HC Deb 07 April 1977 vol 929 cc616-7W
Mr. Molyneaux

asked the Secretary of State for Northern Ireland when the Shepherd Report will be published; and what action is being taken on the report.

Mr. Concannon

The report is being published today through Her Majesty's Stationery Office and I shall arrange for copies to be placed in the Library as soon as possible.

The report identifies the problems facing the Northern Ireland Electricity Service' and makes recommendations designed to overcome these problems over a period. As a first step, a complete overhaul of the capital spending programme is recommended. This has been examined jointly with the service, with particular reference to the new Kilroot power station. I am satisfied, following exhaustive financial studies, that it would not at this stage be in the interest of the service and its consumers, or of the economy generally, to cancel or postpone any part of this project. Cost comparisons of alternative options—calculated on the appropriate present value basis indicate that the net financial savings would be insignificant. Moreover, cancellation or postponement would not in themselves have justified tariff reductions in the foreseeable future. I have accordingly asked the service to proceed with the full contract for four 300 MW sets.

The report goes on to recommend a capital restructuring of the service to ease the massive burden of interest charges, but the report itself does not provide sufficient information on which detailed decisions can be taken. This is the subject of intensive study within the departments concerned which should be completed with in a matter of weeks. Decisions will then be taken with a minimum of delay.

The report makes a number of other recommendations, some aimed at the service and some at Government, which are still being examined but which are subsidiary to the points which I have highlighted.

In the meantime I have had to consider the tariff policy of the electricity service during the period when capital restructuring is under review and take into account the April tariff increases in Great Britain. In 1976–77, even though very substantial increases in tariffs were made by the Service, these were not sufficient to enable the undertaking to break even.

To assist the service in the period before decisions are taken about financial restructuring I propose to make a grant to the service to eliminate the deficit which has accrued up to 31st March 1977, and which is estimated to be £24 million. I have also advised the chairman of my view that for the present the main industrial and commercial tariffs should be frozen at their existing levels and that other tariffs should increase but by no more than 4 per cent.-5 per cent. on average.

The effect of implementing these tariff decisions would be to reduce by a small, but, I hope, helpful, extent the serious imbalance which has arisen in the main industrial and commercial electricity tariffs between Great Britain and Northern Ireland and to retain the present relationship of other tariffs.