Dáil Éireann debate -
Wednesday, 22 Mar 1995

Vol. 450 No. 8

Adjournment Debate. - ESB Negotiations.

Mr. S. Brennan

I appreciate the Minister's attendance in the House. I seem to have required his presence here on many occasions recently and I appreciate the courtesy he has shown me and the House by making himself available to reply as the issues involved are important.

The Minister's untimely intervention in the negotiations at the ESB is extremely dangerous and unwise. Following the bitter strike at the ESB in 1991, I understood the company, the trade unions and the Department were committed to building better relations and a better culture in the ESB. That process was working well and had led to talks on costs savings. I understand the Minister's decision to intervene directly has jeopardised that good environment which was painstakingly rebuilt following the 1991 strike.

The Minister's letter to the chairman of the ESB was unwise and, without being unduly political, it raises doubts about Fine Gael's commitment to social partnership. It is a disturbing development particularly as it follows the Government's decision to intervene directly in the management-union relations at TEAM Aer Lingus.

It appears a tension has developed between the partners in Government in regard to the Minister's approach to semi-State companies, particularly the ESB and TEAM Aer Lingus. I look forward to having an opportunity at some stage of hearing from the Labour Party and Democratic Left members of the Government about the Minister's approach to State companies and whether he is committed to the principle of social partnership and the social structure we built for negotiations.

The important talks about cost savings at the ESB were ongoing on a tripartite basis and a steering committee consisting of representatives of the company, the trade unions and the Department met once a week to consider how to progress negotiations. If the Minister reflects on the matter he may consider it would have been more appropriate to have worked through that forum rather than submitting a letter on the matter directly to the chairman. I hope his decision will not result in permanent damage. The Minister should reassess his position before meeting the unions tomorrow.

In regard to restructuring the ESB, the Minister has demanded that full savings be realised within two years, that there shall be no price increase until after that time and full acceptance of a reduction of approximately 2,900 in the workforce. If he reconsiders those demands I am sure he will accept that they are unworkable in the present circumstances. They are certainly unworkable outside the social consensus structure we have built in the ESB.

Will the Minister reconsider the position before it is too late? The trade unions were guaranteed that those changes would be introduced over an acceptable time frame, but I understand that guarantee is being reneged on. I will be particularly interested to hear what the Minister says about that.

I accept the need for change at the ESB, but the scale is enormous. I do not believe it is realistic or workable to try to cram them into the two year period that the Minister has now indicated. I am not in a position to verify the figures but I understand that 2,900 redundancies would cost an average of £80,000, a total of £0.25 billion, in redundancy payments. Where will we find £0.25 billion in two years? Is it more off balancesheet funds like the local loans fund? Can we sell a few more local authority houses or generating stations? Speaking of generating stations, will the Minister square the circle which says on the one hand that we have to reduce staff by 2,900 and pay them £0.25 billion in two years, not over a longer period as we can afford it and, on the other hand, according to a letter from the chairman of the ESB, we will have serious problems from 1997 unless we set about increasing generating capacity? Will that Are we to let go 2,900 people, pay them £0.25 billion and then have the ESB increase generating capacity? Will that mean taking on additional people or can generating capacity be increased without people? Perhaps when the Minister is talking to the unions tomorrow he can clarify that matter with them because I have some difficulty in doing it.

Minister for Transport, Energy and Communications (Mr. Lowry)

I welcome the opportunity to put the record straight in relation to the unfounded statements by Deputy Brennan who takes me to task for intervening at a time when delicate negotiations are underway between ESB management and unions. He suggests my actions are at odds with the Government's policy of social partnership. Nothing could be further from the truth.

My letter to the ESB chairman was clear and concise and was intended to set out the policy which I expect the board and management to follow in the negotiations. These negotiations must be concluded on the basis of achieving savings within a speedy time-scale. I would not be serving the interests of the consumer or the requirements of the national economy if I shirked from making my views known. It is important that these negotiations take place in an atmosphere of realism and that all parties are aware of the urgency attaching to achieving economies in the ESB.

The Government attaches the utmost importance to the objective of social partnership in both the private and public sector. Enlightened economic and social policy recognises the contribution which a co-operative approach between management and unions can make to economic growth and social progress in a modern economy. However, the fruits of social partnership must emerge quickly if the present cost imposition on consumers and the wider economy is to be eliminated.

The meeting tomorrow is at my invitation. I look forward to meeting the ESB group of unions, under the auspices of the ICTU so that they can put their views directly to me. Equally, it will be useful for them to hear my views at first hand. I am confident that this meeting will allay any fears about a departure from the spirit of social partnership.

The ESB is the oldest of our State enterprises and has played a pivotal role in national development over the last seventy years. This Government wishes to ensure that the ESB continues to make a major contribution to economic development. However, as acknowledged in the policy agreement between the three parties in Government, managed change must occur in State companies. External developments, such as technological change, the lessons to be learned from best practice performance in other countries and developments in EU law, mean that our State enterprises must continue to adapt if they are to respond to the needs of their customers and our economy.

Many of the businesses which rely on the ESB for electricity are barely able to survive and maintain employment in fiercely competitive markets. My job is to see that every effort is made to minimise the price of electricity to give those hard-pressed businesses a better chance in the market-place thereby preserving existing jobs and facilitating the creation of new jobs in the wider economy. I could not justify a price increase without being satisfied that every effort has been exhausted to avoid an increase by enhancing efficiency within ESB.

The Government has taken two major strategic initiatives to enable the ESB to achieve the necessary efficiency and cost improvements to maximise the benefit to consumers and to position itself for the coming liberalised European electricity market. Firstly, a comprehensive cost and competitiveness review, involving ESB management, unions and officials of my Department was initiated early last year. The review, with the assistance of the consultants McKinseys, has examined all aspects of the ESB's operations to determine how its performance can match best international practice. McKinsey's conclusions have been widely reported as indicating scope for annual savings of £120 million part of which is due to 2,900 jobs which are surplus to requirements.

In parallel with the cost and competitiveness review I am proceeding with a major strategic restructuring of the electricity industry approved by the previous Government in May 1993. This will stimulate efficiency, build on the achievements of the CCR and create a market which will respond effectively to the wide variety of consumer needs. Restructuring is also essential in the context of moves towards liberalisation of the European energy market. The CCR and the new regulatory arrangements are mutually reinforcing. They are designed to achieve efficiency and cost effectiveness in the generation and supply of electricity in the State.

It is worth reiterating the objectives of the CCR and the climate in which it is taking place. The review has examined how ESB costs compare with best international practice and will recommend any necessary improvements in current ESB practices. It is a major initiative, intended to build on the strengths of the ESB, and to bring about change in a spirit of co-operation and trust. The need for this type of response was identified in the Culliton and Moriarty reports, which focus on the importance of minimising costs within the economy to support industrial growth and job creation. Furthermore, the co-operative approach to this review accords with the Government's philosophy of social partnership and consensus. The willingness of the ESB and its trade unions to work closely together in this way exemplifies an organisation which is prepared to treat change as an opportunity rather than a threat. I am confident that the review will strengthen the ESB's competitiveness and give it a significant advantage in advance of the completion of the Internal Market in electricity.

The Programme for Competitiveness and Work gave central focus to the growth of employment and the competitiveness on which it must rest. The semi-State sector, of which the ESB is a valued part, will play a crucial role in achieving competitive advantage. Indeed I would like to quote what I regard as a key sentence in the programme in its reference to State companies: “The most significant contribution which the State enterprises can make to national economic and social development is the delivery of services which are efficient, effective and able to complete in the markets they serve.”

The sense of urgency expressed in my letter to the ESB chairman is consistent with turning around the ESB to make a positive contribution to our country's competitiveness.

The future of the ESB rests in the hands of its management and employees. The CCR provides a unique opportunity for management and staff, with the support of a Government, to address difficult issues without the sort of confrontation which has jeopardised solutions in other places. My letter to the chairman of the ESB maintains the Government's support for the process but underlines the necessity for tangible early progress now that the opportunity for substantial savings has been identified in the ESB.

The Dáil adjourned at 9.30 p.m. until 10.30 a.m. on Thursday, 23 March 1995.