HC Deb 22 July 1969 vol 787 cc1468-9
7. Mr. Lane

asked the Minister of Power what consultations he has had, at what times, and with whom, on the test rate of discount applied to new investment by the nationalised industries.

10. Mr. J. H. Osborn

asked the Minister of Power whether he will make a statement about the test rate of discount to be applied to new investment by the fuel and power nationalised industries.

28. Mr. Stainton

asked the Minister of Power what test rate of discount is currently applied to new investment in the fuel and power industries.

Mr. Freeson

Cmnd. 3437 announced that nationalised industries—other than the B.S.C.—should use a test discount rate of 8 per cent. The nationalised fuel industries were consulted in the preparation of the White Paper. As my right hon. Friend the Chief Secretary to the Treasury informed the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) on 8th July, [Vol. 786, c. 1139] the rate is at present being reviewed, and the House will be informed of the result.

The rate for the B.S.C., which is still under consideration, will take account of the fact that unlike other nationalised industries, it receives investment grants.

Mr. Lane

As it is now well over a year since Government witnesses before the Select Committee on Nationalised Industries implied that the 8 per cent. figure was out of date, and as apparently we are not to have a chance before the autumn now, is not this an intolerable delay by a Government who claim to be dynamic and modernising?

Mr. Freeson

I am aware of the views expressed with regard to reviewing the position of the discount rate in relation to higher interest rates and it is one of the factors that will be taken into account.

Mr. Osborn

Is the right hon. Gentleman aware that commercial rates are well above this figure? Is he further aware that, since the Treasury has raised this issue, some £1,500 million worth of investment has been carried out? Can the right hon. Gentleman give us any time for the revised target?

Mr. Freeson

I am not in a position to give information to the House at present, but the matter is the subject of a review. All the points made by the hon. Gentlemen will be taken into account.

Mr. Ridley

Since the Treasury has just issued a stock with a 9 per cent. coupon, will the hon. Gentleman bring to its notice the fact that it is high time that this discount rate was raised? When will he make an announcement? He has been talking about it all summer.

Mr. Freeson

If I were able to tell the House when I could make an announcement I would be able to give the answer today. I will draw the Treasury's attention to the hon. Gentleman's observations.