ARRANGEMENTS FOR CARRYING OUT SEWERAGE FUNCTIONS (Hansard, 18 January 1983)

§ Mr. Durant
I beg to move amendment No. 8, in page 5, line 8 after 'to', insert '(a)'.

Mr. Deputy Speaker
With this it will be convenient to take amendment No. 9, in page 5, line 10 at end insert— '(b) the means proposed by any water authority for ensuring that a proper proportion of any additional work that would be undertaken by that authority as a result of the ending or, as the case may be, varying of the arrangements in question, and proposed to be carried out by direct labour, would he subject to competitive tender.'.

§ Mr. Durant
The sewer work that is currently carried out by local authorities is subject to the direct labour section of the Local Government, Planning and Land Act 1980. It lays down accountancy and competition requirements, including compulsory competition for all such work that is valued at more than £50,000. No such requirement applies to the water authorities, although many of them require, through their own standing orders, that there be compulsory competition for work that is valued at more than £600,000. That is clearly unsatisfactory from the point of view of competition.
The Water Bill would, to some extent, worsen the problem. After consultation, it would make it possible for agency arrangements to be wound up. That means that work that has previously been carried out by local authorities and which is subject to competition would be carried out by water authorities which are not subject to competition, except voluntarily.
The amendment would ensure that Ministers would at least satisfy themselves that the new arrangements are as effective as the existing ones. Direct labour by water authorities is a large-scale business. Ministers calculate that roughly 10 per cent. of capital expenditure is carried out by direct labour organisations. That represents about £80 million each year. In addition, an unquantifiable amount of maintenance work is carried out by direct labour organisations. That may represent some £400 million.
The Federation of Civil Engineering Contractors, which has advanced this suggestion, would like there to be complete application of the local government direct labour organisation rules to water authorities. It therefore hopes that the amendment might be accepted so that they are brought in line with local authorities, which the Government have dealt with in previous legislation.

§ Mr. Wyn Roberts
I entirely agree with my hon. Friend the Member for Reading, North (Mr. Durant) that public bodies should ensure that their work is put out to competitive tendering whenever that is appropriate. We carefully considered the merits of including a provision extending to water authorities statutory competition requirements such as those applying to local authority direct labour organisations, including their sewerage activities. We decided on balance against that course. However, we have agreed with water authority chairmen that a code of practice will be drawn up to ensure adequate competition.
My hon. Friend's amendments do not deal directly with the subject but seek to make it a factor that the Secretary of State must take into account in deciding appeals. While it may be important in deciding the balance of costs between a water authority and a local authority, I do not believe it right to single it out among all the other relevant factors to be taken into account. I ask my how Friend to accept that the Government are committed to ensuring competition where it is sensible, and to withdraw the amendment.

§ Mr. Durant
I beg to ask leave to withdraw the amendment.