§ Mrs. McCurleyasked the Secretary of State for Scotland what response has been made by the South of Scotland electricity board to the report on the board by the Monopolies and Mergers Commission which was published in 1986; and if he will make a statement.
§ Mr. LangI have received the initial response of the South of Scotland electricity board to the report of the Monopolies and Mergers Commission published on 20 August 1986. 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 is a well run organisation managing its core function of generating, transmitting and distributing electricity efficiently and effectively. The Commission found that the board's finances are soundly run, that the management structure and information systems are satisfactory and that the board sets itself tight targets for reducing costs and improving efficiency.
The Commission drew attention to some areas where there is scope for improving performance, particularly in billing and debt collection, manpower levels and appliance retailing. The board in its response has described a number of steps being taken which should result in a significant reduction in billing costs and bad debts over the next few years. It has not accepted all of the Commission's recommendations on manpower levels but has indicated that they are reviewing and systemising a number of current procedures and have described their strategy for matching manpower requirements with work load. I shall be keeping in touch with the board's thinking as it develops. I welcome the board's confirmation of its commitment to putting appliance retailing activities on to a profitable basis. Further discussion will be required with the board about how profitablility should appropriately be measured and reported upon and the board's strategy should their endeavours prove unsuccessful.
The Commission made important recommendations about fuel purchasing and tariff structure. I welcome the positive evidence in the response of the progress being made in the board's commercial dealings with British Coal against the background of its strategy to balance the short-term advantages offered by fluctuating fuel prices with long-term security of supply. On tariffs, the board has undertaken to carry out a review and further discussion is necessary to determine the scope and objectives of this exercise. I am asking the board to keep me regularly informed about progress in this important area.
184WThe Commission also made a number of useful recommendations on investment appraisal procedures, quality control and aspects of the arrangements for electricity trading with the CEGB which the board is taking steps to implement.
My Department will be maintaining close contact with the board on the follow-up to the report and the board will report to me again on progress achieved at the end of the year.