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Lord Dixon-Smith moved Amendment No. 86A:

"( ) The granting of a licence to a water supplier may require the payment by the licence holder of sums relating to any of the expenses mentioned in subsection (3)."

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The noble Lord said: Amendments Nos. 86A and 87 would put a licensed water supplier on the same footing as a water company. It is peculiar that a licensed water supplier would not have to meet some of the costs that any other water company would have to meet. That may be a misapprehension, and I would be grateful for an explanation, if that is not the case. According to our reading of the Bill, that is not so. Amendments Nos. 86A and 87 would clarify the situation.

Amendment No. 88 covers a slightly different issue. It is a probing amendment. The amendment says:

    "leave out 'Before section 193' and insert 'After section 192'".

It may just be ignorance, but we are not certain of what I would call the etiquette of placing things in a Bill. The problem is that Section 193 is repealed. I am not sure that it is right to place a section of a Bill before a section of another Bill that is to be repealed. After the Bill is passed, that section will, presumably, cease to exist. If we re-number the whole of the previous Bill, it will make sense, but, otherwise, it will not. We felt that, in the interests of clarity, the phrase "After section 192" was to be preferred to "Before section 193", as Section 193 will not exist after this Bill has come into force. I beg to move.

Baroness Byford: Before the Minister responds to my noble friend, I must re-state the concerns that I raised earlier about the fact that the water suppliers were not included in some things; this is one of them. It seems unfair that a water company that is required to make payments will be treated differently from a new supplier. The water companies will have to meet huge costs, but, as far as I can see—unless I have read it wrongly again—that is not required of the new water suppliers. I cannot imagine why. Surely, that is unfair competition. I would like the Minister to explain why that decision has been made.

Lord Whitty: Amendment No. 86A would make it explicit that the water licensees shared the expenses, but I can reassure the noble Baroness and the noble Lord. Section 17G(1)(b), inserted by Schedule 4, to which the Committee may not yet have paid huge attention, already provides for a water supply licence to require payments to the Secretary of State of such amounts as may be determined, which could fairly include this. The mechanism is already in the Bill.

I think that I can also reassure the noble Lord with regard to Amendment No. 87. In one sense, Clause 36 provides a transitional power to allow undertakers' existing conditions of employment to be modified. The competition provisions of the Bill are unlikely to come into force before the consumer council is set up. If necessary, licence conditions could reflect from the beginning the need for undertakers to contribute to the council's costs.

I have an explanation for the point raised by Amendment No. 88, but I shall write to the noble Lord about it.

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7.15 p.m.

Lord Dixon-Smith: I am grateful to the Minister for his non-explanation of Amendment No. 88. I look forward to receiving his letter, which obviously I shall have to study with considerable care.

On the mechanism that the Minister mentioned in relation to Amendments Nos. 86A and 87, if my memory is correct, he said that the Secretary of State may make charges to licensed suppliers—it is not obligatory. I am aware of the argument about "may" and "shall", but there still seems to be an element of uncertainty about the matter, and we think that it should be certain. We may need to return to the matter. For now, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 87 not moved.]

Clause 36 agreed to.

Clause 37 [Forward work programmes and annual reports]:

[Amendment No. 88 not moved.]

Lord Dixon-Smith moved Amendment No. 89:

    Page 41, line 14, at end insert—

"( ) The Council shall, as soon as is practicable after the end of each financial year, make to the Secretary of State a report (the "annual report" for that year) on—
(a) its activities during the year;
(b) the progress of the forward work programme for that year; and
(c) such other matters as the Secretary of State may from time to time require."

The noble Lord said: The Bill provides that the water service regulatory authority must report annually to the Secretary of State. That is absolutely OK, but we find it slightly odd that, from our reading of the Bill, the consumer council for water does not have to so report. We feel that it should. I am happy to be told that I have misread the Bill because I am quite capable of doing that. By the time one has read such Bills a few times, one sometimes finds oneself in a complete fog. I beg to move.

Lord Whitty: Paragraph 7(1) of Schedule 2, at line 25 on page 125, already requires the council to make an annual report.

Lord Dixon-Smith: I am very grateful to the Minister. I apologise for not having read the Bill the whole way through with sufficient care and put two and two together. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 37 agreed to.

Clause 38 [Objectives and duties under WIA]:

Baroness Miller of Chilthorne Domer moved Amendment No. 90:

    Page 42, line 1, at end insert "in a sustainable manner"

The noble Baroness said: I shall speak also to Amendments Nos. 91 and 93, which are in the same group. Amendment No. 90 defines the consumer

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objective. Its aim is to take the consumer objective beyond what is suggested in the Bill as being simply a price issue, extending it to include sustainability. The amendment would add the words "in a sustainable manner" to the consumer objective.

Amendment No. 91 alters subsection (2B), which refers to,

    "the consumer objective mentioned in subsection (2A)(a)",

which Amendment No. 90 would change. It would change the meaning of that clause from simply protecting the interests of consumers, which might well be taken to be ostensibly keeping the price down, to ensuring,

    "the best sustainable use of the water resource",

in the interests of consumers. That is important in that it would be inappropriate if the Bill could look at consumer interests only as a matter of price. Consumers are often best served when matters are looked at much more broadly, taking into account other issues; for example, the tax burden consumers must pay when the Government need to clean up the environment.

Amendment No. 93 refers to special interest groups. In subsection (2C), the Government have chosen to list a number of special interest groups to which the Secretary of State or the authority shall have special regard. We believe that students in full-time education should fall within that group. That is not only because they have very low incomes, as the Government will be aware. If they must pay the same water bills as everyone else, their situation will be worsened further than it already has been by top-up fees. Some of the work done by consumer associations shows that people in that age group suffer particularly badly with regard to water bills. For those reasons, we would like them included in that group. I beg to move.

Lord Dixon-Smith: My Amendment No. 90A is included in the same group. I have never quite understood what is sustainable and what is unsustainable—it means different things to different people—so I took a different tack. My amendment would add,

    "in the context of best management of the national water resource".

We are talking about the objectives of the water services regulatory authority under the Water Industry Act. Subsection (2A) states:

    "The Secretary of State or, as the case may be, the Authority, shall exercise and perform the powers and duties mentioned in subsection (1) above in the manner which he or it consider is best calculated—

    "(a) to further the consumer objective".

The description "consumer objective" is very, very wide. The Bill continues.

In the first instance, I seek clarification of what the consumer objective is. If the objective is to bear in mind the interests of the consumer as regards the price of water, and if it was then to decide that it was in the best interests of the consumer to keep the price of water down, we could have a situation where

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investment was restricted and water supplies subsequently became vulnerable. The other extreme would be where costs were not judged to be a serious problem; in which case, one could take it to the other extreme and have investment that was unprofitable or not good value for money.

I wonder whether "the consumer objective" is sufficiently objective for it to merit being put in this way. That is why I think that some other words need to be added to make it better defined and more understandable. This is a small but important point. At the moment, I regard the Bill as deficient, not because it does not cover what needs to be covered, but because it does not set it out sufficiently clearly in points that can be understood.

Lord Borrie: I wish to latch on to the remark of the noble Lord, Lord Dixon-Smith. If having the lowest possible price for the current consumer were everything, what he said about sustainability is absolutely right—it would go for nothing. We have already been through Clause 34, which inserts a section in the Water Industry Act. Section 27A(12) states that,

    "'the interests of consumers' means the interests of consumers in relation to—

    (a) the supply of water by means of a water undertaker's supply system to premises".

And, before even saying that, it states:

    "'consumers' includes both existing and future consumers".

There is no way in which future consumers could be best served simply by putting every possible emphasis on the lowest price for current consumers.

Therefore, I am not sure that the amendment of the noble Baroness, Lady Miller, is necessary at all. Surely, the "consumer objective" mentioned on line 1 of page 42 must refer back to Section 27A(12) at the bottom of page 37, where we are talking about future consumers as well as existing ones. It is a most important provision.

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