Exports (Guarantee Bonding)

Oral Answers to Questions — Trade – in the House of Commons at 12:00 am on 3rd November 1975.

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Photo of Mr Frank Allaun Mr Frank Allaun , Salford East 12:00 am, 3rd November 1975

asked the Secretary of State for Trade why he is refusing to make available the guarantees to British firms on export orders of less than £2 million which he provides to similar orders exceeding that amount; and what further steps he will take to help the securing of such orders.

Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow

I assume that my hon. Friend is referring to the ECGD's new scheme for guaranteeing performance bonds. The limit was reduced from £20 million to £2 million in June, and business under negotiation since then is fully engaging the resources which can be made available. I believe that the commercial bonding market can normally deal with bonds required for orders under £2 million; but nevertheless the scheme will be kept under review in the light of growing experience.

Photo of Mr Frank Allaun Mr Frank Allaun , Salford East

Is it not daft to risk losing orders for exports up to £2 million merely because they are under that sum? Would it not be sensible to offer the services of some accountants and thereby save the jobs of thousands of workers? Moreover, would not orders for under £2 million require less investigation and less risk than would orders above that figure?

Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow

If my hon. Friend or any other hon. Member has evidence of the exclusion of orders under £2 million being a serious problem, I am certainly prepared to look at it urgently. I am satisfied that the existing commercial bonding market should normally be able to provide bonds for smaller contracts entered into by exporters without the need for special ECGD support. Where the market will not do this, it is usually because the contract is considered to be beyond the exporter's technical and financial capacity. In that case it is possible that, exercising its normal underwriting judgment, the ECGD would be unable to assist.

Photo of Mr Hilary Miller Mr Hilary Miller , Bromsgrove and Redditch

Is the hon. Gentleman aware that this is not a question of orders worth £2 million overall, but of whether it is possible to include components which separately, cost less than £2 million, but which together comprise an order whose total value exceeds £2 million? My constituents have made representations to his Department about the supply of parts to the Ontario hydro scheme. Will he take another look at this matter?

Photo of Mr Eric Deakins Mr Eric Deakins , Waltham Forest Walthamstow

I shall have a look at the case the hon. Member has raised; it has not yet come to my desk.