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9.23 pm
Ms Joan Walley (Stoke-on-Trent, North): I am grateful for the opportunity, however brief, to participate in the debate. I sat through the long days of the paving Bill and the subsequent legislation on water privatisation. This Bill is welcome, and the proposal to prohibit disconnections is a critical measure. I am sure that that provision will be fully explored in Committee.
I want to deal with the issue of environmental sustainability and public health. The Bill is a wonderful step forward, but I urge the Government to take on board the views of the Chartered Institute of Environmental Health and the second report of the UK Round Table on Sustainable Development. Recommendation FW3 states:
The Bill will lead to far more metering, but not to 100 per cent. metering. I hope that my hon. Friend the Under-Secretary will refer to discussions that have taken place between the British Bathroom Council and Members of Parliament who fear that proposals in the new water by-laws to introduce a valve system as well as a siphon system of flushing could, without full metering, result in an enormous loss of water. It is vital for further research to be carried out on this aspect, for a proper standard to exist for any new valves that are introduced and for proper safeguards to operate at the point of sale to ensure that the highest standards apply.
Mrs. Rosemary McKenna (Cumbernauld and Kilsyth):
I think it important for a Scottish Member to comment on the Bill--a Labour Scottish Member, that is.
Unlike England, Scotland has public water authorities. That is a result of campaigns conducted in Scotland to prevent the last Government from privatising Scottish water. However, changes are needed. First, we should have a commissioner, for whom proper provision should be made. The commissioner should be able to regulate all the financial aspects of the Bill. Secondly, we should have three consultative committees, one for each authority. It is important that that should be done now. The Scottish Parliament will be elected on 5 May next year--
Mr. Alasdair Morgan:
It will be elected on 6 May.
Mrs. McKenna:
On 6 May. Some have more of an interest in it than I do, and the date will stick in their minds.
The Scottish Parliament will meet for the first time on 1 July, and it will have a host of items to consider. What we are doing will enable it to bring the legislation into force very quickly if it chooses. It will not be imposed on the Parliament; it will be able to choose whether to implement it. We will take much of the work load from the Scottish Parliament if the Bill goes through the House now, and can be implemented immediately.
Mr. Oliver Letwin (West Dorset):
I am delighted that the hon. Member for Cumbernauld and Kilsyth (Mrs. McKenna) is able to assure the House that more than one quarter of the representatives of the Scottish Parliament will be Conservatives; I hope that she will prove to be right.
As my hon. Friend the Member for West Chelmsford (Mr. Burns) has said, in many ways, this is a cautious Bill. Indeed, as my hon. Friend the Member for Billericay (Mrs. Gorman) made clear, in many respects, it is a cosmetic Bill. It largely restricts itself to enshrining what is already the case. As my hon. Friend the Member for West Chelmsford said, there is no move to competition. There are no dazzling new charging systems. There is no major environmental advance.
As my hon. Friend the Member for West Chelmsford also said, and as has been repeatedly brought out in the debate, the Bill leaves a number of difficult questions of detail unresolved. Some were mentioned by my hon. Friend: for example, why are children's homes not exempt if schools and hospitals are? Some have come out in the debate. In a particularly thoughtful contribution, my hon. Friend the Member for North Thanet (Mr. Gale) set out two issues: bailiffs distraining tenants' goods when the landlord fails to pay a water bill; and the cost of repairs of pipe from the meter to the stopcock.
I believe that I am the proud possessor of the constituent with the greatest problem in the UK in that respect. Shortly after acquiring his house, he discovered that he had near on a mile of pipe from the water company's meter to his stopcock, a fact that he would have liked to discover before he bought the house. He now finds that he is unwittingly a major contributor to the investment programme of the UK water industry. The problem that my hon. Friend the Member for North Thanet brought up is perhaps most luridly exemplified by that, but there are many less lurid examples. In Committee, we shall want to deal with that issue.
Credit should be paid where credit is due. Labour Members also brought up serious issues of detail. One was voluntary BPU metering. It must be right that people who wish to plan their lives in an orderly fashion should be able to sign some special agreement with their water provider enabling them to install some form of BPU metering; I am sure that citizens advice bureaux and others throughout the country echo that. The Bill, probably unintentionally, prevents that. I would be happy if the Under-Secretary of State for Scotland, the hon. Member for Western Isles (Mr. Macdonald), were willing to assure the House that that will be sympathetically entertained in Committee.
Although the Bill is, generally speaking, cautious and cosmetic, in two senses, it is extremely interesting; indeed, more interesting than some aspects of our debate have brought out. It is on those issues that I wish briefly to dwell.
As has been mentioned on several occasions, the Bill leads gradually, and subtly, to a vast and cumulative increase in the extent of metering. No one knows how fast that increase will be, but it is remorseless; it is a ratchet. I take it that it is intended to be a ratchet--a ratchet with great political sensitivity in that no one will be forced into metering. Indeed, people have the delicious prospect of being able to opt for metering on a trial basis to discover whether it reduces their bills and then to opt out of metering, with the proviso that the next person who lives in their house will end up being metered all the same.
The Bill does not just move subtly and sensitively towards metering, a goal that all hon. Members, or almost all, could share with the Government. It also brings a new and interesting principle into utility regulation. It explicitly permits the Secretary of State to intervene, through regulation, in charging structures.
The Minister for the Environment made it perfectly clear that he regarded himself and the Deputy Prime Minister as being greatly restricted by the Bill's terms in applying those regulations. I think that the element of the Bill to which he was implicitly referring was clause 5(4), which states:
As there is relatively little understanding of the price elasticity of demand in water, it is not clear whether the Secretary of State might, by mistake, also alter the total. The Bill does not prohibit such an alteration but refers specifically to the "purpose". However, for now, let us ignore that point. The main point is that the Secretary of State--within the terms of the Bill, acting perfectly properly--can adjust the whole charging structure so long as his purpose is to ensure that the total revenues raised by charges overall remain constant.
None of us knows--I suppose that even current ministerial incumbents do not know--just how that regulatory power will be used. However, there were ample signs in the statements made in this debate, including those by Labour Members, that the Minister for the Environment intends to use the power to achieve what I suppose he would describe as a greater correlation between payment and the ability to pay. The power is intended, in other words, to introduce into United Kingdom utility regulation the opposite of the principle of economic transparency upon which, so far, the entire regulatory system has been built.
The fundamental principle of economic regulation of the United Kingdom's utilities has always been that it should be exactly that: economic regulation. Moreover, the principle has been that, in cases in which the Government intend, for perfectly good social reasons, to benefit a particular class of people, they should do so by means of explicit and transparent subsidy. The power provided in the Bill is the first time that a departure has been made from that principle. It is a very important departure.
The power is an example of a Secretary of State being able to tell essentially the Office of Water Services, and through it the water companies, how it is to structure charges to benefit those people in society whom the Secretary of State thinks it proper to benefit. The question arises: what is the argument for doing that? Moreover, if there is an argument for doing that, how far does it apply? Why does it not apply also to gas and electricity supply, or to the price of bread?
Labour Members waxed eloquent on the extraordinary importance of water, which no one denies. Water is a very important commodity--like bread, electricity and gas. For myself, I do not see very much difference between dying of cholera and dying of hypothermia; both prospects are appalling. If it is legitimate and proper for the Secretary of State to be given powers to alter the water charging structure, very quickly other Ministers may decide that, by analogy, they wish to introduce similar interventions in the charging structures of other utilities. Before we know it, we may be making such interventions in basic, vital commodities.
That is not new Labour but old socialism. It is not transparency of market products but a return to the use of the state to alter market dynamics and prices in such a way as to achieve certain social effects. If that is what the Government intend, they should come clean about it and announce that they have changed their mind and do not believe in the pure economic disciplines of a market
economy, with transparent subsidies to look after social groups, but are moving back to a world essentially of prices and incomes policies. The very idea behind prices and incomes policies was that one should protect certain socially disadvantaged groups by altering prices.
I am not saying that the Minister for the Environment wants to move there in one step; he is far too subtle for that. He has put only the first tentative marker on the route--a kind of motorway--that leads us down in that direction. My hon. Friend the Member for Billericay, in typically trenchant form, began to point that out, and she was quite right.
The Scottish elements constitute the second interesting aspect of the Bill. The Under-Secretary of State for Scotland, to whom the duty of making the Government winding-up speech falls, is the great expert in that domain. [Hon. Members: "Hear, hear."] Indeed, he is particularly popular with Conservative Members for his ineffable courtesy and kindness in all respects.
A problem of a minor, constitutional variety has been pointed out by hon. Members on both sides of the House: why are those provisions in the Bill? The hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) has told us that, if he and his colleagues have their way, they will ensure that they are never invoked. If the Government really believed in Scottish devolution, they would not be introducing them, but would be waiting for the Scottish Parliament to do so.
I suspect that the Government are rather worried and find themselves in such a position that they believe that the hon. Member for Galloway and Upper Nithsdale may indeed be a member of the Scottish Government. They may also fear that the Conservative party will hold the balance of power, even if it does not hold 25 per cent. of the seats, in the Scottish Parliament. In such circumstances, it is forgivable that, even at this late hour, the Government are busily legislating for Scotland in this place in respect of matters that are utterly devolved under the Scotland Act 1998.
I mention that only as a mild form of teasing, but there is the serious question whether that is the precedent for another development, of which we have heard nothing: the idea that the famous third way should be implemented by introducing official regulators for public sector bodies. I have searched high and low, but I cannot find another example of that. I do not know of a case in which even the Minister for the Environment's own Department has yet suggested that remaining public sector bodies should have public sector regulators regulating them, independently from the Government. That is a most interesting proposition, which would be a remarkable and splendid test of this so-called third way.
If the hon. Member for Galloway and Upper Nithsdale and his hon. Friends do not control the Scottish Parliament and do not immediately undo this aspect of the Bill, we shall discover whether the Government will use Scotland as an experiment--in the way, to which Scottish Members sometimes object, that the Conservatives used it as an experiment for the poll tax--and the Government will discover whether using a public sector regulator to regulate a public sector body does or does not work. I venture a minor prophecy, which I may live to regret, although I doubt it: it will not work.
"The Government should review the regulatory structure of the water industry in all parts of the UK, and devise a system to resolve the inevitable conflicts which arise between the parties during the periodic review process. New powers should be made available to the regulators where necessary to implement their statutory duties. The outcome of the review should include an explicit duty on all regulators, including the Director General of Water Services, to take account of sustainable development."
I fear that proposals in the legislation that specifically concern metering and prices will conflict with issues relating to public health and sustainability. That has already been suggested by today's debate. We must be fully confident that, in the third water price review, Ofwat can reconcile all those issues, and I urge the Government to explore them during the later stages of the Bill.
"The power to make regulations under this section may not be exercised for the purpose of limiting the total revenues of relevant undertakers from charges fixed by or in accordance with charges schemes."
The problem is that, although we accept that it is important to restrict the Secretary of State from changing the total revenues, that is an entirely different proposition from restricting him from making changes to the balance of the charges. Unless I am mistaken--I should be more than willing to admit the mistake if Ministers wish to
intervene--nothing in the Bill restricts the Secretary of State from altering any charges that he wishes to alter so long as, ultimately, the total revenue is not altered or--I should go a little further--so long as his "purpose" is not to alter the total revenue.
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