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Exports (Cost Escalation Scheme)

Volume 938: debated on Monday 7 November 1977

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asked the Secretary of State for Trade of he will make a statement on the future of the cost escalation scheme for exports.

Does the Minister appreciate the concern felt in a number of manufacturing and export companies about the future of this scheme? Is he aware that they are particularly worried about the rumours that next spring the scheme will be scrapped completely and that they are surprised that this should be the case when the Chancellor of the Exchequer has suggested that the rate of inflation will be in single figures next year?

I am well aware of the concern that has been expressed. About 23 guarantees have been issued for contracts worth over £200 million. It is an important scheme, but it is intended to compensate for an excessive rate of inflation. In the light of the Government's success in substantially reducing that rate, we shall have to take account of the situation as we expect it to be at March of next year, which is when the present scheme ends.

Will the Minister take account of the situation as it is, not as he expects it to be, and, when considering the future of the scheme, will he take account particularly of the need to cover large components that go into a minimum order—for instance, turbines for the Ontario hydro scheme, where indi- vidual items are less than £2 million but where four turbines make £2 million?

The hon. Gentleman is referring to the access rules which have been drawn up fairly tightly. But we have also to take account of international criticisms that have been made in various forums about our scheme. Even if it were deemed desirable to renew it in the light of the prevailing situation, I do not believe that we could ease the access rules.