House of Commons Hansard Debates for 2 Jun 1992

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I will repeat some helpful points for Opposition Members. I and my officials will study carefully any representations made by Opposition Members on the question of re-billing costs and the cash flow to local authorities. I take up the point mentioned by the hon. Member for Torfaen. The position has been made very clear. Businesses should carry on paying the instalments and bills that they have received until such time as the rebilling exercise has been completed, assuming the safe passage of the Bill through both Houses and Royal Assent.

I am grateful to Opposition Members who have done their bit to help to speed the legislation. The best help that we can all offer business is to ensure the smooth and rapid passage of the Bill through the House so that the rebilling exercise can be carried out quickly and effectively and so that people get the benefit of the legislation as promptly as possible.

We shall, of course, study any cost analysis that the hon. Member for Torfaen may have on a reduction in rebilling costs. We have a basis for our own calculations and we are consulting the local authority associations. I reaffirm a point I made in other forums in answer to the hon. Member for Torfaen. We intend to consult and liaise closely with individual local authorities and with local authority associations. My right hon. and learned Friend the Secretary of State and I have already met the local authority associations on more than one occasion since we took over our present tasks.

I have recently toured different parts of the country to meet local authority representatives, and I intend to do as much of that as time and business pressures permit. I like to see for myself what is happening on the ground, to listen to the views of local authority officers of all political persuasions and to meet people in my offices in Whitehall and here in Westminster.

The hon. Member for Cardiff, West attacked the system when he said that it was not calculable or predictable. That is exactly what a national business rate with a specified rate of increase in poundage will be when compared to Labour's system where the poundage would move around as well as the valuations. The more regular the revaluations, the more stability there will be from the valuations. The successful completion of a quinquennial review will help to stabilise the system compared to the long gap in the previous case. The hon. Member for Torfaen was worried about the degree of change and stability in the system. There are changes in local government at the moment. However, my predecessors made a sensible point of passing legislation and setting out the main points of the council tax as early as possible, thus leaving people with more than a year in which to plan against the background of that legislation and the main principles of the proposals now coming before us for final implementation.

With regard to structure reform, I was not sure whether the hon. Member for Torfaen suggested that he admired the Welsh model and not the English model or the other way around. He seemed to argue it both ways. Let me reassure him that the Government do not lack enthusiasm for a sensible reform of local government in England as well. I hope that we shall shortly announce more proposals to flesh out the details that have already been passed in legislation. They will make it clear that there will be a structure review in the English shire regions which will start soon when we can make the necessary arrangements and announcements.

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Mr. William O'Brien : I have listened carefully to the Minister's response. I referred to the Forum for Private Business ; I am sure that the Minister has received a copy of the circular that I have received, in which the chief executive states that the forum is prepared to work with the Government in respect of small firms. He also states :

"This is a critical time for small firms, many of whom are suffering cash flow problems with less support from the banks." It is not just a matter of rents and rates. Other issues are involved with regard to the cash flow of small firms. Will the Minister consider what the forum for small businesses has said and, if necessary, will he enter into discussions and listen to what the forum has to say about the important issue of cash flow?

Mr. Redwood : My hon. Friend the Under-Secretary of State for the Environment who is responsible for local government affairs will meet the forum on 1 July if all goes according to plan. He will listen carefully to what its members have to say. Several Ministers over many months have listened to what the forum has had to say. They have read its surveys and have had meetings with representatives. Undoubtedly, the forum helped to influence the Chancellor's and the Government's decision to announce a package of measures in the Budget to help business cash flow of which this Bill is but one. The voice of business through the forum and through other channels of communication to Government does not go unheard. I promise that my hon. Friend the Under-Secretary of State will meet the forum soon and that he will listen to those specific points. The hon. Member for Normanton should bear in mind that we have announced and are carrying through a substantial package of relief from business rate increases which we hope that the forum and other small business representative groups and small businesses themselves will welcome.

I trust that the House will give a swift passage to this legislation. The Bill will be very welcome in the business community, and I hope that it will receive its Third Reading without any further Division.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

9.38 pm

Mr. Bob Cryer (Bradford, South) : On a point of order, Mr. Deputy Speaker. I wonder whether you have had a request from the Leader of the House to make a statement about the legislation that is to be considered in Committee tomorrow, in view of the delightful and welcome news that it appears that the Danish people have very sensibly voted against the Maastricht treaty. If that is the case, it means that the whole of the treaty paraphernalia will collapse and that the business which is to occupy the House for the next two days will be completely wasted. Therefore, it would seem sensible for the Leader of the House to make an early business statement so that we may take into account the good news from Denmark.

Mr. Deputy Speaker : I confirm to the hon. Gentleman that I have heard nothing about that matter, but I imagine that members of the Government have listened to him.

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Water Charges

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. David Davis.]

9.39 pm

Mr. Paul Tyler (North Cornwall) : I wish to raise the issue of general directions to OFWAT, the Office of Water Services, in regard to water charges. First, I should like to explore the residual relationship between the Minister's responsibilities and those of OFWAT, to explore the extent of the Minister's responsibility for water and sewerage services on behalf of the public, and secondly I should like to establish the role of the Director General of Water Services under the Water Act 1989 in defending the public interest. There is wide concern at present at the extent to which the water and sewerage industry appears to lack accountability or responsibility not just to Ministers and to the House but to the general public. I wish to explore for a few minutes who now defends the public interest in relation to water charges, who now sets the criteria for charging policy, and who now ensures that the national investment objectives, which in the past were undertaken with a system of equalisation grants between the richer and poorer parts of the country, are met. I want also to examine how precisely OFWAT and the Director General of Water Services operate within the ministerial direction.

As the House will recall, when the legislation was first prepared and considered in this place, it was assumed that the so-called K factor would be a negative sign. It was assumed that it would be possible to allow charges which would increase by less than the annual rate of inflation. In fact, with the dramatic change in the obligations that were laid upon the industry, especially by the European Community bathing and drinking water quality directives, the K factor had to be plus from the first time that it was used. It was originally assumed, when the legislation was being prepared, that a 10-year interval between reappraisals of the K factor arrangements would be sufficient with just a half-time check at the fifth year. In practice, the pressure has been on for intermediate assessment. There have already been a number of changes, even during the short period since the Act came into force. I shall return to a specific example--that of South West Water--to illustrate the major change that has taken place in that area.

With those major changes in the circumstances which have inevitably led to major changes in the assumptions on which the calculations are made, there is necessarily a complete reappraisal of the role of OFWAT and indeed ministerial responsibility for giving directions to OFWAT.

The Director General of Water Services has been juggling with a large number of variables--capital programmes, revenue expectations, borrowing requirements, European Community obligations, and profit and dividend levels. Clearly, the Director General, Mr. Ian Byatt, has had considerable difficulty in identifying precisely where his responsibilities begin and end. For example, on 19 June last year, he was reported as saying :

"companies do not need big dividend increases because stock market expectations for all companies' dividends have been reduced."

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He went on to warn that the K factor of the companies could be made more onerous if they paid excessively high dividends to their shareholders instead of ploughing money back into their businesses. He also argued that :

"where new obligations are imposed on the companies in the first five years, the cost of the additional borrowing could be accommodated without an equivalent increase in revenue."

The frustration that the director general obviously felt at the limitation on his powers and role was already evident then. As if that were not enough, complex additional problems resulted from the new roles that the water companies felt that they could undertake through diversification.

For example, Welsh Water owns five country house hotels and a civil engineering business, and boasts an almost 15 per cent. stake in South Wales Electricity worth £51 million. South West Water has a property business, a civil engineering arm and a multi-million-pound 20 per cent. holding in West Country Television. The company also runs gift shops. Southern Water and Northumbria Water run car-leasing firms. Northumbria also has a personnel management company. Yorkshire Water has a direct mailing organisation.

When those diversification activities become apparent the director general issued a general warning about the extent to which they could divert the attention of the management away from their core business. My Liberal Democrat colleagues in the House and in another place sought to stop up that loophole. Eventually the Government introduced their own amendment, but it is far from clear that the role of either OFWAT or the Government has been strengthened or that diversification will be prevented, or at least limited, to ensure that it is in the public interest. It is clear from every statement made by OFWAT that there is frustration at the director general's lack of powers in respect of diversification.

Thirdly, I wish to deal with the specific case of South West Water. Obviously, in my constituency of North Cornwall, it is anorganisation that we know well, although I cannot say that we love it. It has a tarnished record of secrecy, complacency and expensive empire building, but it is not to that record that I wish to draw the attention of the House tonight.

I wish to demonstrate that what has happened to water charges in the south- west exemplifies the deficiencies of the legislation passed by the House. I should say in passing that I welcome the repentance of sinners on the Conservative Benches who voted for that legislation but have now seen its deficiencies.

South West Water is the only privatised company to have sought and be granted a major increase in its K factor for 1992-93, 1993-94 and 1994-95. In the first year, it will amount to 16p in the pound. Obviously, in the following years it will depend on the rate of inflation. South West Water is one of only two companies which did not voluntarily defer the K element in 1991-92.

However, the south-west also has huge problems. It has a long stretch of coastline, which is a major national, if not international, asset. That has attendant alarming problems of coastal erosion and pollution. But the area has the extra problem of a demanding burden from our annual holiday invasion. It is also an area of low average household incomes. Yet it is now likely to have the highest average household charges of all 10 water companies--it is already

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No. 3 in the league. There is therefore now a major affordability gap between what is expected of the water charge payers of the south-west and what they can afford.

We should note, as there have been additional reports on this in the last few weeks, that the south-west has above-average wastage--up to one third of the supply from our reservoirs is lost through leakage.

To cap it all, last week the company announced record profits, record dividends and--less obviously and less ostentatiously--record executive bonuses.

All those issues are regularly drawn to the attention of my hon. Friends the Members for Devon, North (Mr. Harvey) and for Truro (Mr. Taylor), who are here tonight.

Against that background, the Director General of Water Services had to assess the bid for South West Water for an increased K factor. The announcement was made just before Christmas, during the recess, and received remarkably little publicity. The factor was 6.5 per cent. in the previous year and was increased to 11.5 per cent. for 1992-93. Many water charge payers in the south-west expected that, when the additional funding was available to the company, South West Water would immediately announce additions to its programme, the acceleration of existing elements in it and the upgrading of schemes in the programme, to show what we would get for the money. We got no Christmas present. Hon. Members will recall that occasionally politicians are accused of producing menus without prices. South West Water produces prices without a menu. All it did was produce a press release in January which said :

"The additional 5 per cent. is largely"--

I emphasise "largely"--

"needed to fund new obligations imposed since 1989".

It continued by referring to those obligations as :

"--bringing forward the existing programme of schemes largely by 1995

--providing land-based sewage treatment for those schemes --ending the disposal of sludge to sea by 1998".

We have not received any specific programme of change as a result of the additional funding.

OFWAT has again seemed to be impotent in the face of those unexpected profit levels, and has not been able to show what we are getting for our money. The Director General of Water Services is clearly frustrated at the extent to which the advice that he gives to the companies is ignored. I shall quote from a letter to me from OFWAT, which refers to the 1991-92 increase in charges as follows : "You will see that Mr. Byatt's view is that profits should be viewed in the medium term rather than on an annual basis. He has, however, drawn the company's attention to the importance of customers receiving some of the benefits of the recently announced profits. He has suggested this might be by way of increased capital investment in their new environmental obligations or by not taking up the whole of their charging limit in 1991-92."

That letter was in direct response to a request for information about his attitude to the increase in charges by South West Water, but it would clearly apply equally well to other companies privatised by the Water Act 1989.

I have several crucial questions for the Minister. First and foremost, are the Secretary of State and his colleagues satisfied with his and OFWAT's powers in respect of water charges? Secondly, is he satisfied that the customer is adequately protected from excessive water charges by the powers?

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Thirdly, what can the Minister do, post- privatisation, to reintroduce national Exchequer support, by way of a green dowry or by any other means, to ensure equalisation between the richer and less well-off parts of the country and to ensure adequate investment in national assets such as the south-west coastline?

Fourthly, we urgently need to know--I know that this view is shared throughout the House--whether the company's privatised status precludes the allocation of European Commission's rural development fund grants. My information is that it does, but the matter needs to be cleared up once and for all. We do not want any more false promises.

Fifthly, is the Minister satisfied that OFWAT's powers are sufficient to prevent the distracting diversification, to which I have referred, and which causes concern in all parts of the House? The Director General of OFWAT clearly expressed great concern, and we should now know whether Ministers are equally concerned.

Sixthly, what can the Minister or OFWAT do to stop companies adding insult to injury as they have in the past few days? Last week, with Cornwall and Devon in a severe depression and many people facing extortionate water bills, The Western Morning News reported : "South West Water chairman Keith Court is set to collect a company shares bonus worth £137,000 on top of his £89,000 a year salary--while customers receive bills set to rise by at least a third over the next three years."

My hon. Friend the Member for Rochdale (Ms. Lynne) will seek to catch your eye, Mr. Deputy Speaker, to refer to an equally damaging situation that has arisen in the north-west. In a sane world, chairmen would be given a bonus for reducing water charges by record amounts, not for increasing them.

Finally, how can the Minister and OFWAT tame what even the chairman of South West Water has admitted, in a letter to my predecessor, is a "monopoly organisation"? Those are crucial questions and many people throughout the country, not just in the south-west, are waiting for positive answers from the Minister.

9.57 pm

Mr. David Harris (St. Ives) : I and all hon. Members from the south- west are grateful to the hon. Member for North Cornwall (Mr. Tyler) for raising this important issue. As the hon. Gentleman said, it is of particular relevance and importance to consumers in the South West Water area, because they are paying--and will be paying for years to come--much higher increases in their water charges than consumers in other parts of the country.

The hon. Member for North Cornwall has highlighted the reasons for that-- the principal one being that we have such a long coastline. We have also suffered years of neglect on an enormous scale, particularly with regard to sewerage facilities. Around the whole coastline of Devon and Cornwall, one finds beach after beach where sewage is poured out on to the beach or into the sea a few miles away. That is an intolerable situation. We recognise that, and we have all been campaigning to correct it. We also have to face the consequences of that. However, the hon. Member for North Cornwall did not pay particular attention to that aspect of the matter or to the fact that massive bills to clear up the neglect and the awful position on the coastline will have to be met. The question is how those bills are to be met.

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I agree with the hon. Member's implication and assertion that far too great a burden is being placed on consumers and those who have to pay the charges of South West Water. As the hon. Gentleman said, the Director General of Water Services authorised an average increase of 16 per cent. on charges this year. That average is based on a basket of five separate tariffs, at the highest level of which some people are being called on to pay an increase of 27 per cent. in their water charges this year.

I admit frankly--I have said it frequently in my constituency--that that is an unacceptable burden, particularly for consumers living on small incomes or retirement pensions. It hits particularly hard those living on amounts which take them just above any measure of income support, so that they do not receive help with any aspect of daily living, such as meeting the community charge or housing costs. It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.

Ordered,

That, at this day's sitting, the Non-Domestic Rating Bill may be proceeded with, though opposed, until any hour. [Mr. Arbuthnot.]

Mr. Harris : Since I have spoken out on this, I have received many letters, including letters from constituents of other hon. Members in the south-west. Other hon. Members will have received similar correspondence. In my constituency, this issue was raised more frequently than any other during the general election campaign. Having talked to hon. Members on both sides of the House, I have found that they too found it a frequently raised subject.

Mr. Anthony Steen (South Hams) : The graph since 1974 shows that the capital invested in South West Water by Labour and Conservative Governments has been inadequate to cope with the later clean water and pollution of the sea directives of the EC. It has been pointed out that the south-west has one of the longest and most complicated coastlines in the country. The consumer is now expected to pick up the shortfall which successive Governments have caused and which was left with South West Water when it was privatised. The question is whether the consumer now has to pick up the tab for the shortfall or whether the Government will accept that the burden is too great and that something special must be done.

Mr. Harris : My hon. Friend is right, and I was about to come to that.

How is the burden to be met, as between the consumer on the one hand and any other source of help on the other? The Government, through privatisation, have made a considerable sum available to South West Water, as they have to every other water company, through the so-called green dowry.

In the light of the extra requirements that have been placed on South West Water, to which my hon. Friend the Member for South Hams (Mr. Steen) and the hon. Member for North Cornwall referred, it is clear that new factors have entered into the equation since the legislation was passed. I am therefore not a sinner who repents, because we are dealing with new factors. We must recognise those and the burden that the new European factors have placed on South West Water and its customers.

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There are two ways out of the problem. First, if the Government recognise the special case being made for South West Water by hon. Members in all parts of the House--there is nothing between us politically on this--they must accept that South West Water is in a peculiar situation. That is borne out by the decision of the Director General of Water Services, who has authorised an extraordinary increase in charges for South West Water.

Mr. Steen : And not just for this year.

Mr. Harris : My hon. Friend is right. It represents a continuing set of increases. The Government should provide extra help. Hon. Members who represent Devon constituencies have already seen the Secretary of State for the Environment. I put in a request, on behalf of Cornish Members, to see him to follow up the excellent case made by Devon Conservative Members of Parliament.

South West Water should be applying to another source of funds--the European Community--under the European regional development fund, or the structural fund as it is now called. When I was the Member of the European Parliament representing Cornwall and Plymouth, we received considerable assistance from what was in those days the European investment bank.

I consulted my successor as Member of the European Parliament for Cornwall and Plymouth, Mr. Christopher Beazley. He assured me that South West Water has had grants from the European development fund and that there is no bar to the continuation of those funds even though it is now a privatised company. In my day as the European Member of Parliament, the criterion was always that grants should go to a public authority or an organisation carrying out the services of a public authority, and I am told that that has not changed fundamentally. By one means or another, or by a combination of both, the burden on the hard-pressed customers of the South West water authority should be lifted and eased.

My hon. Friend the Minister had the great good sense to spend part of last week walking across part of my constituency, from the south to the north coast. I wish that I had known in advance, because I could have arranged for many people to meet him on the way, brandishing their water bills. I am sure that that would have had a much greater effect than this debate. I am sure that it would have made his holiday as he walked from Hayle to Marazion. Perhaps that was a missed opportunity.

I am sure that my hon. Friend has listened to the debate, however, and I can assure him that this issue will not go away. Members of Parliament from Devon and Cornwall--the South West Water area--will continue to press the issue with vigour. We are determined about this because it is a serious matter and we owe it to our constituents to get some justice in the amounts that they are being called on to pay.

10.7 pm

Ms. Liz Lynne (Rochdale) : I agree with my hon. Friend the Member for North Cornwall (Mr. Tyler), but everything he said about South West Water is also true of North West Water. I understand that OFWAT is monitoring the situation, but does it realise that the profits of North West Water are up by 7.3 per cent.? What is it

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doing to ensure that bills go down as profits go up? It is doing very little, and I should like it to have a few more teeth. I should like to draw attention to the salary increase of the chairman of North West Water. Dennis Grove is on a salary of £144, 000. The value of his share option is £260,000. That salary has risen by 206 per cent. since privatisation, while water charges have risen by 29 per cent. OFWAT should go beyond monitoring and take action to ensure that the bills for ordinary householders decrease. As has been said, people are struggling to pay those bills, and it is about time that the chairmen waived their salary increases and ensured that consumers had bills that they could afford to pay.

10.8 pm

Mr. William O'Brien (Normanton) : This is an important and significant debate, because of the concerns of people about the various regional water authorities. I am grateful to the hon. Member for North Cornwall (Mr. Tyler) for raising the subject in an Adjournment debate. Many hon. Members who have had communications with OFWAT are concerned about what is happening in their areas. The replies that we recieve are negative. OFWAT appears to be helpless and refers Members to the regional water companies, which in my case is the Yorkshire water authority. In my area, real problems are developing because of Yorkshire water authority's attitude to many aspects, particularly charges.

In the year 1990-91, bills increased by 13 per cent., and that at a time when inflation was falling. Throughout the year, the average rate of inflation was about 5 per cent. There was a massive increase in charges, over and above the K factor which was set out in the legislation and which should have been monitored by OFWAT. When I took the matter up with the director general, I was advised that the increase was a matter for the Yorkshire water authority. We need some explanation of the various roles of the water companies and the extent of their monopoly powers.

During a four-year period, standing charges in my constituency have increased by between 400 and 500 per cent., with the result that unit costs can be very expensive for those using only minimum amounts of water. That increase in standing charges is another matter that should be addressed.

My constituency held one of the compulsory trials for water metering which gave rise to tremendous problems. We are now advised by the Yorkshire water authority that, when the three-year period set by legislation for the 12 trial areas expires, the charging method will revert to the regional system. Those involved in that trial had no choice about whether to take part in the trial. Since it was compulsory, people should have the option of continuing on that scheme or reverting to the original charging system based on rateable value. If they do not, the water companies have been given more powers than the House wished them to have when the trial periods were introduced. Again we come back to OFWAT's authority and what influence the Minister has in the event of legislation being abused. That problem should be addressed by the Minister.

We are also finding that water authorities are not only interested in providing pure water and sewage discharge services but investing in other sectors, which is an abuse of privilege. Water charges are being increased at rates higher

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than inflation--nearly three times higher in Yorkshire in 1990-91--yet the money raised is not invested in the industry. Water wastage is another matter that ought to be addressed. When we challenge the water companies on why they do not take action to save the 25 per cent. or 30 per cent. of water that is wasted in the system, we are told that it would be uneconomic to locate the wastage points and to repair them--that it is cheaper to let the water run to waste. That is totally foolish and out of compliance with value for money. That is another aspect over which OFWAT has no influence, so I hope that the Minister will take action to prevent water waste and to stop money being wasted by water companies.

10.16 pm

The Parliamentary Under-Secretary of State for the Environment (Mr. Tony Baldry) : The average household--not person--in the south-west pays 62p per day for its water. That is precisely the daily cost of a copy of The Western Morning News and a pint of milk, so 62p a day seems to me to be good value to a household.

South West Water has achieved 99.6 per cent. compliance with bacteriological standards ; dealing with foul water and sewage ; and providing for investment to continue to enhance water standards and to ensure an adequate supply. Customers and visitors to the south-west have benefited from investment of £60 million in the water supply network since privatisation, which has meant no water restrictions in the south- west since 1990--despite record levels of customer demand.

Mr. Tyler : Will the Minister give way?

Mr. Baldry : Yes, I will--but the hon. Gentleman asked a number of questions, and a lot of time has been taken up by other hon. Members. The hon. Gentleman has a choice. I will give way, but I may not have time to answer all the questions that he put to me.

Mr. Tyler : A number of households in north Cornwall had hosepipe restrictions imposed last summer. Is the Minister saying that there were no restrictions on water supplies last summer?

Mr. Baldry : I am saying that there have been no restrictions in the south-west since 1990, despite record levels of customer demand. Understandably, people want the purest possible drinking water, and an assurance that their foul water and sewage is dealt with in a way that is as environmentally sound as possible. In an area such as the south-west, where a substantial proportion of people are involved in tourism, people want the cleanest possible beaches, with bathing waters reaching the highest possible standards.

My hon. Friends the Members for South Hams (Mr. Steen) and for St. Ives (Mr. Harris) made it clear that ever improving environmental standards mean continuous investment in the water industry. One reason that the industry is having to undertake so much investment now is to rectify the neglect of many decades, caused by relatively low priority in the public sector.

That was most notable during the time when the party of the hon. Member for North Cornwall (Mr. Tyler) colluded in the now infamous Lib-Lab pact--when, in 1976, the Lib-Lab Government of the day stopped all further investment in the water industry overnight.

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The water industry must also satisfy the many new environmental standards that are rightly being demanded by the House and the European Community. To meet those demands, the industry as a whole has a programme of investment in excess of £28 billion between now and the turn of the century. That is £1,000 of new investment each and every minute of each and every working day.

In the south-west, that means massive investment. Capital investment by South West Water has more than trebled, rising from £49 million in 1988-89 to £172 million in 1991-92, and it is set to rise again this year. A total of 115 improvement schemes, involving treatment works, mains and sewers, were completed last year, bringing benefits to customers, visitors to the region and the local environment. Six hundred further schemes are under way across the region this year.

Coastal sewage treatment is being put into place for the first time. South West Water's "Clean Sweep" programme is one of the largest programmes introduced by any water company in Europe, and is set to clean up 81 beaches and bathing waters, thereby helping to ensure compliance with the EC designated bathing waters directive. The hon. Member for Cornwall, North seemed unclear what South West Water was investing in. I am sure that the company would be more than happy to take him through the many investments and improvements that it is undertaking, item by item.

Mr. Steen : The Minister mentioned the amount paid by each household in the south-west for its water. Are people in other parts of the country paying other water companies less or more?

Mr. Baldry : In other parts of the country, householders are paying what is deemed appropriate for improvements in those parts of the country. Different areas have different requirements, and that is reflected in water charges.

Mr. Matthew Taylor (Truro) : Will the Minister give way?

Mr. Baldry : No, I will not give way again. I have been asked a number of questions, and time is short.

The hon. Member for Rochdale (Ms. Lynne) has contributed to the debate, and I think that it would be courteous to respond to her contribution. She complained about the increase in charges in the north-west. North West Water's total proposed investment, however, is £5 billion up to the year 2000 : that is £2 million a day, or £20 per second every working day, and it will be invested to enhance water quality.

The water industry is now free to use the private-sector money markets, and can raise the necessary finance to implement the improvements that are demanded by both customers and

environmentalists. Moreover, it can make those improvements within the timetable that has been set, confounding the sceptics. Yes, the water companies have made profits : without profits they could not attract the finance that is necessary to fund their investment programmes. Those profits, however, have not been excessive ; nor have customers been required to meet too large a proportion of the cost.

Indeed, commenting on last year's results, the Guardian business page described them as

"relatively modest profit and dividend figures".

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