§ 4. Mr. Ridleyasked the Postmaster-General by how much he estimates that the Post Office forecast of capital expenditure of £1,200 million over the next three years would be reduced by raising the discounted cash flow rate to 10 per cent.
§ Mr. MasonPost Office capital expenditure over the next three years will aim to meet the demand for service at the revised charges I announced on 10th April. The effect of raising the discount rate for new investment to 10 per cent. would either be largely to stop providing telephones for new residential subscribers, as the charges are not designed to earn this return, or to raise charges further. In the former case the reduction in capital expenditure would be considerable. In the latter it would depend on how the higher charges affected demand.—[Vol. 762, c. 1373–1402.]
§ Mr. RidleyIs the right hon. Gentleman aware that his own White Paper says that when the level of public investment is too great the discounted cash flow rate should be raised? Since the present expenditure level is beyond the capacity 455 of the economy to support, why will not the right hon. Gentleman adopt the course suggested in the Question?
§ Mr. MasonThe hon. Gentleman is specifically referring in the Question to raising the discounted cash flow rate to 10 per cent. His suggestion—taking his figure of 10 per cent.—would mean increased prices all round or, alternatively, part of the service would have to be killed off.