§ Mr. Longden
asked the Secretary of State for the Environment (1) what is the current rate of increase in borrowings by British Rail and what is its outstanding indebtedness;
(2) whether British Rail is now having to borrow in order to pay the weekly wages of its employees.
§ Mr. Peyton
There is no question of the Railways Board having to borrow to pay wages. Its first Corporate Plan, however, envisages investment in the years 1971 to 1975 of about £600 million. It expects to finance about half of its total investment needs internally, and may therefore need to raise up to £55 million of new capital from the National Loans Fund during this calendar year. The Board's 1970 Account show that the outstanding debt to the N.L.F. at 31st December, 1970, (of course including the commencing capital debt of the undertaking) was £365 million.212W
In the longer term, the Board's ability to service an increasing capital debt depends upon achieving trading surpluses substantially higher than in the last two years. There is clearly a risk that such surpluses will not be achieved, because profit margins are narrow in relation to costs and turnover, and are thus sensitive to comparatively small fluctuations in traffic volumes and cost levels. In preparing its second plan, the Board is well aware of the need to seek ways of improving its financial situation. Meanwhile, I consider it right to make the loans currently needed.