House of Commons Hansard Debates for 8 Dec 1988

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water authorities and the ownership of my right hon. Friend the Secretary of State for Wales of the one water authority in Wales is harmful to the proper provision of fresh water and the proper collection of foul water.

I thought that I might receive just a murmur of approval when I said that I had no confidence in the superior wisdom of my right hon. Friends and of my hon. and learned Friend. The House is aware that all the members of the nine water authorities are appointed either by my right hon. Friend the Secretary of State for the Environment or by my right hon. Friend the Minister of Agriculture, Fisheries and Food. Henceforth of course, after privatisation, that power of patronage, which has been one of the evil concomitants of nationalisation throughout the ages, will be removed, and not before time. My hon. and learned Friend and my hon. Friend the Economic Secretary to the Treasury, who is on the Treasury Bench now, are aware of that. They know that not one of the water authorities can embark on a programme of investment without the approval of the Treasury. They do not even need the consent of my hon. and learned Friend or of the Secretary of State.

Mr. Eric S. Heffer (Liverpool, Walton) : Will the hon. Gentleman give way?

Mr. Gow : I always give way to the hon. Gentleman.

Mr. Heffer : I am glad to hear that. The hon. Gentleman must be the only one who does.

If the hon. Gentleman is so much against the water authorities being under the control of the state--and I accept that there is an argument for that, although I do not agree with him on this matter--would it not have been better to hand back many of the authorities to the local authorities? For many years I served on a water authority. I was an elected representative of the water authority of the Liverpool city council. We were responsible for the water that came to Liverpool. We were responsible for water coming from north Wales, and it used to get blown up from time to time. If we want to end patronage, why not put control back into the hands of local authorities? Not that that is necessarily the right thing to do at the moment, but it is better than handing it to private individuals, who will only want to gain for themselves and not have the interests of the people as a whole at heart.

Mr. Gow : I do not have the hon. Gentleman's confidence in the ability of district councils to operate great enterprises. I have received one of those messages which in this place it is wise to obey, namely, that other hon. Members want to speak. Therefore, having received that message, I shall obey it.

8.56 pm

Mr. Alan W. Williams (Carmarthen) : I have listened intently to the speeches this evening, and I have read explanations in the newspapers over the past few weeks of the Government's proposals, but I have yet to find an argument that will persuade me that there is any validity in privatisation.

Under a private monopoly there will be no choice for the consumer. By definition, there will be no competition in the supply of water. Prices must rise, because privatised companies will want to make a profit. By how much prices

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will rise remains a matter for speculation. However, when we consider the profits of British Telecom, 20 per cent. of whose turnover is profit, I can only see higher water prices.

The Government argue that privatisation somehow brings about efficiency. I cannot see any possible efficiency savings in Welsh Water. During the past 15 years it has experienced three reorganisations, and on each occasion it has cut staff. There is no fat left to cut in Welsh Water.

I welcome the National Rivers Authority. The unsatisfactory situation whereby water authorities are both poacher and gamekeeper has long existed. However, dividing those responsibilities would have been possible within the public sector.

I am worried that the NRA will not have the resources that it needs for the massive job that it has to do. Water pollution in Britain is a growing problem. In 1980-81 there were 11,467 incidents. Last year, 1987-88, there were 23,253--a doubling in the past seven years. That is the Government's record on water pollution. Last September we heard the Prime Minister championing environmental issues for the first time in 10 years, yet that is the Government's record--a doubling in the incidence of water pollution.

I hope that the NRA will be able to do something about that. Only 288 of those 23,000 cases resulted in prosecutions last year--barely 1 per cent. Industrial companies were responsible for 61 per cent. of those offences. In Wales, in 1986, two thirds of industrial discharges broke the law for more than one fifth of the time. This is an area of our life in which there is little law enforcement. Therefore, the NRA has a massive job on hand.

I hope that the Government will give the NRA the resources that it needs to tackle that job. I suspect that they will not. In the first place, the water companies will have an amnesty until 1992. Farmers have a non- statutory code of practice. Most important of all, neither individuals nor local authorities who are affected will be able to take water companies to court for such offences. Prosecutions will be left to the Secretary of State and the Director of Public Prosecutions. I fear that at the end of the day the NRA, which is a good concept in itself, will prove no tougher than the Police Complaints Authority.

We desperately need major environmental improvements. According to the EC drinking water directives on nitrates, aluminium, lead and so on, Britain's water has above the maximum permitted concentrations. The cost of cleaning up our water supply is estimated at £5 billion or £6 billion.

The problems of pollcyclic hydrocarbons, trichloroethylene and pesticides in the water have been referred to. Under the Government's legislation, toxic wastes can be dumped in Britain with little regulation, and it is only a matter of time before they too reach ground water, water courses and so on. The bills will amount to £10 billion or more.

We have also heard a good deal about sewerage and sewage treatment. Most of our sewers were built in the last century and are in a state of collapse and need major investment. Rivers are regularly polluted by 20 per cent. of our sewage treatment works. According to an article in The Observer last Sunday, if we tighten up, as we should, the regulations governing sewage treatment, 80 per cent. not 20 per cent. of our works will be breaking the law.

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Again, massive investment is needed to improve those figures and renew our sewers. We are talking, not of £10 billion, but of £20 billion of capital investment.

A few weeks ago, in a television interview, the Minister talked about our water industry. He argued that £10 billion or £20 billion worth of investment could not come from the public purse because the money was not there. What he was admitting was that, despite the Government's protestations on the environment, the water industry is not a high enough priority in their programme. That is what he was saying. The money is there. We have a Budget surplus to the tune of £10 billion this year and the funds could and should come from the public purse. I see no argument for privatisation. The money should have been made available and the Government's terrible neglect over the past 10 years has allowed the situation to deteriorate. No argument has been made by the Government to support the Bill. At the end of the day I abide by public opinion, and it is clear that at least 80 per cent. of public opinion is against the Bill. Yesterday we had a full day's debate in the Welsh Grand Committee, where the Queen's Speech was voted down by 26 votes to 10. I promise the House that if only Welsh Members had voted according to their consciences, the result would have been 51 votes to 7. If the matter is put to the Welsh people, I am certain that 90 per cent. of them will not want to see Welsh Water privatised.

9.5 pm

Mr. Keith Mans (Wyre) : I welcome public attention being concentrated on protecting the environment and, more specifically, the water industry. They have for many years been neglected topics, and the Government's measures have at least served to air them. One of the Bill's chief advantages is that it will allow water companies in the private sector to borrow on the commercial market when and where they need to do so. That compares favourably with the situation that has existed for many years, during which time the majority of water authorities have been in the public sector. I wish to repeat some of the points that were made in the Select Committee on the Environment report on rivers and estuaries. It is clear that one of the reasons why water standards have fallen over the last few years is the lack of investment for about the past two decades. A good example is that when the Labour party came to power in 1964, the previous Conservative Government having invested £400 million annually on sewage disposal, the total almost immediately dropped below that figure. It rose again through the rest of the 1960s and early 1970s, but surprisingly it fell again from a peak in 1973-74 of £900 million, at 1985-86 prices, to £400 million by the end of that decade. Therefore, I regard with scepticism the remarks of Opposition Members about how successful investment in the public sector had been when Labour was in power. The evidence produced by the all-party Select Committee suggests otherwise. Since 1981 investment has continued to rise, and I am convinced that it will continue to do so in the private sector.

As to the National Rivers Authority, one of the chief advantages of moving water companies into the private sector is that a regulatory device will remain in the public sector. I have no doubt that the NRA will be much better at regulating and controlling water companies than has been the case under the present arrangement, whereby

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responsibility for ensuring water purity has been split between water authorities and the pollution inspectorate. It was a pity that in 1974 the old alkali inspectorate, which had a lot of authority in the water industry and did a good job, was altered by the new Labour Government when they assumed office. Many of the problems surrounding degenerating water standards had their beginnings in that Labour initiative, whereby the pollution inspectorate assumed greater responsibility.

I am convinced that the increase in investment that has taken place over the past two or three years will continue when the companies are put into the private sector. I am equally convinced that to have the National Rivers Authority and the Director General of Water Services looking after the interests of the consumer and making certain that pollution is reduced in our rivers in the public sector will be a far better way to look after water in this country. I shall support the Bill tonight.

9.11 pm

Mrs. Ann Taylor (Dewsbury) : I do not want to take up all the points made by the hon. Member for Wyre (Mr. Mans), but we have checked the figures for capital expenditure of water authorities under Labour and Conservative Governments. It is a simple fact, on the Library's own figures, that capital expenditure between 1974 and 1975 averaged £1,254 million a year and in the period from 1979 to 1987-88, the last year for which figures are available, it averaged £922 million a year. Those are the figures that the Library provided today.

Mr. Mans : The figures that I quoted were for sewage disposal works and sewage disposal and I made that clear.

Mrs. Taylor : If the hon. Gentleman chooses to be selective in that way, he should compare his figures with the overall figures for investment during that period.

We have had a two-day debate on the Bill, but even that has not been sufficient to explore all the anxieties of hon. Members and those of many groups outside the House examining the Bill. It has been a strange feature of the debate that the worries that were expressed by a wide range of bodies outside the House have been ignored by Conservative Members, despite the fact that many of the members of those groups live in rural areas that are represented by Conservative Members. Who would have thought that only Opposition Members would be prepared to voice the concerns of the Council for the Protection of Rural England, the Royal Society for the Protection of Birds, fish farmers, the Royal Society of Nature Conservation and even, in some circumstances, the National Farmers Union. No doubt the Whips have been hard at work to silence wets who are worried about water, but I warn the Government that they cannot ignore those fears and anxieties indefinitely. Seventy-five per cent. of public opinion is against the Bill and Tory Members will be under increasing pressure on the Bill. I hope that those Conservative Members who have expressed reservations in private will soon speak out publicly against the Bill.

We should be clear at the outset about the Bill's intentions. The Secretary of State for the Environment, who is absent from the House at the moment, gave us his reasons for the Bill yesterday. He pointed out that the Bill creates the National Rivers Authority and a statutory

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framework for setting river quality objectives and for updating sewerage law. All of that could have been done- -and should have been done--without any proposal for privatisation. Clearly these provisions are in the Bill to try to make the sale of the water industry more acceptable to those groups who forced the Government to back down in 1986. Although they may favour the National Rivers Authority, they are not converted to the overall objectives of the Bill. If the Government are serious about independent controls--and we shall find that out when we try to strengthen the NRA in Committee--they could have introduced the provisions in a separate Bill before now and such a Bill would have gone through the House relatively quickly, with assistance from the Opposition.

The Secretary of State for the Environment claimed again yesterday that in establishing the NRA he was responding to the Select Committee's recommendation that gamekeepers should not be poachers as well. If the Secretary of State is serious about that, why is he allowing and encouraging the National Rivers Authority's regulatory functions to be contracted out--often back to the water plcs, the very bodies that the NRA will be regulating? If the gamekeeper should not be a poacher as well, why should the gamekeeper be forced to contract out his policing role to the poachers? That is what the Minister of State admitted will happen in an interview that was published this morning in the Surveyor.

One of our main concerns about the Bill is its impact on the consumer. Too often, the consumer gets a raw deal--literally so in some areas, including the Secretary of State's constituency where excreta has been found in the water supply. The Secretary of State's constituency faces other problems, too. The amount of aluminium in the water supply in his constituency exceeds the EEC directive level. Hon. Members will be aware, as I am sure the Secretary of State is aware, of the link between aluminium and senile dementia, which is of concern to everybody. That may explain the Secretary of State's absence. The Minister may deal with that point later.

The Minister for Water and Planning (Mr. Michael Howard) : The hon. Lady knows perfectly well--it was explained in advance to the Opposition Front Bench--that my right hon. Friend had to attend an official function this evening. The hon. Member for Copeland (Dr. Cunningham) knows that full well. It was known long before the date for this debate was fixed.

Mrs. Taylor : My hon. Friend the Member for Copeland (Dr. Cunningham) has confirmed to me that he knew that, but I think that it demonstrates the Secretary of State's priorities.

Mr. Howard : It was agreed by the Opposition Front Bench that, in all the circumstances, my right hon. Friend's absence would be acceptable. The hon. Member for Copeland nods his assent. It is utterly disgraceful that the hon. Lady, after such an assurance, should make that point in that way.

Mrs. Taylor : I remind the House that the Secretary of State for Wales was also absent during the opening speeches of today's debate. We saw another example of the Secretary of State's priorities when he introduced the Bill yesterday. The consumer was at the bottom of the Secretary of State's list of reasons for the Bill. The consumer hardly rated a

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mention in his speech. I am not surprised that the consumer came at the bottom of the Secretary of State's list because, in a way, he was being honest. Privatisation is not designed to protect the interests of the consumer, so it is not surprising that little regard is paid in the Bill to their interests.

The Bill provides for regional advisory committees to be appointed by the National Rivers Authority. I hope that the Minister will assure us that the committees will include consumers and representatives from established environmental and conservation groups.

The Minister of State, Welsh Office, boasted at the beginning of today's debate that the Bill provides for customer services committees. He is proud of that. He is satisfied with that protection. We are not. That provision does not satisfy us, nor does it satisfy those groups outside the House who are concerned about the interests of the consumer. The National Consumer Council says that the national river committees and the customer services committees will be neither independent nor sufficiently financed. The provision for customer services committees is laughable.

The Bill states that customer service committees "may"--not will--be established. If they are established, there is no guarantee that customers will be represented on them ; certainly not ordinary domestic customers. The Bill states that such committees should be made up of those with experience of the industry. They could be packed with business men with their own vested interests. Even if those committees are established, and even if ordinary domestic consumers get a few places on them, there is no provision that they must be consulted. As the Bill stands, the new water companies will be under no obligation to consult the consumers of their industry. We shall seek to amend that.

The other area of concern for consumers is prices. There has already been a sign of what the consumer will face because statutory water companies have been advised to increase their prices to the maximum. The Secretary of State claimed yesterday that those price increases were for investment. That is simply not true. They are intended to fatten the reserves and, more importantly, to ensure that the base line for the calculation of prices, post-privatisation, will be as high as possible.

There are other signs of more to come, and the message is always the same-- maximise the cost to the consumer to ensure maximum return to the investor. We should not be surprised at that--after all, that is what private investors expect of their companies. The British Business School, which is not exactly a Labour party organisation, has identified three groups of people who have benefited from privatisation. The first is the short-term speculator, who has bought into the industries for a quick profit derived from the undervaluing of shares. The taxpayer is cheated to ensure benefit for short-term speculators.

The second group is the City, which has benefited from the costs of flotation. Figures from Price Waterhouse show that the City has gained more than £660 million in fees alone, with more to come. The third group-- the only other group to benefit from

privatisation--comprises the top managers in the industries concerned, who have gained average pay increases of 78 per cent. in the first year of privatisation. Those who know about the industry have been bought off with promises of increased salaries, and all of those costs have to be met by the consumer.

The consumer might not mind paying more, within reason, for quality or for environmental improvements

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--but there are no guarantees in the Bill that such improvements will take place. The Bill gives the Secretary of State many powers. For example, clause 98 states that the Secretary of State may establish water quality standards. Clause 104 states that he may establish water protection zones. Only yesterday he said that that power would belong to the National Rivers Authority. Will the Minister tell us whether that will be one of the first amendments to the Bill? Was the Secretary of State giving that power to the NRA? Under the Bill, it belongs to the Secretary of State. Clause 108 states that the Secretary of State may establish codes of agricultural practice.

What do those and other provisions really mean? They mean that the Secretary of State has the power to introduce stringent controls--but they also mean that he has the power not to introduce stringent controls. If this Secretary of State has a choice between introducing stringent environmental controls and protecting the profit of private water companies, I know which he will choose.

That is only one of the choices facing the Minister. The other choice relates to the arrangements for the sale of the industry and the price that will be fixed. The Secretary of State has not yet told us what he intends to do about the debts of the water industry. Does he intend to write off all or a proportion of those debts at massive cost to the taxpayer? It is important that we know that if we are to know who will buy the industry, and why.

If we compare the £5.2 billion debts of the industry with the profits, it is difficult to see where there is any incentive to invest. Will people queue up to invest in the sewers of Greater Manchester? Of course not, even though some of the most expensive functions will be transferred to the NRA to be funded by the taxpayer.

Mr. Summerson : Has the hon. Lady not heard the old saying, "where there's muck there's brass"?

Mrs. Taylor : I think that we all know whether the brass is due to go under this provision.

We have a water industry which is run on commercial lines with the water authorities run by Tory appointees, all of whom are committed to the commercial approach. The only commercial improvement from privatisation mentioned by the Minister is access to loans on the private market, although the Chancellor of the Exchequer has said that the water authorities could not borrow more cheaply in the market than they do from the Government. That was before the increase in interest rates which have reached their current ridiculous height.

Let us get to the real reason why investors will be buying into this industry. We all know why people will be looking at the water industry. It is because the total assets of the water authorities are so great that even they cannot quantify them. The private sector would simply like to get its hands on them. There are half a million acres of land, some of it in prime sites in London and other major cities and much of it in areas of outstanding natural beauty. There are examples in every region. The Secretary of State and the Minister of State say that we should not worry about what will happen to the land because we should rely on planning controls. Anyone who knows anything about what has happened to planning procedures knows that time after time under this Government the developer wins. More serious than that perhaps is the fact that water companies will have a large degree of control over the infrastructure necessary for future development. By laying

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new water mains, increasing the size of water mains and providing new sewers, they can increase the value of land dramatically and then sell it. Or the conglomerates that might take over the water industry can allow their subsidiaries to reap the benefit of development. Before Conservative Members with construction interests become too excited about the backdoor means to development opportunities, they should be aware that the French are already one step ahead. They are buying into statutory water companies, not because they are happy with the regulated return allowed--they are not investing so much money for the 1 per cent. yield that they have so far received--but because they know of the opportunities for the future.

The Secretary of State told us yesterday that the French would be able to teach the British water authorities a lesson--how helpful they would be. He almost welcomed their presence because they would be able to teach the water authorities how to diversify and provide cable television. Perhaps the chairman of Thames Water would like to diversify into cable television. However, consumers would prefer to have water companies that concentrate on providing a good water service.

The French are buying into our water companies not just in order to have a base for profit out of water management--although they will happily accept that--but mainly to have a base for future asset stripping and to use the infrastructure power of the new companies to give work to their own construction subsidiaries. They are already operating in this way in many other parts of Europe. As the Secretary of State said, French companies have diversified. However, he did not tell us about all the ways in which they have done so. Many French water companies are already providing theme parks. Conservative Members may think that that is what is needed in the Lake District or in the Peak park or the Brecon Beacons, but we do not think so and I do not think that the general public want that either.

There are other and perhaps more ominous overtones to the French history of diversification. Not only have French water companies diversified into construction companies and theme parks, but some have diversified into funeral undertakings. I shall not make the obvious comment about the link between that and the possible future quality of water, but it is rather alarming to hear that the funeral company subsidiary of Lyonnaise des Eaux has just decided to pay its employees on the payment-by-result method.

We do not want French conglomerates running our water industry, nor do we want to be run by British conglomerates. Britain needs a publicly-owned water industry that is properly resourced and properly accountable. The Prime Minister is keen to emulate the Victorians, and I would have thought that the Secretary of State, if he were here, would do likewise. The Victorians concluded that the aims of private enterprise and the need for a clean and plentiful water supply were incompatible. In 1894 Joseph Chamberlain said :

"It is difficult and indeed almost impossible to reconcile the rights and interests of the public to the claims of an individual company seeking as its natural and legitimate object the largest private gain."

Yesterday the Government made it clear that the real object of the Bill was not to protect the environment but

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to create viable and profitable companies. We seem to have learnt nothing in the 94 years since Joseph Chamberlain made his comment because we are contemplating whether we should again subject the country's water needs to market and competition forces. All those years ago even the Conservatives realised that the water industry was not safe in private hands. Who are the extremists now? I ask the House to vote against Second Reading.

9.33 pm

The Minister for Water and Planning (Mr. Michael Howard) : The debate has lasted for almost 10 hours and detailed points have been raised to which I shall shortly reply. The most conspicuous feature of the long debate is the utter intellectual bankruptcy of the Opposition. Hour after hour Conservative Members have waited for some coherent explanation of the Opposition's attitude. We have waited patiently, we have waited attentively and we have waited in vain. The Labour party is the "Say no" party. It says no to change, to new ideas and to any constructive proposals designed to improve the condition of our people. The Labour party is the most sterile, destructive and negative Opposition that we have seen for generations. At no time have those characteristics been more apparent than in the past 10 hours of debate.

Yesterday, we had from the hon. Member for Copeland (Dr. Cunningham) the routine rant that we have come to expect from him. He railed about the evils of the private sector. But until my right hon. Friend the Secretary of State intervened, he said nothing about the private sector water companies which presently supply one quarter of our drinking water, as we were reminded by my hon. Friend the Member for Eastbourne (Mr. Gow) in his elegant speech.

It is, of course, hardly surprising that the hon. Member for Copeland should be rather wary about the private water companies. If the private sector is the menace to standards in the water industry that the hon. Gentleman suggested, why were they not taken into public ownership under any of the Labour Governments who have existed since the war?

The hon. Gentleman has no answer to that. He prefers to forget that the private companies exist. He does not even know what they do. He suggested yesterday that they were not private enterprises, and that they simply act as agents for the regional water authorities. That is an astonishing statement for the hon. Gentleman to have made. It will not, of course, come as a surprise to my right hon. and hon. Friends, who know from long experience not to expect Opposition spokesmen to have any acquaintance with the facts or with the real world. But it came as a considerable surprise to the companies themselves which have a long and distinguished history of supplying drinking water in the private sector quite independently of the regional water authorities.

Then the hon. Gentleman railed about price increases.

Mrs. Ann Taylor : Before the Minister leaves the subject of private water companies, if he will not accept the word of my hon. Friend the Member for Copeland (Dr. Cunningham), will he accept the words of Jack Jeffrey, who was chair of the Water Companies Association, who remarked :

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"We are subject to strict financial controls, especially on dividends, which make us very different from the water plcs which are being proposed by the Government."?

Mr. Howard : I do not know what point the hon. Lady is addressing, but it is not the point made by the hon. Member for Copeland. The hon. Gentleman said that they were not private enterprise companies, and he was wrong. He said that they acted only as agents of the regional water authorities, and he was wrong about that, too. The hon. Gentleman railed about price increases. My right hon. Friend the Secretary of State dealt with that point in his speech yesterday. But what of the increase in the price of water of 42 per cent. in 1975-76? Did the hon. Gentleman not notice it at the time? Had he forgotten it?

Last, but very far from least, the hon. Gentleman had the temerity to criticise the condition of our rivers and beaches. The hon. Gentleman knows very well that the main cause of our present problems lies in the record of the Labour Government-- [Interruption.] The convolutions in which the hon. Gentleman engaged in a vain attempt to defend the indefensible were astonishing. The first thing the hon. Gentleman did yesterday, when he sought to explain the Labour Government's record, was to succumb to a bout of amnesia about the last year of office of the Labour Government. He tried to pretend that the last year of the Labour Government was 1977-78. It is in Hansard for all to see. I think we can all sympathise with the hon. Gentleman's desire to expunge from the record all trace of the year 1978-79 or, failing that, to hope that we will forget that Labour was in office during that disastrous year. But the hon. Gentlman will have to be just a little more sophisticated if he is to have much success in that endeavour.

The hon. Gentleman was then faced with the decision of which deflator to use to bend the figures to his case. Should he use the GDP deflator or the public works deflator? He decided to use them both--one for one set of figures and the other for an entirely different set of figures. But that did not work either. The length to which the hon. Gentleman went to try to find some figures that he thought he could use illustrates better than anything the hollow weakness of the case that he was trying to defend.

Dr. John Cunningham (Copeland) : I should be flattered that, in his speech, the hon. and learned Gentleman has referred only to my own speech. I take that as a compliment. As he and the Secretary of State find it difficult to face the truth, I say to him again that they are not my figures ; they are the figures published in "Water Facts", and the statistics were calculated by the House of Commons Library. The hon. and learned Gentleman is trying to suggest that somehow Opposition Members have manipulated the figures. That is a manifest dishonesty.

Mr. Howard : Perhaps the hon. Gentleman will tell the House whether he depends on the House Library to tell him what was the final year of the last Labour Government. That was just one of the things that he got wrong.

Mrs. Ann Taylor : Will the hon. and learned Gentleman give way?

Mr. Howard : No, I shall not give way-- [Interruption.] I shall refer directly to the hon. Lady. We have just heard the hon. Lady's maiden Front-Bench speech on this

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subject. I welcome her to her new responsibilities. Shehas certainly made an enthusiastic start, but, unfortunately

Mrs. Taylor rose--

Mr. Howard : I shall give way to the hon. Lady in a moment. Unfortunately, in her desire to make an enthusiastic start, the hon. Lady has let her enthusiasm run away with her. On Monday, for example, the hon. Lady issued a press release. It was a mixture of mistakes, muddle and misrepresentation.

I shall confine myself to one example. The hon. Lady alleged that, after privatisation, the water industry would not be able to spend money on protecting the environment because, for the first time, it would have to pay local authority rates. I shall quote the exact words that she used.

"It is also likely"--

the hon. Lady said--

"that while the industry in public hands did not have to pay local authority rates, the private industry will."

There is just one difficulty about that. The industry in public hands has been paying local authority rates. There will be no change after privatisation. The hon. Lady got that simple, elementary fact utterly and completely wrong.

Mrs. Taylor rose --

Mr. Howard : I shall give way to the hon. Lady if she wishes, but I hope that, on this occasion, she will not blame the House Library for that mistake.

Mrs. Taylor : They do not pay rates, but they will after privatisation.

Perhaps I may refer to the figures for investment in the last year of the Labour Government. The hon. and learned Gentleman was challenging our figures. I shall tell him about investment in water authorities in the last year of the Labour Government, 1978-79. Would the hon. and learned Gentleman prefer the figures for 1977-78? I shall give both. In 1977-78, investment in water authorities was £1, 066 million. In 1978-79, it was £1,013 million. Investment did not reach either of those figures under a Conservative Government until 1987-88.

Mr. Howard : We know what the figures show because we heard the speech yesterday--I shall return to it in due course--by the Chairman of the Select Committee on the Environment. That Committee reported, in terms which were supported and signed by the hon. Member for Bootle (Mr. Roberts), that, under the Labour Government, investment by the industry fell by one third in real terms and in sewerage by a half. Those are the facts of the matter.

Following the press release by the hon. Member for Dewsbury (Mrs. Taylor) on Monday, which contained such an elementary mistake, I should like to make an offer to the hon. Lady. I want the debates in which she and I will be engaged in the next few months to be conducted on a sensible basis. I want to help the hon. Lady to get her facts right. If she sends a copy of her press releases to the Department of the Environment in advance, I shall make sure that the facts are properly checked and that she does not in future make the kind of mistake that she made on Monday.

The Bill represents a giant step forward towards a better water environment. It is about the quality of the water that we drink, the purity of our rivers and the

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cleanliness of our beaches. It is the key to those higher environmental standards of which others speak, but which we deliver. Of course, the measures in the Bill will secure for our people all the advantages that any privatisation brings--the advantages that have led so many other countries, governed by parties of many different political persuasions, to emulate our example. It will contribute to the spread of share ownership, it will give employees a real stake in their companies, and it will remove from this important segment of our economy the public sector shroud which conceals and disguises true accountability. It will open up for the industry all the opportunities and incentives for increased efficiency that only the private sector can provide, and it will free the industry from the constraints of competition for limited public sector resources with schools, hospitals, defence and all the other demands which must continue to be met by the taxpayer.

It is that access to private sector capital which will, above all, enable higher environmental standards to be achieved. The hon. Member for Bootle suggested yesterday that we could somehow abolish all spending restraint while retaining the industry in the public sector. It would be interesting to know whether he had consulted his party's economic spokesmen before making that statement.

Mr. Allan Roberts : Will the Minister explain how funds for river navigation, flood defences, sea defences and all the other major environmental concerns, which now rest with the water industry, but which will be given to the National Rivers Authority, will be released from the public sector borrowing requirement if they stay in the public sector? How will they be funded?

Mr. Howard : They will be funded from the public sector. The reason for that is very simple--so simple that it has escaped the hon. Gentleman. The amounts to fund those activities are very much smaller than the amounts needed to finance the investment of the authorities themselves. If the step suggested by the hon. Gentleman yesterday was such an obvious and easy step to take, why was it not taken between 1974 and 1979 by the Labour Government, who presided over a cut in investment of one third overall and one half in sewerage services? It is, of course, true that the industry is a natural monopoly. We recognise that, but that does not mean that there will be no scope for competition. There will be competition between the various privatised concerns in the capital markets, there will be competition over supply to "inset areas" and there will be competition in the provision of various commercial interests.

There will be the yardstick of competition between the companies themselves which will enable the Director General of Water Services, in setting the price at which the companies will be permitted to sell their water, to ensure that consumers benefit from improved efficiency. We are determined to ensure that the customer gets these benefits not only in the price that he pays for water but in the quality of service that he receives. Customers will be protected by enforcing the conditions of appointment of the companies, and there will be new customer service committees with a balanced membership representing consumer interests.

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The Bill also provides for regulations to be made for a guaranteed standards scheme. These guarantees will cover such matters as resumption of water supplies after a supply failure or planned disconnection, prompt response to billing inquiries or reasonable written complaints and keeping appointments at the agreed time. My hon. Friend the Member for Stockton, South (Mr. Devlin) referred to the need for automatic payments to be made to domestic customers if guaranteed standards are not met. We agree, and I am happy to be able to announce that there will be such a scheme providing compensation for a breach of guaranteed standards. We envisage a payment of around £5 for each and every day, or for each and every occasion, as appropriate, on which a breach occurs. This would be a no-nonsense, no-quibble scheme to provide a spur to management for good commercial manners and quick recompense to customers for the inconvenience that they have suffered. It will be a new remedy for the customer. It will be in addition to existing legal rights. It will be but one of the many advantages that will accrue to the customer as a result of privatisation.

If there has been a focus for the contributions to this debate, it has related to the environmental aspect of our proposals. That is as it should be, because concern for the protection and enhancement of our water environment lies at the heart of the Bill. It was my right hon. Friend the Secretary of State who last year saw the need to separate the regulatory functions of the water authorities from their water supply functions. Even Labour Members have been grudgingly obliged to concede the merits of the National Rivers Authority. The advisory committee, under the distinguished chairmanship of my right hon. and noble Friend Lord Crickhowell, has made an excellent start in identifying its responsibilities and putting in place the organisational framework within which these responsibilities will be discharged.

My hon. Friends the Members for Devizes (Sir C. Morrison) and for Pudsey (Sir G. Shaw) expressed concern about the resources available for the NRA. They were right to say that, unless it gets the resources it needs, it will not succeed. We accept that. We are determined to ensure that it gets these resources and that it will succeed. That is the basis on which it is being established. My hon. Friend the Member for Cornwall, North (Mr. Neale), who has taken such a close interest on behalf of his constituents in recent events in his constituency, asked for a specific assurance that the Department will continue to monitor closely what is happening in his constituency. I am happy to give him that assurance. My hon. Friend the Member for Dorset, North (Mr. Baker) asked for a reassurance that the full rigours of the planning system would be maintained after privatisation, and I am happy to give my hon. Friend that assurance. My right hon. Friend the Member for Woking (Mr. Onslow) suggested that the regional fisheries advisory committees of the NRA should have the same executive responsibilities as the regional flood defence committees as anglers would contribute a great deal to the funds of the NRA. The answer to my right hon. Friend's worry is that matters will continue as they have. The regional flood defence committee will continue to exercise the executive functions that are now exercised by the land drainage committees, and the regional fisheries advisory committees will continue as advisory committees to the new authority.

My right hon. Friend the Secretary of State has explained how we see this measure as the key to improved

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