§ Mr. Meacher
To ask the Chancellor of the Exchequer (1) what have been the total sums in debt and financial liabilities written off in each case of privatisation since 1979, both at current prices and at 1989 prices; and in each case how capital reconstruction altered the balance sheet in relation with the profit or loss position beforehand;
(2) how much in write-offs was granted to each company and industry privatised since 1979; and how much is planned over the next three years.
§ Mr. Peter Lilley
[holding answers 18 and 19 October 1989]: The normal practice on privatization—of a nationalised industry or company wholly or majority owned by Government—is to repay, rather than write off debt. This repayment may be financed from the company's existing resources, the injection of new equity, or new debt 151W finance. In some cases, the Government provide the finance to repay debts, for example, by an equity injection. Such finance is shown in the relevant departmental
National loan fund debt has been formally written off only in the following privatisation cases:
Year Company Amount £ 1980–81 National Freight Corporation (under Section 45 of the Transport Act 1980) 100,000,000 1982–83 British Transport Docks Board (under Section 6(1) of the Transport Act 1981) 81,293,616 1984–85 British Telecom (BT (Extinguishment of Loans) Order 1982) 2,789,865,772 1986–87 BAA (under section 3 of the Airports Act 1986) 43,503,340
Details of the debt write-offs proposed for the 10 water plcs are set out in the reply by my hon. and learned Friend the Minister for Housing and Planning to my hon. Friend the Member for Cardiff, North (Mr. Jones) on 26 October 1989.
These write-offs had no direct effect on public expenditure in as much as they represented a reconstruction of the balance sheets of the industries concerned. In each case, having had NLF debt written off, the successor company issued new securities to be held by the Secretary of State as assets of the Consolidated Fund pending realisation.
Public dividend capital has been reduced in three privatisation cases:
Year Company Amount £ 1980–81 British Airways Board (under the Civil Aviation Act 1980 S1(1)) 160,000,000 1980–81 British Aerospace (under the British Aerospace Act 1980) 60,000,000 1988–89 British Steel (under the British Steel Act 1988) 500,000,000
A further £3,480,000,000 of borrowing by British Steel under the Iron and Steel Act 1982 (S18(1)) was written off on privatisation.
Details of the capital reconstruction of the companies concerned can be found in the individual prospectuses.
Any further write-offs over the next three years will be announced at the time of a specific privatisation.