§ Mr. Michael Shaw
asked the Secretary of State for Trade and Industry what developments there have been in setting up the committee on inflation and company accounts.
§ Mr. Peter Walker
On 25th July I announced that the Chancellor of the Exchequer and I would set up an independent committee to consider the various methods of adjusting company accounts to reflect changes in costs and prices.
Mr. Francis Sandilands has agreed to chair this committee, with the following terms of reference :
To consider whether, and if so how, company accounts should allow for changes (including relative changes) in costs and prices, having regard to established accounting conventions based on historic costs, the proposal for current general purchasing power accounting put forward by the Accounting Standards Steering Committee, and other possible accounting methods of allowing for price changes, and to make recommendations. In considering the question the following matters inter alia, should be taken into account :
- (i) the effects upon investment and other management decisions, and upon the efficiency of companies generally ;
- (ii) the effect on the efficient allocation of resources through the capital market ;
- (iii) the need to restrain inflation in the United Kingdom ;
- (iv) the requirements of investors, creditors, employees, Government and the public for information ;
- (v) any implications for the taxation of the profits and capital gains of companies, the assumption being that the share of the total direct tax burden borne by the company sector remains unchanged ;
- (vi) the repercussions on the accounts of other corporate bodies ;
- (vii) procedures in other countries particularly EEC.
Inquiries and correspondence should be addressed to the Secretary of the Committee at the Department of Trade and Industry, Room 1541A, Thames House South, Millbank, London SW1P 4QJ.