Like my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) I welcome the placing of some of these State activities on a commercial basis. I certainly think that there might be scope for extending the practice.
I listened with great interest to what my hon. Friend said about financial incentives. He mentioned the Royal Dockyards. If I have read my naval history correctly, I remember that in the days of sail the ship's purser was allowed to make a profit on the catering. I am not sure that that always led to the highest standard of catering. However, as a principle I would not quarrel with what my hon. Friend has suggested, although I would steer clear of status symbols such as carpets, the size and shape of desks and whether the tea is served on a tray or trolley, because in private industry these things are often the source of much heartache. I agree that the motivation of those who manage these industries is important and a factor which should be considered.
I have four brief technical questions to put to my hon. Friend arising out of the Bill. First, I should like to know who lays down the financial targets where the requirement goes beyond breaking even. Clause 4 places on the Minister the responsibility for managing these activities. If he is responsible for managing the activities, it is not necessarily right that he should fix the financial target. I should therefore be interested to know who it is who fixes these targets.
Secondly—and this may have been answered elsewhere—what are the limits to the activities of these various undertakings and the extent to which they can diversify and embark on related activities? I think particularly of Her Majesty's Stationery Office, which is in publishing and clearly could expand widely. Presumably there are some guidelines to lay down where it can operate, and I should be interested to know of them.
Related to that, does my hon. Friend envisage that there might be circumstances when one of these undertakings might find itself in competition with private enterprise? For instance, I can envisage that the Royal Ordnance Factory might be tendering in competition with a private manufacturerer for the supply of defence equipment to the Government. In such cases it would be important to ensure that tenders were on a strictly comparable basis. It is possible for Government Departments and local authorities to allocate their overheads in a way that enables them to put in favourable tenders and that puts them at an unfair advantage compared with private enterprise.
Related to that question of accounting practice, who will carry out the audit of these companies? Who will ensure, for instance, that they use the correct and prudent procedures for depreciating their plant and equipment?