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Worthington, Tony

Wray, Jimmy

Young, David (Bolton SE)

Tellers for the Noes :

Mr. Frank Haynes and

Mr. Martin Jones.

Question accordingly agreed to .

Bill read a Second time, and committed to a Standing Committee pursuant to Standing Order No. 61 (Committal of Bills) .



That, at this day's sitting, the Ways and Means Motion may be proceeded with, though opposed, until any hour.-- [Mr. Dorrell.] Water Bill [Money]

Queen's Recommendation having been signified--

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Water Bill ( the Act'), it is expedient to authorise--

(1) the payment out of money provided by Parliament of the following, namely--

(a) grants by the Secretary of State to the National Rivers Authority ;

(b) the remuneration of, and any travelling or other allowances payable under the Act to, the Director General of Water Services and any staff of the Director, any other sums payable under the Act to or in respect of a person who holds or has held office as the Director and any expenses duly incurred by the Director or by any of his staff in consequence of the provisions of the Act ;

(c) the remuneration of the chairman of a customer service committee, any travelling or other allowances payable under the Act to such a chairman, to other members of a customer service committee or to members of a sub- committee of such a committee, any other sums payable under the Act to or in respect of a person who holds or has held office as such a chairman or member and the expenses incurred by a customer service committee ;

(d) grants and loans by the Secretary of State to a water undertaker or sewerage undertaker in relation to which a special administration order has been made ;

(e) sums required by the Secretary of State for making any payment in respect of an indemnity given under the Act to a person appointed to achieve the purposes of a special administration order made in relation to a water undertaker or sewerage undertaker ;

(f) expenses incurred by the Treasury or the Secretary of State in acquiring securities of a holding company of a water authority's successor company or rights to subscribe for any such securities ; (

(g) compensation payable by the Secretary of State under the Act in respect of the exercise of functions in relation to trade effluent or in respect of loss or damage caused in connection with a power of entry ;

(h) grants in respect of compliance with directions given under the Act in the interests of national security ;

(i) sums required by the Secretary of State for making payments under the Act into any fund maintained for the purposes of any regulations under section 7 of the Superannuation Act 1972 ; (

(j) sums required by a Minister of the Crown for fulfilling guarantees given under the Act ;

(k) administrative expenses or charges incurred by any Minister of the Crown or Government department in consequence of the provisions of the Act ;

(l) increases attributable to the Act in the sums payable out of money so provided under any other Act ;

(2) the payment out of the National Loans Fund of any sums required by a Minister of the Crown by virtue of the Act for making loans, while it is wholly owned by the Crown, to a successor company of a water authority or to a holding company of such a company ;

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(3) the reduction of the assets of the National Loans Fund by amounts corresponding to such liabilities of a water authority's successor company, or of a holding company of such a company, in respect of any loans as the Secretary of State may by order extinguish.- - [Mr. Dorrell.]

10.14 pm

Mr. Matthew Taylor (Truro) : After the debacle of the Government withdrawing their previous privatisation proposals in 1986, I had hoped that such proposals would never come back to the House in any form. I regret very much that they have.

e consider what the Government now say to justify their position--that this is a "green" Bill, that the NRA is the linchpin twhat they are doing-- it draws a wry smile from us, because those points were not made originally. [Interruption.] Mr. Bob Cryer (Bradford, South) : On a point of order, Mr. Speaker. I can hardly hear the hon. Member for Truro (Mr. Taylor), despite his being very close to me, because of Tory loungers and scroungers who are making such a noise.

Mr. Speaker : Order. Will those hon. Members beyond the Bar either come into the House or go out into the Lobby?

Mr. Cryer : Further to that point of order, Mr. Speaker. A Tory Member just shouted across the Chamber, "We do not want to hear you either." It appears that there could be a concerted attempt to drown out hon. Members, which is completely against the traditions of the House.

Mr. Speaker : I did not hear such a comment. Let us get on with the debate.

Mr. Taylor : I thank the hon. Member for Bradford, South (Mr. Cryer) for leaping to my defence. I have never been accused of having a quiet voice, so there will be a tussle if anyone tries to drown me out.

Yesterday, the hon. Member for Devizes (Sir C. Morrison) wondered how the privatisation of water could lead to competition. Many privatisations have been justified on the ground that privatisation would bring with it the benefits of competition. In privatisation after privatisation we have been told that competition is the crucial element, but the hon. Gentleman said that there would not be competition in any normal sense of the word in this case. Indeed, Ministers have accepted that there will not be competition. That is hardly a surprise. We are dealing with a natural monopoly. No one could possibly think that there could be any competition in any real sense.

Nevertheless, the Government have pressed ahead with the privatisation of water. In doing so, they reveal that competition is never one of the reasons for privatisation. In fact, they have pressed ahead with privatisation on occasion after occasion because privatisation is central to the Government's dogma. It is a matter of ideology. The Government are not looking at the merits of each case. Whatever the industry, whatever the circumstances, whatever the electorate think, the Government want to privatise whatever may be in state hands--or rather, in the community's hands.

In three Thatcher Administrations, none of which has had the support of the majority of the electorate, 29 partly or wholly owned public companies have gone under the hammer. Ironically, as each Conservative Administration has gained less support at the general election polls,

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privatisation issues have become not only more audacious but have centred on areas that are more and more deeply unpopular. We on these Benches are willing to say that in some cases a transfer to the private sector has been beneficial ; for example, in Rolls- Royce and Jaguar. Our objection is not against privatisation per se, as we hear from the Labour Benches. Indeed, when the Front-Bench spokesman replied to the Second Reading debate they made clear the rather stale arguments over privatisation versus nationalisation.

What we have said is that the individual merits of each particular case have been ignored, and the particular means of going about it have been ignored, simply to gain the maximum financial return for the Treasury and the maximum ideological advantage of privatisation. The Government have not considered what is best for each individual sector that has been privatised. Instead, there has been a blinkered ideological approach, blind to any wider considerations.

Finally, we have the privatisation of water. People are now against the proposal by a margin of 5 : 1, yet the Government propose the privatisation of water. Boiled down, it is the ultimate triumph of dogma over democracy.

Mr. Rob Hayward (Kingswood) : Which of the 29 companies and organisations to which the hon. Gentleman referred does he propose to return to state ownership?

Mr. Taylor : None of them. If the hon. Gentleman will listen, he will know that the essential problem is not privatisation or nationalisation, but whether either is the best thing for the industry in question.

I do not believe that privatisation is best for the water industry. Also, one must also consider whether, in privatising, one is giving adequate power to consumers and meeting environmental concerns. In any privatisation, the first consideration should be the ordinary men and women of this country, whereas the Government's primary consideration has been maximising the return to the Treasury.

Mr. Hayward : If the hon. Gentleman does not think that privatisation is best for water, one presumes that he proposes its renationalisation. In which other cases does he consider that privatisation has not been best for the public and which does he propose renationalising?

Mr. Taylor : I shall not give way again to the hon. Gentleman, because he is not listening. If he is, he is incapable of understanding my argument. I shall spell it out again very simply for him.

One ought not to privatise just because one believes that it is the right thing to do--as is the Government's practice, to privatise purely on ideological grounds. Instead, one should do one's best to maintain the industry and ensure that its customers are given the best possible service, while protecting the environment and meeting other areas of concern. On every occasion such considerations have come second best to the Treasury's desire to make a bigger financial return.

I wish to move on, because the result of the Government's action in respect of water can be described in a single word.

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Mr. Speaker : Order. When the hon. Gentleman moves on, will he relate his remarks to the money resolution that is before the House?

Mr. Taylor : Of course I will, Mr. Speaker.

I move on to the cost falling on the consumer as a result of the Bill--a cost that is allowed for in part in the money resolution, in the provision that it makes to spend money as part of privatisation. Even more expense will fall on individual consumers when the Bill is passed. We must ask ourselves whether it should be allowed to pass. Looking back to 1986 when the Government last proposed privatisation, there was another difference--I have already mentioned the NRA--between their comments then and their comments now. Now we are hearing about the NRA and that this is a "green" Bill, but in 1986 we were being told that privatisation would lead to lower water prices. We do not hear that argument any more. On the contrary, the Government no longer claim that privatisation will keep bills down, but that it will increase them. All kinds of reasons are given for that, but the Government have ditched the idea of lower water charges. The only people who believe that passing this money resolution or any other relating to the Bill will benefit the consumer are the Government and their supporters. Nobody else, in the House or anywhere else, believes that.

The House regularly allows money resolutions to go through on the nod, but I have no intention of allowing that to happen on this occasion. I say to the House that this is an opportunity to pause and reconsider whether this money resolution should be passed and whether the Bill should take effect. I say to right hon. and hon. Members who suggested earlier that there is public support for this measure that they are wrong, and that the House would be wrong to pass it. There is no general support for it in this Chamber or elsewhere. I remind Conservative Members that the Government do not have the money, because the resolution has not yet been passed.

I represent an area where people are on low incomes, where some villages do not yet have their own sewerage systems, and where many beaches are polluted. It is they who will have to foot the bill for the improvements that are required. One example is the problem of sewage outfall on beaches. There are currently three projects in hand, all of which require substantial amounts of money. There is one project in Falmouth and Truro, one in Parr and St. Austell and one in Penzance and St. Ives. The Penzance and St. Ives project alone required a massive investment of £50 million, yet discharges will still go out to sea.

Conservative Members want the money resolution to go through on the nod, but they are not so interested in spending money where it needs to be spent as they are in trying to make the Bill fit their own ideology.

Mr. Patrick McLoughlin (Derbyshire, West) : May I draw the hon. Gentleman's attention to the fact that we are debating a money resolution, not various aspects of the Water Bill which, had he caught your eye, Mr. Speaker, he might have raised on Second Reading?

Mr. Speaker : I have already drawn the hon. Gentleman's attention to the fact that he must relate his remarks to the money resolution, which is widely drawn.

Mr. Taylor : That is right. The money resolution allows the Government to spend money on the provisions of the

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Bill. The Bill is so appalling that we should not allow it to go through, as there are many other ways in which the money could be better spent.

In the past, my own area has relied on the European regional development fund to pay for projects. There is great concern in my area--and I hope that the Minister will be able to answer my question now or on another occasion--that, if we allow the Bill and the associated money resolution to go through, a private company such as one of the new water companies will not receive funding from Europe. The work is essential to bring our beaches up to the European standard, and I hope that the Minister can assure the people of Cornwall that they will not be expected to meet all the costs of cleaning up the beaches, which are used by citizens of the United Kingdom and Europe, purely because the Government, by their ideological approach, are cutting off the potential to obtain money in other ways.

Conservative Members have said that all this has nothing to do with the money resolution. They are really saying that they want the money resolution to go through on the nod. They do not mind money being spent as a result of the Bill, rather than on matters that are important to people, particularly in my part of the country. What will happen to some individuals? It is easy for the House to vote sums of money and to spend money that does not come out of the pockets of hon. Members to any large extent. The money that hon. Members receive comes mainly out of public funds, so, although hon. Members can easily pass this resolution on the nod, it is less easy for it to be accepted by some individuals who, after privatisation, may find that their water supplies are disconnected because they are unable to pay their water bills after the price increases that the Bill will bring about.

I challenge the Minister to guarantee that the 9,000 disconnections last year will not be increased after privatisation. Will he guarantee to come to the House each year and tell us that there has been no increase in the number of disconnections following privatisation? We have seen the record of previous privatisations, particularly British Gas. I cannot let the money resolution go through without seeking such guarantees.

I remind Conservative Members that none of them is on low incomes, so they are unlikely to find it difficult to pay their bills. None of them is ever likely to be faced with the problem of having the water supply to their house and family cut off. None of them is likely to face the difficulty of not having water to wash in and to clean with.

Mr. Frank Haynes (Ashfield) : Or of not having water for their swimming pools.

Mr. Taylor : None of them is likely to suffer, but people up and down the country will suffer as a consequence of price increases after privatisation. That will happen if we allow to go through on the nod the money resolution to a Bill under which there is no real accountability. Real accountability cannot be achieved by privatisation and by putting the industry into the hands of public companies. It can be achieved only by placing directly elected representatives in charge of a public water supply that was designed and built at the expense of local ratepayers.

We shall oppose the money resolution. It allows legislation that is daylight robbery to be passed. Our grandfathers and fathers invested, through their local authorities, in the water industry. Privatisation will not

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benefit local communities. It will benefit the Treasury, higher rate taxpayers and private shareholders. Local communities cannot afford, as Conservative Members can, to move around the country, pay their way and even fill their baths with Perrier water. Our constituents will be disconnected because they cannot afford to pay their bills. They will suffer from the pollution that is caused because public investment is no longer available. They will have to meet the real costs of the Bill.

10.30 pm

Mr. Bob Cryer (Bradford, South) : I am taking yet another opportunity to speak on a money resolution, but this is a particularly important one. Earlier today I was approached by a Conservative Whip who suggested that, by means of some device, the money resolution would be debated at 4 am. I assured him that if the Government used such a device I should be here to speak about it. I am not sure whether he was being jocular but, as with all Tory Whips, his manner was threatening. He disappeared, chastened, after my brief conversation with him.

The money resolution is what was formerly called Supply. A ways and means resolution is to follow the money resolution, when we shall be able to discuss the ways and means by which revenue is to be provided to fulfil the supply need. The money resolution is subsumed in greater detail on pages xii and xiii of the explanatory and financial memorandum.

The residual functions of the National Rivers Authority will, it is estimated, cost £290 million. Those functions are wide and important. Is the Minister able to give details of the calculations? There is to be Exchequer grant aid amounting to £71 million for the first full year of the National River Authority's operations. I presume that that will be in addition to the £290 million.

There are reservations about the National Rivers Authority. They relate to its funding, naturally enough. the functions of the NRA are said to be as follows :

"So far as the new NRA is concerned, we see this as an unnecessary addition to the hierarchy and contrary to the concept of integrated river basin management, which we believe is the best method of managing the whole water cycle. To divide the responsibilities would seem to be a retrograde step when so much effort was put into achieving a coherent policy, based on watershed borders, only 13 years ago.

We see no justification for privatisation, which is certain to result in increased charges for consumers, nor are we convinced of the need for dividing responsibilities in the water cycles, inherent in the setting up of a National Rivers Authority."

The Minister may ask me which green or Left-wing organisation produced that statement. I am sure that he is anxious to know that it was made by the Confederation of British Wool Textiles Ltd., which probably numbers among its ranks a large number of employers. It circulated a letter in October that expressed that view.

Is the Minister able to provide information about the total expenditure and will he tell the House whether he is satisfied that that expenditure will meet the NRA's requirements, thereby reassuring the confederation?

On page xiii the Bill states :

"Net proceeds of sales of securities in the nominated holding company and any dividend or interest payment on such securities will be paid into the Consolidated Fund. Whilst a successor company and its nominated holding company are wholly owned by the Crown, clause 76"

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--it says clause 76, but I assume that it should be clause 77 "allows the Treasury to issue sums out of the National Loans Fund to the Secretary of State to enable him to make loans to those companies."

Clauses 77 and 78 govern the issue of those loans. In essence, repayments will be made as

"the Secretary of State may from time to time direct."

We should know a little more about what is in the Secretary of State's mind regarding issuing directions for repayment. For example, will he charge interest at current interest rates, which will be a very steep figure? Will he obtain repayment at a nominal rate? What figure does he have in mind?

The national loans fund debt owed by the water companies will be extinguished by the issue of debentures. Most debentures are secured by either a fixed or an appropriate floating charge. As it involves a considerable sum--almost £4 billion--will those debentures be permanently in the ownership of the Treasury or will they be discharged over a period--and, if so, over what timescale? The economic regulation and consumer protection arrangements will involve increased expenditure. It is a relatively small amount compared with the large sums of money that we have been discussing. It is one of the cornerstones of the Government's protection measures, yet less than £4 million a year is to be available to finance a director and staff who will undertake the range of activities set out in the Bill.

The Confederation of British Wool Textiles Ltd. questions whether the limitation of price increases by that mechanism is adequate. Does the Minister think that £3.7 million is adequate to finance such an important sector? The confederation said :

"You should know at once that we find the Government's justification for this step"--

that is, privatisation--

"quite unconvincing. As a matter of principle, we do not believe that any public utility, providing services so fundamental and where consumers have no choice in using its services should be allowed to pass into private hands. Competition and the discipline of the market place are, we believe, the cornerstone of Government philosophy on privatisation but we have great difficulty in working out how our members can get their water from Severn and Trent or dispose of their effluent to North West Water Authorities--so where is the competition? We are not persuaded that the Government's proposals to ensure the reduction of controllable costs and the limitation of price increases to the consumer are adequate."

I question whether £3.7 million is adequate to finance that sort of operation.

There is a curious circumstance in clause 24, which is the contingency section. If any sewerage and water undertaking gets into financial difficulties it can prevent winding-up because there is a guarantee. The guarantee is covered in clause 24. Subsection (2) states :

"The Secretary of State may, with the consent of the Treasury, guarantee, in such manner and on such conditions as he may think fit, the repayment of the principal of, the payment of interest on and the discharge of any other financial obligation in connection with any sum which is borrowed from any person by a company in relation to which a special administration order is in force at the time when the guarantee is given."

The special administration order must be given, but that gives wide powers to the Secretary of State. It is true that he has to have the consent of the Treasury, but that means talking to a chum in the Cabinet. He will say,

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"Look here, Nige"--this is a representation of the Cabinet and, naturally, I would call the Chancellor of the Exchequer an hon. Member in other circumstances--"there are a couple of water undertakings that we privatised in rather great difficulties. It has come as a shock to us all, but we have miscalculated. I am giving a special administration order. There are one or two of our chums involved too, Nige. They were decent contributors, you know, in 1987." What are the terms and conditions that will be laid down when we give them the money and ask them for repayment? The House should have some idea, lest anybody should imagine that that sort of conversation should pass between Cabinet Ministers.

The terms and conditions that the Secretary of State thinks fit should not be subject to general rules imposed by the Treasury. We must ensure that the dealing is absolutely fair and square and at arm's length. This is a fall-back position and I am surprised that the Government think that it is needed, but it appears from the legislation that it is.

The next matter of concern is national security. Clause 158 states :

"The Secretary of State may, after consultation with a body to which this section applies, give to that body such directions of a general character as appear to the Secretary of State to be requisite or expedient in the interests of national security or for the purpose of mitigating the effects of any civil emergency which may occur." The financial relevance is that the Secretary of State can give grants subject to Treasury consent to meet his directions in the interests of national security. That may appear to be above board and straightforward, but clause 158(4) states :

"The Secretary of State shall lay before each House of Parliament a copy of every direction given under this section unless he is of the opinion that disclosure of the direction is against the interests of national security or the commercial interests of any person." The Secretary of State can give a direction of a general character because he thinks that a civil emergency may occur and then he may say, "It's against commercial interests to reveal the sort of direction that I am giving and the payments which arise from that direction." The House should know a little more about the circumstances in which that would arise, particularly those circumstances in which the whole matter could be kept effectively secret. The Secretary of State will be giving money as a result of these directions. Is it possible that secret directions could be given which would result in payments which would never be revealed to this House? It is important that when we give powers, we ensure that there is accountability.

If the Minister says, "I have these powers and commercial interests are involved", will a civil servant stamp the top of the page, "Commercial. In confidence"? Only rarely do Ministers determine the status of documents. Civil servants decide and they thrust papers on Ministers' desks.

It is important that the Minister should give us an idea of the circumstances in which clause 158 will be exercised, particularly the way in which payments to meet those directions are accountable to this House, even when the secrecy measure is invoked.

The other significant expenditure is the £800 million to protect the pensioners affected by the transfer under clause 160. I take the view, which I am sure is held by my hon. Friends, that when the water industry is taken back into public ownership we should protect pension funds. I have never believed in expropriation and people who are foolish

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enough to buy water shares should be warned that in my view we should deal with them on the ground of hardship. We should send them to DHSS offices as other people suffering hardship are. Otherwise, we should make sure that this public asset is returned to the people who presently own it--all the people of Britain.

It is daylight robbery for the Government to abstract this public asset from the 55 million people who live in our country and sell it to a few of their cronies who have acquired money in a variety of ways--some of them highly disreputable--in the City. Pension funds should receive adequate consideration and I have quoted the amount that will be required to do that. I shall now deal with money that is not mentioned in the memorandum.

I have had correspondence with the Minister about the re-laying of old pipes on private land and in private houses. I am talking not about estates but about terraced or back-to-back houses in constituencies such as mine. Bradford is an old industrial city and many of its houses were built in Victorian times. Many of them are in decent condition because much care and affection has been given to them by their owners. Some of them may not be in good condition because of lack of care by some--though not all-- landlords. I would have welcomed in the money resolution provision for grant. I know that the Water Act 1945 allows the water authorities at present constituted only to provide and maintain pipes up to the border of the curtilage of the property. With back-to-back or terraced houses there is a problem. People at the front get the full water pressure but when the water pipe going round the back is within the curtilage of two private houses, the householder in the back-to-back group gets the worst water pressure. That means that people cannot have washing machines because they will not operate and cannot have a bath when their neighbour is having a bath. The Minister will say that the Water Act 1945 provides a limitation. Since this is such a big change in the statutory provisions, will he consider in Committee financial provisions so that the water authorities can allow for pensioners and other elderly people who entered these houses in their youth and bought them over a period of time? If they have old pipes the water authority will say, "You have a leaking pipe. Give us £550 and we will repair it, and we will need another £200 for resurfacing." That is more than many pensioners or people on low incomes can afford. There is no provision in the DHSS and local authorities do not make provision for such improvements, even by way of grants. There should be provision for older industrial cities such as Bradford, Leeds, perhaps Doncaster, Sheffield and others. I speak from knowledge and from representations made to me by people in my constituency. The Minister should consider that.

This labyrinthine legislation--this massive legislation--has two main parts. I cannot remember another Bill with two such huge chunks. Perhaps there is some authority in the Bill that will allow the Minister to direct the authorities to provide the assistance that I have mentioned. If that is so, it is the one tiny part of the Bill that I shall welcome. I should be pleased if the Minister could guide me to such a part. If he cannot, I would like an assurance that he will do something about the matters that I have mentioned.

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