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Column 107Bill is right. Until the authorities get outwith the control of Government, they will not be able to manage and develop their assets on a long-term basis without intervention.
The case can be made for central control. In replying to an earlier debate, the hon. Member for Bootle (Mr. Roberts) made it clear that the next Labour Government would take the authorities back into what he loosely termed social ownership public control. But the case for bringing them back into public control by the Government is even thinner than that for going back to municipal control. Surely the water industry must now be recognised for what it is--a modern, effective, well-managed range of public utilities. It is a capital-intensive industry, operating scientifically controlled systems for the distribution of pure water, with a complicated computerised system for cleansing foul water by biological and chemical processes. In addition, it has a high standard of efficiency.
When one thinks that the water industry has had to contend with a rapid growth in demand not only from the ownership of houses and of the developments that that brings but from changes in industrial technologies that require huge uses of water, one would have to be remarkably complacent to argue that the water industry has sold the country short. It has not. It has managed to keep pace with domestic demand created by the washing machine, the car wash, and all the other demands made on the public water supply by domestic consumption, for a daily cost that currently averages 29p to 30p per household, not per person. For that cost to be regarded in 1989 as a significant impost for an amenity that, as the hon. Member for Brecon and Radnor was so keen to argue, is essential, irreplaceable and God -given, is absurd. A cost of 10p per day for each individual is far from high. No one can deny that the water industry has made that possible by its policy of developing new technologies and new effort.
The major argument for privatisation is that it will allow a major service industry that has long outlived its municipal founders and has outgrown its need for central Government constraints to take its place in the private sector. That is the main reason for the Bill, and it is why the Bill deserves, and will have, my support. I do not believe that the statutory water company is a relevant model to the scale of the water authorities, their regional basis, and the range of services that they currently provide. They are not a model for what a locally based statutory company can do. It must differ radically in its management skills and experience, and in the range of the assets that it can produce.
Mr. Nicholas Baker : My hon. Friend refers to the great record of water authorities in coping with increased demand arising from developments in certain parts of the country. Does he agree that a connection charge, which is now subject to discussion, would benefit privatised water companies in providing a good service to the consumer and ensure equity between existing consumers and the developers of new housing estates, which would be highly desirable and a fair innovation?
Sir Giles Shaw : I entirely support my hon. Friend. I was glad to note that in a recent speech my hon. and learned Friend the Minister for Water and Planning said that he was still looking for a way of putting such a provision into
Column 108the Bill. I wish him well. I hope that he will not be put off by the fact that it will be difficult and that officials say that it is impossible. Good political leadership of the kind that I am sure my hon. and learned Friend can provide should see such a measure put in the Bill.
The second reason for privatisation is that it will allow the regional quality of water authorities to develop when they become plcs, providing an important opportunity for regionalisation to take a lead. The regions have their different needs and priorities, and I welcome the prospect of strong regional shareholdings in the regional plcs. I should like to see not only preferential treatment given in the flotation plans to employees and customers, as I am sure is my hon. and learned Friend's view, but a proportion of the stock made available only to regional investing markets, such as Birmingham, Newcastle and Leeds, so that we may ensure that there will be a placement of stock to the benefit of local institutions and companies. Until now, far too little attention has been paid in privatisation to the regional markets. We are presented with a classic opportunity to put that right.
Mr. Simon Hughes (Southwark and Bermondsey) : The hon. Gentleman ignores the fact that proper representation of regional interests currently exists but with the Bill as it stands the probability is that, in future, the regions well represented will be foreign and not British. Is that not a valid criticism, and one which argues in favour of the current arrangement being retained?
Sir Giles Shaw : The hon. Gentleman will understand that there is a golden share, which is designed to prevent the development that he mentions. However, I agree with him in principle. I am not one who believes that the Battle of Britain was won on the motto "Per ardua ad Perrier". We should do what we can, by strengthening regional shareholdings, for example, to make it very difficult for French investors to obtain shareholdings in this country.
Ten separate regional businesses will be established, offering a unique and imaginative opportunity that I trust the Government will prosecute vigorously, so ensuring that at least one aspect of water privatisation will have much more public acceptability than at present.
The third reason for privatisation is that it will allow British water management and technology to compete across the world. It is an amazingly large market. In my brief time at the Department of the Environment, I took the first British water mission overseas. We went to the French Cameroons.
The French Cameroons desperately needed new technology, because its cities failed to comprehend that most of their population lived below the water level. The overseas market for British technology can be released only after the industry's privatisation. That is exactly what should be done. If we accept EC standards, as we are required to do, it should be recognised that our water industry has developed against a history of fast-flowing rivers for the transportation of drinking water as well as for the disposal of sewage and of foul water. The way in
Column 109which continental standards are to be applied seems to ignore our particular aquatic advantages, which we seek to retain.
The fourth reason for privatisation is that it fits extremely well into the Government's policies for its third term of office. Our first term was dedicated to containing inflation, restoring sensible economic policies, and releasing industry and commerce so that it could expand on the basis of competitive quality and price. Managements were given the power to manage, and unions were made accountable to their own members. In our second term, we took great advantage of the public sector by returning it to the private sector, and in industry and in housing there was a massive increase in capital ownership. We have substantially spread the benefits of ownership, and with that has come a greatly reduced demand for tax revenue. Now is the time, in the Government's third term, to tackle major social issues such as health, education, social provision and the environment.
The Government's environmental policies are epitomised by the Water Bill. Only now can we afford evironmental policies of that kind. The environment is one of the most expensive areas in which to legislate and in which to create change. The water environment in particular requires the massive release of resources and an unshackling from the controls that have been applied at a municipal or central Government level in the past. There will be changes in respect of conservation, access and sporting uses, and there will have to be better provision and more flexible policies.
There will undoubtedly be increased costs, in terms not only of the investment that is still required but of ensuring higher standards of river quality, drinking water quality, and of amenities. At a current daily cost of 29p to 30p per household, we are not paying enough for the range of services that we enjoy. I shall be very happy to see increases in water charges, if they bring with them the scale of benefits that I am sure that a new and environmentally sensitive policy will bring.
For something that is as important as water, we should be asking how its price per head compares with the other amenities that the British consumer enjoys. Is 10p per head per day enough? Is that a reasonable price to pay for four or five gallons of water per head? Should it be 12p or 15p? In relation to the cost of other amenities that the consumer currently enjoys, water is excessively cheap. [ Hon. Members :-- "Oh!"] Hon. Gentlemen may roar, and they are entitled to do that, but there is no doubt that water in this country is cheap and that we are perfectly entitled to say that, given the controls being placed on price by the National Rivers Authority and the director general, some increases will be essential and that we should not try to destroy those increases when they are proposed. My fifth and final reason is that this has been a commitment that the Government have undertaken for a considerable time. We made it an election commitment the last time we went to the country. It is something which has been worked on for a long time. I am confident that now is the right time to proceed. But if we have confidence in the Bill, I am bound to say that we look to the Government for a further demonstration of their own confidence in the industry. For example, I am not satisfied with merely a 51 per cent. hold on water privatisation. Why cannot it be 100 per
Column 110cent., particularly as we now have provision for golden shares and so on? Why cannot 100 per cent. of the water equity be made available? Why confine it to 51 per cent.?
We must also ensure that in the way in which the National Rivers Authority and the director general control the private sector water companies there is a fair relationship between the two. I hope very much that the NRA will not be a large, central, bureaucratic body but will break down into regional authorities and that this regional representation will have a much closer link with the water plcs than is perhaps envisaged in the Bill. If that comes about, as we look to water privatisation being fulfilled, there will be a genuine meeting in the regions between the controllers and companies to see that both get a fair share of the hearing that is necessary before controls are implemented to the disadvantage of either.
All in all, water privatisation is a sensible measure. The Bill is a sensible way of taking it, and I wish it well.
Several Hon. Members rose --
Mr. Tom Pendry (Stalybridge and Hyde) : I will adhere to Mr. Speaker's request for brevity. As one who represents a north-west constituency and is sponsored by the National Union of Public Employees, which has many thousands of members employed in the water industry, I share the view of my hon. Friend the Member for Copeland (Dr. Cunningham) that the Bill ensures that the people have to pay a high price for Tory dogma, because the Bill is part of an ideological crusade and has nothing whatever to do with water quality or efficiency.
After all, this labour-intensive industry has a pretty good productivity record. Productivity has risen by over 33 per cent. in the past decade, yet the cost to the consumer is, on average, six times cheaper than in West Germany and four times cheaper than in France.
Unlike the Member for Pudsey (Sir G. Shaw) I take great pride in the fact that we produce cheaper water. I hope that the Pudsey Times will pick up that bit of his speech to make it clear that he is in favour of higher prices for water. The water industry even exceeded the target rate of return on assets set by the Government last year by a factor of one third.
This is, therefore, an efficient industry, staffed by workers who care for it. So why must the Government meddle with it, force prices up, reduce pollution safeguards and introduce diseconomies of scale by more than doubling the number of water and sewerage authorities? On top of this is the attack on the workers in the industry themselves. I give one clear example--and I hope that the Minister of State is listening.
I was given an assurance in a written answer from the Under Secretary of State that workers would have the right to a pension scheme with the same benefits and contributions as at present. The Under-Secretary of State said :
"existing employees will have the right to remain in a pension scheme with the same benefits, and requiring the same contributions, as the Local Government Superannuation Scheme, of which they are members. Any provisions necessary to secure this position will be included in the legislation to privatise the water authorities."--[ Official Report, 16 November 1987 ; Vol. 122, c. 417. ]
Column 111What do we find in the Bill? Water employees will be able either to keep their existing pension scheme when they move into a new private company or join a new and so-called "improved" scheme. The catch is that the old scheme will have its index-linked benefit removed and the new scheme will not replace it. For the Government to have refused to guarantee the pension benefits accumulated over decades by NUPE and other members is a disgrace. The Minister clearly misled me, the House and, more important, thousands of workers in the industry with that reply in November 1987. Perhaps the Minister, who is now looking to his officials, will tell us why he misled us all on that occasion.
It is clear what sort of water industry we shall be faced with, should this Bill be enacted. It will be one that skimps and muddles through at the expense, not only of consumers, but of water workers as well, because it is clear that the £250 million saved from index-linking will be used to sweeten privatisation.
The changes will be worst of all in the area that some of my colleagues and I represent in the north-west. My region has not only the oldest and most decrepit infrastructure in the country but by far the largest landholding. My constituents will doubly lose out, from a lack of investment and a loss of open land. Of the 150,000 acres of water company land, a substantial proportion is in or next to my own constituency. New, profit-motivated water companies will be under pressure to dispose of land which is declared non-operational. I have no doubt that as soon as water is privatised we shall see vast tracts of unspoilt land declared non-operational and sold for a large profit, a profit which will not be passed on to our constituents by way of cheaper water bills.
The Government claim that recreation will be safeguarded in this Bill, not least by the National Rivers Authority. This is the same National Rivers Authority that the Secretary of State has said should employ as few people as possible. How on earth can a small body with its hands tied keep tabs on pollution discharges, on water quality and on recreational use throughout the country?
It is not, perhaps, surprising that the Under-Secretary of State, the hon. Member for Lewisham, East (Mr. Moynihan) is connected with the Bill. After all, he is doing his level best to demolish our national sport of soccer with his ridiculous Football Spectators Bill. As has already been stated in Committee, I would not be surprised, if he has his way, to see turnstiles installed on country walks, cliffs fenced off for use by climbers with ID cards and reservoirs surrounded by barbed wire to stop people fishing. He really ought to listen to his former friends at the Central Council for Physical Recreation. They are particularly worried that their demands for statutory safeguards for recreation have been ignored, particularly in regard to the fate of the 190 reservoirs used for fishing and water sports. The Minister responsible for sport should be ashamed that he was unable to persuade his unsporting boss or bosses of the merits of the CCPR case.
The other place, however, may well come to our rescue, not for the first time, to stop this potentially damaging Bill becoming law. I believe that there is a case to be heard as to whether this Bill is hybrid. I hope that the Government will give considerable thought to that possibility, as will, I am sure, the House of Lords.
Column 112My own council of Tameside is investigating a possible loophole in the Bill. My authority has certain historic rights through the ownership of the lordship of the manor of Mottram in Longdendale, an area containing much water authority land. The ownership of this manor and its rights can be traced back to Henry VIII ; the rights, which were reserved indefinitely in 1922, include fishing, grazing, wood collection and even turf cutting on the land. These historic rights, bequeathed to the people of the aera, surely cannot be usurped by a private water company. The land was originally removed from a Sir William Stanley, a knight of the area, who was found guilty of high treason. As one who does not believe in capital punishment, I would draw back from suggesting that the Secretary of State and his Ministers should encounter the same fate as Sir William for their part in this treasonable Bill, but they should and will get their come-uppance from the electorate. The Prime Minister, judging from her public utterances on the way in which this measure has been promoted by her Ministers, is only too well aware of that probability.
The Bill will continue to be opposed by Opposition Members as the dangerous, damaging nonsense that it is. More importantly, as every poll shows, it will be opposed by the millions of our electors who believe that water is essential to life itself and must remain a public service.
Mr. Beaumont-Dark : This Bill is the most recent in a long line of privatisation measures. I agree with privatisation as a philosophy. I think that it is nonsense for the state to own assets for the sake of owning them. That becomes an ideology only when the assets can be sold and used for better purposes. Privatisation of, for instance, British Airways, British Telecom and the Trustee Savings Bank--and in due course, I hope, British Rail and British Coal--is, in my view, acceptable and fair. The sensible criterion applied to all our privatisations so far has been the existence of another source of supply--the existence of competition--and clearly competition will exist following the privatisations of British Coal and British Rail. I did not understand the Minister--I often do not understand him, although I am sure that that is my loss--when he said that British Gas was a monopoly. Heating can be provided by oil, electricity or even Calor gas. The reason why I have voted for privatisation until now is that I dislike state monopolies, quite apart from not liking the state to tell anyone what he should or should not do. If I dislike state monopolies because they stand astride people's lives, I dislike private monopolies even more. Private sector involvement helps efficiency where there is competition, because a private person needs to make a profit to make investment in the service worth while. Ministers speak of erecting walls. In the City, Chinese walls were proposed. I do not doubt Ministers' good faith, but private companies will attempt to climb such walls and even to demolish them, and in the main they will succeed. That is the spirit of the animal of free enterprise, and there is nothing wrong with it when competition is there to hold it in check.
With respect to the hon. Member for Brecon and Radnor (Mr. Livsey), it is not a good argument to say that water comes from Heaven. Unfortunately it does, usually on bank holidays, but that is not an argument for it remaining in the public domain. Water, as we all know,
Column 113must be treated, and it costs hundreds of millions of pounds before it reaches our tanks. If state monopolies are to be feared, I tremble before private monopolies. That is why I believe that the Government are wrong, although I have supported them on every privatisation issue until now.
Let me say in all seriousness that the water in Birmingham is not the Government's to sell. Back in the mid-1800s, Joe Chamberlain borrowed tens of millions of pounds because Birmingham's water was foetid, as was most water. By 1850 Birmingham had more direct sewerage and cleaner water than that great empire of the sun in Japan has today. Birmingham's ratepayers were put in hock so that the people could have good water. All the water that we have--in the Elan valley, and everywhere else in Wales--was paid for out of Birmingham ratepayers' money, freely negotiated.
I was chairman of finance when we were discussing what we would do when the Severn-Trent water authority was set up. It was agreed that we would go along with it, but that it would remain under local government control. Now, however, that agreement has been swept aside unilaterally, because we all know that Governments can do what they--
Mr. Ashby : Has my hon. Friend compared the colour of Birmingham's water with that of the water in, for example, London? Has he observed that the water in Birmingham is brown, and has been for about 120 years? That water is in the public sector. Is not the reason the lack of necessary investment over the years, and is that not why this Bill is such a good Bill? Has my hon. Friend not considered the people of Birmingham?
Mr. Beaumont-Dark : With the greatest respect, the only reason that I can think of for my hon. Friend's argument that Birmingham's water is brown is that he puts too much whisky in his water. It is patent nonsense. My hon. Friend may get away with conning juries, but he could not get away with conning the people of Birmingham in that way.
We agreed that, as long as it remained under proper control, we would go into the Severn-Trent. Now we are going to sell it off because the Government insist. Quite rightly, if they can get Bills through the House, Governments can do what they will. We feel, however, that much of the money invested at the expense of Birmingham ratepayers needs to be spent to combat some of the problems experienced by Birmingham, as by other cities. If the Government wish to be honest to people, they should recognise that-- if cost inflation is taken into account--Birmingham is being robbed of over £500 million of ratepayers' money. That is an incontrovertible fact. This concern is not the Government's to sell. If they insist in bludgeoning such a Bill through the House, they should at least be honourable enough-- as I know that they will be in the end--to ensure that Birmingham people at least get back what they invested.
I believe that the Bill is fundamentally flawed. It will be not only flawed but dishonoured if, having broken unilaterally an agreement reached in fairness, we proceed in this way. If the Birmingham ratepayers, who looked after Birmingham's people properly for more than 140 years, find that what we did in honour has been dishonoured by a subsequent Government, I do not think that they will understand--and nor will anyone else who appreciates the ethics of business.
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Mr. Gareth Wardell (Gower) : This House is known throughout the world as the mother of parliaments. As Members, we cherish the example and traditions of our democracy that for centuries Britain has spread throughout the world. Yet today we are debating a Bill which is opposed by at least three quarters of the people of this country.
The polls show that at least three out of every four people oppose this sell-off of water, and nothing that the Government have said, from the time the proposals contained in the measure were first announced, has changed the public's position over the unsoundness of the step that is now being taken.
If the Government had any concern for the wishes of the people, the Bill would have been abandoned long ago. Instead, as the hon. Member for Brecon and Radnor (Mr. Livsey) pointed out, complacent in their majority in the House, they have chosen to abandon their responsibility for large sectors of public health and environmental protection inherent in the water industry.
Increasing water pollution in Britain is one of the major concerns of those of us who care about our environment and that of future generations. It is one of those few areas of environmental concern where we can, as a nation, clean up our own backyard without reference to, or co-operation with, other countries. Yet despite their professed concern, the Government have chosen to wash their hands of the responsibility for halting and reducing the gross pollution of our rivers and seas.
No matter how much the Government wriggle and postulate about public spending 15 or 20 years ago, it is a fact that, when the Government introduced external financial limits on the water industry in 1981 and subsequently, they deprived water authorities of the wherewithal to invest adequately in schemes to cope with the pressures of pollution of rivers and seas.
Britain's rivers, the first in the world to be polluted by effluent from sprawling towns and industries during the industrial revolution, governed only by laissez-faire light-handedness, were the first to be cleaned up by public spending and investment. Now they are being fouled again at an unprecedented rate.
About one tenth of our rivers have degenerated to class 3 and 4, being polluted or unable to sustain marine life. The number of cases of river pollution in England and Wales increased last year to 23,000, nearly double the 1982 figure. Obviously, when one third of the nation's drinking water is extracted from those rivers, there is an increased risk to public health, either from the water or from the additives that are put into it to make it safe to drink. Obviously, there is a danger to fish stocks and marine life. Obviously, our environmental heritage and facilities for water -based recreations are being limited.
The Government have responded by increasingly limiting the amount that local authorities can spend to deal with the problem. The Government have reduced their pollution inspectorate, cut funds and opportunities for research and failed to legislate to ensure that polluters pay for their actions.
Now that the EEC has stepped in and said that they must find £1.6 billion to obtain minimum standards of pollution control, the Government have designed a way of selling off that responsibility. The Government can find
Column 115£10 billion to repay some of the national debt. They cannot--no, they will not--find £1.6 billion of investment to halt the decline in water quality that they have overseen.
This sell-off of responsibility will be subsidised by all of us. An industry independently valued at £27 billion will be disposed of for between £5 billion and £7 billion. What a gesture. How sweet it must be to operate on such a grand scale. On our behalf, a £20 billion discount is being given--that on behalf of 75 per cent. of the electorate who oppose it.
It is a pity that the grand scale obscures little, nitty-gritty problems that are inherent in the Bill and that would cost little to put right. They would certainly not cost billions of pounds. I refer, for example, to unadopted and unadoptable sewers.
Because the water authority criteria for adopting sewers, laid down in 1974, were allowed to differ from building regulation requirements ; because developers were quick to maximise profit and slow to improve standards ; and because local authorities were not empowered to enforce section 18 agreements on developers in planning permissions, hundreds of thousands of householders are left today with sewers serving their properties which are not, and which can never be, adopted, for example because pipes are too small or because they cross private land. Those householders face increasing costs to repair and maintain those sewers.
The Government were set for a blanket adoption of those sewers in the Bill, but they changed their mind. Now they appear to be saying that householders should have known about the problem and that, if they did not, their solicitor was negligent in not informing them. I gather that I should now advise my constituents--2,500 of them in one district authority alone in the area--that they should sue their solicitor. It promises to be interesting.
But the Government, set on their grand sell-off, have their mind on higher things. One is the NRA, which the Government claim is their passport to the greatness of the greens. The Government have established the NRA to monitor river and coastal pollution. It is ironic that they should have established it at a time when they will not have to provide the money to run it.
We are told that the NRA will monitor pollution and ensure that the polluter pays. I fail to see how that will be brought about. The legal maximum penalties for polluters, such as industry and farmers, are inadequate to the point of ridicule. Water authorities are virtually exempt from prosecution. Yet one in five of Britain's sewage works is breaking the law by discharging sub-standard waste into rivers. Untreated sewage leaks into rivers from 5,000 recorded sites. Storm overflows are exempt from all controls, yet in periods of heavy rainfall they deposit tons of untreated waste and sewage into seas and rivers.
The Bill allows water plcs to maintain indefinitely their privilege of non- prosecution. Water authorities do not prosecute themselves. Once the Bill becomes law, the NRA will not be able to prosecute. The Government say that the water industry pollutes too often and on such a large scale that it would be unreasonable to expect it to stop. So much for the powers of the NRA. The NRA will be unable to do anything, other than complain, about this form of pollution.
Column 116It is reasonable for the public to expect that, when shareholders grab control of the water industry--when water charges increase to make up for the lack of past investment--those shareholders should have definite responsibilities for ending this scale of pollution. I am cynical about this whole Bill. My cynicism derives from many many factors, but I will mention just one. For many years after the issue of the EC directive on bathing waters in 1976, the Department of the Environment defined a bathing beach in such a way that, in Wales for example, there was not a single bathing beach to which that directive could apply. My cynicism continues. Responsibility, as opposed to ideology, is not prominent in the Government's vocabulary, but it is understood that responsibility--or lack of it--is what this Bill is about. That is why three in four people oppose it. That is why we call on the Government, even now, to abandon these proposals and to allow common sense and the public interest to prevail. 8.11 pm
Mr. Robin Maxwell-Hyslop (Tiverton) : At the last election I declared my opposition to proposals to nationalise--and I mean nationalise- -the water and sewage disposal industry. We have heard a lot about privatisation, but it may be that some of my hon. Friends do not realise that this is the largest nationalisation measure that any Conservative Government will ever have passed.
When the question of privatising water was first mooted several years ago, I kept pointing out in the House that, unlike any of the other industries that were to be privatised--industries whose equity was vested in Ministers of the Crown--this one was not owned by the Government. This Bill, first of all, nationalises the entire water and sewage disposal industry, so all my colleagues who vote for the Third Reading tonight will be voting for the largest nationalisation measure ever offered to the House by any Conservative Government--and it is well that they should realise that. I certainly shall not be voting for it.
Privatisation only follows prior nationalisation under this measure. When I say that, it is not vested in any Minister. As has been pointed out already, in the representative case it was paid for in the first place by local authorities, or by combinations of local authorities, which raised the money by means of loans, and serviced those loans and repaid them by charges on the ratepayers--not just on the users of water and sewers. That was when the systems were owned by local authorities.
Of course, it is not true, as some facile hon. Members would have us believe, that water is in free supply--it most certainly is not. The cost of impounding it, the cost of pumping it, the cost of the distribution system, the cost of renewing old, inadequate and rotten distribution and sewerage systems, are immense, so a lot of investment is required to replace the rotten water supply systems and the inadequate and rotten sewerage systems. But we do not have to have this Bill in order to get the external financing limits that are necessary to do that. We do not have to have this Bill, lock, stock and barrel, in order to have a National Rivers Authority, with its functions ; we could perfectly easily have had a Bill separating the functions of policing and inspection from the functions of supply and
Column 117distribution. That arrangement would most certainly have had me in the Division Lobby voting for it. It would have been an entirely sensible thing to do.
The greatest single benign characteristic of the Water Act 1973 was that it brought together the supply of water and the disposal of water after it had been used. The previous absurdity was that some authorities poured effluent, more or less--very often less, rather than more--purified, into rivers, and lower down the system other authorities extracted the water in order to supply it as allegedly fresh water. Of course it made sense to amalgamate those two functions. Unfortunately, what the 1973 Act did was make the poacher and the gamekeeper the same person--and that arrangement has never worked.
Anyone who lived through the torment of the pollution of the fresh water supply in north Cornwall, for instance, will know what I mean. I do not believe that the South West water authority prosecuted itself, although, quite rightly, it prosecutes others for polluting the public water supply. The NRA, if it is to be other than a laughing stock, will have to have ministerial sanction--not only sanction, but encouragement--to prosecute the water and sewerage authorities if they do not reach the necessary standards of purity. But how separate will the gamekeeper be from the poacher? In many areas the gamekeeper will not have his own laboratory for testing the water supply and the effluent, and will have to use the poacher's laboratory.
Of course those functions are different. I would not wish to say that water companies will set out to supply polluted water. Of course they will not, because, unlike the present system--under which, if the authority is sued, it is the consumers who pay--if a private owner is sued, it is the shareholders who will suffer. That is certainly benign.
I could have been persuaded to support this measure if all the revenue, all the receipts from the sale of these assets, were to be recycled into defraying the cost of meeting the purification standards for water and sewerage effluent, of cleaning up our beaches and of replacing the hundreds of thousands of miles of rotten water-pipes and sewerage pipes that are either rotten or of inadequate diameter. If the money had been recycled for those purposes the Bill could have had my reluctant support ; but the fact is that it is not so. It is the consumers who will be charged with the cost of bringing sewage effluent treatment and of piping and disposal up to the standards rightly required by the EEC. We ought not to need the EEC to tell us what the standards should be. For years, mincing up turds and putting them into the sea as processed sewage really was a public scandal-- "macerated" was the word that was used. I once swam out in a bay--I may say that it was in a holiday resort--to what I thought was a line of fishing floats, until I reached it and found that it was not.
This Bill is a wasted opportunity. The opportunity could have been taken to set up a really effective National Rivers Authority to define the effluent standards and to enforce statutorily the separation of sewage from storm
Column 118water disposal. It is unforgivable that sewage works should overflow when there is a heavy downpour. The two systems should be different.
Sir Charles Morrison (Devizes) : Is it not correct that the control of pollution could be carried out more swiftly and perhaps more efficiently by Her Majesty's inspectorate of pollution, which is not of great age?
Mr. Maxwell-Hyslop : If the record of the alkali inspectorate had been such as to fill me with confidence, I might have found that an alluring suggestion. The case for setting up a new, independent inspectorate with its own testing facilities--not using those of some of the principal polluters--is very strong and unanswerable. That is what should have been in the Bill, instead of so much that is. Again, how does one balance--the Bill does not do it for us--the needs of different sectors of the United Kingdom? In Devon, the population doubles in summer at the time when river flows are at their minimum. The cost of providing impounding facilities to avoid drought when there is a maximum inflow of people who are not normal ratepayers and minium river flows is immense. That cost falls upon the people who live there all the time and who derive less and less benefit from tourism as more and more people bring their holiday homes with them. Instead of staying in hotels or other permanent accommodation, more and more visitors arrive with caravans and tents, with the result that they spend very little, some of which would otherwise go towards the extra infrastructure costs.
Nobody but a fool provides a reservoir at a low level, with the result that all the water has to be pumped at hideous expense, if it can be placed much higher up where the water would flow by gravity. However, those who live in parts of the country to which other people like to go are told that reservoirs must not be put on the moors because that would spoil the view that visitors want to enjoy when they go on holiday. The people who say that do not, however, have to bear the additional expense of low-lying reservoirs from which all the water has to be pumped. There is no rectification of that issue in a Bill that is so large that it had to be printed in two physical parts because the staples would not go though it in one.
At 10 o'clock, which is not so very far ahead, I shall be in the No Lobby. Those are some of the reasons why.
Mr. Wigley : I agree with many of the points that have been made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop). The sea coast problems to which he referred are also faced by Wales. Wales also has to support a large population in summer and needs to have the capacity to supply it. Many of the additional costs that Wales has to face have to be borne in the south-west, too--in Devon in particular.
The hybridity of the Bill was referred to earlier. The hon. Member for Tiveton did a lot of work some years ago on the question of hybridity. Between now and further consideration of the Bill elsewhere I hope that he will have the opportunity to consider whether this is a hybrid Bill. If he did so, he would be doing the House a service. He might be able to find a means by which to deflect the Bill from its movement towards the statute book.
Mr. Wigley : I think that many hon. Members could sit at the knee of the hon. Member for Tiverton and learn about the intrigues and the ins and outs of hybridity, which we should not go into in too great a detail now unless we can prove it. I wish that we could.
Wales did not vote for the Bill at the last election. Wales did not want it. It wants it even less now, the Bill having been subjected to weeks of debate in Committee. For once, Welsh Opposition Members were almost totally united, both in detail as well as in their general approach, in their opposition to the Bill. Week after week we put to the Government a central fallacy--the cost of water to the consumer. That point was not answered in Committee and it was not answered on Report.
The Government tried to get away with press propaganda in Wales. They suggested early in March that there would be a massive reduction in the price of water. In a debate in this Chamber on 1 March, the Under-Secretary of State for Wales told the House :
"Opposition Members may have a surprise coming to them because it is our intention to give the people of Wales every opportunity to take a stake in their own water company in a way that has not been possible before."--[ Official Report, 1 March 1989 ; Vol. 148, c. 368.]
That does not feature in the Bill, and there has been no suggestion as to how it may come about. The people of Wales will not have a 25 per cent. reduction in the price of water, although Ministers tried to sell it in the Welsh press. The reduction was then disowned during earlier debates on Report. In fact, there will be a massive increase in the price of water. It will be on top of other increases in recent years.
During the last few days I have received a letter from someone who lives in the Aberdare area of Mid Glamorgan. This person pointed out that water rates have increased from £23 in 1981-82 to £107 in 1989-90--a fourfold increase. I prophesy, on the basis of what we were told in Committee, that the price of water will increase to about £250 by 1995. That is because there is a need, as everybody recognises, for considerable investment in the industry to improve standards. The Government argue that the only way to secure the resources that are necessary for the work that must be undertaken is to privatise the industry. The Opposition have argued time after time that the only way that capital funds can be attracted is by a massive increase in the price of water, an increase that would hit hard the poorest people in the community.
There is a danger with privatisation that, as private companies find that they do not have the resources to attract capital, the degree of capital investment will be inadequate. That will have an effect on pollution, of which we in Wales are conscious--pollution in the industrial areas and along our coastline. There is a real danger that there will be a reduction in the capital investment that is so much needed in order to meet EEC standards and those that we ought to have set many years ago.
In Committee we asked the Government to clarify the guarantees for shareholders, but the guillotine prevented discussion of amendments that would have led to a large slice of the shareholding going to consumers within the areas served by the private water companies and also to a slice of the shares going to the employees of the private water companies. The Government have made no such provision. Conservative Members who argue that the water industry will be answerable at regional level cannot guarantee that that will happen. Shareholdings will be subject to market fluctuations. Shares will be bought and
Column 120sold in order to make a profit or a long- term return. They will not be bought and sold to guarantee that the private water companies are answerable to the regions that they serve.
The only way in which the finances of privatisation can add up is by the provision of a massive capital write-off of historic debt. If that debt is written off, why on earth was it not written off before, to bring down the water charges that people face? Perhaps for the only time during the passage of the Bill I want to disagree with the hon. Member for Brecon and Radnor (Mr. Livsey), who referred to the low disparity between charges in various parts of this country as compared with France. In fact, the average equated water rate in 1988-89 in Thames was 33p in the pound, in Severn- Trent 51p in the pound, in north-west England 59p in the pound--and in Wales, it was 108p in the pound. That is almost four times the rate in the Thames area. These charges are high and we are facing yet higher charges. If there is to be a capital write-off, why cannot there be one in the public sector?
The capital value of the Welsh water authority is £1,700 million, and if, as seems likely, it is to be sold off for £250 million or £300 million, why do not the Government go the whole way and enable water consumers in Wales to have the shareholding at a nominal cost, and then at least guarantee that there is answerability in Wales? The same formula could apply to the regions of England.
The other part of the Bill deals with the National Rivers Authority. All the Opposition parties argued in Committee that the Bill represents an unwanted and unwelcome centralisation of the Welsh water industry, with the establishment of the centralised form of the NRA. That is not to say that there was not a case for taking away powers from the plcs and giving them to the NRA, but they should not be given to a centralised body in London. That is to take away the powers that the Welsh water authority has over rivers. The version of the NRA in the Bill provides inadequate involvement for important groups who are concerned with rivers, such as anglers and other interest groups. There is also inadequate capital for the NRA, a subject that has already been touched on this evening.
No doubt other hon. Members have received the letter that I have from Professor Edwards, the chairman of the regional rivers division of the Welsh water authority. On 22 March he wrote pressing that the NRA should be allowed
"to have the benefit of long-term borrowing where this is necessary in order to carry out any of its statutory functions ... the authority must have flexibility to use loan finance for all capital expenditure."
Some progress was made on the issue of flooding earlier tonight, but the general argument has not been dealt with--and this letter was sent by someone who is involved in its detail.
Many outside groups are unhappy with the Bill. The National Farmers Union of Wales has written :
"Farmers are deeply concerned at the lack of control over the ability of the proposed private water companies operating as monopolies to raise their charges, particularly in rural area where their costs are higher."
That was one of a number of concerns expressed to us by people who usually support the Conservatives and who are unhappy about these proposals.