§ Amendments made: No. 294, in page 136, line 3, at end insert—
§ charges levied by the Welsh Water Authority on the borough of Newport. The Water Act 1973 was the work of the last Conservative Government, who went out of office in February last year after the debacle of the three-day working week and the confrontation with the miners. They were in office for three years and eight months and their main legislation fell into three sections.
§ First, there was the Industrial Relations Act, which has now been wiped off the statute book with hardly a whimper from the Opposition. Second, there was the European Economic Community legislation, which is now to be the subject of a referendum, three years later. Third, there was the reorganisation of local government, along with the reorganisation of water and health services.
Last Sunday in the Sunday Telegraph, Mr. Patrick Hutber, the Economic Editor, said that the reorganisation was "disastrous",
… quite possibly the single worst official decision since the war, with effects which are as devastating in Whitehall and the Treasury as they are upon the ground.
That is a formidable indictment from a paper which we have always recognised as—
Almost an official organ of the Conservative Party. But it appears that this view is now held by many Conservative Members.
Last Wednesday there was an Early Day Motion on the Notice Paper, signed by a number of hon. Members, headed by the hon. Member for Sudbury and Woodbridge (Mr. Stainton), which said:That, in view of mounting disquiet regarding the structure, manning, salaries, efficiency and constantly increasing responsibilities of local government, this House appoints a Select Committee to appraise the situation before the recent reorganisation becomes ossified, and contemporaneous with the work of the Layfield Committee on local government finance.I put down an amendment to the motion, pointing out that Conservative Members were now regretting the undue haste with which the last Conservative Government pressed their local government reorganisation proposals in the Local Government Act 1972 and their failure to take note of the then Opposition's warning that the financial arrangements and the devolution of central government to the regions should be decided upon first. The Minister who will be replying to the debate was one of the active Labour Members pressing that point of view, but he got very little joy from the Government of the day.
The criticism in the Sunday Telegraph is applicable to the borough of Newport. Before reorganisation, it was a reasonably efficient one-tier authority.
§ Mr. Michael Roberts
Does the hon. Gentleman agree that one of the benefits of the reorganisation of local government, whatever criticisms can be levelled at it, is that the social services departments have been so well organised on a comprehensive basis that they have embraced the whole level of social service development and have proved in many areas—and I hope in Newport—a great success?
I assure the hon. Gentleman, without qualification, that the benefits to Newport of reorganisation are very thin on the ground.
If the hon. Gentleman does not mind, I prefer to make my own speech.
The action of the Conservative Government was the worst single thing to happen to Newport since the end of the war. In 1446 regard to water supplies, due to the initiative and imagination shown by the town council in generations past the town had provided itself with adequate supplies of water and with proper facilities for sewage disposal. We must not exaggerate these sorts of things because, after all, most of what we know now about sanitation, and so on, was known way back in the 1830s, in the time of Edwin Chadwick. Nevertheless, the Chief Executive of the Welsh Water Authority, Mr. H. H. Crann, in his circular letter of two weeks ago, pointed out that an inadequate level of services had been provided by many predecessor local authorities.
It seems that the Welsh Water Authority is now trying to make up the leeway too quickly, and areas such as Newport, Cardiff and Swansea are having to pay for it. This is just not good enough. Some areas have suffered from years of neglect. There has been skimping on their rates. What I have always felt about rates is that they should provide value for money, not skimping on services, because when good amenities and facilities are provided for citizens and ratepayers, they in turn are prepared to pay.
Newport at present is desperately trying to keep down the increase in its rates to 20 per cent., which is no more than is required to deal with inflation. But even if the borough and the Gwent County Council keep down the rate increases to that 20 per cent. figure, the effect of water and sewerage charges will be to increase rates by between 67 per cent. and 80 per cent.
The water authority has almost doubled its expenditure on sewerage, from £18 million to £35 million, and its expenditure on water has risen by nearly a half, from £23 million to £33.3 million. What is more, it has equalised its charges over the whole of its area in one go. In other reorganisations, of course, the equalisation has been spread over a period of perhaps five or even seven years. This happened when the South Monmouthshire Water Board and the Gwent Water Board were created. But the combined effect of the water authority's action is that Newport's bill for sewerage is jumping from £890,000 this year to £2½ million next year. If the reorganisation had not taken place, the bill to Newport would be half of that latter figure.
1447 Perhaps the most evil principle of the 1973 Act, however, was that water was to be self-financing. That meant that a whole range of subsidies to the consumer on water and sewerage was withdrawn. That was despite intense opposition from the party which now forms the Government. My hon. Friend the Under-Secretary of State for Wales—the hon. Member for Merthyr Tydfil (Mr. Rowlands)—was prominent in that opposition. It was government by steamroller. We know that the driver of that steamroller has since been sacked. The authority is almost an autonomous body and the ratepayers are having to suffer accordingly. Newport, for instance, is the third largest town in Wales, but it has no representatives on the authority. That in itself is disgraceful.
It should be said that rating is a bad basis for levying a charge. We know that rating valuation was transferred from the local authorities to the Inland Revenue in 1948 to even up the various areas, but vast anomalies remain. For example, a three-bedroomed house in Newport has a rateable value 50 per cent. greater than a comparable house in Merthyr Tydfil. I would have thought that a different formula needs to be worked out. If we are to have equalisation, let us have it, but let us not have the artificial loading of a few areas.
To add insult to injury, Newport is now being called upon to contribute £17,000 per annum for 12 years as a contribution on a guaranteed basis for the completion of a sewerage scheme within the borough boundary. It seems that the Welsh Water Authority is having its cake and eating it. The borough should be treated as a single complex, but the authority is picking off small schemes within the borough which individually do not pass the test of viability. Under the Act the authority can claim extra rates. That is just not good enough.
What should now be done? Firstly, there should be Government assistance to those areas which are worst hit. Schedule 3 of the Act provides for that to be done. Secondly, there should be equalisation spread out over a period from five to perhaps seven years. There are many precedents for that.
I am glad to have the agreement of the hon. Gentleman. I know that the ratepayers of his area have suffered in just the same way as have the residents of Newport, from the legislation of the Government which he supported. Official reports have also recommended that the equalisation should be spread out over a period of years. Perhaps more fundamental, equalisation should be spread out over the country as a whole. We have a ridiculous situation in respect of Welsh water. As my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) has pointed out, the reservoirs in the Elan Valley in Radnorshire are almost on top of the people's doorways, but the people of Birmingham, whom the reservoirs are supplying, are paying considerably less for their water than are those people living at the edge of the reservoirs. There could be nothing more ridiculous than that. I sympathise with my hon. Friend the Member for Brecon and Radnor. He has been to the fore in his advocacy on this problem.
My right hon. and learned Friend the Secretary of State for Wales, at Question Time on Monday, pointed out in a reply to my right hon. Friend the Member for Anglesey (Mr. Hughes) that the committee under Sir Goronwy Daniel that was set up to investigate this matter would be reporting in the next few days. We await with interest that report, and we wait for the Minister to reply. I hope that he has something of interest to tell us. Areas like Newport have fared badly. Councillors and ratepayers are fed up. Revolt is in the air. There has been talk of a refusal to collect the water rates. I am not advocating such a course, but something needs to be done urgently.
§ 12.30 p.m.
§ The Under-Secretary of State for Wales (Mr. Edward Rowlands)
The importance of the subject of water charges in Wales generally as well as in individual communities like Newport can be measured by the number of times we have returned to the issue during the past year. There can be no doubt in the mind of any hon. Member that the increased water service charges introduced 1449 12 months ago and those which are now proposed for 1975–76 are without parallel in the history of the industry.
The context in which we discuss the issue, in particular in relation to Newport, is one of a water industry which has never before been afflicted with so many severe handicaps. There are, first, the twin evils of inflation and high interest rates. If these were not enough, the effects of the Water Act 1973 have been the last straw.
I will not bore my hon. Friend the Member for Newport (Mr. Hughes), who has mentioned my personal antipathy to the 1973 Act, by repeating our criticisms of the Act. They are well known and firmly on the record. I shall, however, mention one thing which has a firm bearing upon the position of the Welsh Water Authority and its decisions this year. I refer to the requirement that water authorities shall be self-supporting from charges. This has probably caused more difficulty than any other single factor. The removal of rate support from water and sewerage services had a sudden and dramatic effect, particularly on the rural areas whose need for subsidy from the rates was greatest. As a result, massive charge increases were visited on these areas in 1974–75.
§ Mr. Michael Roberts
The hon. Member for Newport (Mr. Hughes) criticised the legislation which was introduced by the Conservative Government. The Under-Secretary has said that he is on record as having opposed that legislation. It is no secret that when my party was in power, Labour Members made it clear that when they were returned to office they were prepared to make changes and that they would reorganise the structure of local government which we had introduced. After one year in office, what changes does the Minister intend to introduce? If he intends to introduce no changes, I ask him not to continue saying merely that the Tories introduced the 1973 Act. If he has nothing constructive to say, let him stop criticising the constructive changes that we introduced.
§ Mr. Rowlands
The Tories introduced very little in the way of constructive change. The hon. Gentleman's remarks were not exactly constructive. What we have been saying is that there were many 1450 aspects of the 1973 Act which caused great offence to hon. Members on both sides. Nevertheless, for better or worse, this is the system that the Government and the authority have to operate. We cannot change it overnight.
We have had one great unheaval in administration. As my hon. Friend the Member for Newport said, we have had simultaneously an upheaval in the health service, in local government and in water. To throw the new administration of these services into further upheaval would obviously be a matter of considerable concern.
My hon. Friend raised the particular problem of areas like Newport. When the Welsh Water Authority took over responsibility in April 1974, it faced a very difficult situation. It inherited estimates prepared by local authorities which were based on wide-ranging assumptions with great variations from place to place. At the same time, local government had been reorganised. The Welsh Water Authority thus had no practical choice but to impose its rates for 1974–75 based on the cost of supplying water in each division of the authority in 1973–74, plus a uniform percentage increase to cover increased costs. Added to that was the effect of losing the rate subsidy. Hon. Members will realise that those areas which most needed help were the ones which suffered the largest increase.
I mention those matters because I am sure that my hon. Friend will not wish to consider merely the problems of his own community but will consider the position nationally as well as locally.
My hon. Friend has described the situation facing Newport in 1975–76. Invidious comparisons can be and have been made. I must tell my hon. Friend of the present position, and of the present plight of many communities in Wales as a result of the 1973 Act. Let me contrast Newport's water charge for 1974–75 of 6.6p in the pound with that of Cardigan and Radnor and North Brecon at 20p in the pound, Anglesey at 18.8p in the pound, Merioneth at 18p in the pound, and, if I may be forgiven for mentioning my own area, Taf Fechan at 16.8p in the pound. Indeed, of the 17 water division areas, Newport, as part of Gwent division, had one of the lowest water rates of all in 1974–75.
1451 A similar pattern of charges can be found in relation to sewerage and general services. I assure my hon. Friend, therefore, that he is not alone in feeling strongly about the problem of water charges. Many other communities have suffered huge increases during the course of this financial year.
I turn now to the future. My hon. Friend spoke of the burden on his community, and the possibility of Government assistance under one of the provisions of the Water Act. I remind him—this is in answer to the hon. Gentleman, also—that when we found the situation, as we did, arising from the 1973 Act, we acted swiftly to try to relieve the domestic ratepayer of the burden. In Wales in 1974–75 generous domestic relief was awarded, double that in England, to offset, among other things, the effect of water charges. All consumers in the whole of Wales benefited from that, but, ironically, those in urban areas were particularly well shielded from the increases of 1974–75. That was our immediate answer to the problem with which we were confronted.
In some districts—the hon. Gentleman represents one of them—ratepayers had to pay less in 1974–75 in total general rates, including water and sewerage, than they did in 1973–74. For example, in Newport the total net demand on domestic consumers was reduced by 6.8p in the pound as a result of the change which we made for domestic rate relief. In Cardiff the total net demand was reduced by 7.1p in the pound. That was, I am sorry to say, in sharp contrast to what happened in other communities in 1974–75.
I come now to the problem for 1975–76. The Welsh Water Authority faces an even more difficult situation. My hon. Friend tended to suggest that the authority has had something of a spending spree. This has been put to us also by letters from Newport and other places. I should put the record straight.
There was a deficit of £5 million on 1974–75, which had to be made good, as well as the need to avoid a similar deficit for 1975–76. Loan charges and inflation accounted for a further increase of £15½ million. Quite clearly these increases could not be passed on to the communi-p1452 ties which had borne the heaviest burden in 1974–75. These increased revenue requirements are firmly in the class of "inescapable commitments".
The Welsh Water Authority has not been given carte blanche for new capital spending. Its programmes for 1975–76 are generally confined to priority works required for reasons of public health and for new housing, as well as to completing schemes started by its predecessors. Indeed, I have frequently had to explain to hon. Members why schemes in their own constituencies cannot go ahead.
I understand and, indeed share, the dismay expressed by my hon. Friend about the steep rise in charges in Newport and other urban areas. I respect the force of the argument that it might have been preferrable to phase the move towards equalisation. But each authority has to deal with the circumstances in which it finds itself. My hon. Friend referred to the problems of my hon. Friend the Member for Brecon and Radnor (Mr. Roderick), and his constituency has certainly faced massive problems over water charges. If the Welsh Water Authority had not chosen to equalise it would have had to raise heavier charges upon those communities which bore the brunt of the increase last year. It did not consider that was fair, or equitable, but that was part and parcel of the principle of the 1974 Act. Similarly, if a phased introduction of equalisation had been made, this, too, would have maintained a considerable discrepancy in rates of water charges between community and community.
The authority faced the nightmare dilemma that if charges were not increased in an area such as Newport, other areas would have to suffer more than they have suffered in 1974–75. We believe that the authority was right to abandon the system adopted in 1974–75. It decided to do so and the decision was its own, taken under the powers given to it under the 1973 Act. It therefore moved to full equalisation in one stage.
My hon. Friend has advanced two main arguments for phasing equalisation over a number of years. First, he suggested that the authority should have followed the advice of the recent Jukes 1453 Report, which advised caution in this matter. The Jukes Report was advisory, and regional water authorities were not bound to follow it
The question for the authority was whether an equalised system would be more—
§ The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at seventeen minutes to One o'clock.