House of Commons Hansard Debates for 16 Jun 1992

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I am not sure that the effect of large-scale underground abstraction is fully understood and I should be grateful if my right hon. Friend the Secretary of State should refer to the latest thinking on that subject in his wind-up speech. It will be interesting to see which farmer will sue first for loss of crops due to the drop in the watertable, as levels continue to drop. May we have the latest thinking on the possibility of charging by meter? I do not think that anyone is seriously suggesting pre-payment meters, which were mentioned by the hon. Member for Birmingham, Northfield (Mr. Burden). The basic proposition that one pays for what one uses is a sound philosophy and, moreover, can be justified on environmental grounds. Is it correct that the introduction of metering might result in a 10 per cent. decrease in consumption? Simultaneous increases in demand would act to nullify that trend. If it is environmentally sound to use less water, then the presence of meters is a regular reminder in the form of a bill that people should use water sparingly.

Far more water is lost, however, through leaks. I understand that 25 gallons in every 100 from the reservoirs are lost, and because of increased expenditure that huge loss will be greatly reduced in the next few years. That can be done only with private capital. Of the 25 gallons leakage, about 15 may be lost between the reservoir and the stopcock. I am sure that water companies will deal with that, but it appears that the other 10 gallons are lost between the stopcock and the tap in the domestic property. That problem must be looked into ; we must ask whether metering will help to reduce the loss of one gallon in 10.

Unless people are directly responsible for paying for what they use, they are unlikely to want to go to the expense of repairing their pipes. I hope that the Government will think along those lines. I suspect that the present system, under which all new properties must be metered and anyone else who feels disadvantaged without a meter has a choice, represents the right approach.

The hon. Member for North Cornwall (Mr. Tyler) made an interesting speech, in which he drew attention to his constituents in Bude. He said that an elderly couple spent more on water than on rates. I wonder whether he pointed out to them their right to a meter if that was to their advantage. He hinted that they did not use much water--

Mr. Tyler : I did point out that option to them, but as the cost of a meter is £200 and there is an additional cost of £200 before it starts metering a single gallon, that would not be to their advantage.

Mr. Knapman : The hon. Gentleman will realise that the couple's method of payment was not changed by the Act. This method of charging has been followed for a great number of years, including during the Lib-Lab pact. The Government are now looking at varioius methods of charging, and have acknowledged that there are anomalies. I am glad to hear that the hon. Gentleman tried to help his constituents, but I am surprised that he did not mention that in his speech.

Another option is to provide new reservoirs. It is reasonable to argue, whether we have meters or not, that, because of increasing demand and consumption, more reservoirs will be necessary. That could be an argument

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against metering. I asked about the cost of metering the whole Severn Trent area ; the answer bears out what the hon. Member for North Cornwall said : it might be as much as £700 million. But the cost of the Carsington reservoir, which was opened by Her Majesty a few weeks ago, was £100 million. Thanks to the benefits of an integrated system--yet another benefit since privatisation--water can flow to almost any area served by Severn Trent. If metering costs £700 million as against a new reservoir costing £100 million, Ministers may believe that constructing more reservoirs is cheaper and more efficient than metering.

Politics is always a question of priorities. I wonder what the Minister's thoughts are. If we are to reduce demand, we need metering in some areas. We must reduce waste of water ; that is already happening in many areas and has been promised by most water companies. Alternatively, we can increase supply by storage in reservoirs. Again, it is a question of priorities, although we must recognise that the whole idea is not to have politicians running the business any longer.

Today's motion notwithstanding, it was absolutely right to privatise the industry. The companies are strong and profitable, and most importantly of all, they are regionally based. Many of the companies used to be based in London. It is important to the areas concerned that water and electricity companies be regionally based. The House should be grateful to the Opposition for raising this issue, because it gives us the chance to congratulate the water companies, which are looking after their staff, their shareholders and--by improving standards--their customers. Those customers are supplied with an average 200 gallons a day for 46p. That being so, the House need not be as alarmed as the Opposition suggest. 7.44 pm

Ms. Diane Abbott (Hackney, North and Stoke Newington) : I want to talk about the effects of privatisation of the water industry on my constituents. I want to talk about the grotesque pay rise awarded to himself by the chairman of Thames Water ; about Thames Water's profiteering ; and above all about Thames Water's asset-stripping to enhance its profits at the expense of Hackney's environment. Throughout the 1980s, privatisation was sold to the British public in terms of efficiency and service. In fact, it was always about profit, not people, and about big salaries for the few and higher charges for the many. Water privatisation is a perfect example of what was wrong with all the privatisations that the Government pushed through in the 1980s.

Thames Water, which covers my constituency, has 17.5 million consumers. Since privatisation, they have seen the salaries of the bosses of Thames Water shoot up. For instance, the salary of Roy Watts rose from £34,000 in 1988 to £160,000 in 1991. Conservative Members may wonder why that matters, but if they earned the average salary of one of my constituents and saw one man's salary shoot up without justification, they might be shocked too.

The highest paid director in Thames Water earns £209,000. Salaries for the top management have shot up, with no justification on grounds of productivity or any other criteria. Charges have risen, too. In 1986, the average domestic consumer in the Thames Water area paid £82.24

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a year. Now, he pays £139 a year. Complaints have risen as well : last year, there were more than 10,000 of them. In the meantime, Thames Water has diversified into property speculation, to the concern of the regulatory authorities.

Stoke Newington's two reservoirs are a matter of anxiety to Hackney people and to me, because they show the way forward for other water authorities. They show the sort of profiteering and asset-stripping that water authorities throughout the country will go in for under the new regime.

We have a 93-acre reservoir site in Stoke Newington. The site became redundant because of the new London ring main. It is the size of Regent's park, a sort of secret garden in the middle of Hackney. On it stand four listed buildings, including a remarkable pumping station built to look like a Scottish castle. The site of the two reservoirs has plants, wild flowers and fish and 16 species of bird including smew, Bewick's swans, tufted ducks, gulls and grebes. There are also gerbils. All this is remarkable in one of the poorest and most built-up inner city areas in the country.

This open space, this nature reserve, serves 26,000 people, including my constituents on the huge Woodberry Down and Lincoln Court estates. Few of them have back gardens. There is much unemployment, there are many elderly people and young children, and there is a terrible shortage of open spaces. We in Hackney want this precious site redeveloped for need, not greed.

Local people have come up with several suggestions for the site : a nature reserve, a site for sailing, canoeing and sports--important in an area of such high youth unemployment ; a leisure centre ; an alternative technology centre ; a garden centre ; a workshop space. A site of this magnitude will not fall vacant in Hackney again ; nor will the opportunity to provide such amenities come round again. But what is Thames Water thinking of doing? It goes almost without saying that rational planning in the public interest is not on the agenda. Thames Water's plans involve expensive redevelopment, mostly for houses. It will keep one reservoir as it is and might allow some limited sailing, but it will not allow any other leisure activities. At the other reservoir, there is a proposal for a housing development of 70 to 90 units on a two-and-a-half acre site. The remaining 19 acres will be covered in housing.

Thames Water is not interested in leisure or nature or in the wishes and priorities of local people : it is interested only in maximising its profit. It ought to know the end result of such speculative development, because it has the example of Canary Wharf, a major site that currently has no proper public transport and few facilities. No thought was given to local people when it was being developed, and now it is a huge white elephant. However, Thames Water presses on regardless.

I and my constituents oppose a massive private housing development on the site, because the houses would be completely out of the reach of the ordinary people of Hackney. The development will not meet their housing needs. It will be a yuppie housing stockade in the middle of one of London's poorest areas. The people of Hackney need play spaces for their children and recreational space for young people and retired people. For a privatised water industry that is completely profit-led, such facilities are apparently out of the question. As I have said, Thames Water is not interested in local people or in nature

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conservancy. The new management have awarded themselves grotesque pay rises and are interested only in the bottom line.

Future legislation should provide for poor families to be helped with their water bills. Conservative Members could scarcely contain their boredom and derision when Opposition Members opposed the abolition of social security help with water charges. With their MPs' salaries and, is some cases, big consultancy fees, they do not understand what water charges mean to pensioners and people on fixed incomes. The decision to abolish social security help for water bills is a retrograde step.

I invite the Prime Minister and the Secretary of State for the Environment to visit Hackney. John Major and Mr. Howard went all the way to Rio to talk about the environment. They should come to Stoke Newington to look at our environment. I invite them to speak to people on Woodberry Down estate, to go to the top floor of Lincoln Court and admire the view over the reservoirs and the wildlife, and see how that would be ruined by Thames Water's redevelopment plans. I urge them to talk to mothers and young people on the estates about the need for play space and recreation areas. If they did that, they would find that the need to protect our environment is every bit as pressing as the need that they found in Rio. They might find it in their hearts to ask Thames Water to reconsider its plans for greedy property speculation.

Hackney needs open spaces and homes to rent, and the water authorities should not be allowed to award their managers ludicrous pay rises or to engage in profiteering. Above all, they should not be allowed to asset- strip our environment in the search for profit. Thames Water is a major landowner in London, with over £1,000 million-worth of property. If it is allowed to implement its plans for the reservoir site, it and the other water companies will see it as the green light to continue asset-stripping. Before privatisation, water authorities saw themselves as custodians of the environment. The people of Hackney wish that the privatised water companies would take their responsibilities seriously.

7.54 pm

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury) : This is an important debate about the future of an industry with responsibility for the very essence of life. Since privatisation, as many hon. Members have said, investment has been high and will be about £28 billion over the next 10 years. That amounts to £5,000 for every minute of every day. All hon. Members agree that capital projects must be paid for by the consumer or by the taxpayer. Labour's manifesto made it clear that a Labour Government would return water company assets to common ownership. A Labour Government would pay not only for that, but to keep water bills down, and the taxpayer would be faced with a double whammy.

I am concerned about the delivery of quality water. European directives have increasingly imposed more stringent demands on the water companies. Nitrate limits have been lowered from the World Health Organisation's approved level of 100 parts per million to 50 parts per million and may shortly be further lowered. The companies are also being obliged to meet other stringent demands. The limit for pesticides is down to 0.1 microgrammes per litre. That is such a low level that sophisticated techniques are required to detect it, and such

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techniques are expensive. The water companies deserve help from public authorities to meet those standards and British Rail, local authorities and farmers must use pesticides responsibly.

The water companies will also have to meet the European directive on lead. The demand will be stringent in, for example, Wales and the north of England. Lead levels must be kept at not more than 50 parts per million. Should the taxpayer meet the bill, or should the consumer be obliged to put his water pipes in order?

Water must be treated as a precious resource. Anglian Water recently estimated that over the next 30 years the demand for water will increase by a staggering 41 per cent. We must look diligently at how that increase in demand can be met. Will we abstract more from our rivers and build more reservoirs? Thames Water is about to face a massive public inquiry over a proposal for a big new reservoir just outside Didcot. There may come a time at which supply cannot meet demand.

I welcome the initiative by the Secretary of State for the Environment in calling for a careful examination of the use of water resources. I also welcome yesterday's news that the National Rivers Authority is investigating the levels of about 40 key rivers. I hope that it will examine the levels of three key rivers in my constituency, the Churn, the Coln and the Windrush.

Over the next 10 years or so, there must be a new method of charging. The new council tax will provide an ideal opportunity to look at new methods more closely related to the size and value of properties. It will also provide an opportunity to examine water charges for one-person households. Larger properties do not always contain more occupants, although that is usually the case. The cost of universal metering could not be fully justified. Most water companies now require metering for the major industrial users and large hotels, commercial premises and agricultural users. They also require all new houses to be metered. Partial metering is the best way forward, with changes for other consumers based on the new council tax.

Given the inexorable rise in demand, there is a need to rectify leakage, which averages 17 to 20 per cent. in most water company pipes. Before privatisation, leakage in Thames Water was 28 per cent. so privatisation has forced the water companies to consider carefully the amount of water that is being lost. Thames Water recently introduced a sophisticated technique to monitor water flow by computer. In the past three months, it has reduced leakage by 3 per cent. That is to be welcomed, and I urge other water companies to consider whether they cannot adopt that technology to their benefit. It is not only in water company pipes that leakages occur. About 10 per cent. of all water supplied is lost in consumers' pipes. The average householder uses 28 gallons a day, and a leaky tap could lose almost the same amount.

The use of hosepipes and water sprinklers should also be carefully reviewed. While the average consumer uses 28 gallons of water a day, a sprinkler can use 200 gallons an hour. Water companies should consider introducing a licensing system for hosepipes and sprinklers. Hosepipe use is a social activity rather than a necessity. If one walks down any street in this country, one can see people

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watering their gardens. The moment someone comes along they want to talk to, they stand still, drop the hosepipe and start chatting. Privatisation has been an outstanding success. Despite the fact that the water industry is one of the most regulated of all in the country, it still produces a level of service second to none. Investment, productivity and quality is up. Why else would the canny French want to invest in our industry, and to bottle our own excellent water?

8.1 pm

Mr. David Hanson (Delyn) : I congratulate my hon. Friend the Member for Oldham, Central and Royton (Mr. Davies) on his maiden speech. This morning, I had the pleasure of joining him in a game of football between the parliamentary team and members of the Press Gallery, which we lost 3-0. My hon. Friend the Member for Cannock and Burntwood (Dr. Wright) also made a sterling effort in that game. In the same way that we lost that match, I am sure that we will lose today's motion in the Division, but, having heard the speeches of my right hon. and hon. Friends, I am confident that we have won the argument.

When water was privatised in 1989, the Government's objective was to ensure that private investors had a say in controlling the new companies. A resource that was once owned by everyone in this Chamber and throughout the United Kingdom was transferred to the ownership of a selected few. The influence that I and my constituents once had on the industry's future direction was lost for ever.

Presumably the Government believed that water services and standards would be improved by privatisation, but, as every Opposition speaker has said, there has been a noticeable drop in standards--and, thanks to Government policy, some of the poorest of my constituents are denied water services.

My objections to water privatisation are summed up in the Opposition's motion, which mentions the record levels of disconnections, rising prices, the inflated salaries of management and the increasing sham of investment.

Water charges in my constituency have increased sharply since privatisation. In 1988-89, Welsh Water charged £147 per annum. By 1990 -91, that figure increased to £168 ; in 1991-92 to £195 ; and this year, to £212. That is equivalent to annual rises of just over 9, 14, 10 and 8 per cent. respectively--a total of nearly 42 per cent. since privatisation. At the same time, the retail prices index rose by only 19.5 per cent. Welsh Water charges have increased by 23 per cent. over and above every other commodity.

Conservative Members argue that investment is important, and that it accounts for the initial prices rises, but why should the whole burden fall on consumers--many of whom are poor and face other pressures at this time? The cost of investment could have been met by borrowing, to be repaid over a period of time. Perhaps the Minister will explain why the whole burden of investment costs has fallen on the consumer.

Many of my constituents ask out loud why Wales, which is blessed with water and is an exporter of water, has to meet price increases of 42 per cent. One of my constituents living in a village near Mold in Clwyd is an 82-year -old widow who has a one-bedroom flat. Just before the election, she wrote to me asking why she has to

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pay £212 a year--the same as an incomed family living in a five-bedroom house down the road. There can be no justification for that.

The director of the National Association of Citizens Advice Bureaux said :

"Water is a vital service, and action should be taken to ensure that it remains available to vulnerable sections of the community." The citizens advice bureaux are handling 55,000 water debt cases a year throughout the United Kingdom. My constituents very often cannot afford to pay their water charges--it is not that they do not want to pay. When a water charge of £212 is coupled with the poll tax and a mortgage or a higher council rent, and given that the Government will not introduce a minimum wage, many of my constituents find themselves under tremendous financial pressure.

In 1989-90, which was the first year of privatisation, 1,356 consumers had their water services cut off. Last year, the figure rose to 2,951. I ask the Minister to compare Welsh Water's record with the rest of the United Kingdom. For every 10,000 Welsh Water customers, 26 were cut off--but the figure for England was only 10. What is the reason for that discrepancy. Why are Welsh Water's customers served so badly? Why have I, as a Member of Parliament, no say in that performance of that company, which operates a monopoly? Cut-offs are occurring because of price increases, and because council tenants are having to meet separate water charges for the first time, and homes are being repossessed.

Mr. Hall : Does my hon. Friend agree that Welsh Water's charges are expensive by comparison with other companies? Is not that the reason for the higher number of cut-offs in Wales?

Mr. Hanson : I thank my hon. Friend for that observation. However, not everyone in Wales is fortunate enough to suffer disconnection. The chairman of Welsh Water, John Elfed Jones, has seen his salary increase to £143,000, and with shares and other perks worth £200,000 he has enjoyed a 211 per cent. rise in his salary since privatisation.

This year, Welsh Water will make a pre-tax profit of £143 million, which is 11 per cent. higher than last year. According to weekend newspaper reports, bonuses worth £290,000 are heading Mr. Jones's way. That is insensitive and obscene when the company over which he presides is doubling and trebling the number of disconnections in my constituency.

Whom am I to turn to ? Am I to turn to Ian Byatt, Director General of Water Services ? He said :

"If they consider their executives are worth a lot of money, that is a matter for the shareholders and not for the regulator to challenge."

How can I explain to my constituent in Mold who must pay water charges of £212, and who may shortly join the list of those who are disconnected, that I have no power through the regulator to challenge the massive salary increases given to the chairman of Welsh Water ? We are told that higher charges are to pay for investment. In the final three years of the last Labour Government, investment in the Welsh water industry in real terms totalled £129 million, £133 million and £103 million. In the first 10 years of the Tory Government, that investment dropped to the lower end of £60 million, £70 million, and £80 million. Only since privatisation has Welsh Water's capital expenditure returned to the levels at

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which it was when my party left office in 1979. When I asked the Leader of the House about that during Prime Minister's Question Time last week, he failed miserably to answer.

Our approach to Welsh Water should not be entirely negative, although we are very concerned about price rises, capital expenditure and cut-offs. I favour an element of public control, which would give my constituents and me a line of accountability. Like 70 per cent. of the Welsh people who voted on 9 April, I should like an elected Welsh assembly, and I should like it to control the water service. The Conservatives will disagree with that ; let them go to Wales, where 27 Labour Members were elected on 9 April, along with other Opposition Members who took Conservative seats. Welsh Water should be brought into line with other services : it should be placed under the control of an elected assembly, so that it is accountable. In Wales and elsewhere, water services are not accountable to hon. Members and the people whom they represent. There is no way in which we can influence the policies of water companies. If the Government vote against the motion--as they will--they will be avoiding their responsibility to stand up for the poorest of my constituents, who face the imposition of cut -offs by an insensitive company. They will be avoiding their duty to put down a marker--to say, "Whatever our political differences, we know that it is insensitive of water company chairmen to accept such large bonuses and salaries while presiding over a rundown in capital expenditure, and allowing services to be disconnected."

If you go into the Lobby and vote against the motion, you will demonstrate to the people of Delyn, and the people of Wales in general, that you are not concerned about their water services--

Madam Deputy Speaker (Dame Janet Fookes) : Order. The hon. Member should remember that he is addressing me, and I am not going anywhere.

Mr. Hanson : I am sorry, Madam Deputy Speaker. I have done that before, and I shall probably do it again.

If Conservative Members vote against the motion, they will let down the people of Wales. They will be endorsing large price rises and high salaries, and they will show the people of Wales why there was an overwhelming vote for alternative Governments on 9 April. 8.12 pm

Dr. Tony Wright (Cannock and Burntwood) : An earlier speaker began by declaring an interest as a director of a water company. I declare an interest as a consumer, and as one who represents 3,500 people in south Staffordshire whose water supply has been disconnected in the past year. That figure is seven times the national average, and more than twice as high as that applying to the next worst company. People in my area feel very strongly about what is happening to the water industry, and especially strongly about disconnections. I should add that in the past year the company concerned has achieved an 11 per cent. increase in turnover, and a 42 per cent. increase in profit after tax. It has achieved a dividend increase of 642 per cent. since the time when, at 4p per share, it declared as a statutory water company. Now, having converted to plc status, it declares at 40.2p. We are not dealing with a company that is strapped for cash.

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I declare another interest. People keep mentioning a K factor. That talk of "RPI plus K". When my constituents ask about the scale of water charges, I have to explain how those charges are calculated. As Conservative Members have instructed, I talk of "RPI plus K", telling them that they need K to pay for all the capital spending. My constituents then ask, "May we have some of this K? We have a lot of capital spending to do. Why do only the water companies have K? Is that what pays for all the salaries that we keep hearing about? Where does it come from?" They have heard of Special K and they know that it does good things, but this is ridiculous.

All that focuses attention on the history of the subject that we are discussing. Hon. Members have mentioned leakage from pipes and water company investment. In the 1980s, Opposition Members argued that infrastructural investment was needed because, as well as improving the service, it would help the economy. The Conservatives, however, said that they did not want that, and they are having to act now only because of European directives about higher standards. The tragedy is that with a different policy we could have embarked on all those measures over the past 10 years, and they need not have been financed directly through consumer prices--which, of course, affects poor consumers most. Conservative policy has led to the making of a strategic choice : the Government have been forced to act in this way because they turned off the tap of infrastructural investment for so many years.

My main point has been touched on by a number of other hon. Members. It relates to the question of accountability--the question of who is now answerable for prices, disconnections, corporate salaries and all the other matters that we discuss in the House. What can the House do about that? What can Members of Parliament do for their constituents? The answer, I am afraid, is nothing.

What, indeed, can be done by Ofwat and its assorted arms? Again, the answer is nothing. Ofwat can snap at the companies, but the companies can snap back. Unless a licensing system and a code of conduct are introduced which will make the companies work genuinely in the public interest, there will be no reason for them to do so. Ministers tell the House, as a Minister has told us today, that they are not responsible for the matters about which hon. Members have spoken, but in a sense Ministers are the public relations arm of the water companies. They are saying, "These are splendid organisations--go out and buy some shares." When we advance criticisms, they say, "The regulators are there, and they are independent." There are problems with the regulators and with the regulatory regimes that they operate. The way in which they are appointed is a problem. The idea that regulation solves the accountability problem is all wrong. After all, we are talking about monopoly suppliers of essential services. Hon. Members want to ask the Government about such matters as pricing, but the Government simply say, "Do not blame us--it is not our fault. These splendid companies are doing these things, and the regulators are keeping an eye on them." That is a profoundly unsatisfactory answer. There is a vacuum where accountability should be : one kind of accountability has been removed, and nothing has been put in its place.

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Let me offer a practical suggestion. If the House were less supine in relation to the Executive, it would not tolerate such a position. It would not tolerate the creation of what are essentially private governments, delivering essential services to our constituents on a monopoly basis with no accountability. It would demand to be involved in that process, to appoint the regulator, perhaps on a short-term contract, to have a regular review of the regulatory process and to be centrally involved in that. But I am afraid that it will not have that. It will have the kind of thing that we have seen today, and the upshot of that will be that as the issue becomes one of who speaks for the consumer and the public interest, people will increasingly see that it is Opposition Members who speak for the consumer and the public interest and that it is Conservative Members who have abdicated such responsibilities into other hands--remember again, monopoly suppliers of essential services.

The Government, softening us up for privatisation, had a water awareness campaign. They had to remind us that there was a thing called water. They thought that people had forgotten that, that they needed to spend several million pounds of our money to tell us that there was a thing called water so that we might go out and buy some shares in companies that would sell it to us--our company that they had taken. It was a nice little idea.

The end of the story is that the Government are now engaged in a non- awareness campaign, trying to make people not aware of what has happened to the process and to the companies so that people will not be aware of pricing levels, real investment records, corporate salaries, disconnections, or the realities of life when public services are provided in that way. In particular, they will not be aware of the vacuum of accountability around the process. People will look to the Government and to the House to do something about what has been talked about today. The Government will say, as they have said, that they can do nothing about such things and people will therefore increasingly look to Opposition Members to do something.

Mrs. Mahon : On a point of order, Madam Deputy Speaker. Earlier this evening I intervened in the speech of the hon. Member for Pudsey (Sir G. Shaw) and asked him how much he received as a non-executive director of Yorkshire Water. I have now learnt from Hansard that that has been wiped from the record. I should like your advice, Madam Deputy Speaker, on whether that can be possible when a Member has asked such a question in the House and what I as a Back Bencher can do to have it put back on the record.

Madam Deputy Speaker : The hon. Lady will appreciate that I was not in the Chair at the time. I shall ensure that inquiries are made. As I am sure the hon. Lady will understand, I cannot take the matter beyond that point now.

Mr. Barry Jones (Alyn and Deeside) : Further to that point of order, Madam Deputy Speaker. I distinctly heard my hon. Friend the Member for Halifax (Mrs. Mahon) put that question.

8.22 pm

Mr. Nick Hawkins (Blackpool, South) : I rise to address the House on this subject because investment in pollution control is of great importance to my constituents in

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Blackpool, South. Hon. Members may be aware from adverse publicity that for a number of years Blackpool has had a considerable problem of sea pollution which I am glad to say is now being addressed by urgent measures which are being taken by North West Water. It seemed appropriate today to recognise the great achievement of North West Water in tackling the problem, first by a disinfection scheme which is due to start during this bathing season and, secondly, by a construction of a new sewage treatment plant which is expected to be operational by 1995. I stress that it is only the success of North West Water that has enabled it to make investment. The need for such investment requires that it be a successful company, as it is, earning the profits that it does.

In speeches made by Opposition Members, including the hon. Member for Dewsbury (Mrs. Taylor), there seemed to be an attempt to suggest that profit is a dirty word. It is the dirty water that the profit is combating. It is essential that water companies such as North West Water continue their investment in pollution control because only then will tourism, on which my constituency depends heavily, be able to recover from its current difficulties.

I hope that Opposition Members, particularly those with connections in the north-west, will bring whatever influence they can to bear on the Labour leader of Lancashire county council who has made a crusade of blackening the reputation of Blackpool, stressing the pollution that has unfortunately occurred due to under-investment in pollution control when the Labour party was in power for many years rather than concentrating on efforts to eradicate that pollution.

The Opposition need to concentrate much more on constructive measures to control pollution rather than on criticising the problems which, in many cases, can be laid at their door. It is only since the Government came to power and introduced the measures that they have in relation to the water industry, that we have had the investment that was so badly needed to control that pollution.

It is important to consider the progress that is now being made on the cleanliness of bathing waters around Britain's coastlines and to recall that an independent body such as the Consumers Association has stressed that many continental European countries are far less scrupulous than Britain about testing their bathing waters. Opposition Members and their colleagues outside the House have stressed the problems of European Commission prosecutions of the United Kingdom Government for water pollution. However, they should recall that 11 of the 12 EC countries are currently facing prosecution by the Commission for dirty bathing waters. The only reason why the 12th, Portugal, has not been prosecuted is that the EC directive concerned, under which such prosecutions are brought, will apply to it only later this year.

Because Britain's testing methods are more scrupulous and scientifically accurate, we are providing ammunition to the European Commission which is not provided by many other EC countries. Therefore, it is far from the case that we have the dirtiest bathing waters in the community, as I am sure any of my constituents and any other hon. Members' constituents who travel abroad will be only too well aware.

Standards of United Kingdom waters are improving all the time and when testing is continued later this year

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during the tourist season we shall see the fruits of that. The EC blue flag symbol will be displayed at far more British beaches. It is important for me, as the Member of Parliament for an important tourist resort, to stress that Blackpool's bathing waters are improving all the time. I hope that that will encourage more and more tourists to visit my constituency.

However, the water industry has other priorities which also involve my constituency. The Minister may be aware that my constituency has an extremely successful manufacturing company involved in the production of water treatment plant. My right hon. Friend, his colleagues and the Director General of Water Services have been in correspondence with me about the importance of ensuring that that company can sell and distribute its products as widely as possible in order to earn important income from exports and continue important business development in Britain. I am extremely grateful for the help that the Minister, his colleagues and the director general have given. I am particularly grateful for help with the problems caused by the variability of water pressures set by local authorities when new housing developments are planned.

There has been a difficulty with which my hon. Friend the Minister assisted my constituency company. Often, local authorities specify a range of water pressures that are very different from the water pressures that can actually be expected. Wide ranges of pressures have been specified by local authorities and the equipment that my constituency company has been encouraged to develop and produce cannot be ordered because the range of pressures specified is too wide, even though it could be used. I urge my hon. Friend and his ministerial colleagues to continue the work that they have done in encouraging local authorities and others to specify the exact water pressure to be expected on different housing developments. That would assist companies such as that in my constituency. I also urge my hon. Friend the Minister to continue his discussions on coastal zone protection with our right hon. Friend the Minister of Agriculture, Fisheries and Food. I hope that when the new environmental protection legislation comes before the House it will incorporate continued firm policies to improve coastal zone protection. That issue is extremely important in my constituency, particularly for hotels near the sea front. We need a programme of sea defences in areas such as mine which suffer the extremes of tide and wind which can cause flooding problems at very high tides. We have been fortunate in recent years not to have had those high tides but businesses in my constituency have suffered from serious flooding in the past. I am aware that the coastal zone protection document produced recently by the Minister of Agriculture, Fisheries and Food was widely welcomed in my constituency. I trust that the Departments involved will continue with those policies.

I support the continued investment in all aspects relating to water. It is so important in my constituency and I hope that my right hon. and learned Friend the Secretary of State will continue with his successful policies.

8.32 pm

Mr. Cynog Dafis (Ceredigion and Pembroke, North) : In a newspaper article, John Elfed Jones, the chairman of Welsh Water, said that he was adamant that his company gave "value for money". He insisted that water was

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relatively cheap, and gave figures to suggest that people were getting a fine product for a low price. On the surface, his argument seems perfectly plausible. Water is an essential and it is a wonderful thing which just comes to our taps. For most of us, the price is extremely reasonable. However, it may be that even those of us who are on good salaries will be squealing in a few years as the K factor leads to what will probably be a 50 per cent. increase in the price of water in real terms by the end of the century.

For low-income families, a sum of £200 or so a year is a serious burden. That point has been made more than once today, but it needs to be made again. It is not good enough to talk constantly about this wonderful commodity that is provided at a reasonable price. The fact that it can be a serious burden is reflected in the increasing level of disconnections.

The statement by the chairman of Welsh Water is somewhat complacent. The situation that he described conceals serious injustices--the sort of injustices that have been typical of government in Britain since 1979. The people of Wales have had to endure Tory government since 1979, despite the fact that that party has had less than 30 per cent. support in Wales for all that time. The injustice is clearly linked to the creation of privatised monopolies. That term has been used several times, but it is true. The injustices is seen in the increased profits of Welsh Water over the past few years. Profits have increased from £95 million to £128 million up to £138 million over the past three years, and hefty dividends have been paid to shareholders.

The injustice is most clearly seen in the increase in prices over and above that required to cover inflation--the notorious K factor about which we have heard so much today. Welsh Water allowed a K factor of 6.5 per cent. To its credit, this year it has used a K factor of only 5 per cent. The purpose of the K factor, as has been said, is infrastructural and environmental improvements. In Wales, it is also to be used to deal with coastal pollution.

There is no doubt that investment is needed to deal with coastal pollution, which is a contentious issue in my constituency in west Wales. Recently, a survey of 20 beaches carried out by the district council on the basis of the EC water directive showed that only two of those 20 could be designated as excellent, five were good and 13 were poor. That is unsatisfactory, and it has serious implications for human health and, perhaps more importantly, for marine ecology. There is considerable evidence that viruses emanating from human sewage persist in sea water for long periods and, as a result, there has been evidence of sickness among sea mammals such as dolphins and porpoises in Cardigan bay.

Sea pollution must also be addressed for the sake of the holiday industry. There is a great deal of dissatisfaction and anxiety in my constituency about the effect of reports of sea pollution on the holiday industry.

Investment is required to deal with that. There must be investment in adequate treatment such as disinfection. Clearly, long sea outfalls are not the answer. In fact, it has been argued that long sea outfalls are worse for marine ecology, and mammals such as dolphins are probably more seriously affected. Human sewage gathering on the sea bed has serious effects on marine ecology generally.

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It is worth mentioning that, to its credit, Welsh Water has undertaken to provide full treatment in certain circumstances. In the Aberystwyth area, there is to be full treatment with ultra-violet disinfection. Welsh Water withdrew its original scheme for a long sea outfall, which would have met the EC standards for a designated beach at Aberystwyth but would have simply removed the damage elsewhere, either further out to sea or to another beach. The danger of EC designation of certain beaches is that it will simply move the problem elsewhere. As I have said, Welsh Water introduced an excellent scheme, but it did so only in response to intense and well-informed public campaigns and pressure from those who were not prepared to accept the original intention.

Such plans involve large-scale investment, and a great deal more is needed. It is certainly needed in west Wales. We must ask how it is to be paid for. That brings us back to the K factor. It is to be paid for by the K factor, through consumer pricing. It is not fanciful to describe the K factor as a non-progressive tax. Water bills are made up of a standing charge and a payment based on rateable values, which have only a tenuous relationship with people's ability to pay. Environmental improvements are being effected by charging the badly-off the same as the well-off. That gross injustice is all too typical of the policies from which we have suffered in the past 13 years, which found their apotheosis in the poll tax.

My party is convinced that environmental improvements should be funded from general taxation. People have suggested borrowing, which is another reasonable suggestion, but environmental improvements that benefit everybody should be funded from general taxation. Even Conservative Members have made that suggestion.

Welsh Water recognises the force of the argument, as evidenced by its recent application to the west Wales task force for funds for a sewage treatment works at Goodwick and Fishguard. It recognises the need for environmental improvements to be funded not only from itself but from public funds. That is part of the economic renewal programme for west Wales. I hope that it is successful in obtaining the funds, but it recognises the need for funds from general taxation and not simply consumer pricing.

Plaid Cymru takes the principle of social equity further than that. People entitled to income support and housing benefit should be entitled to water charge benefit. That suggestion has been made by hon. Members on both sides of the House and recognised as a possibility. Water, like housing, is a basic need. If there is such a thing as housing benefit, why not water charge benefit?

We advocate a statutory 25 per cent. reduction in water charges for single- person households. That, again, is a reasonable suggestion. The sense of grievance about social inequity in Wales is compounded by a national sense of injustice. I use the word "national" advisedly. There is a sense that Welsh water resources have been exploited. Wales is a nation rich in water resources. It has been plundered at great cost to its communities and with a minimum of benefit to its economy. Water is an emotive subject in Wales. The injustice continues today. In 1991, Welsh Water's consumers--the majority of consumers in Wales--paid an average of £90 for water supply, compared with £58 in the north-west of England. Welsh Water is selling water to the north-west for two thirds of the price that is paid by its own customers. That must be crazy, and it is profoundly unsatisfactory.

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It is high time that Welsh Water was able to get a fair price for its water. That has been recognised by the chairman of Welsh Water, Mr. John Elfed Jones. If we got a fair price for that water, it would make a significant difference to the burden on Welsh customers. If the ambitious plans of the National Rivers Authority to pipe water from Wales to the south-east of England were to come to fruition, and if there were a fair pricing system, it could bring an additional £20 million to Wales, which would make a significant difference to our water prices. I regard that scheme as environmentally highly suspect. It is clear to me that we need to reduce the profligate use of water. If such a scheme to transfer water went ahead, it would be intolerable if we were not able to capitalise on a natural asset by charging a proper price for it. I finish on an overtly political point that has already been made by the hon. Member for Delyn (Mr. Hanson). If we had had a Parliament in Wales, we would not have privatised water. Social equity would have been fundamental to our system of pricing, and we would have ensured that water resources were developed to provide economic and environmental benefits for Wales and a service to our own people. I am quite confident that a Welsh Parliament will come, but it may take a few years. That is why Plaid Cymru will seek to move a draft Bill in this Session to introduce measures to mitigate the injustice of the existing system. We shall seek support for the Bill from all parties in the House.

8.46 pm

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