§ Mr. John Hallasked the Chancellor of the Exchequer whether he has reached a decision about the future status of the Royal Mint, and about the type of financial structure appropriate to quasi-commercial activities of this kind in government.
§ Mr. BarberYes. I have concluded that there are sound reasons for retaining the Mint as a Government Department. I propose, however, to introduce changes in the financial structure of the Royal Mint which will make the Mint a unit of accountable management financed through a trading fund.
The Government are now considering what further scope exists for introducing trading funds as the basis for financing and improving the management of several areas of quasi-commercial activity in government. Where services can generate substantial receipts, and their expenditure should be determined by commercial type considerations rather than by narrowly defined annual budgetary limits, there may be considerable advantages in financing through a trading fund, with a capital structure and a financial target. If Parliament approved, the trading fund undertaking, while remaining in government under the direct responsibility of Ministers, would be authorised by statute to meet current expenditure out of receipts without recourse to annual votes. It would also be permitted to borrow and required to meet resultant capital charges. Trading accounts would be produced. Management would be freer to vary the mix and—if receipts allowed—the scale of expenditure in order to achieve a financial target. These arrangements should make it easier to concentrate attention on the performance of the undertaking as a whole and not only on the cash flows reflected in annual Votes. A trading fund would require that any subsidy given for policy reasons was clearly distinguished from commercial operations, and that any arrangements with Government Departments were made on a commercial basis.
305WThe Government have already announced their acceptance in principle of the recommendations of the Mallabar Committee on Government Industrial Establishments (Cmnd. 4713) for the introduction in due course of trading funds for the Royal Ordnance Factories and Royal Dockyards. Trading funds may also eventually prove appropriate in other areas, such as the supplies activities of the Property Services Agency of the Department of the Environment and services of Her Majesty's Stationery Office. Legislation would be necessary to authorise the introduction at the appropriate time of trading funds for a number of these quasi-commercial services, and the Government will make proposals to Parliament in due course.