§ Mr. Trotterasked the Secretary of State for Transport (1) what was the purpose, amount and duration of the loan which he authorised British Rail to guarantee on behalf of Hoverspeed; and to what extent the other shareholders of Hoverspeed have provided similar guarantees;
(2) to what extent in deciding to authorise British Rail to guarantee the liabilities of Hoverspeed he (a) obtained financial and commercial information to justify the support, (b) had regard to the poor financial forecasting of Hoverspeed in its first year and (c) had regard to the effect on its non-subsidised private competitors;
(3) why he has given his consent to British Rail to guarantee the overdraft of Hoverspeed;
97W(4) whether it remains his policy that Hoverspeed should look to the private sector for future finance and not have recourse to public funds.
§ Mr. EyreThe Government remain firmly of the view that Hoverspeed should meet its financial requirements from the private sector. In the first year of operation the company failed to achieve its targets, largely because of difficulties with the computerised advance booking system. I understand that the company, and their bankers National Westminster Bank, with the benefit of advice from Peat Marwick Mitchell and Co., concluded that the faults were remediable, and that substantially improved results might be expected in 1983. Because of the cyclical nature of their business, in which most of the income arises during the summer period, the company require overdraft facilities during the winter. The bankers asked for a guarantee from the shareholders for a portion of that loan. British Rail concluded that its commercial interest would be best served by providing this support, since otherwise it would have faced substantially larger immediate losses. Giving the guarantee does not constitute a public sector subsidy. My right hon. Friend therefore gave consent that British Rail could repeat an earlier guarantee of Hoverspeed borrowing, to the extent of £750,000, with a time limit of 31 August 1983. I understand that the other shareholders also provided a guarantee.