Pressure groups accuse the government of putting business interests above human rights and the environment.

Taxpayers’ money could be used to fund child labour or slavery under new government proposals, campaign groups warned today. Amnesty International UK, The Corner House, Jubilee Debt Campaign and WWF UK criticised the proposals, which would water down the human rights and environmental standards (so-called ‘Business Principles’) employed by the Export Credits Guarantee Department (ECGD). The groups fear that the changes would represent “a giant step backwards” for minimising UK companies’ impacts on human rights, poverty and climate change in developing countries.

One example of particular concern to campaigners is that the absolute prohibition on “harmful child labour” and forced labour will be replaced with a discretionary ban, where considered appropriate. The moves are believed to follow heavy lobbying from UK exporters, who argued last year that the 'Business Principles' should be "modified, if not scrapped altogether", in a submission which campaigners call "short-sighted”.

But campaigners warn this must not happen at the expense of increasing poverty, environmental destruction and human rights abuses around the world. Even with the current standards in place, they argue that the ECGD is effectively a taxpayer subsidy to the arms sector, fossil fuel industries and aerospace sector – which historically has comprised 75% of ECGD’s custom. They warn that a further watering down of standards would seriously undermine Britain’s claim to be a ‘force for progress’ in the world. 

Peter Frankental from Amnesty International UK said:

"The upshot of these proposals is that British taxpayers' money could end up funding child labour and forced labour overseas. Lord Mandelson needs to realise that people in the UK simply won't stand for this.

“The government should be sending out a clear signal to companies that child exploitation is never acceptable - not putting up the funding to help them do it. It's time the government accepted the need for UK companies to respect human rights in all their business operations abroad."

Margaret Ounsley from WWF-UK said:

“These measures are a serious backward step, and would imply scrapping one of the few voluntary safeguards currently in place . We need an ECGD that can support and promote new green jobs capable of transforming our economy.”  

Nick Hildyard from The Corner House said:

“The ECGD is already a law unto itself – a government department excused from abiding by government commitments to human rights and the environment. The proposed changes will make it even easier for the ECGD to ride roughshod over government commitments. If the proposed changes go ahead, even the ECGD’s previous commitment not to fund projects involving forced labour and ‘harmful’ child labour would no longer be binding.”

Nick Dearden from Jubilee Debt Campaign said:

“The overwhelming majority of debt repayments paid by developing countries to the UK are based on ECGD projects – including arms loans for dictators and useless projects that did nothing to benefit ordinary people. These changes will unleash similar projects in future, and poor countries will spend another 20 years paying for our mistakes.”

The ECGD is a government department which supports UK businesses exporting and wanting to invest in areas considered too risky to receive financial support from the private sector. It uses taxpayers’ money to guarantee payment in the event of a default. Ramping up this system of ‘export credits’ is seen by the government as a key way of stimulating UK industry, especially during the current recession.