HL Deb 01 June 1981 vol 420 cc1052-4

2.40 p.m.

Lord Boyd-Carpenter

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they have any plans to improve the accounting procedures of the nationalised industries so as to show distinctly the difference between capital and revenue expenditures.

The Minister of State, Treasury (Lord Cockfield)

My Lords, the audited accounts of the nationalised industries already distinguish between capital and revenue expenditure. If, however, my noble friend has in mind a particular aspect where he feels that an improvement could be made, perhaps he would let me know.

Lord Boyd-Carpenter

My Lords, while thanking my noble friend for that helpful reply may I ask him whether he can assure the House that it is not possible under the present accounting system for monies provided for the necessary investment of a nationalised industry to be employed for the purposes of propping up its deficit position?

Lord Cockfield

My Lords, a full analysis of the capital expenditure of the nationalised industries and of the way that that capital expenditure has been financed appears in tables 3.2 to 3.5 inclusive in the White Paper on public expenditure. Therefore, it is possible from these tables to deduce whether money which has been allocated for capital expenditure has been used for that purpose or has been used to make good a shortfall in profits or an increase in losses. I entirely agree with the point of substance made by my noble friend, namely, that it is quite wrong and in fact damaging to the economy generally if money which has been allocated for capital expenditure is in fact used for revenue purposes.

Lord Bruce of Donington

My Lords, will the noble Lord give the House an assurance that if he considers some improvements in the existing accounting arrangements, he will consult with the profession before he brings those improvements into operation? And does he not agree with the CBI—and indeed other bodies—that there is now an overwhelming case, for the purpose of determining the public sector borrowing requirement, for treating capital investment for productive purposes differently from ordinary current revenue expenditure?

Lord Cockfield

My Lords, so far as the first part of the noble Lord's supplementary question is concerned, the Government have always given their support and indeed encouragement to the adoption by the nationalised industries of the highest standards of accounting. Consultations on these matters proceed on a regular basis. The Government have in particular given great encouragement to the adoption of current cost accounting, and the publication of the new accounting standard SSAP 16 should result in an improvement in the level of current cost accounting for the nationalised industries, as elsewhere.

So far as the second part of the noble Lord's supplementary question is concerned, I do not agree with him at all. That money which is raised by the nationalised industries is in fact a charge on the public sector so long as those industries remain within the public sector. No change would be made in the reality of the situation simply by juggling with the figures. Of course, if the point the noble Lord is making is that an improvement in the efficiency of the nationalised industries would set money free for a higher level of capital expenditure, I would agree with him.

Lord Orr-Ewing

My Lords, may I ask my noble friend whether it is not a fact that in the current year the National Coal Board have been allocated, after depreciation, £363 million for capital expenditure? If this capital expenditure allocation is diverted to make good losses in the revenue area, surely this has serious repercussions for those companies which are making mining machinery and for the jobs that industry provides? Would my noble friend perhaps tell us if it is true that Government lending to the nationalised industries in the current year is £1,400 million; what it is likely to be reduced to in the current year; and whether that target will in fact be achieved?

Lord Cockfield

My Lords, I am grateful to my noble friend for his support and I agree with many of the comments that he makes. One of the points that is commonly overlooked in the present debate is that the capital expenditure on fixed assets planned by the nationalised industries in each of the next three years—that is, the current year plus the two following years—is expected to be £5.2 billion, compared with 4½ billion in each of the last three years. This is at constant prices, 1980 survey prices. We are therefore expecting a substantial increase in the level of expenditure by the nationalised industries on capital development compared with the position that existed in the past.

Lord Boyd-Carpenter

My Lords, will my noble friend add to his kindness by answering the question which was included in my earlier supplementary question, as to whether, with the aid of the tables in the national accounts of which he has reminded us, it is possible for him to assure the House that, at any rate during the lifetime of the present Government, money provided for one purpose has not been used for?

Lord Cockfield

My Lords, it is obviously highly desirable that such a result should be achieved and it is the Government's intention to use their best efforts and influence to ensure that it is achieved. But it would not be possible to give a guarantee of the sort for which my noble friend asks.