§ Mr. Michael Brown
asked the Secretary of State for Industry how the British Steel Corporation will be financed within the new £5,500 million borrowing limit approved by the House on 15 May.
§ Mr. Adam Butler
BSC's external finance requirements, other than short term, will continue to be met by subscriptions of capital under section 18(1) of the Iron and Steel Act 1975, as explained in paragraph 29 of the previous Government's White Paper of March 1978 " BSC: The Road to Viability" (Cmnd 7149).
However, circumstances have changed since then, in particular because later developments in the market have required further reductions in capacity to bring 299W capacity more into line with demand. The capital reconstruction envisaged in Cmnd 7149, which we now plan to provide for in legislation during the next Session, will need to be related to the future size of the industry. In these circumstances, it will no longer be possible to require that all the new capital subscribed by the Secretary of State since April 1978 should be remunerated by dividends after that capital reconstruction.