§ Mr. Bagierasked the Secretary of State for Transport what action he has taken on the proposals put to him by the British Railways Board for the re-organisation of their shipping activities.
§ Mr. William Rodgers:I have given the board my approval to a scheme under section 7 of the Transport Act 1968 to transfer the shipping and harbours assets of the board to a wholly-owned subsidiary company to be known as Sealink UK Limited. The transfer will take place on 1st January 1979.
I have also agreed with the British Railways Board that Sealink UK Limited should be set a financial target to achieve, by progressive improvemen in its financial performance, a real return of 5 per cent. by 1982. This is the return, before interest and tax, but after adjustment for inflation, on the value of its net fixed assets at the year end.
The White Paper "The Nationalised Industries "—Cmnd. 7131—said that Parliament would be informed of the main assumptions on which the target is based. It has been assumed that no legislative or other change will limit more closely than at present the company's ability to match its pricing and other commercial policies to the changing requirements of the business and the 552W market. The company's market forecasts supporting the target are broadly in line with other forecasts for the industry available to the Government. The target takes account of the need to earn the required rate of return on new investment.