Industry and Exports (Financial Support) Bill

My Lords, first, I thank the Minister for her helpful explanation of the Bill. It has been introduced as a key part of the Government’s attempts to tackle the economic crisis and, even given that it is a money Bill, it is perhaps remarkable how few noble Lords have chosen to speak today. Given that it deals with spending up to £16 billion, perhaps it suggests that we have become numb in the past few months to figures of that order. I hope not. In that regard, I should be grateful if the Minister could inform us how much of the existing ceiling under the extant legislation has been used up. She may have mentioned it, but it came at some speed so I should be grateful if she could confirm it. She has explained Clause 1 as being necessary for several reasons, one of which was to accommodate the increasing number of loans, as opposed to grants, being made. We support the move from grants to loans and would encourage the Government to move even further in this direction if it means that limited taxpayer resources can stretch further and provide more support for more businesses. However, as my honourable friend in another place pointed out, this support is effective only if and when it actually reaches the businesses concerned. Simply announcing various million and billion pound funds to do various things in various sectors is meaningless, and even counterproductive, when companies and employers are unable to access the money or when the funds in question are insufficiently attractive to gain their interest. The last thing we need is another fiasco along the lines of the Government’s misjudging of the VAT cut. Indeed, the Government must have been very concerned that several major auto manufacturers had serious problems, coincidentally again to do with VAT, in the cash for bangers scheme. I suggest that it is time for the Government to provide in writing a detailed assessment of all the schemes they have announced, showing which are fully up and running and how much money has been disbursed and committed under each, as it appears that these schemes are so far producing very disappointing results. Manufacturing output has continued to decline—by 5.5 per cent in the first quarter this year—and the economy has shrunk by 1.9 per cent. Perhaps most worryingly, the Government’s policies seem so far to be making little or no headway against unemployment. We now have the highest redundancy rate since records began and have just witnessed the largest quarterly rise in overall unemployment since 1981. Instead of a big, simple and effective scheme, like a £50 billion national loans guarantee scheme as proposed by the Conservative Party, which would cover all sizes of businesses in all sectors, the Government are relying on a hotchpotch of funds and schemes, all requiring the struggling employer needing help to jump through different hoops. The Bill even adds to the confusion since the money will apparently not be able to be spent in areas with assisted area status. The Government have apparently taken on board the impossibility of navigating their labyrinth and established what the Minister in the other place described as a "parallel programme", called Solutions for Business, specifically designed to clarify the actual funds and schemes. I wonder whether the Minister can tell us how much money is being spent on this programme just to make the various funds and schemes more understandable. In addition, I wonder whether she can give reassurance that a proper assessment is being done on each of the Government’s various schemes. Perhaps as an inclusion in the written assessment I asked for earlier, can we know what audit procedures and analysis are undertaken regarding each of the schemes to ensure that taxpayer money is committed effectively? Furthermore, what EU consents are required in respect of each scheme? I now turn to Clause 2, which is slightly more controversial than Clause 1 because there is at least one group of outside interests who are convinced that it will have an impact. It is unfortunate for the Minister that that group is WWF, and the impact it foresees is not a beneficial one. Although we agree that the ECGD needs to be able to give what support it can, I hope the Minister can reassure us about the effect that this change will have on the stringency of the due diligence procedures that applicants must currently go through. We do not believe that the economic crisis that this Government have made such a major contribution to plunging us into means that we must give up on our environmental responsibilities. Finding ways out of the recession must not mean undoing necessary safeguards against environmental damage or our high standards on bribery, corruption and human rights. I understand from the debates in another place that the requirement that no support can be given until the proper assessments have been made will be maintained and I welcome that assurance. However, the WWF highlights the difficulties of undertaking a proper baseline assessment retrospectively. The project for which support is being sought might already have had a significant impact on the local environment, making a proper analysis of any damage, impossible. How will the ECGD deal with such applications where limited information is available? Indeed, it seems possible that the clause will provide an incentive for an application to be delayed to hide the very damage that the assessments are designed to prevent. We also hear that the Government are looking to introduce a new underwriting process, the letters of guarantee scheme, with no impact assessments at all. Is that really the case? I very much hope that the WWF's concerns are unfounded and that the Minister can give us clear assurance that the impact assessments will not be weakened either by this Bill or by any future policy the Government intend to introduce. If those concerns are misplaced, they are the predictable result of policy undertaken without proper consultation. Can the Minister explain what consultation was done on the policy? There seems to be considerable doubt as to whether even the Export Guarantees Advisory Council was consulted. Have the Government really made this change without talking to the advisory body most qualified to warn of problems?