HC Deb 03 April 1981 vol 2 cc653-8

2.6 pm

Mr. Marcus Kimball (Gainsborough)

I beg to move, That this House calls on the Government to take steps further to curtail the bureaucracy of the water authorities. It is exactly six months since this subject was debated at the Conservative Party conference. That was perhaps the most sincere and heartfelt debate of all at that party conference. In tabling the motion today I am asking the Government to give a progress report on their thinking since that debate last October.

Last October the Government said that they were considering how the charging system could be made to work more efficiently and fairly. Direct billing has brought home to people the cost of water. At the same time, it has increased the unfairness in the present charging system. Rateable values, on which the present system is based, take no account of the amount of water used. When one considers that one-quarter of all households in the United Kingdom are made up of single persons, one realises that it is on them that the greatest unfairness falls.

As a whole, the general public do not complain about the service given by the water authorities. I accept the concept of the authorities dealing with both clean and dirty water throughout the watershed. I do not complain about the size of the present water authorities. I pay a special tribute to the management of water authorities at divisional level. Whatever one may say, local managers are in touch locally and they are approachable. They are expert at bidding for almost more than their fair share of the budget. I am grateful to the managers of the Lincoln division and the Lincoln sewerage division for the great attention that they give to Gainsborough constituents.

In addition to the growing unhappiness about the charging system, the underlying concern is not about the water supply but is based on a distrust of the management structure. Water is a major business today and it should be run as such. There is no complaint about the executive management, but the proper non-executive control is lacking. That bureaucracy which has been built up in the water authorities must be considered, even if it means legislation. I could best describe it as a mule—neither a horse nor a donkey. It is a mixture of local government representatives and Government-appointed members—the Thames water authority has over 60 appointed members. The Anglian water authority has up to 40.

The idea that the public receives a better service by increasing local authority representation on the water authorities is a red herring. Local government representatives on the water authorities are already finding it difficult to find out what is going on and difficult to attend meetings. In Wales they complain about the distances involved and they have no hope of controlling the bureaucracy.

The water authorities should be run like a public company, with a board of between five and seven directors. They should be run as a proper business. Local authority representation should be achieved by having in each area a watchdog group appointed by local councils, with the right to elect one member to the main board.

I am sure that the Minister will make great play of the fact that a foray by firms of accountants into the water authorities has produced a substantial reduction in what might have been the water rates in the coming year, but that in itself shows the weakness of the system.

What company would be satisfied with outside auditors? One expects them to come in if cash is missing or if it is believed that someone has had his hand in the till, but no one suggests that that has happened with the water authorities. Because the directorate is not correct, it has been necessary for an outside firm of accountants to do the job which, in any proper company, would be done by the non-executive board and the audit company.

My case hinges on the fact that the water industry is well run but badly managed. The time has come to examine the management structure of the water authorities and to run them as the proper business that they are and not with a mixture of local authority representation and the appointment of ex-politicians to look at them.

2.10 pm
Mr. John Ryman (Blyth)

I support the general tenor of the remarks of the hon. Member for Gainsborough (Mr. Kimball), but I wish to draw specific points to the Minister's attention so that we may have the Government's views.

The Northumbria water authority, in my constituency, is a gigantic organisation, consisting partly of Government-appointed members and partly of local authority members. It does a good job. The difficulty arises because the authority has inherited from its predecessor an out-of-date system for commercial and residential tariffs. People in Northumberland pay far too high water charges. They are acknowledged by the authority to be excessive, but when I visit the authority in its sumptuous premises in Gosforth the people I speak to agree that the tariffs are anomalous but say that they were inherited from the authority's predecessors, before the 1974 legislation, and it has not had time to change them. From discussions with the Water Council and interested persons generally I understand that that is the picture throughout the country.

These massive organisations are making substantial profits—and some show signs of great extravagance—while residents and commercial organisations have to pay substantial water charges, wholly unrelated to the cost and consumption of water. Will the Government consider recasting the whole system of charges, which authorities agree is anomalous? Will they introduce charges based on consumption rather than on rateable value? Will they look more carefully at water authorities' finances, as they are making excess profits which prove that their financial forecasting and investment programmes are abysmally wrong? Water authority officials go on expensive trips abroad. The water authorities' prime duty is to give customers a satisfactory service at a commercially-sensible rate, but I have dozens of stories from disgruntled constituents who are being fleeced left, right and centre by water authorities, which at the end of the year produce a balance sheet showing a substantial profit.

The finances of water authorities must therefore be examined very carefully. I dissent from the hon. Member for Gainsborough in this respect only. I am not sure that the role of local authorities can best be served in the way that he described.

The difficulty is this. As the legislation stands, the Government are powerless to intervene in the administration of water authorities except through the appointment of individual members of the authorities. I remember this vividly from the time of the Labour Government, when I saw the then Minister about this very problem as a result of representations that I had received about excessive water charges in Northumberland. The Minister at that time told me that he was unable to intervene in any matter at all because he did not have the power to intervene on questions of tariffs. That is an appalling state of affairs. The public interest cannot be served by the Minister because he is powerless to intervene on behalf of constituents who, rightly or wrongly—and very often rightly—feel that they are being overcharged. Under the present legislation, the Minister's power is limited to the appointment of a few members of the authority.

The recent very serious dispute between the management of water authorities and trade unions representing the workers graphically demonstrated the extent to which management was out of touch with the feelings of the workers. The water industry has a long and honourable record of industrial relations. I believe that there has never been an official industrial dispute. The recent dispute was unofficial. It resulted in a derisory pay offer to a number of trade unions representing workers in the industry by a management that was totally out of touch with their feelings. Had the matter been handled differently, the very serious industrial dispute that was on the point of occurring might have been avoided altogether. Happily, the matter has now been resolved, as the Minister knows—but no thanks to him, because he was unable to intervene, and no thanks to the management of the water authorities.

The Government must therefore deal with a number of issues. I am sure that the country would like to know what the Government's thinking is. I believe that local authorities should continue to play an active part in the administration of water authorities. There is an argument for saying that their role should be different from what it is at present, particularly with regard to representation on the authorities in question. The time is long overdue when the Government should have a direct say in protecting the consumer in the water industry and in controlling the financial affairs of the management of water authorities. At present, there is no protection for the public, due to the absence of the powers that I have described.

2.19 pm
Sir Frederick Burden (Gillingham)

I shall be brief, as I am sure that we wish to hear from the Minister. I shall take two minutes.

I congratulate my hon. Friend the Member for Gainsborough (Mr. Kimball) on introducing this short debate, as there is great concern among our constituents—both private individuals and business people—about events in the water industry over the past couple of years. Last year Members of Parliament were inundated with letters of complaint about the enormous increase in cost when direct billing was undertaken y the water authorities. In many instances this was attributed to the cost of direct billing. Certainly the charges were very much greater than they had been when they were paid through the local rates. Not unnaturally, there were considerable expressions of distress from many consumers at the great increase in costs. Hon. Members on both sides of the House took up this matter strongly with the water authorities. Hon. Members have no power to table a question about the charges of the water authorities. The motion gives us an opportunity to raise this important point.

This year, again, the cost to the ordinary consumer has escalated considerably. I see that the water authorities have also introduced standing charges—this has never been done before—for water and for sewerage. I join my hon. Friend and the hon. Member for Blyth (Mr. Ryman) in asking the Government to look seriously at this matter. It is time that the consumer was considered. The Government and the water authorities will do themselves a great deal of good if it is made evident beyond doubt that they are looking at efficiency and the service given to the community and to industry—provided at reasonable rates.

Many people on low incomes are greatly concerned. In the past, water charges were attached to the billing of ordinary rates. Those in great need could get relief on that basis. I understand that they can no longer get relief from their water rates because they are billed directly by the water authorities. It has to be made clear beyond reasonable doubt that when old-age pensioners and others are called upon to pay high water rates which will cause them considerable financial difficulty they will have the opportunity to get a rebate.

2.21 pm
The Under-Secretary of State for the Environment (Mr. Giles Shaw)

At this late hour in the course of the time permitted, the House will understand that it will not be possible for me to deal in full measure even with the points raised by my hon. Friends the Members for Gainsborough (Mr. Kimball) and Gillingham (Sir. F. Burden) and the hon. Member for Blyth (Mr. Ryman), which reflect the need for a wider debate on the problems affecting heir constituents in relation to water authorities. I congratulate my hon. Friend the Member for Gainsborough on raising this issue. I have no doubt that there will be further reference to it in the future. This will enable more hon. Members to participate in the discussion. I understand the reason for their interest.

My hon. Friend the Member for Gillingham raises the matter of relief on charges. I remind him that water charges are charges for services provided. Rates are a tax for which a rebate is an appropriate method of deduction for those unable to pay. As in the case of other charges—gas and electricity and so on—relief is available through supplementary benefit or DHSS provisions. It is not a matter for the authorities to give a rebate.

I understand the view of my hon. Friend the Member for Gainsborough, to be that the present structure does not suggest adequate management control. On the other hand, the House has heard from the hon. Member for Blyth the view that there should be greater intervention by the Government in controlling prices and charges. There is, therefore, this immediate dichotomy. Either we set up an authority which is well managed and can manage its own affairs or we seek an even greater degree of nationalised control of water undertakings to make them more directly accountable to those in the House or to Ministers.

At the time of the restructuring of the water authorities the view was taken—a view that I fully support—that the authorities would become as independent and as effective in their operation as their ability could ensure. Within that structure, the House at the time passed a Bill which included representation from local authorities as the major route by which local consumers could obtain service and/or redress.

As my hon. Friend the Member for Gainsborough made clear, the element of consumer representation via local authority representatives on water authority boards has perhaps not produced as great or as close a relationship as might have existed. The hon. Member for Blyth was also keen to see stronger consumer representation. I must tell them that, as my right hon. Friend the Minister for Local Government and Environmental Services made clear at the Conservative conference in October last year, we expect and require representatives from local authorities to be an informed and informative channel of communication. If they cannot do that, we shall have to look closely at that point.

I accept that consumers within the areas served by the authorities must be aware of what the authorities wish to do. Likewise, the authorities must be aware of the need to satisfy consumers. It is undoubtedly true that in the past year or two, as direct billing has been adopted, consumer reaction and involvement has demanded a sensitive system and relationship.

I stress the skill and dedication with which authorities serve the public in their respective areas. My hon. Friend the Member for Gainsborough rightly paid tribute to the services that the Lincoln authority had given to his constituents. Authorities provide extensive services to practically every household in the country. They provide essential services in terms of water purity and reliability. In addition, authorities are now taking in hand the essential disposal of effluent and sewage.

For the first time, those who are directly billed—I do not refer to those who have received bills from water companies—by water authorities are fully aware of the costs of the services that are being provided. One problem has been that for a long time consumers have assumed that water was a cheap and disposable commodity that came out of a tap for 365 days a year without any problem. They did not want to know about things that were flushed out of households. We are having to recognise that water provision and the disposal of water in its effluent form is costly. Understandably, if regrettably, consumers must pay for it. That is why my right hon. Friend the Secretary of State took due note this year of the importance of the ranges of charges that are proposed. As my hon. Friend the Member for Gainsborough said, somewhat cavalierly, he used a team of consultants to satisfy himself that further changes could be made in the water charges that many authorities sought to expose. That does not suggest that at that time the water authorities were exceeding their management function in imposing such charges.

The Government had to take the view that it was necessary to proceed in that way. The consultants' report that resulted from the exercise produced a significant consumer saving. Overall, the average of regional water authority main charges was reduced from 19.4 per cent. to 13.3 per cent. In England and Wales, consumers saved about £86 million as a result of the exercise. That is indicative of two things. First, there is a need to recognise that charges are now a major item in household budgets and are a significant item in planning. Secondly, it must be recognised that the costs of water and sewage disposal are sufficiently high to be recognised by the consumer as a major impost. Whether we move to metered supplies or continue to base charges on rateable value, water and water services will continue to represent a significant cost. There is no getting away from that.

What the Government are seeking to do is to see that those costs are correctly levied and that they reasonably reflect the authorities' power to obtain a satisfactory return on their capital and keep within their tightly controlled borrowing limits. That brings me to the 10- point plan that my right hon. Friend the Minister for Local Government and Environmental Services announced last year. We have taken action to provide tight financial limits and to set financial objectives for the authorities. We consider that local authority representatives must be more effective in providing an informed and informative channel of communication between authorities and the areas that they serve. But we remain convinced that independent authorities of the kind set up under the Act are the best way of ensuring that regional variations—

It being half past Two o'clock, the debate stood adjourned.

  1. FOREIGN AFFAIRS 31 words