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Lord Whitty: My Lords, I agree with the noble Lord's objectives but I do not think that the amendment is necessary. I understand the situation that he described. There could be all sorts of other complicated situations where one has to net off a cost or otherwise. I agree that only quantifiable benefits can be deducted from the undertaker's charges but they would have to be quantifiable if the regulator is able to identify them and calculate them. He will not be able to make a financial determination unless they are quantifiable. Therefore, the regulator is to a large extent already constrained by ensuring that the financial calculations can be made, so "quantifiable" is unnecessary in terms of determining what sum the regulator comes up with.

As in so many discussions that the noble Lord and I have, it would not do any harm to add what an amendment would add—"quantifiable" in this case—in normal parlance. However, the lawyers will always

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say, "Don't use more words than you have to", although with a Bill this long he would be justified in challenging whether that was a general precept. Nevertheless, that is the view. If the sums are to be reduced to a financial calculation, clearly they have to be quantifiable in any case.

9 p.m.

Lord Dixon-Smith: My Lords, I am grateful to the Minister for his explanation. I am not sure that it takes us any further forward, as it seems that the argument will be able to go on in all its intricacy and detail for a considerable time in a number of such cases. That said, I am quite prepared to accept that "quantifiable" may not be the right word. It may be that we could find a better one, or a better way of making the point that we want to make. For now, I shall study his explanation with considerable care, think about it and see whether we can do anything at Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 136:

    Page 161, line 8, leave out "Secretary of State" and insert "Chief Inspector of Drinking Water"

The noble Lord said: My Lords, the amendment is grouped with Amendments Nos. 137 and 138. They all have the same effect, which is to leave out the Secretary of State. We have no particular wish to do him out of a job, but we think that the chief inspector of drinking water or the chief inspector of drinking water for Wales is more appropriate in this instance.

The amendment arises out of a debate on Amendment No. 168ZF, believe it or not, in Grand Committee on 10th April, as reported at col. GC 75. The Minister explained that the wording to which we had objected was a legislative drafting device to enable the authority to consult the Drinking Water Inspectorate, which reports to the Secretary of State. Clause 38 substitutes a new section in the Water Industry Act that specifically gives the Secretary of State or, as the case may be, the authority the powers and duties covered in that Act as general duties in respect of the water industry. It seems ridiculous to lay down such a general duties clause and then say that the authority cannot consult a department reporting to the Secretary of State without his specific permission.

We think that that is very peculiar. It is a very sophistic argument, and we think that our amendment would lead to a considerably clearer situation in the Bill. It would also leave the Secretary of State secure as a final court of appeal, so that if there were any need for such a thing we could speed up the clarification of complaints. If the Secretary of State were involved at an earlier stage, that would be more difficult. I beg to move.

Lord Whitty: My Lords, I am sorry that the noble Lord viewed the previous explanations as sophistry, but I agree that they are hugely legalistic. The problem is that the Drinking Water Inspectorate does not exist as a legal entity, and therefore cannot of itself have duties. The

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Secretary of State has duties that are then conferred on the chief inspector of drinking water. Although one can designate in legislation the fact that the Drinking Water Inspectorate could be consulted, that does not impose a duty on it. It is a duty on someone else to consult it. The legal position is that duties cannot be conferred on something which does not have a legal personality. Hence the only way of doing it is to designate the Secretary of State. In commonsense terms, of course, there is a problem in that the Secretary of State can, in certain circumstances, appear later in some of the procedures. But we cannot so designate the Drinking Water Inspectorate under the current structure and conventions.

So while in a sense I accept the logic of the noble Lord's approach, I cannot accept the statutory form in which he is putting it.

Lord Dixon-Smith: My Lords, before the Minister sits down, this is a legislative Chamber and it can establish the precedent that it wishes to establish. If it wants to establish the Drinking Water Inspectorate as a legal entity, surely it can do so. It may be that this amendment is not the appropriate way to do so and that a different amendment is required in order to achieve that, but I ask the Minister why that cannot be done. It seems to me that it would be helpful if it were done.

Lord Whitty: My Lords, it can, of course, be done, but it would require a definition of the inspectorate as a body with its own identity rather than an amendment in one particular respect. The noble Lord would therefore have to come forward or force the Government to come forward with a large number of substantive amendments. At the moment, the Drinking Water Inspectorate is part of the department and is no different from any other Civil Service branch which cannot be designated as a legal entity—the Secretary of State has to be designated in terms of defining the responsibility of the department.

Baroness Farrington of Ribbleton: My Lords, I was flexible with my noble friend and with the noble Lord, Lord Dixon-Smith. But this is Report stage; once the Minister sits down questions cannot be asked.

Lord Dixon-Smith: My Lords, I accept the noble Baroness's rebuke. She is perfectly correct. But it does seem to me that we have an acknowledged anomaly, in the sense that the existing situation is not perfect, but we do not have the appropriate amendment to rectify it. The only question is, therefore, whether the Opposition have to carry out the task of drafting an appropriate amendment and almost certainly get it wrong, or whether we invite the Minister to tackle the issue and perhaps have cold towels round his drafting clerks for a number of nights, and they might or might not come up with the right answer, or might not be able to do it in the time available.

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The only thing that seems certain in this situation is that the right thing for me to do at the moment is to withdraw the amendment. However, I should welcome an opportunity to discuss it with the Minister subsequently. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 137 and 138 not moved.]

Baroness Farrington of Ribbleton moved Amendments Nos. 139 and 140:

    Page 164, line 23, leave out "a" and insert "the"

    Page 165, line 13, leave out from "agreement" to end of line 15 and insert "for a supply of water in bulk"

On Question, amendments agreed to.

Baroness Byford moved Amendment No. 141:

    Page 166, line 13, at beginning insert "shall lay a copy of the notice in each House of Parliament subject to objection within 40 days,"

The noble Baroness said: My Lords, this amendment relates to prohibitions and exemptions. In Committee, we moved a series of amendments designed to probe the meaning of paragraphs 66I to 66K as laid down in Schedule 4. We were unhappy about the prohibition on the ability of water undertakers to prosecute anyone who used their systems to introduce water without permission. We were also unhappy that the Secretary of State could apparently authorise certain people or classes of people to make free of a water system.

The responses that we received were unsatisfactory. It has subsequently been pointed out to me that the negative procedure already exists, but I invite the Minister who will reply to point me to it in the Bill. That would be hugely helpful. I should be glad to have clarification from the Minister. I beg to move.

Baroness Farrington of Ribbleton: My Lords, I fully understand that the noble Baroness, Lady Byford, seeks to ensure that the power to grant, by order, exemptions from the prohibition on persons supplying from or introducing water to the undertaker's supply system is subject to parliamentary scrutiny.

I can confirm that an order under this section is already subject to the negative resolution procedure under subsection (6) of new Section 66L on page 168 of the Bill. I am very pleased to have been able to reassure the noble Baroness. I trust that she will be happy with the reply and feel able to withdraw the amendment.

Baroness Byford: My Lords, I am grateful to the Minister. It is quite difficult to get round the various parts of the Bill. However, with that confirmation, I am happy and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 8 [Minor and consequential amendments: licensing of water suppliers etc]:

Baroness Farrington of Ribbleton moved Amendment No. 142:

    Page 184, line 36, at end insert—

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