HC Deb 07 July 1982 vol 27 cc293-302 3.31 pm
The Minister for Local Government and Environmental Services (Mr. Tom King)

With permisssion, Mr. Speaker, I should like to make a statement on the future organisation for water in England and Wales.

The regional water authorities were set up in 1974 with large memberships, the majority of such members being appointed by local authorities in their areas. The original intention was that these members should represent the interests of consumers. There has for some time been concern that this system is not working as intended. Consumers have not felt that they were really represented and few people knew who their representatives were on the water authority. At the same time, large memberships have led to a proliferation of committees and bureaucracy and inhibited efficient decision taking. The Monopolies and Mergers Commission, in its report on the Severn-Trent water authority, recommended that the present membership should be substantially reduced and not based predominantly on local government representation. The Welsh water authority has already been reconstituted on these lines. Earlier this year we issued a consultation paper for England on this question.

The regional water authorities are substantial undertakings requiring a high level of management ability. Having considered the responses to the consultation paper, the Government have decided to create smaller boards of between nine and 15 members, appointed by Ministers and including executive members on every board. We propose that county and district councils should have the opportunity to nominate people for some appointments to these boards. In addition, land drainage and fishery interests will continue to be represented. Chairmen and members of the new boards will be paid, and will serve for fixed terms.

Together with these new boards improved arrangements can then be made for consultation with consumers, local authorities, and other interested parties. Water authorities have already established various kinds of liaison arrangements at divisional level, and we intend to build on these.

Our proposal is that water authorities should appoint an advisory committee for each division, which would include representatives of local authorities but also representatives of industrial, commercial and domestic consumers, and agricultural and amenity interests. We shall issue guidelines for the estabishment of these committees, and will require the water authorities to satisfy us that proper arrangements have been made.

In considering the structure of the water authorities, we have also examined their relationship with the National Water Council. The National Water Council played a valuable role following reorganisation in assisting the new authorities and helping to represent them to the Government. They are now fully established and the Government have developed a more direct relationship with the individual authorities. The Government therefore believe that they are able to carry out their responsibilities without an additional central statutory body. We have therefore decided to dissolve the National Water Council. We shall be consulting those affected by this decision, including the trade unions. The Water Space Amenity Commission will also be dissolved.

The legislation which will be required for these changes which cover both England and Wales will be introduced at the earliest opportunity.

We believe that these proposals represent an improvement in the arrangements for the organisation of the water industry, and that they will command wide support both among consumers and in the water industry itself. I commend them to the House.

Mr. Denis Howell (Birmingham, Small Heath)

Why have the Government decided to treat the House with such contempt? When the major proposals for the Water Act 1973 were being formulated they were put to the House in a Green Paper and White paper and the House was given an opportunity to debate them. When the previous Administration issued their White Paper in 1977, they followed the same procedure. Were the Government so ashamed of what they were doing that the House could not even be consulted before this announcement was made?

Do not these proposals result from considerable national concern about the level of water charges, which gave rise to angry debate throughout the country, led by local authorities—which is no doubt why they are now being killed off? Even at the Conservative Party conference in 1980 the right hon. Gentleman made a brave speech, during which he talked about faceless, remote water authorities.

Is it not a fact—if I am wrong, perhaps the Minister will give the facts—that nothing m these proposed changes will reduce water charges to the consumer by a penny? That is what all the agitation has been about.

Why have the Government decided to eliminate local democracy in the water industry? Why do they carry on this vendetta against local authorities of all political persuasions? Why do they believe that it is better to replace that democracy by a system of corporate centralism, the like of which we can expect to find only behind the Iron Curtain or in other totalitarian States?

Will the right hon. Gentleman confirm that every regional water authority and local authority association that was consulted about these proposals was opposed to them? In that case, why are the Government ignoring those views?

The National Water Council is to be dissolved, but the statement was unsatisfactory and silent on some matters that are of great concern to the nation. I mention three. The first is the level of national investment policy. When so much of our creaking system, particularly the sewerage system, needs to be replaced, who will decide the total programme? Why have we not been told how that will be done?

National wage negotiations can be conducted only by the National Water Council. It is important that we should know how wage negotiations in the water industry will be conducted, but the Minister said nothing about that or about quality control, which is equally important.

Why will the consumers and local authorities have no representation, when the undemocratically constructed internal drainage authorities are to have a seat as of right? That cannot be right, and it is another blow to local authority representation.

The Government propose a system of advisory councils for consumers and local authorities which will be selective in make-up and which has proved unsatisfactory in all our nationalised industries. These proposals are retrograde in every respect and will be opposed by the Opposition.

Mr. King

The right hon. Gentleman said that the statement was silent about the investment programme. It deals with the structure of the industry and the investment programme will continue as it is now, with discussions between individual authorities and my Department.

The right hon. Gentleman also referred to the importance of national wage negotiations. That is the principal function of the National Water Council and it will be necessary to make suitable alternative arrangements. As I made clear in my statement, the change requires legislation. The National Water Council will continue until well into next year, depending on the legislation programme. It will be a matter for discussion, and this afternoon we are issuing a consultation paper on the alternative arrangements which will be available to all hon. Members.

There will be some savings in charges, because the National Water Council involves certain costs, but it will depend upon the alternative arrangements. The council employs about 450 people, some in training, fittings and pensions, which will need—

Mr. Nigel Spearing (Newham, South)

To continue.

Mr. King

—to continue, but economies can be made in other areas. The water authorities also incur considerable costs in their committees. The National Water Council used to operate more than 100, but that number has recently been reduced. However, the individual authorities still have a large work load because they must come to London for committee meetings. I know that some of them believe that economies could be made there.

It is not correct to accuse the Government of corporate centralism when, first, we refused to go down the line adopted by the right hon. Gentleman of a national water authority with all-pervasive powers and when we are now abandoning the corporate centralism of which he accused us in favour of more decentralisation to regional water authorities.

Sir Marcus Kimball (Gainsborough)

Is my right hon. Friend aware that the smaller and strengthened executive that he has just announced will go a long way towards meeting the criticism of large water authorities so often voiced by Conservative Members? Does he agree that the smaller divisional units will at least be sensitive to local pressures?

Mr. King

I am grateful to my hon. Friend. I believe genuinely that the previous arrangement was an attempt to meet both problems in one body. It led to real problems, as shown by the Monopolies and Mergers Commission which, in the Severn-Trent water authority, identified a sum of about £1 million that was attributable to the size of the membership and the paper work involved in servicing committees. It will now be possible to include many more consumer representatives who can get across their points of view.

Mr. Stephen Ross (Isle of Wight)

Is the Minister aware that, of the five options that appeared in the discussion paper, none of which was satisfactory, he has chosen the worst? What is wrong with direct elections to the water authorities? Why cannot the public elect members? Is not his example of what happened in Wales very much regretted and resented there?

Mr. King

That view is advanced in some quarters, but I have never believed that there would be wide support for directly elected water authorities. They are substantial undertakings that require considerable commercial management skills in their operation, and direct elections to them would not be effective.

Mr. Spearing

Does not the first part of the Minister's statement show that either the 1972 Government, who introduced the previous reforms, have failed in their purpose, or that many local representatives, including Conservative representatives, have failed in their purpose since then? Does he agree that, apart from the functions that he mentioned in reply to my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell), many functions require national planning of water resources and disposal and that they are not best carried out by his Department in Marsham Street, where history has shown that civil servants, by their background, know little about water and its importance?

Mr. King

The basic reform in the Water Act 1973 was to convert about 1,600 bodies responsible for water supply, treatment and sewerage into 10 water authorities based on the river basin concept. That fundamental reform has been proved right.

Mr. Michael English (Nottingham, West)

It is not based on river basins in the Midlands.

Mr. King

It is based on two river basins—the Severn and the Trent.

Mr. English

He does not even know the background.

Mr. King

The original concept, which is not the world's greatest secret, was along the lines that I announced. It was subsequently amended in the face of local authority opposition. On reflection, we believed it best to revert to the original concept.

Mr. Kenneth Lewis (Rutland and Stamford)

Although I appreciate my right hon. Friend's real attempt to strengthen and streamline the management of water authorities, is he aware that the greatest criticism of those authorities has been that they do not include local representation? If the advisory bodies are weak against the strengthened management, the position could not be improved but might be worsened.

Mr. King

I accept entirely what my hon. Friend says. It is important to ensure that the advisory bodies are effective. I accept that that approach has been criticised in the past, but it is extremely difficult for organisations of that size—the Thames water authority has 11½ million customers—to ensure that we have effective management—

Mr. Spearing

They have just reorganised themselves.

Mr. King

—and effective consumer representation. We shall issue guidelines to the water authorities and we shall not allow matters to proceed until we are certain that consumer arrangements are satisfactory.

Mr. Peter Hardy (Rother Valley)

Does the Minister agree that his announcement is premature, because he has not given the water authorities time to reconsider their position in the light of recent evidence? To some of us, it looks as though the Government are about to go along a rather sordid road. Does he also accept that the future of the water industry should depend rather more on the Government considering the need to increase capital expenditure than on their obsession with tinkering with its structure?

Mr. King

It is important correctly to identify the needs of the industry. Those needs are different in different parts of the country. The North-West water authority would put collapsing sewers and derelict underground assets at the top of its list of priorities. In the hon. Gentleman's area, the quality of water is a problem. It is important not to try to deal with the problems globally but to identify them in each authority. Structure and value for money in investment go hand in hand.

Mr. John Cartwright (Woolwich, East)

Does the Minister accept that consumers suffer from taxation without adequate representation? Does he agree that we should increase and not reduce accountability? Why does he rule out direct election in favour of creating yet another bureaucratic tier of divisional advisory committees?

Mr. King

If one distinguishes between electricity and gas, and water, one immediately draws attention to the fact that the major part of water supply is based on the rateable value and not on the amount consumed, measured by meter. There are some tentative signs that that is changing. The number of domestic consumers whose water supply is metered has doubled, although it is still extremely small. Directly elected bodies would not answer our problems. That was an alternative proposition, but we believe that this is the proper solution.

Mr. Den Dover (Chorley)

Is it not true that business pays more than half the water rates? Does my right hon. Friend accept that business men will welcome the new divisional arrangements? Will my right hon. Friend the Secretary of State give due consideration to appointing business men to the water boards?

Mr. King

My answer to both questions is "Yes". We shall certainly need people with commercial and industrial abilities on the boards because they are major undertakings. The nine authorities in England and one in Wales are responsible for £750 million to £800 million of capital investment every year, plus more than £2,000 million of revenue expenditure.

Mr. David Ennals (Norwich, North)

Bearing in mind the political axemanship of the right hon. Gentleman's colleague, the Secretary of State for Social Services, when he sacked the chairmen of regional health authorities who dared to disagree with him, is it not ominous that he is introducing a similar political approach to water authorities? Why does he deny any representation to local authorities, which will deeply resent that, and when will the House be able to debate this package of proposals which the Opposition find totally unacceptable?

Mr. King

The right hon. Gentleman has heard my statement. These proposals will require legislation and a full examination by the House at that time. I found his preliminary remarks extraordinary.

Mr. Teddy Taylor (Southend, East)

Does this major money-saving reorganisation have any implications for places such as Southend where the water provision is subcontracted to private commercial companies? In Southend, that is the Essex water company.

Mr. King

My statement does not affect the position of the water companies—the statutory undertakers—in their areas. It deals purely with the structure of the water authorities.

Mr. English

We all understand that all Governments wish to provide jobs for their supporters. Will the Minister ensure that there is a maximum age for members beyond which he cannot appoint? Nobody above the retiring age of civil servants should sit on such authorities. The last quango appointed by the Government has an average age of 67 years. Water is rather more important than the history of the Falkland Islands.

Mr. King

There will be a considerable reduction in the number of appointments and the number of members on water authorities. The age of members will arise during legislation.

Several Hon. Members


Mr. Speaker

Order. I propose to call the five hon. Members on both sides who have been rising throughout questions on this statement.

Mr. Toby Jessel (Twickenham)

What will the effect be upon the River Thames, both on the tidal area below Teddington lock and the non-tidal area above it, on the flow of traffic along the river on the moorings, on the management and on the quality of the water?

Mr. King

I should need notice of that question to say exactly how my statement will affect the River Thames. I hope that my hon. Friend and his constituents will see an improved performance by the authority and a more accountable authority.

Mr. Andrew F. Bennett (Stockport, North)

Will the Minister accept that most of my constituents resent the water authorities because of their remoteness, bureaucracy and charges? The Minister's proposals do nothing to help. He should return them to local democracy and alleviate the hardship caused by the charges by introducing a rebate system for pensioners and others on low incomes who cannot afford the extremely high water rate charges.

Mr. King

It is an interesting fact, as the hon. Member knows, that his water authority has one of the lower levels of charges in the country, although it has some important responsibilities to tackle. When the hon. Member used that rather easy phrase "return them to local democracy", I was not clear whether he meant returning to the system under which 1,800 bodies were responsible in different areas. These problems have to be looked at seriously and we believe that our proposal is a serious and sensible attempt to achieve the right balance.

Mr. Roger Moate (Faversham)

Can my right hon. Friend confirm the impression that one has, that the majority of those who responded to his consultation document wanted to retain some direct local authority representation? If that is not so, will he comment on the nature of the responses that he received? I recognise the difficulty of reforming a bad system but has my right hon. Friend not fallen into the trap of converting what were semi-quangos into complete quangos?

Mr. King

The majority of responses received were from local authorities and water authorities. Because one of the proposals involves the diminution of numbers on the authority the majority of local authorities, but not all, were not in favour of the reduction. We had a similar response from the water authorities where local authority members are in the majority. The majority of outside bodies which responded were in favour of smaller boards with advisory committees. Advisory committees will be appointed by the water authorities. They will not be Government appointments, although they will be made under my guidelines.

Mr. Bob Cryer (Keighley)

It appears that the Minister's proposals will save a few train journeys to London. It seems absurd to remove all vestiges of local authority and consumer participation to achieve that. There is a strong suspicion that the Minister is setting up a few quangos to put Tory placemen on them who will say "Yes" to central Government and shift the power to his right hon. Friend the gauleiter of Marsham Street. Is that not the position?

Mr. King

I am surprised by the hon. Gentleman's intervention. He seems unaware of the public anxiety that exists at the remoteness of the water authorities and the lack of opportunity for consumer involvement and representation. We believe that this attempt will improve the position.

Several Hon. Members


Mr. Speaker

Order. I want to make it clear that I propose to call only those hon. Members on both sides whom I said earlier had been rising in their places.

Mr. Michael McNair-Wilson (Newbury)


Sir David Price (Eastleigh)

On a point of order, Mr. Speaker. Does that apply when a new fact has emerged from the Minister?

Mr. Speaker

Yes, I am afraid it does, or we should go on for ever.

Mr. McNair-Wilson

Will my right hon. Friend say something more about the accountability of the new regional authorities? Are they to be effectively autonomous in the way in which they handle the problems of their areas or are they to be answerable to him? If they are to be answerable to him, will he be answerable to the House for the way in which they conduct their business?

Mr. King

Yes, Sir.

Mr. Dennis Skinner (Bolsover)

Will the Minister tell us whether, 24 hours after the Leader of the House made a statement about giving power back to the people, this Tory proposal for water authorities falls into that category, as the Secretary of State will arrogate all that power? Is it not ironic that the Government and the Secretary of State talked about quangos when they were elected to office yet they have now set up God knows how many more on top of all the others? Does he realise that when constituents read about it they will ask whether the Minister will tell them when the water rates will come down, and whether old-age pensioners and others will get a rebate? Those are the questions that he has to answer. When will water rates come down? Answer that.

Mr. King

The answer to the first part of the hon. Gentleman's question is, "Yes Sir. It does conform with our policy". The hon. Gentleman is determined to maintain a central body when we are anxious to give the responsibility to the regional authorities, who clearly serve the consumer.

Mr. Skinner


Mr. King

The hon. Gentleman's questions about reducing the charges show that he is uninformed about these matters, whatever structure exists.

Mr. Christopher Murphy (Welwyn and Hatfield)

Is my right hon. Friend aware that his emphasis on real consumer consultation in the future will be welcomed by all water retepayers as they have found that their views have not been represented until now?

Mr. King

I am grateful to my hon. Friend, because one gets the impression from the questioning that we are attacking a well-established and well-respected system. Any hon. Member who has studied the matter will recognise that there is public anxiety about the present structure and a desire to see it changed.

Mr. Les Huckfield (Nuneaton)

Will not the Minister accept that the reply he gave to his hon. Friend the Member for Chorley (Mr. Dover) about appointing more business men confirmed our worst fears about this being yet another extension of Tory party patronage? Will he not accept that his new authorities will still be too remote and even less democratic and that the customers still will not know their representatives? His proposals will do nothing to eradicate the faults that emerged from the two committee reports. How much does the Minister think he will save?

Mr. King

On the first point, about the appointment of people with industrial and commercial experience, as I made clear in my statement, we shall seek nominations from local authorities in the area, county and district councils, and from agricultural and amenity interests. We shall seek the best combination of people to contribute to the efficient operation of the water authorities. I am sure that the hon. Gentleman has looked at this matter and has his views upon the water authority in the area he represents. He will know that people are worried about who the members are. There is no system for consumer representation from outside the authority. We hope that what we propose will be more effective than the present position.

Mr. Huckfield

How much will it save?

Mr. Geoffrey Dickens (Huddersfield, West)

I am not completely convinced that the proposals will have the results that we hope for, but on first inspection they can only be an improvement. However, is my right hon. Friend prepared to tell the House now that the new structure and streamlining of water authorities will help to reduce the wicked, cruel, unfair and unjust standing water charges that are financially crippling old-age pensioners?

Mr. King

I am glad that we appear to be passing my hon. Friend's first inspection, and I hope that his further inspections will be equally satisfactory to him. The wider issue about the system of charging has been a matter of considerable discussion. I understand my hon. Friend's point and I know that with more effective consumer representation by consumer committees, this issue will be examined.

Mr. D. N. Campbell-Savours (Workington)

Have not these arrangements been introduced to accommodate a later privatisation of the industry? Which of the 11 chairmen supports what the Minister said at the Dispatch Box today?

Mr. King

The hon. Gentleman should not put ideas into our mind. Water authorities need this change in structure, and if the hon. Gentleman examines the position in his constituency he will find the problems and needs that exist. It will be helpful to have consumer representation in the North-West water authority that is closer to the people he represents.

Mr. Denis Howell

Has not the Minister repeatedly failed to satisfy the House that any substantial economies will be made? His list of savings was trivial and irrelevant, especially the saving on people coming to London by train. Does he agree that he cannot say—nor will it happen—that these proposals will reduce water bills in any way for water consumers?

The Minister proposes to replace the voluntary system of membership by nine to 15 full-time executives, according to the statement, which will far outweigh the cost of a chairman's odd visit to London to the National Water Council. Is the Minister not trying to blind consumers with Conservative science, which will not work because their agitation was to bring bills down, and this will do nothing to reduce any bill anywhere?

Two even more important points that the Minister should consider are those of investment and national wage negotiations. Is it not clear from what the Minister said that the Government have not thought out this matter? They are to issue a discussion document about national wage negotiations, which is one of the most crucial parts of wage negotiations. Further, they said nothing about maintaining investment.

What the North-West wants to replace the falling sewers is not a new structure but money and investment, and there is nothing in these proposals that will produce or guarantee that. Are not these things inadequately thought out and a disservice to the industry and the House? Can the Minister arrange a debate as early as possible before he introduces the legislation?

Mr. King

The question of a debate is not a matter for me, but the right hon. Gentleman's request will have been heard by my right hon. Friend the Patronage Secretary.

The right hon. Gentleman's comment about the North-West was singularly ill-informed. It appears that he is not aware that last year the North-West water authority was not able to spend the full capital allocation which was available to help with sewer renovation. The right hon. Gentleman made an unfortunate reference.

As to economies, perhaps the right hon. Gentleman is not used to dealing with people who are modest and anxious not to make any claims before they can be demonstrated. Being a modest person, I simply said that there will be economies, and significant ones. I am not prepared to state now what their scale will be, because it will depend—[HON. MEMBERS: "Ah".] Hon. Members say, "Ah," because they want me to jump into an early announcement, but the scale of the economies will depend simply on the final decisions that are taken.

The right hon. Gentleman revealed once again what a centralist he is with his remarks on wage negotiation and other arrangements. The matter will depend on the judgments of the chairmen of the regional water authorities, on the best arrangements that they decide to make in agreement with the trade unions and negotiations about the wages and conditions for their employees. That is where those decisions should be taken.