§ Mr. Skinnerasked the Secretary of State for Industry whether he will make a statement about the National Enterprise Board's report on British Leyland's 1979 corporate plan.
§ Mr. VarleyI am today placing in the Library of the House a copy of a report from the National Enterprise Board on British Leyland's performance in 1978 and on the company's corporate plan for the years 1979–83. Copies are also available in the Vote Office.
The NEB has concluded that support for the company through 1979 would be justified as enabling the new BL board to continue with the recovery exercise which it set in hand last year. It has therefore recommended that the Government should support BL's corporate plan and approve the injection of 150 million of equity funds by the NEB to assist in meeting the company's financial requirements in 1979. This is significantly less than the £300 million which, at the time of the 1978 corporate plan, BL and the NEB envisaged as being needed during 1979.
The Government have accepted the NEB's recommendations, and I have authorised the necessary commitment of public funds by the NEB. British Leyland's plans continue to be based on the overall public funding limit of £1,000 million recommended in the Ryder report, and the Government remain committed in principle to provide the remainder if required in 1980 and 1981, provided that the company's performance and future prospects, which are reviewed annually on the basis of its corporate plans, continue to justify this.
In view of the difficulty of making any precise forecasts of BL's longer-term profitability until the prospects in such vital areas as the improvement of productivity are clearer, the Government have agreed with the NEB that the NEB's existing financial duty to secure a return of 10 per cent. on its investment in BL by 1981 should remain unchanged and that the determination of a financial duty for later years should be considered when the NEB reports on BL's 1980 corporate plan.
479WThe commitment of the NEB funds to BL in 1979 is dependent on the increase in its financial limit provided for in the Industry Bill, which is due to be read a third time today in another place. On the assumption that the Bill becomes law, it is the Government's intention that NEB funds will become the sole source for the tranches of assistance envisaged in the Ryder report and that the use of section 8 of the Industry Act 1972 to provide part of these funds will cease.
While the Government would wish Parliament to have an opportunity for a debate on the NEB's report on BL in due course, we consider that it would be imprudent to risk delay in meeting BL's financial requirements by asking the NEB to withhold its commitment to the 1979 funding until such a debate has taken place.