HC Deb 13 May 1992 vol 207 cc144-5W
Mr. Riddick

To ask the President of the Board of Trade when he proposes to publish the Monopolies and Mergers Commission report on the United Kingdom Atomic Energy Authority; and if he will make a statement.

Mr. Hamilton

The report is published today. The commission was asked to carry out an extensive inquiry into the efficiency and costs of and the service provided by the United Kingdom Atomic Energy Authority (AEA).

The commission concludes that AEA is an organisation undergoing fundamental change, whose present structure had been in operation for only 16 months when the inquiry started. It concludes that AEA could continue to make efficiency and quality improvements, and could generate higher net revenue. It has identified particular weaknesses in financial and project control, investment appraisal and marketing and makes 58 recommendations for improving AEA's performance across all of its business.

The commission reports that it was none the less impressed by the expertise, enthusiasm and dedication of AEA's staff, and recognises the substantial progress made already with a radical change of culture. It notes AEA plans to cut its staff further, by a sixth, in order to contain costs and achieve a closer match of manpower to the needs of the businesses. It also says that future commercial viability will require significant growth and perhaps some financial reconstruction.

AEA is moving from a location-based management structure, providing a service on behalf of the Government, to a much more commercially driven business-based organisation. Its nine businesses (four nuclear and five industrial) have forecast external sales ranging from £14 million to £126 million in 1991–92. The new structure is still evolving and the commission found that it was too soon to reach firm conclusions about its success. The commission notes that AEA itself recognises that it still has a long way to go to complete its transformation into a fully commercial operation.

he commission notes two other general considerations. First, AEA's nuclear activities still account for some two thirds of the external sales of AEA's businesses. Secondly, AEA's nine businesses, with activities ranging from nuclear research to petroleum services, rest uneasily in the public sector where their entrepreneurial activities are inevitably somewhat constrained. The commission has concluded that any decision on whether or not AEA's business activities should be removed from the public sector would be appropriate after completion of the review of nuclear power which the Government have announced they intend to carry out in 1994. It recognises that this would entail both some financial reconstruction and satisfactory arrangements for taking care of AEA's legacy of nuclear sites. Meanwhile, the commission has welcomed the steps AEA has taken, and is continuing to take, to reduce its very high overheads, although it fears that under present arrangements overheads are likely to remain uncomfortably large.

The AEA will produce a preliminary response to the commission's findings within three to four months, in the light of which my right hon. Friend will make a statement.