§ Mr. Gristasked the Secretary of State for Energy what response has been made by the South Wales Electricity Board to the report on the Board by the Monopolies and Mergers Commission which was published earlier in the current year; and if he will make a statement.
§ Mr. Goodlad[pursuant to the reply, 29 November 1984, c. 537–38]: I have now received the second response of the South Wales Electricity Board (SWALEB) to the Monopolies and Mergers Commission (MMC) report published in February 1984. This describes further progress by the board in meeting the commission's conclusions. I have placed copies of the board's response in the Library of the House.
The board has responded in a constructive and specific way to many of the MMC's recommendations and significant progress has been made since my right hon. Friend's statement to the House on 29 November 1984 concerning SWALEB's initial response.
The commission recommended that board members should play a more active role in setting SWALEB's corporate strategy through the formulation of key medium term objectives, including cost reduction targets. I am pleased to note that board members are now fully involved in considering the board's central objectives and plans and that comparative performance indicators are studied as part of the planning process. It is clear from the response that SWALEB is committed to continuing progress in reducing its costs while maintaining acceptable standards of service—for example, a key objective in the current annual operating plan is to reduce the board's revenue expenditure by 3 per cent. in real terms compared with the outturn for 1984–85. I welcome the board's increasing use of quantified targets, including job-related indicators, which will play an important part in the continuing effort to enhance efficiency and value for money.
702WI am also pleased that in response to other recommendations the board is developing a comprehensive management information system related to the role and key objectives of each manager and that it continues to test the effectiveness and performance of its own labour force by regular comparisons between in-house and private contractors' costs over a wide range of work. I am glad to note SWALEB's success in eliminating losses in its appliance repair activity in 1984–85. I am discussing with the Electricity Council whether it might be appropriate for boards to adopt any new accounting arrangements for the repair business.
The commission commented (in conclusion 6) on the board's relations with the council. I attach considerable importance to the promotion of close working relationships within the industry, provided that these are cost-effective and give value for money. I am pleased to note that the Electricity Council has set up an audit group to monitor this aspect of central operations. The council is also taking action on a number of other recommendations with industry-wide implications, including the important areas of computer development and investment appraisal.
I should like to convey the Government's gratitude to the MMC for its thorough and stimulating investigation. Its findings have clearly been of considerable use to the South Wales board in helping it to increase efficiency and reduce costs.