§ 53. Mr. Bruce-Gardyne
asked the Secretary of State for Trade and Industry what is the latest estimate of the current rate of return on capital employed by the British Steel Corporation; and if he will lay down a new and improved target rate of return for the Corporation to aim at.
§ The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)
The return on capital employed by the British Steel Corporation, including its subsidiaries, in its last financial year—28th September, 1969, to 28th March, 1970—was at an annual rate of about 4 per cent. As regards the current financial year, I cannot reveal the details of forecasts made in confidence. On the question of the financial objective, I would refer my hon. Friend to the answer my hon. Friend the Minister for Industry gave to the hon. Member for Newcastle-under-Lyme (Mr. Golding) on 27th October.
§ Mr. Bruce-Gardyne
Is it not clear that there has been a fairly staggering decline in the profitability of the Corporation over the past two years? Has my hon. Friend had any indication of the amount which the Corporation has been spending out of its sharply dwindling profits on advertising and public relations activities 1192 designed to oppose the policies which the Government were elected to pursue?
§ Mr. Ridley
On the first point, my hon. Friend must await publication of the accounts, which I cannot anticipate. On the second point, I suggest that he writes to the Chairman of the Corporation because that is a matter entirely within his province.
Mr. J. T. Price
Is not this a rather unfortunate time in our affairs for hon. Members opposite to table hostile Questions about nationalised industries? Does not the hon. Gentleman realise that many of us on this side of the House, because we think that there are occasions when national interests are greater than party interests, restrain our tendency to indulge in recriminations about this sort of thing? If we are doing our best to be restrained over the Rolls-Royce case, it does not help the country when hon. Members opposite put down hostile Questions about the nationalised Steel Corporation.
§ Mr. Ridley
So far as I am aware, I have not indulged in any recriminations. But I would draw the hon. Gentleman's attention to the need to obtain a proper return on capital from public as well as private investments.
§ Captain W. Elliot
As the return on the steel industry's capital is so low and the capital expenditure so high, would my hon. Friend agree that the difference comes from the profits made by private industry?
§ Mr. Ridley
My right hon. Friend is having a careful review of the whole of the finances of the B.S.C. and I cannot anticipate what the result of that will be, but there can be no contradicting what my hon. and gallant Friend says, that if one concern whether in the public or the private sector makes a poor return on capital, the others, which make a better return, subsidise it.
§ Mr. Michael Foot
Can the Minister give us an up-to-date account of the fresh burdens the Government have been placing notably through the abolition of investment grants on the British Steel Corporation, and their proposals for dealing with the scrap, which may together be adding an extra burden on to the Corporation? Moreover, before he accepts the suggestions of his hon. 1193 Friends, will he tell us what are the latest estimates of the Government of the rate of return on capital in the Japanese steel industry, with which we have to compete? Will the hon. Gentleman try to find out the facts there before he takes any further action to injure the position of the British Steel Corporation?
§ Mr. Ridley
I think the question of scrap and of investment grants would arise in relation to future financial years and not to the present one, which is what this Question refers to. I am afraid I must tell the hon. Gentleman that I am not responsible for the Japanese steel industry.