ECGD Statement Raises Serious Concerns

3.17.00pm BST (GMT +0100) Thu 1st Jul 2004

Commenting on today's statement by the DTI detailing the future operation of the Export Credit Guarantee Department, Malcolm Bruce MP, Liberal Democrat Shadow DTI Secretary, said: "Today's statement acknowledges a capital requirement of £1.8 billion on top of the ECGD's annual borrowing requirement of over £5 billion.

"This is in addition to uncomfortable rumours that the DTI is seeking to write-off up to £10 billion in unrecoverable debts.

"Current claims that the agency makes a contribution to the Exchequer seem hard to sustain in these circumstances. If this really was the case, the agency would be a prime candidate for privatisation.

"If the ECGD breaks even, and is self-funding, why can't it be in the private sector? The fact is there are huge hidden costs attached to the running of this agency, which requires it to remain in public hands.

"After acknowledging the situation is unsatisfactory, the Government has ensured it will be 3 years before the reforms are operational. One has to speculate the delay is to enable them to get the agency's accounts in order, particularly in respect to historic unrecoverable debts."

ENDS

Notes

The changes to the ECGD were announced today in a Written Statement by the Secretary of State for Trade and Industry, Patricia Hewitt.

A Trading Fund will be established with a capital framework to enable ECGD to take a more expansive approach to cover. The Fund will have two separate accounts, Realisations and New Business. They will be capitalised and accounted for separately and have separate financial objectives. Capital for New Business will be £1.8 billion.

A Pilot Trading Fund will be operational from April 2005, leading to the establishment of a Statutory Trading Fund in 2007-08.