WATER CHARGES EQUALISATION BILL

HC Deb 24 January 1977 vol 924 cc985-1102

Order for Second Reading read.

4.12 p.m.

Mr. Terence Higgins (Worthing)

On a point of order, Mr. Speaker. Before you consider whether you should put the Question, "That the Bill be now read a Second time", I would wish to submit to you a point which I believe to be of considerable importance.

The Bill refers at several points to raising a levy. I believe that that expression should be interpreted in this context as a tax and that therefore, if the Bill is to be debated, it should be brought in upon a Financial Resolution. However, to my surprise, I did not discover a Financial Resolution on the Order Paper today.

"Erskine May", in the section headed Enforcement of Rules of Financial Procedure on page 709, states: The rules of financial procedure, whether based on practice or upon the standing orders, are unquestioningly observed by the House of Commons; and any disregard of them would now only be due to misunderstanding of their applicability in a particular case, or to inadvertence. Questions of interpretation are decided by the Speaker". I would therefore ask you to express a view of the interpretation in this case.

Of course, it is important to distinguish what "Erskine May" in this context describes as "charges upon the people" because it is only if there is a charge on the people, I believe, that such a resolution would be necessary.

On page 701, "Erskine May" Says: The term 'charge upon the people' is now primarily taken to connote any impost in the nature of a tax or customs duty the proceeds of which are payable into the Consolidated Fund. But in a secondary sense it also includes any burden upon local rates. That is a particular point which I should like you to consider, Sir; it is the actual point on which this matter should receive our consideration.

On page 702, "Erskine May" States: A charge must first be considered in the form of a resolution, which, when agreed to by the House, forms a necessary preliminary to the bill or clause by which the charge is authorized. It has been suggested to me that that might not be the case if the matter were a secondary matter, but it is clear from the Bill that, far from being a secondary matter, this is the matter which forms the fundamental feature of the Bill, which is to raise a levy upon my constituents, among others, in the sense that it is a tax.

That having been said, I have taken note of the fact that the original Water Act of 1973 was not introduced on a Ways and Means Resolution. I ought to have some regard for that because I was Financial Secretary at the time. Nevertheless, it seems to me that the two cases are not on all fours and that, whereas it was right that no resolution was moved on that occasion, it would be right for a resolution to be moved on this occasion.

The 1973 Act was concerned with raising charges. Quite explicitly, limits were put on the way in which those charges should be fixed by the water authorities. In particular, Section 30(4) says: In fixing charges for services, facilities or rights a water authority shall have regard to the cost of performing those services, providing those facilities or making available those rights. It goes on to say in subsection (5): A water authority may make different charges for the same service, facility or right in different cases but that all authorities must ensure that their charges are such as not to show undue preference to, or discriminate unduly against, any class of persons. This Bill discriminates heavily against different classes of persons and therefore, I believe, is not on all fours with the 1973 Act.

The 1973 Act also says that in giving directions the Secretary of State shall have regard to the two subsections which I have quoted. Clearly, those provisions mean that the intention was that the charges should be levied to meet the provision of a service, and they set out the specific terms on which that should be done. But what is proposed in the Bill is in no way related to the costs of providing the services. My constituents will in no way benefit from the Bill—on the contrary, they will suffer; but I would not wish to go into that at this stage. My point is that a levy is being imposed upon them, and it is a fundamental feature of our House of Commons that levies are not imposed on one's constituents without the proper financial procedures having been observed. I submit that the Bill involves the imposition of a levy.

It is true that in some ways this is a second-hand levy, because it is a redistribution of the money among water authorities, but of course an individual water authority has no money other than that which it raises from the public. For the reasons that I have given, therefore, I believe that this charge is a tax, albeit levied by the water authority. It is, of course, being levied by the Secretary of State on his direction. Clearly, that is totally different from the 1973 Act.

I gave your office notice, Mr. Speaker, of my intention to raise this matter, although I am sorry that I could not give as much notice as I would have liked. I submit that we should not proceed with the Bill without the necessary Financial Resolution being brought forward.

4.18 p.m.

Mr. Robin Maxwell-Hyslop (Tiverton)

Further to the point of order, Mr. Speaker. I do not think that the House had a Financial Resolution before it, for instance, when the Tomato and Cucumber Marketing Board or the Potato Marketing Board made a levy on producers. Since the Secretary of State is not himself making a levy on the Consolidated Fund which is then disbursed for certain purposes, I cannot see that a Financial Resolution is called for.

Mr. Speaker

I thank the hon. Member very much.

4.19 p.m.

Mr. Ronald Bell (Beaconsfield)

Further to the point of order, Mr. Speaker. May I invite your attention to these considerations?

The water authorities are enabled and enjoined to raise their revenue by rates on the public. Under Clause 4 of the Bill, the levy which a water authority is required to pay shall be treated as an addition to the costs of the authority in that year. Therefore, what the Secretary of State will be doing, quite directly through the statutory channels, is raising the water rates of people in the areas of the authorities concerned. It will be done, as my hon. Friend the Member for Worthing (Mr. Higgins) said, not for the purpose of defraying any charge but for purposes of political and social policy.

In my submission, that is a tax and it therefore requires a Financial Resolution. In that respect it is quite different from the category, to which my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) referred, of the marketing boards, where, of course, the purpose is commercial.

I therefore urge you to say, Mr. Speaker, that a measure which by direct statutory linkage to provisions imposes a levy on my constituents, not in respect of any service rendered but for political and social purposes, should originate in a Resolution of Ways and Means.

Mr. Speaker

I am deeply grateful to the hon. Member for Worthing (Mr. Higgins) for giving me considerable notice of the matters that he wished to raise. I am also obliged to hon. Members who have added their comments to the point of order. "Erskine May", which was quoted by the hon. Member for Tiverton (Mr. Maxwell-Hyslop), says on page 777: Impositions are not generally charges unless the proceeds are payable into the Consolidated Fund. This connotation excludes local rates and loans, and even burdens imposed by Parliament, the proceeds of which are payable to local funds. The charges with which the Bill deals are not taxes. That is to say, they are not levied by the Crown or for the benefit of the Crown. They are levied by the authorities to which the Bill relates. The powers that the Bill confers on the Crown to redistribute proceeds as between one authority and another do not amount to a tax and, therefore, are not subject to a Ways and Means Resolution.

4.21 p.m.

The Minister of State, Department of the Environment (Mr. Denis Howell)

I beg to move, That the Bill be now read a Second Time.

This is intended by the Government to be the first step in clearing up the confusion that resulted from the water reorganisation of 1973. I was under considerable pressure last year from both sides of the House as a result of that confusion—not least because of the internal equalisation upon which the 10 water authorities in the country then thought it right to embark.

The Bill is based upon the need for more equitable charges, without which it would be extremely difficult if not impossible to develop a national strategy for water and the national ownership of water as forecast in the Green Paper published last year. The reasons for the Bill result directly from the effect in practice of the 1973 Act. Some hon. Members opposed that Act because they foresaw the considerable administrative difficulties and the haphazard national organisation that would flow from it.

The 1973 Act established 10 separate and totally independent regional water authorities. I may fairly point out, incidentally, that although we announced that we intended to proceed with this equalisation measure in the Green Paper of March last year, not one hon. Member has ever objected to our proceeding and producing these proposals. No representation has been made by any hon. Member.

Mr. Eldon Griffiths (Bury St. Edmunds)

The Minister should get his facts right. In the issue of the National Water Council's magazine that followed the Minister's statement on the matter, I wrote giving my detailed views on this and I took particular exception to what the Minister now proposes?

Mr. Howell

I withdraw and apologise to the hon. Member for Bury St. Edmunds (Mr. Griffiths), but that makes my point even more strongly. Only one hon. Member objected.

I was coming to the point that some opposition to the Government's proposals emanates from those who believe that we should have 10 independent regional water authorities and that those authorities ought not to sacrifice any part of their control or authority to the centre. Such people believe that we ought not to have a national water authority.

Immediately one moves in that direction, obviously the relationship between the proposed new national authority and the regions must be discussed. I have just had an interesting discussion with the regions about computer policy. I found some opposition to my view that it was odd and silly for every regional authority to own its own computer, yet that is almost what the authorities now propose.

I have been told firmly by some regional authorities that they are completely masters in their own houses and intend to remain so. This is a matter of management. Some of us believe that duplication of bureaucracy is wasteful and expensive for consumers. Ministers have an obligation to make this point. Some misplaced opposition comes from those who intend—if they can—to maintain the policy of having 10 totally independent regional water authorities.

Mr. Gwynfor Evans (Carmarthen)

Would the Minister clarify for the House what he means by a national water authority? What would it exclude? Would it include only England, Wales and Scotland, or other entities as well? What is meant by the term "nation" in this case?

Mr. Howell

We intend exactly what was outlined in our consultation document of March last year, with which I am sure the hon. Member for Carmarthen (Mr. Evans) is familiar. I labour under the misapprehension that hon. Members actually read the documents that we put in front of them; I may be wrong to do so. It is obvious that the national water authority would embrace the 10 existing regional water authorities which, of course, include Wales as well as the nine English regions.

Mr. David Price (Eastleigh)

The Minister has made a very fair point about optimising the use of computers, but why did he conclude that there ought to be a centralised computer? Use can be optimised in other ways and I should be delighted to talk to the Minister about how it could be done. It need not necessarily mean centralisation.

Mr. Howell

I agree, and I never said that it did mean centralisation. I have asked the water authorities to adopt a rational policy for the employment of computers and not to have a computer each. This does not necessarily mean centralisation of all resources, but it could mean the employment of one computer among two, three or four water authorities, or the use of spare capacity in the computers owned by other public authorities. There are a variety of means of doing this. I was explaining the difficulties that I have experienced in putting that view to the water authorities.

Mr. Robert Mellish (Bermondsey)

I understand the case for a central water authority and that the 1973 Act set up 10 different bodies. Why does the Bill not get rid of those 10 bodies? If it is an anomaly to have 10 bodies, why are we keeping them and giving them chunks of cash? Why not do the job properly?

Mr. Howell

If my right hon. Friend the Member for Bermondsey (Mr. Mellish) will be patient, I shall come to the background of the Bill in a moment, but, as I said at the outset, this is the first step towards a rational national policy, and the next step will follow rapidly.

Another reason why some of us opposed the 1973 Act was that it abolished the Water Resources Board, which was a central strategic planning unit. The water industry now has no such unit. It has instead a central unit within the Department of the Environment, but it is not concentrated, as it ought to be, within a national water authority. The Water Resources Board was an independent board that comprised eight people appointed by the Secretary of State. The last of the Board's reports was germane to the Thames water situation, which interests so many of my right hon. and hon. Friends.

My second reason, for the setting up of a national water authority is that the drought of 1976 proved the Government right in saying that the country must have such an authority and must have a national water policy.

The country was in a very serious situation in September last year. When I first visited each of the regional water authorities, I, together with my officials and the officers of the National Water Council, had to try to create a national strategy and a national co-ordination.

If one instances the west side of our country, one can immediately understand the situation that I am outlining. Our contingency planning there had to be done on the basis that, had the drought gone on for another two or three weeks, it would be necessary, in the case of water from Lake Vyrnwy in North Wales, to say to the North-West Water Authority that water could no longer be available to service Liverpool and that Liverpool had to be serviced from other resources in the area, so that the water from Lake Vyrnwy could be put into the Severn and travel down the Severn to the assistance of the Severn-Trent authority in the Midlands and of Bristol and Wessex at the bottom end of the Severn. That would have enabled us to use the water which the Severn-Trent authority normally received from the Elan Valley complex in Mid-Wales and put it in the Wye so that it could be used by the Welsh Water Authority to assist in dealing with the critical situation in South Wales.

I use that as a graphic illustration of the imperative need for a national water strategy. Therefore, in the context of the drought, the concept of 10 independent regional water authorities is an absolute nonsense.

Mr. Michael Heseltine (Henley)

As the Minister has explained precisely how, within the existing framework, he is able to make all these potential arrangements, why does he need to change it?

Mr. Howell

First, because of the organisational and structural problems; secondly, one cannot transfer water from one area to another without immediately coming up against the question of charging policy. In the emergency of the drought and under the Drought Act which we passed as a temporary measure it would have been possible to make such transfers. In this Bill we are dealing with a permanent situation.

There is another reason why the Government have thought it right to proceed in this matter. On the day that the 1973 Act became law we had not only 10 regional water authorities but almost 200 different water charges to domestic households. It was an absolute jungle. The charges varied enormously—from 2p in the pound in one part of the country to 20p in the pound in another part.

It is not surprising that this financial and charging chaos caused considerable resentment in various parts of the country. Even if people do not like this measure—and I can understand the opposition to it—whoever was responsible for water policy could not have allowed that situation to continue. It would have had to be faced. The 10 authorities immediately had to face it. They could not tolerate a situation in which there were between 150 and 200 charges. It would have made nonsense of their accountancy and administrative procedures.

I was interested in the representations made to Mr. Speaker by the hon. Member for Worthing (Mr. Higgins). However, the principle to which he objected and the basis for his suggestion that we had no authority to proceed without a Ways and Means Resolution is already operational in every one of the 10 regional water authorities. Every authority has had to equalise its charges for the reason I have given, namely, that they could not allow this financial jungle to persist.

I know that hon. Members possibly have objected to it—we had some objections last year—but the regions certainly cannot object to the principle of equalisation in the regions. The position in my region, which is in the area of the mammoth Severn-Trent Water Authority, raises the question: if it is right to equalise charges between Birmingham and Nottingham, why is it wrong to equalise charges between Birmingham and Cardiff? Taking the area of the Thames Water Authority, if it is right to equalise charges between the GLC area and its outskirts, such as Buckinghamshire and Hertfordshire, why is it wrong to do the same between Exeter and London? The question of principle, therefore, does not arise.

Mr. Higgins

On this point and not the procedural point I raised earlier and which I hope to pursue elsewhere, it is basic economic theory that if one averages a price, the monopolistic practice is of benefit to people in high-cost areas as against low-cost areas. The principle is clear. One should charge people the amount which they cost the authority concerned. Once we get away from that, the wider the area we take, the more injustice is done. Ideally, one should deal with each case individually, which I hope will eventually happen.

Mr. Howell

I remember vividly explaining from the Opposition Front Bench when the water equalisation charge went through that it would inevitably mean that authorities such as London and Birmingham which had provided themselves with good and efficient water undertakings would have to pay towards the provision of similarly efficient undertakings for authorities which had not done so. The same principles plainly apply to any national service industry. They apply to the gas and electricity undertakings.

I am bound to say to my hon. Friends, who I think understand my logic better than do my colleagues on the Opposition Benches, that with a fully nationalised industry a degree of equalisation and levelling up is inevitable. Most of the industries I have in mind in, for example, Birmingham, Manchester, Liverpool and London, could come under the heading of municipal socialism. They are efficient because they have local authorities which believe in the principle of publicly owned industries.

I do not want to spend too much time on our discussions last year about the effect of internal equalisation. I know that it caused some concern at the time which was expressed from both sides of the House. The Jukes Report, in 1973–74. stated that in view of the substantial increases in the general level of charges that may be expected next year, any moves towards greater equalisation of charges should be both gradual and limited in extent in order to avoid further sharp increases in charges to particular groups of consumers. This proposed equalisation scheme is certainly the most modest of all the alternatives that we have considered. Some might say that it was too modest, but in recommending it to the House we are following that same principle of moderation.

I move now to the consequences flowing from local government reorganisation. Many people still do not realise that under the 1973 Act water was taken out of local government altogether. That is an important point, because until the 1973 Act an alternative way of dealing with the problem would have been to use the rate support grant system. Under that system weighting can be given to special factors, and it would have been possible, had water still been in the orbit of local government, to give special weighting to areas with high distribution charges, such as Wales, Norfolk and the South-West. Unfortunately, that solution to the problem is not available to the Government as a result of the decision to take water out of the sphere of local government.

Mr. Michael Mates (Petersfield)

Was that option ever taken up by either Government?

Mr. Howell

Of course it was, for a long time. When the water industry was under local government, it was subsidised by the general rate system, through the rate support grant.

Mr. George Cunningham (Islington, South and Finsbury)

Why does my right hon. Friend say that that option, which was obviously the sensible way, is not available? It cannot be because legislation is needed. We need legislation for the present option. My right hon. Friend must know that it is far easier to take central Government funds and give them to some areas than to take money from some local organisations and hand it over to others. Even at this late stage, with the possibility of something happening at 10 o'clock tonight, could not the Government recognise that the other option should have been taken?

Mr. Howell

I hope that what happens at 10 o'clock tonight is that the Bill will be given a Second Reading. That option is no longer available because water is no longer a local government service. We have no local government organisation to ensure that the rate support grant system can operate.

Mr. George Cunningham

We can create it.

Mr. Howell

I have no doubt that the House could do a lot of things. I should like to think that it would give me now the whole of my water reorganisation Bill, which is a very complex matter because it involves taking into public ownership many private companies. I shall explain in a minute that we shall be proceeding in that direction.

Several Hon. Members rose—

Mr. Howell

I cannot give way any more. I must proceed with my argument. [HON. MEMBERS: "He has not started it yet."] If hon. Members are willing to listen for much longer than I had wished to inflict myself upon them, I am ready to give way, but I hope that I shall be allowed to proceed.

I am sure that the hon. Member for Bury St. Edmunds, who proposed these measures at the time and argued them very fairly, recognises that the intention was to take the water industry, for what he thought were good and sufficient reasons, out of the sphere of local government. That is the context in which we have to operate. As I say, enormous disparities in charges were demonstrated—so much so that the Government felt it necessary to establish the Daniel Committee to look at the effect in Wales.

Of course, other regions are affected, too, particularly Northumbria, Anglia and the South-West. The Daniel Committee recommended: Early action should be taken to reduce the difference in average water charges between the Welsh National Water Development Authority and other authorities. The Daniel Committee made it perfecty clear that there were only two ways in which this could be achieved. One was the way which it referred to as a "levy/subsidy" system, which I prefer to call a degree of equalisation, and the alternative was to propose that water-exporting authorities must be able to sell water at their own commercial prices.

That is what the Daniel Committee said, and I shall come back to it in a moment because we have to look at the alternatives, unless the House thinks it right to maintain the tremendous disparities in charges. But I suggest that the House and the regional water authorities have to recognise those two alternatives and decide which they think the most practicable and in the best interests of their consumers.

I have no doubt of the answer to that question, and the Government themselves stated their view in March 1976, in paragraph 73 of the consultation document. I shall not weary the House by quoting it now, but we related our proposals in the consultation document directly to the relationship between some form of equalisation and the need to ensure that future water transfer charges in this country should take account of the "no profit, no loss" principle.

Mr. Arthur Jones (Daventry)

What is the average size of the domestic water bill in Wales compared with that in the area of the Thames Water Authority?

Mr. Howell

I shall give that when I come to the appropriate point in my speech, if I may.

Mr. Arthur Jones

Why not now?

Mr. Howell

I shall tell the hon. Gentleman now if he wants it. In 1977–78 the average charge to the domestic householder in Wales is £27 and in the Thames area it is £15. That is the average charge per household within each region, and it immediately emphasises the point I make about the tremendous disparities in charges for what is a vital supply to every household.

Mr. Arthur Jones

I am in a position to challenge those figures, and I have here figures given by the Severn-Trent Water Authority. The authority tells me that the average size of domestic bill in Wales for 1976–77 is £20 and for the Thames area £19.60.

Mr. Howell

I shall have those figures looked into during the debate, but I assure the hon. Gentleman that they are not accurate. A good many figures have been circulated recently to hon. Members which, after representations made by hon. Members in the past few weeks, we have discovered to be based on old published information. The figures I have just given to the House and other figures that I shall give are precisely the figures that I gave to the chairmen of all the regional water authorities when I met them just before Christmas, and they have not been challenged since.

Mr. Ioan Evans (Aberdare)

If the hon. Member for Daventry (Mr. Jones) is arguing that there is almost equality between Thames and Wales, why is he arguing against the Bill?

Mr. Mellish

I do not know what the point of that was. I shall now put an intelligent question. Even assuming that my right hon. Friend's figures are right and there is a disparity between Wales and London, that is not what concerns the London ratepayer. What concerns him at the end of the day is the total of rates and water charges. We should not let it go out from the House that somehow all this is being done because there happens to be a difference which ought to be equalised. No one should ignore the fact that the majority of Londoners pay far higher rates than any Welshman would ever see.

Mr. Howell

I am sure that it would be unwise to have a general debate on rating policy at this stage, but I hope that my right hon. Friend, when he reflects on the implications of the valid point which he makes—I do not object to it at all—will have regard to the fact that as a result of weighting of the rate support grant system the Greater London Council will be £19½ million better off than it would otherwise have been.

Mr. Mellish

I can answer that.

Mr. Howell

My right hon. Friend may answer it, but if he puts a point to me, I think that I am entitled to state the total effect of Government policy in this matter.

I was about to refer to the tremendous disparities in the cost of water to households in various parts of the country—and people judge this issue according to how much they are paying for water. After the Bill becomes law, the average annual cost of water for domestic users will be £27 in Wales and £15 in the Thames area. That means that the variation in water charges ranges from 46 per cent. above the national average in Wales—with similar figures in other parts of the country—to 18 per cent. below the national average in the Thames area.

The Daniel Committee thought it right to check the variations in charges for gas and electricity. Electricity charges for domestic consumers in various parts of the country range from 4 per cent. below the national average to 6 per cent. above. Gas charges range from 12 per cent. below to 12 per cent. above the average.

The variation in water charges is at least twice as great as that for gas, and three or four times as great as the variation in electricity charges. The Bill is intended to narrow that range and to smooth the peaks and troughs. I do not believe that it can be thought to be inequitable.

Mr. Dafydd Wigley (Caernarvon)

The right hon. Gentleman has argued cogently about the enormous difference between domestic charges in Wales and the South-East of England, but there is also a great discrepancy in industrial charges. Why have the Government not done anything to close that gap?

Mr. Howell

There is a fundamental difference between domestic and industrial consumers.

Mr. Heseltine

The domestic users have the votes.

Mr. Howell

The hon. Member for Henley (Mr. Heseltine) has just emerged from a lengthy period as the Shadow Industry spokesman. I am surprised that he does not understand that industrial users have a vote. His term as Shadow Industry spokesman seemed to be dominated by that fact. The difference is that the industrial user's supply is metered and is not charged on the same basis. He can control his supply, and many industrial users do so.

The work being undertaken and the work that will have to be undertaken to ensure adequate supplies of water underlines the importance of the Bill. As a result of last year's drought and the Government's proposals resulting from it, we have had a winter programme of work totalling £187 million. Only a small part has not been carried out—because of the moratorium on public expenditure—and it has all been designed to improve the situation by next summer.

Much of the programme is concerned with the transfer of water from one regional authority to another. That is the only sensible way of proceeding. The transfer of water is bound to increase. The increase in demand for water has been phenomenal.

I am told that we each use 31 gallons of water a day. That includes 11 gallons in washing and bathing and 11 gallons in flushing the lavatory. There has also been a considerable increase in the use of water by industry. Many families use dishwashers, and they require 40 gallons of water for each programme. Washing clothes in a launderette uses another 30 or 40 gallons. Every time a person takes his car to a car wash, another 30 or 40 gallons of water is used. The whole lifestyle of the nation is changing and it is geared to the demand for more water.

Some people may say that the solution is to recycle and re-use the water. I agree, but there is a limit to what can be done in that direction. In the Thames area, water is re-used and recycled six times during its journey down the river. It is also costly to operate all the necessary drainage systems.

Mr. Donald Anderson (Swansea, East)

Does not the increasing demand mean that the Thames area will come to rely increasingly on water from the area of the Welsh National Water Development Authority?

Mr. Howell

That is a pertinent point that I was about to mention. The last report of the Water Resources Board dealt with this matter in respect of the Craig Goch scheme, which is designed to provide water for the Midlands and possibly Wessex and the North-West. The Board said in its report in 1973 that, provided the project were completed in good time, the best choice for providing a major addition to supplies for the South East from about 1984 onwards is by transfers from the Severn to the Thames. The increased demand for water and the inability of the Thames authority substantially to increase supplies will make it inevitable that, whether in the mid-1980s or in the 1990s, the Authority will need to draw water from Wales.

There are still many hon. Members who wish to speak. [HON. MEMBERS: "They have already".] I take the point, and I take some comfort from that. I have tried to be courteous to all who have wished to intervene.

If water is to be transferred in substantial quantities to the North-West, the Midlands and probably even to the Eastern Region, Anglia and Thames, the Government's policy, which was announced in the consultation document last year and which I reaffirm again today, is that the transfer should be on a "no-profit, no loss" basis, and we intend to see that that is the case. Also, the Government's strategy contains some responsibility on our part to remove the extravagantly high charges in some parts of the country. That is the inevitable logic, and it is on that basis that we bring this Bill forward.

As a result of the Bill no household in the country will be asked to pay more than 2½p a week, and in most cases where people have to pay, they will have to pay about 1p a week. The help is very substantial in the areas that will receive it. In Anglia, for example, the help will be to the extent of 5p a week; in the South-West 6p; and in the area of the Welsh National Water Development Authority, 6½p.

Finally, the Bill is absolutely consistent with general Government and Labour Party philosophy. During the course of this year we have thought it right that the country's resources should be channelled increasingly to those areas of greatest need. For example, those areas that clearly need financial assistance received help from the rate support grant. This amounted to £19 million—which I defend and which is absolutely essential—to assist the GLC area. That switch of resources brought an additional £43.5 million to the other hard-pressed metropolitan areas.

The same philosophy was applied in areas of housing improvement and house building. The Secretary of State made it a cardinal part of his policy to switch resources in housing terms to areas of greatest need. This Bill does the same thing. The only difference is that areas of greatest need in this regard are not the same as those that have been assisted by the rate support grant and housing policy. Nevertheless, they are areas that are in great need. If we wish to carry the country with us on rates and housing, it is reasonable to ask my hon. Friends to support the same principle in respect of the Water Equalisation Bill.

This Bill is the first essential step towards correcting the severe anomalies arising out of water reorganisation, and it should be seen in the context of a national strategy of national ownership. The events of 1976 showed this to be essential, and the Government are determined to provide such a national policy.

We shall issue a White Paper in the spring following consideration of the representations made on the consultation document. Work is already proceeding on the preparation of legislation that will be introduced as early as possible. The legislation will prepare the national strategy and the concept of a National Water Authority. For these reasons I move the Second Reading of the Bill.

5.4 p.m.

Mr. Arthur Jones (Daventry)

We have had a lively opening to our debate. I recognise that this was essentially due to contributions other than that from the Minister. We are indebted to him for his courtesy to the House and the numerous occasions on which he gave way.

The Water Act of 1973, which established the nine regional water authorities in England and the Welsh National Water Development Authority in Wales, is widely recognised as being an enlightened measure, giving, as it does, responsibility to the authorities for the whole of the water cycle. My right hon. and hon. Friends responsible for this legislation are to be congratulated on their initiative in successfully introducing all the new arrangements, as are those involved in their implementation. The reorganisation has been proved to be soundly based, having regard to the many aspects of water supply and storage, sewerage and sewage treatment. Also, it has brought together, in organisational terms, many and varied authorities, and it has ensured a day-to-day working harmony. The private water companies and the local authorities, who share the administration, play an important rôle.

The revised arrangements have run for less than three years, yet unfortunately the Government feel the need, for one reason or another, to interfere at such an early date in the work of the new authorities. The Minister, who has enjoyed a variety of titles during the past year has today earned the title of Minister for Equalisation, having been Minister for Water and Minister for Drought. But as Minister responsible for Sport and Recreation he has set his heart on meddling with the financial arrangements so recently introduced, albeit on the narrow question of equalisation.

We should be trying to assess the reasons for the games of ducks and drakes which he proposes for water charges, which have already been widely deplored by those who are concerned for the long-term interests of both suppliers and consumers in England and Wales.

In a Written Answer on 18th March last year, the present Minister of Agriculture, who was then Secretary of State for the Environment, referred to the consultative document "Review of the Water Industry in England and Wales", which was published on that day. The document had as its purpose a full review of the industry which the Government had intimated would be undertaken as far back as June 1974—between the two General Elections of that year. It is quite extraordinary that such an announcement should have been made only two months after the effective date of the water reorganisation.

When Baroness White introduced the consultative document in another place on 26th May last year, she almost made an apology for the Government's proposals to reorganise the regional water authorities so soon after they had been established. I quote from her speech in the Official Report, House of Lords, on that day: I cannot give the Paper as high marks as I would wish, which I regret because coming as it does only three years after the substantive legislation, the Water Act 1973, and only two years since the consequent reorganisation took effect, one requires some very cogent argument for pulling things up by the roots quite so soon. This is what the Government proposed as long ago as June 1974. But we have yet to hear from the Government arguments which justify another dose of reorganisation. We have not heard why the Minister is now coming forward with proposals affecting only water charges, leaving the pursuit of the Government's other objectives for another day. Later on Baroness White said on that same occasion: I am Welsh, and therefore I could not speak on this matter of water charges without emotion and partiality."—[Official Report, House of Lords, 26th May 1976; Vol. 371, c. 269–761] There appears to be little more than an emotional response to justify the Government's proposals for equalisation of water charges and the Minister must recognise that there is a likelihood of an English backlash. This may well be reflected in the debate today. It is fair comment that the right hon. Gentleman did have a little difficulty in justifying this measure. He talked in grandiose terms of a national strategy clearing up confusion, and dealing with the differing charges within the regional water authorities. But that is largely irrelevant to the nature of the issue which is before us today. Is he saying that these differing charges—up to 200 of them—will be reduced as a result of this measure? Not at all. It will not have that effect in any way. In fact, there was little in his speech that had much to do with the merits of the case, and there was no recognition of the disadvantages that will flow from these proposals.

There is clear evidence that what is now proposed is in reality unrelated to water charges but concerns the political objectives of the Socialist Party. The Minister mentioned them. The substantive evidence lies in the opening paragraph of the consultative document, in these terms: It explains the relationship between the Government's proposals and the intention, announced in 'Our Changing Democracy: Devolution to Scotland and Wales' (Cmnd. 6348), that responsibility for water services in Wales will be devolved to the Welsh Assembly. The Minister said nothing about the national water authority. That point was left for one of my hon. Friends to raise, and this aspect is not put forward in the consultative document.

The benefits proposed for some, and the increased charges to be levied upon others, is the price to be paid by those living in the area of the Thames Water Authority and in the other five water authority areas from whom increased charges are to be extracted in order to fulfil Government policy and start up consumer subsidies for water in Wales. That is what the Bill is all about. The question of equalisation of water charges and the significance of the benefits to those living in Wales are clearly linked with the Government's proposals for devolution. The terms of the Bill appear to arise in the main from those considerations, and the timing of its introduction supports that view.

I understand that the National Water Council was informed of the Government's intentions on 22nd October last year. The proposals are to be effective from 1st April next. Clearly there must be considerable doubt about the possible progress of the Bill and its enactment. This faces the regional water authorities with problems about predicting their budgetary procedures for 1977–78. The Bill excludes properties drawing unmetered water supplies from the 28 private water companies which account for about 25 per cent. of supply in the country as a whole. Metered supplies for industry, horticulture and agriculture, which take about half the total water availability throughout England and Wales, are totally excluded.

The Minister made no attempt to justify the narrow base of the Bill. It is not a question of equalisation throughout water supply; it is based on a very narrow front indeed. The Daniel Report tells us that domestic consumers take about three-fifths of the water supply of the Welsh National Water Development Authority, where, as a matter of interest, there are no private water companies. In the Severn-Trent area 83 per cent. of consumers of unmeasured water, if the Government's proposals are implemented, will face additional costs. The remainder supplied by the companies would be unaffected.

I think that I am right in saying that the right hon. Gentleman did not mention private water companies and the position in which they will find themselves. That is, however, germane to the whole question. What possible justification could there be for such an unfair arrangement, in contradiction to the word "equalisation" in the Title of the Bill? The Government's proposals have differing effects on the various water authorities involving a transfer of £8,067 million from six to four recipient authorities. The main beneficiaries will be Wales—£3.688 million, and Anglia—£2.403 million. The most significant payment is from Thames—£3.845 million—and it is fair to make a direct comparison in these circumstances between consumers in the Thames area and those in Wales.

In this context a simple comparison lies in the figures projected for 1977–78. They will be a payment from Thames of £3.845 million and to Wales of £3.688 million.

Mr. Gwynfor Evans

Am I following the hon. Gentleman's argument correctly in deducing that he is against equity for Wales? If he is against that, what sort of proposal does he or his party wish to make?

Mr. Jones

I seek equity for everyone, but I think that in the course of my argument I shall be able to demonstrate that there is not a great inequity between consumers of unmetered domestic water supplies in Wales and those in many parts of England.

Let me come to that point now. The Daniel Report carries comparable figures in Table 6, Paragraph 3.25, which show that for 1974–75, under the heading "Unmetered supplies—pence in the £ of rateable value", the figure for Wales is 11.5p, while the figure for Thames is 3.1p.

I agree that there is a tremendous difference, but that is not the total equation. Let us consider the factor of rateable value. These figures have no regard to the differing levels of average rateable values, which for a domestic hereditament in the area of the Thames authority is about £270, while in Wales it is just over £120. It should be noted that within the Thames area the present rate poundages vary from 4.7p to 6.5p, excluding South Bucks, regard being taken of the differences in rateable values of similar properties in various parts of the region and the variations in costs which are apparent.

The average comparison derives from a figure with which I challenge the right hon. Gentleman. It is the size of domestic bill for unmeasured water supply in 1976–77, and is significantly revealing. It was given to me by the Severn-Trent authority. In Wales the average size of the domestic bill for unmetered water supply is £20. For Thames it is £19.60. How, on the basis of this marginal difference, can there be justification for levying a penalty payment upon householders in the Thames area for the benefit of those in the Principality?

Again, this begs the question of what is the Bill all about. Can it be said to be based on the objective of ensuring equality between consumers? Clearly the answer must be "No".

Mr. Denis Howell

Although this is the most modest scheme of equalisation that we could think of, the result is significant, certainly for Wales and the Thames area. It will reduce the disparity from 46 per cent. above the average and 18 per cent. below, to 28 per cent. above and 12 per cent. below, which is a significant improvement. The figures I gave of what people will pay—I am prepared to read them out rapidly now—were supplied to me by the chairman of the regional water authorities, and no one has challenged them. I am sure the hon. Gentleman will accept that on the basis of the best evidence we have available to us these are the figures that will apply, after equalisation, for next year.

Mr. Jones

Not for next year. I am talking about the figures for 1976–77. Those are the comparisons that I seek.

Mr. Denis Howell

I understand that the figures quoted by the hon. Gentleman relate to unmeasured supply, not to domestic supplies. In that case, I do not think they are a true comparison in the light of the Bill, which seeks to deal with the cost to the domestic householder.

Mr. Jones

It is clear that the right hon. Gentleman is not challenging my figures. They are correct. He is basing his case, surely, on what the consumer is paying. The difference is that consumers in Wales are paying 40p more than is being paid in the Thames area.

Mr. Denis Howell

But unmeasured supplies include such institutions as Selfridges, Harrods and C & A, whereas the Bill is exclusively concerned with domestic households.

Mr. Jones

The right hon. Gentleman is not excluding such properties from the Bill. Supplies to commercial premises are unmetered and they are included in the terms of the Bill. That is the point that I am making and the Minister is trying to say that it is not the case. Someone will have to deal with it but clearly he is not going to do so. The figures I have given and the case that I am making destroys much of what the right hon. Gentleman was saying earlier. The right hon. Gentleman cannot have it both ways.

Let us consider the effects of the Government's proposal on the water industry both in the short term and in the long term. It should be noted that in his answer to a Written Question on 18th March last the then Minister for Planning and Local Government—the right hon. Member for Deptford (Mr. Silkin)—said: The broad structure of the industry, and in particular the independent status of the regional water authorities, would however remain largely unaltered."—[Official Report, 18th March 1976; Vol. 907, c. 597.] The Minister is saying today that he wants the regional water authorities to lose their independence, but in the statement to which I have referred it was said that their independent status would remain largely unaltered. There is a clear discrepancy between what was being said on 18th March and what the right hon. Gentleman has said today. Surely it has been established that the intention of 18th March has been surrendered in the terms proposed in the Bill. That is what the right hon. Gentleman has made clear to the House. It means that there has been a significant change in Government policy since March of last year.

What continuing independence can there be for the authorities in circumstances in which they are required to charge their customers in accordance with decisions taken by the Government? Hitherto, the managerial effectiveness of both the authorities and the private water companies has been judged on independent financial criteria. Any measure of equalisation beyond regional water authority areas weakens the incentive of members and officers alike to exercise strict financial management and undermines current statutory obligations to relate charges for water services to their actual cost by 1981.

Equalisation of some charges only—indeed, part only of the costs of one service—will tend to give rise to pressure for uniformity and standardisation of types of charges between authorities. This, essentially, means a loss in autonomy of decision by members and is in conflict with the method of charging being developed by some regional water authorities. An example is the present difference in treatment of abatements from rateable value of charges for unmeasured supplies to commercial properties—this is the point on which I found myself at some variance with the right hon. Gentleman—as a means of moving to equitable charging arrangements.

Furthermore, the equalisation of charges is bound to affect adversely relationships with consumers. I think that the course of our debate, in the contributions that I anticipate from both sides of the House, some of which have already been made, will highlight the criticism of the Government's proposals and question their justification.

The proposed scheme involves the pooling of financing charges on authorities assets that relate to unmeasured water supply and redistributing the pool by reference to the number of unmeasured consumers that are supplied direct and not via the private water companies. Differences in unmeasured consumption between areas are not taken into account.

A further problem is presented by the fact that depreciation practices have varied. Consequently, net assets related to unmeasured supplies are in no way proportionate to the obligations now borne by the authorities in terms of outstanding debt. For example, the Thames and Southern water authorities have depreciated their assets in general to a greater extent than other water authorities. That will result in their contributing to the equalisation pool to a far greater extent than would otherwise have been the case. The right hon. Gentleman said nothing about that and he has not told the House anything about the effect that capital charges, and so on, will have on his proposal. They are serious omissions.

Furthermore, no limitation is proposed on the period for which the Bill will operate and there are not safeguards to regulate depreciation policies.

If the Government seek to be equitable, the level of depreciation for each authority needs to be prescribed and to remain for the term during which the arrangements are to operate. In paragraph 5.36 the Daniel Report draws attention to the desirability of leaving authorities with an incentive to reduce costs and to secure increased efficiency. Clearly, as I have already indicated, the Bill strikes at that principle, which is of fundamental importance to the long-term interests of the industry.

Mr. W. R. Rees-Davies (Thanet, West)

My hon. Friend is rightly making the point that the Southern Water Authority will have to provide £1 million by way of levy, but the authority is in the area in which there are all the private companies. My hon. Friend has pointed out, for example, that three-quarters of Kent is dealt with by authorities other than the Southern Water Authority. It would appear that in certain parts of the country there will be two forms of equalisation. There will be the equalisation that has been dealt with by the Minister, but those who are supplied by the non-statutory companies, the private companies, will make no contribution, where- as others in Kent and Sussex will have to make every contribution. Parts of Kent will be making a contribution under the equalisation scheme but most parts of Kent will not. That is another matter to which the Minister has not referred.

Mr. Jones

That emphasises the criticism that has been made about the variation in charges. The right hon. Gentleman is adding to the confusion by excluding the private water companies from the arrangement. What can possibly have motivated the right hon. Gentleman to introduce a Bill of this character? I have made some suggestions based on my own judgment and I believe that they are difficult to contest.

Adverse comments about the Government's proposals are made by the Association of District Councils. It comments on the proposed procedure for calculating revenue transfers, and refers to the complexity and uncertainty of the scheme and to the lack of firm numbers of unmeasured consumers". I am told that for some months it will be extremely difficult to decide how many unmeasured consumers there are. The records may not be available, and there are all the complications of deciding where the services of private water companies begin and end.

The Association of District Councils states: The fact that final calculations cannot be made until after the end of the financial year in question, because the most significant fluctuating element of the formula is the average rate of interest … which cannot be accurately assessed in advance. There is also the special position of Wales. The Minister mentioned rate support grant, and clearly Wales has had all the benefit of that grant in the past. The ADC refers to the special position of Wales, which has had double the domestic element of England partly to compensate for higher water charges". Those are the higher water charges that were made in the past. Wales has already had its compensation. I see that the Minister is shaking his head. If he contests what the association is saying, perhaps the matter will be dealt with by the Under Secretary of State when he replies. The ADC tells us that Wales has had double the domestic element of England partly to compensate for higher water charges. … The proposals are a further impost on those areas worst affected by the rate support grant settlement. The Association of County Councils is opposed to the Bill for the following reasons, among others. It says, first, that There is no convincing case for treating unmeasured water supplies any differently from measured supplies or from general charges for sewerage services. I shall be dealing with that topic a little more elaborately.

Secondly, it states that Pooling arrangements of this nature weaken the incentive to exercise strict financial management. In the view of the association the proposals represent yet another step in the process of separating responsibility for spending money from responsibility for raising it. If the Government are seeking fairness in the charges made by the regional water authorities, there could be no more deserving field for legislation than the serious position facing the occupier of a house with a private cesspool or septic tank. The charges made by local authorities for emptying and by water authorities for disposal are often a real hardship to families. The Water Charges Act 1975 dealt with some of the problems arising from the Daymond case, but there are grave inequalities in the present situation to which the Government should address themselves forthwith.

Why should equalisation be restricted to water supply? Disparities between regions in the general service charge are apparent—in the main for sewerage and sewage disposal. There are far greater disparities here than there are between water rates, and the political argument for equalisation should therefore be stronger. For unmeasured water supply the high figure is £21.90 for the South-West and the low figure is £15.10 for the North-West. For sewerage the high figure is £26.52 for Anglia and the low figure is £14.43 for Thames.

The Government make no proposals about sewerage and sewage disposal charges, and it would be interesting to know why. The comparative figures on the basis of average domestic bills for the general service charge are as follows for the four highest regions in England and Wales: Wales £21.75, Wessex £23.74, South-West £25.16, Anglia £26.52. In Anglia the general service charge is £5.87 higher than it is in Wales, but the Government are not venturing into that. The charges reduce for Northumbria to £12.66, and the average for all authorities is £18.26. Where is the emotion from Wales on the question of the general service charge, and what are the Government's views and proposals? I suggest that as this is of no advantage in terms of the devolution debate the decision has been to forget it.

Mr. Jeremy Thorpe (Devon, North)

The hon. Gentleman refers to sewerage charges and septic tanks. As I am the proud owner of a septic tank, perhaps I can inform him on these matters. Is he aware that since the Daymond case no part of the water rate goes towards sewerage for anyone who does not have main sewerage? Therefore, the sewage is collected by the district council and it is a charge on the rates. Therefore, it is a charge by an elected body over whom one has control. It is also a body which can, through the central Exchequer, get rate support grant. The charges, therefore, are not comparable.

Mr. Jones

Has the right hon. Gentleman addressed himself to the fact that in many parts of the country the charge for emptying cesspools and septic tanks is in no way related to the rate support grant but is determined by the local district council? Furthermore, the cost of disposal is decided by the regional water authority and is in no way related to the rates. The right hon. Gentleman did not deal with all the matters which are relevant to the question.

Mr. Thorpe

Will the hon. Gentleman give way?

Mr. Jones

No, I shall continue with my speech.

Mr. Thorpe

The hon. Gentleman is suggesting that my information is inaccurate. He should give way.

Mr. Jones

No, I shall not give way.

When we debated the rate support grant, the hon. Member for Islington, South and Finsbury (Mr. Cunningham) said what he repeated today: There will be great resentment about that in the areas that have to pay for it. The only good thing about it is that it attempts to equalise the cash incidence". I agree with him in that respect.

The hon. Member for Hackney, South and Shoreditch (Mr. Brown) said: We shall be having another row on the Water Charges Equalisation Bill. I, too, dissent from it. My hon. Friend the Member for Wycombe (Sir J. Hall) said: Many Members who have constituencies in the Thames Water Board area will be happy to join him in any opposition that he wishes to put forward against that Bill". The hon. Gentleman who spoke for the Liberal Party on that occasion—perhaps that is why he is not in his place today—said: I assure the hon. Gentleman that as a representative of a constituency in the Southern Water Authority catchment area I am virtually certain that we shall be going along with him in opposition to the Water Charges Equalisation Bill."—[Official Report, 22nd December 1976; Vol. 923, c. 795–819.] I wonder whether, in saying that, the hon. Gentleman was speaking for the Liberal Party or just for himself. We shall hear the view of the right hon. Member for Devon, North (Mr. Thorpe) on behalf of his party later in the debate.

It is completely inappropriate that water charges should be used as a means of subsidising some groups of people at the expense of others and where certain consumers are excluded altogether, it is doubly wrong. Where social or political factors may justify subsidies, it surely is preferable, certainly more equitable, and probably more efficient, for the subsidies to be made openly by the appropriate political authority and paid for by money raised directly by it. I think I am right in saying that that was the argument put forward by the hon. Member for Islington, South and Finsbury, and I entirely agree.

No one, other than those who benefit—and by no means all of them—has a word to say in favour of the Bill. It strikes at the sound basis upon which the regional authorities have been building up their administrative and financial procedures for the past three years. It directs those authorities on to a completely new course which cannot be in their long-term interests, and introduces inequitable treatment by way of Government-determined levies, which have as their purpose the benefit of one consumer at the expense of another—a thoroughly bad arrangement. The Bill is a grave disservice both to the public and to the industry.

5.38 p.m.

Mr. Cledwyn Hughes (Anglesey)

Water has been a contentious subject in Wales for decades. Someone once said that water was the most inflammatory subject in Wales, but I little thought it would become a contentious subject in a debate in the House. The well-thought-out speech by the hon. Member for Daventry (Mr. Jones) did not help to resolve our Welsh water problem. He failed to put forward a reasonable alternative proposition to help us to meet our difficulties.

I do not think that anyone could agree with the hon. Gentleman's convoluted argument that there is a relationship between this Bill and the Scotland and Wales Bill. There are hon. Members who are very much against the Scotland and Wales Bill who, if there is a Division, will go into the Lobby to vote for the Bill. It has nothing to do with the main theme of the argument about devolution.

I welcome the Bill and regard it as a modest step towards redressing the wrongs and grievances caused by the iniquitous Water Act 1973. "Iniquitous" is not too strong a word. The Bill is no great radical measure, nor will it recompense my constituents for the substantial excessive payments they have had to make because of the 1973 Act. I have on several occasions drawn attention to that in the House, both in debate and at Question Time, and I record my gratitude to the Government for tackling water charges as a matter of priority. I assume, as my right hon. Friend said in his opening speech, that this is a small, holding measure pending a much wider piece of legislation which the Government propose to introduce when time is available.

I sympathise with many of my hon. Friends and hon. Gentlemen opposite whose constituencies will be slightly adversely affected when the Bill becomes law, but when we were explaining the monstrous effect of the 1973 Act on our constituents there was very little sympathy from the other side of the House. The hardship dealt to my constituency of Anglesey was extremely great.

I shall not make a long speech, but let me illustrate briefly what I mean. In 1973–74, the domestic water rate for houses and flats in Anglesey was 3.6p in the pound. In 1974–75 it rose to 18.8p in the pound, and for metered supplies the position was even worse. The figures that we are discussing today, and which the hon. Gentleman deployed, fade into insignificance when compared with the burdens that we had to bear as a result of the Act passed by the Government which the hon. Gentleman supported.

Mr. Ronald Bell rose—

Mr. Hughes

I shall not give way. I intend to make a short speech, and the hon. and learned Gentleman can make his own speech in due course if he catches the eye of the Chair.

For metered supplies, water cost 12.5p per 1,000 gallons in Anglesey in 1973–74. The following year, as a result of the 1973 Act, it rose to 57p per 1,000 gallons. There was a fivefold increase in those years. Hon. Members would have some cause for complaint if their constituents had to find that kind of increase. The effect of this Bill will be modest, as will be the advantage to my constituents.

The hon. Gentleman rightly mentioned sewerage charges. These went up very sharply in our area, but they do not affect the rate support grant. Nor do they rank as rates for the purpose of determining rate rebates. I am not impressed by the way in which local sewerage schemes are dealt with by the Welsh authority under the 1973 Act. Councils have to act as agents of the authority, and they are often hamstrung by people who do not know the local need. Councils build sewerage schemes, not for fun, but to meet the requirements of the Public Health Act. However, these are matters to which we can return in due course, and we in Wales must be thankful for what we are about to receive from the Bill as it stands. I repeat that what we are to receive is not lavish by any manner of means.

The present intention of the Welsh National Water Development Authority is to increase water charges for domestic consumers from 14.8p to 17p per pound rateable value, leaving the fixed charge of £5 unchanged. If the Bill does not go through, the domestic consumer in Anglesey and Wales will, on average, face an increase of over 11.5 per cent., and this in addition to the increase that we suffered in 1974–75. On the other hand, if the Bill is passed there will be a reduction in the poundage charge of 0.4p per pound of rateable value. That is the small advantage that we shall derive, and hon. Members will appreciate that that is very modest when one recalls what happened in 1974–75.

Furthermore, the swingeing increases that we have suffered in Anglesey could not have come at a worse time. Our unemployment rate stands at 14.5 per cent. of the insured population—one of the highest in the country. We are a special development area. We are trying hard to create new jobs, and the higher water charges have been a serious disincentive in attracting industrialists. I should like my hon. Friend the Member for Rhondda (Mr. Jones) to be good enough to tell us what will be the position under the Bill on metered supplies to industry, because that is relevant. The Government are anxious that we should be able to tempt new industry to come to development areas, and water charges are one of the central factors when it comes to persuading certain industries to go to an area.

Mr. Eldon Griffiths

In so far as there were substantial increases in charges following the 1973 Act, will the right hon. Gentleman accept that some part of that was the result of inflation? Secondly, will he accept that if areas such as Anglesey and much of Wales need additional help to meet higher water charges it is right that the decision should be made as a matter of national policy by the House and the money taken from the generality of taxation as a matter of general policy, and not by putting a hand in the pocket to help one group of citizens?

Mr. Hughes

I do not have the figures, but, as I recall the situation, inflation was only a small contributory factor in 1974–75. I call in aid a speech that I made on the Adjournment of the House at that time, when I gave these figures and the percentage figure related to inflation. I do not recall them now, but I shall draw them to the hon. Gentleman's attention later.

There may be something in what the hon. Gentleman said on the question of general policy. In the Bill we shall be operating a policy that was operated by the Welsh Authority. Initially, in 1974–75 there were differences in the cost of water to various bodies within the area of the Welsh authority itself. I made a strong case in the House at the time for the equalisation of charges within Wales. The Daniel Committee, having looked carefully at this matter, said that there was a considerable argument for equalisation throughout England and Wales.

This Bill is the quid pro quo. England has done very well out of Welsh water. I do not want to make too much of this argument, because in some senses we do well out of England in other things. It is undesirable that various areas of the country should be in competition with one another. We all make our contribution to the common pool, if I may coin a phrase, but the fact remains that as a result of the 1973 Act the position m Anglesey and Wales was totally unsatisfactory, especially if one records as well that the average wage in my area is substantially lower than in, say, London and the South.

The consequences of not getting the Bill would be that the average domestic water bill in Wales would be nearly twice what it would be in the Thames area. Even with the Bill the average cost in Wales will be £23, as against £16 in the Thames area. The Bill does not go for full equalisation, but it does blunt the sharp edges of the increase.

Mr. Mellish

My right hon. Friend is making a fair point, and if I were in his position no doubt I should make it, though not so effectively. Would he like to state how much rent the average person pays in Aberystwyth and compare that with the average rent paid by Londoners?

Mr. Hughes

The short answer is that it is probably too much, wherever it is paid. London has its special problems; there is no question about that. My right hon. Friend knows that I have supported him on many occasions in arguing that London should be given special treatment. I support him, and I support the Government in their policy of giving special treatment to London and other inner city areas to deal with their housing problems. We in the rural and less urbanised areas will suffer to some extent because, quite rightly, the Government are to concentrate effort on the urban areas. If one compares the amount that the inner city areas will receive in housing grants with what we shall get in this small equalisation adjustment, one finds that the amount that we shall get is negligible.

However, I support my right hon. Friend the Member for Bermondsey (Mr. Mellish) on this matter. When the time comes, I shall if necessary join my right hon. and hon. Friends from London in the Division Lobby. I hope that they will be gracious enough to join me tonight.

5.51 p.m.

Mr. Hugh Fraser (Stafford and Stone)

I promise to speak for only about three minutes.

First, I object to the Bill because it will hurt my constituents. Many of them are in the Severn-Trent area. The people of Stafford and Stone are to have a charge of 50p extra to compensate Wales for the terrible scourges that befell the Welsh several years ago. However, that is no concern of mine. It is unfair that one area should be penalised to help another.

Secondly—and this is the view of all the water authorities concerned—this equalisation is not a true equalisation, as has been pointed out by my hon. Friend the Member for Daventry (Mr. Jones), and it is bound to lead to less concern for the proper running of the individual authorities. That is the nature of events, inevitably, when we get some concentration in the centre of this sort of direction of rate.

Thirdly, this seems to be a paving Bill for a yet further spread of bureaucracy. I am certain that if the Minister of State—who has been Minister responsible for sport, Minister responsible for water and Minister responsible for the drought, and is now champion of the leek himself in Wales—stays in office, we shall get a national water grid and all the paraphernalia of a higher water tier, more civil servants employed, and the general confusion that so often spreads not so much from a Socialist approach but from a bureaucratic approach to a problem which can be perfectly well handled by individual water boards concerned.

I hope, therefore, that there will be a very powerful vote against the Bill tonight by my hon. Friends and others who represent the Thames area and by those who represent the Severn-Trent and other areas, and if there is a Welsh Lobby in the Government, I thoroughly hope and expect that the Bill will be heavily defeated tonight.

5.53 p.m.

Mr. Caerwyn E. Roderick (Brecon and Radnor)

The Bill is a measure of equalisation. Just as we have had over the years a measure of this, that and the other, it does not attempt to do the whole of the job in one fell swoop. On reorganisation, some parts of my constituency, at least, suffered a rate poundage for water charges of 20p in the pound. These were people living at the northern end of Radnorshire, in Mid-Wales. One can imagine their feelings living in an area which has so many reservoirs supplying so many other parts of the country, seeing the water flowing past them to Birmingham and other areas for 4½p in the pound.

We understand the historical nature of this problem, but it is difficult to explain to people that their water charges should be five times as much, having transported the water 90 miles away. It is very difficult to get the message across.

That is how things were on reorganisation. The Welsh National Water Development Authority attempted to equalise the charges throughout Wales. Of course, the charges did not equalise throughout Wales, because the old Montgomeryshire is in the Severn-Trent authority area and the difficulties of dealing with rate support grant, as my right hon. Friend the Minister of State mentioned, are apparent when one considers Montgomery's position. The rate support grant tried to assist the areas in Wales that were suffering. Montgomery received the assistance when it was being charged the same as Birmingham, under the Severn-Trent authority within which it came.

There are, therefore, phenomenal difficulties in this matter. Wales landed up with equalisation. It brought down the rate a little in some areas, but clearly it was not enough.

I understand the difficulties of equalising the rate poundage because of the very big disparities between rateable values in different parts of the country. That is what the Bill attempts to overcome. It deals not with the rates in the pound but with the average payment, which is quite a novel formula for getting around the problem. I appreciate the Government's difficulties and the way in which they are trying to overcome them.

As my right hon. Friend mentioned, in Wales we shall be charged a basic £5 per hereditament and a water charge at 17p in the pound. It might be instructive for me to tell one or two hon. Members that I have my present water bill in my hand. I shall be faced with a bill in the coming six months—not a year—of £21.52, and the general charge is £21.85. That is for six months. The total charge for water and sewerage is £86 in the coming year. That is in Wales.

The hon. Member for Daventry (Mr. Jones) quoted some figures for the difference for the average household between the Thames authority and the Welsh authority, amounting to just about £1—£20 to £19. My hon. Friend the Member for Aberdare (Mr. Evans) pointed out that if this is true, the hon. Gentleman need not worry about the Bill, because the transfer will be minimal. However, that cannot be true if the other figure is true—the transfer of about £3 million. One or other of those figures must be wrong. I hope that we shall hear the truth before the end of the debate.

So far as it goes, the equalisation in Wales has been quite beneficial to some of the people there. However, the only way out of the problem completely is the suggestion that I put to the Daniel Committee, when I was privileged to present evidence in person. I do not think that many had volunteered evidence. I suggested that in view of the inequalities of the rateable values throughout the country, there could be only one ultimate solution, which is that the Exchequer should cover the costs of water. I know that the people will pay in the end. People tend to think that if the Exchequer pays for something, it is free. However, it is much more equitable to pay under the taxation system, and water ought to be "free" in that sense.

As far as it goes, the Bill is good. However, we shall have to do something to help commercial users, because commercial users in Wales on metered supplies are paying very heavily indeed. As my right hon. Friend the Member for Anglesey (Mr. Hughes) said, this acts as a disincentive in attracting and retaining industry.

I understand that some hon. Members will approach the Bill parochially and oppose it because it means the imposition of an extra payment on their constituents. I should like to suggest what a dangerous argument and line that would be. I ask my right hon. and hon. Friends, particularly my right hon. Friend the Member for Bermondsey (Mr. Mellish), who was formerly the Parliamentary Secretary to the Treasury, to remember—

Mr. Mellish

Do not remind me.

Mr. Roderick

—that when we returned after the General Election we produced very hurriedly a new rate support grant order. I was expected to go through the Lobbies on the Government side and to see my constituents suffer an increase of 5p in the pound in their rates due to the reduction in the rate support grant that they were to receive. I went through the Lobbies on the Government side for the overall good, in face of the opposition of my constituents. I hope that hon. Members, particularly those from London, will appreciate that I am trying not to be parochial. I proved it on that occasion. I hope that they will support us tonight in the same way. We are looking for some element of justice for all consumers and not merely for some.

Allied to the question of water charges is the question of a national grid. My right hon. Friend the Minister of State dealt with the problem of a national strategy, and he emphasised that matter. We must urgently pursue it. If we needed a lesson, we had it last summer.

The Welsh National Water Development Authority and the Severn-Trent Water Authority are pursuing a project at Rhayader, in my constituency, where they propose to build a new Craig Goch dam. It will be a tragedy if the project goes ahead without national considerations being taken into account. The present proposals are sufficient only to cover the needs of those authorities, which can afford no more between them. If we are to meet the needs of the country—of the wider population in the Thames Valley, the South-West, Wessex and various other parts—through a good system, a larger dam should be built.

It would have cost £100 million to carry out the original proposals. The smaller dam now proposed will cost £40 million. There is provision for it to be extended later, but it would be nonsense to have to do that. I hope that I can persuade the Government to become involved now and not allow the plans to go any further without a national involvement, taking it out of the hands of the two authorities and thus dealing more and more with national rather than regional questions. The regional water authorities are merely arbitrarily-decided bodies. Their boundaries are not sacrosanct.

I hope that my right hon. Friends will have discussions with all the authorities and assure them that they will safeguard the interests of the consumer in the country as a whole, with a certain amount of water being supplied from one source rather than there being a proliferation of reservoirs. The dam to which I have referred would be an exciting project. If hon. Members refuse to give a Second Reading to the Bill, partial solution though it is, the House will place me in a difficult position.

There are those who advocate selling water. We in Wales have plenty for sale, but I have always opposed selling it, because I have believed in a standard price throughout the country. I have never believed that a natural commodity such as water should be up for sale from one area to another, any more than that there should be differential pricing for coal, electricity or oil supplied from one area to another. But where do we draw the line? Do we sell water from Wales as a unit or from my constituency, the major supplier in the country, to every other area, including Newport, Cardiff, Swansea and Birmingham? I could easily advocate that my small area should benefit completely from such a sale. That illustrates the difficulties of transferring water by sale from one area to another. The Bill is a small step to try to achieve some justice for my constituents. If that step is not taken, I shall be forced into the camp which says "Let us sell the water." I shall have no alternative.

Some hon. Members say that the Exchequer should make up the equalisation, that it should not come out of the pockets of one section of the community and be put into the pockets of another. Whichever system is used means a transfer of funds. I do not like the rating system, but until we have a better system the Bill would satisfy some of my constituents and make them see that we are out to achieve more justice in the long term.

There is one other burning issue in connection with charging for water—one that is a hobby horse of mine. I refer to the proposal by the Welsh National Water Development Authority for direct billing. That proposal is a farce in this day and age. The authority might save a few pounds, but the overall cost to the consumer would be enormous. We should see that the proposal is not implemented. If water is to be chargeable on the basis of the rateable value, it is sensible to send out one bill. I appreciate what the local authorities feel when the rates and water charges are lumped together. The authorities have been blamed for what people have seen to be increased rates. We must devise a way of showing that water is not a local authority charge, but we do not want to go through all the rigmarole of separate billing for this one commodity.

I hope that hon. Members will take a sensible view and give the Bill a Second Reading.

6.6 p.m.

Mr. Geoffrey Finsberg (Hampstead)

I strenuously oppose the Bill, for a wide variety of reasons.

It is difficult to follow the argument of the hon. Member for Brecon and Radnor (Mr. Roderick), who asked us not to be parochial. I have yet to hear support for the Bill from the Labour Benches, except from Welsh Members. [Interruption.] I exclude the Minister, but he has been running around and I am not sure where he has landed up. We may learn later. I shall deal later with the right hon. Gentleman's points about the rate support grant, which are utterly fallacious. The story that is constantly spread about, that London has done well out of the grant is not true. I shall quote what I regard as an authoritative document on that subject.

This is a bad Bill for many reasons. First, it is bad for the whole country because its basis is to upset good management techniques. Secondly, it will cost the majority of water consumers more money. Those facts cannot be gainsaid.

I do not deny that those in the South-West and the Welsh water areas—the domestic consumers in particular—are paying more than the average. I appreciate that in the South-West that may be largely due to the influx of tourists, but the proposals are not the way in which the South-West should be recompensed, at the expense of other people.

In any case, the Bill does not tell the whole story. I challenge any hon. Member who has to pay rate bills to be frank and admit that, like the average householder, he does not look at his water rate in isolation from his general rate. He thinks "Heavens above! Look at the rates I have to pay." In many premises where rents are inclusive of general and water rates the two are lumped together anyway. I believe that most people look at their rate and water outgoings as one item. Therefore, I should like to analyse what happens in a few areas, taking the year 1975–76.

In the Welsh water area the water rate was £18 and the average general rate £59, making a total of £77. In the English metropolitan districts the corresponding figures were £18, £89 and £107; in the English non-metropolitan districts they were £18, £96 and £114; and in London they were £16, £149 and £165. In Devon and Cornwall the amount payable for water was £21, but in Devon the general rate was £58, making a total of £79 and in Cornwall it was £60, making a total of £81. Those in the Thames area paid double that amount. That is the burden being placed on that area already, before the effects of the Bill are felt.

The Daniel Committee was set up in 1974 because there were many problems arising from a direct comparison between, in particular, the Severn-Trent water charges of 4.8p per pound rateable value and the Welsh charges of 11.8p per pound rateable value. In the light of average bills paid, the Welsh paid nearly 40 per cent. more than the consumer in the Severn-Trent area. By 1976–77 the difference came down to 20 per cent., and is probably not unfair because the Welsh consumer used more water than a consumer in the Severn-Trent area. One must accept that what Daniel was set up to consider has been overtaken by natural events. Plainly, I cannot rule out the possibility that the Bill represents Danegeld in respect of devolution and we all should know that Danegeld does not pay off.

Mr. Gwynfor Evans

I hope the hon. Gentleman will take into account the fact that earnings in Wales are only 70 per cent. of earnings in England.

Mr. Finsberg

Indeed I do. I am half Welsh and I know a fair bit about Welsh problems.

I have no hesitation in speaking against this Bill. The Welsh and the people in the South-West may feel that the formula involving pence per rateable value shows that they do not do too well. I suggest that what counts is the actual cash paid by the domestic consumer. On that basis my figures are conclusive. They prove that people in Liverpool, Manchester, Birmingham, Leeds and London will be badly hit and unfairly treated.

The Welsh and Anglian Water Authorities do not always do their best to maximise the revenues available to them. Both authorities give commercial users a rebate of 75 per cent. against only 50 per cent. which is given in the Thames area. There may be good reasons for encouraging industry to go to areas in Anglia and Wales, but, on the other hand, there are many areas in London where unemployment figures are higher than they are in many areas in Wales and Anglia and where there have certainly not been rebates as great as 75 per cent. to the advantage of industry.

The condemnation of this Bill is almost universal, and comes from, among others, the Association of County Councils, the Association of District Councils, the London Chamber of Commerce and Industry, and the London Boroughs Association. And it is worth mentioning that Thames takes no Welsh water. I do not accept that what was said by the Water Planning Unit several years ago is necessarily correct today.

We in London may be accused of being interested only in our own problems, but that is what Members of Parliament are for—to represent the views of their constituents as well as the broad national interest. That interest is quite clear.

I have quoted the views of the local authority associations. I now wish to quote the Association of Metropolitan Authorities which has issued a document from which I intend to quote and which demolishes the argument put forward by the hon. Member for Brecon and Radnor. So far as I know, there are at least two major Welsh authorities which are members of the AMA and which will benefit from equalisation. The document says: Without a doubt, on current information the principal beneficiaries will be non-metered water consumers in Wales, and for reasons which are not established. For the justification of such a statement it is necessary to recall the events of local government and the water industry reorganisations in 1974. Prior to 1974 when the water charge was considered to be part of the charge on households for local services along with rates, relief to ratepayers was given by way of the domestic element. The domestic element in England and Wales in the year immediately prior to reorganisation was the somewhat modest figure of 6p in the £. However, in the year 1974–75 a differential domestic element was introduced which gave 13p in the £ to ratepayers in England and 33½p in the £ to ratepayers in Wales—additional relief to Welsh domestic ratepayers of 20p in the £, a not inconsiderable benefit. We have not heard a word from the right hon. Member for Anglesey (Mr. Hughes) or the hon. Member for Brecon and Radnor about that enormous figure. The AMA document continues: It was understood at the time that the reasons for such a large differential was because of the financial effects on Welsh ratepayers of the costs of local government and water reorganisation A differential between ratepayers in England and Wales has been maintained since that time and currently Welsh ratepayers receive additional benefit over those in England of 17½p in the £. That difference is to be continued in 1977–78. The proposals of this Bill will give additional benefit to Welsh householders and are in effect compensating them twice over for the costs of reorganisation in 1974. Those are the words of the AMA, and we have not heard one word of repudiation from any of the Welsh authorities in membership of that association.

Incidentally, the charge for domestic water does not bear any regard to ability to pay. A uniform increase will be regressive and will hit hardest those low-income households. Whereas rate rebates are possible in the case of general rates, they are not possible for water rates. The burden will hit those who have to pay more with no chance of their receiving any benefit.

I should like to remind the House of the figures that will pass from some authorities to others: from Wessex £86,000; from North West £964,000; from Yorkshire £976,000; from Southern £1,070,000; from Severn-Trent £1,126,000; from Thames £3,845,000.

It is significant that the Secretary of State did not choose to move the Bill—perhaps because he is a London Member. The beneficiaries will be Northumbria £223,000, the South West £1,753,000, Anglia £2,403,000 and Wales £3,688,000. Many of those authorities have already been compensated in the domestic element to which I have already referred.

These are vast figures and must be regarded as a grossly unfair burden on those who have to pay. My hon. Friend the Member for Daventry (Mr. Jones), who spoke on behalf of the Opposition, did not find a word to say in favour of the Bill. So far, other than the Minister and two of his Welsh hon. Friends, I have heard no word in favour of the Bill from anybody. We may hear some favourable comments later in the debate, but so far the drought of sneakers in favour of the Bill is noticeable except from the Welsh areas.

The Bill ignores the vital factor of depreciation. It will tempt water authorities to go away from a sensible depreciation policy and cash in on the best possible benefits available under the Bill.

The hon. Member for Brecon and Radnor referred to direct billing. I entirely agree with the hon. Gentleman. It seems to me that in the Long Title there will be a chance to table a suitable amendment if the Bill is fortunate enough to survive its Second Reading. I look forward to seeing an amendment on the subject of direct billing.

Nobody has argued against equalisation within water authority regions. That is practicable and common sense. However, to cross frontiers is to upset principles of sound management and will reduce the need for efficiency. I do not know why the Minister is making so many loud comments from a sedentary position.

Mr. Denis Howell

I am astonished that the hon. Gentleman uses phrases such as "across the frontiers". That is an indication of his attitude of mind. It bears out what I said earlier, namely, that there are people who wish to persist in having 10 separate water authorities totally unconnected with one another when all our experience shows that the regions are interdependent. Therefore, any national policy must have that in mind in financial and transportation terms.

Mr. Finsberg

The Minister has made a sensible point, which shows his thinking. He means, in effect, "Blow local democracy". That is just what he is trying to do. He will soon be saying, if he is consistent, that there is no point in having a local authority for the West Midlands, that we had better have one authority for the whole country because there is no point in keeping frontiers. When the Minister honourably sat in local government, he would have been the first to say that the problems of different local authorities were essentially different. I do not care how much the right hon. Gentleman laughs. I repeat—the majority of people in this country accept equalisation within authorities, but not across frontiers in this nonsensical way.

Mr. Anderson

I am a little perplexed by the implication of the hon. Member's speech, that there is in some way democratic control of water at the moment. Perhaps he will say what he has in mind.

Mr. Finsberg

It is a somewhat more democratic method than would be advocated when we have some national water body—and that is precisely what the Minister said he hopes to have. I do not want to see that. But I am not going to be driven off course. I am talking about this nasty little Bill, not about the Minister's grandiose schemes which may come about if he does not suddenly become Minister for Solar Energy because we are running out of heat.

A few days ago we discussed the problems of the urban areas and there was no division in the House. The London Chamber of Commerce and Industry, in a letter which presumably has come on to the Minister's desk, says: As it stated in its response to the Green Paper … the LCCI does not regard it as reasonable or equitable that consumers in areas such as Greater London, who have in the past paid for the provision of reliable and efficient water and sewerage services, should now in addition be expected to contribute towards the cost of making good deficiencies in other parts of the country. In view of the increasing concern about the pressures in the Inner City generally"— for instance, Liverpool, Manchester, Birmingham and London— and the ever-increasing costs of London's own public services through rates and fares, the LCCI can see no justification for imposing on London—or on the parts of the country which have provided efficient water services—this additional levy. We have a simple argument to examine. First, the Bill will work unfairly and will penalise those least able to pay. The Bill will help domestic water bills in Wales and the South-West to some degree in the coming year and may prevent them from rising quite so fast, but my information is that in the South-West the increase planned already is about 32 per cent. and in Northumbria 28 per cent. Clearly, therefore, there will still be some rises. In Thames, the rise of 12½ per cent. which is already planned may now have to be as high as 19 per cent. I see no justification for that.

The scheme conflicts with any interpretation of equity and with the present statutory obligations of water authorities. The scheme weakens incentives to the exercise of strict financial management. If there were a completely free vote I am certain that the Bill would fail to get a Second Reading. We on this side will have a free vote, so it cannot be a major crime for any Labour Members to join us. No Government can call a defeat on this Bill a major defeat requiring a vote of confidence. After all, if 30 or 40 right hon. and hon. Members were to join my colleagues and me, who intend to force a Division, it would be difficult for so many to be disciplined. This is a bad Bill and I hope that it is thrown out.

6.24 p.m.

Mr. Robert Mellish (Bermondsey)

Coincidentally, I also followed the hon. Member for Hampstead (Mr. Finsberg) the last time he spoke, when I agreed with him virtually 100 per cent. I do not agree with him 100 per cent. on the fundamentals this time. I agree with the Minister. There is a case, and an urgent one, for unified control of water. It is a scandal that we have 10 different authorities with gravely diversified allocation of resources.

As a result, we have what my right hon. Friend the Minister fairly admitted to be an interim Bill. All this talk about Robin Hoods robbing the rich to give to the poor is all right if the rich are still rich. Some of my hon. Friends know that I would have been the first to agree during my 30 years in the House that the depressed areas should get all possible assistance. To that end I have made some terrible blunders, as I conceded last Friday week, over the denuding of London's resources.

My Welsh colleagues should clearly understand why some of us in London have taken as much as we are prepared to take. Year after year we have been told—I was one of those who said it—that London was fat, bloated and overweight and that it had too many resources, which should be shared among our poorer friends. We responded. We sent thousands of people out of this London of ours with unbelievable inducements. We have paid thousands of pounds to firms, including travelling expenses and cheap rents, to persuade them to leave and go to the North, some to Wales, many to Scotland.

Looking back, one of the most embarrassing moments of my life that I can recall—and I have had some—was the time when I went down almost on my bended knees to plead with 600 of my constituents to go to Scotland. I must have been stark raving mad, especially when one looks at the Scottish National Party. I was successful and got most of them to go.

My right hon. Friend may be surprised that someone like me should say that we are not prepared to support the Bill. But the time has come when those of us who represent London should say loud and clear, in a phrase I used in a speech elsewhere, "Enough is enough." We have gone too far in London. We should now retrace our steps and pull industry back into London somehow.

It may interest my Welsh colleagues to know that in my part of London, south of the river, which used to have a whole area of engineering firms of the highest repute, there is not one of them left. Unemployment is running at 7 per cent. and more. Up to a few months ago, Ministers of this Government and the previous one refused to allow industrial development certificates for anyone who wanted to start up in London. The commandment seemed to be "Thou shalt not go to London."

We are in the middle of a fierce row about the transfer of civil servants. For 300 civil servants to leave my constituency now is a disaster. The Government Chemist is going up to Cumbria. One would think that many chemists up there were waiting for work. I could say a lot about that, but this is not the time or the place.

I am arguing that I and other Members take an entirely different approach today from the approach we took three years ago. My hon. Friend the Member for Brecon and Radnor (Mr. Roderick) rightly referred to what he did—I understand it and I respect him for it—but he will understand that it cannot be argued that London has not given. She has given and given and given until we have just about had too much.

Now, because of a system—these wretched 10 authorities—over which my right hon. Friend has no control, this fat and bloated London will have to find, according to the London Boroughs Association, £3.1 million to be transferred to the benefit of Wales, Anglia and the South-West. With the contributions of other regions, the Welsh authorities will get about £3.4 million.

Until fairly recently I was Chief Whip. It is unbelievable that I should now be talking about voting against a Bill promoted by the Government of my own party. If I were Chief Whip now, I would have been doing my best to make sure that the Bill never saw the light of day. I do not know how much influence I would have had, but I would have tried, and had the Cabinet insisted on the Bill going before the House my position as Chief Whip would have been in doubt.

The Minister knows my regard for him and for his Department, but it is too much to ask of hon. Members representing London that they should vote for the Second Reading of a Bill that the Minister himself admits is only an interim measure because the Government have not had the time, resources or policy to carry out a complete reform of the water system.

I respect my hon. Friend the Member for Rhondda (Mr. Jones), who is Under-Secretary of State for Wales, for what he said in reply to an intervention from me during Question Time—that he was one of those who advocated that the amount of rate support grant given to London should be larger. I hope that did not mean that my hon. Friend would ask Wales and Scotland to receive less rate support grant. But rate support grant comes out of national taxation. It is money that has been given by the nation as a whole. This wretched Bill is asking London to give more money in spite of all the heartaches that London has already had to suffer. There is unemployment of between 7 per cent. and 10 per cent. in some parts of London. In Tower Hamlets the unemployment rate is 14 per cent. We cannot get industry back to London, and London is crying out for the development of its docklands. London's record at giving is as good as that of Wales and Scotland. It is always giving and hardly ever taking.

I regret that I cannot support the Bill because I am a Londoner. London has given more than enough, and I beg the Minister to think again. If the Bill is lost—although I expect that it will be carried—no one need feel ashamed. It is a bad Bill and it is only an interim one. Let us have the next Bill that the Government have promised on the subject, and I shall be only too pleased to support it.

If Wales is in trouble, London should not have to provide for it. Wales should be provided for out of the nation's resources as a whole.

6.33 p.m.

Mr. Jeremy Thorpe (Devon, North)

I have never before seen the right hon. Member for Bermondsey (Mr. Mellish) performing on water. It was a sparkling performance. I only ask myself whether he did violence to his conscience when he was Chief Whip. The right hon. Gentleman hypothecated what he would have done in this situation if he were still Chief Whip. I ask myself how much agony he must have sustained in the interests of his party over the years. He looks healthy enough, so perhaps there were not many similar occasions, but I offer him the sympathy of his party in his deep afflictions.

This is a highly contentious matter in the South-West. A leading member of a local council said in a speech the other day that it was a "burning issue". The position in the South-West is different from that in Wales. The Welsh have suffered what they regard as depredations upon the Welsh valleys. We have no valleys to be preyed upon. During the summer we suffered from extreme drought. The emergency measures cost about £1.5 million and about another £2.5 million in extra capital costs.

It is a frightening experience to live in a region where one simply does not know what to do because there will be a total lack of water in two or three weeks' time. It is eerie to find an area looking like a desert, with trees and crops dying and the cattle looking slim. The hon. Member for Hampstead (Mr. Finsberg), whose party opposes devolution because it thinks that it will break up the unity of the United Kingdom, now complains about abolishing frontiers. I thought it was the nationalists who wanted to create frontiers, not the Tories. The hon. Member for Daventry (Mr. Jones), who said that we were satisfied with the 1973 Act, should ask his colleagues from the South-West about this.

But at least before 1973 there was a form of election and the authorities were run by elected councils. Authority members are now appointed or indirectly elected. In the South-West there is great dissatisfaction about the effects of reorganisation. We have had to face the most enormous capital outlay to deal with the drought. It is the most extraordinary thing that, when the Almighty is over-generous and there are floods, Exchequer support is immediately given, but when He is parsimonious and there is drought the charge is put upon the local water authorities. There were floods in Lynton and Lynmouth in 1952 and an Exchequer grant was immediately given. Perhaps it is inevitable that those who come from areas that will be recipients are in favour of the Bill while those who represent areas that will be paying out are opposed to it. It is inevitable but unfortunate.

There are two principles at stake. Upon the first the House is united. We as a nation are prepared to help needy areas for any purpose. This point was eloquently made by the right hon. Member for Bermondsey. If such help is to be given, however, it should preferably come out of the national Exchequer through national taxation and not, as in this case, come from a levy on consumers. I have sympathy with that point and there is difficulty here.

The general concept of help being given by the more affluent to the less affluent areas is one that we all accept. The rate support grant itself has been an acceptance of that concept by Governments of various political persuasions. The Minister mentioned the £19 million—as well as the £43.5 million—of additional money that will be made available to the London area and other metropolitan areas for current expenditure. He mentioned house building and improvement in stress areas. There are educational priority areas that receive special Exchequer funds, and there are industrial development areas where, again, there is special help. I made my maiden speech on that subject when the then President of the Board of Trade introduced industrial development certificates in 1959.

There is no conflict in the House about the need to help areas that have special problems such as housing deprivation, education, unemployment, water or amenities. The House accepts that these should be subject to equalisation throughout the country. But how are we to do it? It cannot be done through the rate support grant. The 1973 Act knocked that firmly on the head. It can be done through some form of Exchequer grant raised through a Budget, new taxes or Supplementary Estimate. It would be interesting to know why the Government have abandoned that course of action, which would have had little opposition in the House. Instead, we are being asked to pass a holding measure until we can achieve some form of equalisation and until there is a national water grid.

When one reaches the situation that one's constituency has only two or three weeks' water supply left, when one is discussing at what age people will be exempt from using standpipes and how to deal with applications from those who should not have to use standpipes on disability grounds, and when one is telephoning the Ministry to find out whether water will be brought in by sea or tanker, in this country one thinks not about frontiers but about any region that may be a source of water.

I do not believe that we shall have a sensible water policy until we have a national water grid. I want all water supplies to be nationalised. That need not lead to a tremendous bureaucracy. It can be rationalised and made subject to elected authorities. That is another reason for having regional elected authorities as part of a federal system of devolution. If it does not happen, the United Kingdom will break up. However, that is as irrelevant a point as one or two of the issues raised by the right hon. Member for Bermondsey, so I feel that I am in good company.

I understand that the Bill is a holding measure. May I give a word of advice to the Government—because I intend to vote in their Lobby tonight. Perhaps they will indicate why they abandoned the concept of raising the money through direct taxation. There may be good reasons for not doing that, and perhaps they will carry many hon. Members with them if they conconvince us about why their proposed formula has been used.

I hope that the Government will give us an undertaking that this is a temporary measure pending root-and-branch reform. We are grateful to the Minister for having nominated someone for the South-West Water Authority who will represent the interests of the North Devon area where last summer we had a major drought problem. We did not have such a representative before, so democracy is slowly breaking out through ministerial appointment.

The figures are pretty terrifying. In my area, on the unequalised system, we shall be paying 45 per cent. more than the national average. The Thames authority will be paying about 18 per cent. less than the national average. The effect of equalisation will be to reduce the 18 per cent. to 12 per cent. for the Thames authority and, in our case, the 45 per cent. to 28 per cent. Therefore, there will still be disequilibrium. But the Bill is a small step in the right direction. We are dealing only with the historic debt before 1st April 1976.

The Minister must consider Clause 1(4)(b) and define whether "premises" is meant to include domestic premises. If it is, there must be an amendment, which is possible. This is an attempt at equalisation. It may not be the most perfect, but it is a temporary measure to deal with a drastic situation.

People may say "You may have higher water charges, but what are you paying in rents and rates compared with other parts of the country?" We can always make such comparisons. In the area for which I speak, in 1975 average wages were £8 a week less than the national average and £2 less for women. Unemployment in my constituency is well over 8.8 per cent. Therefore, it is an economically deprived area.

Both Labour and Conservative Governments have made tremendous efforts to bring new industry and new employment to such deprived areas. The fact that they have not succeeded is due partly to bad communications and partly to other reasons, but the need to pump some red blood into these areas is recognised. I hope that some water will be pumped into them, together with, through the Bill, some cash, so that we do not have to face astronomic charges in addition to all the other charges which low-income, high-unemployment areas have had to face for the last quarter of a century.

6.43 p.m.

Mr. Dafydd Wigley (Caernarvon)

Inevitably, Wales has been mentioned several times in this debate. As the right hon. Member for Anglesey (Mr. Hughes) said, water is an emotional subject in Wales. It could even be described as being inflammable. That is so from my experience and the experience of people in my part of Wales.

Perhaps the House will forgive me if I quote from a constituent of mine, one of Wales's most eminent poets, writing in the English language, R. S. Thomas, who in "Reservoirs" wrote: There are places in Wales I don't go: Reservoirs that are the subconscious Of a people, troubled far down With gravestones, chapels, villages even. That may seem an emotional quotation with which to start my speech, but it touches on a nerve which is very much alive in people in Wales and probably will be reflected, if there is a Division tonight, in the fact that Members from Wales will be voting across party lines, if what we have heard from Conservative speakers is right.

I am of a generation which is overshadowed by an incident which happened in the Tryweryn Valley in the 1950s, in the old Merioneth. The valley, in an area with few resources, was taken over against the opposition of Members of Parliament of all parties in Wales and of local people to be made a reservoir for Liverpool.

I represent an area which has suffered intensely from the effects of the Water Act 1973. For example, an industry which initially would have employed 200 people—200 jobs which were very much needed—was lost to my area because the price of water to industry was 50p per 1,000 gallons compared with 25p elsewhere. Water was abundant in the area and it was easy to catch it, yet the price was prohibitive.

Therefore, hon. Members may not find it surprising that we in Wales feel strongly about this subject, and there must be an answer to the problem. The Bill is a small step in the right direction and we welcome it, but it concerns a historic grievance which goes further than the matters covered by it.

The problem has existed for longer than the period since 1973. I did a study in the mid-1960s comparing the price of water to industry in Wales with the price to industry in Liverpool and Birmingham, which received water from Wales. In Liverpool the price was 1s. 9d. per 1,000 gallons and in Birmingham 2s. 3d. per 1,000 gallons, compared with 4s. in the old Flintshire. The irony was that Flintshire got its water from Liverpool, which had taken it in the first place from Wales.

Therefore, understandably Wales has an axe to grind, but perhaps we are now seeing a small movement in the right direction. I do not suppose that the Minister will concede it, but we in my party feel that the present movement, although not going as far as we would wish, is a response to some of the pressure which we in Plaid Cymru have been mounting for a considerable number of years.

Mention has been made by the Minister and by others of the Daniel Report on the investigation into the question of the sale or transfer pricing of water or equalisation. I was pleased that that report, commissioned by the Government, acknowledged the possibility of selling water. As the Minister said, and as the hon. Member for Brecon and Radnor (Mr. Roderick) underlined, the options which were open were equalisation or sale. To use words used in the devolution context, the status quo is not an option. It is not an option for people such as those in Radnorshire whose water was sold to them at seven times the price at which it was sold to people in Birmingham, having been extracted from their area.

I refer briefly to the attitude of my party to the extraction of water from Wales and the use of it in other areas. We regard water as a mineral raw material of immense value. Last summer we realised how immense its value was, because, industry was grinding to a halt without it. We do not believe that there is much difference between the concept of selling oil or hay and the concept of selling water. It can be argued that all are God-given. There is a coherent argument for selling it. It is a question of policy.

We in Wales live in an area which suffers from the rain, and it is reasonable that we should derive some slight benefit from that inconvenience. We also believe that, if our resources in Wales are to be properly organised for the benefit of ourselves and of people elsewhere, not only the sale of water needs to be recognised but we need a national authority which is coterminous with the whole of Wales, including Montgomeryshire.

The charge which we have mentioned in the past of 10p per 1,000 gallons would give £10 million to £15 million a year to Wales compared with the £3 million or £4 million that will result from the Bill—money which could be used in developing deprived areas of Mid-Wales. I am sorry that the right hon. Member for Bermondsey (Mr. Mellish) is not present. If he had to suffer from the lack of public transport and of other facilities and amenities from which people in many parts of Mid-Wales suffer, and which are the result of a historic process over decades, he would perhaps have a different attitude towards the transfer of resources which we are discussing.

We want the money mainly to develop the catchment areas themselves but also so that money will be available to develop a national grid so that we can overcome our recent problems in Wales. It was ridiculous last summer that water from Welsh reservoirs had to be transferred from the Severn to supply Bristol so that water drawn originally from other Welsh reservoirs could be transferred from the Wye to ease the problems of Glamorgan and Gwent. We want to see a grid developed to avoid this. We are willing to pay, provided that we can have the benefit of the price of water going to those who need it.

We are not opposed to development of our own resources for the benefit of others, and we recognise that other areas will need water in the future. It is clear that Wales is one of the few areas from which that water can come. But we want to make sure that we gain some benefit from that water.

I refer in passing to remarks made by the hon. Member for Brecon and Radnor on the Craig Goch scheme. In view of certain things which have been said about the attitude of my party to that scheme, I must point out that we are not against the scheme, but in considering reservoir projects we lay down certain conditions—that communities are not moved wholesale, as at the Tryweryn reservoir, and that good agricultural land is not used up. Those are the two main criteria. The criterion of safety is also a prerequisite. The Craig Goch scheme can certainly meet those criteria, and to that extent I welcome it. But I underline the point made by the hon. Member for Brecon and Radnor, that if there is to be a second phase at Craig Goch—in other words, looking at more than the requirements of the two authorities that are co-operating in its construction—that should be done now, because there could be serious safety implications if certain types of reservoirs were constructed in two phases. The whole project should be thought out right from the start.

The Minister made a number of points and answered an intervention of mine on the subject of cost to industry. I spoke earlier of the effect which the price of water can have on industry. I am sorry to say it, but I feel that it is somewhat disingenuous of the Minister to say that industry can cope for itself because it has the ability to turn off the water. That is pushing his argument too far. I shall quote what was said by Mr. Ian Kelsall, the secretary of the CBI in Wales: My reaction to the Bill is one of concern that firms which did their best during the drought and responded to appeals for savings now find that they have to pay increased charges. This will not be very well received by industry in Wales. Yet that is what the Minister said—that companies have shown that they can close the tap and use less water—and that is his argument for not allowing any benefit to metered users under the Bill. There should be some provision for metered users.

If I disagree with the Minister on certain points, our disagreement with the Conservative Front Bench spokesman is far more fundamental. He said that the Bill was a political response to Wales. If the Conservative Party is willing to leave Wales with the imbalance which it has at present—the hon. Gentleman's figures do not tally with whole reams of figures which I have for different years showing the imbalance between Wales and other areas in the last decade—and if the Conservatives are not ready to respond to that situation, people in Wales will be justified in thinking, as we are encouraging them to do in the devolution debate, that they should question the attitude of the Conservative Party towards Wales in general.

In reply to the right hon. Member for Bermondsey, I would point out that the level of services in Wales is much lower than in London and the per capita personal income in my constituency is only 55 per cent. of the United Kingdom average. We cannot expect my constituents to live with such high levels of charges. It is ironic that last summer they had to pay more for water when their incomes were so much lower. We have had whole valleys drowned in Gwynedd to provide reservoirs, yet when the drought comes there is no water in Wales even at the increased charges which people have to pay. It is not surprising, therefore, that people there and elsewhere in Wales would not share the attitude of the Conservative Front Bench or of the right hon. Member for Bermondsey.

Mr. Eldon Griffiths

I venture to intervene because I had a lot to do with the 1973 Act. Is the hon. Gentleman aware that, specifically as a result of pressure from Welsh authorities, there was set up the Welsh National Water Development Authority? If the hon. Gentleman is critical of the situation in Wales, ought he not in the first instance to lay it at the door of that authority, and, since that specific Welsh authority has not done particularly well—or so he says—why does he assume that specific Welsh authorities would do any better in any other respect?

Mr. Wigley

I respond to that question with pleasure, since it goes off at a tangent which I am happy to follow. First, our model for a Welsh national authority is one which would have the power to charge for water, and had that Welsh authority had that power it would have been possible, as I say, to raise £10 million to £15 million—

Mr. Eldon Griffiths

It has the power.

Mr. Wigley

The hon. Gentleman says that it has the power, but I discussed that matter with the directors of the authority in Brecon, and the interpretation of the clause relating to charging for water going elsewhere is disputed. The idea of charging 10p per 1,000 gallons for water is an interpretation of the Act which is disputed by people involved in the authority. Had the extra £10 million or £15 million come to the Welsh authority, however, it could have done very much more. The hon. Gentleman's Government, moreover, delineated the authorities making up the area, cutting out a great water conservation area, namely Montgomeryshire, where the Clwyedog Valley is now a reservoir covering land which was once farmed by my wife's family and by my great-grandparents as well. It goes home deeply when such areas as that are cut out of the territory of the Welsh National Water Development Authority.

Mr. Wyn Roberts (Conway)

The hon. Gentleman has made several references to the Conservative Front Bench. I am sure he is aware that the Shadow Secretary of State for Wales, my hon. Friend the Member for Pembroke (Mr. Edwards), publicly declared himself in favour of partial equalisation of water charges at the time of publication of the consultation document.

Mr. Wigley

Yes, and I welcome that glimmer of light on the road to Damascus for certain Conservative spokesmen in Wales. I welcome the fact that they are taking attitudes to matters in Wales different from the attitude of their colleagues in England. This is clearly related to our argument on the need for devolution and the need for an Assembly to show a different response and consequently different policies in Wales from those appropriate for England. That is the very case which we make, and I am glad that the hon. Gentleman made his intervention.

We welcome the Bill as a step in the right direction. It is not enough, but it is a first step and I am sure that it will be welcomed by the people of Wales. We have reservations about the charges to industry, and the lack of financial control in a transfer system of this sort presents a problem. Second, we believe that the reference to 1st April 1976 seems somewhat arbitrary in regard to capital expenditure which has been undertaken before that date, which is the key to determining equalisation payments. We consider that there is need to recognise that a lot of money must be spent in Wales to make up for the situation which existed at that time. That, therefore, is a weakness.

Moreover, we regard the Bill as weak because it does not allow for the sale of water. In addition, even if we accept the principle of equalisation, we consider that it does not go far enough when we shall still be paying 28 per cent. above the average.

We welcome the Bill, therefore—to adopt the words of one hon. Member—as a measure of equalisation. If this is the single measure, we look forward to having the double.

6.59 p.m.

Mr. Ronald Brown (Hackney, South and Shoreditch)

I cannot share the enthusiasm for the Bill expressed by the hon. Member for Caernarvon (Mr. Wigley). It is not a small measure. I am sad that such a half-baked and bureaucratic scheme has been introduced. I say that because I believe it to be ill prepared. I believe that it is deliberately misleading and that it is also unfair. It is small wonder, therefore, that it is almost universally disliked. The greater condemnation, however, lies in the attempt by my right hon. and hon. Friends to set out to create bad feeling between one area and another, setting Wales against England and Anglia against London. This legislation is positively and wholly divisive. I cannot imagine anything more divisive.

Everyone, including the Daniel Committee, has drawn attention to the fact that before 1973 there was no information on water charges, other than those in London, on which a scheme could be calculated. The Layfield Committee made the same point and said that the Department of the Environment could not produce any reliable analysis of the increase in water charges in the former rating authorities. A Bill presented on that basis—even though it is said to be only a first step—cannot but be ill prepared. It is misleading because it implies that London has been getting its water cheaply.

I tried to discover the average domestic household bill in Wales between 1967 and 1977. I was unable to get those figures, but I learned that the London charges had increased every year between 1967 and 1976 and that they rose by £2 a year over the last three years. I am not suggesting that this is a lot, but the implication in the Bill is that the London charges have remained stationary while others have been increasing. In fact, the London charges have been increased every year.

The Bill is unfair because its proposals apply to only a small group of people in London. It is nonsense to talk of equalisation when 25 per cent. of consumers will not be covered by the Bill. The Government have deliberately left out industrial and commercial consumers, and we shall have the silly situation of a person on one side of a street being asked to pay more for water while his neighbour on the other side will not have his charges increased. This is nonsense.

We cannot justify exempting such a large number of people from a payment which is alleged to be equalisation. Anyway, London has already been equalised. The inner London area consumers pay more to the Thames Water Authority than do those in outer London. We are not objecting to the principle of equalisation; we are saying that the Bill does not include it.

The new "in" word is "rawp". It relates to the Resource Allocation Working Party. London has been rawped over the National Health Service, the rate support grant and water.

My right hon. Friend the Minister of State said that London had received £19 million in rate support grant. I was expecting him to say that because I have heard him rehearsing that speech in the Tea Room every day for the past three weeks. I have always told him that he should also inform his listeners that, although London had been given £19 million, it had had £400 million taken away this year and £300 million last year. When my right hon. Friend says that out of the goodness of his heart he and our Welsh colleagues are giving London £19 million, he does not mention that they have taken £700 million. My right hon. Friend never understands this argument. Perhaps I should give him a tutorial on Saturday morning so that he appreciates the point.

Mr. Denis Howell rose—

Mr. Brown

I should warn my right hon. Friend that I have a note of his rateable value which I intend to use if he insists on intervening. It is up to him.

Mr. Denis Howell

The seminars which we have conducted in the Tea Room have obviously had a beneficial effect, because my hon. Friend's speech is much more moderate than those he has made in the Tea Room.

Mr. Brown

It is moderate only because I have been called so late in the debate that everyone else has used the arguments which I wished to put. My anger against the Bill has not subsided.

If the Government think that one area needs special help, there are many ways of dealing with the problem—though my right hon. Friend should remember that the problem was brought about in the first place by his own Department in 1973. Hon. Members should not think that this was a misunderstanding or that we did not know what was going on. My right hon. Friend's advisers started it. Now, those same advisers are telling him how to overcome the problems which they created. They have had two bites at the cherry. The Daniel Committee referred to the first when the advisers decided that they should do something about the nonsense which they had created and decided upon the differential rate. The committee pointed out that in Wales this varied from 11p in the pound in Cardiff to 39.5p in Radnor.

When the present Government took office, they decided that they did not like that stystem and the advisers changed course again and introduced a flat-rate grant of 13p in the pound in England, rising to 33.5p in Radnor. The result was that some districts in Wales paid less in general rate, water and sewerage charges in 1974–75 and 1975–76 than in 1973–74. The claim of my hon. Friend the Member for Brecon and Radnor (Mr. Roderick) that areas such as his constituency were heavily burdened is not supported by the Daniel Committee.

Mr. Roderick

Is it not a red herring for my hon. Friend to bring in the general rate since this is a payment for services, which are better in inner cities than in Radnor?

Mr. Brown

That is not what the Department of the Environment would tell my hon. Friend. I have taken Ministers and officials round my constituency many times. I am ashamed of parts of my constituency, but I should gladly take my hon. Friend round because that would correct his impression.

My point was that water charges were ameliorated by the method that I mentioned. That was the criticism made by the Daniel Committee. It said that, if only more time had been taken to explain to the people of Wales what that help was about, they would not have been so angry over the water charges. The committee said that no time was taken to explain to the Welsh people why they were being given that enormous amount of help. It was specifically for water rates. It seems to me that when my right hon. Friend talks about relying on his advisers for giving him this Bill and future Bills he should take another look at their past track record, because it is not particularly good.

I support hon. Members who take the view that we are not arguing that no help should be given to other parts of the country. Of course it should be given. But I regret the fact that my right hon. Friend has not taken the opportunity to look at another way of doing it. Whatever other ways there are, one thing is certain —this is the wrong way. It is not even cheap.

When I found that I could not get a sensible answer from Ministers on this matter, I thought that perhaps the Bill was a sop for the Welsh nationalists, but from what I have heard tonight I do not think that my right hon. Friend will get very far there. Then I thought that perhaps I did not understand it properly. The more I hear from my right hon. Friend, the more I believe that that is possible. I listened very intently to what he said, but I am afraid he has not persuaded me that the Bill will resolve the chaos which has already been created by his Department in various parts of the country.

Instead of putting the matter right, my right hon. Friend is tinkering with it. He is using extravagant words such as "This is Socialism", and he cannot understand why I am not one of those Socialists. This Bill is a smokescreen for the abject failure of his Department and its unwillingness to deal with the matter properly, simply because he will be called upon to find the money. That is the root of the whole problem—he would have to find the money to do the job properly.

The Bill embodies the new process of "rawping"—doing what is suggested by the Resource Allocation Working Party. But I call it tinkering around and asking for something from someone regardless of whether he can afford to give it, and giving it to someone regardless of whether he needs it. My right hon. Friend's Department has failed in a situation where it had a lot of good will from the local authority associations. The Department has refused their help and it has refused to talk meaningfully about the problem, and in doing so it has achieved something which no other Department has ever achieved: everyone is against it. Even those who will be getting the money are being rather humbuggish because the time will come when they will say that they want even more.

My right hon. Friend has chosen a course of confrontation instead of cooperation, of hostility instead of helpfulness. He is driving his hon. Friends to a course of action which can only lead to disaster. Even at this late stage, I urge him to discard the advice he has received from his Department and to come back to sanity and decide tonight that this is not the right way to deal with a difficult problem, especially when he has a whole series of other options.

7.15 p.m.

Mr. Michael Morris (Northampton, South)

I have listened to speeches from the hon. Member for Hackney, South and Shoreditch (Mr. Brown) for well over 10 years now, and on every single occasion he has quoted statistics they have been colourful, but they do not always stand up to the cold hard light of day.

The rate support grant for London may have gone down in total, on a percentage and per capita basis, but I refer the hon. Member to the experience of the non-metropolitan counties in this regard. I am a member of one such county, and it is my area and others like it, particularly the expanding towns, which have had the burden not only of depreciation in the rate support grant, but of the population moving out from the hon. Member's constituency and others in London.

My hon. Friend the Member for Hampstead (Mr. Finsberg) said that in London the water rate bill is not considered to be separate from the ordinary rate bill. Outside London, and certainly in Anglia, it is considered a separate charge, and it is not a charge which can be lightly tossed aside. It is a couple of quid. It is a substantial sum of money and has gone up by a lot every year for the past three years. In fact, it has gone up 30 per cent. a year.

Mr. Ronald Brown

Since he has referred to me, would the hon. Member for Northampton, South (Mr. Morris) tell the House that from 1968 to 1971 the major discussion he had with me was when he was a councillor in Islington, and he urged me, as his Member of Parliament, to do something about the rate support grant?

Mr. Morris

Yes, and I am pleased to say that following my representations the hon. Member did something about it. That was the last time anything was done to help Islington people. I hope that hon. Members realise, therefore, that when pressure is exercised by Tories, the result is action.

The right hon. Member for Devon, North (Mr. Thorpe) was right to say that we should reflect for a few moments on the background of the Bill. When one represents an area—as he does—where the drought has been particularly severe, with only two or three weeks' water in hand, and it has to be worked out who should and who should not get stand pipes, this is an extremely worrying factor. This is a frightening situation, and something we do not easily forget. Long before the drought there was great unease in the country about the way in which our water was organised. There is great disquiet today, and there has been ever since reorganisation, about representation and control of regional water authorities. Each of us in his inner heart knows that there is not always effective local representation and control on regional water authorities.

Mr. Eldon Griffiths

Does my hon. Friend agree that in the Committee stage of the reorganisation Bill, following representations made from all sides, we wrote into the Bill quite specifically the provision that without exception the local authority should be in a majority on every regional water authority.

Mr. Morris

My hon. Friend may have written something into the Bill, but that does not achieve success in terms of getting all those representatives to a meeting at the same time. One has only to look at the committee minutes of any regional water authority to see that because there is only a bare majority of local authority representatives they do not have control over key decisions, because there is not always 100 per cent. attendance.

Mr. Eldon Griffiths

That is their fault.

Mr. Morris

It may be their fault, but the fact remains that there is a wide dissatisfaction on the ground.

Concern has been expressed about direct billing. We have the farcical situation in which regional water authorities propose to undertake their own direct billing when for many years this has been done perfectly adequately by the old councils and could still be done by the present district councils. There were rumblings about this before the drought. We should not forget also the moratorium on capital water projects. Houses can be sold and completed when they have no water laid on, and even after six months they still have no water. This situation follows from the drought, and it is crazy.

If the Minister wishes to deny what I am saying he should read the report, in Municipal Engineering and Environmental Technology, of specific sites in the Reading area where the houses are completed and sold but have no water, and the builders have been told that they cannot have it for six months.

Mr. Denis Howell

I should be anxious to look into what the hon. Gentleman suggests. I am completely mystified to know how a house can be completed and sold without water supply and a drainage system. There is certainly a moratorium on new contracts, but even in that respect we have asked the regional water authorities, if they are running into difficulties over housing which is outside the moratorium, to lay before us specific cases so that they may be investigated.

Mr. Morris

I am grateful to the right hon. Gentleman for his offer. I shall certainly send him a copy of Municipal Engineering which lists the sites affected. I hope that he will remove the moratorium on them.

I support the Bill in principle, because it seems to have some basis in logic. It seems to me fair so far as it goes. But in supporting it I make it clear that in no way do I see it as the first step towards the grand nationalisation plans that the right hon. Gentleman says will be implemented, even though we have not seen the results of his so-called consultation.

The pricing of goods is always fraught with difficulty, but for the majority of goods and services supplied by the private sector there is an all-United Kingdom pricing system. On the whole, we do not have differential pricing for goods as between one part of the country and another. In the 1930s the majority of the private sector went in for differential pricing, but the experience of anyone involved in marketing is that differential pricing is more costly to implement than a pan-United Kingdom price system.

Let us consider the other end of the spectrum. Among the nationalised industries the Post Office, for example, operates a single rate for the delivery of letters, however near to or far from a post office one lives. That is probably the prime example of a nationalised industry charging one price across the United Kingdom. Take the example of the gas and electricity industries. British Gas sells at a bulk constant price. Regional gas boards, however, charge three regional prices, but even within those three zones the differentials are now being removed. It is the policy of British Gas to operate only minor variations in prices, these being caused by excessive costs depending on the type of offtake. A similar situation, although less refined, operates with electricity supply.

In both the private sector and the nationalised sector, therefore, pricing in the United Kingdom is in tune with the objectives of the Bill in principle.

Mr. Giles Shaw (Pudsey)

I am interested in my hon. Friend's argument about the consistency of the product, but I question whether he is right. Does he not agree that in the case of postage, gas and electricity there is rarely a detectable difference in the assessment of these products by consumers when they receive them. With water, however, there can be vast differences in terms of the chemical content and the quality, which can have a tremendous effect on food industrial processing.

Mr. Morris

My hon. Friend may be right about food industrial processing, but to me a glass of water tastes the same here as it does in Northampton. Those who are more discerning, however, may feel that there is a difference.

Let me turn for a few moments to the Thames Water Authority and to those hon. Members who are pleading that their constituents should not be subject to a levy. I did a bit of research to see whether it was wonderful pre-planning that enabled the Thames Water Authority to impose charges so much lower than everyone else. The fact is that the authority just happens to be lucky in having a large river and the right geological structure to provide it with a plentiful supply of water. All of that, however, was an act of God—not the result of Socialist planning or brilliant anticipation by private enterprise.

Mr.Michael Shersby (Uxbridge)

Does my hon. Friend not agree that London has such a plentiful supply of water because over many years the London boroughs and the Metropolitan Water Board, as a result of a process of careful planning and investment, have established in the Greater London area large reservoirs and an extremely sophisticated system of supply to their consumers? The plentiful supply of water has nothing to do with the fact that the River Thames is there.

Mr. Morris

It may be true that over the years the London boroughs have invested considerably in water equipment. Some of us who represent new towns might reflect that they have somewhat over-invested and failed to anticipate the decline of those boroughs. The logical conclusion to that argument is that there should be some special per capita payment for all those who move out of London to the areas, such as that of the Anglian authority.

Water is one of our primary needs. In the past some areas may have invested a little more in water than others, but it is of such a vital necessity to life that it is important that every part of the country should have the maximum supply available to it. It is obviously the task of individual Members to assess what is in the interests of their constituents and to consider wider aspects. I in no way support the right hon. Gentleman's proposals for nationalisation. If another emergency should arise, there is no way in which I could see nationalisation providing the answer. It is unfair that the consumer supplied by a water company in one of the deprived areas will not actually get the benefit of the levy. It is illogical to leave out 25 per cent. of consumers, but in no way do I wish to see those companies nationalised.

My hon. Friends do this Bill an injustice if they automatically assume that they should oppose a proposal simply because further along the line it might be twisted by the Government to suit the Government's purpose. We must be honest with ourselves. We are dealing here with a public utility. We have no choice. Every home in the country needs water. If the Bill is given a Second Reading and if I am selected as a member of the Standing Committee I shall want to consider making certain modifications, but I support the Bill in principle this evening.

7.30 p.m.

Mr. R. B. Cant (Stoke-on-Trent, Central)

I think that I am unique so far in the debate, in that I shall support my right hon. Friend even though I live in the area of an authority that is one of the losers. I am all for being a great constituency Member, and I hope that I have that reputation, but there are times when we must raise our sights a little and consider the national interest. I believe that this is such an occasion.

I am not suggesting that the Bill is in any way a brilliant example of Socialist philosophy. However, it serves the needs of equality, in that it seeks to assist those who are perhaps not so well off as others. I live in an area which even during the period of the drought did not suffer too greatly. That is because there are large amounts of water underneath our feet, as well as some excellent reservoirs, although I put in the caveat that we shall want another reservoir in the near future.

I am sorry that my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) has left the Chamber. I thought, as my right hon. Friend the Minister may have, that his speech was strangely muted. I seem to recollect, although I never raised my eyebrows to confirm what was being said in the Tea Room, that my hon. Friend was lambasting my right hon. Friend. He was saying "You have stolen our people, you have stolen our industry and now you want to steal our water revenues" or some such philosophical statement. I thought that my hon. Friend's speech would be the high spot of the debate, but whether he felt, as he said, that a great number of the arguments had already been used or that his argument was not as sound as he once thought it was—perhaps he did not feel too well—he did not register any great conviction with me.

Many other Members wish to speak so I shall make only one or two general and non-technical points. To a large extent I think that there has been much ado about nothing. Some of the most rousing and contentious debates to which I have listened in the House have been about non-earth-shaking events. The presence of the hon. Member for Blaby (Mr. Lawson) reminds me of the half-decimal scheme, about which we really became aroused on one occasion.

Mr. Nigel Lawson (Blaby)

Why pick on me?

Mr. Cant

I pick on the hon. Gentleman because he is a monetarist who unfortunately had to be sent to the Whips' Office. I thought that I would just communicate with him.

In a sense, we are making great and grandiose arguments about something that does not amount to very much. I do not want to say that it is not significant if in this day and age a person has to pay out one new penny more, but I find it hard to comprehend and digest the argument about London vis-à-vis Wales, which is based upon an extra £2 a year.

If we read the most recent issue of the document setting out regional statistics for 1976 and extrapolate to 1977–78 the rather ancient figures in that document, we find that the average family earning about £4,750 a year will have to pay another £2 a year because of the new scheme that my right hon. Friend has introduced. I suppose that the figures are rather suspect. In a way they are bound to be, as all the figures mentioned so far have been contradicted, revised or amended. However, I think that the figures demonstrate an order of magnitude. Surely no members of London families need shudder or fail to sleep in their beds tonight because of an additional burden of £2.

The hon. Member for Caernarvon (Mr. Wigley) made a good point when he said that the estimated average income in Wales for 1977–78 would be a mere £3,100 a year. In the interests of Socialism, equity or whatever else, I do not think that the proposed transfer is too horrible to contemplate.

My second point relates to rate support grant. At this juncture I must say how sorry I am that my hon. Friend the Member for Hackney, South and Shoreditch has left the Chamber. He is such a delightful chap. He told my right hon. Friend—I hope he will explain this—that although London received an extra £90 million it lost £400 million. I have made one or two superficial inquiries to try to ascertain what the £400 million represents, as even in this day and age that is a rather large figure. We hear that London has lost 1½ million bricks, so I suppose that anything may happen.

Staffordshire, as a shire county, lost £13 million this year in rate support grant. It will have to increase its rate by 25 per cent. Oxfordshire will have to increase its rate by 30 per cent. I do not think that the reaction should be to go around gnashing our teeth and berating the Government on account of their proposals for London, this great capital city of ours, albèit a rather weak leviathan. We must recognise that these are the facts of life. I should like it otherwise, but if someone says to me as a Socialist—I do not know what my constituents will say—"Are you prepared to make a concession to help the strategy of the revitalisation of the inner cities?", I think I must agree to do so.

Some terrible things are happening in areas such as Birmingham, Liverpool, Glasgow and even London. A great deal of money will have to be spent. If that is necessary, in the Government's wisdom—and leaving aside the argument, with which I agree, that it is the wrong sort of strategy—and if we in Staffordshire have to make a contribution, we shall have to face the fact that it is necessary, although I hope that next year this situation will not be repeated. My hon. Friend the Member for Hackney, South and Shoreditch and others who have spoken about London, this great and proud international city, bewail the loss of £3 million in water revenue. I plead with them to get these matters into perspective.

The hon. Member for Daventry (Mr. Jones), who spoke for the Opposition, accused my right hon. Friend the Minister of playing politics. I do not think that that accusation can be sustained. I do not think that we can play politics in this context or that we want to win hearts and minds in Wales. I do not think that we can be playing much in the way of politics by giving millions of pounds to Labour strongholds such as the South-West or Anglia. I sometimes think that the political antennae of Labour Governments are—

Mr. Roy Hughes (Newport)

—not as good as they could be.

Mr. Cant

Exactly. Every time that we come up to local elections at district or county level they either take away the rate support grant or increase the burden of the water rate. It cannot be true that my right hon. Friend is introducing this scheme because he wants Labour to win the elections in May.

7.40 p.m.

Mr. Robin Maxwell-Hyslop (Tiverton)

I want to talk about the Bill as it affects the South-West, because certain specific features have not been mentioned. For instance, the population of the South-West more than doubles in the holiday season. Under the present system of levying water rates, the people who come in the summer make no direct contribution—a large proportion do not even make an indirect contribution—to the severe cost of providing water at peak period demand, minimum flow of the rivers and minimum levels in the reservoirs.

Once upon a time it was arguable that the representative holidaymaker stayed in a hotel and, because hotels and boarding-houses paid rates, indirectly contributed to rates and water charges. But the representative holidaymaker now goes in for self-catering, comes by caravan or with a tent and makes no contribution to the cost of providing water, a cost which is particularly expensive per gallon because it is the marginal cost of providing water when it is most scarce. Only by some system of national financing can those for whom a very expensive service of this kind is provided partially contribute to the cost of providing it.

Hon. Members who do not come from the South-West do not abdicate from preventing the South-West from collecting and impounding its water in the most economical form. The predecessor of the South-West Water Authority was prevented from making a reservoir at Swincombe. Had that reservoir been made, many of the standpipes erected last summer might not have been necessary, although I do not know whether the reservoir would have been on stream by then.

It was an extremely economical site, being high up, so that gravity would have done much of the work of providing the water, yet hon. Members took it upon themselves to kill the Bill. When hon. Members from outside the area talk about national parks being a national heritage and say that reservoirs must not be put there, they must not be too shocked if they are asked to bear some of the extra cost which they place on the water authorities by preventing them from doing what in their commercial, political and engineering judgment they wish to do.

It is not, as some of my hon. Friends have represented, simply a question of saying that if a water authority in a given area is less efficient its consumers should be penalised, when hon. Members take it upon themselves to deny those water authorities decisions which in other areas they are allowed legitimately to take.

The South-West not only has a tremendous influx of holiday visitors who have to be provided with water but is also an area of dramatically low average income per head. Reference was made to the variation in water charges between different parts of the United Kingdom when comparing rates in Wales and London. What was omitted was a comparison between the facilities available. In many parts of the South-West no public transport of any kind is available. Ratepayers in London would be shocked if they had no public transport available. Public transport in London is heavily subsidised out of the rates, and that is one reason why the rates in London are so high.

It is a somewhat unbalanced argument for those who are opposed to the Bill to suggest adding together water charges and rates and to say that areas with high water charges may have lower rate bills and, therefore, there should not be transfer payments from areas with lower water charges to areas with higher water charges. The reason for the rate charges being very heavy in London is that the services provided by local councils are very sophisticated, although they are sometimes not very efficiently run.

I do not dispute the argument put forward by colleagues on both sides of the House who say, granted the case for a measure of equalisation charges, is this the fairest way to do it, as transfer payments of this kind are in no way related to ability to pay or benefit received? That argument has merit, but the Government cannot entirely be blamed for not yet having introduced an entirely new system of financing water authorities, as that will necessarily go with the reconstruction of local government finance.

After the drought crisis last winter, there was a condition of financial catastrophe in the water authorities in some parts of the United Kingdom, and the Government had to act, and act fast. Although valid ethical criticisms can be made of the method that the Government have adopted, it stands on its own feet as an effective interim measure but not as a permanent feature of our financing.

There is some merit in the claim that water today is much less of a uniquely local phenomenon than it once was. I would want to take issue with the hon. Member for Caernarvon (Mr. Wigley) were he still here, but as he has abandoned the debate I am prevented from availing myself of that luxury. He bracketed together water, oil and other mineral resources. It may not have occurred to him that whereas those other mineral resources, once consumed, are gone for ever, and are not self-replenished resources, water has merely to be impounded and distributed. It recycles itself atmospherically and is totally unlike oil, natural gas, coal and the other minerals to which the hon. Gentleman alluded. I cannot believe that even in Wales that is not true.

Increasingly the problem is, where is it best naturally to impound the water? Having answered that question, we have to distribute the water to where it is needed, and that is not the same place as that in which it is collected.

If the nation as a whole says that there are parts of the country, such as the national parks, which people enjoy visiting and, therefore, we must not impound water there, although it is the sensible place to impound it, the nation as a whole must pay for the privilege of exercising that judgment.

Whereas once upon a time people dug a hole, made a well, drew out water in buckets and hoped that their neighbour's private sewerage arrangements were not in excessive proximity, nowadays water and sewage disposal are properly and sensibly grouped under the same authority—a long-overdue reform—and it is the business of one authority to know what the neighbouring authorities are doing. Where one authority discharges its sewage effluent can affect the quality of life in other areas.

The idea that if a given coastal resort wants to discharge raw sewage into the sea that it is own business, and it should be entitled to do so if it wants the cheapest possible means of getting rid of its sewage, is not nowadays generally shared. It is recognised that society as a whole has a legitimate locus standi in this matter. If people who live 200 miles away say "No", we quite understand. The national coastline is to some extent a national resource and must not be polluted by sewage from one water authority. The people must shoulder their share of the burden for wanting to participate in decisions of that kind. That seems to me to be the other side of the equation.

In so far as the Bill tends to recognise with a broad brush—a very broad brush indeed—the general principles that I have been outlining, I shall feel bound to vote for its Second Reading, because that is what the Second Reading is about. It is about the general principles of a Bill. I trust that the Government will, as they say, regard this as an interim measure and that when the finances of local authorities are put on an entirely different basis the same will be done for water authorities.

The broadest, fairest brush with which one can paint that picture is to say that the amount of water consumed in domestic premises is more nearly related to the number of people in the building than to any other single factor, and not simply add it to some hypothetical rental value on which rateable value is based after certain deductions. It should he based more nearly on the number of people in the house—on the number of people on the electoral register, if one does not want to tax children.

Mr. Arnold Shaw (Ilford, South)

I take the point about the number of people in a house, but does it necessarily follow that because there are more people in a house they will use more water? It has been said that if certain appliances are introduced into a house the amount of water used will rise dramatically even though there are only a few people in the House. I therefore do not follow the hon. Gentleman's argument.

Mr. Maxwell-Hyslop

I do not deny that one could introduce devices into a home which would increase the amount of water consumed, but just as in some water authority areas an additional price is paid if there is a swimming pool, or if a garden hose is used, so it would be possible to say that if someone installs a dish-washing machine a Premium will have to be paid, for the very reason given by the hon. Gentleman. Just as, for commercial premises, many electricity boards—I cannot speak for them all—set a tariff that depends not only on the number of units that are used but on the maximum consumption that may be expected with all the equipment—because that is the maximum demand for which they have to make provision—so arrangements could be made for payment for water. It may be that when the rating system is reformed it will be brought more nearly into line with the per capita charge for persons on the electoral register, adjusted according to income tax coding or something of that kind.

I have much less enthusiasm for fitting premises with meters so that a whole army of people have to be employed reading them. Direct billing has been criticised, and rightly. How absurd it is, as one does not save any part of a council rent collector's costs because he does not collect water charges at the same time as he collects the rent. Postal charges are doubled if separate bills have to be sent out and separate cheques sent in, with the clearing charge that often goes with them. It is pure empire-building, and when that ludicrous decision was taken by the South-West Water Authority the chairman said "I want to be like the electricity and gas boards." If the electricity and gas boards were customer-oriented, they would arrange for people who had both electricity and gas meters to have them read by the same person at the same time and not have them read by different armies of inspectors.

Mr. Colin Shepherd (Hereford)

Why should not the water meter be read by the same gas or electricity inspector or meter reader if we go for the water meter as a means of charging?

Mr. Maxwell-Hyslop

I shall come to that in a moment. If it were considered that the desperate capital cost of equipping and maintaining everyone with a water meter was justified—which I do not believe it would be—at least let the meter be read by somebody who comes to read the electricity or gas meter, or preferably both at the same time, instead of regarding that as a justification for hiring another army of people to look at a dial when one does not always want to encourage people to use the minimum amount of water, on grounds of health and hygiene.

Mr. Michael Spicer (Worcestershire, South)

Does the logic of my hon. Friend's previous arguments lead him to the conclusion that we must abolish the independent water companies?

Mr. Maxwell-Hyslop

They have not led me to any conclusion about that. I have not turned my mind to the independent water companies. There is none in the area from which I come, but if an independent water company can supply water to meet the demand at a lower rate than that provided by a statutory undertaking I see considerable merit in the idea. In other words, if an independent company manages to run itself without attracting the sort of nonsense to which the Minister referred, where everybody wants his own computer, well and good. This is not just a theoretical thing. The South-West Water Authority regards the computer as a sort of fertility symbol that must be acquired. It has to be put somewhere, and therefore one needs extra accommodation and more people to bow down and worship it. It is a well-known phenomenon that when there is a computer it is necessary to find more and more things to do with it to justify having it.

Many a firm has thrown out its computer after getting it. There is a process first of direct billing and then, when it is found that it is not possible to compete with the paper work, a computer is brought in. Having got the computer, more work must be found for it to do, to say nothing of more space having to be found for it. That is not how one meets what the consumer wants, which is to be provided with water in the quantity he wants, at the purity he wants and at minimum cost.

I think that the general approach of the Government to this matter to date has been sensible. On Second Reading tonight, and, I expect, on Third Reading as well, the Government will have my support in the Division Lobby.

7.58 p.m.

Mr. Roy Hughes (Newport)

The hon. Member for Tiverton (Mr. Maxwell-Hyslop) has made quite a reputation for himself as a procedural expert and I have no wish to cross swords with him tonight. I am glad that he is on our side, or, rather, will be in the Lobby, later.

I agree with the hon. Gentleman's opposition to direct billing. We are told that costs will not rise if that takes place, but I do not believe it. We have heard all the speculation about separate computers for use by different boards, and so on, and again the question arises of what is to happen to the people now in local government. I am convinced that those now carrying out the work would not be made redundant.

Despite the opposition of certain of my colleagues on the Government side, I still maintain that the Bill is essentially about equalisation, or is at least a small step in that direction. I contend that that is a principle to which every hon. Member, or at least those on this side of the House, should adhere. As I see it, the Bill is little more than an attempt partially to iron out the variations in charges between different parts of the country.

We know of the unfortunate reorganisation measures that were carried out by the Conservative Government. There was the reorganisation of the National Health Service. We heard a report on that by the consultants this morning. They have described it as remote, costly, bureaucratic, and so on. The same applies, even more so, to local government. Tonight we are dealing with water reorganisation, which has been equally unfortunate in certain ways.

Ratepayers in many parts of the country have paid dearly for water reorganisation, certainly in my constituency of Newport. What is more, despite what the hon. Member for Bury St. Edmunds (Mr. Griffiths) maintained—he was one of the Ministers dealing with the legislation at the time—the water authorities are again essentially bureaucratic and undemocratic organisations.

I represent Newport, which is the third town in Wales after Cardiff and Swansea. Newport does not have one direct representative on the Welsh National Water Development Authority. That is wrong. Indeed, that is one of the reasons why I support the creation of an elected Welsh Assembly.

At one stage many major local authorities in Wales were threatening a revolt against water charges. That might give some ideas to my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown). Those authorities wanted to refuse to collect the water rate, because of the exorbitant charges. The swingeing increases brought about considerable resentment in different parts of the country.

Rationalisation in certain water authorities brought large increases in charges in certain areas. My right hon. Friend the Member for Anglesey (Mr. Hughes) referred to the travesty in Anglesey and a 400 per cent. increase in water charges there. In my constituency of Newport, the matter was almost as bad. Indeed, on 4th March 1975 I had an Adjournment debate on this subject, to make my own protest. As a result of the general public outcry in Wales, we eventually had the Daniel Committee to look into the whole matter. It reported in 1975. It recommended early action to reduce the differences in average water charges between the Welsh authority and other authorities. The Government felt, quite rightly, that some action was needed to implement that recommendation. That is why we are debating the Bill before us.

My Welsh nationalist colleague, the hon. Member for Caernarvon (Mr. Wigley), has pointed out that Wales has vast natural resources of water. He rightly pointed out what a precious commodity water is, particularly to an industrial community such as Britain. We could also remind ourselves of what happened during the drought, and of our great predicament then. That clearly showed that for the future we needed to plan our water resources.

Wales supplies many other parts of the country with water. The Midlands is one obvious example. It is a great centre of British industry. However, in Wales we are paying more than is being paid in areas such as Birmingham, so it is no wonder that water in Wales has become such an emotional issue.

The Bill helps just a little. We have been told tonight that figures lie, and figures have been contradicted, as my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) has pointed out. I understand that if the Bill becomes law the average domestic water bill in Wales will be reduced by £3.40. It will nevertheless leave Wales very high in the list of water charges, as compared with other areas. I understand that charges in Wales are 27 per cent. above the national average.

There is also the fact that any benefits coming from the proposals will go not only to Wales but to other parts of the country, such as Northumbria and East Anglia, and, as the hon. Member for Tiverton has reminded us, to the South-West. We must face the fact that other parts of the country—the Thames, Southern and Severn-Trent areas—will pay slightly more, but those will be only very limited increases. They are not increases about which a great row should be made, as my hon. Friend the Member for Hackney, South and Shoreditch seemed to be doing.

Mr. Rees-Davies

I beg to correct the hon. Gentleman. The Southern Water Authority fixed its budget three or four days ago at £83½ million—a rise of 18 per cent. for next year. It is 18 per cent. in a single budget, and that is before the levy comes into effect.

Mr. Hughes

I do not know the precise figures for the hon. and learned Gentleman's area. The figures that I have are for the Thames authority, which is another authority that I have mentioned and which is like the hon. and learned Gentleman's authority. The average increase in the Thames authority area will be at least £1 per household, or about 2p a week, on water charges.

We know that equalisation is going ahead inside individual authorities at present, so the logical question that follows from that, as I understand it, is: why should it not be done on a national basis as well? The alternative could present other difficulties which some of us certainly do not wish to see arising, particularly in Wales. We would eventually have the great cry that the WNWDA should make increased charges, even excessive charges, for supplying water to other parts of the country. It would then become not a national issue but very much a nationalist issue. Hon. Members will appreciate the difference between the two.

Another aspect is that of rating. I have some sympathy with London Members. I agree that rating is a bad basis for levying the charge. Valuation for rating was transferred to the Inland Revenue in 1948 to even out the various areas. The House should bear in mind the differentials in Wales. In Newport, the rateable value of a three-bedroomed house is still 50 per cent. greater than that for a similar house in Merthyr. A different formula should be worked out for levying these charges. In that sense we need equalisation and not an artificial loading of certain areas.

Nevertheless, broadly I feel that the Government are moving along the right lines. It cannot be right that people in the Elan Valley, represented by my hon. Friend the Member for Brecon and Radnor (Mr. Roderick), who have the water on their doorstep, are paying more for water than is paid by people in Birmingham. The Bill's provisions do not entirely rectify that situation. However, the measure is essentially modest in character and deserving of the support of the House.

8.10 p.m.

Mr. Terence Higgins (Worthing)

The Bill involves a great deal of constituency politics and raises important points of principle, but as a number of my hon. Friends wish to speak I shall be as brief as possible.

The point that is of greatest importance to my constituents is that the Bill will increase the amount that the Southern Water Authority has to pay by about £1.1 million. That will represent an increase of 9 per cent. on the water rate, in addition to the increase already scheduled.

Mr. Anderson

The essential point is that the Southern Water Authority's rate will still be about the average water rate throughout the country—1 per cent. above as opposed to 6 per cent. below.

Mr. Higgins

That may be so, but my point is that in a constituency with a high percentage of people living on low fixed incomes, this increase, on top of the inflation we have seen in recent years, and the 15 per cent. rate of inflation officially forecast by the Government, is a heavy burden.

With great respect to the hon. Member for Stoke-on-Trent, Central (Mr. Cant), who raised the question of ability to pay, he does not understand the burden that will be imposed on my constituents, in my view unfairly, by this measure. This gives me cause for concern.

Mr. Geraint Howells (Cardigan) rose—

Mr. Higgins

The hon. Gentleman has not been present all that much during the debate, so I shall not give way. I am short of time, and many of my hon. Friends who have been here all afternoon wish to speak.

I come now to the point of principle touched on by the Minister of State—that, ideally, we should try to relate the charges for water to the cost of providing the service to the individual. We all recognise that that may not always be feasible. That is why there is a degree of averaging within a water authority area, but it is very much a second-best solution. Like any system of averaging prices, it does injustice to those who incur lower costs and is to the benefit of those who incur higher costs. Therefore, while the point of principle has been conceded, the wider the area over which one averages the greater the injustice.

That being so, we see that there is a very important point of principle involved, and I do not believe that we should proceed along this road. Nor do I agree with the Minister that a system of average pricing is in any way necessary in order to have a national water policy. One could well have a national policy for water without a system of different charges in different areas related to the costs.

Once we get away from a system that relates costs to prices, we are likely to have inefficiency and a misallocation of the nation's resources. That is the other main point of economic principle showing that the Bill is absolute nonsense and should be opposed. I hope that I would oppose it equally if it were to the benefit of my constituents, because it is not in the general interest. Constituency points apart, we should not go along this course; we should reject the Government's view.

We should also appreciate that the Bill is absurdly discriminatory, in as much as it does not take into account the position of the private water companies in areas, such as the South of England, where there are both statutory undertakings and private companies. Those who come under the statutory authorities will be paying the extra 9 per cent. while others in the same area will not if their water is provided by a company not paying the levy. That is completely nonsensical.

Another absurd point of detail is that the financing costs are based on certain assets, taking no account of the general running costs. Therefore, the Bill impinges on each authority in a very different way. If it becomes law the effect on the Southern Water Authority will be to bring it from below the average without the scheme to above the average with the scheme. That is absolute nonsense, as the hon. Member for Swansea, East (Mr. Anderson) will appreciate.

Those are all strong reasons for opposing the Bill, but I want to make one other important point. In view of Mr. Speaker's ruling, I do not wish now to return to the question whether the Bill involves what is technically, from a Money Resolution point of view, a tax. That is a matter that I shall need to pursue elsewhere. But the levy is beyond doubt effectively a tax on my constituents, because they will receive absolutely nothing for the extra money they will pay. They are in no way imposing any cost on the community, and they have no option but to pay it. If that is not a tax, I have considerable problems in understanding what a tax is.

It is not right that there should be subsidisation of any of the areas concerned, certainly not on the basis which my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) seemed to imply. I do not see why tourists in Worthing should help subsidise tourists in Tiverton. But let us leave that on one side. The effect of the tax will be such as to bear very unfairly on individuals selected arbitrarily.

If there is a case for subsidization—and I do not believe that there is—the right approach is for the burden to fall on the general body of taxpayers, because we are taking what is purely a social decision. That came out clearly in an intervention by the hon. Member for Carmarthen (Mr. Evans), who referred to the level of earnings in Wales. If we are to subsidise this or that group, the cost should be met by the general body of taxpayers. Arbitrarily to put such a levy, determined by the Secretary of State, on certain groups is an appalling fiscal innovation.

The Bill has been opposed by hon. Members on both sides of the House. I hope that those who oppose it will carry the vote and that the matter will come to an end. That would in no way inhibit a more rational policy on water charges generally, or questions of direct billing and democratic representation on water boards. I very much hope that the Government will be soundly defeated.

8.17 p.m.

Mr. Arthur Blenkinsop (South Shields)

I do not suppose that my right hon. Friend the Minister of State is very surprised that the Bill has received the kind of reaction that it has. Predictably, with one very honourable exception—that of my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant)—those who represent constituencies likely to benefit from the provisions of the Bill are expressing their good will, or are not present, and those who represent constituencies which are regarded as being disadvantaged are expressing their staunch disapproval and producing all kinds of artificial issues of principle about a fairly detailed matter of administration.

With my hon. Friend, I believe that the matter should be seen in perspective. I represent a constituency that is not affected, as it is provided with water by a private company, and I also live in an area provided with water by a private company. My concern about the Bill, which I broadly support in principle, is, lest the fact that it is a temporary expedient, should lead it to exist too long and delay the major measure of reconstruction that we are anxious to see.

I am concerned because I know of the problems between private companies, with all the statutory regulations, and public authorities engaged in the normal provision of water. I fully accept the desirability of national responsibility for water supply. Our experience during the past summer should have convinced everybody who had not previously been convinced about that. Therefore, I am most anxious for an assurance from the Government that there will be no avoidable delay in introducing the main measure and dealing with the whole question of a national authority.

This matter was explained in the Green Paper.

Mr. Rees-Davies

Surely that argument cannot be right. It is not in areas such as Tiverton or in the Welsh areas that private companies predominate. Furthermore, it is not because they failed to provide water in their areas that we had a drought.

Mr. Blenkinsop

I was merely seeking to say that we recognise the importance of having a national system in which we can easily ensure the transference of supplies more widely than we have been able to do up to now. I believe that experience proves that to be the case.

I do not fully understand why the private company areas should be excluded from the Bill's provisions. Perhaps the Minister will make the situation clear when he replies to the debate. However, I broadly support the Bill as an interim stopgap measure. It is not a measure of enormous importance and it will not create a great deal of excitement, but it is probably a necessary interim measure to meet an undoubted injustice between one area and another.

I find it difficult to understand why any of my hon. Friends should jib at a situation such as this when many of us from time to time call for help for authorities, including London and other urban areas, where such help is patently necessary and required.

The case has been made for some assistance in this or any other form for Wales and other areas in which the extra charges are unconscionably high. Therefore, I hope that my hon. Friends will join me in supporting the Bill, even though it does not happen to be person ally important for them or for their constituents.

8.22 p.m.

Mr. David Price (Eastleigh)

At this late hour I shall be as brief as I can. The hon. Member for South Shields (Mr. Blenkinsop) touched on the wider topic of whether one should have a national water grid and the subject of charges agreed on a national basis. But the Bill does not attempt to deal with those wider matters. Nor does it attempt to deal with charges on a standard national basis. As the Scots put it, all that is out with the scope of the Bill. Furthermore, the Bill does not attempt to deal with the wider questions of nationalised water, which may interest some Labour Members.

The plain fact is that water is regionalised and remains so. The Bill does not attempt to change that situation. What the Bill does is to make some consumers in certain regions pay for the past performance of other regions. That is a neutral way in which to put the matter. All the remarks about last year's drought and the problems of regions seeking to face up to deficiencies which then became apparent are irrelevant to the Bill. The Bill is time-dated. It relates to a period before 1st April 1976. Therefore, although I have the greatest personal sympathy with some of the wider arguments, they are totally irrelevant to the Bill.

Mr. Michael Spicer

I wonder to what extent the arguments are irrelevant if they seek to make the point that the private companies look absurd or out on a limb in this respect. Are not those who seek to advance such arguments paving the way to nationalisation?

Mr. Price

My hon. Friend is entitled to his suspicions. I try to look at the matter neutrally in terms of equality of motive between the proponents and the opponents of the Bill. We all know that the water industry is capital-intensive. The main matters dealt with in the Bill relate to the disparity of charges between various regions and arise out of the heavy dependence of those authorities on borrowing and in paying interest on that borrowed money.

It is worth looking at the reasons given in the Green Paper "Review of the Water Industry in England and Wales" in respect of equalisation. I quote from paragraph 62: Proponents of equalisation point to water services as a basic necessity of life. They emphasise that the costs of supply include financing costs which result, in part, from the accidents of past levels of prices and of interest rates at the different times at which loans were raised. They conclude that it is inequitable that people in some areas should have to pay substantially more for water services because of these accidents. That argument could be applied to any difference between one local authority and another and, indeed, between one public utility and another. It could be applied to an argument whether the Southern Electricity Board borrowed at the right moment in the market against the Eastern Electricity Board or a Scottish electricity board. In other words, it is a questionable argument.

We should take cognisance of the fact that in the same paragraph from which I have quoted there is the counter argument as to why the general principle of equalisation may not be right. I quote again from paragraph 62: There are, however, arguments against equalisation. It could result in misallocation of resources (both nationally and within regions) because the direct link between costs and charges in a given area would be severed. The salutary discipline on an authority of answering to its own consumers for its own actions would be eroded. That was the principal point canvassed among the arguments against equalization—namely, that there would be less incentive for an authority to conduct its affairs in the most efficient and economic manner.

Those are formidable objections. Equalisation is the cry in the Bill, but let us be under no illusion that since reorganisation there have already been major moves by many regions towards equalisation. I can quote from experience in the Southern Water Authority. We are moving towards standardised charges throughout the region by 1st April 1979. Therefore, a number of inhabitants in the southern water area are already the victims of standardisation.

Secondly, why does the Bill apply only to unmetered water? That point has not been answered so far in the debate. If it be right to redistribute the burden of water charges across the community, why apply it only to unmetered water? Why exclude the customers of water companies? Substantial parts of the Southern Region are covered by water companies. I know that my hon. and learned Friend the Member for Thanet, West (Mr. Rees-Davies) is interested in this subject and no doubt, if he has the opportunity to do so, he will develop his arguments a little later. These are formidable objections against the Bill as it stands.

I return to the basic question asked by the right hon. Member for Bermondsey (Mr. Mellish) and other London Members on the Government side. If it is necessary to introduce legislation to produce the equivalent of a rate support grant for Wales, why not for other areas? I accept the argument adduced by the Minister that he could not use the rate support grant in its present form without legislation, but why not introduce legislation? Why not introduce into it something that I will call, for want of a better word, a water equalisation grant and pay it out of the Consolidated Fund?

There is the argument about Wales. With the Scotland and Wales Bill before the House, we have a measure which will devolve responsibility for Welsh water to the new Welsh Assembly. This is not the occasion to argue the rights and wrongs before the House. I merely present this argument to the House. Why should my constituents in Hampshire be expected to pay this totally unreasonable surcharge to help Wales when the metered consumers in Hampshire will not be expected to contribute, nor will the metered consumers in the area of the Portsmouth Water Company? This is not equalisation. It is merely moving away from one system of inequality and trying to achieve another form of inequality.

We know from the Minister of State that in the coming year it will cost the Welsh domestic householder an average of £25 a year on water rates. I am informed that in the area covered by the Southern Water Authority it will cost £23.18p. Therefore, there is not much difference in it. This is the difficulty that arises when talking about averages.

The plain fact is that, as it affects us in the Southern Water Authority area, this scheme represents, first, a loss of autonomy over the authority's financial resources and, consequently, results in a dilution in the authority's overall control. As long as we are regionalised, it is right that the authority's overall control be retained This is without going into any of the arguments about whether there should be a national authority rather than a regional one. We are working now in a regional authority. Secondly, I suggest that it will result in a misallocation of resources as the direct link between costs and charges will be removed. Thirdly, it is inconsistent to exclude the water company areas and the metered customers.

Finally, I believe that the proposal relates only to the financing cost in respect of certain assets, but takes no account of the general running costs, and hence its impact on each authority is markedly different. By its exclusion of the water companies, many of which cover large rural areas, it means that our area will not be able to bring in to the calculation the relatively high costs associated with distributing water in rural areas; and accordingly I argue that our region as a whole will be contributing more than its fair share to the national pool as a result.

Finally, on the figures which I have received the costs to my constituents in the coming year will rise from 9.47p per pound of ratable value to 11.45p per pound of ratable value—a 21 per cent. increase. Of that, between 9 per cent. and 10 per cent. will arise as a result of the Bill.

The poet Byron may well have spoken the truth when he wrote: Till taught by pain, Man rarely knows good water's worth. I greatly object to my constituents having that pain imposed upon them by the Bill, and I shall vote against it.

8.34 p.m.

Mrs. Millie Miller (Ilford, North)

At this late stage, much that I might have said has already been covered. As a London Member who has spoken in the last two weeks on two separate occasions about the injustice being done to people in the London area by all the events of the last 30 years and of the present, I remind the Minister that many of us will be unable to support the Government in putting a further imposition on people who are already heavily overburdened by national activities.

We have heard of the example of the reorganisation of the National Health Service and the publication only today of the admission by the eminent consultants brought in to advise us on it of the failure of their activities. Heaven alone knows what was the cost of the consultants. I doubt whether even Heaven knows what the cost has been of implementing their proposals, which they tell us today are not only a failure but bureaucratic, over-elaborate and cumbersome". We should remember the comment by one of my hon. Friends that the experts who are now advising the Minister are the same as, or similar to, those who originally gave advice on the reframing of the water industry.

That industry has been bedevilled by the exclusion from the original Bill of the private water companies, which are also excluded from these proposals. It is more than unfortunate for people living under ex-local authority water suppliers that in the urban areas they will be carrying that burden. It is important that someone from London makes it clear that nothing said in this debate by us minimises the terrible problems which beset the South-West and Wales during the drought of last year. But, as has been said, that is nothing to do with the Bill.

Because of the way in which the Bill has been presented, I am worried about the danger that it poses to local democracy in other fields. If we once subscribe to the idea that charges should be the same for the same services all over fie country, what opportunity is there for local government to develop along the lines which its electors require? What opportunity is there to have selective services in some areas which are not required in others? Some equalisation has been going on in the London area for many years. It has been adjusted to meet the changing needs of the various boroughs, but in the main they all require similar services. That cannot be said on a national scale.

If the Bill reaches the statute book, it will be the thin end of the wedge of imposing standardisation of charges and therefore of action on local authorities. That is one of the reasons that I shall not be able to support the Government tonight.

8.38 p.m.

Mr. Michael Spicer (Worcestershire, South)

I begin by expressing my shock, amazement and dismay at the remarks of my hon. Friend the Member for Northampton, South (Mr. Morris) that he cannot tell the difference between any two glasses of water—for instance, one from my constituency, from Malvern, and common or garden water, as served in the restaurant.

The hon. Member for Stoke-on-Trent, Central (Mr. Cant) said that we were talking about paltry sums of money for individuals and that it did not matter—that we might as well vote for the Bill because there were bigger things to come. Much of the debate has been a discussion of pork barrel politics, between the disparate views of London and Wales—whether one was giving up, and the other gaining too much. But that misses the basic issue of principle, which is summarised in the very first words of the Bill: If … it appears to the Secretary of State that … the relevant financing costs of a water authority are less than the average of the relevant financing costs of all water authorities in England and Wales, he may by order direct the authority to pay to the National Water Council a levy". The Bill would put a tax on efficiency. If the country had a surplus of efficiency, a tax on it might be acceptable. Perhaps one could offer a mention in the New Year's Honours to the most inefficient chairman of the most inefficient authority. But the problem is that the disciplines imposed upon authorities, particularly public sector authorities, are now so fuzzy that it would be worrying to lose the discipline that enables authorities to reflect in their prices the efficiency with which they provide services.

The only convincing arguments for equalisation were expressed by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and the right hon. Member for Devon, North (Mr. Thorpe). They said that there were such inherent differences between various areas that some form of equalisation charge was justified. There was no hope that Devon could provide itself with a service as efficient as that of Worcestershire.

I do not understand the argument to justify figures that I have heard quoted. The North-West will be stung for £900 million—[HON. MEMBERS: "Nine hundred thousand."] I am sorry—£900,000 to be paid to Northumbria at the rate of £200,000 annually. It is argued that these two areas are so inherently different that the equalisation is justifiable. This would appear to be a tax on an area that has been relatively efficient—the NorthWest—in favour of Northumbria, which, for various reasons—some historical and some to do with the changing nature of authorities and boundaries—has been less efficient. That is a bad thing.

In his opening remarks the Minister said that the Bill was a first step in a broad strategy intended to create a single national water system. The Minister brought that point into the argument, and to say that it is irrelevant would be to deny the main thrust of his argument. The Minister said that there was an administrative justification for this. That can be dismissed, because his justification was almost exclusively based upon the events of the summer and he could give little other justification.

The Minister said that one had only to consider the effects of the drought to realise that administrative change was necessary. But drought has happened only once in 200 years. The Opposition spokesman has pointed out that the Government were able to take powers to overcome it, and this could be done again. Yet the Minister has used the drought as an argument in favour of creating a national water authority.

I am concerned to know what effect a national water authority will have upon the independent water companies. I am sure that the Minister will be frank and say that this is a first step in the ultimate take-over of the private companies. This is the Government's unashamed strategy. In no other way does the Bill make sense, in terms of leaving the private independent companies out of the equalisation charge. Therefore, I am sure that this is the first step, and it is fair to make the point that it will be disastrous.

I do not claim that it is possible to have true competition in water, but the private companies allow for some form of yardstick outside the nationally controlled system for investment policy. I know of a private independent water company which has been streets ahead of the Severn-Trent authority in, for example, investment policies. It is a yardstick on pricing, employment policy, charging and delivery in general. It would be a great shame, to put it no higher, to abolish it. We have so few yardsticks.

I do not say that the independent companies are always more efficient than the nationalised system, but they represent something by which we can test the nationalised system. I go further. All the remaining companies are extremely efficient. I know of no company which is not efficient.

I oppose the Bill on grounds of principle. Far from abolishing the relationship between price and usage or between price and cost, I should like it to be increased. That is why I should like to see extended the Malvern metering system—the only system now working—in my constituency which has been working for 103 years and is still unique. The Victorians had a great deal of sense, and this was one of the things that they did.

To argue that meters are too expensive is to forget present unit costs. Metering, when done en masse and in different forms, is not too expensive to install. Above all—and this is the point of principle—it relates price to cost and price to usage. It is significant that in my constituency the bureaucrats and officials are against it. They say that it is extremely difficult, time consuming and costly. The consumers are very much in favour of it. It is a fair system. It measures usage to the price that consumers have to pay. I hope that my party, when in government, will extend the system. It is the reverse, in principle, of what the Government are doing. That is why I shall vote against the Bill.

8.47 p.m.

Mr. Donald Anderson (Swansea, East)

The hon. Member for Worcestershire, South (Mr. Spicer) is in favour of metering. He will probably be aware of the report of the National Water Council entitled "Paying for Water" which suggests that the capital cost of installing metering is estimated to be between £650 million and £950 million. However, as the hon. Member was rather blasé about a few hundred million pounds, one can perhaps understand that. I am not sure how he fits his argument into his party's general attitude to the question of public expenditure.

Mr. Michael Spicer

I said that the costings on metering were based on present unit costs. If we went into large-scale production of total metering, the costs would be radically reduced.

Mr. Anderson

Then perhaps we will take off a couple of hundred million pounds.

The hon. Member for Worcestershire, South said that the proposals in the Bill were a tax on efficiency. That is far from the case. He spoke as if there were a contrast between the wise virgins and the foolish virgins, the wise virgins being those who prior to March 1976 husbanded their resources properly and invested wisely. He will know not only of the argument in the March consultation document on the cost of borrowing money at particular times and, therefore, the haphazard element which enters into that but—and this is particularly relevant to Wales—of the extra costs that fall on certain areas because of the facts of geography and topography in places such as Wales which lead to greater costs in piping the water along the valleys and, therefore, have nothing to do with the good or bad husbandry of resources in former times. Therefore that argument, which has been raised by several hon. Members, about the wisdom of the investment policies or other policies of the authorities prior to the effective date in March 1976 is nonsense.

If any reminder is needed, I shall try to emphasise that there is a widespread sense of injustice in Wales about the present system of water charges. That sense of injustice is not confined to members of the Welsh separatist party. It is true that over the decades water has been a uniquely explosive substance in Wales. This was emphasised especially by last year's drought, when we found that although one-third of our water resources was exported many of our counties had their water supplies turned off for 17 hours a day in August.

The case for equalisation is not related only to the sense of injustice. Water is a basic necessity of life. These very wide disparities in charges do not occur with other utilities such as gas, electricity and postal services. With other utilities we do not have examples of costs in some areas being 46 per cent. to 47 per cent. above the line or 16 per cent. to 17 per cent. below the line.

The historic costs in March 1976 were often derived from haphazard reasons not related to the wisdom of the previous authorities. Wide variations currently exist, and although there will be relatively small increases, albeit real increases, as hon. Members have said, for the loser authorities, this measure will provide a basis for co-operation among water authorities.

I do not propose to follow the hon. Member for Worcestershire, South in his stout defence of the private water undertakings. The Minister has emphasised the interdependence of water authorities, which was highlighted by the events of last year—although I concede that such events would happen only once every 200 years or so—and which will be accentuated by the increasing demand for water resulting from the wider use of gadgetry and the greater use of water by individuals.

Without this measure of equalisation it will be difficult, in a Welsh context, to justify there being no surcharge on Welsh water.

Mr. Wigley

Hear, hear.

Mr. Anderson

I am very glad to have vocal support from the hon. Member for Caernarvon (Mr. Wigley). The choice proposed in the Daniel Report was that we either met this injustice with a measure of justice, albeit rough and ready, along the lines of the Bill or we took the option of setting out on the altogether different road of commercial pricing, abandoning the present policy of transferring water from one authority to another on a "no-profit, no loss" basis.

I do not want to see commercial pricing of water from the Welsh authority to other authorities because that would be a very dangerous precedent in a whole range of other areas. I see our economy as a single economy, and when one starts to charge for transfers across frontiers—the rather unfortunate phrase used by the hon. Member for Hampstead (Mr. Finsberg)—I foresee most unwelcome results.

The Welsh National Water Development Authority has been advised by leading counsel that legally, under the present system, the authority could charge receiving authorities for water. I believe that it would be wrong to do so, but I believe that it would be difficult to withstand the very strong pressures because of the feeling of injustice unless some modest measure along the lines of the Bill were accepted by the House.

This is a relatively modest Bill, a short-term proposal to meet that sense of injustice. It reduces the range of disparities, although Wales will still be paying about 28 per cent. above the national average. I pay water rates to the Thames Water Authority and the Welsh National Water Development Authority. The disparities will remain, but the Bill will help to spread the burden.

There will still be a longer-term problem because the historical costs are frozen at March 1976 levels, and as new expenditure is undertaken there is a danger of the disparities widening again unless advantage is taken of this breathing space to get a long-term measure to provide justice for Wales. The Bill is a measure of justice and it is necessary for Wales.

8.56 p.m.

Mr. Reginald Eyre (Birmingham, Hall Green)

I understand the emotional views of the hon. Member for Swansea, East (Mr. Anderson) about the water which comes from Wales, but I hope he will understand that people in the great industrial areas of the Midlands also have emotional feelings when they watch Governments divert industrial development to Wales. I am sure that the hon. Member will understand those feelings because he said that he looked at the economy of the country as a whole, which is the proper and balanced approach.

Mr. Anderson

I wish that the Midlands had diverted their employment levels to Wales.

Mr. Eyre

The Government have made a mistake in introducing a Bill which imposes a levy on some residents in urban areas, including Birmingham, London and industrial parts of the North-West, to enable a substantial subsidy to be transferred for the benefit of users in Wales and other, predominantly rural, areas.

Ministers refer to the allocation of resources through the rate support grant as a sophisticated way of taking account of the problems of industrial areas. The Bill seems to go in the opposite direction and appears to be nonsense. It is crudely inequitable in its operation. My hon. Friend the Member for Eastleigh (Mr. Price) was right when he said that if the factors involved in these calculations were to be taken into account the only fair way of doing it would be through the Consolidated Fund.

From Birmingham's point of view, the Minister could hardly have chosen a worse time to introduce the Bill. Consumers are already feeling aggrieved about the present water charges against the background of rising prices and charges. They are already having to pay an extra 16 per cent. for water this year.

The Minister of State will understand that many Birmingham people feel that, as the city has been a wise long-term investor in producing facilities for water supply, the advance towards equalisation within the region itself should be slowed. Birmingham will also greatly resent this interference by the Government, which is against the interests of so many Severn and Trent consumers.

Mr. Denis Howell

No doubt the hon. Gentleman will acknowledge that what we are doing to protect future supplies to Birmingham has as a quid pro quo that Welsh water—and the future of the Craig Goch scheme is vitally important—will be sold to the Severn-Trent Water Authority, and therefore to Birmingham—on a "no-profit, no-loss" basis. In protecting that principle, the Bill seems a reasonable measure which is in the long-term financial interests of the people of Birmingham.

Mr. Eyre

Like the Minister I always try to explain to Birmingham people what is in their long-term interests. However, the inequities in the Bill negative the arguments that the Minister has just advanced. He knows that the proposals for the acquisition of expensive new headquarters for the regional water authorities have attracted much criticism, as has the proposed acquisition of a computer by the authorities at a cost of £8 million. The Minister's comments about this matter were welcome.

Against this background of discontent we must look at the system and the Minister's speech, which did not justify in any way this levy and subsidy scheme. The Minister failed to show any merit in the case for making the Severn-Trent consumers pay no less than £1.1 million so that the process of paying water subsidies to Wales in this way can be started. The Minister's reasons are really connected with the devolution Bill.

Looking at the Bill in operation, as far as the Severn-Trent consumer is concerned, the Minister took account of only part of the factors relating to water charges. That is why the Bill is so inequitable. The Government have taken no account of the fact that rateable values in Wales average £120 whereas in Birmingham they average £185. When this share of the burden on the Severn-Trent consumer is calculated, one can see that because the region has had a certain rate of depreciation—a writing-down of its assets—as a consequence, its share of the burden has increased.

The burden of these extra charges will not even be fairly distributed within the Severn-Trent region itself. Only 83 per cent. of consumers will be charged. The other 17 per cent. will remain unaffected. One cannot think of a way in which such a proposal can be justified in the Midlands. One could point to parts of the Black Country where people will not have the burden of extra charges and then compare them with Birmingham where residents will have to pay the full charge. The Bill puts an unfair burden on people in urban areas, and the Minister has failed to give any justification for the measure. Within the Bill there are obvious unfairnesses in the way in which Birmingham people have been treated compared with others. That is why I shall vote against it tonight.

9.3 p.m.

Mr. Arnold Shaw (Ilford, South)

We the Labour Party look forward to the time when we shall have a national water policy, but I am afraid this Bill does not go very far towards it. We are told that it is something of a lead-up to such a policy, but in reply to an intervention made by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham), the Minister ducked the question why it is necessary under the Bill for certain authorities to pay towards the cost of another authority, and why this should not be paid from national resources. This was again put by my hon. Friend the Member for South Shields (Mr. Blenkinsop), and I understand the vote tonight will turn very much on the Minister's answer.

The Minister made an excellent case for a national policy, nationalisation, and all the things we want, but at the same time he held us in suspense about when the real measure is coming forward. He said something about the issue of a White Paper at some time, but White Papers have come and gone, and I am sure that we shall be left ultimately only with this miserable Bill, to which I cannot subscribe in any way.

I go along with my right hon. Friend in one respect. Of course the haves should help the have-nots, but for heaven's sake my right hon. Friend should not come to London for more money at this stage. It is a long time since the streets of London were paved with gold, but the Minister does not seem to understand that. My right hon. Friend the Member for Bermondsey (Mr. Mellish) spoke eloquently about the way in which London had been denuded of its industry and population. But there are many other instances of the way in which London has suffered. One has only to consider the costs that Londoners bear in terms of rates, transport, and so on. Now my right hon. Friend wants to add still further to those costs.

Perhaps I may describe the effect of the Bill on the citizens of the borough of Redbridge. The measure will affect the bills they have to pay, though perhaps not to a great extent. My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) pointed out that we are talking about peanuts in terms of Londoners, whose average income is about £4,000 a year and who will hardly notice the few extra pounds that they will pay out under this redistributed water rate. My hon. Friend, however, seems to forget that in London there are thousands of families whose incomes are so low that they qualify for rent and rate rebates. They will get no rebate on the impost to be made under the Bill.

Every citizen in Redbridge will be affected. In addition, other costs will rise because of inflation. Then again, there is the question of equalisation within the Thames Water Authority area. This will affect those who were previously supplied with their water by the Metropolitan Water Board. Because of its efficiency the Board was able to supply water much more cheaply than most of the other authorities, so that the people who were supplied by the MWB face increases in two respects.

Redbridge had a private water company. I am being altruistic in this matter, in that many of my constituents draw their water from the private water company's reservoirs. They can therefore quite cheerfully stand aside while other Redbridge citizens have to pay greatly increased prices.

A peculiar situation therefore obtains in Redbridge, and the borough council is deeply opposed to it. It means that many people are paying different rates because they are in different circumstances, all under the same water authority. Like my right hon. Friend, I look forward to having a system under which equalisation is brought about throughout the country with a national water authority, and under which all private water companies are nationalised.

9.9 p.m.

Mr. Wyn Roberts (Conway)

Many right hon. and hon. Members who have participated in this keen but good-humoured debate have confessed that the House is divided in the final analysis not so much along party lines but along the lines of constituency interests. However, that statement requires qualification, and I shall qualify it in due course. The majority of hon. Members have been for or against the Bill depending on whether their constituents stand to gain or lose from equalisation.

Some hon. Members have risen about the consideration of constituency interest, and I very much admire them for it. For example, my hon. Friend the Member for Daventry (Mr. Jones) stands to gain from the Bill but is critical of it, whereas the hon. Member for Stoke-on-Trent, Central (Mr. Cant) stands to lose but is for the Bill. For my part, I represent a Welsh seat, and the House knows that water and water charges are highly emotive issues in the Principality.

Some hon. Members, in advancing their criticisms of the Bill with the vigour and forcefulness that we have come to expect of them, have been good enough to acknowledge the special position of Wales. Wales is and has been a major supplier of water to English cities in the Severn-Trent and North-West areas for decades. With the ever-increasing demand for more reservoirs and land in which to site them, water supply has been and is bound to remain a political issue.

Water is an increasingly valuable resource and is recognised as such. It is especially valuable to those parts of Wales where the supply is most abundant and where other resources are scarce—so scarce, indeed, that in the past their scarcity caused depopulation on a depressing and highly problematic scale. I do not want to linger over the history. Suffice it to say that water was a political issue in Wales long before the reorganisation of the industry.

As the hon. Member for Caernarvon (Mr. Wigley) said, some hon. Members may recall the tremendous unrest over the Tryweryn reservoir in the 1950s. The effect of reorganisation, however commendable in itself, coupled with the withdrawal of rate support was to increase charges at an alarming rate in Wales. The right hon. Member for Anglesey (Mr. Hughes) referred to his own constituency. The poundage increase in charges for unmeasured water supply in Anglesey between 1973–74 and 1974–75 was a staggering 422 per cent. These are the figures that we have been talking about in Wales. The smallest increase in any water supply division of the Welsh National Water Development Authority area was 58 per cent. The average for all divisions was 165 per cent.

Measured water supply charges increased by a similar average of 138 per cent. Many figures have been quoted in the debate, but the weighted average increase for Wales between 1973–74 and 1974–75, as stated in the Daniel Report, was 121 per cent. compared with 40 per cent. for England. The House will imagine the outcry on the part of the Welsh public. That is the sort of thing from which we have been suffering.

Equalisation within the authority's area from 1st April 1975 caused considerable further increases in certain areas. Public reaction was all the more sharp when increases in Wales were compared with increases in other areas. Wales was top of the league of charges. The average charge for unmeasured domestic water supply in the WNWDA area in 1975–76 was £19.20p per domestic property compared with an average for England and Wales of £13.25p. That is the information given to me in a Written Answer on 12th January. The Welsh charge was 44.9 per cent. about the average for England and Wales.

Average household bills in the Thames Water Autority area were about £11–17 per cent. below the national average. That was the situation which confronted the Government, and it led to the following conclusion in the consultative document published last year: The unavoidable and continuing increases in the cost of water services make it all the more necessary that charges should be seen to be fairly distributed. This consideration, together with the special problem of water charges in Wales (on which the Daniel Committee reported last August), led the Government to put in hand an urgent examination of the need and possibilities for a more uniform system of charges throughout England and Wales. Figures have been bandied about. I am surprised that no reference has been made to the evidence given to the Select Committee on Nationalised Industries. In the Sixth Report of that Committee it is stated that the gap in charging between the authorities is narrowing, but those who have studied that evidence will have noticed that the South-West and Northumbria were chosen for comparison with Wales. The figures given in the Sixth Report from the Select Committee on Nationalised Industries for household water charges in 1976–77 were as follows: Wales £22, South-West £20, Northumbria £17. That is an interesting selection of authorities showing that the gap is narrowing.

The Daniel Committee reported that there was a bigger variation in the average price of water between different areas of England and Wales than there was in the average price of gas and electricity. The effect of the Bill before us is not to introduce absolute equalisation but to bring average domestic charges within a narrower bracket. I do not believe that any of my hon. Friends object to equity within individual areas. Eight water authorities have adopted policies of full equalisation of water supply charges. The remaining two—North West and Thames—have equalised increases in charges.

The Thames Water Authority in its admirable letter to my hon. Friend the Member for Hampstead (Mr. Finsberg) states that it is taking steps towards equity of charging within its own area"— and goes on to say that it feels that the concept and burden of equalisation should go no further than this. Some of the key arguments for equalisation within an authority's area are equally applicable to its extension to other areas. The arguments are that the water supplied is taken by those who have no alternative to taking it, and equity suggests that consumers in places where, for hydrological or topographical reasons, water supply costs are high should not be penalised, because in practice they have no real alternative to continuing to use this high-cost water.

The argument usually advanced against internal equalisation is that it destroys the financial incentive towards economical use of resources, but, again, this argument has little force where there is no effective choice of supply. These arguments for equity within an authority's area are equally applicable on an inter-authority basis.

Mr. Wigley

The hon. Gentleman said that there was no alternative source of supply. Well-expressed arguments have been put forward in various journals, to the effect that there are alternative sources such as estuarial barrages, and so on, and that it is the cut-off cost that determines whether those sources are practicable. One argument in favour of selling water is that it would bring into focus the possibility or impossibility of developing these alternative sources.

Mr. Roberts

All I can say is that, for the most part, these alternative sources are not available at present. I shall in due course come to the whole problem of selling water.

I now turn to the response by the Thames Authority to the consultative document. It recognises the Government's wish to achieve some measure of equalisation beyond the confines of individual authorities and goes on to say that if this is carried through it should be with a full appreciation of the implications. In other words, no one is arguing that the principle of reasonable equity is wrong. What is being argued is that the extension of the principle outside the boundaries of individual authorities has serious implications.

I do not for a moment deny that those implications should, and no doubt will, be thoroughly examined if the Bill goes into Committee. The implications arise from the implementation of the principle of equity. I regard that principle as of great importance in the present context, however badly it has been embodied in the Bill. The principles underlying the Water Act are also of great importance. I am glad that the Government showed an awareness and appreciation of those principles in their consultative document, but I was surprised at the tone of the Minister's speech in opening the debate.

In answer to the financial efficiency argument put forward by my hon. Friends the Members for Eastleigh (Mr. Price) and Worcestershire, South (Mr. Spicer), I say that if there were total equalisation of charges between authorities the incentive to economical working by each authority would be reduced substantially, but the proposed partial equalisation avoids that to some extent. I think that my hon. Friends should consider that point.

Mr. Higgins

I think that my hon. Friend has totally misunderstood the argument. If he is saying that one should divorce the use of price as a means of allocating scarce resources, I think that he is very mistaken indeed.

Mr. Roberts

I did not say that. I asked my hon. Friends to consider the effect of the total equalisation of charges, as opposed to the effect of partial equalisation.

Wales has always been something of an exception, in that it has been recognised since the Local Government Act 1974 that part of the domestic rate support grant in Wales, which currently amounts to 36p in the pound as opposed to 18½p in the pound in England, was intended to compensate to some extent for the higher water charges prevailing in Wales.

There are two points to be made clear. The first is that the differential forms part of the rate support grant settlement as a whole and is not attributed in particular ways. There are varied factors to account for the differential, including water. The second point is that in the public mind it has always been difficult to relate the domestic rate support grant to water charges. Domestic rates and water charges are separate items, and the alleviation of one on account of the other has never been clearly grasped by the people of Wales.

How long the disparity between Wales and England in domestic rate support will continue at the present level is an intriguing question. Welsh water charges, even after the implementation of the Bill, will still be comparatively high. Perhaps in replying to the debate the Minister will be able to give us some guidance on this matter, which is of great importance for the future.

The right hon. Member for Devon, North (Mr. Thorpe) could not understand the Government's rejection of the idea of a water rate subsidy of some kind. The same problem worried me. However, I understand that it would be contrary to the Government's policy of phasing out subsidies to nationalised industries, and even if an exception were to be made in the case of Wales and a water rate subsidy were provided, it would not end there. There would be demands from other areas of high water rates and extensive undermining of the principles of the 1973 Act—perhaps more extensive than the undermining implied by the Bill.

That was the view generally taken by Lord Nugent when he gave evidence before the Select Committee. However, it is for the Government, not for me, to justify their present method of implementing the principle of equity in water charging.

As so many hon. Members have said, there were a number of other alternatives open to the Government. We in Wales transfer much of our water at cost to the Severn-Trent and North-West areas. I am bound to say, in passing, that much of the discontent in Wales arose following comparisons between the low water rates charged in those areas and the top rates charged in Wales. The Government could have considered a scheme of equalisation limited to Wales and those two areas of supply only, or they might have encouraged a scheme of inter-authority sales on a fully commercial basis rather than the simple cost basis on which water is supplied at present. I have one or two comments to make on those proposals.

I absolutely agree with those who have said that the Bill has a great deal to do with devolution. I disagree with the right hon. Member for Anglesey, who implied otherwise. There is not much doubt in my mind that if this Bill were not before us today and if the Scotland and Wales Bill were to be passed into the statute book, the Welsh Assembly, which is to have circumscribed powers over the Welsh National Water Development Authority, would do its utmost to reduce Welsh water charges by increasing their charges to other authorities outside Wales. Once the principle of at-cost transfers had been breached in an area of public utilities such as water, the way would be wide open for further breaches in other spheres, and it is difficult to see how they could be prevented.

The Bill takes a national view of the problem, and I hasten to add that it is a British national view. The majority of people in this country would regard that as the right approach to the supply of one of the basic necessities of life, and I am glad to say that sane opinion in Wales does so, too.

My hon. Friend the Member for Pembroke (Mr. Edwards), with his usual foresight, welcomed the Government's decision in favour of the principle of partial equalisation months ago soon after the consultative document appeared.

Mr. Roy Hughes

Where is he?

Mr. Roberts

There is plenty of scope for criticism of the implementation of that principle in the Bill. I am glad to say that the Western Mail, on Tuesday 11th January, welcomed the Bill in these terms: For some time, Welsh water has taken on considerable political significance for many people. They invest the reservoirs of Mid Wales with the same kind of strategic importance that the Scots see—more realistically—in the North Sea oilfields. Demands that Welsh water should be sold to our English neighbours are regularly heard. Leaving aside the fact that during this last summer we would have had difficulty in fulfilling a water supply contract to a small tap, the idea of selling water to England is constitutionally and morally wrong. The Equalisation Bill—by removing the main abuses in the system—will further weaken the already shaky case of the putative water sellers. And perhaps it would be as well to warn them now not to delude themselves by thinking that the establishment of a Welsh Assembly will give their cause a fresh lease of life. The Devolution Bill is quite specific on the question of Welsh water resources. It divides responsibility between the Secretary of State for Wales and the Welsh Assembly for the operation of the WNWDA and the Severn-Trent Water Authority. The division is on a greographical basis but is to be qualified firstly by the Secretary of State's retention of responsibility for England/Wales national water policy, and secondly, in the words of the Bill, 'By discretionary powers for the Secretary of State to take over responsibility where the exercise of certain powers by the Welsh Assembly could be damaging to overall England and Wales water policy or to interests on the English side of the border. There is little joy there for the water sellers.

Mr. Mellish

I have been trying hard to follow the hon. Gentleman's speech, but I am not sure whether he is for the Bill or against it. I think that, by and large, he is in favour. Incidentally, I am sorry that I missed the beginning of his speech. I was waiting for the annunciator to announce that it had started.

How can the hon. Gentleman justify the fact that London has to find £3 million-plus to subsidise Welsh water, when any London borough council that builds flats today has to let them for £12 or £14 a week—rents the like of which have never been heard of in Wales? Overall expenses in London are appalling, and unemployment is between 7 per cent. and 14 per cent. I want to know where the hon. Gentleman stands.

Mr. Roberts

All will be revealed in due course.

As the Daniel Committee stressed, it is vitally important for the future welfare of the urban areas that they retain the good will of the upland areas whence they draw their water supplies. Their demand for water is increasing year by year, and there are some major schemes in preparation. In Wales, for example, the Brenig Dam is nearing completion, and it already supplies 32,000 cubic metres of water per day to the North-West. There is also the enormous Craig Goch reservoir project, to which many hon. Members have referred, which involves Wessex as well as Severn-Trent and which is due to supply from 1986. When completed it will be the biggest inland lake in Britain and may become the biggest in Europe. Wales is indeed the umbrella of a great deal of England, and it is only right that those who live in the shadow of our massive dams should not find themselves paying significantly more for their water than those urban dwellers whom the dams supply.

The debate has clearly established that the disparity in water charges is due not to varying degrees of efficiency on the part of the water authorities but to the differing costs of distribution to rural and urban communities and the different times when those costs were initially incurred and money borrowed. If I may refer to the constituency of the hon. Member for Brecon and Radnor (Mr. Roderick), I remind the House that the Daniel Report shows that in 1973–74 the total working and debt expenses of supplying 1,000 gallons of water to Birmingham were 14p, compared with 104p for supplying 1,000 gallons to the Radnor area. Different debt charges and differences in the number of consumers per mile of pipeline show up as significant factors accounting for the disparity in the cost of supply.

I have devoted most of my speech to the Welsh aspect of the Bill, as Wales is the major beneficiary. Other areas which will benefit—the Anglian Water Authority area, Northumbria and the South-West—also have special major problems which have been well described by those hon. Members who have spoken on their behalf.

There are clearly divergent views on this Bill. Therefore, I do not intend to give my hon. Friends any more guidance than I have already given as to the way they should vote. I shall support the Bill because I believe that it deserves a Committee stage, where its grave defects can be examined in depth.

9.35 p.m.

The Under-Secretary of State for Wales (Mr. Alec Jones)

Were it not for the humour on both sides of the House, one could say that this debate has been similar to the debate on rate support grant held in the House just before Christmas. All those who will benefit from the Bill will go into one Lobby and all those who live in areas whose inhabitants will be asked to pay additional charges will apparently go into the other Lobby. That puts some of us in difficulty. I shall pay an increased levy on my London flat, but I shall receive benefit through occupation of my house in my constituency. Therefore, I hope to preserve an impartial approach throughout the debate.

I was challenged to find one Labour Member from a losing area who would support the Bill. Therefore, I was refreshed to hear my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) support the Bill on the basis of fairness and justice. [HON. MEMBERS: "What about the Minister?"] I was a little hesitant to include my right hon. Friend the Minister of State, because some may feel that he had obligations for a quite different reason.

I wish to refer to the remarks of the hon. Member for Daventry (Mr. Jones). He expressed his love and admiration for the Water Act 1973. That view was not shared by many hon. Members. The hon. Member for Conway (Mr. Roberts) referred to the alarming increase in costs of water supply attributable to the Water Act which his hon. Friend the Member for Daventry loves so well.

Mr. Wyn Roberts

It was basically to do with the withdrawal of the rate support grant.

Mr. Alec Jones

I accept that, and that was an integral part of the Water Act. Indeed, if it had not been withdrawn half of the problems we have been discussing today would not have existed.

I found the references to devolution something of a red herring in discussing the Bill. There will be major discussions about linking water services in Wales in terms of devolution when we come to deal with that part of the Scotland and Wales Bill. The hon. Member for Daventry will know that there are sufficient reservations implicit in paragraphs 37 and 38 of the consultative document to allay some of his fears

The hon. Gentleman used selective quotations from Daniel—not biblical quotations, I hasten to add. I remind him that there was a strong recommendation in that report for a Welsh national water authority to be given power to extend into commercial pricing. The hon. Gentleman did not refer to that part of the report. Perhaps it was a significant omission on his part.

The hon. Gentleman also mentioned that we were dealing with some isolated issues concerning equalisation charges, and he added that it was something that should not have been considered at present because last year was an abnormal period because of the drought. But we are not talking about isolated equalisation charges. Our decision on partial equalisation will have significant long-term effects on the transfer of water from one region to another based on the principle of no profit and no loss. If the House desires that principle to be implemented, it should view with alarm the possibility of the rejection of the modest proposals in the Bill.

The long-term future of water supplies for people living in England and Wales depends upon co-operation, not only between water authorities but between people living in the different areas of the United Kingdom. A wrong decision on equalisation charges will affect the no-profit, no-loss transfers, the willingness of people to co-operate, and the ability to build the reservoirs which it is essential to build where they are most needed. It is folly to believe that because we escaped the worst consequences of last year's drought we can escape the worst consequences of any future drought.

Mr. Arthur Jones

I know that the hon. Gentleman will deal with the point of who pays for the transferability of water. Does he believe that it is fair that a consumer in one area should pay for the costs of water supplied to consumers in another area? That is the general question that arises—whether that is fair or whether it would be fair to pay for it out of general taxation.

Mr. Alec Jones

I could have given the hon. Gentleman my scribbled note, because that is the very next point to which I intended to come.

Mr. David Price rose—

Mr. Alec Jones

I am prepared to give way, just as long as hon. Members do not blame me for not dealing with specific questions that have been raised in the debate.

Mr. David Price

The hon. Gentleman talked about the drought. Can he explain how a Bill that is time-barred at 1st April 1976 can deal with last summer's drought?

Mr. Alec Jones

All that I indicated was that, if we are to ensure that we have adequate supplies of water in the United Kingdom, this will need long-term planning and co-operation between water authorities; and we are not likely to get that co-operation unless we set right the disparities that exist at present between charges.

Hon. Members on both sides have accepted that there is a measure of injustice in the wide disparities that exist, not only between Welsh domestic consumers but between consumers in the South-West and other regions. Most hon. Members who have spoken in tile debate have accepted that, because of the 1973 Act, the rate support grant is no longer available and that there is no possibility of using that method as a means of remedying the defect.

Hon. Members have also considered the possibility of using a Government subsidy. My right hon. Friend the Member for Bermondsey (Mr. Mellish) made this suggestion. I should like to suggest to my right hon. Friend the Prime Minister that he thinks of some job to give my right hon. Friend the Member for Bermondsey so as to keep him off my back for a few months. This is a point which was taken up by the right hon. Member for Devon, North (Mr. Thorpe).

Mr. Mellish rose—

Mr. Alec Jones

I am sorry, but I have given way already.

Mr. Speaker

Order. This is not a private debate. The Minister has not given way.

Mr. Alec Jones

If my right hon. Friend feels strongly about this I shall give way in a moment or two, but I must make this point in repy to the point raised by my right hon. Friend and the right hon. Member for Devon, North. I accept it with some reasonable grace from my right hon. Friend but with somewhat less grace from the right hon. Gentleman. I thought it was a bit thick of the hon. Member for Bury St. Edmunds (Mr. Griffiths) to advocate an increase in public expenditure at the present time.

Successive Governments have accepted that the water industry should be self-supporting. If that is so, especially at this time of great financial difficulties, it is completely unrealistic to think that we could increase public expenditure when we have been reducing or slowing down the rate of growth in many other services. That is why the Government could not accept that a Government subsidy was an appropriate means of bringing together wide variations in water supply.

Mr. Mellish

If my hon. Friend has it in mind to bring in a National Water Authority that would remove all these anomalies, which he talks about with a good deal of justification, and if he likes to offer me the chairmanship, I am prepared to consider it.

Mr. Denis Howell

What about me?

Mr. Alec Jones

I shall consider my right hon. Friend the Member for Bermondsey for any suitable vacancy which occurs.

Just before Christmas I stood at this Box debating the rate support grant. At that time I defended the Government's decision, when the grant was restricted, to concentrate it in the areas with the most acute need.

Mr. Mellish

That is a national grant.

Mr. Alec Jones

I understand my right hon. Friend's views. We had a trial run at Welsh Question Time today, when he apologised for some mistakes that he had made in the past. Whether one talks of rate support grant or of levies, ultimately the money comes from the pockets of the same sort of people. It is not reasonable to compare water charges with rates.

I found it peculiar that the hon. Member for Hampstead (Mr. Finsberg) should suggest that people regarded their rate bills in the aggregate. If that is so I do not know how they manage in his constituency, where they receive separate water bills.

Mr. Geoffrey Finsberg

Will the Minister recall that my point was that those who will now pay higher water rates, unlike those paying higher general rates, qualify for no rate rebate?

Mr. Alec Jones

I do not know where many Conservative Members were during those bleak years from 1970 to 1974. The Water Act of 1973, which brought about the very situation that the hon. Member is describing, was introduced by his Government and carried through by the votes of his colleagues and not those of mine.

Figures show that the unequalised bills in the next financial year, 1977–78, are likely to range from £15.10 at the lowest for domestic supplies to £26.80 at the highest. We say that this range, from 18 per cent. below the average to 46 per cent. above, is intolerable.

My right hon. Friend the Member for Anglesey (Mr. Hughes) was right to draw attention to the history of this scheme. In answer to his question whether this was a holding Bill, I would say that we shall have a National Water Authority and we are hoping to publish a White Paper giving our proposals on this in the spring of this year. As for the effectiveness of this scheme, about which my right hon. Friend also asked, it is likely to disappear in about five years. There is reference to this in paragraph 73 of the consultative document.

The hon. Member for Worcestershire, South (Mr. Spicer) referred to the Bill as a tax on efficiency, and this was also implied by other hon. Members. They said that high charges in one area reflected bad management in the past while low charges reflected wise managemen and that, therefore, we ought to be seeking to reward wisdom and to punish the foolish. I do not for one moment believe that. If one examined the large number of individual water authorities that existed in Northumbria, Anglia, the South-West and Wales, one would not find that each and every one of them had high charges because they were guilty of bad management.

High charges reflect high costs. Distribution costs are greater in rural areas than in populated areas. It is much more expensive to provide water supplies for 1,000 houses in the South-West than it is to provide supplies for 1,000 similar houses in London. The Daniel Report gives a comparison of costs in 1973–74 in two areas—Birmingham and Radnor—and the sources of payment. In Birmingham costs were 0.20p and in Radnor 0.40p. After the cost of distributio boosting was added, the cost in Birmingham jumped to 14.01p but in Radnor it jumped to 104.46p.

Those figures clearly indicate that it is the nature of an area that causes higher costs and charges. This point was made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop), who mentioned that in the South-West and many other areas one of the factors involved was the increasing population in summer caused by visitors who made no direct contribution to the cost of water resources.

Similarly, the hon. Member for Tiverton was right to remind us that the predecessor of the South-West Water Authority had been prevented from providing water resources because the House had killed the Bill. It is not a matter of bad management or unwillingness to finance essential services. The cost of providing water services in some districts is, by the nature of those areas, much more expensive than in other districts.

I was asked why industrial users were not included in the Bill and why there will be no effect on the charges to industrial consumers. The reason is that they can exercise—and the drought shows that they did this—control over levels of consumption. In many cases industrial consumers showed that there was a possibility of more economic use of our water resources. It should also be borne in mind that the Bill is an interim and holding operation. It is desirable to concentrate on the area of greatest need, and that is the wide range of charges laid upon domestic consumers.

The hon. Member for Daventry asked about sewerage. One of the reasons why sewerage is not included in the Bill is that there are wide variations in standards of treatment of sewage and it is, therefore, not a comparable matter to standards of water supply. Furthermore, water authorities, whilst being fairly self-sufficient in terms of sewage disposal, are to a larger or lesser degree interdependent for water supplies.

Water companies were left out of the Bill for practical reasons. It was not possible to include them because of their entirely different financial structure. The White Paper clearly spells out that they will be included in future and will become part of the scheme. This was mentioned in paragraph 56 of the consultative document, and I recommend the hon. Member for Worcestershire, South to read it.

An alternative to the scheme—the Daniel Committee offered this option—is that the pricing of water should be done on a commercial basis. I do not agree with that there are probably only three hon. Members who do. The water authority took legal opinion on this matter, and that opinion stated: The Welsh authority can, by an agreement made under Section 12 of the Water Act 1945 (as substituted by Section 12 and Schedule 4 to the Act of 1973) lawfully make a charge on the English authority for the bulk supply which exceeds the cost of providing that supply". If that policy were implemented, bang would go all prospect of transferring water on a no-profit, no-loss basis, and bang would go all prospect of co-operation between water authorities in building new or extending existing reservoirs.

My hon. Friend the Member for Brecon and Radnor (Mr. Roderick) referred to the question of Craig Goch. As long as the threat to charge on a commercial basis for water supples existed, there was no hope even of having discussions between the Severn-Trent Water Authority and the Welsh National Development Water Authority on the essential need to extend Craig Goch for Welsh consumers and for English consumers. Once the Bill had been introduced, the soured relations between the two authorities changed and they are now working together to bring about a considerable improvement.

There has been some difference over figures. Every document which has come my way, from the Thames, Severn-Trent or any other authority, contains slight variations. I do not blame any authority for that. It merely indicates—this point was emphasised in the consultative document—how difficult it is to get true, up-to-date, reliable figures. The figures which we have published have not been disputed by any of the authorities.

The Bill includes all unmeasured charges, including the commercial ones, but they are relatively important only in the Thames area—where Harrods and other big stores are situated—so that they distort the average. Therefore, my right hon. Friend the Minister of State and the hon. Member for Daventry were using relatively accurate figures but were not comparing like with like.

It has been said that the Severn-Trent Water Authority had made the point that the gap was narrowing without its being necessary to introduce the Bill. I accept that on the figures which the authority used there was a narrowing, but those figures were drawn from an answer given last February. Our most up-to-date figures, far from indicating that the gap was narrowing, show that it is increasing.

The Bill is truly a modest measure. It will bring about a degree of fairness, but it is essential if we are to establish this important principle of fairness and if we are to ensure that water supply shall be developed economically and for the full and best use of all of us, wherever we may live.

This is a worthy Bill and I commend it to the House.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 228, Noes 133.

Division No. 43.]	AYES	[9.59 p.m.
Abse, Leo	Fernyhough, Rt Hon E.	Lyon, Alexander (York)
Allaun, Frank	Fitch, Alan (Wigan)	Lyons, Edward (Bradford W)
Anderson, Donald	Flannery, Martin	Mabon, Rt Hon Dr J. Dickson
Armstrong, Ernest	Fletcher, Ted (Darlington)	McCartney, Hugh
Atkins, Ronald (Preston N)	Fookes, Miss Janet	McDonald, Dr Oonagh
Barnett, Guy (Greenwich)	Foot, Rt Hon Michael	McElhone, Frank
Bates, Alf	Ford, Ben	MacFarquhar, Roderick
Bean, R. E.	Forrester, John	MacGregor, John
Benn, Rt Hon Anthony Wedgwood	Fowler, Gerald (The Wrekin)	McGuire, Michael (Ince)
Bennett, Andrew (Stockport N)	Fraser, John (Lambeth, N'w'd)	MacKenzie, Gregor
Bishop, E. S.	Freeson, Reginald	Mackintosh, John P.
Blenkinsop, Arthur	Garrett, John (Norwich S)	Maclennan, Robert
Boardman, H.	Garrett, W. E. (Wallsend)	McMillan, Tom (Glasgow C)
Body, Richard	George, Bruce	Madden, Max
Booth, Rt Hon Albert	Gilbert, Dr John	Mallalieu, J. P. W.
Boothroyd, Miss Betty	Ginsburg, David	Marks, Kenneth
Bottomley, Rt Hon Arthur	Golding, John	Marshall, Dr Edmund (Goole)
Boyden, James (Bish Auck)	Gould, Bryan	Marshall, Jim (Leicester S)
Bray, Dr Jeremy	Gower, Sir Raymond (Barry)	Maxwell-Hyslop, Robin
Brown, Hugh D. (Provan)	Graham, Ted	Maynard, Miss Joan
Brown, Robert C. (Newcastle W)	Grant, John (Islington C)	Meacher, Michael
Buchan, Norman	Grist, Ian	Meyer, Sir Anthony
Callaghan, Jim (Middleton & P)	Hamilton, James (Bothwell)	Millan, Rt Hon Bruce
Canavan, Dennis	Hannam, John	Mills, Peter
Cant, R. B.	Harper, Joseph	Moonman, Eric
Carmichael, Nell	Harrison, Walter (Wakefield)	Morris, Alfred (Wythenshawe)
Carter-Jones, Lewis	Hart, Rt Hon Judith	Morris, Charles R. (Openshaw)
Clemitson, Ivor	Hicks, Robert	Morris, Rt Hon J. (Aberavon)
Cocks, Rt Hon Michael (Bristol)	Hooley, Frank	Morris, Michael (Northampton S)
Cohen, Stanley	Horam, John	Moyle, Roland
Coleman, Donald	Howell, Rt Hon Denis (B'ham, Sm H)	Mulley, Rt Hon Frederick
Concannon, J. D.	Howells, Geraint (Cardigan)	Murray, Rt Hon Ronald King
Cook Robin F. (Edin C)	Hoyle, Doug (Nelson)	Newens, Stanley
Cowans, Harry	Huckfield, Les	Newton, Tony
Crawshaw, Richard	Hughes, Rt Hon C. (Anglesey)	Oakes, Gordon
Crosland, Rt Hon Anthony	Hughes, Mark (Durham)	Ogden, Eric
Crowther, Stan (Rotherham)	Hughes, Roy (Newport)	O'Halloran, Michael
Cryer, Bob	Hunter, Adam	Orme, Rt Hon Stanley
Cunningham, G. (Islington S)	Irving, Rt Hon S. (Dartford)	Owen, Rt Hon Dr David
Cunningham, Dr J. (Whiteh)	Jackson, Colin (Brighouse)	Palmer, Arthur
Dalyell, Tam	Jackson, Miss Margaret (Lincoln)	Park, George
Davidson, Arthur	Janner, Greville	Parker, John
Davies, Denzil (Llanelli)	Jay, Rt Hon Douglas	Penhaligon, David
Davies, Ifor (Gower)	John, Brynmor	Prescott, John
Davis, Clinton (Hackney C)	Johnson, James (Hull West)	Price, C. (Lewisham W)
Deakins, Eric	Jones, Alec (Rhondda)	Price, William (Rugby)
Dean, Joseph (Leeds West)	Jones, Barry (East Flint)	Radice, Giles
de Freitas, Rt Hon Sir Geoffrey	Jones, Dan (Burnley)	Rees, Rt Hon Merlyn (Leeds S)
Dell, Rt Hon Edmund	Judd, Frank	Ridsdale, Julian
Doig, Peter	Kaufman, Gerald	Roberts, Michael (Cardiff NW)
Dormand, J. D.	Kerr, Russell	Roberts, Wyn (Conway)
Douglas-Mann, Bruce	Kilroy-Silk, Robert	Roderick, Caerwyn
Dunnett, Jack	Kinnock, Nell	Rodgers, George (Chorley)
Eadie, Alex	Lamborn, Harry	Rose, Paul B.
Edge, Geoff	Lamond, James	Ross, Rt Hon W. (Kilmarnock)
Edwards, Robert (Wolv SE)	Leadbitter, Ted	Rowlands, Ted
Ellis, John (Brigg & Scun)	Lewis, Ron (Carlisle)	Ryman, John
Evans, Gwynfor (Carmarthen)	Lipton, Marcus	Sedgemore, Brian
Evans, Ioan (Aberdare)	Lomas, Kenneth	Sheldon, Rt Hon Robert
Ewing, Harry (Stirling)	Luard, Evan	Shepherd, Colin
Shore, Rt Hon Peter	Thomas, Dafydd (Merioneth)	White, Frank R. (Bury)
Short, Mrs Renée (Wolv NE)	Thomas, Jeffrey (Abertillery)	Whitlock, William
Silkin, Rt Hon John (Deptford)	Thomas, Ron (Bristol NW)	Wigley, Dafydd
Silverman, Julius	Thorne, Stan (Preston South)	Willey, Rt Hon Frederick
Skeet, T. H. H.	Thorpe, Rt Hon Jeremy (N Devon)	Williams, Rt Hon Alan (Swansea W)
Skinner, Dennis	Tierney, Sydney	Williams, Rt Hon Shirley (Hertford)
Small, William	Tinn, James	Williams, Sir Thomas
Smith, John (N Lanarkshire)	Tomlinson, John	Wilson, Alexander (Hamilton)
Snape, Peter	Torney, Tom	Wilson, William (Coventry SE)
Spriggs, Leslie	Tuck, Raphael	Wise, Mrs Audrey
Stainton, Keith	Varley, Rt Hon Eric G.	Woodall, Alec
Steel, Rt Hon David	Wainwright, Edwin (Dearne V)	Wrigglesworth, Ian
Stoddart, David	Walker, Harold (Doncaster)	Young, David (Bolton E)
Stott, Roger	Walker, Terry (Kingswood)
Stradling Thomas, J.	Ward, Michael	TELLERS FOR THE AYES:
Strang, Gavin	Watkins, David	Mr. Thomas Cox and
Strauss, Rt Hon G. R.	Weetch, Ken	Mr. A. W. Stallard.
Summerskill, Hon Dr Shirley
NOES
Arnold, Tom	Higgins, Terence L.	Price, David (Eastleigh)
Atkinson, Norman	Hodgson, Robin	Rathbone, Tim
Baker, Kenneth	Hooson, Emlyn	Rees, Peter (Dover & Deal)
Bell, Ronald	Hordern, Peter	Rees-Davies, W. R.
Bennett, Dr Reginald (Fareham)	Howell, David (Gulldford)	Rhodes James, R.
Berry, Hon Anthony	Howell, Ralph (North Norfolk)	Rhys Williams, Sir Brandon
Bidwell, Sydney	Jeger, Mrs Lena	Richardson, Miss Jo
Biggs-Davison, John	Johnson Smith, G. (E Grinstead)	Ross, Stephen (Isle of Wight)
Boscawen, Hon Robert	Kaberry, Sir Donald	Rossi, Hugh (Hornsey)
Bottomley, Peter	Kershaw, Anthony	Rost, Peter (SE Derbyshire)
Bowden, A. (Brighton, Kemptown)	Knight, Mrs Jill	Royle, Sir Anthony
Boyson, Dr Rhodes (Brent)	Knox, David	Sainsbury, Tim
Brown, Ronald (Hackney S)	Langford-Holt, Sir John	Scott, Nicholas
Butler, Adam (Bosworth)	Latham, Arthur (Paddington)	Scott-Hopkins, James
Butler, Mrs Joyce (Wood Green)	Lawrence, Ivan	Shaw, Giles (Pudsey)
Chalker, Mrs Lynda	Lawson, Nigel	Shaw, Michael (Scarborough)
Clark, William (Croydon S)	Lestor, Miss Joan (Eton & Slough)	Shelton, William (Streatham)
Clarke, Kenneth (Rushcliffe)	Lloyd, Ian	Shersby, Michael
Clegg, Walter	Loveridge, John	Silvester, Fred
Cooke, Robert (Bristol W)	Luce, Richard	Sims, Roger
Cope, John	Macfarlane, Neil	Sinclair, Sir George
Cormack, Patrick	McNair-Wilson, P. (New Forest)	Smith, Dudley (Warwick)
Costain, A. P.	Marshall, Michael (Arundel)	Spence, John
Drayson, Burnaby	Marten, Neil	Spicer, Jim (W Dorset)
Durant, Tony	Mates, Michael	Spicer, Michael (S Worcester)
English, Michael	Maude, Angus	Stanbrook, Ivor
Eyre, Reginald	Mayhew, Patrick	Stanley, John
Finsberg, Geoffrey	Mellish, Rt Hon Robert	Steen, Anthony (Wavertree)
Fisher, Sir Nigel	Mikardo, Ian	Stewart, Rt Hon M. (Fulham)
Fletcher-Cooke, Charles	Miscampbell, Norman	Taylor, R. (Croydon NW)
Forman, Nigel	Mitchell, David (Basingstoke)	Tebbit, Norman
Fowler, Norman (Sutton C'f'd)	Mitchell, R. C. (Soton, ltchen)	Townsend, Cyril D.
Fox, Marcus	Moate, Roger	van Straubenzee, W. R.
Fraser, Rt Hon H. (Stafford & St)	Montgomery, Fergus	Viggers, Peter
Galbraith, Hon T. G. D.	Moore, John (Croydon C)	Wainwright, Richard (Colne V)
Gardner, Edward (S. Fylde)	More, Jasper (Ludlow)	Walker, Rt Hon P. (Worcester)
Glyn, Dr Alan	Nelson, Anthony	Walker-Smith, Rt Hon Sir Derek
Goodhew, Victor	Neubert, Michael	Wells, John
Gorst, John	Normanton, Tom	Winterton, Nicholas
Gow, Ian (Eastbourne)	Onslow, Cranley	Wood, Rt Hon Richard
Grant, Anthony (Harrow C)	Ovenden, John	Young, Sir G. (Ealing, Acton)
Griffiths, Eldon	Page, Rt Hon R. Graham (Crosby)
Hall, Sir John	Page, Richard (Workington)	TELLERS FOR THE NOES:
Hall-Davis, A. G. F.	Pattie, Geoffrey	Mr. Arnold Shaw and
Hampson, Dr Keith	Pavitt, Laurie	Mr. Ernest G. Perry.
Hayhoe, Barney	Percival, Ian

Question accordingly agreed to.

Bill read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).