House of Commons Hansard Debates for 19 Jul 1994

Mr. Atkins : No, I shall not give way.

As for the drinking water directive, the United Kingdom has made clear to the Commission the changes that we believe should be made. We believe that a revised directive should be based on sound scientific and medical advice such as that in the World Health Organisation's recent guidelines and that standards should strike a proper balance between benefits to the consumer and the likely costs of achieving them. We also believe that the directive should accord fully with the principle of subsidiarity but, until revisions are agreed, the United Kingdom will comply fully with the provisions of the existing directive.

Dame Elaine Kellett-Bowman (Lancaster) : Under the revised guidelines, will properties such as colour, which do not matter--if one lives on peaty soil, there will be a slight coloration in the water but it makes no difference to people's health--count in any test ?

Mr. Atkins : There is clearly some concern among consumers about the colour of water and, generally speaking, water companies prefer water to be clear and bright. However, I have some sympathy with my hon. Friend because peaty water in whisky adds a little flavour which might not otherwise be there.

The motion deals next with sewage treatment, of which the hon. Member for Islington, South and Finsbury made great play. Over the years, Governments of all political persuasions believed that coastal tides were sufficient to disperse sewage from outfalls without it being necessary to treat it. The advice now from health and scientific organisations is that that is no longer acceptable. We understand that

Mr. Enright : Some of us knew that a long time ago.

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Mr. Atkins : The hon. Gentleman may say that, but Governments of any party believed otherwise for many decades. Labour was told that the original view was unacceptable when it was in office. I remind the hon. Gentleman that the bathing water directive was promulgated in 1976, but what did the Labour Government do about it ? Absolutely nothing.

Mr. Nicholls : They washed their hands of it.

Mr. Atkins : Indeed, they washed their hands of it, as my hon. Friend says.

The Opposition persists in their campaigns to knock the state of British beaches and do untold damage to our tourist industry in the process. They are only too ready to trumpet failures to meet the necessary standards-- often marginal failures--but when improvements are made, we hear nothing from them.

Last year, about 80 per cent. of our bathing waters exceeded the mandatory coliform standards set down in the bathing water directive. In 1987, only 56 per cent. did so. The water industry and the Government are firmly committed to completing our programme as quickly as possible, but the improvement schemes have to be paid for.

The Government and the water companies have faced the difficulties and we are acting on them. As I said, vast sums of money are being spent. In the north-west--in Liverpool and Fleetwood--about £500, 000-plus is being spent to ensure that pollution on the Merseyside and Fylde coasts is a thing of the past by the end of next year. We have also taken a great deal of trouble over river quality. About 90 per cent. of rivers in England and Wales and 95 per cent. in the United Kingdom as a whole are already classified as being of good or fair quality compared with an average of 75 per cent. for rivers of comparable quality in the European Community. I might add that our monitoring and record keeping is among the best and most publicly available in Europe.

We are continuing to make significant progress in improving inland and coastal water quality. The National Rivers Authority--a much respected organisation--has recently reported a net improvement of almost 11 per cent. in river quality in England and Wales between 1990 and 1992.

In addition to the improvements that will result from obligations under EC and domestic legislation, we announced only recently--on 6 July--that between 1995 and 2000, £522.3 million of spending is to aimed specifically at achieving further improvements in river quality. Those improvements will be the result of tighter discharge consents for sewerage works and will be incorporated in the new statutory water quality objectives as they are introduced. The most cost-effective use of expenditure will be determined by the NRA in consultation with water and sewerage companies. That will allow a number of high-priority schemes to go ahead, which would not otherwise have been the case.

The Labour party must make up its mind--does it want bills kept down at the expense of clean beaches or rivers, or the reverse ? It cannot have it both ways without even greater expense to the consumer and the taxpayer. A balance has to be struck, and we, the NRA, Ofwat and the water companies are doing just that.

We meet, or we will meet by the end of next year, the EC directives. Other countries--notably France, Germany,

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Spain and Portugal--recognise, for example, that the high cost of implementing the urban waste water directive must be spread over more years than is proposed at the moment.

I will deal with the south-west for a moment, because I know that it is of interest to many of my colleagues who raise their concerns with me whenever they have the opportunity to do so. The Government are striving to ensure that a proper balance is struck between the desire for environmental improvements and the costs associated with them. South West Water alone

Mr. David Jamieson (Plymouth, Devonport) : The Minister is talking to himself.

Mr. Atkins : That is something that I do quite often.

In the 1990s, South West alone is investing about £900 million on improvements to the arrangements at seaside towns for the collection of sewage and the provision of sewage treatment. The programme, known as "Clean Sweep", consists of 33 individual schemes and will result in cleaner bathing and other coastal waters throughout the south-west.

In view of price pressures, it is reasonable that any waste water improvement schemes should not be undertaken any earlier than is cost- effective, provided that they are completed by the legal deadlines. In determining future price limits, the Director-General of Water Services will be considering the most cost-effective way for South West Water to meet its legal obligations, including those set out in the urban waste water treatment directive.

Mr. Robert Hicks (Cornwall, South-East) : Before my hon. Friend leaves the subject of the link between investment and the cost to the consumer, and although I welcome the steps being taken to restrict the rate of price increases in water and sewerage charges, will he tell us what action is currently being taken to deal with the costs that 3 per cent. of the population of the United Kingdom--the people of Devon and Cornwall--are obliged to pay for about one third of the country's investment as a whole ? When will the Government acknowledge that action is required to deal with the current situation even though we welcome measures to deal with a future situation ?

Mr. Atkins : I am grateful to my hon. Friend, who understandably feels very strongly about this and has spoken to me about it many times, as he has to the Secretary of State and, indeed, the Prime Minister. Clearly, the problems in the south-west are endemic in the sense that the south-west has a substantial number of beaches and a smaller number of people who can afford to meet the cost of improvements required under EC directives while we endeavour to keep costs at an acceptable level.

If my hon. Friend is fair--I know him to be so--he will accept that we have spent a great deal of time and effort on, for example, river improvements. Where the NRA advised that it was unnecessary to spend excessive amounts of money to alleviate the problems of my hon. Friend's constituents, we took that advice. I assure him that I, the Secretary of State and the Prime Minister will continue to look for every legitimate way in which we can assist his constituents who are paying bills which, for all sorts of reasons, they are called upon to pay.

Mr. Nicholls : Will my hon. Friend be saying something in his speech or will the Under-Secretary of State, my hon. Friend the Member for Banbury (Mr. Baldry), say something in the winding-up speech about the considerable

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efforts that the Government have made in putting our

representations to the Office of Water Services to reduce water charges after they had virtually tripled ? Has my hon. Friend detected the same degree of enthusiasm in the South West water authority to co-operate and to ensure that water charges are kept to an absolute minimum as he has detected among his colleagues on the Back Benches ?

Mr. Atkins : As usual, my hon. Friend makes a fair point. My hon. Friend the Under-Secretary of State has taken note of that and certainly intends to address it in his winding-up speech. There are concerns in the south-west and we understand that fact, as does the regulator, who appreciates that the matter needs addressing. It is his responsibility and task to do so. My hon. Friend knows that, at the end of next week the regulator will be announcing the new price figures. My hon. Friend will therefore have to wait until then. The Government and the director-general are determined to ensure that the rapid price increases which we have seen in recent years should not be repeated over the next five years. Those large increases were unavoidable, as I said earlier, but they must be a thing of past. The director-general-- [Interruption.] Opposition Members keep suggesting that somehow I am not telling the truth. The fact remains that the investment that has had to be made is a direct result of the Labour party's inaction, inefficiency and incompetence. We know that. That is what people are having to bear in the south-west as much as anywhere else.

Mr. William O'Brien : May I draw the Minister's attention to the fact that, only a few months ago, he was in charge of water services in Northern Ireland ? At that time, there was no problem of capital investment, no massive salaries were being paid to chairmen because the Minister was in charge of water services. There was no regulator, no massive increase of charges and the industry, as the Minister knows, was in public control. How does he justify the fact that, when he was in charge in Northern Ireland, there was none of what we are hearing today ? I have listened carefully to the Minister. Will he explain why Northern Ireland enjoys those benefits without the regulator, without massive increases in chairmen's salaries, and without the dividends, while the rest of the United Kingdom is having problems ?

Mr. Deputy Speaker (Mr. Michael Morris) : Order. I think that the Minister has got the question. The only problem is that it does not seem relevant to the motion, which is about England and Wales. I shall leave it to the Minister to judge.

Mr. Atkins : I shall not be drawn into a debate about Northern Ireland-- [Hon. Members :-- "Why not ?] simply because this is not the place to do so. I shall not be drawn except to say that, before I left that fascinating and enjoyable part of the United Kingdom, one of the problems on my ministerial desk was that we were going to have to spend about £500,000,000 to improve water quality in Northern Ireland. That money would have to be found from the taxpayers of Northern Ireland. One of the matters that we had to consider was how that would be done. One of the options would have been privatisation, as the hon. Gentleman knows full well.

I shall conclude my remarks in relation to the director-general who, as I said to my hon. Friend the

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Member for Teignbridge (Mr. Nicholls), is nearing the completion of his first periodic review of water price limits. Hon. Members will want to know that the outcome will be announced on 28 July, when the director-general will tell us the new annual price limits for each company for the 10-year period beginning on 1 April 1995. He has already said that he hopes that, nationally, it may be possible to limit overall price increases on average to between 0 and 2 per cent. above the rate of inflation. That will supersede the current average ceiling of 4 per cent. above the rate of inflation.

Before I leave the south-west, it would be invidious of me not to mention our friends the Liberal Democrats. God bless them. What would we do without them ? The Liberal Democrats say one thing here and another thing there. They say one thing on one doorstep and another on the very next doorstep. I shall refer to the Liberal Democrat candidates who stood at the Euro- elections down in the south-west. Their manifesto, which they called "Unlocking Britain's Potential", contained a pledge to provide

"national and European help with the unfair burden of local investment needed to clean up Britain's beaches".

What European funding ? I would like to know, as I suspect the House would, what European funding they think will be available. How much national support do they expect to be able to find ? Will it come from other parts of the country ? Is it something on which the Liberal Democrat Treasury spokesman, the right hon. Member for Berwick-upon-Tweed (Mr. Beith), has been consulted ? Would he have any views about the cost implications of that ? Who will pay ? Will he be happy that his constituents in the north of England have to subsidise those in the west country ?

Where exactly do the Liberal Democrats stand on those issues ? They say :

"Liberal Democrats are determined to have clean beaches and lower bills."

We want to hear from them how that can be done. It is no good saying all sorts of things on the doorstep which they cannot justify here, where such things ought to be justified. That is why the Liberal Democrats are all things to all men, women, children, animals and tabloids and why, when it comes to general elections, the vast majority of the public know that they count for very little. That is enough of the Liberal Democrats. What, then, of the future ? I have said that price rises must be contained. Most of the work has been done to catch up with the investment which needed to happen as a result of the Labour Government's incompetence. The directives to which I referred, must continue to be implemented, but over a reasonable time scale and on the basis of the best contemporary and technical health advice. All methods of charging must be considered. Is metering fair, bearing in mind that electricity and gas consumers are used to metering. Perhaps that is too long-term an answer.

Mr. Elliot Morley (Glanford and Scunthorpe) : Is the Minister aware that, on Monday, the local residents association in Crosby in my constituency presented a 11,000-signature petition against compulsory water metering ? Does not the Minister think that water metering ought to be an option for consumers rather than a compulsion in all houses ? Does he not think that the whole issue of pricing centres around the high price of water since

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privatisation, rather than that of metering ? The option of linking price to council tax bands is a fairer way than compulsory metering.

Mr. Atkins : The argument with which we are faced is what are the various options by which charges may be levied for water. That discussion probably crosses the House because some hon. Members believe that metering is the answer, some believe that council tax banding is an answer, some believe that ratable values extended to 2005 are the answer.

Mr. Morley indicated dissent .

Mr. Atkins : The hon. Member for Glanford and Scunthorpe (Mr. Morley) clearly does not. All those issues must be examined. Indeed, I have asked the individual authorities, the Water Services Association and others to look at the matter and to give me some advice on what they believe is best. Whatever that advice is, a balance must be struck between the cost to the consumer and the need for environmental improvement. That is just what the Government, Ofwat the National Rivers Authority, water companies and others are doing.

I ought to draw to the attention of the House one point to which I did not notice any reference in the speech of the Opposition spokesman, the hon. Member for Islington, South and Finsbury--the worldwide recognition of what has been achieved in Britain by our water companies and what they have achieved abroad in export orders. For example, North West Water has obtained a contract for £1.5 billion to upgrade, extend and operate the sewerage system throughout Malaysia, a £285 million contract to operate water and waste systems in Mexico City. [ Laughter. ] Opposition Members are laughing about the fact that British industry has been successful in obtaining major contracts abroad and they do not consider it to be important. Mr. Enright rose

Mr. Atkins : I am not giving way. I shall continue telling the House and the country what has been achieved by North West Water, for example. It has obtained another two contracts for treatment plants in Sydney and Melbourne, valued at £75 million with an estimated revenue of £400 million.

Thames Water, the company which looks after the hon. Member for Islington, South and Finsbury, has a contract to supply Ismit in Turkey with a water supply scheme worth £450 million. It has a 45 per cent. stake in a consortium developing a £344 million waste water infrastructure in Mexico. Severn Trent, to which the hon. Gentleman referred, has a £240 million contract for Mexico City and a 20-year concession to upgrade and operate sewerage facilities in New York state. So the achievements of British companies abroad, creating income for this country and protecting jobs goes on.

Since I became the Minister at the beginning of the year, a number of politicians from all parts of the world have come here to find out what the Department and the British Government are doing in relation to water and I shall give the House an indication of who. We have had politicians, at local and national level, from Israel, the Ukraine-- [Interruption.] The Opposition do not like the facts. The fact is that we have a worldwide reputation on water and

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that people come here to find out what has been achieved. People have come from Israel, the Ukraine, Oman, Brazil, Australia, Greece and Portugal. They want to know what has been achieved and to learn about our successes. What about Labour ?

Mr. Chris Smith : Will the Minister give way ?

Mr. Atkins : I will not give way any more because I am conscious of the time.

What about Labour ? Labour cannot make up its mind what to do with this success story. Labour has produced a document called "In Trust for Tomorrow". The hon. Member for Islington, South and Finsbury reckons that 680,000 jobs will come of that. But who will pay ? The document suggests an environmental court in which losing plaintiffs will have their costs paid by the taxpayer.

Mr. Chris Smith indicated dissent .

Mr. Atkins : The hon. Gentleman specifies in his document that there will be free charges. The document suggests greater regulation and more controls. Who pays ? Has anyone checked with the shadow Treasury team ? This is not "in trust for tomorrow"--like so much of the Labour party's policy, it is in hock for tomorrow.

Mr. Salmond : On a point of order, Mr. Deputy Speaker. I have looked closely at the motion and the amendment and I see that they both refer specifically to Scotland. The Minister proposes to conclude his speech without making any mention of the Scottish dimension to this issue. Is it in order for him so cavalierly to ignore the Scottish dimension to this issue ?

Mr. Deputy Speaker : The Chair is not responsible for the Minister's speech. The Minister is still making his speech

Mr. Enright : I bet you are glad of that ; yours is much better.

Mr. Deputy Speaker : Order. The hon. Member for Hemsworth (Mr. Enright) is making many sedentary comments, most of which are not very helpful--although I accept the last one.

Mr. Atkins : I have a question for the Labour party. Will it renationalise water ? We have heard from the acting leader of the Labour party, the right hon. Member for Derby, South (Mrs. Beckett), who said on 21 June 1994 :

"There is one area . . . where we might be looking for some new form of public control, and that is water".

The leader-elect, the hon. Member for Sedgefield (Mr. Blair), said of the major utilities, such as water, on 6 July :

"We believe that the great utilities must be treated as public services and should be owned by the public."

Then we have the Labour party commission on the environment document which says :

"We will ensure that the actions of all private water companies are under public control."

Yet on the wireless this morning, the hon. Member for Islington, South and Finsbury said that he would not renationalise, but that he was in favour of more regulation. That is simply a cop-out under pressure. What does it mean ? Do his comments mean more intervention in company operations ? Do they mean more regulation than is the case now ? We have the most regulated water industry in Europe. Would he direct resources to one area

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at the expense of another or would he subsidise consumers' bills ? Who will pay ? Has the hon. Gentleman cleared his comments with the shadow Treasury team ?

The fact is, as the hon. Member for Islington, South and Finsbury knows, as we know and as the House knows, more Labour regulation equals more Labour interference, and that means more cost to the company, the customer and the taxpayer. Prices are now steadying as environmental improvements continue. That is the right balance, and that is why I urge my hon. Friends to support the Government's amendment and to oppose the misleading nonsense from the Opposition.

5.42 pm

Mr. Richard Burden (Birmingham, Northfield) : I would not be letting out too many secrets if I said that, at the moment, the water industry in general and Severn Trent Water in particular are not the most popular institutions in the midlands. Why should they be ? Last week, after careful examination of the company's accounts, we learned, as my hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) said, that John Bellak, the former chair of Severn Trent, got a pay-off last year of £500,000. His salary had already gone up from £51,000 a year just before privatisation to £179,000 a year in the last year in which he was there.

Mr. Bellak has also done rather well in other ways. He, like many directors and chief executives of water companies, had been subject to share option deals. In the year ending March 1993, he exercised 107,572 share options at an option price of £2.62 per share. At the close of trading on 22 February 1994, the market price for Severn Trent shares was £5.83 per share. To work out the benefit of those share options, we would need to know whether the shares bought under the option were then sold and at what price. That is not absolutely clear at the moment because Mr. Bellak has not said anything about it. However, an article in the Observer suggested :

"company chairman John Bellak made £226,000, pre-tax, on the sale of 100,000 shares"

from his share option dealings. He did not do too badly, did he ? When there was a public outcry over the £500,000 pay-off to John Bellak, the cry that came back from the water companies, which may be echoed by Ministers, was, "Well, it was in his contract." We must ask, of course, who negotiated that contract in the first place. Although Ministers may now say that it is nothing to do with them and that they rather disapprove of these big pay increases, they are not exactly neutral in terms of how people like John Bellak came to be running the water industry. They appointed those people in the first place.

It is interesting that in 1987, when Mr. Bellak was chair of Severn Trent, the then Conservative Member of Parliament for Cannock and Burntwood said :

"Is my hon. Friend aware that the chairman, Mr. John Bellak, is both diligent and competent--indeed, one might describe him as a good bloke--and that under his leadership, the Severn-Trent water authority looks forward immensely to being in the vanguard of privatisation ?"--[ Official Report , 2 December 1987 ; Vol. 123, c. 921.] One would look forward to privatisation if one was going to make so much out of it. Mr. Bellak is also a prominent Conservative party supporter, and twice stood as a Conservative candidate in general elections.

It does not go like that for all the staff of the water companies. The staff at Severn Trent face reorganisation.

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Some will do all right out of it, but the protections that they have enjoyed for many years will be swept away by the privatised water company. It seems that there are standards for the people who actually do the work which are different from the standards for those who run the privatised water companies. Yet the response of the water companies when these things are criticised is that somehow they have been misunderstood. I do not think that we misunderstand them. The people who misunderstand them are the Government.

The Conservative party has not always taken its present view of the water industry. Back in the 19th century, it was significant that Conservatives such as Joseph Chamberlain, again from the midlands, were prominent in setting up a proper, municipally run water industry. Arguably the best contribution to public health in that century was the establishment of clean, wholesome supplies of water under municipal control. No doubt, if a Conservative suggested that today, he would be regarded as a dangerous pinko. However, that was the view taken all those years ago.

Now, of course, we are in an era of privatisation. Now we are in an era when the salaries of the top executives shoot through the roof. We are in an era when profits have gone up by 117 per cent. since privatisation and when dividends went up by 63 per cent. on average between 1989-90 and 1992- 93. For consumers, it has obviously been a very different story. Prices have gone up on average by 68 per cent. in the Severn Trent area.

The water companies say that they are misunderstood and that they are putting all the money into investment. It is true that there has been an increase in investment in the Severn Trent area. However, I ask Ministers to consider what happened, before privatisation, when a Conservative Government were in power. Prices were ruthlessly pushed up through the roof while investment was driven down by cash limits and controls on borrowing the like of which had not been seen in the water industry. Ministers have some explaining to do on that one. The fact is that privatisation was sold as a way to boost investment. As my hon. Friend the Member for Islington, South and Finsbury said, the Government said that the water companies would have access to the money market and that they would have access to investment. They said that the companies could extend their share issue. We have not seen much of that since privatisation. Certainly there have been some increases in borrowing in the past two or three years, but in terms of the scale of their operations, water companies have a very low gearing. As for extra share issues, we have hardly seen them at all. About 69 per cent. of that investment is being financed directly by consumers through their water bills. The Government said that they wanted water companies to operate in the private sector. I do not know of any other private body which knows that it can jack up prices by such an amount and still be sure of a captive market. Of course, that is the case with water because it is a natural monopoly. The consumer has no choice but to use water when it is needed and if they can afford to.

Mr. Nigel Evans (Ribble Valley) : Will the hon. Gentleman give way ?

Mr. Burden : I will not give way, as other hon. Members want to speak.

We have seen the growth of water poverty. Pensioners and people on low incomes now have to choose between essentials, and must decide whether they can afford to have

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a bath if they have a water meter. They must choose between paying the water bill or cutting back on essentials elsewhere. There is evidence that that is going on. Ministers may close their eyes to that, but evidence has come from local authorities, the National Consumer Council and from anti-poverty organisations. If they looked, they would see that that is the truth.

Nobody in the late 20th century should be put in the position of not being able to afford something as vital to health as a wholesome supply of water. Some water companies have a solution to the problem. Severn Trent has a great wheeze which they call a prepayment water meter. It is a bit like a coin-operated gas or electricity meter, only the water meter does not accept coins. A person buys a card which he or she charges up with a certain amount of time, and that is put into the water meter. That provides the person with a supply of water for a specific length of time.

The problem, of course, comes if the person is not able to charge up the card. What happens then is that the person runs out of water and he or she is effectively cut off. When Ministers say that they are pleased that the disconnection rate has gone down, we must remind them that it has gone down following the period after privatisation in which the rate actually went up. Are they including the question of disconnection by prepayment water meters in their disconnection figures, and if not, why not ?

In the Birmingham area, Severn Trent has embarked on a trial with prepayment water meters. The trial has already led to a phenomenal rate of self-disconnection. It is arguable that prepayment meters are unlawful under sections 60 to 63 of the Water Industry Act 1991. Are the Government doing anything about that ? Are they investigating the matter ? The answer simply is no.

We need a new deal for our water service, and we certainly need new methods of charging. I do not want to see--as apparently Ofwat does--the introduction of compulsory water metering. That would discriminate against families on low incomes, the disabled and families with children. We should be moving towards a system of payment according to the council tax which can be related to the ability to pay. We must end the scandal of water disconnections and also the scandal of prepayment meters and self- disconnection. We need a regulator which stands up for the interests of the consumer. That has not been the case with Ofwat, and it is about time that that was changed. We need changes which benefit the system and which recognise the true cost of water bills, because that has not happened in recent years. But most of all, we need a change in attitude in the water industry.

As privatisation came along, the language of the industry changed. Suddenly, we did not have consumers--we had customers, as if there were somehow a choice about whether one paid or not. We did not have a public service--we had a business. Water is a public service. There is no more vital element than water.

If one does not have access to a wholesome supply of water, it is obvious to everyone--apart, it seems, from the Minister--that there will be health risks. That is why we need to get back--I shall say it--to a democratic system of public control of the water industry. We need a system

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where water is treated as a public service and consumers are not treated as mere commodities, because that is the situation that we have at the present time.

5.56 pm

Mr. Peter Atkinson (Hexham) : Opposition Members never cease to amaze me, and tonight they have amazed me more than ever before in the way that they have tried to turn the genuine success story of the British water industry into a failure. Sometimes they simply use blatantly misleading facts, and the hon. Member for Islington, South and Finsbury (Mr. Smith) was guilty of that.

Their other tactic is to do down the work that the men and women of the water industry have done to turn it around and to make it such a success. By unjustifiably attacking the industry, as they have in the debate, they are rubbishing the ordinary men and women who have put so much over the years into building up the business into a great success.

The hon. Gentleman represents a London seat, and he was rude about Thames Water. The hon. Gentleman is a neighbour of his hon. Friend the Member for Sedgefield (Mr. Blair). Does the hon. Gentleman keep his eyes closed when he walks around the city ? Has he not seen the big holes in the ground with Mr. Joe Murphy's name on a sign above them and people digging them ? Does he not realise that the London ring main is one of the biggest capital schemes in London for many years ? Speaking from my own experience of the service I get when I have to use Thames Water's customer services, it is vastly better than it was before privatisation.

One of the remarks which the hon. Gentleman made which absolutely staggered me was that water companies are now collectively spending very much the same as they did pre-privatisation. That is clearly wrong. We know that they will be spending £30 billion before the end of the decade.

A research paper from the Library makes it clear that the hon. Gentleman does not understand that expended capital by the water industry does not include operating expenditure incurred as a result of compliance costs. If one improves bathing water and river water, one must put in some capital. But the vast majority of money goes on the day-to-day costs of running a plant to a much higher standard than it was run before. Clearly if one tipped sewage out in the sea untreated, and then tipped it into the sea treated, one would spend more money on a day-to-day basis than before. That is why those annual running costs must be put on to customers' bills--that is the only way.

If the hon. Gentleman wants to talk about a success story, I suggest that he goes to the north-east of England where the success of Northumbria Water and North East Water has been evident to everyone. My constituency has the distinction of having the largest man-made lake in Europe, the Kielder reservoir. Incidentally, that scheme was invested in before privatisation, and will prove its worth in the future.

An interesting point which my hon. Friend the Minister made related to what would happen if a scheme of unifying water charges--as the Liberal Democrats suggest--was introduced, and a national contribution was made to the problems of the south-west. The ratepayers and water consumers of Northumberland who invested many years

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