§ Mr. RiddickTo ask the Chancellor of the Duchy of Lancaster when the Monopolies and Mergers Commission report on the investment programme of the British Coal Corporation will be published.
§ Mr. MaudeThe report is published today.
The commission was asked to investigate the investment programme of British Coal. It took into account British Coal's achievements and looked to the future, particularly in the light of the changing environment posed by privatisation of electricity supply. The commission concluded that British Coal should take a more positive view of the opportunities which existed to influence vital aspects of its business future, for example, in its response to the threat of future imports.
The Commission found that in general investment and post-investment appraisal had worked effectively, but singled out Asfordby new mine for particular comment. It disagreed with British Coal's view that the project had ever been demonstrably viable according to British Coal's investment criteria. However, the commission accepted that the project now has sunk costs and that this, combined with agreement on six-day working, might mean that the remainder of the project could be shown to be a worthwhile investment. However the commission recommended that in future the sort of conditional approval which was given for expenditure in Asfordby, in advance of its showing a sound financial prospectus, should not be allowed, except where other factors were explicably judged to be of sufficient weight, were clearly laid out in the project appraisal, and a decision to proceed was made at board level.
Looking to the future, the commission recommended that British Coal should now commit itself firmly to
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Expenditure at current prices £ million 1978–79 1979–80 1980–81 1981–82 1982–83 1983–84 1984–85 1985–86 1986–87 1987–88 1988–89 (estimates provision) (a) Regional selective assistance England 59.1 46.7 48.6 54.4 68.7 62.2 72.9 74.8 100.6 122.9 157.0 Scotland 14.9 17.8 22.3 19.7 21.6 28.2 38.2 55.0 43.9 46.0 60.4 Wales 30.3 18.8 10.7 9.2 15.5 18.2 25.1 28.0 35.6 36.7 47.3 (b) Regional development grants England 238.1 210.0 273.8 351.8 280.7 223.8 209.1 166.5 254.3 139.3 161.6 Scotland 107.3 70.2 113.3 142.7 287.3 143.0 109.2 107.5 170.2 78.0 60.3 Wales 71.5 50.7 103.5 122.2 121.5 72.1 92.7 84.4 88.8 53.4 65.6 specific quantified financial objectives for the next five years. All investment projects, and the investment programme as a whole, should be related to these targets. British Coal should also continue to examine the prospects of further simplifying its organisational structure to enable it to respond flexibly to a rapidly changing business environment. The commission commended British Coal's efforts to introduce more flexible working.
The commission also recommended that British Coal should update and run its forecasting models more frequently, and should incorporate the United Kingdom coal market into its world model. It should use its models to consider the effect on the industry of a wider range of possible developments, including ESI privatisation, exchange rate movements, competition from alternative fuels and possible rapid growth in world trade in coal.
The commission made some 20 other recommendations relevant to British Coal's investment policy. It concluded that British Coal was not operating against the public interest in the areas falling within the reference.
Detailed case studies are included as appendices to the report.
British Coal will be producing a preliminary response to the commission's findings within three to four months, in the light of which my right hon. Friend, the Secretary of State for Energy will inform the House of his views.