House of Commons Hansard Debates for 16 Jun 1992

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invested. Every company must ensure its credit-worthiness, and the share price of a private utility reflects the company's worth, enabling it to engage in low-cost borrowing. Every board must review borrowing year by year and event by event, because it must meet its costs.

The Minister gave an admirable tour d'horizon of the way in which the industry is coping. I emphasise the speed with which the industry has to move. People say that borrowing can be spread over a long time, but the industry must meet deadlines for the implementation of entirely new standards for water quality, and that requires an enormous effort in a short time. Yorkshire Water has about 4,500 employees and it is therefore not huge in terms of manpower, but it is a high-quality company and needs significant resources in technical and qualified manpower to deal with contracting and sub-contracting, and must acquire the necessary talent speedily to develop the investment processes.

The privatisation programme was about the only way to develop the nation's assets above ground and subsequently below ground. Those are entirely different phases. Most companies are currently investing in above ground assets, such as sewerage works, reservoirs and treatment plants. However, as the Minister said, another great tranche of investment will be required for the review of underground assets, and I suspect that it will be beyond the £28 million programme of which he spoke. All those programmes must be skilfully managed to time, and above all to cost, and the water companies have shown themselves capable of achieving highly desirable results.

Since privatisation, there has been a real shift in price, and I entirely accept Opposition suggestions that that has brought hardship to some people. However, as the Minister said, the absolute price for water of 46p per household is not high. We and our fathers inherited the belief that water was not only a natural resource but was free and that delivery costs were absorbed by other commodities. The old domestic rating system was undoubtedly the vehicle for that, because it contained the water rate, which was not easy for the householder to determine. The rate element for sewerage has always been much higher than that for water.

We have a major task in taking the public with us while maintaining speed of development. We must ensure that the quality of service is satisfactory and appreciated and that people understand the necessity for the investment that has led to higher charges.

Mr. Derek Enright (Hemsworth) : Can the hon. Gentleman explain the unfairness imposed by the very board on which he serves, whereby a single- person household has to pay three times as much as a neighbouring one comprising a family of six? That arises from the disgraceful way in which Yorkshire Water meters water. Does not that go against all the tenets of the hon. Gentleman's forefathers and foremothers, who provided water at an affordable price because they knew that it was good for the public's health?

Sir Giles Shaw : I accept the hon. Gentleman's conclusion that the public will ultimately have to accept that water is good value for money. In terms of the method of payment, obviously a range of alternatives is available. There is some metering, but the majority of domestic bills

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are still based on the old rateable values formula, which gives rise to much more grief than metering would in respect of the single owner-occupier.

I am sure that a correct method of charging will eventually be found, and that, after the immense rush of capital investment that has been made for the reasons that I gave, the price of water will stabilise at a level that is bound to be acceptable to the public. The question of debt and disconnection was raised by the hon. Member for Dewsbury, as well as implied by the hon. Member for Hemsworth (Mr. Enright). Yorkshire has an Ofwat of its own, which states :

"We continue to be concerned at the numbers of people who experience difficulty in the paying of their water and sewerage bills The number of domestic premises suffering disconnection in the region has continued to rise to a total of 1,931 in the year ending 30 September 1991. We have monitored the systems employed by the Yorkshire company and by Yorkshire Water before disconnection occurs, and are satisfied that the code of practice is being correctly applied."

Disconnection is a threat and a last resort. As the hon. Lady said, court action is involved--but that is prior to disconnection, as part of the process of ensuring that it does not occur without proper statutory backing. It is not necessarily something that stands in its own right.

Water prices are rising faster than inflation because the rate of capital expenditure is passing through an extremely rapid phase.

Mrs. Mahon : Does the hon. Gentleman agree that people on low incomes--£66 per week if they are a couple on income support, or £86 per week if they are a pensioner couple--suffer disproportionately because of rapidly rising water prices? They receive no rebate, and so pay a disproportionately high price.

Also, coming as I do from a local authority background, I find it difficult --

Mr. Deputy Speaker : Order. The hon. Lady should confine her intervention to one question. She asked one very fair question, but she cannot have two bites of the cherry.

Sir Giles Shaw : I accept the hon. Lady's point about the difficulty of making up the payments. There is a strong case for ensuring that water is encompassed by the benefits system in the same way as electricity and gas. I have strongly argued with the Department of Social Security that that should be so. Water is an essential service, as is power, heat, and light. The hon. Lady makes an important point, and I would certainly support efforts to win DSS recognition of it.

The scale of investment is high in national terms, and also in relation to Yorkshire Water. We are currently spending about £2.5 billion, and that figure is likely to increase by the end of the year, and by another £1 billion or so before the end of the current capital programme is reached. The capital programme is therefore roughly two thirds the size of the company's entire annual turnover. That is a substantial amount for a company to find.

Mr. Martlew : Surely Yorkshire Water is one of the authorities that cannot supply consumers with the water they require. Yorkshire has water shortages. What is Yorkshire Water doing about that?

Sir Giles Shaw : Fortunately, the management of Yorkshire's water resources is not a matter for me ; I am a non-executive director. As the hon. Gentleman probably

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knows, the problem occurs in the Hull aquifers, and the present climate has caused a reduction in the water- bearing rock. The Yorkshire grid, however, transfers resources from most parts of the county to where they are needed, and water is currently being extracted from the River Derwent and sent to Hull.

Despite four years of exceptional weather of one kind or another, most parts of the country have succeeded in managing water resources. In the past, there has been insufficient investment in collection and storage, and probably insufficient examination of methods of moving water from one area to another. Such examination is needed now. There is also the question of leakage of resources. I accept that there is an onus on the industry to reduce the amount of water that is wasted from the pipework, preferably to an insignificant level. Underground renovation on a huge scale will be needed, as the hon. Member for Dewsbury will appreciate ; that will be part of the next phase of major capital investment.

Some companies have already managed to reduce leakage, however. Anglian Water, for example, has achieved a reduction from 22 per cent. to 18 per cent., and Thames Water a reduction from 25 per cent. to 18 per cent. That shows that the problem can be corrected, and I hope that it will be ; but we should also recognise that a large proportion of leakage may occur on domestic customers' own premises, where ancient pipework is now porous.

Obviously, the regulator will determine the way in which the industry progresses. A review of the regulating formula is currently under discussion, and I have little doubt that debates such as this represent an element of the evidence that he will seek in relation to both prices and allowances. It is clear, however, that most companies have been able to make progress without applying the full increase allowed by the regulator, and that should be recognised as a mark in their favour.

The fact remains that the industry is in the early stages of renewing the nation's assets for the distribution, consumption and treatment of probably the most important substance that mankind can have. We should appreciate that we are blessed with an extremely high quality of water for household use--much of it not for drinking, but able to be put to the many other domestic uses that are possible in the modern dwelling. We have a world resource, and we have world standards of conservation to observe. Only a high-quality, profitable and well-managed industry can deliver that resource to our people. 5.58 pm

Mr. Paul Tyler (North Cornwall) : The core of the debate is the difficulty--nay, impossibility--of introducing any element of competition into a natural monopoly. I am disappointed to see not just that there are comparatively few Conservative Members but that they are not dressed in sackcloth and ashes for what surely must be the privatisation programme's one huge failure.

It must be apparent at the outset that the legislation has failed to distinguish between a natural monopoly and one that can be mitigated by competition. That was why I and

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my hon. Friends tabled an amendment which, sadly, has not been selected, relating to the organ grinder, the Minister, rather than the monkey, the director general.

In the 1989 legislation it was impossible to introduce a positive commitment to competition and the use of market mechanisms. Instead, it simply followed the Thatcherite path of negative opposition to public ownership of a public utility. Had the Government taken on board the rhetoric of competition and produced some realistic solution, we might not be having this debate. Instead, they were more concerned with selling off the family silver than providing effective consumer control.

Sadly, we cannot start again and it is already apparent from the contribution from Opposition Members this afternoon that although some now wish to do a U-turn, or perhaps a U-bend, there are others who wish to find some form of renationalisation, however prohibitive the cost.

We must now consider how some element of competition or, in default of competition, some form of effective regulation on behalf of the public interest, can be introduced into what otherwise will inevitably continue to be a monopoly.

Surely we can learn some lessons from the other regulators. Ofgas has referred the gas industry to the Monopolies and Mergers Commission, but there has been no such reference, except on a minor issue, in the water industry. That might be a route to be explored. The Minister might wish to consider that.

Oftel has had some success in introducing an overall price cap and, perhaps even more important, in disaggregating the basket of charges and costs, looking at them individually. That would be a major benefit if it were applied by Ofwat to the water industry. An extremely effective step would be if Ofwat were enabled to consider the range of connection charges, which vary enormously from one part of the country to another without apparently any rational basis.

Perhaps most important of all, Ofwat should be looking at the notorious standing charge which encourages households to use more water, which must be against all conservation principles. The average standing charge in the south-west in 1991-92 was £27.50, a not inconsiderable amount for such a low-income area. We certainly wish to abolish all standing charges for pensioners.

Mr. Nicholls : Even billionaire pensioners?

Mr. Tyler : Certainly, I do not believe that they should be excluded from such a benefit ; nor, I understand, does the hon. Gentleman.

Mr. Nicholls : Will the hon. Gentleman give way?

Mr. Tyler : I shall not give way again on that point.

One way in which the director general could make a substantial difference is if he were permitted to transfer his consideration of charge increases, to look at them in terms of rate of return. The problem about a rate of return basis is that it is backward looking. It takes into account historic costs and demands, but the K factor looks forward to future demands and productivity improvements. It also has the disadvantage that it can be a disincentive to cutting costs and improved productivity. On balance we must agree that the K factor, if properly used, is more likely to be effective than a rate of return regulation.

What we could do is to ensure, as happens in the United States, that the process by which that regulatory decision

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is taken is carried out in the open with the support and encouragement of consumers and consumer representatives, enabling the utilities to put their case so that future charges can be scrutinised in public. If there is a capital underspend, Ofwat should automatically be able to curtail the intermediate price increases. There has been much discussion today about alternative methods of paying for water. Clearly a new method must be found before the current rateable values are disallowed in the year 2000. The proposed bands for the council tax will not prove an effective instrument. They will be a blunt instrument. But whatever advantages there are in metering in monetary and environmental terms, they must be set against the considerable difficulties that have been referred to this afternoon, if for no other reason than that the cost would be astronomical. The original estimate based on the Isle of Wight pilot area was about £4 million and the actual cost could well be £12 million. In those circumstances, we must analyse the present situation, not just wait for a new system of charging which we think would be a great deal better.

It was originally anticipated--this is what has changed since the original legislation was enacted--that the K factor would be a minus figure. As the Minister said in answer to the hon. Member for Teignbridge (Mr. Nicholls), the changes that have taken place in those three years in terms of increased environmental

responsibilities and, therefore, increased costs, have been so dramatic that it must now be evident to everybody that the basis of the original calculation is wildly out of date. The Act is no longer relevant.

That is also true of the way in which the drinking water inspectorate's role has changed dramatically. The inspectorate is still hidden in the bowels of the Department of the Environment. It has never instigated any prosecution or attempted any public exercise to ensure that we meet EC standards. There have been widespread failures in attempting to meet the EC standards.

It is anecdotal, but I am told that the pigs at the food and farming festival in Hyde park a few weeks ago refused to drink the tap water and water had to be brought from Harrods. They may not be the arbiters of taste, but there surely comes a point when we must consider carefully whether the effective regulation of water standards in rivers by the National Rivers Authority is not rather higher than the quality of tap water.

The problem is that the regime set up in 1989 is too inflexible. There are all sorts of examples that hon. Members can quote showing what has changed since then. In his latest report the director general says :

"The requirement to meet new environmental obligations, mainly the acceleration of the Bathing Waters Programme, announced by the government in November 1990 in order to meet European Community obligations has resulted in an increase in customers' bills in the South West this year of some 16 per cent., and will involve further heavy spending largely concentrated during the next three years. It is of concern that the estimates submitted to me by South West Water in October 1991 were considerably in excess of those made to the Secretary of State in October 1990."

The director general himself is not satisfied with the quality of information available to him in making his determination. We need two major changes. Clearly we need legislation to increase the powers of the regulator to protect the consumer and, at the same time, we clearly need a

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recognition that there needs to be an injection of public and EC money to pay for the improvements that we all demand.

It seemed to be apparent--I hope that the Minister will make it abundantly clear when he replies--from the answer given to the hon. Member for Teignbridge that no further Government money will be available to help areas such as the south-west with its enormous new obligations.

Two weeks ago, in a minor dress rehearsal to the debate, I initiated an Adjournment debate. At the end of it, the

Under-Secretary was asked a number of specific questions. As he has had time to consider them a little further, I hope that this afternoon I will receive more detailed replies than I did on that occasion.

I first asked whether he was satisfied with the powers available to Ofwat. On that occasion he seemed to be over-satisfied, but we have to wait and see. Secondly, I asked whether he was satisfied that the customer is adequately protected from excessive water charges. The Under-Secretary seemed to think that it was perfectly acceptable that the average household in the south-west was paying 62p per day for its water. We have heard today that the national average is 46p per day. That differential already calls into question whether it is a fair system of charging. When it is set against the average household income, 62p in the south-west is very high.

Thirdly, I asked the Under-Secretary whether he would reintroduce Exchequer support by way of equalisation to deal with problems such as those referred to by the hon. Member for Teignbridge--our long coastline and comparatively small resident population. He did not say no, but he did not say yes. This afternoon the Minister seemed to say that the answer was probably no.

Another question related to the eligibility of the privatised companies for public funds from the European Commission. I asked whether the Minister would ensure that the rural development fund of the European Commission was available to the privatised companies. He said yes, but he did not seem to accept that that would require a degree of additionality from Whitehall. I asked whether he was aware that Ofwat powers to prevent distracting diversification--such as, for example, into shareholding in television companies--were unacceptable to the public. There was no answer to that. Finally, I dealt with the issue of chairmen's perks. Today the Minister seemed to be unaware of or unworried by that.

Last weekend, a retired couple in my constituency aged 71 and 66 spoke to me. They live in a modest bungalow in Bude which, ironically, until recently was within a few hundred yards of a discharge point into the sea for raw sewage. They told me that their poll tax for two people was £530.34 and that their water charges for the current year are £510.92. That is the scale of the problem and hon. Members on both sides of the House must come across the same problems in their postbag and surgeries.

The Minister claimed today that the Act is working as the Government intended. Was that what hon. Members voted for and what they intended in 1989? We believe that the Act needs to be reviewed and overhauled urgently. If it is not, the water charges in this country will bear far too heavily on far too many people who simply cannot afford them.

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6.13 pm

Sir Jim Spicer (Dorset, West) : Like my hon. Friend the Under- Secretary I think that we heard just what we expected from the Opposition. In other words, they hear no good, see no good and speak no good. That will be the tenor of all that we hear during this debate from them because it is sour grapes on their part. What has happened in the water industry has been done by our Conservative Government for the good of the country. I want to speak up loudly and clearly for the water companies, especially Wessex Water.

Mr. Eric Martlew (Carlisle) : The hon. Gentleman probably owns it.

Sir Jim Spicer : I do not own it. If I played any part within that company, I would declare it. I hope that the hon. Gentleman will accept that.

Wessex Water is a fine company and it has done a great job since privatisation. Since privatisation, 80,000 samples of drinking water have been taken every year and are subjected to over 1 million tests for purity. A total of 99.6 per cent. of the legally required tests complied with United Kingdom and European Community standards last year. One cannot do much better than that. There have been no water restrictions in Wessex since 1976 and I would give a pretty firm guarantee that there will be none this year.

In this decade, Wessex Water is committed to spending over £350 million on improving already high drinking water standards. A total of 98.2 per cent. of Wessex Water's sewerage treatment works meet compliance standards. Six years ago, that figure was 85.7 per cent. Bathing water standards are of great importance in a constituency such as mine. The figure for meeting compliance standards is up from 71 per cent. in 1987 to 92 per cent. last year.

Mr. Mike Hall (Warrington, South) : Is the hon. Gentleman aware that Wessex intends to spend £70,000 to establish the life of a meter, when Welsh Water has already established that that life will be seven years? Does the hon. Gentleman think that that is a good way of spending money?

Sir Jim Spicer : Yes. In Wessex we are cautious people. We do not necessarily accept all that has been done in Wales. In fact, we take it with a pinch of salt. We want to do our own investigation. As the hon. Gentleman will know, we have already carried out the largest tests in the entire country on the Isle of Wight. So the hon. Gentleman should give some credit to Wessex Water for knowing a little more about metering than any other authority.

I am sorry that the hon. Member for Hammersmith (Mr. Soley) is not present, because he raised the point about four or five properties being flooded with sewage. In Bridport, a town served by Wessex Water 24 terraced houses have faced flooding with sewage three or four times a year over the past 50 years. The people in those properties have lived in fear for all that time. I have been horrified and shocked over the years when, time and again, I have gone to the old nationalised company only to find that no work was contemplated. Immediately after privatisation, I went to Wessex Water and said, "This will not do." That fear has now been lifted from those people. They have a marvellous scheme.

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Although the cost per household has been astronomical, Wessex Water felt that it was its duty to do what was required for those people. I sometimes think that we spend our time in this country saying how dreadful we are. However, 90 per cent. of our rivers reach European Community standards compared, with 45 per cent. in the rest of the Community. We know the situation in that great city of Brussels. It does not even have a decent sewage works. It should get on to that and improve its standards dramatically.

From 1975 to 1979, I served on the Public Health Environment Committee of the European Parliament. That was in the heady days when we were passing resolution after resolution, regulations were being approved and the Commission was demanding higher air and water standards left, right and centre. At that time those of us in the Community lived in an ivory tower and agreed with all those regulations, because we believed that we should aim for total perfection within the Community. We believed that that was what it was all about.

However, with compliance figures now of 99.6 per cent. and so on, I wonder whether it is right and proper for us to search for that total perfection when we know what horrors exist outside the European Community. That 0.5 per cent. improvement within the Community would cost billions of pounds, always assuming that everybody did what they said they would do. Yet even a small fraction of that sum could be spent in eastern Europe, Russia or Africa and could produce so much more for our world and for us because we are part of that world. My hon. Friend the Minister said that improvements must be paid for. By all means let us have improvements, and let all of us be prepared to pay for them, but let us not go for perfection at whatever cost.

Costs of £28 billion in this decade have been mentioned. Some people say that, if the flood of directives continues from the Community, with its constant searching for perfection, that figure could double. I beg Ministers carefully to consider what we are being required to do within the Community to see whether it is absolutely necessary. If we could transfer to the third world just 10 per cent. of the money that we shall spend this decade, all the promises that have been made at Rio would come true tomorrow. That applies to water, to air pollution and to every other aspect of our environment about which we are worried.

I am sick and tired of people who, on a heavy day in London, stick five or six checkpoints down Mile End road and then say "It is disgraceful ; we have not got a high enough air quality." They should go to China, Africa or eastern Europe and see for themselves the conditions in which people are not living but dying and, despite all the problems that we must solve, contrast that with the unbelievable world of plenty and purity in which we live today. We do, after all, live in the same world.

6.21 pm

Mr. Eric Martlew (Carlisle) : I agree with much of what the hon. Member for Dorset, West (Sir J. Spicer) said, especially towards the end of his speech. We are debating the effects of privatisation on our constituents.

In December 1988, in the Second Reading debate on the Water Act 1989, I said that privatisation would not work and that 80 per cent. of people opposed water privatisation and that it was the one privatisation measure

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that they would not accept at any price. They were right then and are right now. No hon. Member believes that water privatisation was a vote winner for the Conservatives at the last election.

Mr. Knapman rose --

Mr. Martlew : I shall give way to the hon. Member, who mentioned me earlier in the debate, despite the fact that I had not spoken.

Mr. Knapman : I was with the hon. Gentleman on the Committee that considered the Water Bill. What privatisation has he ever supported?

Mr. Martlew : I make no apologies for the fact that I was not too worried about the privatisation of Cable and Wireless. If the hon. Gentleman is asking whether water should be taken back into public ownership, the answer is yes.

We have heard much today about the amount of investment that has been made in the industry. The same amount could have been invested under public ownership and, by cutting the profit margin, bills could have been reduced by a third. In Committee, it was said that privatisation would send prices sky high. That has happened. It was said that the service will worsen. That has happened. It was said that there would be a massive number of disconnections. That has happened. We said--there has been little mention of this by Conservative Members--that there would be water shortages in many parts of the country. That has happened.

Privatisation has made a national strategy for water impossible. If people in the south-east, who, funnily enough, tend to support the Government, but were more reluctant to do so at the last election, are without water it is not the fault of the Labour party. We would have been quite happy to ensure that water from the north and the north-west--the area that I represent, where there is plenty--was sent to people in the south. That will not happen now because of privatisation.

I represent Carlisle, and the Minister, the hon. Member for Penrith and The Border (Mr. Maclean), represents a constituency in the area. Inflation is 4.5 per cent., but our bills increased 9 per cent. this year. No other company in the north-west, except Norweb, has been able to make such increases. There is no competition because the water authorities have a private monopoly. No company offers me an alternative tap in the bathroom. The House created a private monopoly without safeguards--a licence to print money. Any fool can run a company that has a monopoly in a product such as water. North West Water cannot go bankrupt, because without it the people of the north-west cannot survive. We created a money-making machine for the stock exchange and for shareholders.

The Minister defended the massive increase in the salary of the chairman of North West Water, which seemed reasonable to him. The chairman was not head -hunted ; he did the job for about £54,000 before privatisation. He is now being paid £146,000 for doing the same job. That does not seem reasonable. In addition, he was given a share option worth £250,000. I understand why he favours privatisation.

Mr. Hall : I have a letter from a constituent who lives in Great Sankey, the headquarters of North West Water. He

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tells me that the chief executive has had a monogrammed carpet installed in his office. Is that what the profits of water companies should be used for?

Mr. Martlew : I am grateful to my hon. Friend for exposing what is going on with our money. I am sure that my constituents are not happy about lavish amounts of money being spent on carpets for a new privatised industry that was supposed to improve the service. The service has not improved. Complaints have increased by 130 per cent. I am sure that hon. Members receive more complaints about the privatised water companies than they did about the publicly owned companies. Admittedly, 50 per cent. of the complaints will be about the price of water, which is a major concern to my constituents. It is nonsense to suggest that privatisation has helped to clean up our beaches. I am sorry that the hon. Member for Penrith and The Border is not in his place. While he was in Rio, trying to wreck the world environment conference, a report was issued showing massive pollution in his own backyard on some of the beaches of the Solway. What hope have we of solving world pollution when the Minister cannot clean up beaches in his own area?

The hon. Member for Blackpool, South (Mr. Hawkins) mentioned North West Water's plans for beaches in the area, but 23 of the 33 bathing beaches do not meet the EC's standards for bathing water. Seventy per cent. of beaches in the north-west are not up to standard. Privatisation has not helped.

Mr. John Marshall : Is the hon. Gentleman aware that since privatisation North West Water has invested £511.6 million, compared with £188.8 million five years ago? Is not that helping to solve the problems?

Mr. Martlew : I am well aware of the fact that the hon. Gentleman's party was in power five years ago and kept the water authorities short of resources. It brings nothing but shame on the hon. Gentleman to mention the Government's record. We know where the extra money is coming from--the consumers. Consumers in my area wonder why North West Water has investments in Malaya and Canada. We are worried that the money is being taken out of the area to be invested throughout the world.

Disconnections do not seem to bother Conservative Members who appear to be happy to continue a two-tier society and to create an underclass. We shall reap the whirlwind sooner or later. The number of disconnections has increased to about 22,000, which is approximately the number of households in my constituency. I wonder whether hon. Members know--and perhaps the hon. Member for Stroud (Mr. Knapman) might remember this fact, which we learned in Committee--that it is a criminal offence to give a cup or bucket of water to anyone who has had his water disconnected. We hope that there are enough compassionate people who will risk the threat of prosecution by ensuring that such people are provided with water.

I am not in favour of people not paying their bills, but the bills have become too large because the profits of the water companies are too high. There has been talk about water metering being a way to solve the problem, but compulsory water metering would be an appalling mistake. It is a system of rationing by price rather than by need. The rich would still water their gardens, buy

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dishwashers and fill their swimming pools. They would not be affected, but metering would have a drastic effect on the poor. The money that we are talking of spending on water meters should be spent on providing a national water grid. That would make a lot of sense for areas such as mine. I hope that Scottish Members will not accuse us of stealing their water as they accused us of stealing their oil, but there is ample water in Scotland. It is ridiculous that we have no system of getting that water from the north and the west of the country to the south-east and to Yorkshire. A perfect example is the Kielder reservoir in Northumberland, which was built to feed the steel industry which has since declined. There are major water shortages in Yorkshire 100 miles to the south, but we could solve the problem if we could transport the water. We must consider the issue in a United Kingdom context, but, by privatising water, the Government have made that almost impossible.

We said that the Government were wrong about privatisation. We said that the people of this country would pay through the nose and that is what they are doing. The Government deny any knowledge of that--we heard from the Minister who said that it was nothing to do with the Government and that one must consult the regulator. The regulator is a waste of time. Anyone who has read any of its press releases will realise that it has very limited powers and uses them very rarely. The Government and the regulator have a Pontius Pilate attitude--they are washing their hands of a natural resource which is important to everyone.

6.34 pm

Mr. Patrick Nicholls (Teignbridge) : First, I commend my hon. Friend the Minister for the Environment and Countryside for the way in which he opened the debate. He set the context in which all our contributions must take place.

For many years the water industry had been starved of investment. It was the one industry to which the Government could always look for the economies that they needed for more pressing demands. In the end, that had to stop. Whatever else I may say, I fully acknowledge that that process had to stop. It is clear from what the Minister said that massive sums of money are now available to be spent on investment in the water industry, and it is unrealistic to deny that.

I shall make a more local contribution and provide what might be described as a gloss on what the Minister said. Understandably, the Minister spoke about averages and the average cost of water to people in this country. The difficulty is that I do not represent the country--I am a west countryman born and bred and I represent a west country constituency, so my knowledge of the average is restricted to how it applies to my area and especially to my constituency. In Teignbridge the average water charge is about £227 a year, but the west country has a curious feature--it is an area of comparatively low wages but comparatively high rateable values. That produces some interesting distortions. It means that when one goes out on the stump in the streets of Teignbridge, people will say that their water charges are now higher than their community charge. One cannot draw a simple correlation between the two and say

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that if one charge is higher than the other, it tells us something immutable, but the difference surprises many people. People in relatively average accommodation can pay more in water charges than in community charge.

There is no mystery about how that happens. The west country has more coastline but fewer water charge payers than any other area in the country. To pay for the coastal clean-up in the west country, the K factor combined with the rate of inflation means that the average west country water charge will rise for the next five years--and, realistically, for the indefinite future--by between 15 per cent. and 20 per cent. per annum.

Let me explain what that can mean in practice. As I said, in west country terms the average is a misleading figure, but on average the £227 per annum will amount to about £700 by the year 2000--and that is not very far away. It is a remarkable figure, and I am sure that many hon. Members will be surprised by it.

Certainly, the privatisation programme has been a success because it has produced £25 billion or £26 billion to spend now which should have been spent a long time ago. It would be unfair, though tempting, to criticise the Government for not being able to envisage the minutiae of policy in advance because that would be asking too much. However, having been shown how things have worked out in practice in a particular region, I do not think that it is too much to ask the Government to consider some fine tuning.

It is not the fault of the people in the west country that they have to clean up what is essentially a national asset. It is not their fault that people in Brussels are anxious to pass regulations which they know that we shall enforce because the good old Brits always play the game. It is not the fault of my constituents that people in Europe are far keener to impose obligations on other people than to meet those obligations themselves. It is not my constituents' fault, but they must cope with the consequences.

It would be tempting for the Minister--although it would not be in character--to say, "You have set out the problem, so you produce the solution." I am open to offers, but that is not my job. As a Back Bencher, it is my job--

Mr. Tyler rose --

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