Hansard

Current Cost Accounting

Volume 976: debated on Friday 21 December 1979

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Mr. Chapman

asked the Chancellor of the Exchequer whether he has any progress to report on the Government's consideration, announced by the Secretary of State for Trade in June, of the application of current cost accounting to the nationalised industries.

Mr. John Biffen

Yes. The Government have considered this question in consultation with the nationalised industries. The Government's position, which has been conveyed to the nationalised industries' chairmen's group. is as follows:

  • (a) Nationalised industries should in general apply the accounting principles as set out in the final standard based on ED24.
  • (b) In particular, the industries should show current cost operating profit in their accounts so that their results can be compared with the financial targets which will be set on that basis wherever possible.
  • (c) Current cost balance-sheets should be published wherever possible, though this may be difficult and not wholly appropriate e.g. in the case of certain transport industries.
  • (d) Those industries which the Government have decided to return to the private sector should adopt the gearing adjustment embodied in the final standard based on ED24.
  • (e) The remaining nationalised industries should not make a gearing adjustment in their accounts, though they should show in a footnote the effect of such an adjustment if it had been made. The Government consider that a gearing adjustment would produce misleading results in view of the special circumstances of the financing of the nationalised industries.