§ Mr. KynochTo ask the Secretary of State for Scotland what plans he has to introduce new financial arrangements for Caledonian MacBrayne.
§ Lord James Douglas-HamiltonCapital expenditure on vessels by Caledonian MacBrayne will from now on be financed by grants of 75 per cent. from the Scottish Office with the balance being met by long-term borrowing, also from the Scottish Office. This arrangement replaces the previous arrangement under which capital expenditure on vessels was financed mainly through borrowing from the Ship Mortgage Finance Company, and is being applied to the financing of the new vessel for the Ullapool-Stornoway service. The purpose of the new arrangements is to eliminate the need for any capital expenditure to be financed by short term borrowing. Additional grant of £6.7 million is also being made this year to eliminate the company's accumulated overdraft and to enable the company's accounting year to be changed from a calendar year to a financial year basis. Capital grant for the Ullapool-Stornoway vessel will total £10.9 million, of which £3.45 million will be paid in 1993–94. All the changes will be accommodated by compensating reductions in the company's market borrowings and will therefore be contained within the existing external financing limit set for the company.