Electricity Industry (Hansard, 23 November 1987)

§ 16. Mr. Favell
To ask the Secretary of State for Energy if, when he next meets the chairman of the Central Electricity Generating Board he will raise with him proposals for reducing manning levels in the electricity supply industry.

§ Mr. Parkinson
As I said in my statement on 3 November, the Government expect the industry to consider carefully the scope for improving the rate of return through increased cost efficiency.

§ Mr. Favell
Does my right hon. Friend agree that it is difficult to judge the performance of a domestic monopoly without figures comparing it with like countries, such as those in the EEC? When he next meets Lord Marshall, will he ask him to provide such figures?

§ Mr. Parkinson
Yes, I will.

§ 18. Mr. Pike
To ask the Secretary of State for Energy what discussions he had with the chairman of the Central Electricity Generating Board about the financial target for the electricity supply industry.

§ Mr. Parkinson
I meet the chairman of the Central Electricity Generating Board frequently to discuss a range of issues.

§ Mr. Pike
Is the chairman of the CEGB happy with the financial policies being forced on the board by the Government and the resulting massive price increases for domestic and industrial consumers, which will cause considerable problems for many manufacturing industries?

§ Mr. Parkinson
The chairman of the CEGB has confirmed that he accepts my argument that the rate of return needs to be improved. He argues that it could be improved a little more slowly, but he accepts that it must be improved if we are to attract investment and achieve diversity in generation.

§ Mr. Michael Morris
My right hon. Friend has rightly stated that the rate of return must be improved. Will he clarify the statement by the Secretary of State for Scotland suggesting that in Scotland 2.7 per cent, seems to be acceptable?

§ Mr. Parkinson
The reason for that is precisely the reason why our rate of return has been so low. Scotland has very substantial surplus capacity. We have just come through a period of substantial surplus capacity. That is now disappearing and we are about to embark on a huge investment programme. In Scotland, the investment has been made and there is a surplus. That is why the rate of return is lower.