§ Sir R. Nugent
asked the Minister of Power what financial objectives have been set for the gas and electricity boards under the White Paper, Command Paper No. 1337.
§ Mr. Wood
I have now agreed with the electricity boards in England and Wales and with each of the area gas boards' financial objectives for the five-year period 1962–63–1966–67.
The objectives agreed with the electricity boards require the industry to secure an average gross return (before deducting interest or making provision for depreciation) of about 12½ per cent. on its not assets. On present estimates of capital requirements, this will make it necessary to earn an aggregate surplus of £336 million over the five-year period. The Gas Boards' objectives require an average gross return of about 10¼ per cent. on net assets and an aggregate surplus over the five years of £54 million. These objectives will be reviewed annually.
These surpluses are not funds available for disposal. They are contributions from revenue needed to carry on the business and to finance the development which the Boards must undertake if consumers' needs are to be met. During the 124W five-year period the electricity boards will still need to borrow very large sums over and above these surpluses and the depreciation funds which they provide. The gas industry, in view of its slower rate of expansion, will seek to finance the greater part of its investment out of its own earnings.
The following table shows the objectives set for individual boards in the light of their circumstances, needs and capabilities:
Boards Average Gross Return as percentage of average Net Assets Total Net Surplus £m. FINANCIAL OBJECTIVES: 5 YEARS 1962/63–1966/67 ELECTRICITY BOARDS London 11.9 18 South Eastern 13.0 9 Southern 12.4 17 South Western 14.0 7.5 Eastern 12.8 20 East Midlands 12.5 15 Midlands 12.6 17 South Wales 12.4 9.5 Merseyside and North Wales 12.9 10 Yorkshire 12.5 23 North Eastern 12.7 12 North Western 12.9 15 Central Electricity Generating Board 11.9 163 TOTAL 12.4 336 GAS BOARDS Scottish 10.9 3.5 Northern 10.4 2.6 North Western 11.2 6.6 North Eastern 10.6 2.5 East Midlands 10.4 5.0 West Midlands 10.6 4.9 Wales 10.0 2.4 Eastern 10.0 3.1 North Thames 9.5 11.8 South Eastern 10.1 6.0 Southern 9.5 2.8 South Western 9.8 2.8 TOTAL 10.2 54