Water Authorities (Privatisation)

HC Deb 03 July 1986 vol 100 cc1265-74

10.1 pm

The Secretary of State for the Environment (Mr. Nicholas Ridley)

With — [Interruption.] — permission, Mr. Speaker, I should like to make a statement.

My consultations on privatising the water authorities have shown that, while preparations for their privatisation are well under way, more time is needed to prepare the necessary legislation. I have therefore concluded that we are unlikely to be able to introduce the Bill in the next Session.

I understand that further powers may he needed to enable water authorities to prepare themselves for privatisation.

I reaffirm the Government's intention to proceed with water privatisation as soon as practicable.

Dr. John Cunningham (Copeland)

Apparently, at least for once in a while—judging from the noise coming from the Conservative Benches— this is the news that the Conservative party, like the rest of the country, wanted to hear. Is the Secretary of State aware that this is a scandalous way for him — [Interruption.] — and his Cabinet colleagues to behave, as a statement has had to be dragged out of them at 10 o'clock on a Thursday night. At that, it is a pathetic and inadequate statement to meet the information needs and requirements of the House and to meet the needs and requirements of those responsible for managing the industry, those who work in it and the public. It is a pathetic performance, and a humiliating introduction to the Secretary of State's tenure of his high office.

Will the Secretary of State make it clear that several major legal questions, which are unanswered, and which the Government are currently unable to answer, lie behind this humiliating climb down? Will he confirm that the Government have no legal title to those assets, and are unable to sell them for that reason alone? Will the right hon. Gentleman also confirm that the water authorities have no legal powers to prepare themselves for privatisation in the way that this Government have been urging them, or indeed pushing them, to do? Will he further confirm that privatised water authorities would not be recognised as competent authorities by the EEC, could not, therefore, be acceptable to the Community, and would not he eligible for the sort of Community investment that is currently being made in order to try to clean up the pollution, for example, in the Mersey basin?

Will the Secretary of State also make it clear that his friends in the City have told the Government that there is no way in which the water authorities can be sold effectively for any realistic price, given the pending prosecution of Her Majesty's Government by the European Economic Community, because the quality of bathing water on dozens if not hundreds of British beaches does not match the minimum requirements? [Interruption.] Given that these proposals were at the heart of the Government's future programme and their legislative intentions, it is amusing to see how light Conservative Members are making of the retractions. They will not be laughing when they start looking for money for the tax cuts in the next Budget.

Is it not clear that the creation of private monopolies would fail completely to provide any realistic safeguards for consumers? In that respect, among others, the Government have failed to provide any convincing rationale for their proposals[Interruption.]

Mr. Speaker

Order. This is a very serious statement.

Dr. Cunningham

I can understand why Conservative Members are anxious to get this over as quickly as possible. How could the Government have ensured the necessary regulation of privatised water authorities, which may well have major shareholdings of some of the biggest polluters in the country, to guarantee that they would meet the requirements for environmental protection that millions demand and expect?

Has not this whole episode been an example of how a reckless and despondent Prime Minister was willing to gamble with the health and well-beingofthe people ofthis country in a desperate grab for cash to bail out yet another election promise? We make it clear that, like the vast majority of people, we warmly welcome this recognition of the abject failure of the Government's thinking. We shall go on opposing these proposals if ever, or whenever, they return.

Mr. Ridley

I find the hon. Gentleman's mood a little difficult to interpret. I cannot discover whether he is angry or pleased. Some of his concern seems to be thoroughly misplaced. He said that the statement had been dragged out of me, but it was not a bit like that. I am all eagerness, but only a few days ago the Labour party was asking for the Bill to be postponed. I quote his words when he was told that we were proceeding with the Bill. He said that the Government's motivation is a crude, desperate grab for cash to buy votes." —[Official Report, 5 February 1986; Vol. 91, c. 289.] Now, when we have abandoned that immoral technique for a year, he seems to be thoroughly disappointed. I cannot help thinking that the hon. Gentleman is a little sad because he thinks that we may have shot his fox.

There is no suggestion whatsoever that we do not have legal title to sell these assets. Although the legal powers are utterly adequate for what the water authorities have done so far in co-operating to further the cause of privatisation, as flotation comes nearer their powers to plan and prepare for their operations as a private company are not entirely without doubt. For that reason, I included in my statement an undertaking that we would remove any such uncertainty so that in due course we may continue with the policy when we are returned to power after the next election.

The hon. Gentleman had further contradictions to put before the House. He said that he thought that the water authorities were unsaleable because of the state of the beaches in certain parts of the country. Then he went on to say that what we had done was to deny ourselves massive tax cuts. He cannot have it both ways. He was all over the shop tonight. I have never seen such a deplorable performance, and I know why: because it is the last time that the hon. Gentleman will be able to make the kind of silly speech that he made tonight.

Mr. Michael Colvin (Romsey and Waterside)

Will my right hon. Friend acknowledge that it is a little unfair to make a statement like this at 10 o'clock on a Thursday evening, because Opposition Members normally enjoy a four-day weekend? For them to be expected to be here on a Thursday evening to listen to a statement like this is really asking a little bit too much.

However, as Conservative Members are here in strength, I should like to ask my right hon. Friend to give an undertaking to the House that he will think again about the disbursal of the proceeds from the liquidation of these assets. When the water authorities were originally set up, certain water boards that provided water, such as the Andover borough council, had their assets sequestered and no compensation has been paid to them. When my right hon. Friend comes to decide how the proceeds from the privatisation of the water authorities are to be disbursed, I hope that he will bear in mind the original owners of those water assets.

Mr. Ridley

I agree with what my hon. Friend says about the impending departure of the sleepers, which has caused and will continue to cause me to keep my answers as short as possible, so that the weekends of Opposition Members are not truncated and made short. I do not believe that there is a case of the kind that he mentioned relating to who owns the assets. However, a little time will enable us to examine all such questions, and I am sure that my hon. Friend is grateful that we shall do so.

Mr. Simon Hughes (Southwark and Bermondsey)

I congratulate the Secretary of State on responding so promptly to the points that we made to him when we initiated a debate on the subject about 10 days ago. We told him then that his plans would not succeed. Will the next election manifesto contain a reference to water privatisation, unlike the previous one, so that if the Government wish to proceed with privatisation they will have a mandate for it, for a change, if they are elected?

Secondly, given that the Secretary of State's Department has now abandoned rates reform, local government structure reform and rent decontrol reform, does the Department of the Environment have any other plan left to bring out on this side of the general election?

Thirdly, has the Secretary of State made any estimate of how much the Government will have to find from another budget in terms of additional revenue, since the prime motivation appeared to be financial gain to the Government from privatising the water authorities?

Lastly, when was it that the Government realised that what was always bound to be a several stage process lasting several years could never be completed within the maximum remaining length of this Parliament? To the rest of us, it was obvious a long time ago. Did it take the Secretary of State to make clear what was clear to the rest of us a long time ago?

Mr. Ridley

I must confess that when I heard the hon. Gentleman's speech in the recent debate on privatisation I thought that perhaps we ought to look again at the case for proceeding with it even more quickly.

I believe in the privatisation of state assets just as much as I believe in the privatisation of water. However, I actually believe it important to get it absolutely right so that when the Bill comes before the House, as it will, although the hon. Gentleman probably will not be here because it will be after the next election, and perhaps will be included in our manifesto—he will not be able to find one part that does not fully satisfy the House in all reasonable quarters.

I assure the hon. Gentleman that my right hon. Friend the Chancellor will not lose revenue that could have been available for tax cuts this side of the election. The great advantage is that there will be even more revenue available for tax cuts after the election.

Mr. Roger Sims (Chislehurst)

Is my right hon. Friend aware that Conservative Members who warmly supported the policy of privatisation are disappointed that he has found it necessary to make this statement? However, I assure him that we realise the complexity of this legislation and are anxious that, when it comes forward, it is comprehensive. We welcome the reaffirmation of his adherence to the policy of privatisation. When he brings forward the legislation, it will have the wholehearted support of Conservative Members.

Mr. Ridley

I am grateful to my hon. Friend, to whom the information was first imparted because it was he who inquired about this matter not long ago. I am also grateful for his support for both the principle of privatisation and the obvious need to ensure that we get all aspects of this massive and complicated matter correct before presenting proposals to the House.

Mr. Michael Cocks (Bristol, South)

I congratulate the Secretary of State on maintaining his reputation for always making the worst of a bad job. Since the motivation for privatisation is mainly political, what bearing will his announcement have on the timing of the next general election?

Mr. Ridley

I do not quite understand whether the right hon. Gentleman welcomes my statement or is against it. He appeared to be somewhat ambivalent. Many Conservative Members, and quite a few Opposition Members, believe that the Government have taken the right decision to present proposals that are fully worked out and correct.

The right hon. Gentleman must reach his own conclusions about the timing of the general election. On a personal note, I hope that it is a long time away so that we can have the pleasure of the right hon. Gentleman's company a little longer.

Sir John Page (Harrow, West)

Is my right hon. Friend aware that the country will find the bogus indignation of the Opposition absolutely absurd? Does he appreciate that the captain of the Opposition ship that is sailing tonight has produced a unique feat of navigation by running into both Scylla and Charybdis on the same statement?

Does my right hon. Friend accept that all sides of the water industry will be grateful to him for giving a little more time to study the complications of privatisation before it occurs?

Mr. Ridley

I entirely agree with my hon. Friend on all but one point — I do not think that the Opposition's indignation is bogus, I think that it is genuine. I believe that the fury unleashed by the hon. Member for Copeland (Dr. Cunningham) is because he wants us to proceed with the Bill. I cannot think of any other reason for there being so little welcome for my statement.

Mr. Dafydd Wigley (Caernarfon)

Does the right hon. Gentleman accept that any prolonged period of uncertainty cannot be good for those who work in the industry and that there needs to be clarification as quickly as possible?

In view of the difficult legislative position to which the right hon. Gentleman referred, will there be any paving legislation during the next 12 months? If not, will there be more than one parliamentary year in which it will be necessary to introduce legislation before the matter is concluded? If so, will it not be a period of three or even four years before the matter is satisfactorily concluded?

Mr. Ridley

I can assure the hon. Gentleman that there is no uncertainty. The water industry will be privatised as soon as the general election is over and it will he done by a Conservative Government. The hon. Gentleman can assure his constituents that they have no need to worry about returning to the dead hand of state ownership. All necessary steps will be taken to ensure that when the legislation is presented it is in complete shape and perfectly proper. I cannot go beyond what I said in my statement earlier about any necessary changes beforehand.

Mr. Patrick Nicholls (Teignbridge)

Does my right hon. Friend agree that, far from this being a humiliating climb down, it is no more than what might have happened given the reply which the Minister of State made in response to the debate on water privatisation? When responding to doubts that had been expressed by Conservative Members, he said that the Government would listen.

Does my right hon. Friend agree that it is possible, if we are now to take further time to consider the privatisation proposals, to decide to abandon the proposals entirely once the exhaustive examination has been completed?

Mr. Ridley

Although my hon. Friend is right to say that this is not a climb down, perhaps he exaggerates. This is neither humiliating nor exhilarating. I do not think that we need the extra time to review whether we shall continue with our policy. I tried to tell the House that it would be necessary to come to a conclusion on many important and complex matters in an extremely short time scale. It might be better to take a little longer to ensure that we get the right answers to the questions.

Mr. Willie W. Hamilton (Fife, Central)

Does this statement imply a U-turn? If not, why should it be made at 10 o'clock on a Thursday night?

Mr. Ridley

It does not imply a U-turn. That is why it would have been perfectly proper not to make a statement. However, the House wanted me to make one. I have done so.

Dr. Keith Hampson (Leeds, North-West)

Does my right hon. Friend accept that for some of us there is genuine concern and not bogus indignation? That is partly because many of us have recently been defending the Government's privatisation policy. We have been defending the Government's policy on the royal ordnance factories as well.

Is my right hon. Friend aware that it caused some concern when he did not come to the House earlier to make a statement? The statement which he has made is less extensive than the written answer which was arranged. In that written answer he talks about extra powers being necessary to take part in privatisation. What are the necessary extra powers? It would have been much better for us all if a statement had been made honestly, frankly and in detail earlier today.

Mr. Ridley

I much admire my hon. Friend's efforts to convince people that the policy of privatising water is right. I hope that he will continue to defend that policy. There has been no change made to that policy and we have not abandoned it. I do not think that it is necessary for the Government to make a statement every time that they have not changed their policy. All that I am saying is that we are not able to see a proper way to bring a Bill forward for the next Session. I think that there was a general expectation that we would be able to do that. It is right in the interests of all concerned that I should make that abundantly clear. I think that that can be done just as well by means of a written answer as by making a statement.

Mr. Peter Snape (West Bromwich, East)

May I tell the Secretary of State—I add my sincere congratulations on his statement—how much we miss his sure-footed political agility in transport matters? Does he agree, fresh from his triumphs in that Department, where he managed to lose three court cases and not privatise British Airways, that not to privatise British water is entirely consistent, and could he regarded as the glittering pinnacle of a distinguished career? Bearing in mind that at the time of the right hon. Gentleman's recent promotion the Prime Minister said that he had been promoted because he was a man who gets things done, should the House, at the very least, start questioning the Prime Minister's ability as well as the right hon. Gentleman's faculties?

Mr. Ridley

The hon. Gentleman is a welcome convert to the privatisation squad. I may not have achieved anything else other than to persuade him that it is desirable to privatise both British Airways and water. I greatly appreciate his support. I shall even have a word with his leader to see whether I can arrange for him to have preferment as I have had.

Mr. Spencer Batiste (Elmet)

Does my right hon. Friend agree that the spectacular success of the Government's privatisation programme can be maintained only if each measure is considered at the right time and in the right way instead of trying to meet some pre-arranged arbitrary timetable? If as a result of his consultations he is satisfied that more work needs to be done before the important measure can proceed, he will be widely supported.

Mr. Ridley

I entirely agree with my hon. Friend. I am grateful to him for making the point that the policy of privatisation requires that we get each individual industry or company absolutely right before we offer it to the market and ask the House to approve its privatisation. I think that my hon. Friend will have noticed that in the queue for privatisation are gas, British Airways, British airports and Rolls-Royce. I should have thought that that was a sufficient programme to convince the House of our determination to proceed.

Mr. Allan Roberts (Bootle)

In view of the fact that the Secretary of State claimed that one of the reasons why he wanted to privatise water authorities was to allow them to borrow in the open market—to raise funds to do things such as cleaning up the Mersey basin—will he release the publicly owned water authorities from the restrictions that are imposed on them by the Government? The restrictions prevent them from raising money to do necessary work.

Will the Secretary of State give an assurance that money will not be taken from the Mersey basin project in order to clean up beaches in the north-west area, such as Blackpool beach, which is terribly polluted, but that extra money will be made available either from the private sector or public expenditure? Does he accept that if the high priest of Thatcherite monetarism turns heels and runs in the face of opposition from all the trade unions in the water industry — the public opinion is that the Government are doing a U turn and that privatisation has not been postponed, it has been cancelled because a general election will intervene — it will be one of the industries that the next Labour Government will not have to take back into public ownership?

Mr. Ridley

We are doing awfully well tonight. We have another recruit in favour of water privatisation in the unlikely figure of the hon. Gentlemam, as well as the hon. Member for West Bromwich, East (Mr. Snape). Do the Opposition want, or do they not, the Government to privatise the water industry? When we said that we intended to do so, they criticised us. When we said that, unfortunately, we had to postpone it, they criticised us for postponing. They really are all over the shop. The desire for opposition seems to have got the better of their judgment. I had better not reply at great length because I do not want the Opposition to miss their sleepers, which is the best thing that could happen to the House.

Blackpool beach may be polluted, but it is not polluted with radioactivity as the MEP, Mr. Huckfield, keeps saying. I think that it is disgraceful for him to make such accusations to try to frighten people away from the beaches of the north-west. Those beaches are the finest in the land. I encourage everyone to spend their holidays there.

Mr. Peter Bruinvels (Leicester, East)

My right hon. Friend is a very dear friend. I must say that I am disappointed to hear of the delay, as someone who has campaigned for water privatisation and raised the matter in business questions today. Will my right hon. Friend assure the country that water privatisation will take place and that it will be a commitment in the Conservative manifesto? Will he assure the House also that, in the meantime, a full explanation will be given for the delay by his Department to Roy Watts and the Thames Water Authority, because Mr. Watts has been a great supporter of water privatisation?

Mr. Ridley

Yes, Sir. We shall proceed with privatisation. There is little doubt about that, because I believe that we shall be in a position to proceed with it after the next election. I understand that Mr. Watts was on television tonight showing his complete understanding of what the Government are doing and agreeing that it is right to ensure that the Bill is correct rather than introduce legislation that is not yet in proper shape.

Dr. John Marek (Wrexham)

Will the Secretary of State be a little more specific and say whether, if the proposals are not enacted by the next general election, they will be part of the next Conservative manifesto? If he cannot answer that question with a simple yes or no, will he say whether he personally will fight to ensure that they do become part of that manifesto?

Mr. Ridley

The anwer is yes.

Mr. Edward Leigh (Gainsborough and Horncastle)

The hon. Member for Copeland (Dr. Cunningham) talked about pathetic behaviour. Is not the only pathetic thing his attempt to make a mountain out of this molehill of a statement? The hon. Gentleman rushed into the Chamber at 6.30 today in a lather demanding a statement. He had to be dragged off his sleeper to come here tonight. All he found was that the Government, in a sensible and pragmatic way, have listened to the people's representations and intend to carry on with denationalisation as early as possible. Should we not be asking the hon. Member for Copeland: where is the beef?

Mr. Ridley

The hon. Member for Copeland would have been wiser if he had caught his sleeper and gone away tonight.

Mr. Martin Flannery (Sheffield, Hillsborough)

Will the most arrogant Minister in the Government now talk reality to us and tell us what has dragged him kicking and screaming at 10 o"clock on a Thursday might to the most monumental climb down we have heard for years? Will the right hon. Gentleman finally admit that the Government — [Interruption.] The laughter of the Leader of the House, so feigned and obvious, shows that I am telling the truth. Will the Secretary of State now admit that the Government are in a terrible mess and do not know where they are going?

Mr. Ridley

I do not know where the hon. Gentleman comes on the arrogance table, but I do not think that he is at the bottom of that league. If the Government take a sane and sensible decision — first, to listen on the privatisation matters which worry people and, secondly, to give enough time to get the answers right—it is, as has been said, very worrying to the Opposition parties

Mr. Tony Marlow (Northampton, North)

I totally share my right hon. Friend's, commitment to water privatisation I am interested, as is my right hon. Friend, to hear the commitment of that relatively moderate member of the Labour party, the hon. Member for Bootle (Mr. Roberts), to renationalisation in the unlikely event of a Labour Government ever being returned. I wonder whether my right hon. Friend can find an appropriate adjective to describe the hon. Member for Copeland (Dr. Cunningham), who said that he was scandalised about the sensible decision which my right hon. Friend took this evening, but would have gone on to say that he was scandalised if we had proceeded with water privatisation?

Mr. Ridley

We must look at this point. Labour Members want the water authorities to have the freedom to spend capital as though there was no limit. Of course, the only way in which that can be done is by privatising those authorities. It is clearly impossible in a planned public sector economy to have freedom to spend capital—the two are totally inconsistent. We are increasingly seeing from the Labour party a recognition of the importance of private capital, which of course means private ownership. I welcome that. I am sure that Labour Members will join me in supporting the Bill as they sit in opposition after the next election.

Mr. Dave Nellist (Coventry, South-East)

If the privatisation of the water authorities is not now to take place during the life to this Parliament, will the Secretary of State produce figures on the costs of the appointment of J. Henry Schroder Wagg as bankers and Touche Ross as the accountancy firm? When those estimates have been produced, will he send the bill for this exercise so far to the place that should pay it—Conservative Central Office in Smith square?

Mr. Ridley

No. We have had excellent advice from those banks and advisers, and I am sure that more advice will be needed as we move towards privatisation. I cannot believe that the hon. Gentleman would want us to advance in this matter without taking the proper advice.

Mr. Gary Waller (Keighley)

Is my right hon. Friend aware that many of those who espouse the principle of privatisation in general look for certain pre-conditions—for example, that the enterprises to be privatised will market their products in as competitive a way as possible and will require as little control and regulation as possible? They recognise that the situation in the water industry is different from that in many other industries. Before new proposals are brought forward, will careful consideration be given to those factors?

Mr. Ridley

I agree with my hon. Friend. Those are important considerations which require proper study. That is why it would be difficult for me to complete the Bill in time for early introduction next Session, and that is all I have said.

Mr. Andrew Faulds (Warley, East)

Does not the postprandial performance on the Tory Benches and the inane grin on the face of the right honourable Tewkesbury cat prove that the Government have yet again had to retreat from a most embarrassing, ill-judged and disastrous policy?

Mr. Ridley

No, Sir.

Mr. Harry Greenway (Ealing, North)

Will my right hon. Friend confirm that in this, as in all things, the Government will put the consumer and the people first? Has he noticed that in all the exchanges tonight no member of the Labour or Liberal parties has mentioned the consumer and the people of Britain? They do not care, and never have cared, about the consumers or the welfare of our people.

Mr. Ridley

Yes; and it can only be described as an uncaring party that opposes the Bill and then opposes its delay.

Mr. Ray Powell (Ogmore)

Has the right hon. Gentleman consulted the Secretary of State for Wales—one of the most ardent supporters of privatisation about abandoning the privatisation of the water industry? Perhaps the Government's reasons for abandoning the idea will he explained to the people of Wales. I welcome the right hon. Gentleman's assurance that the matter will appear in the next Conservative election manifesto, because that will represent a rare occasion on which the people will have been consulted on a major issue before action has been taken. On that occasion the electors of Wales will give the Conservatives a vote similar to that which the House gave the proposed Sunday trading legislation.

It is high time that the right hon. Gentleman came clean and admitted that he has been persuaded to drop the idea of privatising the water industry by the arguments of the 10,000 workers in the industry and the statements of local authorities throughout the country.

I assure the hon. Member for Ealing, North (Mr. Greenway) that the consumer's interest was well represented at a recent conference in London, when those concerned with the water industry made it clear that in no way would they support the privatisation of the industry.

Mr. Ridley

I have the full support of the Secretary of State for Wales in what I have said tonight. He feels, as I do, that proposals that we present to the House must be correct. The hon. Member for Ogmore (Mr. Powell) and his hon. Friend the Member for Copeland do not seem to be speaking with one voice tonight.

Mr. Max Madden (Bradford, West)

if the right hon. Gentleman claims that his statement does not represent a climb down or a U-turn, will he accept that most people will see it as a Government cock-up? He owes it to the public to explain whether he inherited the decision that he has made or whether it is all his own work.

Mr. Ridley

The hon. Gentleman may not have heard my statement. I said that we were not able to proceed in the next Session of Parliament but would certainly proceed with the legislation, if necessary, immediately after the election. I do not see how that changes the policy in any respect.

Mr. Robert N. Wareing (Liverpool, West Derby)

Is not the accident-prone right hon. Gentleman admitting that, in view of the fact that there was a commitment in the Queen's Speech only a few months back that there would be privatisation of water, the Government did not do their homework and are now having to cancel this not just for one Session but for two? Is it not also the case that he has had umpteen representations from people with expertise, including Tory councillors, saying that privatisation was ideology, not reality? Should not the message of the House this evening to the consumers and workers in the water industry be "rejoice" because the industry is now safe and there is no chance of privatisation because the Government will not win the next general election?

Mr. Ridley

I am afraid that it is the hon. Gentleman who has done his homework wrong. He should look at last autumn's Queen's Speech: he will find no mention of water privatisation.

Mr. John Home Robertson (East Lothian)

Thankfully, the Government never threatened to inflict this lunatic idea on Scotland, but, since the right hon. Gentleman is apparently writing the next Conservative party election manifesto here this evening, can he give us an undertaking that the idea will be excluded from the manifesto as it affects Scotland?

Mr. Ridley

No, Sir.

Mr. Alfred Dubs (Battersea)

Whatever the Secretary of State thinks the position is tonight, by tomorrow morning his statement will be seen by the majority of his supporters as a humiliating climb down and, at the very least, what he has said tonight is an indication of utter incompetence by the Secretary of State and his Department? Opposition Members who are utterly opposed to water privatisation are naturally pleased that there will be a delay, but will the Secretary of State have a bet with me that it will never happen?

Mr. Ridley

I think that the headlines tomorrow morning will be: "Labour party in turmoil; split down the middle"; "Totally incompetent Front-Bench position, backed up by idiotic statements from the Back Benches"; and, finally, to the House's relief, "All departed for sleepers".