winton: My Lords, is it not the case that the fixed-rate export finance scheme has come to an end and that the new system to take its place was announced and came into existence in December last year? If that is the case, how is it that businessmen are not able to get any information or details about the new system? How can they possibly plan ahead unless they know what is going on?

Baroness Vadera: My Lords, the extension of the scheme to which the noble Lord refers—FREF—will be announced in the autumn, but I point out that there have been only four loans under the scheme in the last seven years. There is not a huge demand for it. There is currently only one serious inquiry and that company is well aware of the position.

Viscount Montgomery of Alamein: My Lords, when I was involved in promoting British projects overseas many years ago, especially in Latin America, we were always overtrumped and beaten to the punch by Coface and Hermes. Does the Minister have a view on whether that situation has improved?

Baroness Vadera: My Lords, we provide a level of support to British exporters that, as a percentage of our exports, is equivalent to that provided by Germany and the United States, but not to the level given by certain countries such as Canada. Following the privatisation of the short-term business in 1991, we have had a lower volume of business than certain other countries. However, I will not apologise for the more rigorous risk analysis, relative to some other countries, and the environmental and human rights concerns that are taken account of by ECGD.

Lord Roberts of Conwy: My Lords, will the noble Baroness explain how the banks got the money that she referred to? Was it for their own activities or the activities of their clients?

Baroness Vadera: My Lords, the working capital scheme assigned a guarantee with Lloyds and RBS, under which they are required to sign a lending agreement whereby they are required to lend to UK companies. We have a specific, legally binding agreement—one of the first of its kind in the world—which we monitor on a monthly basis to ensure that the capital that is released goes to UK industry.

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Lord Tomlinson: My Lords, can my noble friend assist me? She referred to the £1 billion that became £10 billion in the new schemes. Is that part of the £10 billion package that the Government announced to deal with our economic crisis and which Her Majesty’s Loyal Opposition opposed?

Baroness Vadera: My Lords, it is a little unclear sometimes what Her Majesty’s Opposition do or do not support. I find it difficult to follow, because they appear not to have many detailed policies that we can discuss.

Lord Brooke of Sutton Mandeville: My Lords, given the Minister’s first Answer to my noble friend and the answer that she has just given, does she appreciate the irony that, after 12 years of the Treasury working very hard to conceal bad news, it has developed the habit of concealing good news as well?

Baroness Vadera: My Lords, I am delighted that noble Lords have the good news now.

Lord De Mauley: My Lords, the ECGD’s last annual report said that there was a need to reduce its cost base. How has the extra work announced recently affected any planned cost reductions?

Baroness Vadera: My Lords, my noble friend the Secretary of State has announced that a review will be taken in very short order. The review will look at the skills, calibre and resources that the ECGD will need. That will feed into the cost-cutting exercise.

Civil Service: Damian McBride


2.44 pm

Asked By Lord Lamont of Lerwick

Lord Davies of Oldham: My Lords, Damian McBride was appointed as a special adviser in April 2005. He was employed under terms and conditions set out in the Model Contract and Code of Conduct for Special Advisers. Mr McBride relinquished his post as Head of Communications in Her Majesty’s Treasury on taking up this appointment.

Lord Lamont of Lerwick: My Lords, I thank the Minister for that reply. Has he seen the report in the Guardian by Patrick Wintour on 16 April? It stated that Sir Gus O’Donnell, the then Permanent Secretary to the Treasury, insisted on the resignation of Mr McBride as a Treasury civil servant and press officer on the grounds, among others, that he had planted in newspapers false stories about Sir John Major and myself, quite wrongly alleging that we were blocking the release of information about the Conservative Government’s economic policies—information requested under the Freedom of Information Act—and that at that point

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the then Chancellor, now the Prime Minister, decided to make Mr McBride a special adviser beyond the veto of Sir Gus O’Donnell. Is that report true or untrue?

Lord Davies of Oldham: My Lords, Damian McBride was appointed as a special adviser in 2005 following a distinguished and important role in the Treasury. As the noble Lord will appreciate, he held a very high and significant position in the Treasury. He was appointed as a special adviser under the terms of such an appointment. The press reports to which the noble Lord referred have to be taken on the basis of one’s judgment of the paper concerned.

Lord Foulkes of Cumnock: My Lords, will my noble friend join me in congratulating the noble Lord, Lord Lamont, on his courage in raising this issue, which must bring back some painful memories of when he was forced to offer his resignation to John Major because of the collapse of the ERM after being advised by someone—his special adviser, a Mr David Cameron?

Lord Davies of Oldham: My Lords, as ever, I am grateful to my noble friend. However, the House will have seen that the original Question relates to events in 2005, reflecting then discussion about issues which obtained in 1992. We might think that we ought to deal with more contemporary issues.

Baroness O'Cathain: My Lords, will the Minister elucidate a bit further on this? If my noble friend’s statement from the Guardian is correct, surely it should never have passed anybody’s mind to re-employ Mr Damian McBride. Not only that, he did literally the most appalling things while he was in office, but he was allowed to resign. Why was he not sacked? Is the Prime Minister waiting for the opportunity to put somebody in his Government who will be able to turn to somebody like him and say, “You’re fired”?

Lord Davies of Oldham: My Lords, it is true that Damian McBride resigned, but he obtained—and does obtain—no benefits, emoluments, compensation or any money at all. He left that day without a further penny of public money being spent on his employment. If the noble Baroness is suggesting that there is a significant distinction between being allowed to resign and being dismissed, I think that the House will disregard that.

Lord Newby: My Lords, does the Minister accept that, irrespective of whether Mr McBride is a special adviser or a civil servant, his activities are one of the reasons why trust in politicians and this Government is so low? What assurances can the Minister give us that the McBride mentality has been stamped out by Downing Street?

Lord Davies of Oldham: My Lords, as I just indicated, Damian McBride left immediately because of the fault that had been identified in what he had done. All special advisers are aware of that and have been informed by the Prime Minister of an added specification to their code of conduct which reinforces the fact that,

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although special advisers have a particular role in relating matters of government to the public, they are bound by a clear code of conduct, and infringements of that code will produce condign effects on them.

Baroness Noakes: My Lords, the Minister described Mr McBride as having a distinguished and important role at the Treasury, but this contradicts the reports that my noble friend Lord Lamont outlined; that Mr McBride was implicit in briefing against Sir John Major while he was a civil servant and, because of that, Sir Gus O’Donnell required him to stand down from the Civil Service. The Minister did not deny that when he responded to my noble friend; I now give him the opportunity categorically to do so.

Lord Davies of Oldham: My Lords, when I refer to Mr McBride’s role, I refer to obvious facts from his curriculum vitae. He was head of indirect taxation from 1999 to 2002. He was head of VAT strategy in 2003. He was head of communications and strategy from September 2003 until he took up the special adviser’s role. That was a significant career in the Treasury. The Opposition are contending that, during part of that time, Damian McBride may have committed some infringement in his actions in relation to the public. It is clear that, as soon as the offence was identified in 2009, the Prime Minister acted.

Lord Morgan: My Lords, is the answer to this question for the Government to disinter proposals in its Constitutional Reform Bill and create an independent Civil Service, which would be on a statutory basis and would not be tarnished by such appointments?

Lord Davies of Oldham: My Lords, I notice that there are also commendations to my noble friend from the other side of the House. My noble friend will be all too well aware that a very significant expansion in special advisers took place while the Opposition were in power. It is the case that we have increased the role of special advisers. We have also trebled the resources for Her Majesty’s Opposition parties’ ability to hold the Government to account. This reflects that government is more complicated and more demanding and, of course, that media requirements are more demanding. There is a necessity for some role beyond the Civil Service, which must be independent, as my noble friend has indicated. This will be reinforced in our constitutional proposals. I think all parties agree that there is a proper role for special advisers, who must, of course, be governed by a proper code of conduct.

House of Lords: Co-operation with European Parliament


2.53 pm

Asked By Lord Wallace of Saltaire

The Chairman of Committees (Lord Brabazon of Tara): My Lords, there is already substantial co-operation between this House and UK MEPs. For example, there are regular tripartite meetings between your Lordships’ EU Committee, its Commons counterpart and UK MEPs. In addition, our own Brussels-based EU liaison officer is responsible for facilitating the exchange of information between the EU Committee and MEPs. Finally, the EU Committee regularly seeks evidence from UK MEPs.

Lord Wallace of Saltaire: My Lords, I thank the Chairman of Committees for that Answer. I welcome the establishment of an office in Brussels and the improvement of relations between British MEPs and this House. We share the common purpose of improving scrutiny of both national and European proposals as they go into and out of Brussels. I remember well that, after the last European election, the head of services of the British chair of a new European Parliament committee proposed that he should read two reports from our EU Committee before he started. We have the opportunity to make this a closer relationship. What further measures can we take to make sure that Members of the European Parliament are welcome to sit in on EU Committee meetings in this House; and that when we go to Brussels we, in turn, catch up with what they are doing?

The Chairman of Committees: My Lords, as I said in my original Answer, there is high co-operation already. If noble Lords wish to propose any additional forms of co-operation, I undertake to pass them on to the Chairman of the European Union committee. Sadly, as your Lordships are aware, he is not here today; he is recovering from surgery and we hope to see him back before the end of the month.

Lord Howell of Guildford: My Lords, while we are on the subject of scrutinising EU policy-making activities, has by any chance the Chairman of Committees received any information on when the new Minister for Europe will take up her portfolio or when she might be entering this House?

The Chairman of Committees: Sadly not, my Lords. I should make it very clear at the beginning of this Question that I am answering it on behalf of the administration of the House, and I shall not be able to answer any questions on events in the European Union elections last Thursday.

Lord Anderson of Swansea: My Lords, the continued development of the European security and defence policy argues the case for even closer co-operation, because the work straddles the responsibilities of this Parliament and of the European Parliament. Although there has been progress, the two Parliaments are in many ways almost on different planets. Can there not be a series of measures that include ensuring that, as a matter of course, the committees of this House send

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their work programmes and reports to the relevant British Members of the European Parliament, and vice versa?

The Chairman of Committees: My Lords, the reports of our European Union Committee are already sent to all those in the European Parliament who are interested. That is one reason why we have a European Union liaison officer who is responsible in Brussels for dealing with exactly that kind of thing.

Lord Waddington: My Lords—

Lord Pearson of Rannoch: My Lords—

The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, I think we should hear from the noble Lord, Lord Pearson, first.

Lord Pearson of Rannoch: My Lords, given that the EU Parliament only has the power of co-decision, while the monopoly for proposing all EU legislation remains with the Commission, and given that the Government have overridden the scrutiny reserve some 500 times in the past six years, and because, by the Government’s own admission, Brussels pays no attention to the views of our Select Committees, would it not be more sensible to close down our EU committees and redistribute their excellent resources to other Select Committee work, which is of such value to the nation?

The Chairman of Committees: My Lords, that is just the kind of question which I am not going to answer this afternoon.

Baroness Howarth of Breckland: My Lords, does the Chairman of Committees agree that the connections that have been made between the committees, particularly some of the sub-committees, and Members of the European Parliament have influenced the outcome of much of the legislation? I speak as the chair of Sub-Committee G, which has published a number of reports which have changed the proposed legislation.

The Chairman of Committees: My Lords, that is very good news which proves the worth of the European Union Committee and of our contacts with MEPs.

Lord Waddington: My Lords, does the noble Lord not agree that the taxpayer would save a load of money, and it would be a very good thing, if we reverted to the old system of indirect elections to the European Parliament? We would have no need of new procedures, such as those mentioned by the noble Lord, Lord Wallace, and the MEPs would be among us here at Westminster. Surely the present set-up can be attractive only to those who look upon the Commission as a sort of government accountable to the people of Europe. It should be treated as a bureaucracy that serves the community’s sovereign member states so that they can work more effectively together.

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