§ Mr. Hooleyasked the Chancellor of the Exchequer what progress has been made in dealing with the problem of diversity in the accounts of the nationalised industries.
§ Mr. Joel BarnettThe White Paper on nationalised industries (Cmnd. 7131) said that
When an inflation accounting standard is approved it will apply to the nationalised industries, subject to any necessary adjustments to meet their special circumstancs ".That remains the position and the Government will be considering during the consultative period on the forthcoming exposure draft whether and, if so, what special adjustments are required for the nationalised industries. There will, however, be a substantial period before a new standard comes into force.My right hon. Friend the Financial Secretary told the House in August that in these circumstances the Government and the nationalised industries would need to consider together whether there was not a need for some greater consistency, by way of temporary alleviation of the problem, in the treatment of inflation, in their accounts. The Nationalised Industries Chairmen's Group has today published an interim code of practice which provides some guidelines for their accounts, pending the adoption of an accounting standard. I welcome the statement which represents a modest but useful step forward both towards general adoption of current cost accounting and towards reducing the present extent of diversity between the accounts of different industries. The industries will now show either in their main accounts or in supplementary statements the current cost adjustments needed to arrive at current cost operating profit, which will also be shown. The Government also welcome the industries' intention that the accounts should identify performance against each industry's financial target in accordance 269W with the White Paper on the nationalised industries.
I take this opportunity to remind the House that, as the White Paper made clear, a change in an industry's accounting practices would not in itself have any effect on prices. Where the Government can influence prices, they do so through a financial target. Such targets are of course expressed in accounting terms and a change in accounting principles would not in itself lead to a change in prices, though it might lead to a change in the way the target is expressed.