British Steel Corporation (Hansard, 11 June 1982)

§ Mr. Patrick Jenkin

The British Steel Corporation made good progress towards eliminating its losses in 1981–82. Its target was to reduce losses before interest to £225 million within an external financing limit of £730 million. Provisional results for 1981–82 show that the loss was about £252 million with an external financing requirement of about £768 million. The BSC' s cash requirements for its own operations were, however, below the EFL of £730 million; there were additional commitments totalling £72 million in connection with joint ventures with private sector steel producers; and the 179W exceptionally severe winter weather, followed by the ASLEF dispute, added over £40 million to BSC's losses in 1981–82.

The BSC's corporate plan for 1982–85 aims to achieve break-even in 1982–83, and to achieve increasing profits after interest in subsequent years. However, in view of the uncertainties over the international steel market in 1982–83, and of the United States situation in particular, BSC indicated in March that the contingency margin in 1982–83 should be increased from £100 million proposed in the original plan to £175 million.

The Government have decided, after consultation with the BSC, to confirm the profit and loss target for 1982–83, announced on 24 February 1981—namely, to achieve break-even before interest—and to approve the external financing limit—provisionally set at £350 million in November—at £365 million. The provision of this finance is subject to the approval of the European Commission.

This EFL includes a contingency margin well below the £175 million requested by the BSC. The additional £15 million above the provisional EFL will be found from within the Government's Contingency Reserve and will not increase public expenditure.

I warmly commend the efforts of the chairman, the board, the management and the work force in achieving the remarkable progress made so far, and I wish them continuing success.