HC Deb 14 February 1984 vol 54 cc112-3W
Mr. Needham

asked the Secretary of State for Energy what discussions he has had with the Chairman of the British Gas Corporation about the report by Deloitte, Haskins and Sells on the Corporation's efficiency.

Mr. Peter Walker

[pursuant to his reply, 13 February 1984, c. 2]: Deloitte's report was placed in the Library of the House on 23 August 1983. I have now received the British Gas Corporation's response to the report's recommendations, and I am placing copies of this response in the Library of the House.

The Government welcome the publication of Deloitte's report, which was jointly commissioned by my predecessor and the corporation. The report both identifies the corporation's successes and achievements over the past decade, and sets out a number of recommendations which could lead to further improvements in efficiency and substantial cost savings.

The Government agree with the consultants' overall conclusion that BGC has an impressive record over the last 10 years in the efficient management of the gas industry, but that the time is now opportune for the corporation to re-assess its priorities in the light of present uncertainties in the total market for gas and changes to its statutory position.

Deloitte's major recommendations relate to the formulation of pricing policy, the need for a re-evaluation of the present organisation structure, and the scope for cost savings in regional operating costs.

The Government agree with Deloitte's view that the formulation of pricing policy is of major importance to the successful operation of the industry. As part of their concern with the industry's corporate plans and with the determination of financial objectives, the Government are discussing with the industry the factors and principles governing pricing. Deloitte's view will be taken into account in these discussions.

The Government welcome the corporation's decision to review its organisation structure to see whether it remains appropriate to the changed circumstances facing the corporation.

The corporation has accepted a number of the report's detailed recommendations for potential cost saving measures and all of the report's recommendations to review particular policies or practices. The Government and the corporation recognise the importance of maintaining pressure for increased efficiency through the broad financial framework within which the corporation operates, and will continue to work closely together in this area.

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