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Lord Crickhowell: At the outset I declare an interest as I am chairman of HTV, a wholly owned subsidiary of Carlton Television. I wish to take the matter slightly further than my noble friend and consider the approach of the Government to the setting up of this important organisation. I speak with a certain amount of experience in that for about eight years I had ministerial responsibility for a number of quangos and, indeed, set up at least one. For the following eight years as the only chairman of the National Rivers Authority advisory committee and then of the National Rivers Authority, I had the job of advising the Government on how to set up that important regulatory organisation and then chaired the organisation through its entire life before its functions were absorbed by the newly created Environment Agency. I had a role in making certain fairly strong comments about the way in which the Environment Agency should be structured, although I do not think that that advice was accepted and later I shall mention the consequences of that.

We are at the beginning of a rather extraordinary process. The Bill will not become an Act for some considerable time. The board we shall appoint will not be fully in place until about this time next year. At Second Reading the Minister told us that it was hoped that the first chairman would be appointed in the spring and that the non-staff members--I am not allowed to call them non-executive members--would be in place in the autumn. A number of people are involved in the process. I hope that I may be forgiven for describing them as warlords as they are all engaged in a battle for their own interests or the interests of the organisations they represent.

I turn to the departments, of which two are involved on this occasion, not just one. No one has a greater respect for civil servants, their skills and the impartiality with which they provide advice, but in the course of my experience I have learnt one or two lessons about the attitudes of civil servants. Ministers and civil servants always talk about having strong and independent regulators but they are often uncomfortable if those regulators prove to be strong and independent. If departments are able to do so, they try to make sure right from the outset that that independence is curtailed. If they do not entirely succeed, they have a number of mechanisms they can use such as mechanisms of financial control and financial regulation. Certainly, they like to attempt to curtail that independence. If a regulator proves to be very independent, they are often anxious to claw back authority.

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Therefore, I believe that I know what the department will want to do at this stage; namely, to set up an organisation, with perhaps at the back of its mind the thought that it needs to make sure that that powerful body will not get totally out of control. There is a further, perhaps even stronger, set of opinions among senior civil servants; namely, if there is one thing they dislike more than anything else in the world it is being criticised by the Auditor General and, worse, being torn apart by the Public Accounts Committee.

One immediate reaction, therefore, is to appoint consultants. When things go wrong at least if you are a civil servant you are able to say, "We appointed experienced consultants and we took their advice". I have a great many successful friends who have been distinguished consultants. Many of their firms carry out important work. But there is one characteristic of all firms of consultants that we always have to bear in mind; that is, they produce their splendid reports and recommendations but are never responsible for implementing them. By the time they are implemented they have moved on to other things. If anything goes wrong, they are in the happy position of hoping that no one will remember exactly what they recommended.

I turn to a further group. I believe that I am fair in describing them as warlords as they will fight for each of their organisations with great force and with the worthiest of motives. The five existing regulators will all want to make sure that they have a key role--perhaps the key role--in the new organisation and that their senior staff will play the major management role in running that organisation. Equally, they will want to defend all their employees to ensure that their positions are adequately secure. Indeed, as Towers Perrin emphasised in its report, one of the most important jobs to be done in the coming weeks and months will be to consider key issues. Those include developing a co-ordinated communications strategy, progressing the key human resource management issues, clarifying the issues that bear on the size of Ofcom and developing the transitional management structure. It states that all those matters should be tidied up and dealt with as soon as a chairman and chief executive are in place. However, they cannot really be dealt with until a board is in place.

Therefore, we now have the extraordinary situation of a process being started in which the body that will eventually be responsible does not exist. Again, Towers Perrin has some wise things to say about what should be done. Among them is working out the major policy objectives and setting the whole tone under which the organisation will operate. It is very difficult to see how, under the present arrangements, a group of people who will not eventually have responsibility will be able to do that.

When the National Rivers Authority was being planned, our former, much lamented colleague, Lord (Nick) Ridley, took two very wise decisions. One was taken before the general election during which I retired from the other place and from government. His first decision was to take the original proposals put forward

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by my noble friend Lord Baker and to say that the regulatory functions must be separated from the other functions of the water authority.

The second decision that he made soon after that election was to set up an advisory committee. Whether he was quite so wise in deciding to appoint me as the chairman was for others to judge. However, that is what he did. The advisory committee was in place by the spring--or certainly by the early summer--of 1988. It would probably have been in place two or three months earlier if it had not been for a strange but characteristic intervention by the Treasury, which was prepared to spend approximately three months on an absurd little argument about the exact number of minutes or hours to which I should be committed. That was the type of issue that in the private sector would have been settled in an hour or two or, at the most, in a couple of days.

By the spring, I had taken up my responsibilities and proceeded to interview prospective board members. The Secretary of State appointed members to the committee in the knowledge that they would comprise the first board of the National Rivers Authority, as it came to be known. In other words, all the discussions that were under way, out of the control of the people who eventually would be responsible, were directed, spearheaded and organised by the advisory committee which would be responsible when it had emerged as a butterfly, as the National Rivers Authority might be described, from the original chrysalis.

That method appears to have enormous advantages over what is proposed in this case. It is hard to see how the people--the warlords--who at present are fighting the battles can get very far; rather, perhaps I should say that there is a danger that they can get all too far and that the board, when eventually appointed, will not in practical terms be able to reverse many of the decisions that have been taken.

Towers Perrin, perfectly fairly, points out that none of those decisions can be turned into concrete facts until the board has approved them. But, of course, time will be moving on and one hopes--my goodness, one hopes--that by November next year we shall begin to have an idea as to what this body will do. The fact that the Government have not yet decided what it should do presents a further difficulty for those who are preparing the plans at the moment. We are setting up an organisation whose eventual role has not yet been decided. I want to say one more word about that before I conclude.

Towers Perrin rightly says that a number of those issues--for example, some of the management issues--cannot be decided until the chief executive is in place and able to take decisions. In the chart contained in its report, Towers Perrin rather optimistically suggests that the appointment of the chief executive, which it apparently believes will be made by the chairman alone, will take place in the early summer. Of course, that is not possible because Clause 5 of the schedule makes clear that the appointment--I do not criticise this at all; it is absolutely appropriate--must be made by the chairman and the other non-staff members.

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The Minister was right to tell the House at Second Reading that the non-staff members would not be in place until the autumn of next year. It also follows that the chief executive cannot be in place until the autumn of next year. Therefore, there is a whole year to go in which a totally unmanaged, uncontrolled operation will be in place and in which the warlords will secure their ground and ensure that others will not later be able to regain it.

I can hardly think of a more bizarre and unsatisfactory way in which to set up an important organisation of this kind--one more fraught with hazard or one that is more unnecessary. We have precedents for such a situation. We know that in the case of the National Rivers Authority the then Secretary of State found it perfectly possible to establish an advisory committee. Indeed, the Government are always appointing committees for one task or another. If they can appoint a whole raft of special advisers, surely they must be able to appoint an advisory committee and indicate to its members that they will eventually have responsibility for running the organisation that they set up. Therefore, there is a good precedent to guide them.

There is also a precedent that should give them warning. When the time came to set up the Environment Agency, I suggested to the then Secretary of State, John Gummer, that it would be sensible to make the process as speedy as possible. I suggested that it would be sensible to take the large, already established and rather successful organisation--the National Rivers Authority--to make such changes as were necessary and to bring in the other bodies as quickly as possible. I suggested avoiding the employment of a raft of consultants and engaging in a prolonged negotiation in which the then warlords could do battle.

I am not surprised that my advice was rejected. I had already won one major battle with the Secretary of State when he was Minister of Agriculture about what the Environment Agency should do. I did not believe that he would take my advice on this matter when he became Secretary of State for the Environment. By then, I was tired of the whole matter and rather fed up with engaging in battles of that kind. Therefore, what I suggested did not happen.

However, what did happen was something rather like the process contained in this Bill. A prolonged negotiation took place in which all employees of the existing bodies were able to put in their bids and make their claim. I believe that the consequence was that for at least two years the Environment Agency, when it came into being, suffered. I believe that I can claim with some reason that the National Rivers Authority was very effective in making its powers and authority known when it was first set up. Indeed, if no one else had discovered it, the Shell oil company certainly did when it was fined £1 million as a result of action taken about six weeks after we came into being.

I believe that it is also fair to say that, for a couple of years, the Environment Agency was much less well known and was not seen to be so effective. I believe

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that that was because it had to spend a quite unnecessary amount of management time in sorting out the conflicts that had arisen because of the methods that had been adopted.

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