HC Deb 15 June 1982 vol 25 cc922-30

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]

8.52 am
Mr. Christopher Murphy (Welwyn and Hatfield)

In initiating the debate on the public accountability of water authorities, I believe it to be appropriate to comment at the outset on the great interest that has been shown by the Government in the problems surrounding the water industry. Clear evidence of this was seen when my right hon. Friend the Secretary of State for the Environment drafted in a team of financial consultants from private accounting firms to conduct an immediate review of increased water charges which resulted in welcome relief for the already hard pressed consumer, both domestic and industrial.

But of even more fundamental concern, as my right hon. Friend the Minister for Local Government and Environmental Services has previously indicated, is the overall structure of the water industry. Complementary to his recognition of the need for this to be reviewed has been the referral of water authorities to the Monopolies and Mergers Commission, and the reorganisation of the Welsh water supply.

There has been a growing realisation that nearly 10 years after a national policy was formulated circumstances have changed substantially. There is a need to curb pollution more effectively, a need to cope with an increase in demand growth of more than 200 million gallons a day, the need to provide for new reservoirs and all the consequent problems, and so on.

However, underlying all the difficulties being encountered by the water industry is that of the public accountability of water authorities, or, rather, the lack of it. It is with that in mind that I draw the attention of my hon. Friend the Under-Secretary of State, who I know to be particularly anxious to improve the position, to my Private Member's Bill, the Water Authorities (Public Accountability) Bill, and urge him to give full consideration to implementing it.

Despite the early or late hour, depending on which way one views it, I am delighted that two of the sponsors are present. They hope to participate in this short debate. I am grateful to my hon. Friend the Under-Secretary for being here to reply to the debate after such a long sitting.

In essence, my Bill seeks to provide the consumer with direct involvement in the running of his local water authority, by making it mandatory that a water consumers' committee be appointed. At present, under the Water Act 1973, provision is made for the appointment of committees, but unfortunately more often than not little action is taken.

I understand that of the 10 existing authorities only four mention consumer or external consultations in their annual reports. That is often via bodies rather than through individuals. My constituency has recourse to both Thames Water and the Anglian water authority for its needs, and the difference in emphasis is well illustrated. In the first case, divisional advisory panels have been established, consisting of representatives of the local community. I am advised that in the second case there is little attempt at such consumer involvement.

My plea is that the voice of the customers should be given a guaranteed platform. The current system, whereby representation by local authorities and ministerial appointees, remote from the people they serve and unknown by them, is surely inadequate. Care has rightly been taken in many other public utility industries to provide an opportunity for the customer to be heard. There can surely be no justification for water to be an exception to that rule.

However, I am conscious that the Government are fully aware of the unsatisfactory arrangement. Indeed, the Department of Trade produced a report on nationalised industries' consumer consultative councils, which contained comment on water supply, and, even more important, the Department of the Environment issued a consultation document about the membership of regional water authorities, which made direct reference to consultation requirements.

The state of the public accountability of water authorities remains unsatisfactory. The findings of the report into the Severn-Trent authority would surely be echoed in all parts of the land. When the rights of local authorities to nominate a majority of members of the authority were established in the 1973 legislation it was hoped that it would enable consumer interests to be adequately taken into account when the policies of the authority were being determined. It is clear to us that those hopes have not been satisfactorily fulfilled and that better arrangements need to be made to enable the views of consumers to be properly considered.

When it is considered that there is a majority of elected representatives on each water authority, appointed by local government, but that many councils are not given the opportunity to nominate representatives, dissatisfaction is enhanced. When it is also remembered that many of those local councillors have attendance records that leave a great deal to be desired, dissatisfaction is further enhanced.

Water authorities have wide powers to decide their own charging schemes and that has caused great criticism. Indeed, the disparities between standing charges, the level of charges based on domestic or commercial rates, and attitudes towards metered supplies all create more criticism and point conclusively to the need for customer participation.

If my hon. Friend the Under-Secretary is unable to give an undertaking on the means of achieving the more satisfactory arrangement that is outlined in my Bill, I hope that he will be able to share with hon. Members his likely thinking on further action in consequence of the welcome and much-needed consultation document on the membership of regional water authorities, and perhaps confirm that he will be making a statement to the House soon. I am sure that he agrees with me that more accountability is likely to produce a better and cheaper service, and that that should be the first and main objective.

9 am

Mr. Michael Brown (Brigg and Scunthorpe)

I am most grateful to my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) for giving me the opportunity of participating in this important Adjournment debate, albeit very late in the night or early in the morning, or however we may care to describe the time at the end of the sitting. I was associated with my hon. Friend's Bill and I sympathised with his remarks today.

I shall illustrate my support for what my hon. Friend has suggested by drawing the attention of my hon. Friend the Under-Secretary of State to an incident that came to my notice yesterday when I received a letter from one of my constituents about the Anglian water authority. As I have been unable to give my hon. Friend notice that I would seek to catch your eye, Mr. Deputy Speaker, I shall understand if he is unable to comment on the example that I shall quote. However, it serves to show why he should consider seriously the suggestion that has been made by my hon. Friend the Member for Welwyn and Hatfield.

I have a letter dated 7 June from one of my constituents, Mr. G. Capon of 3, Springfield Rise, Brigg. He wrote to tell me, among other things, about the Anglian water authority. He said: A few weeks ago every householder received a letter from the Water Board requesting the use of Direct Debit to pay the Water Rate. Surely this request could have been sent out with the rate demand that came a few days later. I agree with that suggestion. He then makes some justified comments about the size of the authority's staff, the cost of postage and the general cost to the authority.

Mr. Capon raises a more extraordinary matter about which my hon. Friend the Under-Secretary of State should be aware. The Anglian water authority addresses its account and Mr. Capon sent me a copy of the latest account date, which was 12 March 1982. It is addressed correctly to Mr. George Capon, 3, Springfield Rise, Brigg. The addressed was correct when the authority sent out its account requiring money to be paid. However, on 26 May the authority, having presumably accepted that it had addressed Mr. Capon's account correctly as the money had been paid and the water had not been cut off, sent him a card bearing a second class 12½p stamp. It was addressed to Mr. Capon at Plot No. 3, Springfield Rise, Brigg. It stated that as the authority's inspector had been unable to contact Mr. Capon it was requesting him to complete the card and to return it to the office. Apparently no stamp was required for that card. Postage had to be paid when the card was sent out by the authority and postage had to be paid by the authority when it was sent back. The information requested is confirmation of change of address.

Not content with sending that card on 26 May, another card was sent on 28 May. Again, it cost the authority 12½p to send it to Mr. Capon at Plot 3, Springfield Rise, Brigg, and 12½p when Mr. Capon sent it back. It was obviously desperate to get the information. In its view, Mr. Capon had not notified it of a change of address. However, he wrote on the compliment slip that accompanied his bill: This is how the demand for my water rate has been addressed for the past five years. Somewhere in the Anglian water authority offices there is someone who spent quite a lot of time and energy on 26 May, and because he or she had not received a reply on 28 May a further card was mailed. However, the accounts department had the right address. Mr. Capon's letter continues: Last week I received the enclosed two cards and you will notice that they are dated the 26th and the 28th, another duplication! Each one was in art envelope franked 12½p and if returned another 12½p. As far as I am aware no inspector has called, nor should they want to as I have lived here since the bungalow was built and for the last five years I have always paid all my rates properly. I phoned the Water Board to ask the reasons for two cards and I was answered by a young girl who said that they had no record of my address and she could not comprehend that plot number three became number three on completion of the building. She still requested that both cards were returned so that she could 'Look into the matter'. Little wonder that the rates are so high! Mr. Capon would be a first-rate candidate to be a consumer representative along the lines that my hon. Friend the Member for Welwyn and Hatfield outlined. I hope that my hon. Friend the Minister will consider this classic example that I received yesterday as being an excellent reason why he should consider the suggestion of my hon. Friend.

9.5 am

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

The diligence of my hon. Friends has carried us through to this point in the proceedings. Debating the problem of water authorities is a much more amicable subject than what has gone before.

I shall deal first with the points raised by my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown). We are dancing a merry capon at this time in the morning. I note what he has said. I somehow detected the magic eye of the computer that has once again failed to keep pace with its own intelligence. Now that my hon. Friend has released the information in public, I am sure that he will wish to send it to the chairman of the Anglian water authority. I am sure that Mr. Henderson will be pleased to conduct the appropriate examination, and give an explanation if possible into the error that has clearly been made.

I turn now to the main issue that was raised by my hon. Friend the Member for Welwyn and Hatfield (Mr. Murphy) about water authorities' accountability and the relationship of the consumer to the industry. I strongly agree that accountability and the role of the consumer have been among the main issues under discussion, whether it be from the point of view of the size of the water rate bill or of difficulty with water authority activities. The lack of consumer rapport has been one of the most obvious features of public discussion about water authorities recently.

My hon. Friend the Member for Welwyn and Hatfield reminded the House that reference to water was made in the document about nationalised industries and consumers that was issued by my right hon. Friend the Secretary of State for Trade. He may recall that when the water authorities were being established it was the Government's intention under the water legislation to have one or more consumer consultative councils for each water authority, no doubt with representatives from local authorities, domestic and industrial users, farmers and so on. In the event, it was decided not to proceed with that. It was arranged instead that a majority of water authority members should be appointed by local government.

The majority of water authority members are drawn from local government and represent local authorities. That has provided at least one of the questions that our consultative document was intended to provide an answer to. It is true that the present structure with regard to consumer protection has not worked effectively. The sheer size of water authorities that flowed from the decision to have a large representation from local government has probably militated against their efficiency.

I applaud my hon. Friend's principle to try to draw out the question of accountability and to match consumer representation with it. There has been widespread anxiety that the present system is not working as it was intended to do. For example, the turnover of local authority representation has been high. Since mid-1979 there has been a turnover of 43 per cent. in the number of water authority members appointed by local authorities. In some authorities it has been even higher—up to 60 per cent. in some cases. I know that the Thames area in particular has suffered from that.

I should make clear what our consultation is not about. The consultation paper is not about changing the authorities' areas. We are still pledged to maintain the complete water cycle management by a single authority over groups of river basins. That is the geographical basis for the structuring of the authorities, which I think is in every way sound. Over time, it has developed an immense range of services and investment programmes which have been of major benefit to all. Certainly I believe that that structure has worked well.

The investigations by the Monopolies and Mergers Commission into the Severn-Trent authority and its two related water companies, however, show that it is time for a careful examination and probably time for change. The report indicated that the consumer role of the local authority members had not been satisfactorily fulfilled. The commission recommended that membership should be substantially reduced and not based predominantly on local government representation. It suggested that such reductions might produce cost savings estimated at about £650,000 per annum, excluding any savings that it had in mind for land drainage and so on.

My hon. Friends will note that my right hon. Friend the Secretary of State for Wales has reconstituted the Welsh water authority with effect from 1 April this year and reduced its size to 13 members, all of them appointed by him. My right hon. Friend has the power in Wales to implement those changes by order, which we in England do not have. The Welsh water authority is to appoint local consumer advisory committees under section 6(8) of the Water Act 1973, akin to the proposal in my hon. Friend's Bill.

It will be seen from this that the constitution of the authorities themselves, whether in Wales or in England, is closely bound up with arrangements to represent consumers. Therefore, my hon. Friend's Bill, to which he referred and which would make the appointment of consumer committees mandatory, raises a perfectly fair issue.

Some water authorities already have such committees. For example, both Thames and Wessex have established divisional advisory committees on different lines to look after the needs of local consumers. In the case of Thames, the committees are formed from water authority members, both appointed and local authority, and coincide with the new divisional structure. My hon. Friend may in his constituency capacity have received a letter from the chairman of the Thames authority which was sent to all hon. Members on 13 April, outlining these arrangements.

In Wessex, the chairmen are appointed by the authority and members by district councils and other local interests. Other authorities hold regular member-officer meetings with local authorities and other interested bodies. I am not sure, however, that we should impose any of these diverse arrangements without considering their relationship with the members of the authority itself and any implications for the authorities' structure.

I turn to the consultation paper which we issued and to which my hon. Friend drew attention. In general, the responses indicate that local authorities favour continuation of the present arrangements or an increase in the number of local authority members that they appoint. Most of the other organisations, however, have favoured small boards with or without some continuing local authority presence.

We are considering our response to that consultation and I expect an announcement to be made soon. I assure my hon. Friend that in reaching our decision the interests of consumers will be in the forefront of our minds. It would be wrong to make any change which did not in our view represent an improved way for consumers to make known their views, whether taking up an individual complaint or commenting in some broader aspect of authority policy.

In this way, one would certainly use consumers as one form of the accountability to which my hon. Friend drew particular attention. He will understand, of course, that accountability in the strictly financial sense has been taken several steps further forward in the gradual development by the Department of performance aims and careful reviews of capital expenditure programmes, with authority emanating from the Secretary of State. Consultants, with the full co-operation of the water authorities, have now been able to undertake timely reviews of budgeting processes and to make helpful observations for water authorities to act upon.

We will certainly take consumers firmly into account. I indicated that an announcement had not yet been made, and my hon. Friend would not expect me to go into these matters in detail. Nevertheless, it is fair to give some idea of the principles that our new proposals should bear in mind.

First, and in general, it is important that both my hon. Friends recognise that we are considering basically a political issue—the relationship between the citizen and a public monopoly. It is right and proper that hon. Members should be concerned. If a public authority is not measuring up to its job, it is then open to the politicians to take action through the House, as my hon. Friend the Member for Brigg and Scunthorpe said that he would, or to recommend action to Parliament.

This relationship, as well as being responsive to the needs and requirements of water industry consumers, must also consider the broader aspects of accountability. Here I agree with my hon. Friend the Member for Welwyn and Hatfield. The interests of the public as taxpayers—nominal owners—as well as customers must be looked after.

There is no cut and dried answer, nor do I think that the answers are separate. Each aspect, as we have discovered from our consultations, impinges on the others. But, as I said earlier, it is essential that any new arrangements that we make must reflect the best interests of the citizen, whether taxpayer or consumer.

First, then, accountable for what? Like all public bodies, the water authorities exist to do the job laid on them by Parliament and they must be accountable for how they do those jobs. They must primarily discharge their statutory duty properly and any accountability regime must have this as a primary objective.

Like all public bodies handling publicly owned resources, water authorities must be accountable for the efficiency with which those resources are used. This is particularly important since water authorities are suppliers of an essential commodity or service and in this instance one cannot rely on competition or consumers' choice as spurs to efficiency. Competition protects consumers by giving them choices. It compels suppliers to put the interests of the consumer before the interests of the supplier or those who work for the supplier. Monopolies, as we know well do not have the stimulus of competition and their accountability arrangements need to be considered with particular care.

There is the broader question of proper administration. This was a large feature in the Monopolies and Mergers Commission report on the Severn-Trent authority. This may include the sort of thing that the ombudsman investigates, but in practice may go a good deal further and include liaison with Members of Parliament, local authorities, consumer bodies and the question of how consumer complaints are handled. All these are matters that fill hon. Members' post bags, bring constituents to their surgeries and make up a large part of their correspondence. We have to deal with that aspect of proper administration.

I have indicated that water authorities are already accountable in law, and hon. Members will know that we have now provided, in schedule 3 of the Local Government (No. 2) Bill, for continuing public access to water authorities' accounts. This includes the right to draw the auditor's attention to matters on which to make a report if the auditor considers that the public interest so requires.

We also have to establish a sensible accountability regime. All water authorities, like the nationalised industries, have to make annual reports to my right hon. Friend the Secretary of State who in turn lays them before Parliament. My right hon. Friend may direct what the annual report should contain, as well as ask for specific information at certain times. Water authorities provide information through the provision that, unless they are discussing confidential matters, their meetings are open to the public and their minutes are public documents. I fancy that not many of my hon. Friends take advantage of that fact. The water authorities are infinitely more exposed than nationalised industries.

I have already referred to the Monopolies and Mergers Commission's report on the Severn-Trent water authority. The Competition Act 1980 empowered the commission to investigate its standards and efficiency. As part of its programme the commission investigated the overall management of the authority and the two water companies in great detail. It made over 70 detailed recommedations for improving the management of the authority and the companies.

The Severn-Trent water authority has responded with a plan for action to improve its management systems, to cut costs—often building on work in hand before the commission reported. It expects to save about £6.5 million in 1982–83, with increasing savings in the following year. I emphasise that that authority has responded firmly and quickly to the Monopolies and Mergers Commission's report and that substantial savings will be achieved for the benefit of consumer; in the Severn-Trent water authority area.

The two water companies also responded to the recommendations affecting them and we considered the report with the other regional water authorities, which have reacted positively in reviewing their own systems and taking steps to improve them.

As a further sign of our anxiety to improve the efficiency of water authorities we have, as I said, arranged for financial consultants to examine water authorities' budgets for the last two years. The result of these exercises, together with the steps that authorities are already taking, is a considerable saving in operating costs—probably more than £30 million over the two years. These are gains in efficiency and reductions in costs which, we hope, will be achieved in perpetuity and which have set the authorities firmly on the road to tightening even further the management of their operators.

The Government have certainly shown proof of their commitment to cut costs and to investigate and seek efficiency, but the role of management is obviously vital in this drive for greater efficiency. Progress made so far can be sustained and built on only with the participation of highly motivatated management, providing an impetus within each authority. That will be another principle that we shall seek to embody in reviewing the results of the consultation exercise and in arriving at proposals to put before the House.

We are taking every opportunity to encourage greater cost consciousness and a sharper sense of value for money. We are confident that authorities share that aim. My hon. Friend will appreciate that I cannot go further than that this morning. We have not made our decisions on the future structure of the industry, but I have indicated some of the considerations that we would have in mind and some of the improvements we would be seeking.

I must recognise my hon. Friend's interest in these matters and the Bill that he has introduced. I share his aim that between us we must ensure that accountability is made more obvious to the consumer and that the consumer is given a fairer share in the decision-making process of water authorities so that there is a bridge in the gap that so patently exists between water authorities, the citizen and the consumer.

Question put and agreed to.

Adjourned accordingly at twenty-one minutes past Nine o'clock am.