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Mr. Allan Roberts : In the light of recent revelations that pesticides in the food chain are not easily identified, is the Minister still seeking, as he said he was in Committee, a lowering of the EC standard on pesticides in drinking water?
Mr. Howard : The hon. Gentleman knows perfectly well--he has had it explained to him many times--that all we want is a pesticide directive that is based on proper scientific standards. The present directive is not. We think that some standards should be higher and some should be lower than they are now.
Quite apart from the standards, we are specifying minimum sampling frequencies far higher than those in the European Community directive. Our regulations will specify monitoring frequencies for such substances as aluminium, iron and manganese which are at least four times higher than those in the directive. We are also specifying minimum treatment requirements which go beyond those in the Community directive.
To make sure that the companies are kept up to the mark, we are establishing a drinking water quality inspectorate with full powers to carry out thorough and technical audits of the companies' records and procedures. If a company fails to implement an inspector's recommendations, the Secretary of State will be able to make regulations requiring it to do so.
There is a new duty on companies to ensure no deterioration in the quality of their supplies, and there is a
Column 1178new criminal offence of supplying water that is unfit for human consumption. It is punishable by fines or imprisonment.
In Committee, the hon. Member for Dewsbury (Mrs. Taylor) wrongly alleged that the regulations would make it more difficult to monitor samples and obtain information. The truth is exactly the opposite. Information on water quality would have to be made available to the public in a manner that makes it absolutely clear whether supplies comply with standards, and, if they do not, what is being done about that. These information requirements are far more comprehensive than those proposed or enforced anywhere else in Europe.
Dr. Cunningham : Why is it that only the Secretary of State can initiate prosecutions in connection with the matter to which the Minister has just referred? Given the many months of inactivity by the Secretary of State in connection with the Lowermoor incident, in which 22,000 people-- possibly more--were poisoned by their domestic water supply, what confidence can the British people have that the Secretary of State will take whatever action is necessary?
Mr. Howard : Since, as I have said, the offence to which I have referred is a new offence which is not on the statute book, I do not understand the relevance of the hon. Gentleman's reference to Lowermoor. He is wrong even in the terms of his own question. It is not only the Secretary of State who can prosecute for this criminal offence--
Against this background, what do the Opposition propose? They have tabled two amendments which would require water companies to meet quality standards determined by the European Community, but not necessarily those specified in a Community directive. In other words, the requirements that will apply to drinking water in this country could be determined administratively at any time by Community bodies such as the Commission or even the European Parliament. So the Opposition would remove responsibility for water quality entirely from the United Kingdom Government and place it with officials in Brussels. I do not know whether this is to be the model for some of the other rethinking of Opposition policy about which we hear so much these days, but I cannot believe that the hon. Member for Copeland (Dr. Cunningham) is serious about these amendments or has begun to think through their implications.
The true colour of the Opposition's approach to these matters and the extent to which they care for the customer is to be seen in amendments Nos. 128 and 131, which would strengthen the position of local authorities in carrying out sewage work as agents for the sewerage undertakers. The Opposition cling to the view, in the face of all the evidence, that local authorities are the most efficient, the most economical and the best way of achieving the best possible results in the best of all possible worlds. Policy rethinks may come and go, but the slavish
Column 1179devotion of the Opposition to the local authorities which they control, and to the trade unions that control those local authorities, goes on for ever.
Amendment No. 1 would delete the whole of part II. We have waited in vain throughout this long debate for any explanation of how consumers would benefit from the amendment. Part II provides that European Community drinking water standards should be incorporated in regulations--in other words, directly incorporated into British law for the first time. What objection can Opposition Members have to that?
Part II makes it a criminal offence, for the first time, to supply water that is unfit for human consumption. Why do the Opposition want to remove that from the Bill? Part II provides for information on water quality to be published in a way that will make it absolutely clear whether water supplies comply with the standards set out in Government regulations and, if not, what the company concerned is doing about it. Why do Opposition Members wish to deny the public that information?
Part II proposes a new drinking water quality inspectorate with full and unprecedented powers to go in and carry out thorough technical audits of records, actions and procedures. Why are the Opposition opposed to that? Part II proposes a new and rigorous enforcement regime enabling the Secretary of State to specify action to be taken to remedy breaches of drinking water and other statutory requirements, a clear and open process under the scrutiny of the courts. If any Secretary of State unreasonably failed to take action where it was justified, he would himself be vulnerable to judicial review. Why do the Opposition want to remove those arrangements, which would safeguard the quality of our drinking water?
What about the powers of the director general to set prices and the customer service committees and guaranteed standards schemes and automatic refund payments? All those are contained in part II of the Bill. The Opposition's amendment would sweep away all these protections and safeguards for the consumer and we have absolutely no idea of what, if anything, they would put in their place.
Mr. Wigley : The Minister referred to the powers of the director general with regard to prices. Do the Government stick by their line that privatisation, as set out in part II, will reduce water prices in Wales by 25 per cent.?
Mr. Howard : That does not come from the Government. That report refers to the capital restructuring which will no doubt take place in the Welsh water authority, in common with other water authorities, when it is transferred to the private sector. The hon. Gentleman is well aware of that.
By aiming to remove all those protections for the customer, consumer and the citizen, the Opposition are being utterly consistent. Their record on these matters when they were in government was lamentable.
The hon. Member for Copeland used as the centrepiece of his speech the importance of having a coherent, well-planned strategic approach which, he said, we could have only in the public sector. Let us examine the extent to which the hon. Gentleman, as a member of the last Labour Government, was party to such a coherent, well-planned strategic approach to these matters. Let us consider bathing waters.
Column 1180In 1975, the European Community adopted the bathing waters directive which laid down standards and required member countries to designate bathing waters which would be required to meet those standards within two years. Four years later, the Labour Government left office and not a single bathing water had been designated between 1975 and 1979. That is the coherent, well-planned strategic approach to the industry in the public sector which the hon. Member for Copeland commended.
Where was the hon. Member for Copeland at the time? He was a member of that Government and shared collective responsibility for their actions. The Labour Government had only two years to designate a bathing water, and the hon. Member for Copeland was a member of that Government, but they did not designate one during that time. What did he do about it? What did he say? Where was he?
What about the Control of Pollution Act 1974 which was placed on the statute book by the Labour Government? They inherited that from their predecessors. It looked good on the statute book, but part II dealing with river pollution was not brought into force throughout that Labour Government's term of office.
Totally inadequate and ineffectual regulation was carried out behind closed doors. There was no right of public involvement in decisions on consents to discharge into rivers and no right of private prosecution of polluters. The Labour Government had no idea of the performance of water authority sewage treatment works and they did not even bother to find out. Where was the hon. Member for Copeland? What did he do? What did he say? Where was the coherent, well-planned, strategic approach that one is supposed to find only in the public sector? We all know about the cuts in investment, about river pollution, and about enforcement being left in the hands of the water authorities.
It is this Government who are tackling the task of cleaning up our water environment. We have embarked on the most comprehensive programme to clean up rivers in our country's history. We are introducing an open system of effective regulation where there was none. We are giving the public the right to be involved in decisions on consents to discharge where there was none. We are the Government who have introduced a system of sewage works discharge consents, and performance standards against which they can be measured, where there was none, and we have opened the whole thing up for public inspection.
We are the Government who have given the public the right to prosecute polluters, and we are introducing for the first time the new criminal offence of supplying drinking water that is unfit for human consumption.
Yesterday, the House debated the National Rivers Authority, which will be at the centrepiece of our new regulatory system. That authority and all the other provisions will count for nothing if we do not transfer the industry to the private sector. That point was made by several of my hon. Friends, including my hon. Friends the Members for Cambridgeshire, South-West (Sir A. Grant), for Bury, North (Mr. Burt) and for Gainsborough and Horncastle and, in an intevention, by my hon. Friend the Member for Wirral, South (Mr. Porter). They all put their finger on it. It is only when the industry is in the private
Column 1181sector and has access to private sector resources and is benefiting from all the efficiency of the private sector that we shall see improvements.
The truth is that privatisation alone will ensure that the environmental achievements we all want to see are made as quickly as possible. The Government will set the standards, the regulators will police the standards, and the companies will deliver the standards using private sector resources. That is the way we shall get fresher rivers, cleaner bathing waters and purer drinking water. That is why the Opposition's amendments are wholly misconceived, and that is why our proposals deserve the wholehearted support of the House.
Mr. Allan Roberts : The hon. and learned Gentleman is becoming a caricature of a Minister under threat. I am not surprised that, except in the closing minutes of his speech, he spent all his time on the minutiae of the Bill and did not address the major issues of principle. We are opposed in principle to the privatisation of water. That is why we have proposed an amendment to exclude part II of the Bill.
The hon. Member for Batley and Spen (Mrs. Peacock) is quoted in the Yorkshire Evening Post for 3 March 1989 as commenting : "Water is a natural commodity which cannot be commercially and competitively produced. Rainfall is not an area of entrepreneurial activity."
I notice that the hon. Lady is not in her place, but she is one Conservative Member who has got it right.
The Government are in a mess. The Bill has been badly presented. It is badly drafted and ill-conceived. The Government are finding that it is unpopular throughout the country. What do they do? They summon up the cavalry to charge to their assistance, ten good men and true--the chairmen of the water authorities, members of the Water Authorities Association--and an independent group if ever there was one. Surprise, surprise--10 supporters of the Conservative party, all appointed by Conservative Secretaries of State, think that privatisation is a good thing. I am not surprised. We know what will happen to the salaries of the directors of water authorities after privatisation. The top executive remuneration in British Airways before privatisation in 1979 was £45,000 at 1988 prices. In 1988 it was £253,000. In 1979 the remuneration of top executives at British Gas was £49,000 at 1988 prices. In 1988 it was £184,000. It has happened in every other privatised industry, so it will happen in the water industry. I am not surprised that the chairmen are in favour of privatisation and gallop to the assistance of a Government in a mess.
Leaving aside the chairmen of the water authorities, there is great concern among Conservative Back Benchers. The right hon. Member for Henley (Mr. Heseltine) galloped to the rescue of the Government and we have heard speeches from other Conservative Members along the same lines of the proposals advocated by the right hon. Member for Henley in yesterday's debate. The right hon. Member for Henley was Secretary
Column 1182of State for the Environment in 1987-88, but he has suddenly discovered the answer to the Government's difficulties. There will be massive increases in water charges to pay for environmental improvements in future. The consumer will have to pay. The right hon. Member for Henley and other Conservative Members have decided that it would be better if those improvements were paid for out of public expenditure, but they have not said that. They have said that the Government should sell the water authorities to the private water companies and then give back the proceeds of the sale to the private companies to spend on environmental improvements.
The right hon. Member for Henley should examine his own record. At 1987-88 prices, using GDP deflators, £1,062 million was spent in water authority capital expenditure in 1979-80. In 1980-81, under the right hon. Member for Henley, the figure was £1,026 million, and in 1981-82 was £938 million. There was a massive cut in water authority capital expenditure while the right hon. Gentleman was Secretary of State for the Environment. However, he tends to have conversions on the road to Conservative party leadership elections.
I must deal with some of the myths that the Government are creating in their attempt to justify the outrageous proposal to sell off our water assets. There is the myth that only privatisation can provide the capital expenditure to carry out all the necessary work. It will cost £3 billion to implement the EEC directive on drinking water and £1.6 billion to deal with sewage discharges above consent level. It will cost £1.3 billion to implement water metering, and the Secretary of State talks about a cost of £600 million to clean up our bathing beaches-- and that is just the ones that he has identified. There will be the additional costs of dividends, profits for the shareholders and the servicing of shareholders which are not paid when the industry is in the public sector. There will be flotation and advertising costs, and the directors' fees which, as I have pointed out, will be grossly inflated. Consumers will have to pay corporation tax which is not paid by the public sector industry. All those expenses will have to be paid in addition to the capital expenditure required to clean up our rivers.
What investor seeking a return on capital would buy responsibility for the capital expenditure required to clean up the Mersey and all the other rivers in this country? No one in his right mind will buy into that responsibility if there is no return and no profit to be made from the proposals. The Government say that there will be private capital and that they will release the publicly-owned water industry from the public sector borrowing requirement. Why can they not release the publicly-owned water industry from the public sector borrowing requirement? It would be borrowing the same money from the same source, and for the same purpose--to improve quality and for capital expenditure.
The Government say that the consumer must pay, not the taxpayer or the polluter. Under their proposals, environmental considerations will come second to profit. That is why we seek to delete part II of the Bill. Clause 6 sets out general requirements to achieve profitability, economy, efficiency and return on capital. Clause 7, which relates to general environmental responsibilities, is a secondary consideration and is subject to clause 6. We want to delete part II because prices will rise if it is
Column 1183implemented, partly because of environmental improvements but also as a consequence of privatisation and the costs that I have outlined.
We want a proper National Rivers Authority to be given wide-ranging powers over the water undertakers. The attraction for water undertakers and possible investors would fall if that happened and the price that the Government hope to realise through the flotation would be low. The Government are in a flotation dilemma. If the legislation gave the National Rivers Authority power to enforce environmental standards, and if the Director General of Water Services had sufficient power to control prices adequately, no one would buy shares in the flotation. The Government know that if EEC directives on the quality of drinking water had been written into the Bill, as we proposed in Committee, everyone would be deterred from buying shares in the privatised water companies.
Lord Crickhowell, who is chairman of the National Rivers Authority advisory committee and will be chairman of the National Rivers Authority--another independent individual appointed by the Government--is on record as saying :
"I think I should make it absolutely clear that I see it as one of the priority objectives of the new National Rivers Authority to operate a slim, efficient, cost conscious organisation."
That cost-conscious organisation will have inadequate resources to enforce necessary environmental standards and will sub-contract many of its responsibilities to the private water companies, establishing the gamekeeper and poacher as the same body.
The Opposition and the public are offended by the callous disregard shown by the Secretary of State and Conservative Members for those in the greatest need, introducing a regime which will cut off people's water if they have difficulty paying bills without regard to the public health of the nation. If people's electricity is cut off, it is bad for them and their families. If their water is cut off, it is not just bad for them and their families--it is a public health hazard and it is bad for the whole community. The Government fail to realise that. [Interruption.] It is obvious that the Secretary of State has not been drinking much water with his dinner.
The issue of principle for which we are arguing would keep this essential public asset in public ownership. The next Labour Government will take the water industry back into social ownership-- Sir Anthony Grant rose --
I refer finally to the Prime Minister's statement at the weekend : "Bag it and bin it and then we will win it."
She must have been taking lessons from Dan Quayle, but Mrs. Thatcher is no Dan Quayle. The only way out for the Government and their bankrupt policy for the water industry is to take the Water Bill and bag it and bin it. That is their only hope.
Question put, That the amendment be made :--
The House divided : Ayes 199, Noes 300.
Division No. 132] [10 pm
Abbott, Ms Diane
Adams, Allen (Paisley N)
Archer, Rt Hon Peter
Column 1184Ashley, Rt Hon Jack
Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Benn, Rt Hon Tony
Bennett, A. F. (D'nt'n & R'dish)
Bray, Dr Jeremy
Brown, Gordon (D'mline E)
Brown, Nicholas (Newcastle E)
Brown, Ron (Edinburgh Leith)
Bruce, Malcolm (Gordon)
Buckley, George J.
Campbell, Ron (Blyth Valley)
Campbell-Savours, D. N.
Clark, Dr David (S Shields)
Clarke, Tom (Monklands W)
Clwyd, Mrs Ann
Cook, Frank (Stockton N)
Cook, Robin (Livingston)
Cunningham, Dr John
Davies, Rt Hon Denzil (Llanelli)
Davies, Ron (Caerphilly)
Davis, Terry (B'ham Hodge H'l)
Dunwoody, Hon Mrs Gwyneth
Evans, John (St Helens N)
Field, Frank (Birkenhead)
Fields, Terry (L'pool B G'n)
Garrett, John (Norwich South)
Gilbert, Rt Hon Dr John
Godman, Dr Norman A.
Golding, Mrs Llin
Griffiths, Nigel (Edinburgh S)
Griffiths, Win (Bridgend)
Harman, Ms Harriet
Hattersley, Rt Hon Roy
Heffer, Eric S.
Hogg, N. (C'nauld & Kilsyth)
Home Robertson, John
Howarth, George (Knowsley N)
Howell, Rt Hon D. (S'heath)
Howells, Dr. Kim (Pontypridd)
Hughes, John (Coventry NE)
Hughes, Robert (Aberdeen N)
Hughes, Roy (Newport E)
Hughes, Sean (Knowsley S)
Jones, Barry (Alyn & Deeside)
Jones, Ieuan (Ynys Mo n)
Jones, Martyn (Clwyd S W)
Kinnock, Rt Hon Neil
Lestor, Joan (Eccles)
Lloyd, Tony (Stretford)
Macdonald, Calum A.
McKay, Allen (Barnsley West)
Mahon, Mrs Alice
Marek, Dr John
Marshall, David (Shettleston)
Marshall, Jim (Leicester S)
Martin, Michael J. (Springburn)
Michie, Bill (Sheffield Heeley)
Mitchell, Austin (G't Grimsby)
Moonie, Dr Lewis
Oakes, Rt Hon Gordon
Orme, Rt Hon Stanley
Owen, Rt Hon Dr David
Pike, Peter L.
Powell, Ray (Ogmore)
Quin, Ms Joyce
Rees, Rt Hon Merlyn
Reid, Dr John
Roberts, Allan (Bootle)
Ross, Ernie (Dundee W)