Welsh Water Authority
A report on the Authority's efficiency, costs and service
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Summary
On 7 September 1987 the Department of Trade and Industry
sent to the Commission the following reference:
" The Secretary of State, in exercise of his powers under
Section 1 l(l)(a) and (b) of the Competition Act 1980, hereby
refers to the Monopolies and Mergers Commission (the ' Commission')
the questions set out below relating to the efficiency and
costs of, and the service provided by, the Welsh Water Authority
(the ' Authority'), except in so far as those questions relate
to, or may involve
consideration of:
(i) the Authority's charging policy, or
(ii) the discharge of any of its water supply duties through
the Chester Waterworks Company and the Wrexham and East Denbighshire
Water Company.
The Commission shall upon this reference investigate and report
on the following questions:
(1) whether and, if so, to what extent there is scope for
the Authority by the end of the Authority's financial year
1989-90 to put in hand or achieve net cost savings with particular
reference to items (d)-(g) below. In so doing, the Commission
shall so far as practicable quantify any such scope
and shall indicate the scale of gross cost reductions and
gross additions to expenditure which might be involved.
(a) its management structure and the effectiveness of its
management and control of manual and non-manual staff;
(b) its industrial relations, working practices and the effectiveness
of any bonus schemes;
(c) the capital investment programme with particular regard
to the scope for cost saving investment;
(d) its management information and control systems including
the use of performance management;
(e) its method of identifying tasks and setting standards
for its arrangements for carrying out repair, maintenance
and day-to-day operations and the cost effectiveness of these
arrangements;
(/) the scope for making greater use of external resources
by contracting out;
(g) the costs of compliance with requirements under the laws
of the United Kingdom and the European Economic Community
and of maintaining or improving standards of service to customers
with particular regard to the extent to which such costs are
necessarily incurred.
(2) whether, in relation to any matter falling within question
(1) above, the Authority is pursuing a course of conduct which
operates against the public interest.
In making their recommendations, the Commission should have
regard to:
(a) the objectives for the Authority agreed between the Secretary
of State for Wales and the Authority and in particular:
(i) the need to offer a quality of service that is acceptable
having regard to costs and to effects on the environment and
to remedy recognised deficiencies over a reasonable period,
and
(ii) the need to achieve the service objectives at the least
costs and with steadily improving efficiency:
(b) available material on the comparative performance of water
authorities.
The Commission shall report on this reference within a period
of six months beginning with the date hereof.
7 September 1987
(signed) B E ARMSTRONG
An Assistant Secretary,
Department of Trade and Industry
On 10 September 1987 the then Chairman of the Commission,
acting under section 11, sub-section (9) of the Competition
Act 1980 and Part II of Schedule 3 to the Fair Trading Act
1973, directed that the functions of the Commission in relation
to the reference should be discharged through a group of six
members including, as Chairman, Mr R G Smethurst, a Deputy
Chairman of the Commission. The composition of the group is
indicated in the list of members
which prefaces this report.
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