Water Bill

HC Deb 20 January 1981 vol 997 cc202-36

Order for Second Reading read

7.13 pm

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

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

As befits a short Minister, this is a short Bill. In the Government's view, it is uncontroversial, but we regard it as important. Indeed, as will become clear, it is vital for the British Waterways Board that it becomes law as soon as possible.

I should like to place the Bill in context as far as the water industry is concerned. Let me make it quite clear that it does not in any way affect the structure and basic powers of water authorities as provided for in the Water Act 1973; in so far as it affects existing legislation, it does so only very much at the margins.

The Bill provides for three unrelated matters. First—this is its raison d'etre—it provides for an increase in the borrowing powers of the British Waterways Board. Secondly, it seeks to amend existing legislation with regard to the supply and use of water for fire-fighting purposes. Thirdly, it seeks to change the law whereby water authorities can insist on separate service pipes to individual dwellings. I do not want at this stage to dwell on the detail of these provisions—the Committee stage is the proper place for that—but I should like to cover, briefly, the background to our proposals.

I am aware that many hon. Members here tonight take a close interest in the board's activities, but for the benefit of those who are less well informed I ought perhaps to say a word or two about the board's background and the history of its borrowing powers.

The board was set up in 1962 under the Transport Act of that year. It is currently responsible for maintaining about 2,000 miles of inland waterway, including 350 miles of commercial routes and 1,100 miles of canals used for pleasure cruising. It also operates docks, warehouses and terminals in connection with its freight-carrying waterways and is responsible for the amenity development of its recreational waterways.

The board's income does not cover its costs. It therefore receives an annual grant from the Exchequer to cover the deficit on its revenue funding; on average, it amounts to 60 per cent. of total revenue costs. Capital expenditure is funded through borrowing, which is subject to limit under existing legislation. The limit originally set, in 1962, at £30 million was to allow for the board's commencing debt—about £19.25 million—and for future borrowing. Under the Transport Act 1968 the commencing debt was written down to £3.75 million and, as a result, the overall borrowing limit was reduced to £12 million. By 1977 the board was in danger of exhausting this limit, and it was raised by the previous Administration to its present level of £20 million. We now propose to authorise a further increase.

I am sure that few hon. Members will disagree with me when I say that the task of preserving our inland waterways is extremely important but, at the same time, it is extremely onerous and costly. Once the lifeblood of our industry, they have, over the last 150 years, gradually seen their trade eroded by other forms of transport—in particular, the railways—yet they still transport some commercial freight; and, of course, over the last 20 years they have become increasingly important as a leisure facility.

The need to maintain our canals and waterways is thus as great now as it was in earlier years, but not for the original purposes. The Government recognise this. Regrettably, many stretches of waterway, including some of the marvellously engineered aquaducts and tunnels, are in a less than adequate state of repair, due to their age, decay and many years of past neglect. The tragic collapse of the shaft in the Wast Hill tunnel in Birmingham during repair works is but one example of the problems that the board faces. At the same time, the cost of keeping the system going, including the capital costs of buildings, plant and equipment, has continually risen. Inevitably, this is in part due to the effects of inflation.

Borrowing has also increased to cover the costs of replacing essential capital assets and undertaking major improvement work, particularly to the Sheffield and South Yorkshire navigation. Hon. Members may know that, when finished, this scheme will enable 700-ton barges to reach Mexborough and 400-ton vessels to reach Rotherham. This will clearly improve the competitiveness of the canal and it is hoped that it will successfully demonstrate that our inland waterways can have a viable future. The total cost of the scheme is estimated at £14 million, and even with generous grants from the European regional development fund and South Yorkshire county council it makes a heavy call on the board's borrowing powers and will continue to do so in the coming months.

Between 1977, when the board's borrowing powers were last increased, and 1980 we estimate that the board has had to borrow an extra £8 million for capital items. As a result, its present borrowing limit is likely to be exhausted in the very near future if account is taken of its facility for temporary borrowing. The Government therefore propose to increase the board's borrowing powers under the Bill from the present limit of £20 million to £35 million. We intend that £5 million should be authorised on Royal Assent and a further £10 million, as and when needed, by order or orders of the Secretary of State, subject to affirmative resolution. In this way, the House will retain close control over the board's borrowing limit, but will also have the flexibility to authorise limited extra borrowing without recourse to a further Bill.

I turn now to the second main provision in the Bill: the exemption from charges of water taken for fire-fighting. This will come as no surprise to those right hon. and hon. Members representing constituencies in the north-west region who have been in regular correspondence on this subject since 1978.

Under present law—schedule 3 to the Water Act 1945, which has been applied over the years to almost the whole of England and Wales—water undertakers, whether water authorities or water companies, are not permitted to charge for taking water from a public hydrant for fire fighting purposes. But where, say, an employer installs fire fighting equipment such as a sprinkler system in his premises, it is open to water authorities to charge for the benefit of having that supply available and for any water taken through such a system for fire fighting. Indeed, under section 30 of the Water Act 1973, they are bound to have regard to the cost of providing any service in setting their charges and in doing so not to show undue preference to or to discriminate unduly against any class of consumer.

One water authority interpreted this as obliging it to charge for fire fighting supplies as though they were in regular daily use. This would have involved many consumers in substantial additional costs. I do not challenge the view of the water authority in question about its legal obligations as they now stand under section 30, but a major issue of principle is involved here. Any charge on water for fire fighting can be regarded as a bar to public safety. The Government are vitally concerned that there should be no such impediment to the installation and use of fire-fighting equipment in private premises used by the public. I feel sure that the House will share this view, particularly with the memories so fresh in our minds of those terrible fires at the Woolworth's store in Manchester and in hotels in America.

Accordingly, clause 2 provides for the exemption from charges of the supply and use of water for fire-fighting purposes and for testing fire-fighting equipment. Clause 3 brings into effect throughout the whole of England and Wales the related provisions about fire hydrants and the taking of water from them. The combined effect will be that the law on water for public and private fire fighting will be the same in all parts.

There are two supplementary points that I should like to make about this provision. The first is that we regard section 30 as the proper charging framework for the water industry. It is similar to charging provisions in other nationalised industries. Only in exceptional circumstances like these—public safety from fire—would we be prepared to move away from it. Secondly, this provision seeks to establish a general principle. The application of that principle to consumers' circumstances would be left to be worked out in orders made by my right hon. Friend. Some of these orders will be reasonably straightforward. Others will be complicated, particularly those concerned with cases where the consumer has one connection to the mains for all purposes. We shall, of course, consult fully before making any orders, and we shall try to make them as straightforward as possible. But the important point is to establish a general principle that will apply to all cases.

I want now to say a few words about the third provision of the Bill: the removal of the power of water undertakers to insist on a separate service pipe to existing dwellings. A service pipe connects a house or a group of houses to the main water supply. The Bill provides that water authorities may insist on a separate service pipe to existing houses only where there is a genuine operational or management need. It will also allow them to require that all new houses should be built with separate service pipes.

The present position, which the Bill would replace, is that before the Water Act 1945 came into force—which happened at different times in different parts of the country—many houses, especially those built in terraces, were built with a common service pipe, that is, one pipe supplying a group of houses. This causes problems if the common pipe needs renewal and the cost has to be shared among the house owners. The Water Act 1945 provided that all houses built after it came into effect should have a separate service pipe, except where a single owner of a group of houses agreed to pay the water charges for all of them. It also provided that it should apply to houses built before the Act only if the common pipe was defective, or where payment of a bill for water services was in arrears or where a single house had been divided into a number of dwellings.

In some cases local authorities continued to build on the common supply principle. This is slightly cheaper, but can cause difficulties where a council house is sold. The new owner may then be required to install, at his own expense, a separate service pipe. The nonsense of this situation was emphasised by a case in the constituency of my right hon. Friend the Member for Sidcup (Mr. Heath), where the purchaser of a council house faced a bill for over £2,000 simply to install a new service pipe. There was nothing wrong with the existing one, but it was water authority policy to insist that a new pipe be installed. The Bill will simplify the position, removing the distinction between jointly owned houses and others, and still allow water undertakers to insist on separate pipes where there is a genuine need. Before I close I should outline, for the House's benefit, what each clause of the Bill contains. Clause 1 relates to the borrowing powers of the British Waterways Board and provides for an increase in the borrowing limit from the present £20 million to £35 million. Clause 2 provides for the exemption from charges of the supply and use of water for fire fighting and testing fire-fighting equipment. It seeks to empower the Secretary of State to lay down by order the method to be used in calculating charges where a supply is used only partly for fire-fighting purposes. Clause 3 seeks to apply throughout England and Wales provisions relating to the supply and use of water from hydrants for fire-fighting purposes. Clause 4 seeks to remove the power of water authorities to require separate service pipes for existing dwellings, but enables them to require separate service pipes in all new dwellings. Clause 5 describes the short title and extent of the Act.

7.25 pm

Mr. Denis Howell (Birmingham, Small Heath)

My speech will be somewhat longer that that of the Minister because I want to spend some time on the proposals that we were promised would be included in this major Bill but which seem to have disappeared at a very early stage.

First, it would be churlish of me not to welcome the Under-Secretary to our discussions on these issues, and I do so most sincerely. He is a most agreeable colleague and one who takes an interest in his ministerial position. I therefore wish him well in his new post. I am sorry if my first speech to which he will reply is less than welcoming. That is not my intention. I wish him well.

The Bill contains nothing about sewage disposal and drainage, two matters which cause considerable problems throughout the country. We are faced with the collapse of an antiquated sewerage system, some of which was built over 200 years ago, and its dire consequences particularly in industrial areas in the North-West, the West Midlands, Yorkshire and other areas including London. Yet there is no provision in the Bill to deal with those two matters, and those of us who are responsible for the maintenance of public health are therefore gravely concerned.

The Bill is a puny measure. It does hardly anything to tackle the great problems. Moreover, it is astonishing that such a measure should come from the present Government, because clause 1 proposes to increase the money supply. Labour Members happen to be in favour of the Bill, because we believe that it is important to have greater investment in the water industry and in the canals system. Taking into account all that has been said by the Government during the past 18 months, one would have expected a better justification for an increase in the money supply of this magnitude. There has been virtually no justification.

In a moment I shall come to the firebrand speech made by the Minister of State at the Conservative Party conference, when so many promises were made. Those promises seem to have gone by the board.

Clause 1 increases the money supply without justification from the Minister about whether the amount of the increase is adequate or inadequate—and it is probably the latter. Clause 2 contains a remarkable proposal. It seeks to switch the cost of providing water for fire-fighting from industry and commerce to the domestic householder. This is another matter that greatly concerns us. The clause proposes to add a further 1 per cent. of Government-generated inflation to the cost of all water bills—quite apart from any potential increase in staffing, a matter to which I shall refer later.

In the past 18 months we have been promised a flood of action to deal with the rising tide of anger which we were told that everyone in the country felt about the water industry generally. This Bill is not a flood of action; it is a drip produced by wets. It is totally irrelevant to present needs. It does none of the things that the Minister told us as recently as last October were absolutely necessary. For the sake of greater accuracy, I have a copy of that speech. I shall not bore the House by reading the entire speech, but I am sure that the House will be amused by some of the quotations from it. Certainly I shall not read that passage which refers to me as "Minister for Drought, Floods and Snow." As is typical the Minister inaccurately referred to me as having taken up a vain position, whereas everybody else thought the opposite. They thought that I ended the drought, calmed the storm, abated the floods and thawed the snows. The Minister should get his facts right.

I come to more serious matters. The Minister for Local Government and Environmental Services, when addressing the Conservative Party conference three months ago, gave a list by which we must judge the Bill and its inadequacies. In a startling speech to the conference, he listed measures necessary for the water industry. He said: we want a properly-accountable industry … we want a fair basis of charging. Not a word about that need appears in the Bill. The Government have not taken the opportunity to put forward on behalf of all domestic users a Conservative solution to overcharging.

The Minister went on to identify an even more specific anomaly when he said: Let us not forget that a quarter of all households … are single person households, and it is on them in particular that the unfairness falls most heavily. We recognise this and we intend to find a fairer system Not one single-person household will be helped by the Bill. There is a switch in charging from industry to the domestic user and single-person households will be imposed upon even more.

The Minister continued by expressing the need to do something to get the system operating right. He said that one-third of all local authority members attended fewer than half the meetings. He instanced the Southern water authority. Perhaps he has referred it to the Monopolies and Mergers Commission. That is a typical way of passing the buck.

Then followed a magnificent passage which I have headed "Action". The Minister promised, following the Conservatives' review of the water industry: We intend to have a special drive to reduce the waste of water in the present system … in some areas as much as 50 per cent. of the water that goes into the system remains totally unaccounted for. That is right. He went on: No system can operate efficiently with that degree of waste. We shall give that a high priority. Where is that high priority in the Bill? Where is its place in the Government's pronouncements upon the needs of the water industry?

The Minister went on: We are stopping Labour's misguided water equalisation policy. That is one promise that the Government have half kept. They have said that they will not introduce any more equalisation proposals. I am glad to see that the Under-Secretary of State for Wales, the hon. Member for Conway (Mr. Roberts), has returned to the Chamber, because the Government have taken credit for ending the water equalisation programme which we introduced. Many hon. Members will remember the discussions in Committee when it was said that the proposals were important in terms of assistance to water consumers in Wales, the South-West, the North and Anglia. When we debated the order, the Minister said that the Government would not desert their friends. He said that they would stand by their Welsh friends. They should have used the Bill as a vehicle. It will cost the Welsh water authority £3 million a year in loss of support as a result of ending the equalisation proposals. I am told that the cost to each Welsh householder will be a significant factor this year in increasing the cost of water. The same will apply in the South-West, the North, Anglia and other areas.

The Government have done virtually nothing to honour their pledge to stand by the Welsh water user. All that they have done is to make a slight adjustment in the target for the Welsh water authority. It will be given an additional two years to reach its financial target. It will be given five years instead of the three years set for other regional water authorities. Not only is that totally inadequate and a gross imposition on Welsh and other domestic water users but it breaks a pledge given from the Dispatch Box.

The Under-Secretary of State for Wales (Mr. Wyn Roberts)

Is not the right hon. Gentleman aware that the continuation orders under the equalisation scheme would have resulted generally in more "disequalisation"? Is he not aware of the extent of Government support by way of domestic rate relief in Wales compared with that in England?

Mr. Howell

That is one of the biggest red herrings that I have heard from the Dispatch Box. The rate relief to Wales has nothing to do with water charges. Water was taken out of local authorities' sphere of influence under the Water Act 1973.

Mr. Tony Durant (Reading, North)

On a point of order, Mr. Deputy Speaker. Is it in order for the right hon. Gentleman to go on about a lot of matters not contained in the Bill? This is a Second Reading debate and we should talk about the Bill.

Mr. Dafydd Wigley (Caernarvon)

Further to that point of order, Mr. Deptuy Speaker. The long title of the Bill states that the Bill is to make further provision relating to water supply. Is not what the right hon. Gentleman saying pertinent to that?

Mr. Deputy Speaker (Mr. Richard Crawshaw)

On Second Reading hon. Members are entitled to say what they hoped would be in the Bill. On Third Reading one is limited to what is in the Bill.

Mr. Howell

I am grateful to you, Mr. Deputy Speaker, for assuring the House that my remarks are pertinent. I am astonished that Government Members do not know that on Second Reading we debate all matters covered by the Bill as well as provisions which hon. Members believe should be included in the Bill. The point of order by the hon. Member for Reading, North (Mr. Durant) is further evidence of the disquiet and discomfort felt by Government supporters as the issues are outlined. I am not surprised.

The Minister told the conference that the water industry had suffered culpable neglect under the last Government. They are great at talking about problems but absolutely hopeless at doing anything about them. Here we have a Minister who complains that we are hopeless, yet he disregarded the White Paper that we introduced, which said that this should set the pattern for the future of the water industry. He has thrown out that White Paper. He has made great capital out of the impositions on private householders. By his omissions from the Bill he has betrayed every one of the sentiments that he and his right hon. and hon. Friends have uttered in recent years.

I wish to make a few brief comments about the dangerous situation faced by the water industry in terms of a possible national dispute. It would be irresponsible not to be concerned about that looming dispute. The situation is potentially catastrophic, both for the industry and for the public. As we all know, the employers have taken what seems to be an intransigent position on their offer of 7.9 per cent. The unions have balloted their members and are receiving countrywide support for their opposition to the employers' final offer.

One hopes, of course, that the two sides will be able to come together and to reach a settlement. Indeed, they will have to do so. It would be unthinkable for the country to be plunged into a national water strike, with the dire consequences that that would bring in terms of public health. Water from some rivers, such as the Thames, is used four, five or six times. If water taken out of the rivers could not be cleaned and had to be used for drinking purposes, the situation would be extremely serious.

I therefore take this opportunity to ask the Minister to confirm that the National Water Council is a free agent in negotiating a settlement—

Mr. Deputy Speaker

Order. I have allowed the right hon. Gentleman to proceed up to now, but this has nothing to do with the Bill. He must restrict his remarks to what he wishes to be done about the Bill. There is nothing about industrial relations in it.

Mr. Howell

I agree. I do not wish to trespass and I accept your ruling, Mr. Deputy Speaker. But I am bound to say, if we have a National Water Council, that the financial provisions made in the Bill for the water industry will prove to be totally inadequate. I was merely hoping, because I thought that it might be helpful—with your indulgence, Mr. Deputy Speaker, which I fully appreciate that I must seek on this point—to get the Minister, without leading him too far, to confirm that the National Water Council was a free agent and was not subject to Government dictation. I also hope that at the end of the day some form of conciliation or arbitration will be introduced, in the interests of all consumers. The form, of course, would need to be agreeable to the unions and to the industry as a whole. I believe that it would have been irresponsible not to have made that point in the debate today.

Having said that, I shall return to the subject of the Bill. Clause 1, as the Minister explained, extends the borrowing power. We shall wish to examine in Committee the proposal that additional borrowing may be authorised by the Secretary of State without necessarily coming back to the House, or rather in a different way from that which has obtained heretofore. That would deprive the House of the opportunity, in particular, to discuss the affairs of the British Waterways Board and the state of the canals system.

Secondly, although the Bill increases the borrowing powers for capital from £20 million to £35 million, that proposal cannot be divorced from the amount of grant in aid to the board for revenue purposes. The interest charges on the money borrowed for capital works for our canals system must be paid from the board's income a large part of which is grant generated.

The Minister has not yet referred to the figures for grant in aid. In 1979, the Labour Government announced a figure of £21 million. At today's figures that would be equal to £32 million. To carry out maintenance work on the canal system at the level that we agreed the board would need to receive £32 million this year. But the grant is only £27 million—a reduction of £5 million.

That reduction of £5 million is equal to the additional £5 million which, after prolonged discussions in the House, a report from a Select Committee and the expression of grave concern particularly by the chairman of the British Waterways Board, we were able to achieve following our negotiations with the Treasury. This shortfall—or cut—of £5 million this year therefore puts the British Waterways Board back to its position at that time, when, with the support of many Conservative Members, it complained about the inadequacy of its position. That is a very important matter to which attention should be drawn.

As a result of this cut, the Frankel report which stated that we had 12 years' maintemance work to do on the canals and pointed out how dangerous was the condition of some of our tunnels and locks, has been effectively abandoned for the time being. I am not surprised that the board has already found that, with the collapse of tunnels, bridges and locks, an additional £2 million worth of work is necessary to deal with the deteriorating situation this year alone.

At the time when the Select Committee reported, and when the Labour Government produced their White Paper, one of the great discussions that we had was about the role of the water industry. I took note of what the Minister said and I welcomed it because, if he does not mind my saying so, it was a little more realistic than the attitude that some of his colleagues have taken in the past. We all wish to see the waterways industry carrying as much freight as it can. We all support the South Yorkshire navigation scheme, the money for which was found by the previous Administration. We all have high hopes of that scheme and wish to encourage it. But the truth is, as we all know—I believe that the Minister himself said this—that the future of the canals system in this country will be largely bound up with the recreational and leisure industries. That will certainly be true for the overwhelming majority of the 2,000 miles of our canals system.

I shall quote one or two comments that were made in the past about these matters. Having been on the receiving end of considerable criticism from a Select Committee, from the chairman of the British Waterways Board and from others in the past, when the grant in aid is put back to the position that obtained before the Labour Government improved it in 1979, I am bound to ask where the board now stands in face of this desertion of all the policies and all the provision that we made. There is not a word now from the Select Committee. Not a letter has any Member received, so far as I know, from the British Waterways Board. There has been no complaint. The only body which, to its great credit, has dealt with these matters is the Inland Waterways Amenity Advisory Council, the consumer undertaking that looks after the interests of the users of our canals. It has drawn attention to this matter.

One would have thought that the energetic members of the British Waterways Board would be on their feet disclaiming this cutback in the resources that it was promised, after a considerable struggle, by the previous Administration. However, there has not been a word from the Minister or from the board. I feel that it is my public duty to draw these deficiencies to the attention of the House.

Mr. Peter Hardy (Rother Valley)

Although I was not a member of the Select Committee to which he referred, of all the South Yorkshire Members I was perhaps the most impatient and restive about getting an early decision in respect of the Sheffield and South Yorkshire navigation. It ought to be placed on record that the previous Government responded favourably and that work is proceeding, but I shudder to think of the prospects for the British Waterways Board now that he is no longer in charge.

Mr. Howell

I am grateful to my hon. Friend for those comments. I was saying—[Interruption.] I can tell the hon. Member for Grantham (Mr. Hogg) that, although he may have forgotten what I said, the canal users of this country—who are dedicated and devoted people and a strong lobby—will want answers to these questions.

Paragraph 61 of our White Paper stated: the Government remain convinced of the desirability of bringing the management of the waterways into the water industry and creating a national navigation authority. It is … necessary to establish the best permanent arrangements for waterways, and in particular the way they should be financed. In other words, we lave said that the whole future of the canal system could be safeguarded, particularly financially, only if it were directly linked with the water industry as a whole, which is so much larger. That is a solution that the Waterways Board did not like. I notice that on 15 November 1977, in paragraph 293 of his evidence to the Select Committee, the chairman forthrightly supported the line for total independence of the board.

I remember making many speeches both in the country and this House at that time to the effect that, unless the canal system and the British Waterways Board were brought into a close relationship—indeed, were brought within the water industry—every time there was a financial crisis, they would be the first to suffer. I said that they would positively be at the mercy of the Treasury and departmental Ministers who had to make savings and that they would be the first to be cut.

From the figures that I have already given, I regret to say that those prophecies have proved only too true. I return to what we said in the White Paper. Those of us who believe that the canal system is part of our national heritage and ought to be maintained because of its industrial area, archaeological history as well as its potential for leisure and recreation must ask how it is to be financed. It must be financed either by relying upon the water industry as a whole to maintain it as an integral part of the water industry, or by grant in aid. Now that they understand the cuts that have been announced and the deteriorating financial future that the BWB appears to face, those who were sceptical about the merits of my White Paper proposal in this respect may be more convinced about the logic of the proposals.

Mr. Michael McNair-Wilson (Newbury)

Is it reasonable to expect parts of the country that have no part of this canal system in their midst to pay for it? Will the right hon. Gentleman state categorically whether, in the unlikely event of his returning to power, he would end the British Waterways Board as it is now constituted?

Mr. Howell

I believe that every word of our White Paper is becoming more and more justified with every day that passes. The proposal that it contained for bringing the canal system within the main water industry, while maintaining its position as a national navigation authority and its independence within the wider water industry, is the way forward. At some other time the House will have to return to this matter.

The hon. Gentleman asked why someone should pay for the canal system if he did not have a canal running through his back garden. The answer is, surely, that the canal system is a national asset, which is increasingly enjoyed by people throughout the country, wherever they happen to live. People want to go on to our canals. Incidentally, one of the difficulties with which the BWB is now faced is that this year, because of the collapse of parts of the system—in fairness to the Minister, he referred to this—people who have invested large sums of money, such as the boating industry, boat owners and others who want to use the canals, will find that their enjoyment of the canal system this summer will be seriously limited as a result of the Government's withdrawal of funds.

I have looked in vain through the 1979 annual report of the British Waterways Board and through my correspondence, and I find that there is not one word from that authority about the effect of the cuts and the desertion involved in the cutbacks from the commitments of the industry.

As I said, the Inland Waterways Amenity Advisory Council, in a briefing that it issued on 16 January, drew attention to the disturbing effects of these developments. It stated: In particular, major closures are affecting users of the waterways and the Board are unable to give any firm indication of when these closures will be remedied. They include: Netherton Tunnel on the Birmingham Canal Navigations Stoke Bardolph Lock on the River Trent Navigation Blisworth Tunnel on the Grand Union Canal. I am not surprised that the IWAAC is extremely concerned. It has highlighted the problems that our waterways face as a result of the financial situation that I have outlined.

I now turn to clause 2—[Interruption.] Did the hon. Member for Reading, North wish to intervene? I thought that as a member of IWAAC he might wish to comment on that organisation's document.

Mr. Durant

I was getting slightly anxious that the right hon. Gentleman has only reached clause 1.

Mr. Howell

We have plenty of time. We rarely get the opportunity to debate matters affecting the canal industry. The hon. Gentleman now has a double-up. He is greatly interested in the canals. I believe that he is a member of IWAAC. First, he tried to stop me talking about some of the problems affecting water users and he is now complaining about the time that the House is spending on the matter. That is an extraordinary way for the hon. Gentleman to show his devotion to the water and canal industries.

As the Minister said, clause 2 deals with the transfer of charges from industrial and commercial users to the domestic water users in so far as any of those charges represent the supply and use of water for fire-fighting purposes. The Minister has offered no justification for that extraordinary proposition. Commerce and industry are not excused the wages of firemen who have to fight fires. Why should they be excused the cost of providing the water with which the fires are to be fought? The logic of the proposal is beyond me, and I should like to know what it is. I believe that the Government are being subjected to enormous pressure from the sprinkler manufacturing industry. The Minister hinted at that. The effect of what the Minister is proposing will be to add at least 1 per cent. to water bills. That is the estimate that I have been given.

Dr. Keith Hampson (Ripon)

indicated dissent.

Mr. Howell

It is no good the hon. Member for Ripon (Dr. Hampson) shaking his head. That estimate was given to me today by one of the regional water authorities. The cost to the domestic ratepayer will be at least 1 per cent.—

Mr. Durant

rose—

Mr. Howell

I think that the hon. Gentleman is trying to get a three-timer, as we call it.

Mr. Durant

Will the right hon. Gentleman tell us which water authority he asked? That would be interesting to the House.

Mr. Howell

I may tell the hon. Gentleman in Committee, but not now.

What consultations took place on the extraordinary proposal that has been included in the Bill? Does the Minister have the support of the National Water Council and regional water authorities for the proposal? Many of us will take a lot of convincing that those responsible bodies have given their support to an element of switching of costs and burdens from industry to domestic water users. The explanatory memorandum says: No increase in central Government manpower, or in local authority or water authority manpower, is anticipated. How is it proposed to decide how much water is available to industry for its sprinkler systems and how that may be exempted from a general charge for supplying water for all the purposes for which a factory may require it? That will be almost impossible. It will require an army to inspect all the sprinkler systems throughout the country and to decide how many there are—how 200 sprinkler systems are to be exempted or how to separate the supply of water to 200 outlets for fire-fighting purposes from all the costs of supplying water for drinking, toilet purposes and industrial use.

I hope to examine this astonishing proposition in Committee, especially as for most of our old industries no maps are available, so that no judgments can be made unless each of the premises is individually inspected.

The most extraordinary thing about the proposition is that the cost of it, which is to be added to the domestic bill, is more than 1 per cent. and the cost to the domestic user of the potential dispute or national strike in the water industry is less than that. [Interruption.] It is no good Conservative Members saying that that is total rot. I am thus encouraged to go into more detail about the figures, because the 7.9 per cent. offer—I shall be ruled out of order if I talk much about the figures, so I shall illustrate my point by talking about the 1 per cent. additional cost—would add 0.6 per cent. to the water rate. I am not suggesting that this should be so, but, if the offer to the union were doubled, the cost to the domestic water user would be equal to the cost of the provision in clause 2. That is the logic of the clause.

Although we shall not oppose the additional provision for the British Waterways Board, we hear many searching questions to ask about it. In Committee, unless we have a strong case—which we have not yet heard—to convince us otherwise, we shall oppose the switch of an increased burden to the domestic water user, as is proposed in clauses 2 and 3. We shall approach the Committee proceedings constructively, but with considerable foreboding.

8.5 pm

Mr. Douglas Hogg (Grantham)

I should like to congratulate my hon. Friend the Under-Secretary on his first appearance at the Dispatch Box in his new role and on the concise, lucid and attractive way in which he introduced the Bill. Unfortunately, those are not compliments that I can extend to the right hon. Member for Birmingham, Small Heath (Mr. Howell). He took 45 minutes to produce a puddle too small to support a goldfish. I wonder whether his contribution is one to which the House should have been subjected. I do not propose to deal with it in detail, largely because it is not a contribution should attract a reasoned response.

I do not intend to comment at length on the contents of the Bill. My object is to suggest that the Bill should contain one measure of law reform not now included. My suggestion is that the Bill is a convenient vehicle in which to introduce a long-desired piece of law reform. I am referring to the liability of the statutory water undertakers for damage caused to persons or property as a result of escaping water.

The House will appreciate that often water escapes from the plant and installations maintained by statutory water undertakers. There are various reasons for that—mains and pipes burst, stopcocks prove defective and reservoirs leak. Substantial loss is often caused either to persons or to property. That loss takes many forms. In the crudest form, water escapes on to a highway and causes a road accident. On other occasions a burst main causes damage to adjoining property or pipes burst and water causes damage to farmers' crops. On further occasions water escapes on to business premises and damages plant and machinery. Those are instances of what frequently happens.

I imagine that hon. Members have sometimes asked who bears the cost of such damage. Who has to shoulder the financial consequences of that sort of escape? It may surprise some hon. Members to know that the statutory water undertakers ate liable to pay compensation to injured persons only if that person can prove that the statutory water undertaker was negligent. I should like to persuade the House to extend the principle of strict liability. We should make the statutory water undertakers liable for damage caused by the escape of water, provided that there is a connection between the escape and the damage. I want to remove the need to prove negligence and to establish the principle of strict liability.

There are a number of considerations in favour of such an approach. The first is the general one of equity and justice. We are dealing with the provision of a service which is for the benefit of the entire community. On occasions, as a result of a defect in that system, an individual suffers damage. We must ask who should bear the cost of that damage. Should it be society, for whose benefit the facilities are provided, or the individual, who is entirely free blame? I have no difficulty in answering that question by saying that the entire community, and thus the statutory water undertaker, should carry the cost.

A further consideration is that the present law makes an unattractive and wholly unacceptable distinction between the liability of the statutory water undertaker and that of the private individual. My hon. Friend the Under-Secretary will doubtless confirm that the statutory water undertaker is liable only if negligence can be proved. But that is not the case in relation to private individuals. Many hon. Members will know of the decision in the case of Rylands v Fletcher in the latter part of the nineteenth century. As a result of that decision, when an individual accumulates water on his land and it escapes, causing damage to the person or property of another, the individual who accumulates the water is liable for the loss, and it is not necessary to prove negligence. I do not see why there should be a distinction between a statutory water undertaker and a private individual.

There is a further consideration that I should like to put before the House. An individual suffering loss as the result of an escape of water may claim compensation if he can prove negligence. However, that right is often an illusion, because the proof of negligence is both expensive and difficult and it is frequently beyond the ability and resources of individuals.

For example, pipes may burst as a result of frost damage. A prudent water authority is under a duty to guard against foreseeable degrees of frost, though not against unforseeable degrees of frost. Therefore, there can be a complicated and tendentious argument about the sort and severity of frost that a water undertaker should be required to anticipate.

If water escapes because of a failure in an old pipe, questions arise about the lifespan of a pipe—another complicated matter turning on expert evidence. If water escapes because of the failure to maintain the system, there are endless arguments about the precautions that a reasonably prudent water undertaker should take. Those are matters of complexity and difficulty and are often beyond the resources of private individuals.

Mr. Gary Waller (Brighouse and Spenborough)

Statutory water undertakings have a responsibility to provide pure and wholesome water. Does my hon. Friend accept that a water authority that does not do that, but provides brown water, as happens in my constituency and that of my hon. Friend the Member for Sowerby (Mr. Thompson), should be responsible for any harm that comes about as a result? Does my hon. Friend agree that if, as is the case, there is a larger than approved amount of manganese or other metals, the water authority should be responsible for not providing pure and wholesome water, even though no negligence may be proved?

Mr. Hogg

Yes. If someone suffers damage, whether to his property or person, as a result of a defect in the public system, the statutory water undertaker should, as a general proposition, be liable to compensate him.

There is another consideration that I should like to place before the House, because it is significant. On many occasions, statutory water undertakers make ex gratia payments to those who suffer damage. Hon. Members may know that the National Water Council has given guidance to water authorities advocating the payment of compensation to the occupiers of domestic premises. I emphasise "domestic premises".

A number of conclusions are properly to be drawn from that fact. The first is that the practice of making ex gratia payments and the issuing of advice and guidance suggest that water authorities are unhappy about the limited liability that exists at present. Secondly, the right to compensation should not be discretionary. If it is right to receive compensation, that right should be enshrined in law. It should be a substantive right and not dependent on the discretion of any official at any time.

The guidance from the NWC that compensation should be payable to the occupiers of domestic premises has tended to exclude occupiers of other land. Although compensation is frequently paid ex gratia to occupiers of domestic premises, there is an increasing practice among water authorities to say to farmers or occupiers of business premises "We will not pay any compensation to you, because you are outside the scope of the guidance issued by the National Water Council".

Mr. George Cunningham (Islington, South and Finsbury)

Can the hon. Gentleman add one factual point to what he is saying? At least at the beginning of the 1970s, it was the case that when a water authority wanted to make an ex gratia payment of that sort it had to have the approval of the Minister, who, in effect, gave the same sort of certificate that he gives to a local authority that wants to make an ex gratia payment. In effect, he called off the normal sanctions that would apply against unauthorised expenditure. Is the hon. Gentleman aware whether that ministerial approval is still required?

Mr. Hogg

I think that the answer is "No", but that is a matter on which my hon. Friend the Under-Secretary may feel able to comment. I do not think that the ministerial fiat is now necessary, but I do not say that with complete confidence.

I am aware of a number of cases, particularly in the farming community, in which substantial losses have occurred as a result of escaping water, but in which the water authorities concerned have refused to pay compensation. Correspondence on the subject has passed between the Country Landowners Association, the National Farmers Union and the Department of the Environment.

My arguments could be refined at considerable length, but I do not wish to follow the example of the right hon. Member for Small Heath. The House would not tolerate that, and would be right not to do so. My point is that we have an injustice which relates to the limited liability under which water undertakers operate.

I should like the House to take advantage of the Bill to extend the liability of statutory water undertakers so that they are liable for all damage caused by escaping water, irrespective of whether there has been negligence. I want to impose strict liability on the undertakers and to remove the need to prove negligence.

I hope to persuade hon. Members, those on my side and also those on the Opposition Benches, of the desirability of the measure. I should like particularly to persuade the Under-Secretary of State that this is an appropriate vehicle for carrying through what I believe is a small but none the less important piece of law reform.

8.20 pm

Mr. Dafydd Wigley (Caernarvon)

I join the welcome extended to the Under-Secretary of State for the Environment in his new position. He will be pleased to know that I shall not pester him too much. I shall address most of my remarks to the Under-Secretary of State for Wales.

I should like to take up initially the points made by the hon. Member for Grantham (Mr. Hogg). There is scope for looking into the problem. All hon. Members have probably come across the sort of problems to which the hon. Gentleman referred where individuals, businesses and agricultural concerns have suffered. Whether or not the Bill is a suitable vehicle for dealing with these problems I should not like to say. I am sure, however, that there is a need to look in this direction. I hope that the Government will consider the points that have been made.

If I am critical of the Bill my main criticism is of its deficiency and its paltriness. The right hon. Member for Birmingham, Small Heath (Mr. Howell) said that hon. Members were expecting considerable comment from the Government about water. In Wales, the issue of water and particularly its price to the domestic consumer is exceptionally contentious. I have remarked on previous occasions that water is inflammable in Wales. We are aware of the Government's intention to move ahead in doing away with the equalisation provisions for the next financial year. I had a letter only last week from the Department confirming its intentions. We fear that this intention will be carried out by the underhand method which, although legitimate, gives little attention to the changes taking place when carried out, as will be the case, by order. The people of Wales had a right to expect, in any legislation forthcoming in this parliamentary year, some alternative proposals if the provisions of equalisation were to be done away with.

The cost of water in Wales remains excessively high. The cost in terms of average equated rate poundage—this relates of course to unmeasured water supplies—was an average in 1980–81 of 25.28p in the pound in Wales compared with 15.6p in the pound in the North-West, 12.1p in Severn-Trent and an average for England and Wales of 18.18p in the pound. This shows the extent of the non-equalisation that still exists despite the Equalisation Act. If we lose the provisons of the Equalisation Act, we shall lose a further £3 to £4 million, which will work out at £3 or £4 per household in Wales. Even if we change from the average equated rate effect to the average household bill—one is aware of the discrepancy in rateable value between England and Wales—the average household bills will be £60.38 in Wales compared with £47.82 in the Thames area despite the fact that the average per capita income in Wales is 20 per cent. below the United Kingdom average and the average per capita income in the Thames area is 20 to 30 per cent. above.

That underlines the problems. These will only get worse when equalisation comes to an end. It is not unreasonable for us to have expected a provision in the Bill that would at least ameliorate or substitute the provisions that will come to an end if equalisation disappears later this year.

There has been a change over the past few years in expenditure by the authorities at constant money value. In Wales, there has been a decrease, despite the additional resources of equalisation, of the money available to provide water services from £185 million in 1975–76 to £155 million in 1979–80. Over the same period, the money for the North-West was increased from £286 million to £306 million. I have no doubt that the increase was necessary, given the pattern of collapse of sewers in the North-West. The increase in the Southern area was from £150 million to £165.2 million at constant prices. We have seen a decrease in the resources despite equalisation. There have been the problems, particularly in South Wales, of sewer collapse in the industrial areas, while in many areas of rural Wales there is a need to replace inadequate domestic pipes.

This raises what the Government intend to do. It is known that when the equalisation Bill came forward in the House, the Conservative Party had some doubts about it. I am glad to see present in the Chamber the Under-Secretary of State for Wales, the hon. Member for Conway (Mr. Roberts), the only other Welsh Member attending the debate. The hon. Gentleman gave a mixed welcome to the Bill on its Second Reading on 24 January 1977. The hon. Gentleman said: 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"—[Official Report, 24 January 1977, Vol. 924, c. 1088–9.] Those were interesting ideas put forward by the hon. Member for Conway. I am surprised that those ideas have not been developed as an alternative to equalisation if the Government are hell-bent on doing away with equalisation. The most logical step would probably be to have a uniform overall charging system. The previous Government were not able to move towards such a system. It is, however, an alternative that the Government might at least have been considering at this time.

On the Third Reading of the Bill on 16 March 1977, the hon. Member for Conway said: My first criticism of the Bill is that it does not live up to its title. —that title being "Water Charges Equalisation": It does not fully equalise water charges as the title suggests. It equalises them only partly."—[Official Report, 16 March 1977, Vol. 928, c. 572.] It might, therefore, seem reasonable to expect proposals from the Welsh Office in the Bill as a move towards what the hon. Gentleman advocated on the Third Reading of the Bill. They do not appear in the Bill now before the House. I would have thought that in Committee and on Report, hon. Members representing Wales and other areas such as the Anglian area—affected by equalisation—would like to see an alternative system brought forward. I would be interested to hear the Minister say what is to be the substitute. Is there the probability of one area charging more than cost for the transfer of water?

The Under-Secretary of State for Wales and also the Under-Secretary of State for the Environment, with his new responsibilities, will be aware that the Welsh water authority has received legal advice which says that by agreement under section 12 of schedule 4 to the 1973 Act it can lawfully make a charge on recipient authorities for bulk supply which exceeds the cost of providing that supply. Given that we are losing equalisation, Ministers are presumably happy that the Welsh water authority will move ahead to make a charge along those lines to recoup the money that it is losing. This factor was accepted by the right hon. Member for Rhondda (Mr. Jones) on 17 December 1979. He said: either we accept something along the lines of the Act"— that is the equalisation Act— and this order"— that is the order for equalisation— or we deliberately encourage authorities with a surplus of water to sell it to the highest bidder."—[Official Report, 17 December 1979, Vol. 976, c. 237–8.] It is reasonable for the House to expect the Government to make their view clear on what is to happen when equalisation comes to an end. The Bill is an excellent opportunity for putting into a legislative framework any steps that need to be taken. It is probably the only opportunity to do so before equalisation comes to an end. The Government should hold equalisation for another year until they have worked out their proposals, or they should make provision in the Bill.

Mr. Wyn Roberts

I am sure that the hon. Gentleman is aware that the intention of the equalisation Act was to bring charges closer to an average. I am sure that he is also aware that the effect of the continuance of the Act and the issue of further orders under the Act is to make some charges that are higher than the average even further from the average and to make some charges that are lower than average even lower. In other words, there has been not an equalisation effect but a de-equalisation effect. That could be expected with the continuation of the Act. Surely the hon. Gentleman cannot mean what he says when he talks about selling water to the highest bidder. Water supplies from Wales to those who require the supply are fixed.

Mr. Wigley

I am grateful to the hon. Gentleman. It is his party's philosophy that commodities should be sold by those who have them to those who need them. By and large, the argument advanced from the Opposition Benches is that commodities such as water should be sold at a cost that reflects the service rather than the commercial supply. One of those two arguments must be valid. If it is argued that we should treat water as a service, there is an overwhelming argument that there should be a standard price throughout the areas covered by the Bill. If the argument is that it is not a service and that we are looking for initiative from local water authorities, presumably authorities should be rewarded for the initiative that they take and for the water that they supply to those who need it.

The Minister cannot have it both ways. On 16 March 1977 he argued strongly that we needed greater equalisation. I accept what he says. There are some ways in which the Act does not necessarily lead to the equalisation that we all seek. However, it leads to partial equalisation. If it is not working adequately, let us amend it so that it provides the equalisation for which we are looking. Surely we should not seek to sweep it away altogether. It is certain that if that happens Wales will lose about £3 to £4 million. That cannot be denied. I hope that we shall witness some response. If the Government do not respond, there will be hell to pay when the bills come through in Wales next May.

There are two more items that I wish to see in the Bill. The first relates to rebates on water charges. The system of basing water charges on rateable value is even odder than the system of local rates themselves. There are many individuals living by themselves, such as widows, who face the same water rates as those who live next door in a similar house in which there are three or four incomes. A widow may be eligible for a rebate on her domestic rates but she will not be entitled to a rebate on the water rates. This would have been an appropriate opportunity to empower water authorities to move in that direction if they saw fit. It is something that they should see fit to do.

Secondly, I draw to the attention of the Under-Secretary of State for Wales—I presume that he will be replying—the report of the Welsh Consumer Council on the policy fact sheet on the water industry that was issued recently. I am sure that the hon. Gentleman is aware of the details in the report. I shall be interested to hear the Government's response to the suggestion that there should be a public utility stamp available from post offices that covers water and other utilities. That is a helpful suggestion.

The report states that there are inadequate financial resources available in Wales to enable customers to be provided with the water services that they need and to avoid the cut-offs each summer that those in the hon. Gentleman's constituency suffer, as well as my constituents, or the low water pressure that affects many parts of Wales. There are several issues in the report that, if taken up in Committee or on Report, would lead to an improvement of the Bill. Even if it is not appropriate tonight to respond in detail, I hope that the Minister will bear these issues in mind in moving towards consideration of the Bill in Committee.

I turn to land drainage, which could reasonably be associated with the Bill. There are many problems that need to be tackled within a legislative framework. The Gwynedd county council made certain suggestions about that in the context of a Private Member's Bill. I am sure that they could be built into this Bill.

There is one drafting point that I wish to put on the record. I find the wording in clause 5(2) very odd indeed. It states: Section 1 of this Act extends to Scotland and Northern Ireland but otherwise this Act extends to England and Wales only. That may be the normal wording—I do not know—but it appears to imply that, other than section 1, it extends to England and Wales. Perhaps before Committee stage the Minister will examine that wording.

8.35 pm

Mr. Tony Durant (Reading, North)

I welcome the Under-Secretary of State to his new appointment. It would be wrong and churlish of me not to mention his predecessor in relation to inland waterways—a matter in which I take an active interest. He was especially enthusiastic about that subject. I hope that the new Minister will continue his predecessor's excellent work.

I welcome the Bill. Mr. Deputy Speaker ruled that matters left out of the Bill may be discussed. I am tempted to make a long speech about weather control and rain making because they are relevant to water supply. Although they are matters of scientific interest in Britain, as the right hon. Member for Birmingham, Small Heath (Mr. Howell) appointed me to the Inland Waterways Amenity Advisory Council. I shall resist the temptation to do so in case I upset him.

I wish to deal mainly with the contribution of the British Waterways Board. The inland waterways are an important national asset. Currently there are more boats on the inland waterways than there were at the height of the canal madness in the last century. They are not freight boats of course, but more boats pass along our waterways. It is a larger industry than is often realised. The British Waterways Board is principally involved in a leisure industry, but it deals also with freight, to which I shall turn later.

The Government must recognise the importance of drainage and safety. A number of waterways are in a bad condition and an element of safety is involved. If we do not take care, a bank may burst, especially in bad weather, which could cause tremendous damage, not only to farms and fields but to individual houses. I hope that the Government will work with the British Waterways Board on that aspect.

The British Waterways Board has done a remarkable job in relation to freight, and it deserves credit for it. The annual report for 1979 shows that its freight division contributed more than £1,467,800 towards the general revenue of the board. That is £100,000 more than in the previous year. Therefore, it is a growing element rather than a dying element. That is important. In page 6 of the report the board makes an important statement: The Board welcomed the EEC proposal for a Directive on Statistics of Inland Waterway Goods Transport and answered a request from the Government for assistance and advice. The Board have for some years pressed for inland waterway freight statistics to include all the navigable waterways of the United Kingdom so that the total contribution to transport made by those waterways would be apparent. That is important. The Government made a mistake in taking into account only the mileage involved in the British Waterways Board, and then saying that it was not involved in the EEC directive.

The Inland Waterways Association has produced an interesting report which I urge the Minister to read. It takes account of the whole subject of freight, not only on waters controlled by the British Waterways Board, but on all the other rivers, estuaries and canals. It shows that the amount of mileage and freight involved is considerable and could come under the EEC directive if the total is taken into account rather than only that relating to the British Waterways Board. The IWA report contains valuable statistics and information. It is a highly sophisticated document. I suggest that the Minister studies it.

I also urge him to read IWAAC's report on the leisure side of the industry. It has made an interesting report on the number of people involved. The number operating the waterways is small, but subsidiary industries are involved in boat building, hiring boats, waterways facilities, cafes, supermarkets and so on, which all assist the general service. The number of people involved is much larger than one at first realises. The report goes into the matter in some depth. The figures are the best that it can obtain.

In passing, I urge the Minister, bringing a new mind to the matter, to consider not abolishing IWAAC but instead perhaps abolishing the other body. IWAAC does a useful job.

The right hon. Member for Small Heath suggested that the waterways should be looked after by the water industry in general—in other words, the water authorities. I do not agree one bit. I have experience on the Thames. We have a proposition from the Thames water authority to do away with the Thames Conservancy. If any organisation ran a waterway well, it was the Thames Conservancy. There has been a general deterioration in the Thames since the Thames water authority took over. Thames Conservancy had a high standard. People from other countries came to study its methods. It is a tragedy to make such a proposal. There is a fear that, if the functions are taken over by the water authorities, their only interest will be the water and not the navigation. That is the danger. Those who use the waterways are nervous about the proposal. I applaud the Government for keeping the British Waterways Board, which has done a reasonable job with limited resources.

I also fear that the charges that the Thames water authority will make to the commercial side of the leisure industry on the Thames will have a detrimental effect. It has increased charges enormously for licensing boats, which is in itself causing considerable concern. I shall be holding a meeting on that subject in the House. Operators are afraid that in the present financial climate they may have to stop operating because of the high charges that the water authority intends to impose on hire craft. The industry's experience with the water authorities is not good. There is therefore hesitation.

The right hon. Member for Small Heath misled the House by saying that the fire appliance provision would cause only a 1 per cent. increase. Although he did not say so, I presume that he is talking of the North-West area, which is probably the only area that previously made the charge. Most water authorities do not. I hope that the Minister will make the position clear.

We all agree that there is an essential need for repair of the waterways system. It is no good the right hon. Gentleman pretending to be holier than thou. He lost battles with the Treasury. His greatest victory was the South Yorkshire navigation, for which I give him full credit. However, the rest of the money that he obtained was only emergency money in a rolling programme. Money was said to be committed, but it was never paid over.

The board has said sincerely that, if it was given the whole tranche of what the Frankel report recommended, plus, it could not cope with it. It wants a rolling programme. I hope that the Government will opt for a rolling programme of repair and aid so that there can be consistency.

Mr. Denis Howell

I am grateful for the way in which the hon. Gentleman is dealing with the matter, although I do not agree with him. Faced with the Frankel report, the fact that the canals system was in a state of decay and the estimate that it would take 12 years to bring it up to date, we first got what he describes as emergency money, which was used principally for two major projects.

We also obtained an additional sum of £5 million a year for the first two years for the rolling programme about which the hon. Gentleman is now talking. In my response to the Select Committee I made clear that we accepted the full commitment of the whole Frankel programme and that the sum of £5 million would continue until the whole programme had been dealt with. That amount of money has now been reduced, and it is the failure to comply with that commitment—which I gave under considerable pressure—about which I am now complaining.

Mr. Durant

We can continue to argue about that, but I do not wish to delay the House.

I return to my point that I hope the Government will consider a rolling programme. However, there is a danger that if we push too far, the skills and the necessary background and capital equipment will not be available for the work on the scale that we should all like. I should like an enormous programme, but I do not think that the British Waterways Board could cope with it. This measure goes some way towards helping the current situation. An immediate amount of £5 million is provided and the authority can go further than that in the borrowing requirement. That is helpful to the British Waterways Board.

I shall support the Bill. I have my reservations, but it is easy to talk when one is not a Minister. In view of the economic situation, the Minister has done well in this Bill.

8.47 pm

Mr. Barry Henderson (Fife, East)

In the light of what has been said and about whether the water authorities or the British Waterways Board should be in charge of some undertakings, it is a curiosity that in Scotland there are two navigable canals—the Crinan canal and the Caledonian canal. I suspect the the British Waterways Board attracts a greater profit from the Monkton canal, the Union canal and the Forth and Clyde canal, all of which are closed to navigation but are profitable in the supply of water.

I return to the point that was made earlier by my hon. Friend the Member for Grantham (Mr. Hogg). He spoke with considerable eloquence and knowledge about the general case for improving the concept of justice and equity surrounding some of the law on water in regard to farmers and others. The law on water in Scotland is different from that which applies in England, not least in that in Scotland the regional councils are the water authorities.

Last year the Government introduced a useful consolidation measure, the Water (Scotland) Act, which is the basis of the Scottish law on water. Having drawn attention to those differences in the law between Scotland and England, I think that the principle about which my hon. Friend the Member for Grantham spoke, with regard to looking for an element of justice for the individual in dealing with major public authorities, requires more attention than it has received in the Bill. I hope that, even if it is not practical in the long run to introduce such an element into the Bill, it will be taken on board by the Government for early action.

In that connection, I mention two matters. Water authorities do not enter into a deed of servitude with owners, which means that the existence of a water pipeline is not recorded in the register of sasines, and subsequent owners may be unaware that there is a pipe running through their land.

That circumstance raises the second question, to which reference has already been made. If damage occurs as the result of a water main being burst by a farmer, whose fault is it? If he did not know that it was there, is it his fault, or is it the fault of the water authority? Immediately, we have the difficult question of whose responsibility it is in circumstances of that kind. Added to that is the fact that there is no ruling that water authorities are liable for damage caused by a burst water main.

It is often suggested that it would be helpful if a court decision were made in an appropriate case to show that an obligation existed, but the legislation should make clear that the water authorities have an obligation. The law should lay down clearly on what basis someone who has suffered damage may seek to have it rectified.

When this matter has been brought to their attention by organisations such as the National Farmers Union successive Governments have urged the NFU to seek to reach agreement with the Convention of Scottish Local Authorities. This is a somewhat naive view for Governments to take, because the NFU has nothing to give away and COSLA, as representing the water authorities, has everything to give away and nothing to gain.

With the present state of law there is absolutely no reason why COSLA should contribute to a negotiated agreement for improving this kind of environment. We shall not get a better and fairer balance between the citizen and the water authority unless the Government undertake the responsibility of setting down a proper framework within which to deal with these matters.

The farmers would go further than I have in pressing the Minister this evening. Water authorities do not pay wayleaves. I understand that in England the broad principles are the same—that, while wayleaves need not be paid, equally they may be paid, and that some water authorities in England pay wayleaves, at least in some circumstances. I do not know whether anyone will make unfortunate comments about Scots, but no Scottish water authority has ever paid for a wayleave.

This becomes very difficult for farmers to understand when at the moment there is intense activity in Scotland in setting up oil and gas pipelines and the like. The farmers have had extremely satisfactory relationships with private enterprise undertakings in making arrangements for having pipelines across their land, compensation for damage, the establishment of deeds of servitude, and the whole paraphernalia of matters that arise when agricultural communities are dealing with oil companies.

The farmers see this in marked contrast to their dealings with water authorities. In a major petrochemical development in Moss Morran, in Fife, there is a water pipeline to go to that complex as well as the gas pipeline, for no other purpose than to serve that complex. It is not in order to make provision for the general domestic water consumer or anyone else; it is in order only to provide for that complex, and there will be no wayleave payments as there are with the comparable pipelines.

If my hon. Friend the Under-Secretary cannot encourage us to hope that a measure will be included in the Bill to improve the legal environment and to ensure fair terms for the agricultural community, I hope that the Government will at least study this issue and consider action.

8.55 pm

Mr. J. F. Pawsey (Rugby)

I shall speak about the effect of the Bill on public service manpower. I shall also express some scepticism and cynicism about the fact that no increase is expected in Government, local authority or water authority manpower.

Since the 1973 Act, which set up regional water authorities, the record of those authorities has been one of considerable extravagance. I shall seek to demonstrate that such extravagance is likely to continue and that therefore the sentiments expressed by clause 6 are unlikely to have any effect. The 1973 Act rationalised about 1,600 bodies and created regional water authorities. They may not be mammoths or dinosaurs, but they have certainly proved to be sharks. In 1980–81 their turnover amounted to £1.7 billion, which is a massive sum. The water authorities are big business. It is unfortunate that they have not always acted in a businesslike way. They have demonstrated that bigger is certainly not best.

It is unfortunate that water authorities are not more accountable to the public. The public would have enjoyed a better and cheaper service if they had been. But it is impossible to secure membership of a regional water authority by direct election. About half of the members are appointed by local authorities and the balance by Whitehall. However, they are far too remote. Regional water authorities are too big and have no real identity.

Regional water authorities should be divided into much smaller units. For example, my regional water authority—Severn-Trent—could be divided into at least two parts. One could represent the basin of the Severn and the other that of the Trent. As regional water authorities are so large, they act in an extremely autocratic fashion. They are not cost effective. For example, I understand that one authority spent £1,000 on the provision of a personalised number plate. I cannot think of a better illustration of extravagance.

Manpower has increased in a way that local authorities would not countenance. The percentage increases in wages and salaries have far outstripped local government awards. It is no wonder that bills from the regional water authorities increase by leaps and bounds.

Mr. Denis Howell

I am sure that the hon. Gentleman does not wish to do the former chairman of the North-West water authority, who has unfortunately passed on, a disservice. He paid for a personal number plate for his car. He had the number plate transferred from a private car to the car that he used as chairman. I think that the hon. Gentleman will find that no charge was made on public funds, although his action may not have been wise. Most of us respected him, despite the fact that he supported the Conservative Party rather than our party. It is only fair to his memory that I should correct the hon. Gentleman's statement.

Mr. Pawsey

I am grateful to the right hon. Gentleman for that intervention. I accept what he says and I withdraw any aspersions that I may have made about that gentleman.

The water rate now represents a considerable part of the average family's budget. It has been rightly said that the system of rating is grossly unfair. But, worse still, rate rebates are not applicable to the water rate. I hope that my hon. Friend the Under-Secretary will consider that anomaly and correct it.

A considerable measure of empire building has taken place in regional water authorities. Many authorities are now involved in direct billing and send out their own separate demands. I cannot understand how such actions can be justified as money-saving measures.

May I quote from a written answer that the hon. Member for Carmarthen (Dr. Thomas) received? This refers to non-manual staff costs expressed as a percentage of revenue expenditure. For my regional water authority, in 1974–75 that percentage amounted to 10.1 per cent. In 1975–76 it had increased to 12 per cent. In 1976–77, it had gone up to 13.1 per cent. That is a most unhelpful and expensive progression.

We have already heard that in some areas about 50 per cent. of water is not being accounted for. That represents appalling waste, but that wastage is not all due to poor administration; a great deal must be due to the poor state of engineering—the poor state of the mains and sewers.

Perhaps one method of getting better value for our money would be by increasing privatisation. I believe that there are about 30 private companies currently employing just under 9,000 people. Those 9,000 people are responsible for supplying water to about 25 per cent. of the population. To supply the balance, the authorities need about 64,000. There are no prizes for guessing which system is the most cost effective. Privatisation would be cheaper and more efficient.

For example, in my belief, the regional water authorities use far too much direct labour, which is not subject to the same scrutiny that private enterprise must face and is frequently wasteful. I should like to quote from a letter from the Federation of Civil Engineering Contractors, dated 9 January 1981, addressed to the district auditor at Sheffield, referring to North East Derbyshire District Council: Sewer Renewal". The addresses and the roads are quoted. The relevant extract is: I understand that competitive tenders were invited for this work and that a private contractor submitted the lowest tender. The District Council, however, decided to award the contract to its own public works department, who had submitted a higher tender price. There is no justification for that action. That is a direct indictment of the direct labour operation.

The present Government seek to reduce public expenditure. They need look no further than some of the regional water authorities. It can be argued with justification that they should be cut down to a more manageable size, and that we should introduce far more privatisation.

9.4 pm

Mr. John Farr (Harborough)

I welcome the Bill as far as it goes, but it does not go particularly far in a number of important areas. I also take this opportunity to welcome my hon. Friend the Under-Secretary to his new duties on the Front Bench, which I am sure he will distinguish in his own special way.

Before the debate began, I obtained the latest annual report of the British Waterways Board. It will interest the House to consider some of the notable trends contained in it upon which hinges the reason why the Government are asking the House to authorise more money for the British Waterways Board.

For a long time I have been in correspondence with Ministers in Governments of both parties and also with the chairman of the British Waterways Board, trying to get them to dispose of what I regard as unwanted assets. In these days, when the canal system is not as thriving and active as originally intended, there must be a good deal of inadequate development of some of the valuable properties which are in the possession of the board. It seems sensible to me—but, as I say, not to various Ministers or to the chairman of the British Waterways Board—that under-used assets in the shape of land and buildings should be sold when there are anxious buyers who will put them to better use and pay the taxpayers a good price. That should be the policy of the board.

I therefore seized the opportunity to discover from the board's annual report for 1979 what its activities had been recently in disposing of land and property. The report showed that, at 31 December 1979, the board had net assets totalling £20,031,000, of which freehold land and buildings accounted for £13,258,000. But page 50 said that the figures were based on the valuation date of 1 January 1969—11 years ago. It is safe to say that what was worth £13 million on 1 January 1969 must have been worth £25 million or £30 million on 31 December 1979.

What intrigued me about this report—this should be discussed in Committee—is that, despite the fact that the board is in a semi-moribund state, through no fault of its own, it is in the process of acquiring more land and buildings. At the end of 1979 it had increased its holding in freehold land and buildings by nearly £1 million. Page 27 shows that there were some small purchases in 1979 and a number of small land disposals, but the purchases were double the disposals.

Therefore, the board has perhaps £30 million worth of land and buildings, many of which, through no fault of the board's, are not serving the purpose for which they were originally designed. Many anxious purchasers would like to buy them, thus relieving the taxpayers of the £15 million or £20 million which they must pay annually to keep the board going.

I urge the Minister to consider this situation and say that under-used buildings should be sold. There is a ready market for them and they could then be put to full commercial use, and the money could be used to reduce the sum for which the board has now come to the House.

The 1979 report is not altogether a happy one. Page 33 and statement F4 on page 70 show that total staff increased in those 12 months from 3,147 to 3,239. Yet, despite that increase in staff, in the same 12 months the freight tonnage carried on the board' a commercial waterways decreased. The growing number of staff, the falling freight tonnage and the blank refusal by the chairman to dispose of any land or property but steadily to acquire more land and property warrant close examination in Committee.

Mr. Hardy

Is the hon. Gentleman aware that in the period in question the British Waterways Board commenced the Sheffield and South Yorkshire navigation improvement—a project of considerable significance? Does he agree that, although that is not massive in terms of motorway expenditure, it presents the board with a substantial challenge which requires the purchase of a little land for the widening scheme and a modest addition in staff?

Mr. Farr

I am grateful for that intervention. I shall take note of the hon. Gentleman's view.

It is a pity that the present attitude exists at board headquarters. Hon. Members should be worried about it. I do not blame the members of the board. Many of them are old friends from the House of Commons. We know them to be men of integrity and ability. They are probably doing their best, but there is considerable room for improvement.

Mr. Durant

I am following my hon. Friend's argument closely and I agree that the disposal of land needs examination, but I am uneasy about his freight figures. At one point in the report the figures indicate an increase in return from that division of £100,000. Either the figures are different in various parts of the report or my hon. Friend and I misundertand each other. I am not convinced that my hon. Friend is right about the fall in freight tonnage.

Mr. Farr

That lengthy intervention gave me the opportunity to look at the reference on page 5 of the report. Paragraph 32 states: The tonnage carried on the Commercial Waterways amounted to 5,170,645 tonnes compared with 5,361,121 tonnes for 1978. I understand that to indicate a decline of about 200,000 tonnes, which is what I said.

The House should examine the parlous financial situation of the British Waterways Board. The Minister made an able speech about the need to provide the board with the money for which it asks. However, as can be seen in one of the tables, its situation is parlous. In 1979, out of a total expenditure of £27 million, no less than £21½ million—or 77 per cent.—was financed by grant. Only 16 per cent., or £4 million, was generated by commercial activities—a worrying figure. Leisure activities generated 6 per cent., making a total of 100 per cent. for the year.

That is not a happy story. I hope for the prosperity of the British Waterways Board and have in particular an interest in our invaluable and much admired canal system. Like my hon. Friend the Member for Rugby (Mr. Pawsey) I have the pleasure of having the Grand Union canal, probably Britain's premier canal, running through my constituency. My hon. Friend is also interested in the maintenance and adequate use of our canals for leisure.

I wish to bring to the attention of the House once again the topic of disposal of unwanted property by the British Waterways Board. Only this morning I received a letter from a company in my constituency, Foxton Boat Services. That company of canal boat operators has lived with the British Waterways Board quite successfully and harmoniously for a number of years. It is anxious to increase and develop its activities, but it has found that the British Waterways Board has not always helped. The letter written by one of its directors, states: I feel that as British Waterways Board have such a great weight of maintenance responsibilities this could, in fact, be overcome by the sale of privately tenanted properties, but as I understand it, if British Waterways Board shows a profit during any one year then it is payable to the Government in lieu of grants made available and which in turn means that British Waterways Board are making little or no headway in the improvements necessary to ensure themselves of becoming a viable institution. The letter goes on to say—I hope that my hon. Friend is listening to this— If the Government were to call a halt on the return of their grants then I think with the sale of redundant properties in general British Waterways Board would be able to place themselves in a strong financial situation. Enough, in fact, to carry out the backlog of repairs and general maintenance on the waterways and, with good management, to place themselves in a healthy position for the future. I think it would then be fair for British Waterways Board to charge a rental for the facilities enjoyed by those who purchase the canalside properties which in turn will help with future maintenance costs and lessen the burden on Government funds. My hon. Friend the Member for Fife, East (Mr. Henderson) described with great clarity some of the difficulties in Scotland, particularly, the worries there in relation to flooding. I wish to make a criticism of the Bill as being inadequate inasmuch as it does not really safeguard or improve the situation in which a water main bursts and causes damage in England and Wales. At present, if a water main bursts and causes damage, the water undertakers are under no obligation to pay compensation unless negligence can be shown. In the case of buried works such as water mains to which there is no ready access, it is extremely difficult to show negligence. Thus, those whose land is crossed by water mains or sewers, installed with the backing of compulsory powers, may receive no compensation for the substantial damage which can be inflicted by high pressure water from a large main. At the time of the previous legislation, this was not a real problem, but it has come to the forefront in recent years with the continued advent of new housing estates and new rights of access for the installation of water mains.

I hope that it will not be beyond the capacity of the Government to find some way by which fair compensation can be obtained by owners and users of land whose interests may be substantially damaged by a burst water main. I am sure that my hon. Friend knows without my telling him that the National Water Council and, indeed, certain prominent spokesmen in his own Department are understood to be in sympathy with this view. I therefore hope that, sooner or later, perhaps in Committee, an amending clause will be introduced.

My hon. Friend the Member for Rugby mentioned the regional water authorities. Coming from a neighbouring constituency, I can only record my full agreement with all that he has said about the poor reputation with the public currently enjoyed by those authorities. It has been caused by soaring expenditure and soaring water charges. There has been a failure in public relations.

What my constituents do not know, and what they ought to know, is that every regional water authority is composed of a majority of elected members. In theory, if the elected members are upset about something, they only have to act together in a purposeful manner and they can dictate and control the purse strings entirely. Yet so often one finds that being the area representative on the RWA is rather a chore. It is not a job of much interest. It is something which a not very active councillor is delegated to do, and when the RWA meets its members show no cohesion.

The general intention of making elected members the majority on the RWAs is a good one, but those elected members, who can entirely dictate expenditure, are not making proper use of their position of great responsibility. I am not sure what the House can do about it, but it is something that it should consider.

Mr. Pawsey

Perhaps elected members are not able to make their weight felt because they come from so many differing local authorities and represent three differing political parties, four if one includes the ratepayers. Because of that splintering action, it may mean that they are not able to coalesce and to take on the authority as they should. Would not a better answer be the introduction of a greater degree of responsibility to an electorate?

Mr. Farr

I was about to sit down, but my hon. Friend has touched on an important and cogent note. The House could spend hours discussing the attitude and lack of interest of local councillors in relation to these appointments. I personally think that it is one of the most important appointments that councillors can obtain. But somehow or other we must persuade them to have the enthusiasm that is shown by the crowded Benches on both sides of the House.

9.22 pm

Mr. Ted Graham (Edmonton)

I echo the words of Conservative and Labour Members, and warmly welcome the Minister to his first chore as Under-Secretary of State for the Environment. Labour Members very much hope that he will bring some fresh thinking to a Department that is sorely in need of it.

The Minister disappointed us with his contribution. It was far too bland. It failed to deal adequately with the provisions which the House and the people were led to believe were in the Ministry's files when it got the authority to bring the Bill forward. My right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) introduced a number of cogent reasons why the Bill was a disappointment, and it is no good Conservative Members complaining that he spent too much time on that topic. Every Conservative Member who has spoken has added to the catalogue of provisions that they would like to have seen in the Bill. In a Second Reading debate it is perfectly proper not only to comment on and criticise that which is in the Bill, but to comment on things that we would like to have seen in it.

Let us consider some of the points raised in the debate. The hon. Member for Grantham (Mr. Hogg) complained not about the contents of the Bill but about the absence of a provision that he considered ought, even at this late stage, to be considered by the Minister. I see a great deal of merit and equity in what the hon. Gentleman said. His proposal was supported by two other Conservative Members. That is another justification for our disappointment that the Bill has been brought forward so hastily and has not been given sufficient thought. The Government have missed a great opportunity to deal with many issues that ought to have been dealt with in such a Bill.

The hon. Member for Caernarvon (Mr. Wigley) brought the voice of Wales to the debate. He described the Bill as deficient and paltry, and the Opposition do not disagree with that description. The hon. Gentleman said that the whole of Wales would feel let down because promises given to him and his colleagues and to Wales that there would be measures to deal with the inequity of certain aspects of the Equalisation Act had not been included in the Bill. The hon. Gentleman added to the list of topics that could have been dealt with, but have been excluded.

The Minister was frank enough to admit that the measure was almost a miscellaneous provisions Bill. It deals with three disparate aspects, cobbled together into a Bill, and we see no reason why more matters could not have been included.

We recognise the experience and ability of the hon. Member for Reading, North (Mr. Durant) in these matters. In preparing for the debate I read the Frankel report and I appreciated its wisdom. Not too much has been made of the importance of that report, though references to it have been made.

I certainly agree with the hon. Member for Reading, North that in order to give a boost to the morale of the industry we need to make clear that we shall deal with the years of neglect and delay and, not least, the decay brought about by the passage of time. The Frankel report argued that there should be a commitment that ought to be met unless there were overriding reasons against doing so. It referred to a figure of £36 million in 1975 and it is estimated that that figure ought now to be about £80 million.

Is the Minister aware of any thinking—I do not want to pin him down to a definite plan—about the possibility of producing the sort of rolling programme that the hon. Member for Reading, North said would be of great benefit? Such action would be wise and would be a continuation of the picture that emerged in the latter period of the Labour Government.

The hon. Member for Rugby (Mr. Pawsey) made some pertinent points about waste and inefficiency. The hon. Member for Harborough (Mr. Farr) underwrote those comments and no Opposition Member has any brief for inefficiency or waste. I assume that the hon. Member for Rugby was not making a party point, because the authority that he used as an illustration is not over-endowed with Labour members. I imagine that the hon. Gentleman's strictures will hit home to the local authority members and those appointed by the Department. When a new Government takes office, there is a turnover of members of such bodies, sometimes quickly and sometimes slowly, and soon there will be no excuse for inefficiency or waste in that water authority.

The hon. Member for Harborough said that the Bill did not go far enough. The Opposition are fully behind not only the need for the British Waterways Board but also the need to give it adequate funding. One of the prime functions of the Board is to maintain the navigability and safety of the whole network. Against the background that this was accepted as a national responsibility, the Frankel report was commissioned and accepted by the previous Government, and embraced by present Ministers when in opposition. I should like the Minister to say whether there is a time scale and whether the Department has in mind sums that will be made available on a regular basis to deal with the range of matters that Frankel said should be tackled.

There is the regular and systematic inspection of the whole network. Will the Minister say whether there is a regular monitoring of the situation not merely to deal with tragedies or disasters but to ensure that the whole network is examined? There is a range of other responsibilities, including repair and maintenance of locks and aquaducts.

Frankel produced compelling arguments for greater commercial use of waterways. When the system was created 200 years ago, it was used primarily for commercial and freight purposes. As my right hon. Friend the Member for Small Heath has remarked, the canal system is now rightly used for leisure purposes by millions. There is a need to pay special attention to improving the use of the canal system. Frankel said that it was possible to multiply the use of the system commercially three times. One has to consider the appalling damage caused to the environment and the roads by the increasing weight of lorries and juggernauts, often resulting in enormous costs to be borne by the taxpayer. I should like the Minister to say whether the Department is considering any plans to increase the commercial use of the canals not only for their own sake but to take traffic off the roads.

The British Waterways Board has insufficient revenue to meet the whole of its costs. The deficit grant is running at the rate of 60 per cent. We want the Minister to come clean. The hon. Gentleman should not delude either the British Waterways Board or the House into believing that the Government are being generous to the board. One of the first acts of the Government, as an indication of their intention to reduce public expenditure, was to take £2 million off the grant in 1980. As my right hon. Friend the Member for Small Heath has stated, the grant was £21 million in 1979. In 1981, it is £27 million. The grant of £21 million, in real terms, should have become a grant of £32 million. There has, therefore, been a reduction of £5 million in the amount that was required in 1981 merely to stand still and fulfil the same purposes. The inflation for which the Government are at least, in part, responsible, is eating away at the money made available. This is a backhanded way of helping the British Waterways Board.

The Minister should tell us whether he acknowledges that the Government are giving to the board with one hand and taking with the other. We want to know whether the revenue consequences of increasing the borrowing possibilities and the interest charge implications, for which the Government have a great deal of responsibility, are recognised by the Government. Additional moneys are being made available to enable required work to be undertaken, and the fact that those moneys are being used means that there is a greater charge on the revenue of the board.

My right hon. Friend the Member for Small Heath spoke about fire-fighting charges. The Minister argues that the raison d'etre for the change that is set out in clause 2 is related almost entirely to public safety. He argues that there is less public safety now because charges are made and, ipso facto, there will be more public safety when charges are dropped. I should not like to feel that there is any private undertaking of a business or commercial character that is inhibited from making adequate safety provisions for the public on the ground that it may have to face the charges that are now being levied throughout the country. The Opposition want to see every commercial undertaking providing adequate public safety. We subscribe to the principle that is enshrined in the 1973 Act—namely, that users should pay a fair charge for water.

We can see a much more sinister reason than the Minister gave for the inclusion of clause 2. The North-West area authority—I realise that this is not typical—received an income last year of £600,000 from its charges for the provision of water for private sprinklers and the like. In future it will no longer receive that money. Industry is being derated. This is derating by sleight of hand and by the door. Industry is now paying £600,000 in the North-West for a service and next year it will not pay that sum. In other words, it is being relieved of the cost. Who will pay the £600,000 in the North-West? It will be paid not by the Exchequer, not by industry but primarily by the domestic ratepayer. The cost will not be borne by the authority.

The charges made by the Thames water authority are entirely at the discretion of the authority. I am told that last year it received an income of £100,000. However, I am told that before the Bill loomed on the horizon the authority had in its budget plans the raising of £1¼ million. That money is not now to be raised. The authority's budgeting will be knocked cockeyed. Where will the money come from? Adjustments will have to be made. Who will pay in the end? Again, domestic ratepayers will have to bear the burden. That is grossly unfair.

Under the guise of making factories more secure and increasing public safety, private industry is being relieved of the need to pay moneys hitherto charged to it.

Dr. Hampson

indicated dissent—

Mr. Graham

I note that the hon. Member for Ripon (Dr. Hampson), who is a Parliamentary Private Secretary in the Department, shakes his head. He will have the opportunity in Committee—convention dictates otherwise now—to contradict my argument that a charge that is now being made will in future not be made and that the costs of the service will have to be borne by others. I contend that primarily the "others" will be domestic ratepayers.

A point was made about the net effect on the domestic ratepayer. My right hon. Friend the Member for Small Heath estimated that at an additional 1 per cent. The Department has provided me with a document which indicates that the abolition of the £600,000 will add ½ per cent. to the water bill of domestic consumers in the North-West. That figure varies throughout the country. One criticism is that there has never been a uniform basis. We shall want to question the Minister closely in Committee about the justification for relieving industry of that sum of money, and especially about the consequences for the domestic consumer.

One provision in the Bill is that there will no longer be a need for separate supply pipes. The Minister referred quite fairly to existing legislation. But he then made reference to the need for change. Last year there were cogent reasons for separate pipes in terms of water conservation, responsibility, the need better to control the use of water and the tragic problems that might occur if there were a change in the volume of water between one house and another because there were not separate pipes. What has happened to those cogent reasons which he now tells us are to be dropped, by virtue of the increase in the sale of council houses and the need to consider closely the break up of council estates and blocks of flats?

There are two glaring omissions. The Minister, in what was billed as a major speech, said that there were 10 points in a programme for action. He led us to believe that the Bill would include many aspects that would be welcomed by the British people. Let us consider two of them. There is the question of the sewer network. What about the costs to the country and eventually to the domestic ratepayer—the owner-occupier—of the enormous task of renewing the declining sewer network. I know that the Minister is aware of that problem. Could not some attempt to deal with that problem be included in the Bill? I know that in parts of Edmonton and Enfield many owner-occupiers are worried about the eventual cost to them of replacing the sewers.

There are householders who have access to cesspools, but who do not have direct access to a water supply for their domestic arrangements. About 1 million people are currently using cesspools. When will the Government introduce legislation to deal with the consequences of the Daymond judgment to the effect that there is no obligation on any water authority to provide a direct water supply?

Those glaring omissions cause the Opposition both regret and despair. We do not intend to divide the House on Second Reading, but in Committee we shall want many answers to many questions. We reserve our action on Third Reading.

9.44 pm

Mr. Giles Shaw

In consideration of the time of the House, I may defer dealing with some of the points raised and deal with them by correspondence or in Committee.

Two main themes have been apparent. The first is that the Bill should contain many more proposals than it does. The second concerns the consequences of the measures on cost and particularly cost to domestic ratepayers.

The Bill is designed with three fairly small aims. It is designed primarily to increase the borrowing limits for the British Waterways Board. We hope that we can proceed with the Bill in reasonably quick time, so that the board will be able to have the new borrowing limits to operate in the current and subsequent years.

The Government have not used this occasion to widen the scope of the legislation to cater for the myriad points that Opposition Members have sought to include in the Bill. There may be additional opportunities in due course. We do not believe that it is our duty to legislate wide, long and far in order to produce a modest return. We have covered many of the points by administrative action. The reference to my hon. Friend and his 10 points suggests that hon. Gentlemen do not realise how much can be done by administrative action.

There is no need to introduce legislation, for example, to try to improve the financial accountability of the water authorities. We have done that. We have set the cash limits. We have required them to produce a more frequent account of their stewardship and more statements concerning their employees and their activities. We are also concerned to see a better performance from those elected to represent local authorities on the water authorities. We can take those actions without the substantial additional consequence of legislation. I recognise that many hon. Members wish to see steps taken to improve the efficiency of water authorities. Because such measures are not contained in the Bill it does not mean that no action is being taken. I shall refer at greater length in Committee to the actions that can and should be taken.

Let me now deal with clause 2, concerning fire-fighting charges and the consequences for domestic ratepayers. It is not correct to suggest that the burden of the withdrawal of those charges will fall on the domestic ratepayer. It will fall on the same category of consumer as that on which charges are currently levied, namely, the industrial and commercial user. It will fall within the two-part tariff of the authorities concerned. I accept that within that category charges are likely to rise by about 1 per cent. I apologise to the hon. Member for Edmonton (Mr. Graham). Allow me to correct the information that I previously gave him.

I make no apology to the House. The main reason for the change is that it is in the interests of public safety. Changes in sprinkler systems or the acquisition of fire precaution measures could still continue from normal charges. However, where the charges have suddenly lifted from about £5 to £1,370, there could be a deterrent at least for postponement. It is sensible to use the opportunity to allow water authorities to be relieved of the burden of charging in that way.

I also recognise that water authorities, by the Water Act 1973, must not discriminate between categories of customer. Section 30 made that clear. We therefore either have to remove the power or take discriminatory action.

Mr. Denis Howell

I merely wish to refer to the Minister's comments about the effect of clause 2. If we exclude from these charges those who have a supply of water for fire-fighting purposes, whether through sprinklers or mains, the charge has to be paid by the remaining consumers, who are overwhelmingly domestic consumers. There may be a few small commercial properties that will pay, but most of industry, commerce and shops will be beneficiaries at the expense of the remainder, which is overwhelmingly the domestic users.

Mr. Shaw

The right hon. Gentleman is wrong about that, as he was wrong about many other matters, but he will no doubt return to the point in Committee.

The clause does not increase the money supply. We are raising the borrowing powers which, over time, the British Waterways Board may seek to raise in terms of cash, either from central financing or from private sector sources. We shall return to those matters in Committee.

Some hon. Members mentioned the legal position on burst mains, and in particular the problems of the NFU and County Landowners Association. My hon. Friend the Member for Grantham (Mr. Hogg), supported by other hon. Members, was concerned about that. I fully accept that this is a problem that we must find a way of solving. Undoubtedly, the water authorities have wider powers of entry and, as my hon. Friend the Member for Fife, East (Mr. Henderson) suggested, they may not deposit plans that can be easily examined by others. They have greater powers than many other authorities in dealing with entry to land, and they do not require wayleaves or easements.

Although my hon. Friend was right to argue that in the case of the law on negligence something should be done about the consequences, he will also agree that the law of liability is equally cumbersome and difficult. I accept that this principle is one about which we should take action, but, bearing in mind the observations that I made on the scope of the Bill, I do not think that this Bill is the correct vehicle for that action. I hope that legislation can be found that will allow the action that my hon. Friend has recommended. As my hon. Friend the Member for Fife, East also suggested, here is a wide range of reasons why action should be taken on this matter—reasons that are not solely connected with the water industry or its agents. I ask him to bear with me on that, although I accept the principle that he suggests.

There was substantial comment about the British Waterways Board and its activities. Many hon. Members commented on that, notably my hon. Friend the Member for Reading, North (Mr. Durant). I appreciate that there is a major conflict of objective as to whether the influence should be upon commercial development—the hon. Member for Rother Valley (Mr. Hardy) is an arch-exponent of that in relation to the South Yorkshire navigation—or whether it should be concentrated on amenity value and the leisure industry.

I tend to take the point of my hon. Friend the Member for Reading, North with regard to the amenity value of our canals, namely, that this sector must produce developments. But the problem is to generate revenue thereby on the scale required to maintain and develop the system. At this early stage I cannot produce sensible thoughts with regard to the future of the British Waterways Board and the canal system, but I recognise the dilemma. The dilemma was referred to by the hon. Member for Edmonton in relation to the Frankel report and what then follows. It is the question of the sheer costs of maintaining the system, much of which is archaic and cannot justify commercial rates of income and revenue, but all of which requires significant maintainance and some development.

We must examine the matter closely to see how far amenities can produce increased revenue. Equally, we must look at that stretch—there are few such stretches—where genuine commercial freight can be carried at a profit. But between the two there is this large network of a system that has high maintenance charges and inadequate prospects for taking large amounts of revenue.

My hon. Friend the Member for Harborough (Mr. Farr) made a suggestion about the disposal of property. I take his point. We must discuss it with the board, because if property can be sold and that can help with maintenance costs or in reducing Government intervention, it will be all to the good.

With regard to Government subvention, although the grant in real terms has remained constant between 1980–81 and 1981–82 at £19 million in real terms—or £25 million in 1980–81 and £28.5 million in 1981–82 at outturn prices—it is clearly an insufficient amount to cover all that the board would wish to do, and probably an insufficient amount to cover all that hon. Members would wish to do. But I suggest that it is not yet the time and place at which to decide to give expenditures in this field a higher priority than all other expenditures for which the Government are responsible.

Let the House be under no illusion: the ravages of inflation are such that the Government have an overriding duty to see that that rate of inflation comes down. The problems that the British Waterways Board faces are just the same as those in any other business that sees its costs rising and its income static, or even declining. The bringing down of the rate of inflation will make as great a contribution to the prospects for the British Waterways Board as it will for the rest of British industry, and we should still regard that as our prime target in discussing how to finance the waterways.

Finally, I am grateful for the kind words—

Mr. Wigley

Does the Minister intend to respond to comments made about the effects of equalisation? Does he intend to tell us about any ideas that the Government may have for substituting constructive proposals in that regard?

Mr. Shaw

I appreciate that the hon. Member for Caernarvon (Mr. Wigley) has made an important point in that respect. I should not like to comment on it at this stage, but I shall write to him about it, and no doubt we shall also discuss it in Committee.

I am most grateful for the kind words of welcome from hon. Members on each side of the House. I look forward to the Committee stage of the Bill in the expectation that the House will now give it a Second Reading.

Question put and agreed to.

Bill accordingly read a Second time.

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