HC Deb 23 April 1968 vol 763 cc4-7
4. Mr. Michael Shaw

asked the Minister of Power when he expects to lay an order increasing the borrowing powers of the British Steel Corporation.

Mr. Gunter

Probably before the Summer Recess.

Mr. Shaw

Does the right hon. Gentleman realise that there is considerable concern about the amount of money which is being lent to the Corporation? Has he any idea when the first interim accounts will be published?

Mr. Gunter

I am not quite sure of the correct answer to the last part of the supplementary question, but I understand that there will be a report covering July to September, 1967, and then another report later in the summer before we go into the Summer Recess.

Mr. Patrick Jenkin

Does the Minister recognise that this new borrowing will be considerably in excess of what was envisaged at the time the Bill was going through? Does he not recognise, therefore, that it is essential that the House should have accounts before it before it is asked to approve increased borrowing?

Mr. Gunter

I fully understand that there is that degree of interest. My predecessor pointed out in the course of the debate that the£75 million, which I imagine that the hon. Gentleman has in mind, was a very wide estimate.

5. Mr. Michael Shaw

asked the Minister of Power if he will give details of the£252 million drawings of capital by the British Steel Corporation.

10. Mr. Ridley

asked the Minister of Power why the British Steel Corporation draw£175 million of Government advances and£77 million of temporary borrowing, in view of the previous estimate that it would only require£75 million of capital during 1967–68.

Mr. Gunter

I will, with permission, circulate the details in the OFFICIAL REPORT.

Mr. Shaw

Does the right hon. Gentleman realise that there is a feeling that a considerable amount of the money which is being lent to the Corporation is going to cover current losses made by the Corporation; and will he tell the House what is the present net monthly loss being made by the Corporation and its subsidiaries?

Mr. Gunter

The hon. Gentleman's assumption is quite wrong. If he will read the detailed Answer which is to appear in the OFFICIAL REPORT, he will appreciate that.

Mr. Ridley

How does it come about that a public corporation can budget for£75 million capital expenditure and then incur£252 million? Is it not lacking somewhere in financial discipline, so that this runaway expenditure can take place on the capital side?

Mr. Gunter

I am quite sure that the hon. Gentleman is wrong in his suggestion about runaway expenditure. The great addition to the figure has been caused by the desire of the Corporation to establish firm financial control. [Interruption.] Just a moment. The Corporation decided to eliminate bank overdrafts and other short-term finance and to replace this finance, which at vesting date totalled£126 million, with borrowing in its own name.

Mr. Lawson

Will the Minister consider that a large part of the money going to the Steel Corporation should take the form of equities rather than fixed interest bearing stock and securities?

Mr. Gunter

I should doubt that, but I do not know enough about it to give the answer.

Following is the information: Of the£252 million borrowed by the British Steel Corporation to the end of March, 1968, about£57 million was used to finance expenses of the Corporation arising after vesting date, including substantial payments by way of terminal interest and dividends under the revived Section 19 of the Iron and Steel Act, 1949, and by way of interest on the commencing capital debt. The balance of about£195 million was applied in paying off loans and overdrafts and other short term commitments incurred by the companies before vesting date. Refinancing on this scale was not envisaged at the time of the original estimate of borrowings from the Exchequer.
32. Mr. Kenneth Lewis

asked the Minister of Power if he will give a direction to the British Steel Corporation to ensure that production continues in the steel industry in spite of the bricklayers' strike within the industry.

Mr. Gunter

No, Sir.

Mr. Lewis

Why not? Does the right hon. Gentleman realise the very serious situation that could develop not only for the steel industry but for the country as a whole? Is it not justifiable that we should ask him to try to do something to improve the situation so that we do not have a strike?

Mr. Gunter

There is a vast difference between asking me to do something and instructing me to give a direction to the Steel Corporation. The handling of the dispute is a matter for the Corporation and I have no intention of directing the Corporation to act against its own judgment. However, if, behind the scenes, I can do something to help, I certainly shall.

Mr. Lewis

On a point of order. The Minister must realise, Mr. Speaker, that the only way I could table a Question on this matter was to ask him to give a direction.

Mr. Speaker

Mr. Lewis, Question No. 33.

33. Mr. Kenneth Lewis

asked the Minister of Power what proposals he has to reduce interest charges to the British Steel Corporation on its capital commitments.

Mr. Gunter

None, Sir. The terms of the Corporation's commencing capital debt have not yet been settled.

Mr. Lewis

Would the right hon. Gentleman confirm that the Steel Corporation is likely to make a loss this year unless it is relieved of some of this debt? Will he assure us that it will honour the commitments it has?

Mr. Gunter

I can only repeat the Answer I gave; that the commencing capital debt has not yet been settled. When it has been, we will be able to deal with the other matters.

Mr. Lawson

May I again remind my right hon. Friend that, in considering this matter, he should remember that the capital debt need not necessarily take the form of fixed interest bearing securities but might take the form of equities on which dividend is payable, if dividend is earned?

Mr. Gunter

In any case, that would involve legislation.