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5.30 pm
I see the point that my hon. Friend is making, however: all the businesses to be regulated by that regulator would be expected to come up with high standards of corporate governance; to split power between, usually, a non-executive chairman and an executive chief operating officer or a chief executive; and to have non-executives on their board to provide some balance and criticism and to intervene when things go wrong. We probably owe it to those businesses to be a little more generous than I should normally be in public sector staffing and accept that there should be a non-executive power balance on the board. Non-executives are always much cheaper than executives and my hon. Friend recommends a non-executive chairman and non-executive board members. That expenditure may be sensible, and it could be false economy to ignore such advice.
I am pleased to hear that the Minister is moving in that direction. I urge him to do the honourable and decent thing and accept the amendments. If his intentions are honourable, why not include the amendments? Why not protect us from some evil future Government who may not share his wisdom and
common sense and might want to run the regulatory body without the non-executive counterbalance so wisely thought through by my hon. Friend the Member for South Cambridgeshire and formulated in his amendments?I hope that the Minister is in listening mode and that he will be prepared to surprise us by his generosity and common sense. He is rare among Ministers in this Government: he understands what he is doing, listens carefully to the arguments and has some influence over what the Government do. I very much welcome that in a Minister and wish there were more like him. He is stranded without promotion because he is so much better than those who are promoted—[Hon. Members: "He was promoted."] But not to the Cabinet. He is obviously too good to get into the Cabinet; one has to reach a low standard to achieve Cabinet rank. I am sorry that the hon. Gentleman is too good for this Cabinet.
The amendments suggesting that Wales be properly represented also appealed to my generous and emollient spirit this evening. As a former Secretary of State for Wales, how could I say that I was against proper representation for the Principality on such an important body? I trust that as a party we shall offer support for the proper representation of Wales.
I do not find myself in the same sympathy with the Lib Dem amendment, moved without a great deal of understanding or force by the hon. Member for Guildford (Sue Doughty)—[Hon. Members: "Ooh."] I asked a simple question of the hon. Lady. Her amendment states that there should be an assessment based on things that can be quantified and an assessment based on things that require qualitative judgment. I asked her how the Minister and the regulator could come to a conclusion if quantities pointed one way and qualities pointed another, but there was no answer from the hon. Lady. She seems to have designed an extremely ambiguous proposal, which would make the legislation more rather than less difficult for the Minister and the regulator. Surely, the art of legislation is to keep it simple, short and clear. The amendment would do none of those things; it throws many things into the pot, as we are used to the Lib Dems doing, and leaves us in a grey area about what might emerge.
Mr. Redwood: Does the hon. Gentleman want to intervene?
Mr. Redwood: When somebody stands up in this place, it is normal for them to intervene. However, I see that the hon. Gentleman really wanted to leave. He obviously accepts my criticisms of Lib Dem policy on the matter and is so embarrassed that he has had to flee the Chamber. Perhaps he has gone to look for the person who actually wrote the amendment to find the answer to those interesting questions. The Lib Dems do not have the benefit of a Box of officials to scribble answers when they are under pressure in the Chamber. We saw that lack today when they could give us no answers. Given the performance from the Lib Dem
Benches, I urge my hon. Friends not to support their amendment No. 128, as it would create muddle and confusion in a Bill that will benefit from no such extra proposals.My hon. Friend the Member for South Cambridgeshire has introduced another good proposal: amendment No. 22, which deals with access pricing and returns us to earlier contributions that he and I made in this evening's short debate on these vital matters. Again, that amendment represents a clarification. It would put a little more pressure on the regulator to explore why water prices are so high, to ask why the leading water companies think that prices should go considerably higher and to ask why, so far, so few of the inefficiencies in the leading water undertakings have been squeezed out.
Why is so much of the product still lost between reservoir and market? Why has there not been the same competitive and aggressive promotion of the product as we have with things such as mobile telephony in the now very competitive telephone sector? Why is there so much reluctance to deliver new products and to produce the reserves necessary so that water can be more aggressively sold to the marketplace? Why do we still have such very defensive attitudes to the water industry, thinking that it is somehow wrong to buy and sell the product and wrong for people to want more of it?
I would draw an analogy with the hot cross bun industry. It would be rather odd if, around Easter time, that industry issued a note saying, "It is most inconvenient that everyone wants hot cross buns at the same time. Would people please delay their purchase of hot cross buns until August?" Yet the water industry does that at times. When we want water in August to water our plants, we are often advised that it would not be a very good idea to water them in August. I suspect that, if we have a rainy November and December, we will soon be told that it is all right to water our plants. The only trouble is that they are sodden and most of them died in the drought anyway.
I hope that the important issues that have an impact on consumers—water shortage, advice not to use water when it is needed most, high price, poor investment and poor quality of pipes and the network—will be dealt with under the Bill, but they would be dealt with even better if the proposals made by my hon. Friend the Member for South Cambridgeshire, including amendment No. 22, were passed tonight, and it is with great pleasure that I strongly support them.
Richard Younger-Ross (Teignbridge): I am fascinated to hear the right hon. Gentleman outline a new Tory stealth tax. I wonder what the extra reservoir capacity that he is clearly proposing would cost the consumer?
Mr. Redwood: As I have explained, the competition under my model would produce cheaper prices for consumers. The Liberal Democrats have not yet grasped the point that there was a massive expansion of telecoms capacity after the introduction of competition. Consumers did not have to pay more for the extra capacity; they paid lower prices because the market expanded so much. The same would happen with water if competition was allowed. As always, the Liberal Democrats are 50 years out of date and very keen to
have subsidised, poor quality nationalised services for more or less everything. I was not at all surprised to hear them argue that case yet again tonight. At least the hon. Member for Lewes (Norman Baker) argued it a little more cogently than the hon. Member for Guildford, who is their official spokesman on the issue.I have been sidetracked, but I wish to conclude my remarks by saying what good amendments and new clauses have been tabled by my hon. Friend the Member for South Cambridgeshire. I am very happy to accept new clause 5—tabled by my hon. Friend the Member for Leominster (Mr. Wiggin), the Conservative Front-Bench spokesman—in the context that I suggested, but I hope that the House will reject the Liberal Democrat amendments, which are full of muddle and confusion.
Mr. Morley: Before I turn to this group of amendments, it is worth responding to a few of the comments made by the right hon. Member for Wokingham (Mr. Redwood), who made a very interesting contribution. We touched on such issues on Second Reading. Although he is right about the problems of leakages, the regulator sets targets for leakage reduction, in which there has been a 30 per cent. reduction.
The Bill reflects the Government's view of taking a pragmatic approach to competition. We may differ about that, but the right hon. Gentleman is right to suggest that competition can produce greater efficiency and reduce prices. However, we also need to balance that against the possible effects on health, the environment and consumer prices, particularly if there is an element of cherry-picking that disturbs the cross-subsidy that can occur in water companies, especially between rural and urban areas, an example that has already been mentioned. The 50-megalitre target has been set to give the potential benefits of competition to some 2,300 water users—generally the larger water users—in the public and private sectors. Under the Bill, they will be able to examine the potential for incomers who may wish to offer a different service and different prices in a competitive way. The provision will be reviewed in due course, so that we can examine its impact and potential benefits. If this element of competition is considered a success, it could be extended. This is a pragmatic approach to a provision that could bring benefits.
Nor do we ignore the point that the right hon. Member for Wokingham made about water management and long-term projection. Water companies are already obliged to have a 25-year forward plan that considers changes in water consumption and demand, and to have drought plans in times of water shortage, for example. Given this year's exceptionally low rainfall, water management has been pretty good overall, although our reserves are getting very low. If normal winter rainfall occurs, there should be no problem, but there may be a need for some short-term measures such as recharging reservoirs from rivers. However, that is all catered for through existing mechanisms.
Amendments Nos. 19 and 14 would require the Secretary of State to appoint a chairman and chief executive to the proposed new authority. I have no problem with the idea of a separate chairman and chief executive. After our discussion in Committee, I re-
examined the recommendations in the Better Regulation Task Force report and discovered that the Bill is indeed drafted in such a way as to comply with them. The report recognises that there are advantages and disadvantages to separating the roles. Although splitting them may be preferable, to do so may not be appropriate in all cases. The report states that, for example, there are merits in combining the roles when a regulator is first set up. Doing so can help to smooth the transition and the teething pains associated with setting up or reconstituting a new body. Later, it might be appropriate to split the roles, but it makes sense to retain flexibility, so that we can make the right decision based on all the current circumstances.
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