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Mr. Nicholls : I shall deal with the hon. Gentleman in a moment. It is not my job to identify in every particular how one should solve the problem that I have outlined. As a Back Bencher representing my constituency, it is my job to bring to the House my experience of what needs to be remedied and then perhaps--
Mr. Tyler rose--
Mr. Nicholls : I shall deal with the hon. Gentleman in a moment--and then to suggest ways in which it might be possible to deal with the problem.
Mr. Tyler : Is the hon. Gentleman now saying that he made a mistake when he brought his experience to the House, to use his own words, and voted for the Water Act 1989? Or is he saying, as I said earlier, that the circumstances have changed since that Act and it should therefore be reviewed and amended?
Mr. Nicholls : If the hon. Gentleman had listened to what I said, he would not have needed to ask the question.
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I will repeat briefly what I said, just for the hon. Gentleman. I accept that the policy has been successful. There can be no doubt about that. I am saying that in the light of experience we need to know when that successful policy has to be fine-tuned to take account of local circumstances which can now be seen in operation rather than merely being forecast. To take account of the extraordinary position whereby a tiny number of people are responsible for maintaining the nation's coasts, some sort of extra input is necessary, whether through Whitehall, through Europe or through a combination of the two. The problem needs to be addressed.It is not such a unique problem. In the 17th century, Hampden went to court and said that he did not see why he should have to make a contribution towards ship money because he came from an inland area. He said that he was not troubled by pirates or by other such matters and asked why he should have to pay taxes to maintain the Royal Navy. He was told in no uncertain terms that the kingdom in those days was a seamless entity and that he, too, benefited from the security and safety of the coasts. Some things change over 300 years, but that does not.
We are entitled to say that there is an extra dimension at present which needs to be addressed. It is simply unfair and unrealistic to think that as time goes by a national asset will continue to be maintained on a local basis. We do not maintain the coastguards on a local basis, we do not maintain the Royal Navy on a local basis, and ultimately, we cannot maintain all the west country coast on a local basis.
Any debate, no matter how serious the subject, should have some light relief, and I pay full tribute to the hon. Member for North Cornwall, (Mr. Tyler) for providing that. It is extraordinary for the Liberal Democrats to come to the House and say, "We can solve it for you. We have worked out how to do it. Here is the macro-solution from the man from North Cornwall. He says that pensioners should not have to pay standing charges." That is a relief, is it not, Mr. Deputy Speaker ? Already one can hear the thundering of feet as millionaires head towards North Cornwall. Doubtless the people in front will be the Dowager Duchess of Westminster and my right hon. and noble Friend Baroness Thatcher. They will all flood down to Cornwall, North now because they know that under Liberal Democrat policy the working poor in North Cornwall and Teignbridge will be responsible for paying their standing charges. That is an extraordinary proposition. From time to time, it is rather nice to be a Liberal Democrat because the idea is that one does not have a record. In fact, the Liberal Democrats do have a record. The time when capital investment in the water industry was slashed was between 1974 and 1979, when it was reduced from £1.6 billion to £1.1 billion. Who kept the Government in power ? The answer is the hon. Member for North Cornwall and his merry friends.
Mr. Tyler : After the Adjournment debate the other day, I had to point out that the Minister had his dates wrong. I think that the hon. Member for Teignbridge (Mr. Nicholls) was not in the House at the time. My party did not support the Government at the time to which the hon. Gentleman refers. During the short period in which we supported the Government, there was an increase in
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capital investment in the industry. Perhaps the hon. Gentleman will check with the Minister to see whether he has the correct date.Mr. Nicholls : The record of the Liberal party in keeping the Labour Government in office is clear enough. It is a matter of record.
Mr. Nicholls : The hon. Gentleman bawls from a sedentary position that it is not true. He was here briefly before and he will be here briefly on this occasion. He may care to check the facts. As time is short, I will not go through all the years in question. I merely point out that in 1974- 75, the first year of the Labour Government, investment was £1.634 billion. By 1978-79, investment was down to £1.128 billion. Those are the facts.
It is puerile populism for the hon. member for North Cornwall to say, "If I cannot get the dowagers to deal with the problem, I have another idea." He talks about the salaries of the water authority chairmen. Yes, the salaries are large. Ridiculously enough--this is a slightly different comment--some of them earn more than the Prime Minister does. Is the hon. Gentleman going to go to the west country at the weekend and say that he can solve the problem for water charge payers by abolishing the salary of the chairman of the South west water authority? That would be literally a drop in the ocean compared with the present £2 billion capital investment programme. It would be thoroughly unfair and unrealistic for me to say to my right hon. Friend the Secretary of State for Wales that I expect him to come up with a blueprint to deal with the problems that I have set out. He knows, however, --he will have been briefed--that west country Members, of whom I have been in the forefront, have said to Ministers recently, "This is the way it is working out in practice." It would be asking too much of my right hon. Friend to demand that he should come up with a solution tonight.
The Opposition motion makes no mention of investment ; instead it whinges on about perks. On the basis of the motion, there is no doubt which way hon. Members should vote. However, I hope that when my right hon. Friend the Minister replies to the debate we shall see the start of a process. I hope that he will at least acknowledge the effect of the problem on the west country. I hope that he will at least accept from me the feelings of outrage and indignation when people see how a successful policy affects them in a particular area. I do not expect my right hon. Friend to come up with a solution today, but an acknowledgement that there is a problem which must be addressed would be extremely helpful.
6.45 pm
Mr. Bryan Davies (Oldham, Central and Royton) : The speech by the hon. Member for Teignbridge (Mr. Nicholls) revealed some special pleading. The hon. Gentleman supported the principle of the organisation of the water authorities, yet when the shoe begins to pinch in terms of the hon. Gentleman's constituency, he asks for dispensation. There is a suggestion that the Government might come up with some redress, which is exactly the basis of our case. This is my first speech in the House for 13 years, and my first speech as the Member for Oldham, Central and Royton. I am aware that such speeches are often not
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interrupted and that one has the opportunity to make some uncontroversial statements. It is unlikely that I shall be able to avoid making any controversial statements, and I do not mind if hon. Members intervene, if they help to advance my argument.I have always thought that we needed a powerful political campaign to destroy three political metaphors. The first, which is constantly used by hon. Members of all parties, is that we need a level playing field. Any sportsman can tell us that a level playing field is not needed for any sport. If the field is tilted, one normally plays against the conditions in one half and with them in the next half. I have never understood why people, especially politicians, think that a level playing field is such an advantage. I say that especially as the parliamentary football team played on a level playing field today and lost 3-0 to the Press Gallery, our old enemies. It did not do us much good.
The second phrase that I should like to see abolished from the parliamentary lexicon is the "kick start" to the economy, which the Minister used earlier in the debate. The phrase reflects a time when the motor bike industry was British-owned. We persisted with the kick start while the Japanese exported motor bikes with electronic ignition, which wiped out the motor bike industry in Britain. I have never understood why Conservatives suggest that there can be industrial recovery through a kick- start mechanism, as kick starts are an outdated technique.
The third phrase, which I should especially like to abolish, is used when referring to hon. Members who return to the House for a different constituency after a lapse of time. They are referred to as "parliamentary retreads". I think that the phrase was conjured up by my dear friend Andrew Roth, who is responsible for the pen portraits which appear so often in his books. The phrase gives an image of burnt-out rubber, of someone who is decayed and of limited second-hand value, and of limited service to a constituency. I propose that those of us who are privileged to come back to the House after a lapse of time should henceforth be referred to as "recycled" Members. It makes us sound greener, environmentally friendlier and of greater value to society. That is how I should prefer to be identified.
I am exceedingly proud of my new constituency. I am proud of the fact that Oldham and the adjoining town of Royton were the cradle of the industrial revolution. The mills that Blake referred to as "dark" and "satanic" were constructed in Oldham, but I pay tribute to the architecture of the past. Much about those mills has stood the test of time. They were well built, many were extremely light, and they provide excellent premises for new industrial enterprises, of which we have a range in Oldham and Royton.
Industrial and domestic catering machinery is now produced in one of those mills. Ferranti operates from the Cairo mill in my constituency, whose name everyone will recognise, as it had such great significance for the cotton industry. Ferranti carries out the highest level of technology in a building which is more than 150 years old. There is a danger that Ferranti may transfer its processes elsewhere, and I make a plea that the Ferranti board's decision should be in favour of Oldham and of maintaining work there for my constituents.
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Oldham was not only the cradle of the industrial revolution but of parliamentary democracy because the constituency was created to redistribute political power from the south to the north of England--to give working people in the new industrial towns of the north some representation. Although the Reform Act 1832, proved to be a great disappointment to so many working people--especially in Oldham, where the Chartist movement was inspired as a protest that the Bill did not go far enough to enfranchise them--it was a significant redistribution of power from the south to the north. That balance still has to be redressed.Oldham succeeded in giving some powerful political voices to this country. The first two Members of Parliament were William Cobbett--he of "Rural Rides", who identified the needs of the poor--and Henry Fielden, who would not have commended himself to the Conservative side of the House. He was in favour of restricting the working day to 10 hours. He was the predecessor of those arguing within the European Community and on the Opposition Benches for some restriction of the working week, which the Conservatives choose to oppose. Those two men portrayed the horrors of laissez-faire and of the free market capitalism of their day. How they would shudder at the impact of Government policies today, especially on the community that they represented.
Many of my constituents are finding life tough during the second recession in little more than a decade, and the water industry is not making their lives any easier.
Before I identify the water industry's abuses and its depredations on my constituents, I must pay tribute to my immediate predecessor, James Lamond, who was the Member of Parliament for Oldham, Central and Royton for 22 years. James was essentially a modest man, although he was proud to be in the tradition of Cobbett and Fielden, and of the radical Winston Churchill, who represented Oldham at the beginning of this century. However, James would never have put himself in that category. He took great pride in the fact that he represented his constituency well, and he was greatly respected there and in the House.
I have no doubt that the people of Oldham and Royton greatly miss their former Member of Parliament, who presented strong views, which were not entirely uncontroversial. I did not entirely share his view of the virtues of the state centralist planning of the Soviet Union, a country which he visited many times. However, he was historically accurate when he argued in the House that a massive vested interest--aggressively represented on the Conservative Benches and in the wider western world, especially the United States--greatly exaggerated the Soviet threat to our position in Europe. He argued that the military industrial complex of western Europe had a vested interest in dramatising the Soviet Union's power, which was much weaker than it was portrayed.
I do not think that there is any doubt that history has proved that the Soviet Union never possessed the power, even if it may for a short time have had the will, to carry out imperial adventures against western Europe. James Lamond was right to argue that the archaic industrial regime that was the Soviet Union had a limited capacity to cause the sort of damage predicted.
James was not only a critic of the Government's strategic policy on east- west relations. He was a master of the short, sharp question, which permits less evasion by Ministers and is therefore more effective, although it is
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deployed all too rarely in the House. He was also a master of the sedentary intervention, which is a more difficult art form. With his strong Aberdonian accent, he could be heard all over the House, and successive Speakers and Deputy Chairmen were somewhat tolerant of his caustic wit, which often caused Ministers to reply.He also served as a member of the Chairmen's Panel, and I believe that he chaired sittings of the Water Bill, so it is right to mention him in this debate. In his constituency, he was regarded as the most considerable and helpful of Members of Parliament, and during the two years that I have campaigned in my locality, I have been told that I shall do well to match him. I shall certainly try.
First, I shall try to defend my constituents against the rapacity of private exploitative monopolies, created by this Administration. This is a debate about water, but today the North Western electricity board, has announced that its profits doubled last year. Who can provide an alternative competitive mechanism to contrain that exploitation of ordinary people? Water is an equally grim example. How does the party that talks of the virtues of laissez-faire, which has a so-called think tank called the Adam Smith Institute--the party of Sir Keith Joseph and Margaret Thatcher-- justify that private monopoly power? Surely Adam Smith made it clear in the 18th century that consumers would be exploited if private monopolies were created. Surely 19th-century economists--those patron saints of the Tory party--emphasised that too.
Is it not the case that, in the 20th century, Hayek and Milton Friedman pointed out the dangers of monopoly power? It is true that those economists often railed against the state, but at least its monopoly power is answerable to the people. It is answerable in the House, whereas the Minister is disavowing any responsibility for the strategies pursued by the water authorities.
The water companies are monopolies with a captive market. They will set out to make excess profits, and it will be difficult to deter them. That is what has been going on. Since privatisation, the excess profits of all the water companies have increased substantially, especially those of North West Water.
Even in the midst of the bleakness of recession, when all our manufacturing industry is going to the wall, when virtually no one can make a decent profit and all our enterprises are suffering, the public utilities are coining money because of their monopoly position.
What else did we expect from exploitative monopolies but that the people at the top would be the beneficiaries of their exploitative power? Have not the chairmen and key executives of the companies benefited from water privatisation in a way that no one else could conceive of doing? How can Conservative Members justify it when a man doing a job earns one rate in one year and, three years later, triples that salary? It is claimed that that is somehow related to his performance, but his earnings are related not to performance but solely to the exploitative powers of the water companies. How are such increases paid for? Labour Members know the answer, and some Conservative Members are beginning to appreciate it, too. Prices have gone up by more than three times the rate of inflation. Since privatisation, prices have risen by 41 per cent. in the north-west.
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What has been the corollary of the increase in prices? It has been the staggering, shameful growth in disconnections. Should an industry that provides such an essential commodity to our people see the number of disconnections rocket into the thousands this year because people cannot pay for the supply of water that they need? Where will price increases end? North West Water has begun to charge fell runners for the use of land that it controls.How will the national grid for water operate? What will Conservative hon. Members ask of North West Water, which is replete with resources, given the average rainfall on Old Trafford and on points to the north and west of it? What will happen when the drought-ridden lands of southern England make a supplication to North West Water for the transfer of water resources? Will North West Water charge the exact market rate? Will it exploit consumers in southern England by charging them through the nose for the water supplies that they desperately need? We cannot have a rational policy for the distribution of water in this country, despite the growing anxieties expressed in constituencies in southern England, while we leave the powers of the northern water companies unfettered.
It will be necessary in the short term, before we can do anything more dramatic when the Labour party comes to power again, to strengthen the power of Ofwat, the regulatory body. By our scrutiny of its role, we must insist that the water companies are more answerable to our constituents. Labour hon. Members must harry and harass the Government, who have created the exploitative monopolies, so that they answer the case.
7.2 pm
Mr. John Marshall (Hendon, South) : I congratulate the hon. Member for Oldham, Central and Royton (Mr. Davies) on his inaugural speech as the Member for that constituency. I know that he was highly regarded when he was in the House before, and I am sure that he will make a great success of representing his constituency.
I also support the tribute the hon. Gentleman paid to his predecessor, because Jimmy Lamond and I served on Aberdeen town council many years ago. He was known there as an effective debater and as a man of principle. He was highly regarded by members on both sides of the civic chamber. When I joined the House, I was not surprised to find that he was also highly regarded here. In Aberdeen we had a civic toast--the toast of Bon Accord-- which went "Happy to meet, sorry to part and happy to meet again." I am sure that the hon. Member for Oldham, Central and Royton and other hon. Members would be happy to drink that toast to Jimmy Lamond.
I was interested to hear the hon. Gentleman say that we no longer have a British motor car industry. When he was previously in the House, the Meriden co-operative existed, which was financed by large amounts of public money. There is a lesson to be learnt from that--one cannot pour large sums of public money into a venture and assume that it will be a success.
It has been an interesting debate and some Labour Members have said that they would renationalise the water industry. Let them remember that that would mean spending £8 billion to buy the shares back and that they would be forgoing hundreds of millions of pounds of
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revenue in corporation tax. Let them remember that that would mean a vast increase in expenditure on investment, which would be paid for by the taxpayer.The first contribution from the Opposition Back Benches came from the hon. Member for Glasgow, Provan (Mr. Wray), which was particularly interesting because Scottish Labour Members always tell us that English Members should not speak on Scottish issues. This debate relates to England and Wales and, therefore, it was surprising that a Scottish Labour Member should seek to trespass on our issue. We then heard a typical speech from the hon. Member for North Cornwall (Mr. Tyler), who has now disappeared from the Chamber. He spoke of the need for a new method of paying for water, but, as so often happens with the Liberal Democrats, the nature of that new method was not described to the House. No doubt it will be revealed two days after the next general election.
When I was told that we were to have a debate on water, I thought that it would be a debate of congratulation. I thought that we would congratulate the water industry on doubling its investment since privatisation and on spending more money in investment than it has made in profits. I thought that we were going to congratulate Thames Water, which has invested £1,200 million compared with profits of £700 million. I thought that we would congratulate the water industry on having better standards than those of the European Community, and that we would congratulate it on the level of water charges. The average water charge is 46p for each household per day--less than the price of a loaf of bread.
Mr. Win Griffiths (Bridgend) : God knows where the hon. Gentleman buys his loaf of bread.
Mr. Marshall : I am afraid that I do not go to Food Giant to buy my bread. It may cost less in Food Giant, but in many shops a loaf costs more than 40p. The cost of water is well below the price of a pint of beer, and I know which gives better value for money. In the area covered by Thames Water, which supplies Hendon, the average price of water is only 40p per household per day.
When we debated the privatisation of water in 1988, there was general agreement that the standard of our beaches was too low, that our rivers suffered from excessive pollution, that the quality of drinking water in Britain was not as high as we would have liked and that the problem of water shortage needed increased investment. The only difference between the two sides was in trying to find a solution to the problems. Our opponents said that the then structure of the water industry had led to all of the problems, but what did they intend to do? They did not intend to change the structure of the industry. Although they said that the problems had been caused by the structure of the industry, they said that they would solve them by keeping the industry in the public sector.
Conservative Members recognised that the water industry's failure resulted from a lack of investment. In any public expenditure round, the water industry, if in the public sector, had to compete for resources with hospitals, schools and transport. It never did very well. The water industry had to be privatised so that it could tap the resources of the market.
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Today's debate has revealed the Labour party's paucity of thought. It said that, under public ownership, the water industry had failed the nation, but what does it say now? It says that the industry should be returned to public ownership--no doubt to fail the nation a second time. No wonder that, the other day, The Times said that the Labour party has no new thoughts and that anyone looking at the House from the outside would think that the real Leader of the Opposition was the hon. Member for Bolsover (Mr. Skinner). I began to fear that the hon. Gentleman would become a cult Establishment figure and lose his traditional role.Opposition Members live in a fool's paradise. They think that we can have increased investment without somebody having to pay for it. Individual water companies have an excellent record. Anglian Water's investment in 1989-90 was £190 million. The projection for 1993-93 is £380 million, double the 1989-90 figure. That company should be congratulated on that achievement.
In 1987-88, investment by Thames Water was £146.2 million. In 1991-92 it is £400 million, more than double the previous sum. Opposition Members should commend Thames on that achievement. Severn Trent Water invested £205 million in 1988-89 and £585 million in 1991-92, an extra £380 million to improve the water services in that area.
We have heard a certain amount about South West Water. Its investment in 1986 was £55 million. In 1990-91 it is £172 million. Some Labour Members complain about North West Water. That company has increased its investment from £188.8 million five years ago to £511.6 million. Opposition Members should be on their feet commending the water industry for those massive increases and for all the extra jobs that it has created.
I agree that the present pricing system is unfair, but that is because it is related to rateable values. There was no greater nonsense than the old rating system. In those days, we tried to measure the fair market rent of a property and say that that would be its rateable value. But there could never be a fair market in property, because we had a system of rent controls. Likewise, the rating system tried to measure what did not exist. The rating system is an unfair means of measuring water charges. It bears no relation to ability to pay or to consumption. It is inefficient because there is no incentive to conserve water.
The only effective way to charge for water is a system of water metering which relates the price paid to the level of consumption. It encourages the more economical use of water, as we saw in the Isle of Wight. Some will say that it creates hardship for large families, but that is no argument against water metering. It is an argument for giving additional help to families hit by it and for a generous system of family credit. It is not an argument for maintaining a system which is riddled with distortions and encourages an excessive demand for water.
Opposition Members are critical of the price mechanism and we have heard much about rationing by price. Is not virtually every commodity rationed by price ? The only commodities of which there will be shortages are those that are not rationed by price. For years, we had a lack of rented accommodation in the private sector because the Labour party said that we should not have private-sector housing rationed by price. Instead, we were told that rents must be low, with the result that there was no private- sector rented housing. The same applies to water. Without a pricing mechanism, there are bound to
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be shortages-- [Interruption.] There is a shortage of water now because we have not had rationing by price. We have had an artificial system of water pricing, which is why we should go over to a system of water metering.The debate has highlighted the opportunistic humbug of Opposition Members. They have said time and again that we need more investment in the water industry, but they have never said how it is to be financed. They claim that it should not be paid for by the consumer. If it is to be paid for by the taxpayer, they refuse to admit that the taxpayer is, in any event, the consumer in another guise. It is no good saying that the Government will pay, as though that is a panacea, because people must pay the taxes which the Government raise to pay for such investment. We all pay taxes--
Mr. Jimmy Dunnachie (Glasgow, Pollok) : Some people dodge taxes.
Mr. Marshall : The hon. Gentleman, from a sedentary position, talks about people dodging taxes. I find that rather rum coming from a Scottish Labour Member, when a number of Scottish Labour Members told the people of Scotland in the 1980s not to pay the poll tax-- [Interruption.] -- and I think I hear the hon. Gentleman saying, "Quite right." Obviously, he thinks that it is right for people to try to dodge that tax. It shows that he is a member of a party which favours tax dodging and fiddling. It shows how responsible the hon. Gentleman is. He is not fit to be a Member because -- [Interruption.]
Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. It might be advisable for the hon. Member to return to the subject of the debate, rather than to criticise other hon. Members.
Mr. Marshall : I apologise, Mr. Deputy Speaker. I was led astray by the sedentary intervention of an Opposition Whip. Whips are supposed to be silent. Had the hon. Member for Glasgow, Pollok (Mr. Dunnachie) remained silent, I would not have been led down that byway. Opposition Members do not say how investment in the water industry should be financed. They have failed to produce a new pricing system that would be fair and would abolish the wasteful use of water. They have no idea how to react to the problems of the water industry. Instead, they censure the industry, despite the remarkable progress it has made since privatisation. They also censure the Government, even though we have been willing to face the problems of the industry with the aim of improving the quality of our water, our rivers and our beaches and to bring British water up to date in a way that would never have been achieved had the industry remained in the public sector.
7.16 pm
Mr. Richard Burden (Birmingham, Northfield) : Before coming to this place, I spent a large part of the 1980s trying to alert people to Conservative plans for privatisation of the water industry. I had no doubt that there was a secret agenda, for several years prior to its being announced in the 1986 White Paper, to privatise the industry. Following that announcement, I spent much time warning people about the implications of that move.
I intervened earlier to point out that a Conservative Government first nationalised the water industry. The Minister appeared not to know that. As he seemed
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confused, I will explain. The assets of the water industry were inherited from local authorities and belonged to the people. The last Conservative Government seized those assets in order to acquire the right to sell them. The fact that that Government did not own the industry in the first instance blew off course their first attempt at water privatisation in the mid-1980s. I was pleased that when they finally got away with privatising the industry at the end of the 1980s, more than 80 per cent. of the British public had the good sense to oppose their plans. The fact that the Conservatives ignored that opposition destroys any claim that they wished to listen to the wishes of the people.Ministers have echoed the claim of the water industry that privatisation has been a great success. They claim that water quality is at its highest level ever, they point to the fact that more sewerage works are meeting European conditions, and they applaud the standard of sewage being discharged into our rivers. There is no doubt that investment in the industry has been impressive in recent years. There has also been massive investment by those who work in the industry by ensuring that improvements have taken place. Little is said by the Conservatives about that contribution.
Before we get carried away by the improvements that have been made, however, let us pause to consider where they came from, and why the investment was necessary. Some of the Government's most strident claims are about the way in which privatisation freed the industry from the shackles and the dead hand of Government. The biggest dead hand was put on the industry by the very same Government who then sought to privatise it. Those shackles were part of the pre-privatisation process. To claim credit for removing those shackles is a bit like King Herod trying to claim credit for the expansion of Christianity.
For example, there is no doubt that investment in the industry has always been too low, but in the early 1980s there was a deliberate Government policy to hold back investment and force water authorities to accelerate the pace of servicing and paying off inherited debts. In the case of Severn Trent, the water authority which covered my constituency, more than £80 million a year, which could have gone into improving the quality of water services, had to go towards servicing debts. At that time, many of us appealed to the Government to write off those debts and allow water authorities to spend the money that needed to be spent, but the Government shrugged off those calls.
It is not surprising that, now that the industry is privatised, all those views have been turned on their heads. The debts, amounting to some £5 billion, which the Government said could not be written off when the industry was in the public sector suddently became easy to write off once the industry had been privatised. Not content with that, the Government then gave the private sector industry a cash hand-out of £1.5 billion. Why could they not have done that for the public sector water industry? How was it suddenly possible to do so for the private sector?
Not content with that, the Government then gave the private sector water industry tax allowances amounting to some £7.7 billion to ensure that it had an easy ride for the first few years of its existence. Still not content, they sold off assets valued at more than £30 billion for about £5 billion. As though that were not enough, they gave consumers and taxpayers the dubious privilege of
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subsidies to the tune of several more million pounds for the sale of the water industry through a massive advertising campaign. Are consumers--or, to use the current jargon, customers--to be grateful to the Government for such a deal? I doubt whether they will be grateful when they consider the massive profits that the water companies are now making and how water charges have gone up. The impact of those charges is real enough for the 22,000 people whose water supply has been disconnected in the last few years. Just up the road from my constituency, South Staffordshire Water has the worst disconnection rate in the country. I am pleased that Severn Trent has been more modest than the national average in that respect, but disconnections in its area have still increased. Severn Trent says that it has come up with a novel idea to ensure that fewer families are cut off. It is called a pre-payment water meter. It is an interesting idea, a bit like the coin-operated gas or electricity meter, except that customers use a smart card, which is charged up in advance and provides them with a certain amount of water. Perhaps it measures the volume, but I suspect that the charge is made for a certain period of time.Severn Trent says that the cards will help low-income families with their budgeting. To an extent, that will happen because if the budget goes wrong or the family cannot afford to charge up its card, the water will be cut off. I agree that that will help, if that is what is meant by budgeting, but some dangers may arise. When water was privatised, numerous codes of practice said that water could not be disconnected without a court order. Minister after Minister assured the House that court orders would be needed before so-called customers could be disconn-ected. With pre-payment meters, disconnections will happen because people will be unable to charge up their cards, and they will never get near a court. It seems that in the trial operations which are to take place with the use of pre-payment meters, when families have their supplies cut off there will be no obligation even to inform the local environmental health department.
To add insult to injury, it appears that a charge of some £26 will be made for those meters. Is that not an interesting idea? Low-income families with budgeting problems will have a meter installed and pay for the privilege. If their debt amounts to some £100, which is fairly standard, they have to pay £26 to have a meter installed. An interest rate of 26 per cent. to help the local water company improve its cash flow is rather steep. I hear today that Severn Trent is prepared to waive the charge but, surprisingly, Ofwat, which is meant to be the consumer's champion with responsibility also to shareholders, insists that the charge should remain. The most ridiculous aspect of pre-payment meters is that when a card runs out--when people have budgeting problems and lose their water--it does not mean that the debt stops. They will still incur water rates for the time when they have no water. That is a crazy idea.
If the water companies and the Government are worried about the impact on low-income families of massively rising water charges of the kind that we have seen recently, I make a couple of suggestions. If they go ahead with the pre-payment meter trials, I hope that the problems that I have raised will be dealt with first. Two
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more constructive suggestions are, first, that the Government should make regulation work. They should ensure that water bills do not go through the roof and families do not fall into such a trap. Secondly, the Government should reverse the ridiculous social security changes that they pushed through in the 1980s, removing help with the payment of water bills. If they reinstitute that help, it will go some way towards alleviating the problems of low-income families.The only long-term solution is to restore to the water industry something that it should never have had taken away in the first place--democratic control.
7.26 pm
Mr. Roger Knapman (Stroud) : Some time before the 1987 election, my predecessor, who had been in the House for 32 years, asked me what my specialisation would be in the House. He seemed to be thinking of Attlee's dictum that one should specialise and keep out of the bars. When I told him that I was a chartered surveyor, he frowned and said, "Oh dear, they'll have you talking about drains. I advise you immediately to get an interest in foreign affairs or defence." He was Chairman of the Foreign Affairs Select Committee and able to get to Cyprus and Hong Kong at short notice. I should have listened to him because, shortly afterwards, I found myself on the Standing Committee discussing the privatisation of the water industry.
Many of the arguments rehearsed in Committee have been rehearsed again today, and some interesting suggestions have been made. The hon. Member for North Cornwall, (Mr. Tyler), who is in his seat, suggested that pensioners should be exempt from paying standing charges. We should have further details of that policy before long because, although I can see how people living alone could benefit from that exemption, what about those living with families who are not pensioners? How can legislation provide for them?
In Committee, as one might expect, the Bill was bitterly contested by the Labour party. The arguments went along the line just advocated by the hon. Member for Birmingham, Northfield (Mr. Burden). Opposition Members said that God gave us the water and that we had no right to privatise it. We had to point out that He--I say "He" despite recent newspaper reports that God may be female--did not provide the stopcocks, pipes, reservoirs and so on. That was precisely the point in Committee and is still relevant now. Nevertheless, the Labour party still has a manifesto commitment to renationalise the water industry.
The formula advocated in Committee involved poachers and gamekeepers. The poachers--the water companies--were to be overseen for the first time by gamekeepers, or regulators. One was separated from the other. That is the essential difference between private companies with a regulator and a state -owned authority. With a state-owned authority and a regulator, there are merely two Government Departments, resulting in massive regulation and red tape. That does not allow for advancement.
The hon. Member for Dewsbury (Mrs. Taylor) said that she had won some of the arguments in Committee. It seems that time dulls the memory as, to my certain
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knowledge, my right hon. and learned Friend the present Secretary of State for the Environment won hands down on all the arguments, as was widely acknowledged.Despite the Opposition's experience in Committee, on Second Reading and during the rest of the Bill's passage, they have tabled today's motion. According to the Leader of the Opposition--for a while yet, anyway--and his colleagues, "this House is alarmed". The House may be alarmed, but it does not seem that many Opposition Members are alarmed. One could fire a double- barrel shotgun in the Chamber without hitting many. Today is an Opposition Supply day, and next Thursday the hon. Member for Copeland (Dr. Cunningham) will say that it is disgusting that no time has been allowed for various debates. However, today is an Opposition day and the Opposition Whips must be saying, "Thank God for the two or three new faces that we see here." New Opposition Members have been busy writing their little speeches to keep the debate going until 10 o'clock--such is the alarm. The only one showing alarm--and not for the first time today--is the Opposition Whip, the hon. Member for Glasgow, Pollok (Mr. Dunnachie).
Mr. David Evans (Welwyn, Hatfield) : They are all in the Cafeteria.
Mr. Knapman : Yes, that is where they are.
Companies in the water industry are successful. It is no shame to be showing record profits, and no disgrace to have record dividends or salaries. As has been widely reported, customers pay, on average, 46p a day for the delivery to the tap of 200 gallons of water weighing a ton or more, at a time when capital expenditure of about £28 billion is being promised.
Mr. Evans : The debate is unreal.
Mr. Knapman : My hon. Friend the Member for Welwyn, Hatfield (Mr. Evans) says that it is unreal to suggest that the House is alarmed when the industry has such a record with which to commend itself to the House. That record shows just how much more efficient the private water companies are than their predecessor authorities.
I think that my right hon. Friend the Chancellor will be pleased that companies are showing record profits. It is only if companies show record profits that people pay record tax demands, which allow for record sums to be spent on the national health service and other sectors. [Laughter.] The hon. Member for Pollok laughs, but that is why there is privatisation in Poland, Hungary and the USSR. Before long, there will be privatisation in Albania, but the Opposition Front-Bench team will still be unable to see the advantages and will continue to believe in everything being state owned. The Labour party will soon be the only party, not just in Europe but in the world, with its own peculiar view on that subject. With such thinking, it should be preserved as a museum piece.
My constituency is partially served by the Severn Trent water authority and partially by the Wessex water authority. I shall use the Severn Trent authority as an example, as have one or two of my hon. Friends. Last year it spent £300 million running the business and at the same time ploughed £585 million into new capital investment projects. It spent more than it received from customers in any one year. That shows the need for the RPI plus K
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formula that was set up. If it is inadequate, it can be altered with the agreement of the regulators--indeed, on their instructions. The company's planned expenditure for the four years from 1990-93 is more than the amount allowed to the water authorities in the previous 10 years. I believe that the same may be true of other companies. Now, a business decision is taken in co-operation with the regulators. I hope that my right hon. Friend the Secretary of State for Wales will acknowledge the legal ring fence around the core water businesses. It is important to retain that ring fence, and there should be no cross-subsidisation. However, such companies must be granted the freedom to manage themselves and diversify if they wish. Some have already done so successfully and should be allowed to continue to do so. That is the case in France and other countries, even those with socialist Governments where private companies are encouraged. Standards have not slipped in the Severn Trent water authority, where there is a 99.6 per cent. pass rate on drinking water and a 99.8 per cent. compliance rate with effluent standards. That authority's record is jolly nearly perfect.According to the motion, the House is alarmed, but my constituents and those of the Severn Trent district are so "alarmed" that only 15 customers in every 10,000 complained last year. I hope that that statistic puts matters into perspective. It may be that, as people are now clearer about how to complain, more are encouraged to do so. They also know that complaints made to a private company might result in action, whereas it was not much use complaining to a water authority that was essentially a Government Department. That factor may account for some additional complaints, but a rate of 15 out of every 10,000 is not too bad.
The motion has nothing to do with Labour's concern about public interest, but everything to do with the party's traditional hatred of successful companies and capitalism in general. Its arguments do not change and I suppose that the £28 billion can be found from the public sector. Is that the Opposition's promise? If so, we should start to calculate the total of all their pledges for the next election in four years' time. If the Labour party really is committed to expenditure on such a scale, it should say so clearly. It should not pretend that all the improvements can be carried out and no one will actually have to pay for them.
It is marvellous that such a level of services can be provided for 46p a day. Demand for water will certainly increase greatly as more people use dishwashers and the number of two and three-car families increases. Instead of a negative motion that does not even appeal to Opposition supporters--I suppose that it will soon be said that I have thinned them out still further--the Opposition should state how they will provide for the increased demand. Reference has already been made in the debate to reducing leakage, using more modern and efficient sewage plants and the need for vast capital expenditure. In the 1980s, a considerable number of abstraction licences were granted. I am uneasy about whether treating all the bogs and water collection areas as a sponge that can be squeezed as hard and often as possible is necessarily in the public interest. In chalk regions, in the south and, not least, the south-east, many of the upper reaches of rivers and streams are drying up--the Avon and Darent are well- publicised examples of that. If my hon. Friend the Member for Dorset, West (Sir J. Spicer) were here, he might say that the River Piddle was well named.
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