§ Mr. Colvinasked the Secretary of State for Industry how frequently the Government-imposed financial rates of return for the Post Office and British Telecommunications are revised; what the present levels are; and what is the basis upon which they are determined.
§ Mr. Michael MarshallFinancial targets are normally agreed with the corporation for three years. Posts' target is 2 per cent. of turnover—after charging historic and supplementary depreciation and interest—for each of the three years 1980–81 to 1982–83.
The National Girobank's target is an average annual return of 13 per cent. before interest on net assets over 1979–80 to 1981–82, plus £5 million over the three years towards reducing the accumulated deficit.
"The Government's Expenditure Plans 1980–81 to 1983–84"—Cmnd. 7841—were made on the basis that telecommunications would earn a real return of about 6 per cent. in 1980–81 and about 6½ per cent. in the years 398W 1981–82 onwards. The return is calculated on average net assets revalued to replacement cost, before interest but after historic and supplementary depreciation. No final decision on the business's financial target for 1981–82 and onwards has, however, yet been announced.
Factors taken into account in setting these targets include market prospects, the scope for improved productivity and efficiency, the required rate of return which nationalised industries are expected to achieve on their new investment as a whole, the need to finance profitable investment, and the implications for the public sector borrowing requirement and monetary control.