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asked the Secretary of State for Industry whether he has yet determined financial duties for the National Enterprise Board; and if he will make a statement.
The Board has been advised of my determination of its financial duties in respect of its investments in companies other than British Leyland and Rolls-Royce, in the following terms:
I am directed by the Secretary of State for Industry to say that, in pursuance of Section 6 of the Industry Act 1975 he has determined, with the approval of the Treasury, and after consultation with the National Enterprise Board, a financial duty in relation to certain assets and activities of the Board, as set out in paragraphs 5 and 7 of this letter. The duty relates to the Board's investments in companies other than British Leylan Limited and Rolls-Royce Limited (which will be the subject of separate determinations at later date).
2. The duty takes the form of a target rate of return on capital employed, as defined below. This definition excludes loans to companies in which the Board have no share interest; the Board are already required under their Guidelines, in lending to their subsidiaries or other companies, to charge a rate of interest not less than that paid by commercial companies of the highest standing when raising finance. Investments which the Board are required to make under Section 3 of the Industry Act 1975 are also excluded; as indicated in the Guidelines these activities will be accounted for separately.
3. I am to say, by way of explanation, that this duty is aimed at securing a return related to the average rate of return expected to be secured on capital employed in manufacturing industry in 1981. Our judgment, on the best available information, is that this average rate of return could turn out to be about 20 per cent.
4. The Secretary of State recognises however that the Board's purposes are wider than those of commercial enterprises and they are able in appropriate cases to take a long-term view of their investment opportunities. In these circumstances, and taking into account the inevitable uncertainties about the future, he considers it reasonable to look to the Board to secure a return within the range of 15–20 per cent. by 1981, and he trusts that the exercise by the Board of their best endeavours will lead to a result at least as good as this, and to the maintenance of steady progress towards that objective in the meantime.
5. It it becomes apparent that the average rate of return for manufacturing industry in 1981 is likely to differ significantly from 20 per cent. it would be reasonable, in the opinion of the Secretary of State, to take that fact into account in judging the Board's performance.
6. The Secretary of State has accordingly determined that the financial duty of the Board in relation to their investments in companies other than British Leyland Limited and Rolls-Royce Limited, should be to conduct their activities with the object of securing in 1981 a rate of return on capital employed, before interest and taxation, within the range of 15·20 per cent. In the years prior to 1981 the Board are to maintain steady progress towards this objective.
7. This duty does not extend to loans made by the Board to companies in which the Board have no share investment nor any interest in rights to acquire shares, nor to sums paid by Her Majesty's Government in respect of investments made under the terms of Section 3 of the Industry Act 1975.
8. For the purposes of this determination the rate of return will be taken as the consolidated profit (including investment income and share of profits or losses of associated companies) before interest, taxation and minority interests as a percentage of the capital employed; and capital employed will be taken to comprise the aggregate of public dividend capital, reserves, loans from Her Majesty's Government, other loans, deferred taxation, minority interests, overdrafts and short-term borrowings less bank balances and deposits. The calculations will be made on historical cost accounting principles.
asked the Secretary of State for Industry how much the National Enterprise Board has spent in each United Kingdom region.
This is a matter for the NEB.
Mr. Nicholas Winterton
asked the Secretary of State for Industry if he will publish the names of all firms in receipt of funds from the National Enterprise Board which failed to make a profit when their last set of annual accounts was published.
This is a matter for the Board.
|Salary||Date of Appointment|
|The Rt. Hon. the Lord Beswick, P.C., J.P||…||£23,538||22nd March 1977|
|DEPUTY CHAIRMAN (full-time)|
|Mr. A. H. C. Greenwood, C.B.E., J.P., F.R.AeS.||£29,000||29th March 1977|
|MEMBERS (full-time)||One between £12,501 and £15,000, two between £17,501 and £20,000 one between £20,001 and £22,500, two between £22,501 and £25,000, one between £25,001 and £27,500.||29th March 1977|
|Mr. L. W. Buck||…||…||…||…||…||29th March 1977|
|Air Chief Marshal Sir Peter Fletcher, K.C.B., O.B.E., D.F.C., A.F.C||23rd March 1977|
|Mr. B. E. Friend||…||…||…||…||29th March 1977|
|Mr. G. R. Jefferson, C.B.E., Hon. B.Sc, (London), C.Eng., M.I.Mech.E., F.R.AeS., F.R.S.A.||29th March 1977|
|Mr. F. W. Page, C.B.E., M.A., C.Eng., F.R.AeS.||29th March 1977|
|Mr. E. G. Rubython||…||…||…||…||29th March 1977|
|Mr. J. T. Stamper, M.A., C.Eng., F.R.AeS||…||29th March 1977|
|Mr. D. O. Gladwin, J.P.||…||…||…||£1,000||29th March 1977|
|Dr. A. W. Pearce, C.B.E., PhD.||…||…||£1,000||29th March 1977|