Clause 25 (Hansard, 1 May 1973)

§ Mr. Oakes
I beg to move Amendment No. 64, in page 28, line 16, after 1194 'revenue', insert 'including grants in aid'.
I shall be brief with this amendment, because of the hour, but it raises the important question of the financial provisions of the new regional water authorities and whether it is the intention of the Government in future to provide grants in aid to such authorities, as happens at present with local authorities particularly in respect of sewerage functions.
1.15 a.m.
In Committee our attention was alerted to the fact that no firm assurance was given by the Government that grants in aid would continue to the regional water authorities on anything like the present scale of grants to local authorities. Consequently, as the clause gives an express duty under subsection (1) that every water authority shall so discharge their functions as to secure that, taking one year with another, their revenue is not less than sufficient to meet their total outgoings properly chargeable to revenue account", will the Government include in those figures to local authorities grants in aid which are being included now?
What are the Government's intentions concerning assistance to regional water authorities? Those authorities will be extremely concerned about this. It could be a severe burden on them if all Government grants, particularly with regard to their sewerage functions, were taken away or severely reduced, so that each water authority had to be self-supporting in the way that subsection (1) suggests.
What we seek is an assurance from the Government that grants in aid will continue. If they are to continue, there is no harm in adding the words "including grants in aid" after "revenue" in line 16.

§ Mr. Spearing
I shall be very brief, because my hon. Friend the Member for Widnes (Mr. Oakes) and the Minister have been on their feet in Committee or in the House for some 15 hours. This sort of procedure is not necessarily conducive to efficient legislation.
In Committee the hon. Member for Northants, South (Mr. Arthur Jones) and I elicited the fact that about £100 million worth of grants from the 1195 Exchequer are made under the rate support grant in respect of sewerage, and because that will no longer come as of right under the Bill it seemed that there was a likelihood that it would be cut off at a fairly early opportunity. We know from what the Minister has said and from the provisions in Schedule 3 that there is power for the Exchequer to make grants, but it is not in the main part of the Bill and the Minister has said that it will be transitional. He should be given full opportunity to explain exactly what will happen.
My intervention on a Welsh matter concerned not Welsh affairs but Government intentions. We have not had a White Paper, and the notes on clauses were apparently not widely circulated.
Is the Government's intention very clear? The Daily Telegraph, reporting on the Committee proceedings, said on 14th April that there would be £100 million extra on the bill for sewerage, to be paid not by the regional water authorities as my hon. Friend suggested—they would not have to carry the burden in the end —but by the people who pay the new combined rate to the authorities.
In an earlier debate today the Minister tended to indicate that £100 million, or the balance from whatever grants were paid, or at the end of the transitional period, would be given to the local authorities in respect of rate support grant for other services and, therefore, that local authority rates would be diminished by, apparently, an equal amount. He did not make that crystal clear, but I think that was what he said. I hope he will give some clarification of that earlier speech because, if what he said is correct, it is a question of one pocket or the other, but, knowing Exchequers and knowing the present Government, it is unlikely that the amount of aid in terms of general grant will be increased by £100 million.
According to the White Paper of the autumn of 1970, here is an admirable way of reviewing what should be paid for out of central taxation by the Exchequer and what should be paid for entirely by the person receiving the service. If the £100 million were paid in respect of extra and additional rate support grant, the Government would be 1196 going outside their philosophy which they have advanced publicly. I should be glad to hear whether that is the case, and I hope that the Minister will make the position clear.

§ Mr. Graham Page
As I understand it, the effect of the amendment would be to enable water authorities to take into account in drawing up their accounts any grants in aid that they may receive as part of the revenue in meeting their obligations under Clause 25(1), their obligation being to break even over a certain number of years. If there are grants in aid, they may take them into account and bring them into the accounts. There are certain specific grants under the Bill, but not the type of grant to which the hon. Member for Widnes (Mr. Oakes) referred.
The amendment seeks to place the reorganised water services on a permanently subsidised basis to keep the charges down. In Committee I stated the Government's policy quite firmly in the context of the water authorities' recreation and navigation charges. That was on an amendment moved by the hon. Member for Acton (Mr. Spearing). On that occasion I said: I understand the intention of the amendment, to put it bluntly, to be to obstruct any attempts to make recreational and navigational facilities on water authority waterways self-financing. This would be against the principle of the Bill."—[OFFICIAL REPORT, Standing Committee D, That principle applies to other uses of water.
I have stated as a matter of principle that the revenues to enable the new authorities to discharge their main functions should come from charges for the services that they provide, apart from Exchequer grants for specific purposes. Clause 26(4) obliges the water authorities to ensure that charges reflect the costs of providing water services. There is clearly written into the Bill the obligation that they will not in future be able to rely on general grants. In future we shall look to charges for the water supplied or for the sewerage service provided to meet the costs of the service.
The purpose in proposing full reliance on charges for water services is to make plain the real cost of these services and so enable rational decisions to be made 1197 in the use of resources for their development. I had not realised that there was any misconception here. It is clearly written into the Bill that we shall rely in future on charges and not on grants out of taxation, and that is the principle which we must maintain.
There will be a transition period, of course. We shall be faced with a similar situation as obtained on revaluation, when we found that certain individuals were suffering and decided that a transition period would be desirable, however fair and just the eventual outcome. I dare say we shall have to have a transition period in the case of water reorganisation, but the principle behind the Bill is that the consumer should pay for both the services and the goods that he receives.
When one compares industrial and commercial consumption with domestic consumption, I do not think that the domestic user will come off too badly. It may mean that he is much better off than being charged on a rateable value basis for his water consumption. It may be that industry will have to pay a larger burden for sewerage and water than in the past, and to that extent the domestic consumer may benefit.

§ Mr. Denis Howell
That was a most disturbing reply. The Government are proposing to save about £100 million a year and this charge is to be passed on to the consumer. It has not been clear hitherto that this was the kind of saving the Government envisaged and that this was the additional charge that the Bill would impose upon water consumers.
I cannot for the life of me understand why, if Governments of all persuasions have hitherto thought it right to make adequate provision in the rate support grant in order to grant-aid essential services like sewerage, that principle is to be breached and thrown overboard. It is an attempt to achieve a saving by stealth and it is a typical Treasury type of manoeuvre that one can imagine going on in the corridors of power by which the Treasury recognises a good opportunity to make a saving of up to £100 million. It plans to get the Minister to say that the great justification for it is that everything will be clear, that realistic decisions can be taken on their merits and that the consumer shall pay.
1198 If the Minister was logical in his argument, that would be the end of all rate support grants for all purposes, because all rate support grants are in recognition of the fact that in the provision of essential services such as this there has to be a partnership between central and local government money. For the first time ever, or at least for the first time in many years, this principle is to be breached in the important matter of water, sewerage and drainage.
It is a sad business and I imagine that the local authorities are not fully cognisant of the fact. If they had been fully aware of the effect of a Bill to remove £100 million of Government aid or subsidy from the consumer in this important sector, I am sure they would have been writing to us with a high degree of indignation. However, they have not done so. We must therefore press the claims of the consumer at this late hour, although we obviously shall not force the issue to a Division because I have given undertakings not to do so. Looking around the Chamber I see that we would have a better chance of winning a Division than at any time during the evening.
Had we been dealing with this at a more reasonable hour, we should have registered our strong sense of indignation at the saving of this amount of money by stealth. This is a grave departure on a matter of vital principle in the responsibility of the central Government to help to finance local government matters. I cannot force a Division and I therefore content myself with an indignant and righteous expression of the views of the Opposition on this matter.