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Session 2006 - 07
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General Committee Debates
Greater London Authority Bill

Greater London Authority Bill

The Committee consisted of the following Members:

Chairmen: Mr. Edward O'Hara, † Ann Winterton
Baker, Norman (Lewes) (LD)
Brake, Tom (Carshalton and Wallington) (LD)
Buck, Ms Karen (Regent's Park and Kensington, North) (Lab)
Butler, Ms Dawn (Brent, South) (Lab)
Cooper, Yvette (Minister for Housing and Planning)
Fabricant, Michael (Lichfield) (Con)
Fitzpatrick, Jim (Parliamentary Under-Secretary of State for Trade and Industry)
Gove, Michael (Surrey Heath) (Con)
Hands, Mr. Greg (Hammersmith and Fulham) (Con)
Linton, Martin (Battersea) (Lab)
McDonagh, Siobhain (Mitcham and Morden) (Lab)
Neill, Robert (Bromley and Chislehurst) (Con)
Pelling, Mr. Andrew (Croydon, Central) (Con)
Pound, Stephen (Ealing, North) (Lab)
Shaw, Jonathan (Chatham and Aylesford) (Lab)
Slaughter, Mr. Andrew (Ealing, Acton and Shepherd's Bush) (Lab)
Smith, Ms Angela C. (Sheffield, Hillsborough) (Lab)
Gordon Clarke, Keith Neary, Committee Clerks
† attended the Committee

Public Bill Committee

Tuesday 23 January 2007

[Ann Winterton in the Chair]

Greater London Authority Bill

Further written evidence to be reported to the House for publication

GLA 5 Institute of Historic Building Conservation.

New Clause 6

‘(1) The GLA Act 1999 is amended as follows.
(2) In section 351(3), after paragraph (k) insert—
“(l) the efficiency of the suppliers of water and energy,”.
(3) In section 351(4), after paragraph (c) insert—
“(cc) the suppliers of water and energy to Greater London or any part of Greater London,”.
(4) In section 61, after subsection (5) insert—
“(5A) This subsection applies to persons holding the office of regulator of any supplier of water or energy to Greater London or any part of Greater London.”
(5) In section 61(1) for “or (5)” substitute “, (5) or (5A)”.’.—[Tom Brake.]
Brought up, and read the First time.
Question proposed [18 March], That the clause be read a Second time.
10.30 am
Question again proposed.
The Chairman: I remind the Committee that with this it will be convenient to discuss new clause 7—Water and sewerage strategy—
‘(1) In section 41 of the GLA Act 1999 in subsection (1) after paragraph (ef) insert—
“(eg) the water and sewerage strategy prepared and published under section 361F below.”
(2) In Part 9 of the GLA Act 1999 (environmental functions) after section 361E insert—
“361F The water and sewerage strategy
(1) The Mayor shall prepare and publish a document to be known as “the water and sewerage strategy for London”.
(2) The water and sewerage strategy for London shall contain—
(a) the Mayor’s assessment as to the consequences of actual and planned development of whatever nature upon the water and sewerage infrastructre within Greater London; and
(b) the Mayor’s proposals and policies for ensuring the water and sewerage infrastructure is adequate for the development referred to in subsection (a) above.
(3) The Secretary of State may give to the Mayor guidance—
(a) about the content of the strategy; and
(b) in relation to the preparation or revision of the strategy.
(4) The guidance that may be given under subsection (3)(b) above includes—
(a) guidance specifying or describing the bodies, persons or organisations which the Mayor must consult; and
(b) guidance as to the consequences of development to which the Mayor must have regard.
(5) In preparing or revising the strategy the Mayor must have regard to any guidance given under subsection (3) above.”.’.
Tom Brake (Carshalton and Wallington) (LD): I had nearly concluded my remarks, but shall recap for the benefit of Members.
The Chairman: Order. I am reliably informed that the hon. Gentleman had drawn his conclusions to an end in the previous sitting.
Michael Gove (Surrey Heath) (Con): It is entirely understandable that the hon. Member for Carshalton and Wallington should have risen at that point because when the clock stopped at five o’clock last week, he was frozen in the middle of what I considered to be an exemplary analysis of the requirement for the Mayor of London and the Greater London authority to have a water sewerage strategy.
Talking of things being frozen, many of us might remember that in April 2006 there was a magnificent ice sculpture on the other side of the Thames that contained galleries, a bar, an auditorium and, of course, a skating rink. To construct that magnificent ice sculpture and provide that tourist attraction, it was necessary to have 200,000 litres of water frozen. What was striking was that the water was not British, but had had to be imported from Canada simply to provide that attraction and amenity for London citizens. I mention that because London, like many parts of east and south-east England, is in the grip of an acute water shortage.
Just one month after we all enjoyed the ice installation, the Environment Agency pointed out that there is less water in London, per head of population, than in parts of the Sudan, Morocco, Egypt and Kenya. When one thinks of the water situation, particularly given the last couple of weeks, they are probably more inclined to think of flooding, inundation and the effect that they have on homes and other insured properties. Flooding is certainly a problem across the country, but the acute water shortage faced by Londoners is chronic and goes beyond seasonal alterations in rainfall.
Martin Linton (Battersea) (Lab): Did the hon. Gentleman write his speech before the hosepipe ban was lifted three days ago, or did he not notice?
Michael Gove: I am well aware that the ban has been lifted and I am very grateful for it. I am particularly grateful that Sutton and east Surrey had their ban lifted, allowing the hon. Member for Carshalton and Wallington to water his garden this weekend, if he so wishes. However, he will not need to, for the reasons that I mentioned earlier—we had rather a lot of rainfall in Surrey, where I was lucky enough to spend the weekend. [Interruption.] The hon. Member for Chatham and Aylesford, from a sedentary position, refers to Surrey, where I spent many happy hours.
Mr. Andrew Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): I rise in part to query whether the hon. Gentleman writes his speeches. I thought that they were more streams of consciousness. On London’s water problems, does he agree that if one single factor contributes to it, it is privatisation? My problems with Thames Water are mainly down to the fact that its ownership changes regularly and that the priorities of the management are always its share price and investors, not the people to whom they supply water.
Michael Gove: The hon. Gentleman makes an interesting point in attempting to row back on privatisation. Of course, the question that we must ask is whether it is now Government policy to invest a considerable amount of public money in renationalising those companies.
I incline to the view—I think it is also Government policy—that privatisation can bring particular benefits, but one needs a strong and effective regulator and a clear role for publicly accountable and elected representatives. On the specific point about Thames Water, the company faces real problems in delivering water to Londoners and I am aware that it loses something like 197 million gallons of water every day. However, one point that we must bear in mind is that the infrastructure of Thames Water has suffered because of a lack of investment over many years, indeed over generations, in London’s water and sewerage infrastructure. That lack of investment pre-dates privatisation.
One of the arguments for privatisation, not just of water but of railways, was that private companies could bring capital in, which would enable them to invest in upgrading an infrastructure that had been neglected when water and rail were in public ownership. An argument that transcends party politics—it is now just a matter of accepted common sense—is that, when certain utilities are in public ownership, what one may apparently gain in terms of public accountability, one also loses in certain respects. That is because it is sometimes the more unfashionable utilities—utilities that must rely on Treasury funding to ensure that their infrastructure is up to scratch—that lose out in the allocation of public money. That has certainly been the case when one looks at the history of both water and rail in this country. During the period when British Rail was nationalised and water was a utility in public hands, I would submit that both parties—Labour and the Conservatives—failed to invest adequately. Since privatisation, private sector capital has played a part in improving the water infrastructure.
I entirely sympathise with the hon. Member for Ealing, Acton and Shepherd’s Bush when he argues that there is a lot more that Thames Water can do. Thames Water serves my constituents in the same way that it serves Londoners, and it is undoubtedly the case that many of my constituents would like to see Thames Water raise its game.
One way that Thames Water could be more effectively equipped to raise its game would be if it operated in partnership with a Mayor who had the power to set a strategic water and sewerage policy. New clause 7 would give the Mayor that power. In many respects, it is complementary to new clause 6. Although vanity of ownership would incline me to believe that new clause 7 would be a more effective way of achieving those aims, if the Government were minded to accept new clause 6 and reject new clause 7, then, in the spirit of public-spiritedness, I would entirely acquiesce in that manoeuvre. If you are the Minister, you pays your money and you takes your choice between those two options.
The position that Londoners face when it comes to their water supply is precisely the type of issue that should allow us to transcend party political trenches. That is why, although the Conservatives have been characterised as being opposed to Mayor Livingstone and anxious to clip his wings, we are joining the Liberal Democrats in proposing that this Mayor or future Mayors should have greater power and authority to shape a water strategy.
The hon. Member for Battersea pointed out that the hosepipe ban has been lifted recently, and we all welcome that development. However, many of us would ask why the hosepipe ban, which we would expect to be an emergency measure introduced only perhaps during the summer or periods of drought, lasted until the middle of January. Those of us who remember last summer in London will remember the use of standpipes, the fact that vans were delivering drinking water to some neighbourhoods and that those vans had “Ban the drought” on the side of them. We will all remember the effect that hosepipe bans had on particular households.
I suspect that we are also all aware that the level of water usage in London is particularly high, in both national and European terms, with figures suggesting that the average Londoner uses between 160 and 170 litres of water a day.
There are already agencies that have helped to ensure that Thames Water fulfils its obligations, not just to its shareholders but to its stakeholders, as I am sure the hon. Member for Ealing, Acton and Shepherd’s Bush would wish to see. Ofwat has made a number of suggestions as to how Thames Water might raise its game. However, with respect to the hon. Gentleman, Thames Water is not the only player in this game. There are things that can be done by others. For example, we can try to ensure that new housing developments are as water-neutral as possible. We can introduce measures in such developments that will enable people to monitor more accurately, and thereby limit, the water that they use without having an adverse impact on their lifestyle or their family obligations.
Moreover, London’s water position links in with the water position of neighbouring areas. To meet London’s water needs, Thames Water is planning to build a reservoir in Oxfordshire. It therefore seems appropriate that the Mayor should have a role in negotiating with other local government and central Government bodies to ensure that any water strategy for London is a joined-up phenomenon.
The Parliamentary Under-Secretary of State for Trade and Industry (Jim Fitzpatrick): Good morning, Lady Winterton. It is a pleasure to see you this morning, refereeing our final sitting.
The new clauses would extend greatly the Mayor’s responsibilities for energy and water companies. New clause 6 would require him to detail in his state of the environment report the efficiency of suppliers of water and energy services in the Greater London area. The Mayor is already required to report on water quality, emissions to water, ground water levels, energy consumptions, emissions of greenhouse gases, and any other matters in relation to Greater London that he considers appropriate. That requirement already ensures that the Mayor will be reporting on fundamental energy and water issues relating to London.
Tom Brake: Clearly, the Minister is setting out the effect of the new clauses, but does he agree that one significant omission in the Mayor’s responsibilities is water leaks over which he currently has no remit?
Jim Fitzpatrick: I hope to explain later to the hon. Gentleman why we think that what the Mayor does at present is adequate and why the additional requirements proposed under new clauses 6 and 7 would be burdensome, bureaucratic and unnecessary. Perhaps the hon. Gentleman will attract my attention if I do not respond fully to the issues that he has raised.
It is unclear what value the new reporting requirements would add. The new clause would duplicate the ongoing work carried out by the economic regulators for such sectors. Extensive reports on the efficiency of water and sewerage companies are already published by Ofwat. Each year, water companies in England and Wales, the Environment Agency and the drinking water inspectorate provide information to Ofwat on the performance of companies against various aspects of service and performance. Through that process, Ofwat can make comparisons and assess publicly the efficiency of individual companies against well-established standards of performance.
Ofgem similarly oversees the efficiency of the national transmission and regional distribution of energy in the United Kingdom, and the operation of effective competition in the UK wholesale and retail energy markets. It ensures that suppliers meet environmental obligations, for example under the energy efficiency commitment. Ofgem produces regular reports on the state of competition and quality of service in the United Kingdom energy markets.
New clause 6 would simply create additional bureaucracy and, I suggest, could be seen to be a waste of public funds. It would also give the assembly powers to require water and energy regulators to appear before it and to produce documents. Currently, the assembly has powers to summon certain categories of people to give evidence at its meetings and to produce documents as we discussed earlier in Committee. However, at present. they are people with whom it has a direct relationship, such as assembly members and contractors.
10.45 am
The new proposed power is wide-ranging and would set an important precedent, significantly widening the power of the assembly to require organisations working in London, with which it does not have such a direct relationship, to appear before it. It would also be an entirely new departure to extend the power to national and independent economic regulators who, by virtue of their statutory duties, are answerable to Parliament rather than the assembly. Those regulators regularly appear before various Committees of the House to report on their functions. Water and energy companies also occasionally appear before Committees to contribute to other aspects of those Committees’ work.
New clause 7 will give the Mayor a duty to produce and keep under review a water and sewerage strategy that will include proposals and policies for ensuring that the water and sewerage infrastructure is able to cope with “actual and planned” developments. That would, in effect, make the Mayor another water regulator in an already heavily regulated area. The water sector in England has three core regulators: Ofwat, in relation to economic regulation; the drinking water inspectorate, which looks after drinking water quality; and the Environment Agency, which is responsible for water resources and the environment.
On development, the Environment Agency is already a statutory consultee in relation to sewerage infrastructure and water and sewerage companies are consulted locally when new developments are being considered. The Environment Agency advised Ministers as recently as last September that large-scale water transfers for south-east England are not currently necessary before 2025. However, development matters relating to water and sewerage infrastructure are already under consideration by regulators and the companies. Water companies already produce long-term water resources management plans and that is due to become a statutory requirement, with effect from April this year. Those statutory plans, which will be published, already make provision for additional people living in and around London and the south-east.
The regulation of water is also more complex than that of other utilities. Regulation is based on water company areas, which are largely based on river catchment boundaries rather than political borders. Any policies or proposals that meant increased expenditure in London, for example, by Thames Water, would have an impact on the water bills of all Thames Water customers, including those outside the Mayor’s jurisdiction.
The net effect of new clause 7 on the regulation of water would be to reduce the discretion of regulators and water companies without giving the Mayor any additional real powers. It would also duplicate much of what happens already. It is possible that there would be implications for customers who fell outside the Mayor’s jurisdiction.
I understand that the Mayor intends to produce a non-statutory water action framework for London. That could usefully add to the debate on water resources and water efficiency. The Secretary of State for Environment, Food and Rural Affairs has already said that he will take that into account in the run-up to the next price review for the water sector. I hope that the hon. Member for Carshalton and Wallington will ask leave to withdraw the motion and clause.
Tom Brake: I understand what the Minister said regarding the extra regulation that would be created if my amendment were included in the Bill. I will not pursue new clause 6, but I hope that the Minister asks the regulator about the failure to date of Thames Water significantly to eat into its high leakage rate. I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
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Prepared 26 January 2007