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9.44 pm
The Parliamentary Under-Secretary of State for Scotland (Mr. Calum Macdonald): This has been a constructive and positive debate and, if I have time, I shall respond to some of the wider points.
I begin by dealing with the Scottish provisions at part II of the Bill, which were raised by the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) and by my hon. Friend the Member for Cumbernauld and Kilsyth (Mrs. McKenna). As my right hon. Friend the Minister for the Environment said when opening the debate, the Scottish provisions deliver a commitment made by my right hon. Friend the Secretary of State for Scotland in response to the outcome of the Scottish water industry review.
In conducting the review, we were guided by a number of important principles. We wanted to promote accountability, facilitate investment, promote efficiency, ensure continuity of public water supplies, protect public health and minimise disruption to the industry.
The previous Government created a problem by removing water from local authority control. As the Conservatives enjoyed no democratic mandate in Scotland, the water authorities were seen as unrepresentative and unaccountable. There was a real democratic deficit. The coming of the Scottish Parliament next July will change that.
The new Scottish Parliament will bring all public bodies in Scotland, including the water authorities, under strengthened and properly representative democratic control. By holding the Scottish Executive to account, the new Parliament will place the water authorities under the scrutiny that a modern democracy demands. That will be a crucial strengthening of the accountability and control of Scottish water authorities, and it will end for ever the perception and the reality of the democratic deficit.
The review gave careful consideration to a wide range of other proposals for the industry, including the possibility of returning it to pure local authority control. However, the recent local government reorganisation resulted in 32 unitary councils in Scotland covering the areas served by the three water authorities. Splitting up the three authorities between the 32 councils was quickly ruled out. It was clear that the number of councils made that solution impractical. It would have meant disproportionate costs, through the loss of economies of scale and through disruption, which would have been passed on to the customer.
Mr. Alasdair Morgan:
If the fire brigade and the police service can be administered by the elected members of the 32 local authorities, why is it not possible for water?
Mr. Macdonald:
I was going to make a further point that will answer that.
Another option considered in the review was to transfer responsibility for water and sewerage services to joint boards of local authorities. However, we have to recognise that the water authorities are large businesses with massive investment requirements. The current regulated business model has provided scope for delivering large investment programmes. We also recognised the value of having individuals with business experience relevant to such undertakings on the water authority boards. Ensuring the representation of every council on the relevant water authority board would have resulted in large and unwieldy boards. We concluded that that made joint boards impractical.
As well as resolving the democratic deficit through the new Scottish Parliament, we also wanted to make the water authorities more responsive to local authorities, other local interests and customers. We have done that in two main ways. First, as we announced last December, we have increased the number of local authority councillors on the board of each authority so that they now constitute almost half the total. Secondly, we have issued a direction to the water authorities requiring them to consult regularly with the local authorities and other representative bodies in their areas. That direction was issued in August this year and early indications suggest that it is working well. The new commissioner will be responsible for continual monitoring of the responsiveness of the water authorities to local interests.
Taken together, those developments constitute a fundamental reform. We are providing what the Scottish people want: a water service unambiguously in the public sector, with clear democratic control by a Scottish Parliament, with strengthened local responsiveness and a professional, independent regulator.
The review also emphasised that the industry is in need of substantial investment if Scottish people are to have the quality of water service that they deserve. That investment is necessary to bring the quality of our water up to the best British and European standards, to protect our beaches, rivers and seas and to renew the infrastructure gifted us by previous generations, which more recent generations and Governments have neglected. Of course, it will have to be paid for by all water consumers. Those are facts that we cannot avoid or escape.
The Government are committed to securing substantial improvements in drinking water quality and standards of sewage treatment. To deliver that, we have already taken bold and difficult decisions on charges. That was necessary to bring about the modernisation of the water industry in Scotland. As a result, real progress is being made on investment. New water treatment plants are being built over the length and breadth of Scotland. All the main Scottish cities will benefit from brand new sewerage works by the end of 2000.
For the first time in generations, substantial sums are being invested in renewing our water mains and sewers. The three authorities should invest more than £1.5 billion
over the next three years. That includes projects to the value of some £600 million that are being pursued in partnership with the private sector. We can already see benefits for customers from private sector innovation.
As I have already explained, the devolution settlement means that the water authorities will be under legitimate democratic control. The direction on local consultation and the increased councillor representation mean that the water authorities will be much more responsive to local concerns. Despite major changes, they remain public sector monopolies, so the Scottish people need a safeguard to ensure that the money that they pay in charges is being well spent.
The review recommended that an effective safeguard needed a new set of regulatory arrangements. That is why we are establishing the commissioner, who will be responsible for all aspects of economic regulation and for promoting the customer interest.
Under the new arrangements, the commissioner will be obliged to have regard to a range of factors relevant to the water authorities when framing advice on charges. Among those factors will be the economy, efficiency and effectiveness with which the authorities use the resources at their disposal in delivering services to their customers. In short, it means sustained pressure on the authorities to deliver their services with maximum efficiency. Other important factors will be to ensure the authorities can deliver the required environmental and customer service standards.
The review also emphasised the importance of promoting customers' interests. The three consultative committees will help to discharge that role. They will advise the commissioner about the concerns of customers in their respective areas and the commissioner will have regard to that advice in discharging his or her functions.
The water authorities are making real progress in the way in which they deal with their customers. Nevertheless, we believe that the new arrangements will encourage yet greater sensitivity and responsiveness to the needs and expectations of customers.
Mr. Alasdair Morgan:
Will the Minister clarify a remark by the hon. Member for Cumbernauld and Kilsyth (Mrs. McKenna)? Is he implying that, if the Bill is enacted, clauses 12 and 13 will not be brought into force by the Secretary of State prior to 6 May next year? If that is the case and they are not implemented by then, will the power to bring them into force then devolve to the new Scottish Parliament?
Mr. Macdonald:
I was about to explain that point as it was the main thrust of the hon. Gentleman's objections to the Bill. I should make it clear that we attach a high priority to the measures in the Bill. They will deliver real improvements to the arrangements for regulating the water industry in Scotland and real benefits to consumers. There was a consensus among the major consultees on the water industry review--the Convention of Scottish Local Authorities, the customers council and the water authorities themselves--that that approach to regulation was sensible and the best way forward.
We believe that it would be wrong to delay taking steps that would allow the Scottish Executive to implement the new arrangements as soon as possible--if we did not take those steps now, another year would be lost. However, in legislating, we are not pre-empting decisions by the Parliament or by the Executive. It will be open to the Parliament to implement the provisions of the Bill as it sees fit.
Contrary to what the hon. Member for Galloway and Upper Nithsdale said, the hands of the Scottish Parliament will not be tied. It can either retain the proposed new arrangements or alter them in due course. It will be entirely up to the Parliament and the Executive to activate and implement the provisions. If they choose to do so--as I believe they will, given the support that the provisions have--they will be able to act straight away, so freeing up time in which the Parliament can undertake other important and pressing legislation. I am sure that the House will recognise that that is the right way in which to proceed, as I hope the hon. Gentleman will, on reflection, agree.
There have been a range of excellent and constructive contributions to the debate, particularly from my hon. Friends the Members for Sheffield, Hillsborough (Helen Jackson), for Birmingham, Northfield (Mr. Burden), for Scarborough and Whitby (Mr. Quinn), for Waveney (Mr. Blizzard), for Plymouth, Sutton (Mrs. Gilroy), for Stoke-on-Trent, North (Ms Walley), for Stafford (Mr. Kidney), for Peterborough (Mrs. Brinton), for Putney (Mr. Colman), for Crosby (Mrs. Curtis-Thomas), for Birmingham, Hall Green (Mr. McCabe) and for Milton Keynes, South-West (Dr. Starkey). Indeed, so many hon. Members spoke that I could not possibly list them all, but I acknowledge that hon. Members on both sides of the House made good contributions.
Some important points and suggestions were made, most of which will have to be dealt with in Committee, but I shall respond to one or two of them now in the hope of being helpful to members of the Committee and, indeed, the House. Hon. Members on both sides of the House, but especially my hon. Friend the Member for Milton Keynes, South-West, mentioned budget payments
and pre-payments. We are not opposed to the use of payment units as a convenient means of payment for customers who want one. Clauses 1 and 2 prohibit the cutting off of supplies or the use of a limiting device with the intention of enforcing payment. I hope that those who have expressed concern will be reassured by the fact that at least one company that has faced problems with payment is removing the cut-off valves, but is leaving the units as a means of budget payment.
My hon. Friend the Member for Sutton and other hon. Members mentioned regional disparity in pricing, referring in particular to South West Water. The positive answer to the problem in the south-west lies in the outcome of the periodic review. As a minimum, the Government expect in 2000 a reduction in prices for customers of South West Water that is broadly in line with the national picture. In his recent paper "Prospects for Prices", the director general said that customers in the south-west should expect a 15 to 20 per cent. reduction in 2000.
I apologise to hon. Members who raised points that I do not have time to deal with--I am sure that those points will be adequately covered in Committee.
The Bill envisages a new framework for the water industry in Scotland and new provisions for England and Wales. I commend it to the House.
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