House of Commons Hansard Debates for 21 Mar 1989

Mr. Wigley : I cannot comment on the environmental programme put forward by the Labour Front Bench because I am not privy to the details of that, but I know that Wales needs a capital investment programme of about £90 million year by year to meet the standards looked for by the Select Committee on Welsh Affairs. I also know that last year Welsh Water's retained profit was about £27 million and, even if all interest were written off, would barely generate another £50 million, so there is a shortfall of between £20 million and £30 million in Wales in terms of the capital injection needed. The shortfall would be nearer £50 million to reach EC standards. If that is multiplied by 20 for the United Kingdom, we may be talking of a shortfall of £1,000 million. If it helps the hon. Gentleman, that shortfall could be met by 1p on income tax. I would be more than happy to see 1p on income tax to reach those standards.

The Opposition accept that such improvements have to be paid for one way or another, but do the Government accept that? It is not credible for the Government to say that those standards can be reached with an increase of no more than 12.5 per cent. in real terms over 10 years. Funding is central to the problems facing a maritime constituency such as mine, sticking out into the Irish sea,

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which is one of the most polluted seas in the world. It is not acceptable to go into the next century with the kind of standards that we have at present. Wales has to deal not only with maritime pollution but with the effects of both older and modern industrial pollution. In many instances, it does not seem to be making much headway.

The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) will be aware of the pollution of the river Taff. I saw the hon. Gentleman just before the rugby match on Saturday. I was travelling down from Pontyprydd to Cardiff. Looking at the river, very little progress seems to have been made in the past 15 years. I do not criticise the Welsh water authority, which is undertaking important work, but this underlines the work that we still have to do, and which has to be paid for one way or another, whether from general taxation or by the polluter. [Interruption.] It is all very well Conservative Members heckling, but if we are to achieve the necessary standards, we must find a way to pay for that. I am convinced that that is not possible under the privatisation structures which have been proposed. It is not possible with the 12.5 per cent. ceiling to which the Secretary of State referred. If Conservative Members say that that 12.5 per cent. increase is wrong and that we need a 50 per cent. or 60 per cent. increase in real terms for such a level of funding over the next decade, the sums would add up--but they are not saying that.

Mr. Rowlands : The situation is not made easier by the fact that the private companies will also have to pay dividends.

Mr. Wigley : That is the whole point. If the Welsh water authority is to give a return of 10 per cent. on capital, assuming that its assets, with a current cost of £1,700 million, are to be given away for, say, £300 million--a figure that has been bandied around--with £1, 400 million being written off, a profit of £30 million is still needed to give a 10 per cent. return. That is a higher profit than at present. All the profit will go on that and there will be that much less to meet the capital programme that is needed.

Mr. Tim Devlin (Stockton, South) : Does the hon. Gentleman accept that one of the difficulties in his part of the world, as in mine, has been the short-term nature of the water industry in the past 20 years? Each year the water industry has had to spend within the capital constraints put on it by the Government. Under the new arrangements, water companies will be able to act like any private company and go out into the market, borrow the money that they need and invest it in cleaning up all the beaches about which the hon. Gentleman is so worried.

Mr. Wigley : Of course I should have been delighted to see the water industry, like many other industries, investing money over the past decade, particularly in a period of high unemployment. There should have been much greater investment in the capital infrastructure--for example, in sewers. I regret that water authorities have been under such constraints from the Government, funding more and more of their capital investment from retained profit. That is the Government's philosophy.

Mr. Devlin rose --

Mr. Wigley : I am still dealing with the hon. Gentleman's point.

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The hon. Gentleman argues that Government constraints have created difficulties over the past decade and that the water industry will find things easier when it is privatised, but that is a non sequitur. It presupposes that after privatisation it will be possible to obtain hundreds of millions of pounds from the market, but that will be possible only if substantial interest is paid by way of loan or share capital. That means a rate of return substantially higher than the water industry is obtaining at the moment. In Wales, the rate of return at the moment is 2 per cent. We cannot get money from the market at 2 per cent.-- we shall need to pay 10, 12 or 15 per cent. to get the money in for the sort of programme that is necessary.

Mr. Chris Mullin (Sunderland, South) : We should also bear in mind that the first investment that the newly privatised water authorities will undertake is the cost of metering--an unnecessary expense of about £1.3 billion.

Mr. Wigley : Any such additional expenditure will come from the limited capital that is available, or more will have to be paid to attract more capital. I understand what Conservative Members say, but their arguments add up only if there is a substantial increase in the price of water. They argue that improvements should be paid for by such increases. We agree that the money is necessary, that we need the capital expenditure and that the money must come from somewhere, but we are prepared to see it coming from the public purse because it is a matter of such importance to all in our communities.

Mr. Ridley : A few minutes ago the hon. Gentleman said that he believed in the principle that the polluters should pay. In relation to sewage pollution, which demands by far the greatest proportion of expenditure, who does he think is the polluter?

Mr. Wigley : To a large extent, it is the community. That is why general taxation is so relevant. I look for a method of equitable payment for pensioners, those on low incomes, disabled people, and so on. They should not be burdened in the way that they are by the poll tax. The most reasonable way to obtain the necessary funds is through progressive taxation. The capital has to be obtained and it has to be paid for.

Mr. Alistair Burt (Bury, North) rose--

Mr. Wigley : I shall not give way as other hon. Members wish to speak and I have taken more time than I intended.

On Second Reading, the Secretary of State said that over 10 years the increase in prices would be between 7.5 and 12 per cent. Does he stand by that assessment? Will he give a commitment from the Dispatch Box today that all the necessary improvements in standards in terms of the pollution of our coastal and inland waters can be paid for with no more than a 12.5 per cent. increase in real terms in the price of water between now and 1999? I suspect that he realises from what is happening in existing private companies--the way in which they have run for increases in their prices-- that his proposition does not stand up.

The money will not come in because the Government's sums do not add up. That is why it is so important to have issues such as the reduction of pollution and the allocation of costs written into the Bill, as new clause 1 provides. I suspect that many Conservative Members know in their

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hearts that that is the case. I hope that when the time comes to vote they will have the courage of their convictions.

Sir Giles Shaw (Pudsey) : Having listened to the hon. Member for Caernarfon (Mr. Wigley) on the problems of the water industry, I cannot help but feel that for about 100 years these problems have been dodged. It is surely an industry which, probably more than any other, has failed to have any serious renewal of investment since its establishment in the opening decade of this century. The greatest development now in investment is the replacement of aging structures which have not been touched for at least 60 years. It is just the problem which the hon. Member for Caernarfon so eloquently put about how the water industry will obtain the renewal of asset capital, which is so desperately needed, which is fundamental to my right hon. Friend the Secretary of State's measure in this Bill.

My hon. Friend the Member for Torbay (Mr. Allason), who is no longer with us, was referring to the outfall. I remember, a few years ago, when I was in the Department over which my right hon. Friend presides with such distinction, going to Torbay to examine that outfall. I think it was in 1981. It was then a fine pumping station, built about 1908. It was all in brass, and had been converted to oil at no small cost, and was still merrily pumping the sewage of Torquay into Torbay. That is the kind of problem which exists all round the coastline to which all hon. Members refer. I recall that in Newcastle the first sewage works ever was opened in about 1983, replacing the practice of discharging completely untreated sewage into the Tyne. So the great problem with the water industry has been a lack of interest in renewing and modernising its assets. For the vast majority of this period it was in the hands of local authorities, and it was the fact that the public purse was involved which, almost by definition, starved the water industry of assets. It is exactly the same now as it is within the national public purse, because the water industry comes at the bottom of the list of priorities from one year to the next of the state or council.

There are two simple reasons for this. First, there are very few votes in sewerage or sewerage replacement, because the public does not want to know. Secondly, there is an infantile belief that water is free and therefore cannot be charged for adequately, and there is a reluctance to disturb this happy myth. It is the disturbance of that myth and the regeneration of a drive towards capital improvement and the fairly skilful presentation in this Bill of controls balanced by liberating the assets of the authorities to obtain capital in the private sector which is the very nature of my support for the Bill. Speaking to new clause 1 and the allied clauses moved by the hon. Member for Copeland (Dr. Cunningham), I have to say to my right hon. Friend that the argument on the National Rivers Authority is utterly crucial to this whole structure. I am not a supporter of the NRA. I have never been wholly convinced that the arrangements currently in place for the whole water cycle to be managed by authorities of the kind we possess are not perfectly satisfactory for the running of the hydrological cycle and for dealing with water supply and pollution. However, my real worry about the NRA from the time when the concept was first introduced by my right hon. Friend has been that it could so easily become the mortmain of the industry and

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the dead hand of Government, and the controls, the extension of influence and the manipulation of committees would mean that the water industry would not be privatised but slowly strangled. Nothing convinces me that I am right more than new clause 1 and the allied new clauses promoted by the hon. Member for Copeland, who is no fool, never has been and probably never will be. When he seeks to increase the powers of the NRA and prays in aid the importance of pollution controls and making certain everybody pays, and so on, I get very worried indeed, because he is quite right to say that, once established, the NRA will be an absolute godsend to any Socialist Administration. Heaven forfend the day when they use the NRA as the great mortmain of Government, because it must be seen as that. 8.15 pm

The balance of this Bill at the moment is weighted too heavily towards controlling the activities of the private companies in relation to the controls applied by the NRA. However, having said that, I recognise that it is now necessary to see that it is set up efficiently and that the powers given to it over its wide remit are sufficient to discharge its responsibilities. In the case of pollution, in other portions of the Bill, clauses 103 and beyond that, there is an enormous range of powers available to the Secretary of State, the Director General of Water Services and the authority itself to do practically everything possible so that the NRA ensures that the privatised water authorities or any other polluter meets its requirements. I cannot see the need to strengthen the powers, as suggested by new clause 1.

Mr. Allan Roberts (Bootle) : Will the hon. Gentleman say whether his proposal to leave what will now be functions of the National Rivers Authority with the water authorities will increase the possibility of privatisation being successful or make it more difficult, bearing in mind that all the functions being given to the NRA, environmentally essential functions, do not make any profit?

Sir Giles Shaw : I quite understand why the hon. Member is anxious about that. I am not advocating recasting the Bill in relation to the NRA ; I am merely warning my right hon. Friends that the NRA is potentially an instrument of very great power, and I do not accept that its powers need increasing.

In relation to access to land, I find it extraordinary that hon. Gentlemen express such great concern over the disposal of land in the current ownership of the water authorities. I understand that the development of land increases its value, and there are various ways of selling such assets for the benefit of shareholders. I understand also that over the last few years the water authorities, encouraged by this Government, have been able to extend public access to their land to a quite remarkable degree. Not long ago water authorities would not allow the public anywhere near their reservoirs, and acres of land were fenced off. Now, commendably, there are many acres available for public use, provided that the public respects the fact that it is catchment land or water designated for public supply. The vast majority of water authority land is clearly catchment land. If there is really a fear among hon. Gentlemen that catchment land has enormous development potential, they are setting at naught the planning

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system. The vast majority of water authority land is already in national parks, green belt areas, areas of outstanding natural beauty and probably conservation areas too. It is ludicrous to have this phobia, when the policies of authorities have steadily developed towards marketing their catchment land for environmental purposes and to think this will suddenly be destroyed by the fact that the authorities are being privatised. It is crucial that their consumers, who pay their bills, should have access to the land which they currently enjoy. In relation to Yorkshire water authority, which I know well, there is no intention whatever to alter the existing policy of access to its catchment land. That land has the lowest possible development value and nobody will build a block of flats on Upper Wharfedale.

Mr. Elliot Morley (Glanford and Scunthorpe) : Is the hon. Gentleman aware that Yorkshire water authority is considering, for example, selling part of its land in the Tophill low reservoir for the creation of a commercial fishpond, which will go in a site of significant environmental and scientific interest, will destroy rare plants in that area and completely obliterate an area which is part of a voluntary nature reserve?

Sir Giles Shaw : The answer to the hon. Gentleman's question is that I do not know of that proposal. There will always be substantial conflicts in the conservation and environmental policies to be pursued in regard to any piece of land, particularly the aquatic environment as opposed to the catchment land, to which I referred. There will be alternative uses. There could be people who find it more beneficial for the land to be used as a fish farm than for a protection zone for flora or fauna. That is where the local office of the NRA will come in. It will be responsible for ensuring that the water authority pursues a conservation policy which is consistent with national objectives.

We can forget catchment land being on development land. Development land tends no longer to have a potential use, with redundant sewage works and things of that kind. It certainly could be development for commercial use. I sincerely hope that my right hon. Friend--even the hon. Member for Copeland--will consider that a redundant sewage works should be replaced by something moe profitable as soon as possible. If it is for domestic buildings or for buildings of another nature, so be it. That is a far cry from saying that the policy of disposal of land will somehow be turned on its head by water authorities trying to build flats in upper catchment areas and river valleys.

Mr. Eric Martlew (Carlisle) : It is a pity that the hon. Gentleman was not a member of the Committee. He seems to deal lightly with what he calls catchment land. The area that I come from, Cumbria, includes the Lake district national park. Is the hon. Gentleman aware that 45 per cent. of Lake district planning appeals are presently allowed by the Secretary of State? There would be great worries that, if large tracts of what is now water authority land become available, this Secretary of State especially will continue to give planning permission by overruling the Lake district planning board.

Sir Giles Shaw : I would be well out of order if I were to refer to planning applications in a local authority such as

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Cumbria. There will be occasions when planning applications will be granted, which will cause great concern for the hon. Gentleman's constituency.

Mr. Martin Flannery (Sheffield, Hillsborough) : Will the hon. Gentleman give way?

Sir Giles Shaw : I must proceed, otherwise I will exceed my time limit.

Urban land in the ownership of water authorities must be considered in relation to the land register. At the moment, as public authorities, water authorities are required to list such lands for which they have no present purpose. The Derelict Land Act 1982 is an important instrument to dispose of derelict land for the betterment of public use. It will apply to the water companies just as it applies to British Rail, other bodies and local authorities. There is a positive inducement to get rid of derelict land for other purposes in urban areas, and I fully support that.

What worries me most is that, by adding these further powers to the NRA, as the hon. Member for Copeland and his colleagues seek to do, we would so extend the powers of that body that it would make it much more difficult for a privatised water company to try to run its business in a cost- effective way. We know that profits will be limited, that charges and costs will be controlled by the Director General of Water Services, and that the conservation and environmental powers vested in the NRA will be implemented. Those powers include major powers against pollution and discharges. When privatised, water companies will also be under the control of my right hon. Friend through the NRA. There will be immense control on the activities of the companies.

For that reason, their capitalisation should not be high, and the return on assets should be modest--suitable for public utilities, which always had a reasonable place in a share portfolio as safe but not stunning. For that reason also, the privatisation of water authorities will be a major achievement.

I wish the Bill well, but I counsel my right hon. Friend to make sure that we defeat the extended powers that he and the hon. Member for Copeland wish to impose on the NRA.

Mr. Rowlands : My few remarks follow those of the hon. Member for Pudsey (Sir G. Shaw). I shall identify a vital area where the exploitation of assets will become a major concern to the communities that I represent. Fundamental issues have been raised by my hon. Friends and by the hon. Member for Caernarfon (Mr. Wigley). I endorse all that has been said, so I will not go over it again.

However, I shall pick up the points that were made by the hon. Member for Pudsey and illustrate what they could mean in community terms if we privatise water companies. As he rightly described, they will desperately look around for asset sales and for means of raising income. Unlike almost any other company, their main business is not capable of major expansion. It is a mature industry. It supplies its main sales, and its service is already provided to almost every household in the country. There is no way in which there can be any significant increase in sales per se. Therefore, there cannot be a major expansion of sales to boost dividends to finance the company or to give better dividends to the City that invests in it.

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Where is the opportunity to deliver the returns that are required in the City for the investment that it will make? The hon. Member for Pudsey has understandably said that there will be restrictions on the development of land, that planning permissions will be required in respect of national parkland, and that there will be enormous problems in trying to exploit land. Hon. Members have cast doubt on that point. A potential exploitation of land in my area deeply concerns me. I refer to the exploitation of operational water belonging to water authorities, in particular the reservoirs that form an important part of the recreational requirements of many of our communities.

I have the distinguished privilege of being the president of the Welsh Anglers Society. Therefore, I know of the ways in which we anglers and Welsh Water have been trying to develop relationships in the expansion of opportunities for local angling organisations and individual anglers in the communities around the reservoirs of the Principality. Nowhere in the Bill is there a sufficient safeguard against large-scale exploitation of reservoirs by commercial enterprises, which would undermine the importance of local angling associations and individual anglers. It is the one other major area which, when privatised water companies put all their assets into subsidiary bodies, the City will try to exploit. There will be no planning permission objections or difficulties of the kind that the hon. Member for Pudsey mentioned. They will be able to offer powerful commercial leases and lease out our reservoirs. They are our reservoirs--they were built and financed by the communities--and they are of tremendous commercial potential.

Mr. Nigel Spearing (Newham, South) : My hon. Friend was a member of the Committee.

Mr. Rowlands : I was not.

Mr. Spearing : Does he agree that the area of reservoir available for fishing is proportional to the amount of storage capacity for drought purposes and the extent to which water companies must have water for purification by sunlight? What restraints will there be on private water companies, which are currently municipal bodies, from cutting such areas or volumes of storage and cutting corners that are not cut at the moment?

Mr. Rowlands : I am unable to answer the powerful and important technical point that my hon. Friend raised. I did not serve on the Committee.

I was making a good, simple community point. It is not mentioned in the Bill and I want to find out about it before the night is out. What safeguards will the Secretary of State, himself a keen angler, provide for angling communities? How will he prevent commercial exploitation? This is not a fanciful idea that we have dreamed up as an objection to the Bill.

We have watched while short stretches of Welsh rivers have been sold for enormous sums. They are becoming precious assets for use as business perks and weekends. There is a huge market in these assets in the Principality. But there is no provision in the Bill to safeguard the development of local activities for anglers and angling organisations on operational waters after the privatised water companies are running them. I hope that the Secretary of State can answer me. The lack of that safeguard is another fundamental reason why we should object to this act of privatisation.

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Mr. Boswell : Has the hon. Gentleman studied the draft code of practice for the conduct of conservation, access and recreation and specifically the reference to the way in which established recreational activities should be able to continue wherever possible?

8.30 pm

Mr. Rowlands : I have certainly read those weasel words. The codes of practice will not last five minutes with a private company looking around to finance the dividends of its new investors. They will be pushed aside. There need to be statutory rights. Compared with those weasel words, I find no satisfaction in "where possible" or "in a code of practice". We all know too well how they will be pushed easily and quickly aside with a big offer for a major lease of a reservoir for the fishing and angling facilities in our communities. I find no satisfaction in the code of practice or those words. I apologise for talking now about angling because it seems like a sideshow. [ Hon. Members :-- "No."] The main issues of water prices and charges are important, if not fundamental, but we are also dealing with the various side effects of the legislation. The existing situation is not satisfactory. The arrangements have not been effective. I know that the hon. Member for Pudsey was a Minister for water a long time ago. I can remember the neglect and difficulties that occurred due to lack of investment in sewage plants and other areas. Nobody is arguing that it is not a historic problem ; we wonder whether any of these measures will make the situation better.

Dr. Cunningham : Perhaps I can draw my hon. Friend's attention to clause 7(5), which says :

"Nothing in this section or the following provisions of this Act shall require recreational facilities made available by a relevant body to be made available free of charge."

Mr. Rowlands : My hon. Friend has underlined the point that I am making, I hope with some effect. I want to add another thought. We do not find that the provisions about pollution--

Mr. Martin M. Brandon-Bravo (Nottingham, South) rose--

Mr. Rowlands : In fairness, I want to be as brief as possible. I am sure that I would be tempted to reply at length to the hon. Gentleman.

The history of the situation is unsatisfactory. Anyone who has been a Minister or who has had responsibility knows that there are inherited problems that remain unsolved. But I do not believe that any of this backlog will be effectively dealt with, especially when the water companies hand out dividends to shareholders. The money will go into the shareholders' pockets, not into improving the rivers and dealing with pollution. It will be handed out to those who invest in the privatised companies.

Why do the Government oppose simple arrangements of the kind proposed in Committee? At least we ought to know when pollution occurs. It should be registered properly. In the Rhymney valley we have been developing exciting new local angling associations. We have stocked local rivers, yet overnight and at a stroke all those efforts will be wiped out by one irresponsible or negligent action, not by a domestic consumer but by a commercial or industrial operator.

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I fully understand why hon. Members have received letters, as I have done, asking why we cannot strengthen the Bill so that we know who the polluters are. We should know when they pollute rivers. There should be a register. Even if the National Rivers Authority took no effective action, we could pursue the polluters. But that, too, has been rejected by the Government in Standing Committee.

Before we pass the Bill, which I fear we will do, I must say that it has no mandate in Wales. Of all the sensitive issues, water has been a special case. It has no mandate in Wales although the Government have a general mandate. We accept that as elected Members of Parliament. Therefore, the Government should heed our warnings, as represented by the new clauses.

Mr. Michael Latham (Rutland and Melton) : The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) does not need to apologise to the House for talking about angling, because millions of people do it and also because many of us have received representations on the subject. I have had eight letters in the past 24 hours. The only shame was that they were all exactly the same and typed on what appeared to be the same pieces of paper. Nevertheless, they show a strength of feeling on this issue.

I wish to raise only one matter with my hon. Friend. It concerns Rutland water, which is in my constituency. My right hon. Friend will doubtless remember when Rutland water, the largest man-made lake in Europe, was created by Act of Parliament in the 1970s. The proposal was so unpopular at the time that Sir Kenneth Lewis, then the Conservative Member for Rutland, felt unable to introduce the private Bill to the House but opposed it. It was introduced by Mr. Tom Bradley, then the Labour Member for East Leicester. The Bill having passed, and the reservoir being duly flooded, my good friend Sir Kenneth Lewis was invited to the opening--which was carried out by Her Majesty the Queen--and Mr. Tom Bradley was not, which rankles with both of them to this day.

Rutland water has become a very important natural resource in my constituency and for the whole of the east midlands and even wider still. It is one of the most important wildlife reserves in the world. It has angling, sailing, and a fine nature reserve. It is a tremendously popular resort for the people of Leicestershire and others. They can walk around the area and enjoy themselves. My right hon. Friend the Secretary of State will therefore not be surprised to learn that there is concern about the prospect of development around Rutland water. I have carefully studied clauses 7, 8 and 9 which I think are well intentioned. I have studied new clause 20, which was tabled by the Opposition. It does not tackle the issue in the right way. I cannot see any advantage in vesting the land in the National Rivers Authority.

I know for a fact that under the existing system of statutory water authorities one of the most detrimental planning applications that was made to develop around Rutland water was made by the Anglian water authority in 1984. It proposed some hideous Swiss-type chalets around the catchment area --to follow the theme of my hon. Friend the Member for Pudsey (Sir G. Shaw). Thank God that that very prejudicial application was rejected. The water authority did not proceed with an appeal.

I must ask my right hon. Friend the Secretary of State-- [Interruption.] The hon. Member for Bootle (Mr. Roberts) should not anticipate me. I am just leading up to

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that point. I am now fixing my beady eye on my right hon. Friend and saying to him that I shall take seriously the assurances which I hope that he will give this evening and which were given to me in writing by my hon. and learned Friend the Minister for Water and Planning and by my hon. Friend the Under-Secretary of State, the Member for Lewisham, East (Mr. Moynihan).

I accept that of itself ownership is not decisive in that the privatised water companies do not need to sell land to developers. They can put in planning applications themselves if they want to, as the existing Anglian water authority did a few years ago. What I want from my right hon. Friend the Secretary of State is a clear assurance that the Government will not grant appeals for development around Rutland water because that is simply not acceptable. There will undoubtedly be applications. Indeed, an application is outstanding at present, with a written appeal that has been before my right hon. Friend, and we shall take the way in which he deals with that appeal to be a touchstone. It is a planning application for an hotel on the edge of Rutland water. If I have any reason to believe that the water authority or anybody else is allowed to believe that it can come along with proposals for developments all around Rutland water and that they will be supported on appeal by Ministers, I shall not put up my hand for the Bill. However, I do not believe such things because I have had assurances from my hon. and learned Friend the Minister of State and from my hon. Friend the Member for Lewisham, East.

Mr. Mullin : If I were the hon. Gentleman, I should not take such assurances too seriously. We had many such assurances in Committee and we did not take them seriously.

Mr. Latham : The hon. Gentleman can take them seriously or not, just as he likes. I am making this speech to put my right hon. Friend the Secretary of State on notice that the Rutland people expect the Department of the Environment to defend the environment around Rutland water-- [Hon. Members :-- "Not in my back yard."] Opposition Members know nothing about Rutland water.

Mr. Ashby : Does my hon. Friend agree that it is not the Rutland people but the Leicestershire people who will not accept that sort of development?

Mr. Latham : I thank my hon. Friend. I am glad that he drew a clear distinction between Leicestershire people and Rutland people, although the present Secretary of State for Wales tried to abolish the difference between the two in 1972 by that most regrettable reform of local government, which is not accepted in Rutland to this day.

Mr. Ashby : Will my hon. Friend accept that I am giving him my support?

Mr. Latham : I do not think that I shall give way to my hon. Friend again because he is worsening his chances of taking part in the debate, which I know that he wants to do.

If I may have the attention of my right hon. Friend the Secretary of State and of my hon. and learned Friend the Minister of State, I repeat that the planning procedures must remain inviolate. Rutland district council has developed a Rutland water plan. The Leicestershire

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county structure plan does not agree with proposed development around Rutland water. If the planning procedures are to be the defence--I believe that they must be and that they are--I want assurances from Ministers that that is the way in which they wish to proceed.

Mr. Livsey : The National Rivers Authority, to which we are referring in terms of pollution in our discussions on new clause 1, is essentially an environmental protection agency. New clause 1 specifically attends to the question of the polluter paying. The record on pollution is not good because 903 km of rivers were downgraded in the period 1980-85 and 2,800 km are biologically dead in the United Kingdom. In the last year for which recorded figures are available--1987--more than 20,000 pollution incidents were registered, but only 1 per cent. were prosecuted and only one case received the maximum fine of £2,000. When one considers that 20 per cent. of all sewerage works do not come up to standard, one realises that we face a serious problem.

The Government's past record on water authorities and their ability to bring the polluters to book is not a good one. I hope that the Bill will bring about improvements, especially under new clause 1, which insists that the polluters must pay for the environmental damage that they do. I wonder whether the Government really believe that that should happen or whether it is just an idea that sounds good but that cannot be adhered to in practice. I hope that it can be adhered to, because if we make the polluters pay, and if the NRA is effective enough to bring that about, there will be a vast improvement in the quality of our rivers. The new environmental protection agency--the NRA--is hopelessly underfunded and I do not believe that it will be in a position to carry out its environmental protection functions effectively.

8.45 pm

New clause 2 deals with contracting out. It is clear that that should not be allowed by the NRA. It would not be acceptable because if the water plcs are to carry out that contract work, it is obvious that we shall be back to having the gamekeeper and the poacher under the same roof. One could say that, by stealth, the plcs could carry out the contracting out functions for the NRA, but that would result in a hopelessly compromising situation. I hope that the Government will give us definite assurances that the water plcs will not be in that position post-privatisation and that they will not be doing the work of the NRA on environmental protection.

Much has already been said about the statutory water companies. There are many misconceptions about them, especially on the part of the Prime Minister, who has stated that a quarter of the industry is already privatised. Clearly, statutory water authorities do not operate in anything like the same way as the plcs will operate post-privatisation. When we learn that statutory water companies charge 25 per cent. less for their water than the water authorities, the reasons for that become clear. Part of the profit of the statutory water companies is, in law, recycled back to the consumer to reduce the price of water. That will undoubtedly be unscrambled when they become plcs, as can be seen from what has happened in terms of the recent water price increases from the statutory water companies, pre-privatisation, of between 30 and 50 per cent.

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New clause 15, on producing an environmental plan, is excellent and will work specifically to protect the environment. Like many hon. Members who served on the Committee, and like many other hon. Members, I am an exceptionally keen angler. I like some aspects of new clause 15, which states that the NRA should be pro-active in developing angling resources and in increasing the productivity of our waters. Angling is undoubtedly an important recreation. We know that more than 3 million people enjoy it. As the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, the unfortunate thing is that if those aspects are privatised, the price of angling will be prohibitive for local people.

I live in a constituency where most of the rivers cost £100,000 per mile and I know how galling it is to be brought up in such an area as an angler but to be unable to fish the river. My first opportunity to fish the river Wye in my constituency was at the behest of two brothers from Stoke- on-Trent who had made a lot of money and generously offered me the opportunity to fish the river. That was my only legal opportunity to fish the river Wye. In the past, such situations have caused great problems. We do not want the reservoirs of Wales to become unaffordable to local people. In the past, local people were able to fish some of our waters only by using hand grenades. That is very deleterious--it ruins fisheries and spoils people's enjoyment. However, it may again become the only way of catching fish, which would be most regrettable.

There must be proper provision, as in new clause 15, for restocking rivers with trout, salmon and other migratory fish. In this respect, it is particularly important, from an environmental point of view, to ensure that the compensatory flows from reservoirs keep rivers at levels that will cater adequately for fishing and other recreational interests. It is important that the plcs do not, through avarice and a desire for extra profit, take action that will lead to rivers drying up. That is what might happen as a result of lack of effective controls by way of compensatory flows. No doubt the NRA, given the necessary power, will ensure adequate compensatory flows from reservoirs into rivers.

New clause 20 deals with the vesting of land. The land ought to be transferred to the NRA--there is no question about that--but the House should know that, under this privatisation measure, 99 per cent. of it will go to the plcs. I regard that as an unsatisfactory state of affairs.

In the context of the NRA, we are talking about environmental protection. The water protection zones around our reservoirs ought to be in the hands of that body to ensure that pollution does not occur. The Government have no right to maximise the assets of the water authorities--assets that were given to those authorities in 1973. Now those are to be sold off. That is not a satisfactory state of affairs. In fact, under this legislation, approximately 10 per cent. of my constituency--66,000 acres--will be sold off. That is very worrying. The Welsh water authority owns 45,000 acres of the Elan valley, and 21,000 acres in the Brecon Beacons national park. The Government are selling off assets that they do not own, which amounts to misappropriation. The Elan valley originally belonged to Birmingham corporation and that water complex was brought about through the corporation's Water Act of 1892.

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Mr. Pike : While the hon. Gentleman was referring to the disposal of land in his constituency, the Minister was shaking his head as though he did not believe that it was possible. If the Government really did not believe that there is any danger of the water authorities disposing of land, there is no good reason for their rejecting new clause 20, which would put the land in the ownership of the NRA but would allow the water authorities to operate exactly as the Bill proposes.

Mr. Livsey : I am sure that the hon. Gentleman is quite right--that the NRA and the plcs could function adequately with the land in NRA possession. Indeed, that would be a far cleaner division of responsibilities than is proposed in the Bill.

I have referred to the Birmingham Corporation Water Act of 1892, under which the Elan valley complex was built. There is no doubt that the current situation is very worrying. When the water authorities were set up under the 1973 legislation, the assets were transferred to the Welsh water authority and certain payments were made to Birmingham corporation. Everyone appeared to be satisfied because there was local authority representation on the water authority, giving some democratic control of the situation, but all of that is to go by the board and the assets are to be sold. It is not surprising that the leader of Birmingham corporation says that he would like £500 million for those assets. After all, they were paid for years ago and have served the water consumers extremely well. Important large assets ought to be transferred to the NRA. It is also important that local reservoir fishing rights, going back a very long way, should be safeguarded. They ought not to be sold off over people's heads.

For all those reasons, the amendments before the House should be accepted. There is a great deal of logic in them, and they would do much to improve the Bill.

Mr. Edward Leigh (Gainsborough and Horncastle) : I am delighted to take part in this debate--the longest today--because it will focus the attention of Parliament and the country on what ought to be one of the proudest achievements of this Parliament--the setting up, for the first time, of a national environmental protection agency, in the shape of the National Rivers Authority. That is something that no Government, of either party, has succeeded in doing. Government Members should welcome this long, four-hour debate, as an opportunity to say again and again that we are proud that, as the environment becomes more and more important in politics, we have taken this initiative, whereas no other Government has succeeded in doing so.

Mr. Allen McKay (Barnsley, West and Penistone) : Can the hon. Gentleman explain why it is necessary to confiscate the people's water and land to create a National Rivers Authority?

Mr. Leigh : I simply turn that question on its head : if it was unnecessary, why did the last Labour Government do it? Does the hon. Gentleman seriously believe that, but for privatisation, we would have the resources to set up the NRA? Of course, the answer is no. It is because of the pressures created by privatisation that we are setting up the National Rivers Authority.

I accept that in the country there are some doubts about this measure. That is hardly surprising. There is bound to be some doubt about any new measure. If food had been

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nationalised by the Attlee Government, there would have been concern. If we had food queues, and if the Prime Minister were to suggest the privatisation of food, there would be worries in the country. But that would not make it wrong to privatise food distribution, and I think we could show that food retailers are no profiteers but actually provide an excellent service in respect of an essential commodity.

Mr. Allan Roberts : Does the hon. Gentleman accept that the functions of the National Rivers Authority are those which are necessary, which do not result in profit, and that if they had been left with the water authorities that would have been a bar to successful flotation? Is not that the only reason for the setting up of the National Rivers Authority? Is it not a fact that Lord Crickhowell, who is chairman of the National Rivers Advisory Committee and will be chairman of the National Rivers Authority, has said :

"I think I should make it absolutely clear that I see it as one of the priority objectives of the National Rivers Authority to operate a slim, efficient, cost effective organisation"?

What resources will it be given?

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