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Mrs. Gillian Shephard (Norfolk, South-West) : I very much welcome the opportunity to contribute briefly to the debate. I apologise to the House for the fact that I was unable to be present earlier today, although I was here yesterday. I perceive that, regrettably, there is in the House an urban-rural divide in attitudes to the Bill. In my constituency the supply of water and its management have a peculiar significance, composed as it is partly of fen land, which requires carefully regulated drainage, and partly of light land, which requires considerable irrigation if it is to produce crops at all, and containing an important source of domestic water for a large part of East Anglia at Denver sluice. In addition, part of my constituency is deliberately


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flooded each year. Washes constitute an important flood defence mechanism. Therefore, it is easy to understand why the passage of the Bill is being watched closely by my constituents. Many of its provisions touch their lives very closely.

Many of my constituents will be as astonished as I was to learn that 96 per cent. of the population of Britain are connected to a sewer--as some of the background material quaintly puts it. I have lived half my life unconnected to a sewer, as have many of my constituents, and can only say that a considerable proportion of the remaining 4 per cent. of the population must live in Norfolk or, more particularly, in south-west Norfolk.

Rural people do not take water for granted. It is not something which they simply drink and wash in, but something which they understand is necessary for their working lives and for their environment.

Mention has been made of the political dogma behind the Bill. I assure the House that in south-west Norfolk it is not regarded in any way as a political problem, but as a deeply practical problem that affects everyone. The establishment of the National Rivers Authority and the office of Director General of Water Services and the powers that they will have will provide better protection for the consumer and for the environment than we have enjoyed hitherto, provided that those bodies are adequately funded. As has been pointed out, the fact that water authorities have responsibility for sewage disposal and for pollution control has always seemed to be anomalous. It is certainly a system that has lacked credibility with the public. Clearly, the functions should and will be divided, according to the proposals in the Bill.

The office of Director General of Water Services is welcome, as he will be directly accountable to Parliament for the regulation of charges, the standard of services to the public and the proper provision of the infrastructure of water services. It will be important for the public to feel--as they do not in my constituency at present--that the buck for charges and the service provided stops with someone. I sincerely hope that the director general and his customer service committees will prove to have effective teeth. It will be interesting to see precisely how, if the Bill gains its Second Reading tonight, he will be equipped with those teeth.

In East Anglia we are served by a very large water authority. Until the last couple of years its response to the public and its accountability have left a great deal to be desired. We also have a statutory water company, and there are not many fears in my county about changes affecting the water authority. When it was first established, the point that stuck in most people's minds was the size and splendour of the headquarters which, as its first task, it was setting up for itself. Many people in my area will be glad to have a more cost-effective and cost-conscious water authority.

It is clear that, given their dependence on private land drainage, and on water abstraction for irrigation and flood defences, members of the agricultural community are carefully watching the Bill and its contents. Their attention is focused on the nitrate content of water. As hon. Members and farmers know, if no action is taken, nitrate levels in the United Kingdom will reach unacceptably high levels by the end of the century. East Anglia has one of the highest nitrate levels in the country and, incidentally, the


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lowest incidence of cancer of the bowel. High nitrate content must be tackled by a partnership between agriculture and water services. Provisions for the compulsory establishment of protection zones already exist in the Control of Pollution Act 1974, although I believe that they have never been used. No one would argue that such powers should not be retained as a fallback, although, where possible, restrictions on agriculture should be voluntary. The National Farmers Union has promised its fullest co-operation with the new water authorities. As yet, clause 104, which deals with that point, contains no suggestion about how objections might be considered or, if necessary, a local inquiry mounted. I hope that the discussions that are taking place between the industry, the Ministry of Agriculture, Fisheries and Food and the Department of the Environment will result in such provisions being included in the Bill. Farmers are defensive about nitrate levels in water. They accept that more intensive agricultural production is to blame for increased nitrate levels. However, they make the point that they should not be penalised for increasing production when successive Governments have urged them to do so.

As I have said, the NFU has offered to co-operate fully with the Government and the new water authorities to reduce nitrate levels, by a joint approach. There will need to be treatment by the water industry to deal with the problem, and changes in agricultural practice which have been introduced over the past five years to reduce the problem at source. It will be a major task for the new water companies and agriculture to consider ways forward. No doubt some changes will be based on the range of desk studies that were jointly commissioned by the Ministry of Agriculture, Fisheries and Food and the Department of the Environment in 10 varied localities. The Ministry believes that if farmers are obliged to restrict agricultural activities beyond what could be regarded as good agricultural practice they should be compensated. The Ministry has promised that the arrangements will be announced during the passage of the Bill. The matter is regarded with some interest and not a little anxiety.

If the Bill receives a Second Reading, it will provide an improved service for people in the area that I represent. I do not believe that there is heartfelt support for the way in which water is provided at the moment. People consider that water authorities are not accountable. If they telephone them, they speak to an answerphone. They consider that the authorities have been altogether too lavish in the provision that they have made for themselves, whereas they should always have been concerned about the consumer and the uses of water, a commodity which, as I have tried to explain, deeply affects the economy of my constituency. I hope that the Bill will be successful this evening.

7.54 pm

Mr. Elliot Morley (Glanford and Scunthorpe) : The Bill opens a Pandora's box of issues relating to monopoly of supply, quality, the environment, rights of access, and, not least, consumer rights. It is worth remembering that the history of the delivery of safe, clean water in this country is with local authorities. Originally, the free-market system failed, and local authorities had to rationalise it and ensure quality of delivery. I have not heard any mention of the


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fact that, in 1974, many local authorities passed on a great deal of valuable land to water authorities. I wonder whether those local authorities will get any share of the proceeds of the sale of land which many of them bought with their own ratepayers' money. Incidentally, many local authorities ran water services with considerable efficiency and at considerably lower cost than non-elected local authority quangos.

The Bill boils down to the Government's constant claim that everything public is bad and everything private is good. That simplistic view is the root of the privatisation of major utilities such as water supplies. There is no evidence to support the claim. If we consider what has happened to privatisation projects, such as the contracting out of cleaning in education establishments, we find some spectacular failures, which are well charted in a Trades Union Congress publication entitled "Contractors' Failures".

I noticed a letter in today's edition of The London Evening Standard --one of the Tory party's house papers--entitled "Gas, for the record." It is from Mrs. Donaldson of Huntsworth Mews, NW1--not a Socialist stronghold. She outlines a diary of events from 19 August to 25 November and all that she went through in getting a central heating boiler replaced. Her final paragraph, entitled "Conclusion", states that, since privatisation

"Absolutely nothing has changed at British Gas!"

That is a fair comment. I am not saying that British Gas is particularly inefficient--it was a fairly efficient organisation before privatisation-- but things have not changed. It is certainly not my experience or that of that consumer that things in the private sector have got any better. However, there have been one or two changes in British Gas. For example, there has been a 47 per cent. increase in gas disconnections. British Gas has been referred to the Monopolies and Mergers Commission for abusing its monopoly powers. There have been one or two little changes since privatisation. British Telecom is not a great advertisement for the success or efficiency of a privatised utility. The Consumers Association, in its report, stated that the majority of business users who answered its questionnaire said that the quality of service had gone down since British Telecom was privatised, and that claim was backed up by the majority of domestic consumers. The claim that things are necessarily better in the private sector than they are in the public sector does not stand up to examination.

How will consumers be affected when things such as water meters are inevitably brought in? There is no doubt that water price rises will be considerable. The Confederation of British Industry put the figure at about 30 per cent.

Part of the problem with water privatisation is that it has suffered from completely artificial restraints. It is nonsense to say that it can raise more capital in the private sector than it could in the public sector. It has not done so, only because it has been refused permission to borrow privately, and it has suffered from artificial cash limits. In my constituency, investment in a multi-million pound food factory was jeopardised because there was some doubt whether the local water board could provide the infrastructure for effluent treatment. That factory could have been lost because of the artificial restraint imposed upon it by the Government. I suspect that industrial


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consumers will find a considerable increase in effluent disposal and water charges. There is no great benefit to industrial or domestic consumers.

One of the most objectionable things about water meters is that they will penalise those people with families on low incomes. Those people will be forced even further into the poverty trap because their water bill will increase considerably.

There will also be problems for people who live in rural areas. The Bill will replace section 30 of the Water Act 1973 and allow the new privatised water companies to charge differential rates for providing water and sewerage services to the community. Under the new legislation, people who live in isolated villages and on farms will be asked to pay differential water rates when, under the existing leglislation, those costs are spread out evenly among all consumers. How will constituents in rural areas react when they find out that that applies to them?

The environmental aspect of the issue is important to me. I am glad that my hon. Friend the Member for Alyn and Deeside (Mr. Jones) is present to hear my comments. Among the things that has given me a lifelong interest in natural history was a visit to Lake Vyrnwy with the Merseyside natural history association when I was a teenager. The fact that I had access to that site, which is managed as a nature reserve by the Royal Society for the Protection of Birds--one of 77 sites on water authority property--has had a lifelong effect on me. I am worried that other teenagers from inner cities will be denied that experience. Such access will be lost, because of the high charges that will be imposed by the water companies. Under their obligations in the Bill, they will have to maximise their profits by charging for leisure use of and access to their land.

I welcome the setting up of the National Rivers Authority. That is a step in the right direction, but we could have had that without going through the whole privatisation process. However, I am concerned about funding arrangements. The NRA will be left with the state and will receive a grant from the Government. It will not be funded through a levy on the water authorities or through a share of their income. Therefore, it will be vulnerable to the cash limits imposed on the public sector by the Government. Will it have the resources to carry out its role in flood defence and drainage work? Will it be able to meet its obligations to conserve nature in water authority areas and to enforce the regulations laid down in the Bill? There is no obligation in the Bill for a report on environmental support and no obligation for the NRA to employ people responsible for conservation.

There is also some doubt about the consultation arrangements--for example, in respect of the regional rivers authority advisory committee. It does not appear that people involved in conservation organisations will automatically be represented on that body. That problem must be resolved.

Clause 7 is contradicted by the need to make a profit. It is all very well having a code of conduct, but that is undermined if a company's main obligation is simply to maximise its profits. I am also worried about the fact that many of the NRA's obligations can be contracted out. Some of them can even be contracted out to the water plcs. The water plcs may, therefore, win the contracts for the important monitoring work which will enforce the law but, at the


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same time, undermine the NRA's position. The contracting-out might by won be people who cannot do it properly.

I have an interest in wildlife and nature reserves on water authority property. I am an elected member of the council of the Royal Society for the Protection of Birds. Many hon. Members will have received briefs from organisations such as the Countryside Commission, the Ramblers Association and the Royal Society for Nature Conservation. Those responsible bodies reflect the opinion of millions of people in this country and express grave doubts about the legislation. They have made it clear that they do not believe that the Bill will be of advantage to the environment. The Royal Society for Nature Conservation's news release has the headline : "Water privatisation proposals are no charter for wildlife." The organisation makes it clear that the Bill does not go far enough and does not guarantee the protection of the natural environment or access to the areas involved.

Areas such as mine, which are predominantly rural, have problems with nitrate pollution. We are concerned to know whether the privatised water authorities will make available investment to deal with that problem. We are also concerned that the privatised authorities will not make available the money for the enormous infrastructure replacement that is required in many parts of the country. The privatised water authorities will have to pay corporation tax, and, as I understand it, they will no longer be eligible for European regional development fund grants for infrastructure investment. This is a considerable loss in terms of subsidy.

Many other issues in the Bill need to be clarified. I cannot forecast what the outcome will be, but it is safe to predict that the Bill will mean yet more looting of public assets, more speculators lining their pockets, the public paying higher prices for a service that was delivered efficiently and cheaply in the public sector and no guarantee of an increase in quality or an improvement in service to the consumer.

8.6 pm

Miss Emma Nicholson (Torridge and Devon, West) : Thank you very much for calling me in this most important debate, Madam Deputy Speaker. I was fortunate to serve on the enabling committee where I learned a great deal about water metering and an enormous amount about the water industry in Yorkshire. Perhaps I can take my revenge for a brief moment or two by talking about the water industry in the south-west.

I apologise for missing a few hours of this important debate today. I was here yesterday. However, I arrived today about three quarters of an hour ago. I hope that hon. Members will forgive me when they learn that I have been celebrating my father's 87th birthday. My father is a former Member of this place. Hon. Members will guess that, for the past few hours, water has been measured more by its capacity not to dilute whisky too much than by its real importance. Water is the most important thing of all. Surprisingly enough, we can live without food for quite a few days, although one might not think so in this building where there are so many places to eat. However, we cannot live without water. I have spent quite a lot of time working in developing countries. One appreciates the crucial importance of water in life when one sees women walk for half a day to fill some wretched pot with a scrap of water


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that we would use to wash up after a meal and when one knows that diarrhoeal diseases in children are cut by 50 per cent. by the simple means of teaching mothers to take water for their children to drink from above, not below, the place where they discharge human effluent. One also understands why projects involving camels, such as the farm project in Kenya, are important. It is because camels store water. That is why I value so highly the water industry's own charitable project for water overseas--Water Aid. Water matters to human beings and one can see that clearly when one works in developing countries. I wonder whether we can use all these important lessons about water in this country. Have we watched the Golden Horn being cleaned up? That vast area, which was so difficult to water, is fast becoming much cleaner. Have we taken these lessons on board in the United Kingdom? We are in a crowded island with increasing industrial pollution. A mistake by a foreman turning a tap the wrong way can kill off water quality in a river for several weeks. Farm effluent from raising cattle indoors, which can be equal to that produced from a small town, can, if there is a mistake, cause great damage to water quality in rivers. With intensive farming, have we looked closely enough at ways of providing the sort of water quality that we need? Under this flood of effluent from people, industry and farms, the quality of many of our rivers has declined in recent years, and we have to put it right.

In my constituency we have a famous and beautiful river--I am sure that all hon. Members know it--the Torridge. It is famous because of Tarka. Last Christmas, hon. Members may have seen a programme on television called "Tarka's Troubled Waters." Mercifully, it was out of date by the time that it was shown. I was heavily criticised for saying that the Torridge had been badly polluted for many years, but was now being put right again and would soon be properly right. The improvement is the result of a major farming programme. Many farmers who use intensive methods throughout the United Kingdom do not realise the extent of the pollution that they have been causing. South-West Water in my area--and I am sure that equivalent water authorities in many other areas have been trying just as hard--has been running an effective farm pollution programme merely by going out and talking to farmers about pollution and helping them with finance to put it right. As a result, there were more brown trout in the 12 months from Boxing day last year than for many years. The quality of salmon fishing has also gone up.

It can easily be said that these are minor interests and that only a few people want to go salmon fishing, because, although angling has the largest following of any sport in the United Kingdom, fly fishing is quite rare. However, in my area, as in others, we derive much of our drinking water from rivers. Therefore, we want the water to start off as clean as possible, so that it does not have to be put through massive cleansing programmes. Because of the success of that farming programme in our moorland hills, I was more than delighted to welcome the announcement by my right hon. Friend the Minister of Agriculture, Fisheries and Food about a week ago of the fact that he is putting £50 million into farm pollution programmes. That is really exciting. We are on the way, and I am pleased about it.

I was even more pleased when South-West Water committed itself to full treatment of this river and of Bideford sewage in the estuary in which the river ends.


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Therefore, we shall have a pure and gleaming Torridge before long, as I promised last year on television, and a cleaned up estuary. I welcome the visit that my hon. Friend the Under-Secretary is to make on 13 January. We shall be able to show him the progress that has been made. The river is not unique. There are others like it. We have to set our sights on cleaning them all.

I shall also be taking my hon. Friend to see a small area called Lifton down. I bring this to his attention because the water supply there has been disgraceful. One might just as well have been living in the Sudan. If one turned on the tap, put in the plug and waited for a day, one would be lucky if the bath were half full. People have shown me water straight out of the tap that is almost a third sand, or something worse. Is it right that water should be like this in the United Kingdom, a developed country in the European Community, in this day and age? Bere Alston is a tiny village where a mother and baby have not been able to get fresh water in the middle of the day for hours at a time.

Both these areas will have the proper amount of capital invested in them by South-West Water to ensure that these problems are solved. Should it have taken 15 years for Lifton down water to come right, 20 years for Bideford sewage and the Torridge river to be cleaned up, and seven years for Bere Alston to have its problems solved? The raising of standards is one of the reasons why I welcome this Bill so very strongly, as does South-West Water, whose chairman, Keith Court, has worked tirelessly to raise water quality in the south-west. He has carried out a remarkable job. I am delighted that he is in post and will be continuing as chairman of the new plc.

What is necessary for the development of the infrastructure for water in my area, and I would guess in those of many other hon. Members, is intensive injections of capital. That is difficult to achieve when one is in competition for national funds against other great social needs, such as child care, health facilities, nurses' pay and the NHS. It is difficult to get the right amount of capital when social needs are so pressing. I believe that our new plcs will be able to make much faster progress in developing the infrastructure needed to get water quality up to the standards that we all quite properly demand when more options are open for finance once they are in the private sector.

On top of that, it will be possible to spread financing over a longer period. The great difficulty of working within Government constraints of 12 -month intervals is that it is easy to go for a stop-go policy and not think what that means. It means stop on 31 March and start again on 1 April. One is tied to annual budgets when working within the Government and public sector funding programmes. There are many good factors in the Bill. One of the best is that it demands new, higher standards for water quality within the United Kingdom, and I most strongly welcome that. We shall be shifting from expecting an average level of attainment in water quality to a higher standard of attainment in both the quality of water and its pressure--we are back to that half-empty bath--and to higher environmental objectives. We must willingly accept those environmental objectives. People are more and more conscious of the environment, and it is crucial that we respond to the desires and wishes of the general public.


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Standards will be much tougher for the new public limited companies. They will be required to produce much higher standards on effluent levels, and we all want that. It will be hard for them if everything has to be perfect on day one. I know that my hon. and learned Friend the Minister will already have thought of the need to be practical and reasonable with the new plcs on such matters, or they will have pressures to which they simply cannot respond. That is a most important point that I ask my hon. and learned Friend to note.

It is also important, although it may seem an unpalatable point to make at the moment, to have within the pricing structure of the plcs the opportunity to obtain a reasonable rate of return. These new regulations will create water quality standards in the United Kingdom that will be at least the equivalent of the highest in western Europe. The Bill will require and create sewage disposal standards that will match European directives. That is why I so greatly welcome it.

I am conscious of the fears expressed by some hon. Members both yesterday and today about the need not to create a private monopoly in supply. However, I believe that the new inset competition and the pledge in the Bill that the plcs will operate in a "climate of effective competition" will be carried through and will create the necessary competition.

The split must occur. I welcome the creation of the National Rivers Authority, because the water authorities will no longer be required to be both poacher and gamekeeper. It is beyond human endeavour to be required to fine oneself for breaking the law. People are just not made that way. It certainly has not been the way in which the water authorities have been made. It is right and proper that the National Rivers Authority, with proper people and financing, should be responsible for the quality of the rivers and that the plcs should provide the water and sewage treatment.

I am conscious of the importance of safeguarding conservation and recreation. I note that in the Bill prior consultation is required before there is any development of sites of special scientific interest. In my constituency, there is a large part of a national park. I wonder whether the Minister would consider extending that need for prior consultation to national parks. That would reassure many people. The water authorities have built up an excellent relationship with the national parks, and I would not wish that relationship to do other than flourish under the new arrangements. I believe that that sort of reassurance is all that is required to maintain such a relationship.

I warmly welcome the Bill.

8.21 pm

Mr. Martyn Jones (Clwyd, South-West) : When I had a proper job, I worked for a major user of water--although the company would probably be reluctant to admit it--the brewing industry. In fact, the brewery in which I worked is the major water user in Wrexham and, bearing in mind the lack of industry in the area, it is probably the main user in Clwyd. It was often my task when working in the laboratory to check on effluent and it was always my responsibility to monitor incoming water.

The supplier of the water is a private company set up by statute, which my hon. Friend the Member for Alyn and Deeside (Mr. Jones) referred to as a potential takeover target by, possibly, an overseas interest. It is an example of


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the much-vaunted Victorian values that we are regaled with by the Government, because they saw fit to control such monopolies very tightly indeed by Act of Parliament.

With this Bill, we will create private monopolies with no such controls. It is obvious even to the dullest person that the opportunity for competition in what is described in economic theory as a natural monopoly does not exist. With no upper constraint on prices, and the provision that extra costs incurred in maintaining standards of quality will be passed on to consumers, the consumer will pay, not the polluter.

What will be created is analogous to providing local supermarkets that consumers are obliged to use. Consumers would have free access to the store but a tax would be levied on local residents to meet the costs incurred. How can there be any increase in service or consumer responsiveness when additional business yields additional cost but no additional revenue? That is dogma gone mad.

How can the National Rivers Authority perform such a wide task? The task is obviously necessary. Indeed, if a chain of supermarkets were set up like the water utility public limited companies, there would be overwhelming public demand for control. That will only apply to the National Rivers Authority when things begin to go wrong, which is likely. Unscrupulous polluters will drive a coach and horses through such a body. Unscrupulous water utility plcs, which are potential and, indeed, actual polluters, could flout the provision of control. In fact, they will continue to be allowed to pollute anyway, because of the previous lack of investment. How long that continues will, of course, depend on how quickly investment can be attracted, which, in turn, will depend on how much profit can be generated by an increase in charges, which will go directly into private owners' hands. As well as having experience of the industrial use of water, I have a constituency interest, because large areas of my constituency are owned by water authorities and I have a large new reservoir, neither of which are inside a national park, and are, therefore potentially asset strippable by new owners. A long length of the Dee runs through my constituency and that attracts a large number of recreational users, such as anglers and canoeists. It is also the main aquafer from Bala, Clocaenog and Celyn to abstractions for Liverpool and Chester, as well as Wrexham and Deeside. The potential for conflict and chaos is enormous. There is no protection of access for anglers and ramblers. Plenty of potential exists for charging for those recreational activities, but little opportunity for the legitimate representation of the interests of those who use the river. The NRA will have no effective local management structure. In my constituency, the Dee is a special case as it is arguably at present the most controlled and regulated river system in Europe. The control of the flow is crucial to fishing interests. General targets for water utility plcs will not be good enough. The control of the flow must stay in the public sector and must be enforced for the benefit of local recreation as well as profit. Local management boards are needed to give the NRA teeth, or it will be an under-funded and ignored paper tiger.

A conflict always exists between profit and service. Private non-monopolies resolve that by realising that service is necessary or competitors get the profit. Private


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monopolies simply screw the customer, who has no choice. That is what will happen with water. It is political dogma taken to the point of fetishism.

8.25 pm

Mr. Tim Devlin (Stockton, South) : I am sure that the hon. Member for Glanford and Scunthorpe (Mr. Morley) did not mean to mislead the House when he claimed that the CBI said that price increases of 30 per cent. were expected. I consulted the parliamentary brief to which he referred and I saw the sentence :

"However we have noted certain reports suggesting that privatisation may result in increases of up to 30 percent". That does not, in fact, emanate from the CBI.

I have listened with interest to the speeches. My hon. Friend the Member for Warrington, South (Mr. Butler) talked about the quality of water in east London where I live during the week. I understand that water in that area has usually been drunk five times before it reaches the lips of an east Londoner. My hon. Friend the Member for Walthamstow (Mr. Summerson) commented on the river Skerne, which is in the north east. Having heard one northern Member talking about London and a London Member talking about the north, I was tempted to talk about somewhere in the south-west. However, my hon. Friend the Member for Torridge and Devon, West (Miss Nicholson) set out the worries of her constituency so well that I need not bother. Water supply and sewerage are the most important of our public services. I welcome the Bill because it is designed to provide better quality water than we presently enjoy and at the lowest price to the consumer. It will free the water service of Treasury controls and it will provide attractive share ownership possibilities for many in the industry and for the public.

There is no doubt that the introduction of comparative competition in the water industry will provide greater incentives to our water providers to keep supplies clean. I do not for one moment accept that privately-owned water companies will be motivated solely by shareholders' profit, which has not proved to be the case with British Telecom or other industries that have moved into the private sector and where there have been significant service improvements. The new statutory water undertakings will only carry on the good work already done by the 29 privately-owned companies, which provide one quarter of the nation's water. In the north-east, where I come from, the Hartlepool water company provides a good example of how good, clean water can be provided by a privately-owned company. Last night the hon. Member for Copeland (Dr. Cunningham) said that these private water companies were "statutory water companies" and not private enterprise. I asked whether the Opposition would find it acceptable for a number of privately-owned companies, which had statutorily defined duties, to come into being. That question was never answered. However, I believe that we have heard the answer in today's debate.

As usual, we have heard all manner of scaremongering and at times like this it well behoves the House to recall the scares put about when we abolished the metropolitan authorities or when we deregulated the buses. Part of my constituency is a large rural area which has a better--not worse--bus service as a result.

I want to suggest one possible amendment that the Government might care to consider. When water quality


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suffers due to some catastrophe, such as that recently suffered in the south-west to which my hon. Friend the Member for Cornwall, North (Mr. Neale) referred, or when the water supply is cut off, as it can be from time to time even in the best regulated system, rebates or even compensation payments should be made to customers.

Customers are entitled to expect an extremely high level of performance from the new water service plcs created by the Bill. Those plcs will be subject to the stricter pollution controls that will be imposed upon them by the National Rivers Authority. They will also have to respond to statutorily defined quality standards that will be higher than present. That will include directives on water availability, pressure, constancy of supply and response times to repair and billing inquiries. The customer must be able to notice those improvements and obviously there must be a reserve power in the hands of the Secretary of State to intervene when those plcs fail to reach the targets.

I believe that the most effective pressure on water service plcs would be a statutory method of automatic compensation or rebates when a company fails to meet standards or cuts off the water supply. That would be a simple, ready-at-hand scheme, so that a customer is ensured of receiving satisfaction without having to mess about and set in motion long-winded procedures.

It should be noted that, where a water authority owns land in a national park--for instance, 37 per cent. of Northumbria Water's land is in the national parks--there is no question of that land being sold to property developers for despoliation. Land in national parks is guaranteed to be accessible to all by the legislation that established them. Rights of way continue irrespective of ownership and it is only sensible that the Bill includes safeguarding powers for water catchment areas. Therefore, let me speak to those outside these walls, for example, the Ramblers Association, whose concern I readily share. That measure of concern, however, is being unnecessarily aggravated and, if necessary, that concern can be cured by drafting amendments in Committee.

We heard some amazing things earlier about sewage treatment and land being sold off. Here, for the first time in decades, is an opportunity for water service plcs to raise money from other than the Treasury to invest heavily in the sewers. That opportunity, however, is condemned by the Opposition. We are also being given an opportunity to ask water authorities what use they have made of taxpayers' money. If it is true that water authorities have prime sites and other surplus land and buildings that are not being put to the best use, why are they still in water authority ownership? Why have those assets not been sold off long ago so that the taxpayer can benefit from the capital received? The purpose of a water authority is to provide water, treat sewage and to check water pollution, not to own land for its own sake. Water service plcs should have no compunction, therefore, in disposing of land that is not connected directly to their primary purpose. Any land disposal will, of course, still be subject to the planning controls of the specific area. The House may be aware that my constituency includes a long stretch of the River Tees. We produce the best bottled drinking water that can be obtained in the United Kingdom-- Northumbrian water. A private Bill will be introduced shortly to erect a Tees barrage. That will raise


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the water level by 2.65 m throughout the length of my constituency. Undoubtedly that will have an effect, not only on the farming community but on those businesses that currently emit effluents into the river. My hon. and learned Friend the Minister should bear in mind that his Department deals with the environment as well as inner cities. The barrage is an inner-city initiative that will undoubtedly have serious effects on the surrounding countryside and on the environment. Can my hon. and learned Friend tell me whether a full environmental assessment will be undertaken on the River Tees before that barrage is erected? Otherwise the NRA will find itself saddled with a river that is half clean and half filthy. It will then have to pick up the bill, and the costs to the local consumer.

The Opposition have erected a barrage against the Bill from which very little common sense has leaked. By contrast, the Government will erect a barrage on the River Tees that will open up a wave of new opportunities on Teesside in the next century.

8.35 pm

Mr. Eric Martlew (Carlisle) : I must place on record my total opposition to the Bill. The idea of privatising the nation's water is something that must be spoken against. The Labour party must commit itself- -let us use an old-fashioned word--to taking the water industry back into public ownership. There is no doubt about that. Opposition to the Bill is not apparent only on the Labour Benches, because there is opposition to it throughout the country. Given that there are so few Members on the Conservative Benches tonight, I suspect that there is also a lot of secret opposition within the Conservative party.

A recent opinion poll showed that more than 80 per cent. of the population were against the privatisation of water. Why is there such massive opposition? The attempt to sell off the water industry has made consumers think about the service that they receive, and most of them are well satisfied. Today, 99 per cent. of British households are connected to the public water supply--they have water on tap--and 95 per cent. of households are connected to the public sewerage system. Therefore, when they turn on the tap they get clean water, and when they flush the toilet the sewage goes away.

The British people know that the system works and, unlike their experience with British Telecom, they encounter few problems with it. It can take days to get a telephone line replaced, months to get a telephone installed, and one is extremely lucky to find a public telephone that works. In comparison with the privatised industries, people are pleased with the service that they receive from the water authorities and companies.

The public are also against privatisation because of the pressing environmental problems. The pollution of our rivers, lakes and course lines have been mentioned by hon. Members on both sides of the House. We realise that massive sums of money are needed to put things right. The public do not believe that profit-hungry private water companies will be prepared to put in the money that is needed to solve the environmental problems. They are also well aware that the Conservative Government will not make those private water companies invest their money to solve those problems.


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People are also against privatisation because they know from history that the privatisation of water does not work. They are aware that in the 19th century the private sector failed. If any hon. Member cares to look up 19th century copies of Hansard he will see that Act after Act was passed to force improvements in water standards. At that time people were dying from cholera and typhoid because the private sector would not put resources into the water industry.

By 1913, 80 per cent. of all water was in local authority ownership, and that has remained the position. Privatisation did not work, and Governments of both Liberal and Conservative persuasions put water into public ownership. The position in my constituency was little different from the national one. It suffered epidemics of cholera and typhoid that killed many citizens. The local authority decided to spend ratepayers' money to provide an adequate sewerage system and a good water supply system, and that policy served the city well. It got rid of the city's health problems and allowed it to expand. In 1974, the citizens of Carlisle were not too enthusiastic about the proposal of the then Secretary of State for the Environment, the right hon. Member for Worcester (Mr. Walker), who is now the Secretary of State for Wales, to introduce the present water authorities. They had a cheap water system that worked, and they were not far away from the supply. We in Carlisle realised that if we went in with North West Water, our £10 million-worth of assets would go into the general pool and our rates would increase as we would be called upon to pay in part for the problems of Merseyside and Manchester. We accepted that, but we are not prepared to accept robbery of the £10 million. It was taken from the citizens of Carlisle, made available to the water authority and not paid for through taxation. It is now proposed to sell off the water authority, and the people of Carlisle consider that to be an act of robbery. They regard those who occupy the Conservative Benches as pirates. That is why there is opposition to the Bill.

Last week I decided to visit the local sewage works in my constituency. Those who work there were quite surprised to be visited by a politician. It is not often that politicians visit and shake hands with workers at sewage plants. We visit hospitals and old folks homes, but not sewage works. Before the Third Reading, I recommend all hon. Members to visit what is the most important building in their constituencies. Without sewage works, the civilisation that we know cannot exist.

During my visit I asked questions about profitability and how it could be improved. I was told that it would be possible to cut labour costs. I was told that the men were not paid very well, but that wages could be cut slightly, which would increase profitability. I was told also that the work force could be reduced, although that would lead to an increase in pollution problems. It was explained that in the event of an overflow, and with insufficient staff, the rivers would become polluted. It would be possible to reduce the number of chemicals that are put on the sludge. The chemicals reduce the smell, and anyone who lives downwind from the sludge will consider that to be important. There is no profit to be gained from using chemicals, and so the number used could be reduced. I left the sewage works with the knowledge that we have an efficient system in my constituency. I know that £2 million was spent during the 1980s to update it.


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Privatisation would lead only to a worsening of the system for those whom I represent. There is no doubt that sewage works must remain in the public sector.

To whom does water belong? I was taught at school that it was a gift from God. We are all familiar with these lines :

"We plough the fields, and scatter

The good seed on the land,

But it is fed and watered

By God's almighty hand".

Little did I realise that economists would seek to calculate the value of a raindrop. The Secretary of State is taking up one of Bing Crosby's old songs, "Pennies from Heaven". A value is being placed on a raindrop. It is being costed, and then raindrops will be given away to the private sector. In the City, stockbrokers and others are singing the Gene Kelly number, "Singing in the Rain". They are all to make a fortune out of it.

The Government are altering the meaning of our songs and our sayings. No longer will we be able to say, "He spends money like water" when describing a spendthrift. That description will have exactly the opposite meaning. It will be the description of a Scrooge-like person with mean thoughts ; in other words, someone like the Secretary of State for the Environment. There is one saying that brings together what the Government are about with water privatisation and with every piece of legislation that they have introduced. The Government

"knows the price of everything and the value of nothing." 8.44 pm

Mr. Ian Gow (Eastbourne) : There is no need for the House to wonder what you were doing at this time last evening, Madam Deputy Speaker. You were then, as you are now, presiding over our affairs. I begin by commending to the House some of the words that you used from the Chair last evening. You said :

"The hon. Member for Antrim, South (Mr. Forsythe) is perfectly in order to speak on the Bill. He is an hon. Member of this House."--[ Official Report, 7 December 1988 ; Vol. 143, c. 389.]

At the beginning of the afternoon it seemed to be very much a debate for Welsh Members. I wondered whether I would be disqualified by reason of the fact that I am a Scotsman who represents an English constituency. The debate was begun this afternoon by my hon. Friend the Minister of State, Welsh Office, whose remarks were taken up by the shadow Secretary of State for Wales, the hon. Member for Alyn and Deeside (Mr. Jones). It is a day on which Members of the United Kingdom Parliament are entitled to speak, and that includes those who come from Scotland, to which the Bill relates only in small part, and including, as you reminded us, Madam Deputy Speaker, those who come from Northern Ireland, to which the Bill applies not at all. My hon. and learned Friend the Minister for Water and Planning will have reflected as he piloted the Local Government Finance Bill through the House, and as he starts piloting the Water Bill through the House, that the enormous benefits that he believes each measure will confer upon Her Majesty's subjects will be withheld deliberately from those who live in the part of the kingdom that is known as Northern Ireland. It is a matter of legitimate comment when debating the Bill's Second Reading that the benefits that it will bring are to be withheld from Northern Ireland.


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I remember, Madam Deputy Speaker, as you will, the words of the Conservative party's general election manifesto. We have had a most agreeable debate and Opposition Members have made assertions, quite legitimately, that the Bill is unpopular. That is a proper claim to be made by Opposition Members. No one can say, however, that the introduction of the Bill was a surprise. Whatever legitimacy is conferred upon legislation that is introduced in a party manifesto--some may think it scant--it has certainly been conferred upon the Bill.

I shall refer to the words that were approved by my right hon. Friend the Secretary of State when the Cabinet came to give its final approval to the manifesto on which the Conservative party fought and won the last general election. The manifesto stated :

"The water supply and sewage functions of the water authorities will be transferred to the private sector."

It was a clear sentence and a short one. It was shorter than many other sentences that appeared in the manifesto and was incapable of being misunderstood.

The Bill is even longer than the Bill that became the Local Government Finance Act 1988. Although the Bill takes up hundreds of pages and must be in two parts because it is so large, it is implementing precisely the undertaking given in the manifesto. Nor has the proposal for the privatisation of the nine water authorities in England and the one in Wales been a hasty operation. It is nearly four years since the then Minister at the Department of the Environment informed the House that the Government were considering the privatisation of the water industry. There is even a precedent for what we are doing, to which reference has been made today.

Nearly 25 per cent. of our fellow countrymen derive their fresh water from water companies which are privately owned. Everyone knows that those water authorities are subject to a strict legislative framework. They are different from all other companies. However, those 28 or 29 companies have one thing in common with private sector companies that are not like water companies. They are genuinely, fully and completely owned by the private sector. They are subject to control and to special rules, but in terms of ownership the 29 water companies are privately owned.

Those who decided to invest in the private water companies, those who decided to subscribe to their loan stock or to their debentures, did so because they believed that they would get a proper rate of return on their investment. Opposition Members must realise that because the ownership of a water authority, or, as they will become, the ownership of a water company, is transferred from the public to the private sector there is no reason to believe that that change of ownership will mean that there is a commitment to lower standards or to standards necessarily better or worse than those that apply to the water authorities today.

I believe that there are significant advantages in transferring the water authorities out of public and into private ownership. By making the transfer there will be genuine public ownership of a kind that does not exist today. I mean no discourtesy to my hon. and learned Friend the Minister or to my right hon. Friend the Secretary of State for the Environment, but I believe that their ownership, for that in effect is what it is, of the nine


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