British Coal (Objectives) (Hansard, 11 March 1987)

§ Mr. Peter Walker

I have settled objectives with the British Coal corporation chairman, Sir Robert Haslam in he following terms:

1. Coal production, like any other business, must earn a satisfactory return on capital while competing in the market place. The basic objective of British Coal must be to earn a satisfactory rate of return on its net assets and achieve full financial viability without Government support. British Coal should accordingly aim to improve its profitability so as to achieve, after payment of interest and accrual of social grants, breakeven for the year 1988–89 as a whole (though it is hoped that a breakeven position might be attained during the latter part of 1987–88) and thereafter generate an increasing surplus on revenue account and to contribute increasingly to self-financing.
2. British Coal should aim to maximise its long-term profitability by concentrating on low-cost production and on those sales which maximise profit on a continuing basis in competition with other fuels. It should plan its marketing, production, capital investment and research and development accordingly, bring productive capacity into line with its continuing share of the market, and ensure an adequate return on new capital investment in accordance with the principles set out in the White Paper "The Nationalised Industries" (Cmnd. 7131).
3. British Coal's objective should be to ensure that over the period to 1989–90 the operating costs of its mining activities per gigajoule of coal produced are reduced in real terms by at least 20 per cent., compared with the level recorded in 1985–86.
4. Either British Coal or the Government may propose additional objectives from time to time: any consequent adjustment to existing objectives would need to be discussed.