Export Credits set for £1.8bn windfall

The Export Credits Guarantee Department is to receive a one-off payment of £1.8bn under new plans unveiled yesterday to revitalise the Government's export support agency.

The Export Credits Guarantee Department is to receive a one-off payment of £1.8bn under new plans unveiled yesterday to revitalise the Government's export support agency.

The money will be used as capital for a new trading fund to enable the department to finance its help to UK exporters of capital equipment and project-related goods and services.

Under the plan, which has suffered years of delays and will not take full effect until April 2007, the £10bn of debts racked up during the 1970s and 1980s will be ring-fenced in a separate fund.

The department will aim to reduce the premium it charges by up to £5m a year from April 2005. In addition, the Department for Trade and Industry will invest up to £10m over two years from 2005 to help ECGD improve its efficiency and to sustain premium rate reductions for exporters. Patricia Hewitt, the Secretary of State for Trade and Industry, said: "The deal is a key milestone in ECGD's history and provides an excellent basis for moving forward.... I believe it is an excellent package which customers should welcome."

Business groups, which had complained that the delay in reforming ECGD was hurting exporters' ability to do business, gave the new plans a mixed reception. Digby Jones, director general of the CBI, said the department's reputation as a world-class export credit agency had been "seriously tarnished" over the past few years. "The jury is still out on the Government's attitude to export credit support - business will judge all of this on actual delivery," he said.

But the British Exporters Association said the decision showed the Government recognised the importance of exports to the UK economy. John Tyler, its chairman, said: "I am optimistic that ECGD will be restored to its rightful position as one of the leading export credit agencies in the world."