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Mr. James Gray (North Wiltshire): First, I congratulate my hon. Friend the Member for Meriden (Mrs. Spelman) on what I think was her first outing at the Dispatch Box--the first of many, I am certain. It was disappointing that the Minister was unable to accord her a similar courtesy across the Floor. It appears that the Under-Secretary is better at reading from the bit of paper in front of him than he is at making a more informed or amusing speech.

I resent the Minister for the Environment implying that I was being flippant or having a knock about when I discussed the previous group of amendments. I was not. I was making serious points, albeit light-heartedly. One of the points that I made was that Labour is determined to ensure that every aspect of our lives is written down in the small print of legislation. The new schedule was unnecessary, and one could argue that clause 5 is equally unnecessary and interferes with our way of life.

Clause 5 is a classic Henry VIII clause. It gives the Secretary of State powers that currently he does not have. It says, "You, Mr. Secretary of State, are the clever guy. You're the one who will decide which vulnerable category will be exempt from metering. You will decide our futures--not Ofwat, not the water companies, but the Secretary of State." That is why we have tabled these two amendments.

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The amendments would allow the Secretary of State to provide guidance to which the water companies must have regard. Under the Bill, companies charging schemes must comply with the regulations set out by the Secretary of State, which is a fundamental shift in the nature of United Kingdom utility regulation. [Interruption.]

Hon. Members may say that I am reading my speech. That is quite right, but I hope that I am reading it with more passion, interest, authority and belief than the Under-Secretary. There is no question about it; there is a lot of passion in my speech.

At the moment, Ofwat is able to use its discretion and to decide what to do, and the water companies can also decide what to do. The clause dictates that the Government will lay down the categories of vulnerable people who will be exempt, and the water companies will be required to live up to that regulation. It makes the Secretary of State the regulator. Ian Byatt, the regulator, has gone to great lengths to say that he believes the clause fundamentally unbalances the entire UK utility regulation.

The UK model is based on the principle of regulatory independence. The whole notion behind utility regulation is that the regulators are independent. Their objectives and duties, as well as those of the companies, are given by Parliament through primary legislation. Parliament gives the regulator his rights; this clause takes rights back from the regulator not to Parliament, but to the Executive. It is a classic Henry VIII approach. The system of regulation that we set up in the original privatisation Bills is appreciated by all parties because it provides a balance between the Executive and the regulator.

Clause 5 flies in the face of the Government's declared regulatory principles. It makes companies charging schemes comply with regulations issued by the Secretary of State. That regulation imposes objectives on companies and regulators other than those determined by Parliament. It ignores the duties and the role explicitly given by Parliament to regulators. That is the first point I want to make about clause 5 in justification of our two amendments.

The second point is more meaty and concerns the vulnerable groups that clause 5 tries to protect. The Government are asking the water companies to provide a social service through differential tariffs. They are saying that these vulnerable groups will not pay, so there will be differential tariffs, which means that people who are not vulnerable will pay more. That is the clear implication of clause 5, and that is precisely why we are trying to amend it.

That is not to say that Conservative Members are being less than caring about those vulnerable groups. All we are saying is that the water pricing mechanism is not necessarily the way in which to help them. If the Government are searching for a way to help vulnerable groups, it may be useful to mention the notion of variations in income support. It is a curious fact that water bills vary hugely across England, largely because of the length of the pipework taking water into a person's home. In London, they are low: £180 in the Thames Water area. In the south-west, where distances are much greater, the bills are £300 or £400 depending on the state of the market. Irrespective of the difference in water bills across the regions, however, the income support element is exactly the same.

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10.15 pm

If the Government are casting around to find useful ways in which to help vulnerable people, especially those who are least able to pay their water bills, let me repeat a suggestion that I made to the Secretary of State in Committee. He said then that he would consider it. May I suggest that the Secretary of State should have another look at regional variations in the water element of income support bills? That would be a real advance in helping those who are less able to pay their bills.

Mr. Shaun Woodward (Witney): Will my hon. Friend speculate for a moment on the principle that is at stake? It seems to me that the principle involves interference by the Government in a privatised company, and that the crucial aspect of that interference concerns the principle that is now being established. How far can that go? If we can interfere with the water companies, will there be interference in the future with other privatised companies in the fields of, for instance, energy or telecommunications? Will my hon. Friend speculate on that?

Mr. Gray rose--

Mr. Deputy Speaker: Order. The hon. Gentleman must speak to the amendments; he must not deal with what is happening in other utilities.

Mr. Gray: In that case, Mr. Deputy Speaker, I will not be tempted to respond to what I consider to be an extremely valid point. On Third Reading, we may have an opportunity to say more about the way in which the Bill takes away the water companies freedom to act, and moves them increasingly towards a quasi-regulated, quasi-nationalised status and away from the privatised status that they currently enjoy.

Clause 5 is a classic Henry VIII clause. It takes into the centre--into Westminster and into Whitehall--powers that are currently in the hands of the regulator and, through the regulator, in the hands of the privatised companies. The clause is centralising, regulatory and bossy, and our amendments are designed to lessen its effects.

Mr. David Ruffley (Bury St. Edmunds): I support the amendment.

During our debates on the Bill there has been some measure of agreement on core principles, including the importance of a voluntarist approach to the spread of metering. Unfortunately, under clause 5 of the Bill we have no voluntarist consensus: the Government have eschewed the spirit of voluntarism and have introduced measures of compulsion for which there are no obvious justifications.

My support for the amendment is based on evidence provided by my regional water company, Anglian Water. It is at the forefront of innovative designs of tariffs for vulnerable groups. I think that that is accepted throughout the industry. I am thinking of two in particular. I shall not give details, but they cater for low-income large families, and take account of the fact that they should pay less than the normal meter charges. Pensioners are also able to receive discounts in exchange for not being subject to a standing charge. Innovation of that kind will be stymied

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by the compulsion in the clause, particularly in the way in which power to design and innovate will be transferred from the private sector to the Secretary of State. Under the clause, the Secretary of State has the power to set regulations.

Many Conservative Members feel that this is an unwelcome move towards centralisation. In the free market world that we all seek to inhabit--even Labour Members seek to do so these days--is it not more sensible for private companies to design and innovate? A regulator or Secretary of State cannot possibly know or understand the particular customer profile or needs in a particular region. Are not private companies better placed to design products and particular tariff schemes to assist vulnerable groups? Is it not also true that the capacity of the 30-odd companies in the industry to promote innovative ideas must be greater than the capacity of the Department of the Environment, Transport and the Regions to do so?

It is that drag on innovation, that eschewal--[Interruption.]

Mr. Deputy Speaker: Order. May I ask the House to come to order? Far too many conversations are going on in the Chamber. It is unfair to the hon. Gentleman who is discussing the amendment.

Mr. Ruffley: The thrust of our argument is that innovation is better secured by the private sector. Conservative Members thought that we had persuaded the Labour party of that sector's disciplines, but it seems not when we consider the wording and effect of the clause, which is why we press the amendment.

There is the criticism that market failure may occur in the private sector. Perhaps water companies will not design innovative products to protect low-income families and vulnerable groups that we want to protect. What happens if bad water companies are not as innovative as Anglian Water? We do not have to look far to find the answer to that question.

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