British Shipbuilders (Hansard, 4 July 1978)

§ Mr. Varley

In accordance with Section 10 of the Aircraft and Shipbuilding Industries Act 1977 I have made, with the approval of the Treasury, and after consulting British Shipbuilders, the first determination of financial duties for British Shipbuilders. I have notified British Shipbuilders that they have a duty in their current accounting year, which ends on 31st March 1979, to seek to limit any loss before interest and after receipts of intervention fund assistance, to £45 million, and to conduct their affairs to make progress towards providing an adequate return on the capital employed by the corporation and its subsidiaries. A copy of this determination has been placed before each House of Parliament. The short-term target represents the latest forecast of loss given to me by British Shipbuilders. The corporation has not yet been able to finalise its accounts for 1977–78 and is still holding discussions with its auditors and subsidiaries to ensure a more rigorous approach to provision for losses. The forecast of loss is therefore tentative but represents the best judgment of the corporation at this stage. At 31st March 1978, the corporation had received offers of intervention fund assistance of £52 million under which the corporation had received payments of £19.3 million. The forecast of loss assumes that intervention fund subsidies will be available this year to assist the corporation to secure new orders. At my request the corporation is urgently studying ways of reducing the rate of loss, and a longer term target will be set in the light of decisions on this study and the corporate plan which I expect to receive towards the end of this year.