§ But the Government are also responsible for the nationalised industries. In deciding how much public finance to make available to them, the Government must be influenced by their performance in controlling their own costs. Every 1 per cent. they save on labour costs is worth another £140 million that they could use for investment, or to reduce prices.
§ Yet even now this lesson has not been fully learnt. Seven out of every 10 days lost because of strikes in the last two years were within the public sector. The continuing rail dispute, about productivity improvements and up-to-date labour practices that should have been introduced years ago, demonstrates how far there is still to go. In the absence of increased productivity, willingly accepted, it is not easy to justify increased investment.
§ This is why we intend to widen the exposure of the public sector to the discipline of the market place. One way of doing this which has been commended on both sides of the House is by the introduction, under the right conditions, of private capital. Those conditions must ensure fair competition with the private sector for capital. they must also ensure that the consequent higher cost of borrowing is offset by greater efficiency.
§ The Government have now decided to accept, in principle, the proposal for British Telecom to issue a bond to raise market capital in this way. The return to the investor would be based on the profits earned by the corporation.
§ British Telecom will be expected, as a condition of access to market finance, to keep tariff increases at least two percentage points below the annual movement in the 741 RPI, and to reduce real unit costs in 1982–83, by a minimum of 5 per cent. , with further reductions to be agreed for later years.
§ We shall have to satisfy ourselves, in the light of market conditions nearer the time, that the bond represents good value to the Government and British Telecom, as well as to the investor. Subject to that condition, the aim will be to go ahead with an initial sale in the autumn, of up to £150 million. This will be an important experiment in exposing the performance of a nationalised industry to the judgment of the market place.
§ But above all it remains our purpose, wherever possible, to transfer to the private sector assets which can be better managed there. In the private sector, businesses have to respond to consumer needs. The pressure on enterprises formerly in the public sector to do the same at once becomes much greater if they are transferred.
§ We have made considerable progress. There has been some controversy about the method of selling shares in Amersham International, but for those inclined to be wise after the event it is worth pointing out just how much greater public interest in the sale proved to be than commentators expected when the terms were first announced. It is, in any event, a cause for satisfaction that the great majority of Amersham employees are now shareholders in the enterprise for which they work. For the great majority of people, that is the right kind of public ownership.
§ Legislation is on the statute book enabling us to transfer to the private sector the British Transport Docks Board, and British Airways, and to permit the sale of subsidiaries in British Telecom and British Rail. Within the last few weeks we have transferred the National Freight Company to a consortium led by its own management. And British Aerospace and Cable and Wireless are now firmly established in the private sector.
§ Our plans assumed that asset sales of this kind would total about £500 million this year. We expect to achieve that target. The Government look forward to further disposals in the next two years. We are seeking powers to sell the offshore assets of British Gas and to permit the introduction of private capital into the National Bus Company. The most important transfer will be the sale of 51 per cent. of the BNOC's oil-producing business, for which a Bill is now before the House.
§ I now turn to what can be done in this Budget directly to benefit business, industry, and so jobs.