Monopolies and Mergers Commission (Hansard, 14 November 1986)

§ Mr. MacGregor

In order that MMC studies of nationalised industries are effective, proper follow up is necessary. The Government have reviewed existing arrangements with a view to ensuring that procedures are adequate in this regard.

The primary responsibility for considering the recommendations of an MMC report, and for taking the action on them which is judged appropriate, lies with the board of the industry concerned. At present, an industry normally gives its initial response to an MMC report within three to four months of publication. This is followed by a further statement on progress after 12 months explaining the action taken and the results achieved. In practice within this framework, response times have to take account of the differing circumstances of industries and the differing scope of individual MMC reports.

Having reviewed the present arrangements, the Government have concluded that, in general, they work well. However, there is some scope for improvement in three regards. First, the existing procedures should be revised as necessary to ensure that they operate as intended. Second, where an agreed programme of follow-up action extends over longer than 12 months, a reporting gap exists at present, and this should be filled. Third, to ensure that follow-up action is not only taken but is seen to be taken, the industries' progress statements should be given some form of publicity.

The Government have therefore agreed with the nationalised industries' chairmen's group, the following strengthening of existing arrangements: (a) In their first responses to MMC reports, the industries should continue to set out the ways they intend to approach follow-up action and the timetable to which they plan to work. Their 12-month statements of progress should explain what has been achieved by then and reconfirm, if necessary, the timetable for completing action. 8W (b) Progress in these regards should continue to be routinely examined when an industry's performance is reviewed in the context of Corporate Plan discussions (c) To ensure that these procedures work as effectively as possible, industries should consider, in conjunction with their sponsor Departments, ways of presenting their action programmes in as specific a form as is practicable, so as to facilitate subsequent checks of performance against plans. The MMC have agreed to frame the recommendations in their reports with this aim in mind.

While this approach provides a guide to the follow-up procedures which should normally be taken in respect of MMC recommendations, it should not preclude the sponsor Departments from seeking more rigorous arrangements in the case of particularly adverse MMC findings.

The time taken to complete follow-up will necessarily vary, but in all cases the Government would expect follow-up action to be completed within a maximum of three years of the MMC's original report. Once follow-up action is completed, the industry will produce a final progress report recording what has been done and setting out the improvements that have been achieved. The Government think that this would strengthen accountability and be generally welcomed in Parliament and outside. Once follow-up is completed, decisions can be taken on whether any re-reference to the MMC is necessary. The precise nature of the publicity to be given to industries' final progress reports will be agreed on each occasion with the industry concerned.