§ 1. Mr. Patrick Jenkinasked the Minister of Power whether he will give general directions to the nationalised industries for which he is responsible that when charging depreciation on assets used in diversification activities they shall ignore any relief from capital liabilities conferred by Statute unless such relief shall have been expressly related to such diversification activities.
§ The Minister of Power (Mr. Richard Marsh)No, Sir. The point is applicable only to the N.C.B. and I prefer to rest on the guidance given in Cmnd. 2805 and my control over withdrawals from the N.C.B.s Reserve Fund.
§ Mr. JenkinIs the Minister aware that although the book value of the National Coal Board brickworks assets increased by over £1,250,000 between March 1965 and March 1966, the amount of depreciation charged in that year was exactly the same as in the year before? If this was due to the fact that Parliament wrote off part of the long-term debt of the National Coal Board, is this not a grossly unfair form of trading with private brickworks, many of whom were losing money in this period?
§ Mr. MarshNo. The position is quite clear. The Government's intentions in this respect were quite clearly explained in the White Paper on the Finances of the Coal Industry. I have not received any proposals for writing down the Board's brickworks assets and, if I did, I would consider them on their merits.
§ 2. Mr. Ridleyasked the Minister of Power if he will give a general direction to the National Coal Board to pay interest on the full amount of capital invested in their brickworks division.
§ The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson)No, Sir. The Board pays interest on borrowings as a whole and the apportionment of interest to different activities in its accounts is a matter for the Board.
§ Mr. RidleySince the Minister has just admitted that a reduction was made in the capital applicable to the brickworks division of the National Coal Board—because this House wrote off a large slice of Coal Board capital—is this not the most unfair form of competition that there could possibly be between private and public enterprises in the same sphere? Will the hon. Gentleman give an undertaking that he will set up an inquiry into this scandalous procedure?
§ Mr. FreesonNo, Sir. I do not consider the position to be scandalous, and I do not think that there is any need for an inquiry to be set up by my right hon. Friend. As I have already indicated, the apportionment of the Board's total interest liability is an accounting matter for the Board and its auditors.
§ Mr. Patrick JenkinDoes this not conflict with every undertaking that the Minister has given about fair competition with private enterprise if these diversified 1250 activities are to have their capital written off in this way?
§ Mr. FreesonThe answer is "No Sir", it does not conflict. [HON. MEMBERS: "Of course it does."] The Minister has control, and maintains control over the capital investment programme.
§ 3. Mr. Biffenasked the Minister of Power what changes have taken place in the interest liabilities of the National Coal Board brickworks division since 1964–65; if he is satisfied that the present capital structure of the brickworks division properly reflects the capital assets; and if he will make a statement.
§ Mr. FreesonI would again refer the hon. Member to the information given to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) on 4th April, which included details, extracted from the Board's accounts, of capital employed in the brickworks division.—[Vol. 744, col. 2.]
§ Mr. BiffenBut, in view of the indifferent commercial record and reputation of the brickworks division of the National Coal Board, would the hon. Gentleman realise that the kind of fudging which this afternoon's Answers indicate has taken place in the accounts will cause grave disquiet throughout the country?
§ Mr. FreesonI do not accept for one moment that there is any impropriety in the figures appearing in the accounts of the National Coal Board. As I indicated on a previous occasion, it would be wrong for Members to deal only with two years' accounting. The brickworks of the National Coal Board make an important contribution to that industry in this country.
§ Mr. RidleyIs the hon. Gentleman aware that on 1st November his predecessor gave an undertaking that he would stick to rules laid down by the C.B.I. for fair competition between public and private enterprise? He has broken that undertaking. What does he intend to do about it?
§ Mr. FreesonNo undertaking has been broken.
§ 12. Mr. Alisonasked the Minister of Power whether he will give a general direction to the National Coal Board, in the national interest, to cause its brickworks to use the cheapest available fuel for firing.
§ Mr. FreesonNo, Sir. I would refer the hon. Member to the reply I gave to the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) on 25th April.—[Vol. 745, col. 257.]
§ Mr. AlisonWould the hon. Gentleman ask his right hon. Friend, whom it would have been slightly quicker to have had answer the Question himself, whether he will give a general direction that if the Coal Board acquires new brickworks in future from the private sector if will not spend public money converting oil-firing to coal-firing?
§ Mr. FreesonI am not aware of the conversion to which the hon. Gentleman referred latterly, but I would expect the Board to bear in mind all considerations when coming to decisions on matters of this kind.
22. Mr. J. H. Osbomasked the Minister of Power to what financial disciplines Her Majesty's Government expect the National Coal Board to adhere in the operation of their brickworks division.
§ Mr. FreesonI would refer the hon. Member to the reply I gave to the hon. Member for Oswestry (Mr. Biffen) on 12th April.—[Vol. 744, col. 276.]
§ Mr. OsbornIs it not true that in fact the target is about 14 per cent. and that performance has been ridiculously below this? Is not that an unsatisfactory reply to give to an intelligent and piercing Question at this time?
§ Mr. FreesonI do not think that it is unsatisfactory. The previous reply referred to is on the record. Brickmaking is a long-established ancillary activity of the industry and, as with other nationalised industries, the Board has a statutory obligation to keep accounts in a form which conforms to the best commercial practice.
§ Sir T. BeamishWhat sense does it make to subsidise these brickworks when dozens of private enterprise brickworks have been forced out of business by Government policy, thousands of men are on short time, and there is a colossal stock of bricks which nobody can sell?
§ Mr. FreesonThe Government are not subsidising the brickworks of the National Coal Board. As I said in reply to the previous question, it would be wrong to judge the industry's activities in this field on the basis or one or even two years' 1252 experience. We must look at it over a period of time.
§ 23. Mr. J. H. Osbornasked the Minister of Power what was the budgeted rate of return on capital employed, forecast by the National Coal Board, when they applied for approval of an investment of £1 in the Desford brickmaking plant.
§ Mr. FreesonIt is not the practice of the National Coal Board to publish either forecasts or results for its individual units, whether they are mines, opencast sites, manufactured fuel plants or brickworks.
§ Mr. OsbornShould it not be the practice of the National Coal Board to give such information? Is it not true that when purchased this company was operating at a loss, and is continuing to do so?
§ Mr. FreesonThis restriction on the provision of detailed financial information of the kind suggested is a common practice in industry, private as well as public.