Committee disputes basis of NFC's assets
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from our Parliamentary correspondent • Opponents of the Transport Bill are up in arms over Ministerial statements about the financial basis on which the National Freight Corporation will take over the businesses it will run.
They say that Mr. Stephen Swingler, Minister of State for Transport, gave one version to the Standing Committee considering the Bill, and a short while later Mrs. Castle said just the opposite.
Mr. Swingler's view was put forward during a discussion on the NFC commencing debt.
He gave "an unqualified assurance" that there would be no writing down of liabilities to the Minister by the organization which will be transferred to the Corporation. The NFC would not benefit in any way from the writing-down of the commencing capital debts of the railways, added Mr. Swingler.
The assets transferred to the Corporation from the railways would be taken into account at their full book value—they would be transferred at the real value.
Later Mrs. Castle told the MPs that the asset valuation was a matter for the body owning the asset. "It will be a matter for the National Freight Corporation, after they have been vested with their assets and liabilities, to decide the correct financial policies and to determine their asset values in relation to their commercial circumstances."
The transfer was not a sale at a price fixed by the parties concerned, pointed out Mrs. Castle. It was a transfer from one public authority to another.
This meant that all that should be involved was a transfer of liabilities at their current valuation. If the assets were to be revalued for the transfer, that would not necessarily have any effect on the transfer of liabilities since it would merely have the effect of creating reserves in the books of the NFC, and would not increase their interest liabili
ties to the Exchequer.
The Corporation's competitive position vis-àvis the private sector would not be affected.
The Government could not accept the writing down or writing up of the debt of the NFC, because that would be a clear distortion, went on Mrs. Castle.
Replying to her Tory opposite number, Mr. Peter Walker, the Minister said that an up-todate assessment of the assets of the Corporation was a matter for the Corporation when it was set up.
Mr. Walker said he doubted whether there had ever been an occasion in a committee on which, in such a short time, a Minister had denounced a Minister of State for his assurance quite so quickly and completely.
Mr. Swingler's reasonable and sensible assurance had been the first major acceptance of a proper competitive position by the Government, said Mr. Walker, and he had been delighted with it.
Mr. Edward Taylor (Tory, Cathcart) said this was fundamental and basic to the whole question of whether we could have fair competition with the private sector.
The Corporation's commencing debt should be based on real values. To base it on book value was nonsense and would greatly undermine such faith and confidence as the private sector in road haulage still had in this Government— small as it was.
Earlier Mrs. Castle said that with the help of expert advice from the THC it had been calculated that the commencing capital debt of the National Freight Corporation would be about £140m. That, of course, was subject to review in the light of the detailed allocation of assets between now and the vesting date.
That left the sort of net figure for borrowing powers of £50m to £60m. These powers would be needed for a number of legitimate commercial purposes—for normal investment in renewals of vehicles, rationalization of depots, development of the Freightliner grid, development of the subsidiaries, development of shipping services or hovercraft. It would be needed for contingencies, because there might be a continuing process of transfer after the vesting day.
The borrowing power would also allow for the exercise of the power of voluntary acquisition conferred on the THC by the 1962 Act.
The Committee rejected, by 15 votes to 12, an attempt to limit the Corporation's powers.
Mr. Taylor explained that a suitable amendment had been put down "to try to stop the appalling and intolerable expansionism in the public sector which the Government are putting forward in the Bill".
Opposing the idea, Mr. John Morris, the Parliamentary Secretary, said that it might well be that when the NFC wanted to take over any particular company, it might have to take over activities it did not require. But there was ample provision against the abuse which so rightly concerned MPs.
The acquisition of an undertaking as a whole had to be for the purpose of the NFC 's business, and if the extra activity were considered desirable for the Corporation, then it might be retained.
But the Minister had power, after consultation with the Corporation, to direct it to discontinue any of its activities or to dispose of any part of its undertakings.
Mr. Morris was equally opposed to another amendment which would have put an obligation on the Corporation to dispose of premises, vessels, vehicles and other assets for which it had no direct commercial use.
The amendment was lost by 12 votes to 16.
The Opposition withdrew an amendment imposing common carrier obligations on the NFC.
Mr. Geoffrey Wilson (Tory, Truro), who put forward the amendment, noted that the Corporation was being given power to object to competitors being given a licence. So it was only reasonable that it should accept the liability to take all goods offered to it, to make reasonable charges, carry by the usual route, deliver in a reasonable time and insure the safety of the goods.
Mr. Morris said this amendment was yet another attempt to restrict the power of the NFC.
Mr. Wilson's case fell to the ground because the NFC would not be a monopoly. The amount of freight it would carry would be about 10 per cent.
Mr. Wilson said he hoped Mr. Morris's point would be borne in mind when the Committee was considering how much power the NFC would have to object to anyone else having a licence.
An attempt to stop the NFC having an interest in Freightliners was lost by eight votes to 13.