In the long term, Royal Mail still looks attractive given the cashflows and scope for efficiency gains, which is Woodford's argument.
Furthermore, UK science is already efficient and only work judged excellent is funded, so there is not much scope for efficiency savings from cutting grants.
He therefore sees the rationale for separating ownership and management, since asset-light firms, having more variable costs, have more scope for efficiency gains.
Sir Peter identified the scope for efficiency gains of 2.5% a year, which would build up to an annual saving of £21.5 billion in 2007-08.The sum is impressive, but the benchmark against which these savings are to be measured has remained something of a mystery.
Exergy analysis indicates largest thermodynamic losses in the gasifier and during combustion, providing additional scope for efficiency enhancement.
The largest exergy destruction is observed in the gas turbine combustor and reformer units, providing additional scope for efficiency enhancement.
Other important points are the application and monitoring of new advanced technologies, such as the digital and satellite systems which offer huge scope for efficiency in air traffic management, and common standards for the training of air traffic controllers.
In Figure 2, we see that some countries achieve more than others with the same level of health spending, which indicates that there is ample scope for efficiency gains.
While it gave no targets, we were very encouraged by its assessment of the structural outsourcing opportunity, the scope for further efficiencies, and the various case studies, which all gave us a feeling for the depth of management.
