Export Credits Guarantee Department (Regulation and Reporting)

Lisa Nandy Excerpts

Wednesday 27th April 2011 Commons Chamber

[Lisa Nandy (Wigan) (Lab)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to impose certain requirements on the Export Credits Guarantee Department, including the publication of an audit of all sums owed to the Department, an annual impact assessment and a real-time disclosure policy on all supported projects; to prohibit the support of certain activities by the Department; to provide that debt cancellation by the Department cannot be defined as official development assistance; to prohibit companies from receiving support from the Department for a period of at least five years following a relevant conviction of corruption; to introduce a duty of care provision which must be followed in the Department’s operations to provide access to justice for those affected by supported projects; and for connected purposes.

We are in the midst of an economic crisis caused in part by a lack of transparency and regulation in a system that thrived on excessive risk-taking for short-term profit without regard for the wider implications or the impact on people’s lives. It is now, I hope, widely acknowledged that private enterprise is bound by the same moral codes that bind us all and that activity in all areas of the economy should be both sustainable and accountable. We have obligations to one another and that is true for business as much as it is true for individuals. That is why I seek to introduce this Bill today: to shine a spotlight on a Government Department that uses taxpayers’ money to fund business activities overseas some of which are neither sustainable nor accountable and that have, in the past, caused significant damage to people and the environment.

The Export Credits Guarantee Department falls under the Department for Business, Innovation and Skills and acts as the UK’s export credits agency. It uses Government money to support private exporters in winning contracts overseas in countries where alternative support is not readily available to those businesses. It spends a huge amount of taxpayers’ money—in 2009-10, it issued guarantees of more than £2 billion—yet it operates entirely in a moral vacuum. Campaigners have unearthed countless astonishing examples of projects that cause significant damage to people and the environment, such as the sale of weapons to General Suharto in Indonesia that were then used to suppress his own people; a power station in India, which was significantly overpriced and now lies dormant because the electricity that it generated was too expensive for the Government to buy; and a hydroelectric dam in Lesotho that was overseen by a chief executive who was later jailed for 18 years for taking £3 million-worth of bribes.

It is worth dwelling on one more example: the Baku-Tbilisi-Ceyhan pipeline in the Caucasus. From the very beginning, non-governmental organisations voiced significant concerns about the project. Its design, they said, violated World Bank and European safeguards on human rights and the environment on more than 170 occasions, yet the ECGD went on to ensure the construction of the pipeline by the BP-led BTC consortium, providing credit totalling £150 million. Part of the deal was a series of “host Government agreements” with the countries involved. Those agreements take precedence over all national laws, except the constitution, and prohibit improvements to human rights or environmental regulation through new laws if they might affect profits. In effect, the deal puts profits above people, sometimes with the most appalling consequences.

As Amnesty International has pointed out, the deal created a “rights-free corridor” and during its construction much of the route was militarised. In all three countries, local people and international investigators were harassed, detained and arrested and there were allegations of torture. The UK Government have since conceded that the consortium broke international rules governing human rights, but it surely cannot be right that we are facilitating such activities not only without ensuring that human rights can be upheld but while human rights are actively being prevented from being upheld.

Those actions potentially put the UK in breach of international law and are certainly at odds with our human rights obligations, but for recipient countries the implications are much worse. If the deal falls through the exporter is paid anyway and, in the short term, the UK taxpayer foots the bill, but in some cases the ECGD goes on to re-designate that fee as a debt owed by the recipient country. An astonishing 95% of developing country debt owed to the UK has been generated by ECGD-backed operations. Those countries could have spent that money on developing their own economies, but instead they are forced to pay for a service that often does little for their people. Sometimes they are paying for damage inflicted on their people and their country.

I have a personal interest in this matter. Before I entered the House, I had the privilege of working with a group of remarkable children who had suffered appalling abuse and poverty overseas. I feel incredibly strongly that as a country we should be doing everything in our power to prevent the harm that is done to them, yet instead, in some cases, we are underwriting it.

The situation appears to be getting worse. The standards the ECGD applies are, in the words of the Jubilee Debt Campaign, “weak and getting weaker.” In 2010, the previous Government removed mandatory screening of child and forced labour for ECGD-backed projects. Between 2009 and 2010, the ECGD backed £21 million-worth of unscreened projects. In comparison, the OECD recently pointed out that all the UK’s major competitors and the vast majority of export credits agencies screen all the projects that they fund. The UK should be leading the way on this most important of issues, but instead we are trailing further and further behind.

Most of what we know about the ECGD comes from campaigners because it is neither transparent nor accountable. There is no legal requirement on it to publish a list of the projects that it supports and it does not reveal which outstanding debts relate to which projects. Indeed, requests for such information have been repeatedly declined. The ECGD has no duty of care at all to people who are affected and there is no grievance mechanism for those who are affected. Lender responsibility is disregarded and all the repercussions are borne by importers, even if there has been no, or limited, benefit to those countries. That is precisely the opposite of social responsibility.

My Bill would require the ECGD to adopt a list of prohibited activities and proactively to publish information on the projects it supports, including impact assessments, consultation and the monitoring and evaluation of projects. It would also prevent companies that have been convicted of corruption from receiving support from the ECGD for five years after the date of conviction. I want to make it clear that I am not attempting to stifle support for British business, which needs and deserves support from the Government now more than ever, but we should be supporting sustainable trade that is of long-term benefit, that safeguards human rights, that protects the environment and that at the very least does not exacerbate poverty.

Currently, the ECGD supports a handful of large companies that operate in just a few sectors. In the past year, for which we have figures, virtually all its support went to one company alone, Airbus, which hardly represents the diversity of the British economy, and that does absolutely nothing for the small and medium-sized businesses that we are all so keen to support. The ECGD could instead support and promote new, green industries and make productive investment that would generate jobs and prosperity. Renewable energy, public transport projects and low or zero-carbon industries should all be considered for support. Instead, we support proportionally more carbon-intensive industries than any other EU country. A credit line of £50 million, which was rightly ring-fenced for renewable energy in 2003, has not been touched to date.

Reform of the ECGD is backed by Members from the Conservative, Labour, Liberal Democrat, Green and Scottish National parties. Indeed, the right hon. Member for Twickenham (Vince Cable), who is now the Secretary of State with responsibility for the relevant Department, proposed reform of the ECGD just two years ago. There is clear consensus that the most urgent task facing the Government is the recovery of the economy but that can and must be achieved through sustainable and productive investment. We should be promoting the best of British business to the rest of the world and we should be leading the way in our commitment to human rights and the environment.

Question put and agreed to.

Ordered,

That Lisa Nandy, Zac Goldsmith, Roger Williams, Caroline Lucas, Tony Cunningham, Anas Sarwar, Dr Eilidh Whiteford, Sheila Gilmore, Bob Russell, Dr Julian Huppert, Teresa Pearce and Yasmin Qureshi present the Bill.

Lisa Nandy accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 11 November, and to be printed (Bill 182).