HC Deb 23 April 1986 vol 96 cc291-2
12. Mrs. Clwyd

asked the Secretary of State for the Environment what representations he has received from Birmingham city council regarding the privatisation of water authorities.

Mr. John Patten


Mrs. Clwyd

Is the Minister aware that Birmingham city council, which invested in reservoirs in Wales during the last century and was perfectly happy to see those assets managed by a public authority—in this case the Welsh water authority—is not happy to see those assets sold to line the pockets of the Government's friends and that it is demanding compensation—either £270 million in compensation or a portion of Wales, the Elan valley? Which will the Government give to it?

Mr. Patten

I have already made it clear that I have received no representations from Birmingham. I think that the habit of answering hypothetical questions about hypothetical representations is rather a bad one.

Mr. Beaumont-Dark

Perhaps I might ask an unhypothetical question. Bearing in mind that the citizens of Birmingham spent millions of pounds on acquiring this water system and buying 43,000 acres of land, does my hon. Friend not think that there should be some system of compensation, since we gave to what we thought was a public authority? Is we are to sell and to privatise, which may be a good policy, why should Birmingham not get back some of the money of which it was deprived some years ago?

Mr. Patten

I do not think that I should break the habit of not answering hypothetical questions, even from my hon. Friend, but perhaps I could answer another question which was implicit in what he said. In 1973 the Water Act vested the ownership of the assets and the debts of water authorities in the water authorities. They have, therefore, become public corporations answerable to the Government.

Mr. Wigley

The Minister should be aware that Brimingham corporation has passed a resolution on this matter. Over the years Birmingham has shamelessly exploited Welsh water resources and is able to sell water to its own citizens at half the price at which the same water is available in Wales. It is totally unacceptable that Birmingham corporation should now go on a rampage, grabbing land in Wales, in total opposition to the wishes of the Welsh people.

Mr. Patten

We are absolutely against shameless exploitation. Under water privatisation we shall ensure that the director general of whatever we end up calling it will have the power to make sure that bulk transfers from one water authority to another under a privatised regime are properly paid for and properly accounted for.

Mr. Forth

May I tell my hon. Friend that I am a Birmingham ratepayer, and that as such I welcome the proposals to privatise the water industry? I hope that Birmingham's residents and water users will benefit from the Government's privatisation proposals and will be able to shop around for the best deal available for the supply of water.

Mr. Patten

My hon. Friend is right. Privatisation will bring many advantages to the consumer.

Mr. Boyes

Birmingham city council has passed a resolution deploring the privatisation of water authorities and if—I stress the word if—that anti-social policy is carried out, the ratepayers of Birmingham should be fully compensated. A number of other authorities are in a similar position. Water authorities are public assets, not state assets. The Government have no economic, political, legal or moral right to sell assets which they do not own, estimated to be worth £27 billion, to their friends in the City at knockdown prices.

Mr. Patten

I have already explained the legal position. It is that the Water Act 1973 transferred the ownership of the previous assets and the liability of previous debts to the water authorities. Those water authorities became public corporations answerable to the Government. In the privatisation of the water authorities we shall follow the precedent set in the privatisation of British Telecom and British Gas and turn the water authorities into Crown companies. Ownership of assets and liability for debts will be taken on by those Crown companies prior to the successful eventual flotation that will do so much for the consumer.

Mr. Gow

What steps were taken by the Labour party when it was in government, as it is apparently so dissatisfied with the Water Act 1973, to amend that Act so as to frustrate the excellent purpose that is in the mind of my hon. Friend?

Mr. Patten

My hon. Friend did a great deal for the water industry when he was a Minister in the Department of the Environment, and he has put his finger exactly and precisely on the point. The Labour Government did nothing at all.

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