Parliamentary group to examine projects supported by government-backed loans
By Frederika Whitehead | 27 January 2012
“The ECGD has no duty of care at all to people who are affected”
– Lisa Nandy, Labour MP
The all-party parliamentary group on international corporate responsibility is planning to investigate the government’s Export Credits Guarantee Department (ECGD).
It is bound to increase pressure on the agency as it undertakes a review of its activities. The influential parliamentary group is made up of 144 MPs and Lords from all three main parties, and is arranging a special panel of its members to hold the inquiry.
Lisa Nandy, Labour MP for Wigan, chairs the group and is expected to announce the inquiry within weeks. Last year, she proposed a bill to reform the ECGD, after telling Parliament that it was operating “entirely in a moral vacuum”.
The agency helps UK-based businesses by providing credit guarantees and loan insurance for exports when commercial lenders regard it as too risky to do so.
Nandy’s bill, backed by many of the members of the all-party group, sought a ban on backing loans for defence deals and for companies with convictions for corruption. It was a ’10 minute rule’ bill, which allows an MP to highlight an issue, but did not pass into law.
Nandy called for a cut in support for fossil fuels and demanded more backing for smaller companies, public transport, and renewable-energy projects. There were “countless astonishing examples of projects that cause significant damage to people and the environment,” she said.
“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.” She added: “Lender responsibility is disregarded.”
An ECGD spokesman told Exaro that it “operates under a number of international agreements, which cover the social, environmental and human-rights impacts of projects, and we take those agreements very seriously.”
The ECGD, as part of its review, has promised to set out a definition of a ‘dirty fossil fuel’ project, which would not be eligible for ECGD financial guarantees in future.
In November, the ECGD announced that it had “refreshed” its outlook. It pledged to do more to help smaller companies, although its chief executive, Patrick Crawford, said that this would not be “at the expense of large exports”.
It has rebranded itself with the new operating name, ‘UK Export Finance’. The name was “simpler” and more “accessible”, said Crawford. “We are simplifying how we present ourselves.”
Lord Green, minister for trade and investment, and a former chairman of HSBC, told a gathering of small-business leaders last November that the ECGD would be “working closely” with them to support their exports.
Several industry leaders have also criticised the ECGD. It is accused, for example, of giving preference to the defence and aerospace industries.
Graham Dewhurst, director general of the Manufacturing Technologies Association, told an earlier parliamentary inquiry that it was “not fit for purpose” because it was “not interested” in helping companies outside the aerospace industry.
Susan Ross, who chairs the British Exporters Association, told the same inquiry that the ECGD had “got into a rut” and was not “looking for other business” outside the aerospace industry.
Richard Lambert said in January last year, in his outgoing speech as director general of the CBI, which represents British business, that the government needed to do more to support smaller businesses.
But the ECGD again sparked outrage in October 2011 by underwriting bank loans of £1 billion for fossil-fuel projects by the giant Brazilian oil company, Petrobras. The loans were to finance UK exports for the company’s deep-water oil-drilling projects off the east coast of Brazil.
The deal went against the coalition agreement signed by the Conservative and Liberal Democrat parties when they formed the government in 2010. The parties promised to reform the agency so that it would support a broader range of sectors and back green technologies instead of fossil-fuel projects.