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House of Commons
Session 2005 - 06
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Standing Committee Debates

Fourth Standing Committee
on Delegated Legislation

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Fourth Standing Committee
on Delegated Legislation

The Committee consisted of the following Members:


John Bercow

†Abbott, Ms Diane (Hackney, North and Stoke Newington) (Lab)
†Barrett, John (Edinburgh, West) (LD)
†Bellingham, Mr. Henry (North-West Norfolk) (Con)
†Cairns, David (Parliamentary Under-Secretary of State for Scotland)
Cox, Mr. Geoffrey (Torridge and West Devon) (Con)
†Francis, Dr. Hywel (Aberavon) (Lab)
†Goodwill, Mr. Robert (Scarborough and Whitby) (Con)
Johnson, Mr. Boris (Henley) (Con)
†Keeble, Ms Sally (Northampton, North) (Lab)
†Laing, Mrs. Eleanor (Epping Forest) (Con)
†McGovern, Mr. Jim (Dundee, West) (Lab)
†Robinson, Mr. Geoffrey (Coventry, North-West) (Lab)
Rooney, Mr. Terry (Bradford, North) (Lab)
†Roy, Mr. Frank (Motherwell and Wishaw) (Lab)
†Winnick, Mr. David (Walsall, North) (Lab)
Wishart, Pete (Perth and North Perthshire) (SNP)
Sarah Hartwell-Naguib, Hannah Weston, Committee Clerks
† attended the Committee

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Wednesday 2 November 2005

[Mr. John Bercow in the Chair]

Draft Water Services etc. (Scotland)
Act 2005 (Consequential Provisions and Modifications) Order 2005

2.30 pm

The Parliamentary Under-Secretary of State for Scotland (David Cairns): I beg to move,

    That the Committee has considered the draft Water Services etc. (Scotland) Act 2005 (Consequential Provisions and Modifications) Order 2005.

As you, Mr. Bercow, and members of the Committee are aware, today’s sitting is by far the most significant and momentous occasion that is taking place at Westminster today. None the less, the instrument is relatively straightforward, so you will be delighted to hear that I shall not detain the Committee overlong.

The instrument is made under section 104 of the Scotland Act 1998, as a consequence of the Water Services etc. (Scotland) Act 2005. Section 104 orders are used when changes are required to be made to the law of England and Wales or Northern Ireland, or when modifications of reserved law are required as a consequence of legislation in the Scottish Parliament. Such changes would, of course, be outside the legislative competence of the Scottish Parliament.

The 2005 Act reformed economic regulation of the Scottish water industry to make it more transparent and accountable. That included replacing the individual Water Industry Commissioner with a body corporate, the Water Industry Commission for Scotland. The 2005 Act gives the new Water Industry Commission power to determine Scottish Water’s charges on the basis of investment objectives and charging policy set by Scottish Executive Ministers. The purpose of the order is to provide a right of reference to the Competition Commission in relation to two of the Water Industry Commission’s functions, the first of which is to determine the limit of Scottish Water’s charges for providing public water and sewerage services in Scotland. The second function concerns decisions to grant retail water services or sewerage services licences or to modify such licence conditions.

The order balances the new powers for the Water Industry Commission under the 2005 Act by making it accountable to the Competition Commission. The Government and the Scottish Executive have agreed that that is desirable, as the Competition Commission has the economic expertise to provide effective scrutiny of the Water Industry Commission’s decisions. The order will give it the power to do so.
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There is a similar right of reference to the Competition Commission under the equivalent English and Welsh water legislation.

When the Competition Commission does not agree with the Water Industry Commission’s decision, it is given the power to recommend modifications to that decision and, ultimately, to replace the Water Industry Commission’s decision with its own. The order makes small consequential amendments to several enactments to make reference to the new Water Industry Commission and the new powers of the Competition Commission.

The Competition Commission, the Water Industry Commission and Scottish Water have been consulted about the terms of the order and the principle of the proposal. All have agreed that it is a sensible measure and one that they support. I hope that hon. Members have found my brief explanation helpful.

2.33 pm

Mrs. Eleanor Laing (Epping Forest) (Con): It is customary on these occasions, Mr. Bercow, to begin by saying, “What a pleasure it is to serve under your chairmanship.” I have always thought that that takes up time unnecessarily and, when making such a remark, I cannot remember ever having genuinely meant it—until today when I find, to my great surprise, my long-term colleague in the Chair. It is genuinely a pleasure, Mr. Bercow, to serve under your chairmanship. I am sure that it will expedite our proceedings.

We welcome the intent of the 2005 Act that was passed in the Scottish Parliament, so we shall not oppose the consequential matters that are before us. The Minister fully explained why it was necessary and beneficial to set up the commission, and we welcome it. The Scottish Parliament recognised that something had to be done about water, that a commission should be set up and that a quasi-commercial background should be created under which the supply of water is organised in Scotland. However, it would have been better to face up to reality and go the whole way. Scottish Water is currently—this does not change as a consequence of what we are discussing—nothing more than a nationalised monopoly and, as such, it misallocates resources.

We appreciate that Scottish Water has adopted commercial practices. Some of them will be assisted by the order, which I hope the Committee agrees. In adopting those practices its efficiency has improved, but it could be much more efficient. It is a pity that it is not and that the Scottish Parliament and the Government cannot bite the bullet and admit that Scottish Water needs to be taken out of public ownership altogether. That would give it a much needed boost—

The Chairman: Order. I know that the hon. Lady will want to confine her remarks quite narrowly to the terms of the order, which encompasses references to the Competition Commission. I feel certain that she now intends to dwell on that.

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Mrs. Laing: Thank you, Mr. Bercow. I was right in my hope and assumption that you would expedite our proceedings by ensuring that those such as I do not speak for too long on the wrong subject. I apologise for straying from the exact wording of the order.

The Minister explained the content of the order and the necessity for it. We are used to examining secondary legislation that improves the devolution process by bringing any legislation that we have passed or need to pass in the House into line with what is passed in Scotland. I am entirely in favour of that. We recognise the need for the measure.

2.37 pm

John Barrett (Edinburgh, West) (LD): I welcome you to the Chair, Mr. Bercow. I remember a European Standing Committee in which you raised 51 individual points. I will keep my comments brief and I am delighted to see you in the Chair.

Mr. David Winnick (Walsall, North) (Lab): At least it stops him speaking.

John Barrett: Exactly.

The Liberal Democrats also approve of the order. The Minister will be well aware of the history of water supply services in Scotland. The Strathclyde referendum guided people as to what was thought to
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be in the best interests of the water supply system north of the border, and it explains why water supply north of the border is different from water supply in England and in Wales.

People in Scotland want a good transparent system so that they know why charges for water and sewerage services are in place. That is key. The order makes sure that the Competition Commission is involved in ensuring that people get a relatively fair deal out of the system north of the border.

We also note that part 2 of the 2005 Act makes provision for establishing a licensing regime which will introduce retail competition for water and sewerage services for non-domestic customers in Scotland. We must be aware not just of the domestic water and sewerage services, but the water and sewerage services that are supplied to non-domestic customers.

People in Scotland know that the No. 1 issue is health and the environmental impact of the water supply. It is key to our way of life. The measure improves the system because it ensures that the Competition Commission is involved. People want to pay a fair amount for a good quality service, and this measure helps in that.

Question put and agreed to.

Committee rose at twenty-one minutes to Three o’clock.


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