Pumps and Valves (Hansard, 18 November 1976)

Mr. Alan Williams

, pursuant to his reply [Official Report, 16th November 1976; Vol. 919, c. 550], gave the following information:

The first report of the Sector Working Party for pumps and valves, which made a number of recommendations for action by Government, management and unions, has already been placed in the Library of the House. The following is a summary of the main recommendations put to Government together with an outline of the action taken so far: Recommendation—The Government should consider attaching priority, under the Industry Act foundry scheme, to investment for the production of short-run high alloy and complex castings. Action—A substantial amount of the assistance granted under this scheme has been allocated to projects for the production of such specialist castings. Recommendation—The Employment Services Agency should consider how its employment transfer scheme and placement services could assist the movement of skilled workers to areas with most vacancies. Action—The Employment Services Agency is reviewing the whole question of mobility. Recommendation—The Training Services Agency and the Engineering Industry Training Board should review current training and retraining programmes with reference to potential shortages of skilled engineering manpower. Action—The Department of Employment is considering the whole question of skilled manpower requirements. Recommendation—The Government should consider allowing a higher proportion than the present 20 per cent. of new investment to be recovered through higher prices. Action—The revised Price Code, which came into operation on 1st August, provides that the proportion of budgeted capital expenditure which companies may apply as a cash amount to increase their permitted prices and profit margins has been raised from 20 per cent. to 50 per cent. Recommendation—The Government should consider easing the pressure on corporate borrowing limits by removing the possibility of future clawback of stock appreciation relief. Action—The Chancellor of the Exchequer, in his Budget Statement, announced that stock appreciation relief would be continued in broadly the same form for a further two years and made clear his intention to introduce a permanent scheme of relief as soon as possible. Thus for the great majority of companies stock relief implied a deferral of tax into the indefinite future. At the same time there has been a great deal of discussion within the accountancy profession on how far deferred tax should be shown in company accounts and the Government have contributed to this through their representatives on the Morpeth Committee and 724W the Accounting Standards Committee. As a result, the Accounting Standards Committee has now deferred the implementation of the accounting standard, which would have required full deferred tax accounting, pending a thorough review. There is every prospect that the eventual outcome will be satisfactory. Recommendation—The Government should consider recasting the ECGD arrangements for bank guarantees and performance bonds such that no contingent liability remains with the contractor. Action—The Government have rejected this recommendation since it would be inappropriate to provide completely recourse-free cover. Recommendation—The Government should consider reducing the cover qualifying limit under cost escalation insurance from £2 million to £250,000 and for units within a contract from £500,000 to £25,000, and increasing the flexibility of the definition of a unit to cover identifiable sections of a contract Action—The Government believe that there is no scope for any further improvements in the present scheme. Recommendation—The Government were asked to support discussions with the nationalised industries about rationalising standards and quality assurance procedures. Action—Sir Frederick Warner has been asked to carry out a study of all sector working parties' recommendations in the field of engineering standards and specifications.