§ Mr. McQuarrieasked the Secretary of State for Scotland what response has been made by the North of Scotland Hydro-Electric Board to the report on the board by the Monopolies and Mergers Commission which was published last autumn; and if he will make a statement.
§ Mr. RifkindI have received the initial response of the North of Scotland Hydro-Electric Board to the report of the Monopolies and Mergers Commission published on 3 October 1985. It gives the board's comments on the commission's findings and describes the action it is taking to meet the recommendations. Copies of the board's response have been placed in the Library of the House.
I welcome the commission's findings that the board is not pursuing any course of conduct against the public interest and that the board does its job well, striking an appropriate balance between its requirements to supply electricity efficiently and economically and its environmental and social obligations. The commission found that the board's investment appraisal procedures are basically sound, that its financial and management accounting and information systems are sound and well run and that the management and operation of the board's generating function are of a high standard.
Nevertheless, the commission noted a number of areas where improvements in the board's performance should be made. These included cost and stock control and the way in which control is exercised within a delegated management structure. The board has undertaken to improve its efforts to control and reduce costs and has accepted many of the recommendations on delegation. In some cases the board is re-examining existing procedures in the light of the commission's findings.
I particularly welcome the board's positive and constructive approach to the priority issues identified by the commission. The board has confirmed its commitment to the refurbishment of the distribution system and to the development of an assessment system for allocating resources within the refurbishment programme. It has indicated that the management services function is to be strengthened; that a system of cost reduction targets to be set and monitored by the board is being instituted; that the development and introduction of management information systems designed to improve monitoring will continue; and that standard guidelines for investment appraisal and project management procedures will be drawn up.
310WMy Department will maintain contact with the board in its task of implementing the commission's recommendations, and I have asked the board to report to me its progress and achievements by October 1986.