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Commercial Accounts (Surpluses)

Oral Answers to Questions — Post Office – in the House of Commons at 12:00 am on 31st July 1957.

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Photo of Mr Ness Edwards Mr Ness Edwards , Caerphilly 12:00 am, 31st July 1957

asked the Postmaster-General what would be his estimate of the commercial account surpluses for the years 1958, 1959, and 1960 if he presented them in the form prevailing for the years 1946 to 1955.

Photo of Mr Ernest Marples Mr Ernest Marples , Wallasey

There are two differences in the form of the accounts. First, at present the £5 million annual contribution to the Exchequer is charged as an expense before arriving at the profit or loss. Secondly, the eventual surplus or deficit is carried forward for the benefit of the Post Office. Previously all surpluses were in fact surrendered to the Exchequer. These averaged £15 million a year under the Labour Government and compare with £5 million paid now. If the old system had applied to present estimates, the cumulative surplus at 31st March, 1959, would have been £20 million instead of £5 million. But of course all this surplus of £20 million would have been paid to the Exchequer and the Post Office would have been £5 million worse off.

Photo of Mr Ness Edwards Mr Ness Edwards , Caerphilly

Is it not then the fact that by changing the form of the accounts a profit of £20 million has been made to look like a profit of £5 million? Has not that been the basis of the right hon. Gentleman's increased charges?

Photo of Mr Ernest Marples Mr Ernest Marples , Wallasey

No, I could not accept that assumption. What has really happened is that since 1955—I repeat myself again—for the first time depreciation of Post Office assets is on current costs, so that when a telephone exchange breaks down in Caerphilly we have sufficient money to renew it. If we do not make such provision it cannot be provided when the exchange has broken down.

Photo of Mr Ness Edwards Mr Ness Edwards , Caerphilly

Is the right hon. Gentleman aware that this is a bookkeeping account that we are talking about—a commercial account, and not a cash account—and that irrespective of whether the cash is or is not in the commercial account, the money is there to repair the telephone exchange in Caerphilly? I put it to the right hon. Gentleman, is not it the case that what he is doing is something that the Inland Revenue never allows either he or his friends to do, that is, to regard supplementary depreciation as a charge on the current account?

Photo of Mr Ernest Marples Mr Ernest Marples , Wallasey

What I should like to know from the right hon. Gentleman—[HON. MEMBERS: "Oh."]—a whole series of Questions put down on the Order Paper by a previous Postmaster-General have been against the principle of providing for depreciation at current cost. Does the right hon. Gentleman object then to the principle—[HON. MEMBERS: "Oh."]

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

Order. I am aware that some of these questions may be of the rhetorical variety, but the right hon. Gentleman should not reverse the rôles of questioner and answerer.

Photo of Mr Ernest Marples Mr Ernest Marples , Wallasey

May I put it again? The right hon. Member for Caerphilly (Mr. Ness Edwards)when he was Postmaster-General did provide additional depreciation over and above historic costs. The amount he provided was to replace the assets.

Photo of Mr Arthur Woodburn Mr Arthur Woodburn , Clackmannan and East Stirlingshire

Can the right hon. Gentleman tell the House of any firm of chartered accountants which insists on commercial firms charging depreciation at current cost? Can the right hon. Gentleman cite any example where the Inland Revenue will allow that as a charge against Income Tax for any commercial firm in this country?

Photo of Mr Ernest Marples Mr Ernest Marples , Wallasey

I agree that the Inland Revenue does not allow it. All I say is that the latest Labour Party pamphlet recommends the nationalised industries, such as electricity and coal, to generate more of their own capital, and that is precisely what this nationalised industry is doing.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

Order. I am in some doubt about which Question the right hon. Gentleman is answering. Is it Question No. 15 or Question No. 16?

Photo of Mr Ernest Marples Mr Ernest Marples , Wallasey

It is Question No. 15.

Photo of Mr William Morrison Mr William Morrison , Cirencester and Tewkesbury

Depreciation seems to cover the next Question, and if it is depreciation that we are talking about, perhaps we might get an answer to Question No. 16.