§ Mr. Bagier
asked the Secretary of State for Trade if he will make a statement on the review of the fixed rate sterling export and shipbuilding credit scheme.
§ Mr. Dell
Under an agreement with the Government the clearing banks make finance available at fixed rates of interest for exports sold on credit terms of two years or more and which are guaranteed by the Export Credits Guarantee Department. Since 1972 ECGD has operated a scheme under which it refinances a proportion of such lending which is determined in relation to the banks' deposit base, and also guarantees the banks a commercial rate of return on their unrefinanced lending. Fixed rate finance is also provided for home shipbuilding sales under a parallel scheme administered by the Department of Industry.
The agreement with the clearing banks was last reviewed in 1974 and fell to be reviewed again this year. The Government's objective has been to reduce public expenditure on refinancing which had increased substantially over recent years. Renegotiations with the clearing banks have now been successfully concluded.
The clearing banks have agreed to increase further during the rest of this financial year their own unrefinanced contribution to the existing scheme. A new scheme will be introduced on 1st April 1978. Under this scheme the banks will carry substantially more of the lending on their own books without refinancing. Government expenditure on refinancing will be reduced in consequence. The effect will be shown in the White Paper on Public Expenditure to be published next month.
Under the new scheme, eligibility both to arrange lending syndicates and to provide finance will, subject to ECGD's customary underwriting discretion, be open to all banks which are authorised by the Bank of England under the Exchange Control Act 1947 and are registered as companies in the United Kingdom.300W
The fixed rates of interest charged to borrowers and exporters will not be affected by these changes. The foreign currency financing programme for exports will also continue unchanged. The Government are satisfied that adequate finance will continue to be available for fixed rate credit and other priority purposes.
My right hon. Friend the Secretary of State for Industry has asked me to confirm on his behalf that these new arrangements will also apply to home shipbuilding credits.
Banks also make available finance for short-term export credit of under two years, guaranteed by ECGD. The Government have agreed that the interest on such finance can be raised from ½ per cent. to a maximum of ⅝ per cent. above base rate.
An information note providing further details of these changes will be laid in the Library.
§ Mr. Kenneth Clarke
asked the Secretary of State for Trade whether he will make a statement on the progress that is being made towards harmonisation of the export credit guarantee and export credit insurance systems of the member States of the EEC.
§ Mr. Meacher
The harmonisation of export credit facilities has been the subject of continuing discussions within the Community for some years. The Commission has recently tabled new proposals for harmonising certain principles of export credit insurance. These proposals have yet to be examined in detail within the Community, and the work involved is likely to continue for some time.