Examination of witnesses (Questions 100-119)|
TUESDAY 30 JANUARY 2001
100. Can you tell the Committee why you have
a panel rather than an authority?
(Mr Anderson) The Panel wouldwell, I think
I would have to ask the question, what is an authority, as opposed
to a panel, and why that would be different; a panel would comprise,
as I have explained previously,
Chairman: Convince me that you know what you
are doing with this bit of the Bill?
101. Convince us that you are going to get the
balance right. It is all very well saying that at the moment it
has lots of people who are partisan, nobody argues with that,
and therefore you must broaden it, because what has been wrong
with the water industry has been its total inability to see beyond
its own, I was going to say navel, but that might be the wrong
thing. Convince us that you are going to get (a) a broad sweep
of people who actually know what the interest of the consumer
is, as opposed to what the interests of the companies are; and
(b) that this is going to be capable of coming up with a measured
judgement, which will be of use to the people presumably it is
(Mr Anderson) I imagine that both considerations will
be in Ministers' minds, when they make the appointments to the
102. I know about Ministers, Mr Anderson, I
have known a lot of them, over a long time; what I am asking you
is, what is your Panel going to do, and how are you going to make
sure you get the balance?
(Mr Anderson) The balance will be a judgement for
Ministers, but the Panel will comprise people who are able to
advise the Director-General on his range of responsibilities.
The Director-General has already established a regulatory panel,
and draws on that panel to provide him with advice, which clearly
he finds useful.
Mrs Dunwoody: I think that is where we started
ten minutes ago.
Chairman: I think we had better leave this.
John, perhaps you would like to go on to your next question.
103. I think this is an extremely important
issue, but I recognise the time factor, Chair. Perhaps we can
have some form of paper, from the Department, explaining precisely
what appears to be total confusion?
(Mr Davis) Let us give you a paper on that.
Chairman: Thank you very much.
104. Following the Environmental Audit Committee's
Report on Water Prices and the Environment, will you be considering
giving Ofwat a specific duty to have regard to sustainable development?
(Mr Davis) The idea of giving Ofwat, the Director-General
of Water Services, such a duty was not a significant issue during
consultations on utility regulation reform. I am not quite sure
why, but it may be because the Director-General already has specific
environmental responsibilities, under Section 3 of the Water Industry
Act, alongside his economic and customer protection duties. I
believe the Director-General's duties implicitly require him to
have regard to sustainable development.
105. Mr Byatt did not really feel that, did
(Mr Davis) I shall come on to Mr Byatt in a moment
or two. The job involves striking a balance between economic factors,
protecting customers and environmental factors, like conservation.
I am not sure whether the Committee is going to take evidence
from Mr Byatt. I am sure that he would argue that he did have
regard to sustainable development, in carrying out his job; some
environmental NGOs may feel that he gave insufficient weight to
environmental factors, but that is about the judgements he struck,
rather than whether he struck a judgement between the different
factors. So I think Mr Byatt would argue that he did have regard
to sustainable development. The Director-General of Water Services'
duties are already very complex, Dr Helm has already referred
to that in his evidence.
106. But will you, as a Department, be giving
specific duties to Ofwat, in relation to sustainable development?
(Mr Davis) Ministers are considering the proposal
for giving such a duty, in the light of the Environmental Audit
Committee recommendation, and in the light of responses to consultation
on the Bill. Clearly, if your Committee supports this proposal,
Mr Chairman, that will be a significant factor in those considerations,
but the Government is still consulting on the Bill, and therefore
they have not reached decisions on this issue. It has been put
to them in the consultation
107. But you are giving consideration to it?
(Mr Davis) Yes.
108. That is fine. How will the guidance on
social and environmental matters relate to the advice given to
the regulators in the course of the quadripartite process?
(Mr Anderson) The Department is about to respond to
the Environmental Audit Committee's Report on the Periodic Review,
and I must be careful not to anticipate that reply.
109. When is that reply coming then?
(Mr Anderson) Very shortly.
(Mr Anderson) Soon. A matter of days, I would think.
111. A matter of days. So we should be able
to take it into account long before we see anyone else?
(Mr Anderson) Certainly, Chairman.
112. Thank you.
(Mr Anderson) As I say, there will be this report.
But it seems to me that the power for the Secretary to provide
guidance and the process of the Periodic Review can be entirely
complementary. If the Secretary of State chooses to issue guidance
on social and environmental considerations, that guidance will
be taken into account during the Periodic Review. Similarly, if,
during the course of the Periodic Review, it became apparent that
guidance would be helpful and it is quite possible then there
would be an opportunity to issue that guidance.
113. Yes, but you will still be working in close
conjunction with the Environment Agency and the Drinking Water
(Mr Anderson) Absolutely.
114. You mentioned, Mr Davis, earlier, about
water being a scarce resource; do you think there is a case for
adding a duty to promote demand management in clause 53?
(Mr Davis) There is an obligation on water companies
already to promote the efficient use of water by their customers.
115. I know, but this body, in 1996, says that
that really was not good enough and there ought to be a serious
programme of demand management?
(Mr Davis) The Bill adds a duty on companies to be
efficient in the way they use water themselves; so that is the
second part of it. A great deal has been done on water conservation
by the companies since 1996, particularly following the Water
Summit the Deputy Prime Minister called just after the election.
So the Government's view, so far, has been that the pressures
that are on companies, and existing obligations on companies,
are sufficient to ensure they promote conservation.
116. Come on; it was an absolute scandal about
the leakage, and something had to be done to tackle it, and quite
rightly the water companies responded and did try to start to
tackle that. But what about water reuse, and recycle systems;
should we not really be pressing these?
(Mr Davis) A number of the companies are experimenting
with water reuse and recycling systems. I hesitate to mention
the Dome, but the Dome had complete recycling of water on its
site. There are some developments taking place with developers,
where secondary systems are being put in as part of new development.
The case for reuse of water within existing properties is much
harder to make, because of the cost of putting in the separate
system, and there are public health concerns associated with making
sure that plumbers do not connect the wrong tap to the wrong system,
if you have double systems in houses. So there are doubts about
some of the grey water ideas and the reuse ideas, but there are
experiments being carried out by water companies in this area.
117. Is the Government, do you know, giving
any consideration to a Water Saving Trust?
(Mr Davis) The last Government considered it, in the
light of the recommendation from the Select Committee on Environment,
in 1996; the last Government rejected the idea. This Committee
took evidence from Mr Meacher on water resource management in
1997, on the idea, and Mr Meacher pointed out various problems
with the idea, and ended up being told by the Chairman that he
was not sounding very enthusiastic. And, really, the Government's
stance remains that, given all the other things that are going
on, we do not see the case for a Water Saving Trust.
118. You think it is better to have the Deputy
Prime Minister banging the table and telling people to do it than
setting up a bureaucracy?
(Mr Davis) The question really, in terms of a Water
Saving Trust, is what would its functions be and how would it
be financed; and if it is to be financed by a levy on water customers
that will increase bills, or if it is to be financed by the Exchequer
that may not be very popular with the Treasury.
119. But the Energy Saving Trust seems to be
fairly successful; could it not be modelled on a similar line?
(Mr Davis) Water is a very different commodity from
energy, as the Committee has been told earlier; 80 per cent of
people do not pay on the basis of how much they use, they pay
on the basis of rateable value, so the pressures are very different
from the pressures in the energy field. So the judgement for Government
so far has been that the models used in the energy field are not
replicable in the water field.