Water Authorities (Privatisation)

HC Deb 23 June 1986 vol 100 cc31-76

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

4.2 pm

Mr. Simon Hughes (Southwark and Bermondsey)

I beg to move, That this House rejects the Government's proposals for privatisation of the water authorities, which will undermine public accountability without improving efficiency or benefiting the consumer, and which will have serious consequences for capital investment, environmental protection, water resource planning, land drainage, fisheries management and recreational facilities. This is the House's first opportunity to debate the plans that the Government announced earlier this year. The Government propose to introduce legislation in the forthcoming Session of Parliament to privatise the water authorities. Although nothing was said in the Conservative party manifesto of 1983, it is now apparent that water is to be privatised. Water is the latest in the line of national assets that the Government propose to sell. It will follow gas, the airports, the proposal for British Airways, and many others.

However, there is a fundamental difference. To privatise what is, for most of Britain, the most fundamental community asset is the most fundamental privatisation of all. In my view, the country believes that there are fundamental objections of principle which make the proposal unacceptable. I believe that today will mark the beginning of an increasingly Well-argued, vociferous and, I hope ultimately, convincing campaign that will dissuade the Government from proceeding down such a political course.

In February this year, the Secretary of State for the Environment made a statement on this subject. It was only a year after his former colleague, the hon. Member for Eastbourne (Mr. Gow), announced on 7 February 1985 that the Government would examine the prospects for privatisation in the water industry. A discussion paper followed two months later. Earlier this year, the Secretary of State produced a White Paper and announced that the Government would legislate in the autumn. The Secretary of State, in some of his answers and statements in that announcement, gave a clue to the flaw in the logic of the Government. He said: In the last six years we have made the water authorities fit and ready to join the private sector; and, as reported to the Public Accounts Committee, the quality of water services has been improving in almost all regions."—[Official Report, 5 February 1986; Vol. 91, c. 288.] What has happened of late—it is similar to what has happened with the British Airways proposal—is that the Government have, on the one hand, argued how wonderful the water industry is becoming, how suitable and appropriate it is for its job, how competently it is performing and how increasingly effectively it is using its investment, and, on the other hand, said that it is no longer appropriate that it should remain in the public sector.

Although there may be arguments that it is not necessarily appropriate for a particular industry or one area of national supply to be in the public or private sector, we start from a position whereby, for about three quarters of the British public, water is a public service. For the rest, water is supplied by private companies. About a quarter of the people of England and Wales receive water from the private sector. There has never been any suggestion by my right hon. and hon. Friends that those companies should be put into the public sector because they have been pleasing their customers, because they are small and because they are responding effectively to local community needs.

Water is not a national asset; rather it is a community asset. It is principally because it has been seen to be a community asset that the management of the water industry has gone the way it has in the past 100 years. About 100 years ago, there were moves in the House to ensure, for the first time, that water services be provided by a metropolitan water board. The argument at that time was whether it was appropriate that the water industry should be a nationalised industry or a series of municipal undertakings which would be democratically controlled by ratepayers and local residents. We agreed the latter.

Over the decades that followed, a patchwork of local water boards and local undertakings was established throughout the country. They served the needs of people up and down the land. It was not until 1973 that there was a fundamental reform, but it was not nationalisation. In 1973, a structural reform created 10 water authorities, taking control out of local government hands and making them less acceptable because they were less accountable, although the principle of organising water on the basis of river basins was a logical progression.

Our fundamental criticism of the Government's proposal is that they intend to take water out of the area of public accountability and, in doing so, risk prejudicing the service to the consumer in many all-important respects.

Mr. Ian Gow (Eastbourne)

Does the hon. Gentleman believe that the private water companies are "out of the area of public accountability", to use his own words?

Mr. Hughes

The private water companies are accountable because they are responsible within their regions to the water authorities. The Government propose —the hon. Gentleman knows this because originally he was the advocate of the privatisation proposal — that there will be 10 private monopolies. Those companies will give neither the benefit of competition, which the hon. Member for Eastbourne and his right hon. and hon. Friends extol, nor the benefit of accountability to the public because accountability will only be to the shareholders of the private companies.

Another of our fundamental objections is that all of the Government's arguments are clearly flawed, even by their own logic. Water, inevitably, is a universal need, for supply and for removal. It is vitally concerned with health and hygiene. It is of pre-eminent importance environmentally, and what it does environmentally concerns industry, agriculture, food supply, urban and rural living and leisure. It is unacceptable that the Government should seek to dissociate themselves from a close interest in these matters because they affect consumer safety, protection of the consumer from exploitation, adequacy and cost of services, river water quality, flood control — although there is an exception — and the use of chemicals in agriculture, amongst many other things.

I hope that the debate will centre on the fundamentals of the Government's proposition and that we will debate fundamental questions and agree on fundamental and important answers. There are four short questions. First, is there any clear and urgent need to change ownership of the industry? The answer is no. Secondly, is ownership of the industry relevant to the efficiency of its services? The answer is not necessarily. Thirdly, would a change of ownership cause major dislocation? The answer is possibly not major but certainly some. Fourthly, would privatisation lead to greater competition and, according to the Government's argument, greater benefit to the consumer? The answer is certainly not, because water supply and sewage disposal constitute a national monopoly throughout Britain.

The United Kingdom is unique in the developed world in that 99 per cent. of our population are connected to a wholesome, piped water supply and 94 per cent. are connected to the public sewerage system. Compare that with elsewhere in Europe and one can see the great advantage to be gained from retaining substantial public control over this asset. For example, just over the Channel in Belgium only 55 per cent. of the public are connected to the sewerage system, in Italy it is 56 per cent., and in Greece about 25 per cent. In much of Europe the percentage is substantially below our percentage.

For most people, water is the most substantial asset that they use each day. The most recent figures I have show that an average of 340 litres of water a day are consumed by each Briton.

The motivation for the Government lies in the fact that there is money to be made from the sale of the water authorities, when, having sold off as much else as they can, they find that they are running out of money —arguably, to be derived from selling an asset that is not theirs to sell.

When water was taken over in 1973 from the many smaller undertakings, it was taken not into national ownership but into a series of water authorities. Many other assets are properly defined as national industries, but there is an argument, which many people understand, that the Government, having exhausted what they can justify selling out of nationalised control, are turning to assets that are not even properly theirs. The people know why they do that. As recently as last Saturday in Porthcawl, the Prime Minister said that her prime interest was not in services, but in reducing the amount of taxation that British people should have to pay at a basic rate. That is flying in the face not only of opinion polls, but of the majority public view that, under the Conservative Government. the British people are losing good services —whether in the Health Service, the education service or the transport service. The view is that the public are fed up with interference in local accountability. The Prime Minister is not listening even now. I have no doubt that she will rejoice in having at her hand in her new asset-stripping exercise the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who has been so assiduous a devotee of the Government's magic of the market place economic policy.

In 1973, when the authorities took over the existing assets, no compensation was paid. That shows that it was not a nationalisation measure. Under the Labour Government, a national water authority was proposed, but the idea got no further than that. The Government have seized on the idea of taking away our present structure, despite all that they have said about safeguards, because they realise that the water industry's assets are worth £27 billion. There is a total work force of 52,000, annual turnover of about £2.6 billion and capital investment of over £900 million. That is the size of the asset that the Government have decided they would like to sell.

Mr. Cyril Smith (Rochdale)

My hon. Friend has referred to the water authorities' annual capital programme. Is he aware that the North-West water authority has outstanding loans of more than £900 million which add £125 million a year to the bill that consumers must pay in interest charges? While my right hon. Friend is addressing the motley gathering on the Government Front Bench, will he suggest that they write off the water authorities' debts to Government Departments before any water privatisation takes place, if it does?

Mr. Hughes

My hon Friend is right. I have been passed a copy of a letter expressing just that concern on behalf of the North-West water authority. I am having enough difficulty trying to persuade the Government to be generous enough to pay a few thousand pounds to the relatives of those who were injured or who died at the Abbeystead pumping station disaster—they appear to be unwilling to give that money, despite the compassionate reasons for doing so—let alone to give any undertaking about writing off those substantial debts.

Mr. Peter Hardy (Wentworth)

The hon. Gentleman has referred to the asset value of the water industry. Does he realise that the Government pay no heed to the asset value of what they have privatised? The asset value of the British Gas Corporation is about £18 billion, and the Government are likely to sell it for little more than a third of that amount.

Mr. Hughes

The hon. Gentleman is right. He may have seen an article in the Financial Times, soon after this proposal was announced, which, region by region, went through how much the assets were likely to raise.

There are flagships. The Thames water authority in my region in London is a flagship which Mr. Roy Watts wants to sell off. There are other large authorities, of which the North-West is one, that clearly will not be easy to sell off. There are other, small water authorities—for example, the Southern water authority—which probably are not at all ready to be sold off. Therefore, the Government's argument that they have fatted the calf ready for slaughter does not on analysis apply throughout the land, in spite of the fact that investment will have increased from £340 million in 1981–82, in sewerage, for example, to about £525 million in 1986–87—an increase of 38 per cent. in real terms.

There are now 10 modern businesses running the water industry in Britain. In their own White Paper the Government say that the finances have been strengthened and that a great deal of worthwhile investment has been carried out. Efficiency and performance have been substantially improved and now the Government are going to privatise. What is the danger? My hon. Friend the Member for Rochdale (Mr. Smith) made the point. The danger is that what will be of greatest interest to the new private companies will be raising money from the consumer where they can raise it. However, there is not much money in sewerage or in environmental protection. They are not very profit-producing. There is not much money in enhancing recreation without massively increasing the costs to the people who will use it. There is not much money in making sure that the amenities, landscapes and planning are acceptable to the local community or in consulting the public about what is being done. None of those things will produce a great amount of profit.

All the things that are needed will probably disadvantage the paying consumer, unless the Government realise the flaw in the financial argument, in which case they will do something else. They will then make it necessary for the water authorities to put up the prices to the consumer this year, next year and the year after, as they did in past years when the water authorities did not want prices to be increased. The Government will say that the price has to be increased to the consumer in order to have enough money in the kitty to survive in private hands as a financially viable proposition. That argument will not be to the advantage of the consumers either, and the consumers are the most important people to be affected by it. One need cite only one recent example to show that is true. If one looks at the average increase in cost since British Telecom was privatised there is very little net increase. However, if one looks at the net increase to the private telecommunications user, it is 8 per cent. up straight away. Prices have been held down for some of the people who make phone calls abroad on business, but for people using telephones locally privately prices have gone up.

The Minister for Housing, Urban Affairs and Construction (Mr. John Patten)

Is the hon. Gentleman aware that tariffs are already balanced in the British water industry and that the rebalancing of tariffs necessary for British Telecom cannot and would not apply for that reason?

Mr. Hughes

The argument about British Telecom is that the public have seen tariffs go up with privatisation. The most obvious risk to most of the public from privatisation is that they will have no control. If the water companies go to the director general, who the Government propose to appoint, and say they want to put up prices by so much and the Government are tempted to say that it is too much, they will say, "In that case, dear Government, the services will go down."

Mr. Robin Squire (Hornchurch)

rose—

Mr. Hughes

This is a short debate and many hon. Members wish to contribute.

Many people have already expressed concern: farmers, consumers, local government officers, representatives of environmental bodies and recreational interests. They see no prospect of the proposals to privatise water protecting either the service or the environment. In their manifesto of 1983 the Government ended the section on nationalisation by saying: merely to replace state monopolies by private ones would be to waste an historic opportunity. So we will take steps to ensure that these new firms do not exploit their powerful positions to the detriment of consumers or their competitors. I wonder whether the Government had thought about the water industry. If the Government go ahead with what they intend as the last big asset sale before the general election, they may discover that they are dealing with the service that the country and individuals are most reluctant to hand over away from local and Government control. The Government will be making a mistake. They have five months in which to reconsider. If they introduce a Bill in November, we will oppose every clause and every line. [Interruption.] We will oppose it because it is the most fundamentally damaging and risky proposal of the whole privatisation series. If the Government go ahead to privatise the water industry, it may well be the last proposal that they are empowered to make.

4.25 pm

The Minister for Housing, Urban Affairs and Construction (Mr. John Patten)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'welcomes the Government's proposals for the privatisation of the water authorities, which will benefit customers, strengthen safeguards for the water environment, encourage enterprise, improve the efficiency of industry, reduce the public sector and extend share-ownership.'. I listened with great care to the hon. Member for Southwark and Bermondsey (Mr. Hughes). I came to the House this afternoon thinking that I was going to listen with equal care to his colleague the hon. Member for Woolwich (Mr. Cartwright), but alas he has been struck down by some unfortunate illness and could not introduce the debate. I listened carefully to the hon. Member for Woolwich during the debates on the Housing and Planning Bill and endeavoured, by listening carefully, to improve what we are doing. That is why I listened carefully to the hon. Member for Southwark and Bermondsey in his short speech this afternoon.

I think that it is incumbent upon us in this place to listen carefully, especially when people feel that they have fundamental fears about something the Government are setting out to do. When people raise fundamental fears, I take the matter very seriously and do not just bat it aside as some kind of ideological knee-jerk reaction from whichever Bench it comes. Therefore, I welcome the opportunity of this brief debate during which, as much as possible, we can talk about principles, as the hon. Member for Southwark and Bermondsey has done. We shall get many other opportunities to talk about the details.

I would be more moved by what the hon. Gentleman had to say about his fears of water privatisation if we did not have so many examples around the Western world of where water and sewerage services are supplied adequately, with good standards of public consumer protection. We have that not very far away across the Channel in France, where franchise companies supply water and other services very successfully. I know that recommending examples from abroad will not necessarily gain the consent of everyone in the Chamber. Therefore, perhaps I can suggest that we do not have to go very far from the constituency of the hon. Member for Berwick-upon-Tweed (Mr. Beith), who will reply to the debate on behalf of the Liberal party.

The hon. Gentleman and many of his constituents occasionally drink private water, if they let water cross their lips. It is excellent water, supplied by the Newcastle and Gateshead water company. I believe that the hon. Member for Houghton and Washington (Mr. Boyes) also drinks this private substance and does not come to any harm. Therefore, I say to the hon. Member for Southwark and Bermondsey, "Do not let us erect the whole argument on the premise that public provision is good and private provision is bad". That would be a ludicrous argument to advance to this or any other place.

Mr. Allan Roberts (Bootle)

rose—

Mr. Patten

I would give way to the hon. Gentleman much more willingly if he was not wearing that offensive red striped jersey. If at a later stage he chooses to take it off, I shall give way. Until then, I fear that I must restrain myself.

Mr. Roberts

rose—

Mr. Patten

I give in.

Mr. Roberts

As the Minister found my jumper so attractive during the debates on the Housing and Planning Bill, I thought it might have induced him to give way today. As the hon. Gentleman is talking about private water supplies, has he heard the rumour that Perrier is hoping to buy into the North-West water authority when it is privatised, to introduce a new bottled water, Perrier Nouveau, which will be sold in France? It will be bottling Lake District water, because it is some of the best water available. It is better than the water Perrier sells in this country. Nowhere in the White Paper do the Government say that they will prevent foreign capital buying into our water authorities. Will the Minister prevent that?

Mr. Patten

I gave way to the hon. Gentleman when he began to divest himself of articles of clothing, for fear that he might go further. I know nothing of those rumours, and I shall look forward to learning more of the facts when they are forthcoming.

Mr. Roberts

What about foreign investment?

Mr. Patten

Foreign investment is welcome in this country, as our investment abroad is profitable for us. Foreign investment is always welcome in this country.

Mr. Nigel Spearing (Newham, South)

rose—

Mr. Patten

I shall not give way, in the interests of others who want to speak. I shall try to look point by point at some of the issues raised by the hon. Member for Southwark and Bermondsey. There are a number of myths about water privatisation, and there is another side to the argument of almost all those myths.

I should like to ask the hon. Member for Southwark and Bermondsey, in his open-minded way, at least to consider the other side of the argument. One myth is that somehow privatisation will be had for customers. However, we think that customers will benefit very much from the increased efficiency that will result from private sector management. Also, and this is important, water services plcs will have access to funds on the private capital market. That means that each year, during the public expenditure survey discussions with the Treasury, no longer will water authorities have to compete with hospitals—

Dr. John Cunningham (Copeland)

rose—

Mr. Patten

—schools and other parts of the public sector for access to capital, which is greatly needed in those areas.

Mr. Robin Maxwell-Hyslop (Tiverton)

Will my hon. Friend give way?

Mr. Patten

I must give way first to the hon. Member for Copeland (Dr. Cunningham), and then I shall give way to my hon. Friend. After that I had better make some headway with my speech.

Dr. Cunningham

If the Minister wants to make some headway, he would be far better advised to abandon bogus arguments of the sort that he has just advanced. It is completely unnecessary to sell off Britain's publicly owned water companies and the regional water authorities to allow them to raise investment outside the Government's control. That can be done by a simple policy decision of the Government.

Mr. Patten

The hon. Gentleman was on his feet asking me to give way before I had even finished my sentence, so it was hard of him to say that I was using bogus arguments before he had heard me finish my argument.

In answer to the hon. Gentleman's question, I say only that I cannot believe that any Labour Administration or Treasury team would allow unfettered access to outside capital markets by all bodies in the public sector without any control at all. I do not believe that that could possibly be the case. [Interruption. The hon. Gentleman muttered sotto voce. I can lip read. I think he said, "Wait and see."

Dr. Cunningham

I said, "BNOC."

Mr. Patten

I am sorry, I cannot lip read.

Mr. Maxwell-Hyslop

Will my hon. Friend explain why, except on the basis of a purely capricious and reversible decision, water, which the Government do not own, should be considered within the public sector, and British Leyland, which the Government do own, is not considered within the public sector — the public sector borrowing requirement? Is it not wholly capricious? With the stroke of a pen water can be removed, just as British Leyland was.

Mr. Patten

It may be capricious, but that is the fact of the present situation.

I believe that customer requirements will be met much more easily under a privatised regime. Customers will be able to enter directly into ownership and control of water services plcs by becoming shareholders. That will sort out who owns what. It is real ownership. Real power is being given to individuals, not the phoney idea of public ownership through nationalised industries, to which idea I think the hon. Member for: Southwark and Bermondsey does not subscribe.

Strong regulation is essential for any private sector utility. I should be the first to say that. However, just to say that one needs strong regulation is not in itself an argument against privatisation. That cannot be so. It is merely the means by which we can ensure that the benefits of privatisation are passed on to customers and shareholders alike. A Director General of Water Services will be appointed to ensure that the water services plcs are well regulated and do not abuse their monopoly position. The director general's task will be to ensure that customers as well as shareholders benefit from the improved performance of privatised authorities. He will do so by means of a licence. The licence will set limits on the amounts by which water services plcs are able to increase their charges at any one time and will set standards of services that they are obliged to meet.

I return to the matter to which I referred when the hon. Member for Southwark and Bermondsey let me intervene in his speech. British Telecom is a one-off arrangement, as far as I can tell, based on the rebalancing of tariffs. Tariffs in the water industry are already balanced. There is already a statutory obligation on water authorities not to discriminate between one form of user and another. Therefore, the water services plcs will not he in the same position as British Telecom. The licence will be a tough discipline for the water services plcs. To keep within it, they will have to maximise their efficiency.

Let me deal with another myth, that water is somehow a free public good. Although it was not reflected in what the hon. Member for Southwark and Bermondsey said, it is in the back of many people's minds that somehow water comes out of the atmosphere and should be free. It is nothing of the sort. [Interruption.] I am afraid that, as I am suffering from a summer solstice sore throat, I am easy game for those who want to shout me down. I cannot make myself heard above all that. [Interruption.] It comes from the hydrological cycle.

We need the most elaborate and capital-intensive system to ensure that the storage, purification and distribution of water is up to the highest modern standards of health and convenience. The value added by that system is financially enormous and socially incalculable.

Mr. William O'Brien (Normanton)

What about the quality of water in Yorkshire?

Mr. Patten

I know that there are problems in Yorkshire. I have met the water authority to discuss them.

That system means that the water industry puts the highest demands on the latest techniques in engineering and biotechnology. These are very important techniques.

Mr. David Alton (Liverpool, Mossley Hill)

Will the Minister allow himself to he drawn on the question of capital investment? He may have seen speculation in this morning's edition of The Guardian that because of the Government's privatisation scheme it may be necessary to move money that would have been used for cleaning up the Mersey estuary to clean beaches at Blackpool instead. I do not know whether that is true, but it would be difficult for the North-West water authority, with a capital investment programme of £200 million a year, to keep up with such investment should privatisation go ahead. How would the Minister deal with that?

Mr. Patten

The speculation to which the hon. Gentleman refers has no basis whatsoever. The words that were written were incorrect. There is no basis for them. There is no trade-off between the investment in beaches at Blackpool and the Mersey clean-up. The money dedicated to the Mersey clean-up is dedicated to that end. I have received a letter from the chairman of the North-West water authority, outlining his plans to increase investment within the forward capital planning of his water authority over the next five years, to deal with the problems at Blackpool. I am pleased that I had the opportunity to say that in answer to the hon. Gentleman's question.

Another myth to which we might usefully refer, and to which the hon. Member for Southwark and Bermondsey alluded only briefly, is that privatisation will somehow damage the water environment, as if, automatically, just because something is in private hands, the environment will be damaged, or even because there is no profit in it, the environment will be damaged. Those are illogical arguments in themselves. No one could substantiate those arguments. After all, it was left to us to bring into force part II of the Control of Pollution Act, which had long been neglected by the Labour party when it was in government. It is this Government who have introduced public inquiries that control discharges. It is this Government who have opened up public registers. It is this Government who are extending protection to all our water areas, including beaches and coastal waters.

We outlined those new advances in the pale green-covered consultation paper on the water environment, which we published a couple of months ago. We are convinced that privatisation gives several new opportunities for improving the water environment, including tighter ministerial control over water quality.

Mr. Spearing

Will the Minister give way?

Mr. Patten

I shall not give way. I must proceed, as we have little time this afternoon.

The consultation paper on the environment clearly shows our commitment to improve the water environment. It reflects the most thorough review of the needs of the water environment for more than a decade, and that point has been widely recognised by the conservation and environmental bodies that responded to the study. No one has denied the thoroughness of the review that led to the publication of the paper.

I have been heartened by the welcome that some of the practical proposals have received from the bodies which we consulted and which responded to the consultation. The points which appear to have gained the approval of those who have responded so far are: first, the setting up of statutory water quality objectives for the first time—this has been widely welcomed—secondly, the creation of water protection zones for sensitive areas of the water environment; thirdly, the preparation of statutory codes of practice for conservation; fourthly—and this is most important and has considerable implications across the hoard in the environmental area—the establishment of a new Government inspectorate to monitor water services plcs, pollution control activities — this also has been widely welcomed—and, finally, the power to implement national and European Community environmental policies by regulation. These advances will ensure that environmental objectives are better defined, more vigorously pursued and, I believe, more effectively achieved than at present.

Mr. Spearing

Will the Minister give way?

Mr. Patten

I hope that the hon. Gentleman will forgive me for not giving way.

Water services pies will inherit all the statutory duties —and I stress this—which currently rest upon the water authorities. In the performance of their regulatory functions—discharge consents, abstraction licences and so on—they will have to act even-handedly. The powers of call-in by my right hon. Friend the Secretary of State, and the appellate powers to my right hon. Friend the Secretary of State, will continue. We will continue to have public registers and public access to information about discharges, and I am certain that the hon. Member for Southwark and Bermondsey and his colleagues will welcome that. We intend to improve that access in all circumstances. In addition, we have made it clear that we intend water services plcs to maintain—as I made clear in the consultation paper on the environmental protection issues —the current level of subsidy from main charges to continue their vital but non-profit making environmental work.

We have published a league table for the first time, showing the amounts of money which the different water authorities are spending on environmental protection work as a baseline below which they will not be permitted to go in real terms. This will be built into the operating licence, together with the circumstances under which the water services plcs will have to proceed.

Another myth which is sometimes circulated is that there will be an adverse impact on employees through water privatisation. I do not think that that will be the case. Some 50,000 people work in the water authorities and they will directly benefit from the success of their new employers—the water services plcs.

It is established Government policy to offer shares on attractive terms to those who work in the industry. I shall say a word or two about that now, as I know that the 50,000 or more employees will be interested in the Government's plans. Only last week my right hon. Friend the Secretary of State for Energy announced the proposed arrangements for the British Gas Corporation. These followed earlier schemes for employees of British Telecom and a whole range of other recently privatised bodies. The details vary from case to case, and will no doubt he different again for water, but there are common threads which run through them all.

The first common thread is that there is an initial block of entirely free shares for each employee. The second is that there will be an extra free share—sometimes even more—for every share that the employee buys, up to a specified threshold. Often there is an additional discount on additional share purchases, up to a certain ceiling. We will seriously consider what the employees in the water authorities could and should expect. We must also consider what the consumer—those who currently pay their water bills through water rates—might expect. We are keen to see the genuine devolution of ownership to people living in the regions, and individuals living in the regions will find the opportunity of owning shares in their local water company extremely attractive.

Another myth, which was expressed strongly by the hon. Member for Southwark and Bermondsey, is that it is somehow wrong to attempt to privatise any service that is as vital as water. The argument appears to be that anything that is so vital to maintain human life as water must, QED, be provided publicly. That is an instinctive feeling that many people have, and I understand and appreciate it and do not dismiss it. However, I do not believe that that view stands up to close examination, for the following reasons.

First, I hope that there are no hon. Members who believe that there is anything inherently irresponsible about private sector activity.

Mr. Hardy

What about the reverse?

Mr. Patten

If the hon. Member for Wentworth (Mr. Hardy), from a sedentary position, is implying that I mean that all public provision is inherently bad, I must state that of course I do not mean that. That would be bizarre.

There is also nothing that makes it inherently impossible for private bodies to provide public services. There is no logical argument to support that case.

Mr. Spearing

Does the Minister mean by contract., or by ownership?

Mr. Patten

By either.

After all, we have only to consider the food industry. There are no state farms in this country. We provide much, although not all, of our foodstuffs. All the food in this country is privately supplied. We all need food to survive, as much as we need water. However, private production is matched by public health standards, laid down by public bodies to ensure that food is wholesome and of the proper quality.

There is no clash of interest in the private production and the public regulation of foodstuffs. Why, therefore, should there be any clash of interest in the private production and public regulation of water? The argument that there would be a clash of interest does not stand up.

It is said that the food industry, with its scope for competition, is different from the water industry. I recognise that. I was about to say, and the words are deathlessly typed in the brief in jumbo type suitable for Ministers to read at the Dispatch Box, that "of course it is different." The Civil Service is marvellously adept at providing such phrases. Those who raise the argument forget the position of the statutory water companies. These cannot simply be dismissed. They are not a non-argument or an intellectual inconvenience.

Mr. A. J. Beith (Berwick-upon-Tweed)

Will the Minister give way?

Mr. Patten

I shall give way when I have developed my argument.

Since the 1 9th century, the water companies have been an example of the private sector providing a vital service —albeit simply water—on a monopoly basis. They have been doing that for more than 100 years. Twenty-eight private water companies now serve about a quarter of the population of this country. They supply pure water to towns the size of Newcastle and Bristol, and they supply it very well. People have been drinking company water without complaint for a generation. The hon. Member for Berwick-upon-Tweed drinks privatised company water in his area. I shall gladly give way to him if he will tell us how the Liberal and SDP plans for water authorities in the future will deal with the water companies.

Mr. Beith

As the Minister would say, why look in the crystal ball when one can look in the book? It is a pleasure to answer the question, as we were directly involved in preventing the Labour Government from nationalising the private water companies. Those companies provide a specific service—the provision of water—without any responsibility for sewerage, environmental services, and so on, and operate, in effect, as franchised contractors to a publicly accountable water authority.

Mr. Patten

That is a clear indication to the Water Companies Association that the water companies, as franchised bodies, to use the hon. Gentleman's description, have the full support of the hon. Gentleman's party as suppliers of water in the future.

The hon. Member for Houghton and Washington also drinks privatised water. I drank it myself at Gateshead town hall last Thursday, and most people around the table seemed to be drinking it with evident enjoyment. It is no use the hon. Gentleman saying that he never touches a drop, as he once told me that he was a teetotaller. I am sure that he has no objection to water being supplied by privatised water companies. I shall be pleased to give way if he will tell me what Labour party policy is towards the 28 water companies. [[HON. MEMBERS: "Answer!"] It seems that the Labour party either has no plans at all or it has a secret manifesto and will tell us about its policies at a later stage.

Mr. Spearing

rose—

Mr. Patten

Finally, I must deal with the myth about ownership. There is an idea that no one actually owns the water authorities and that they are not the Government's or Parliament's to do anything with them. That is a very rum argument. The Water Act 1973 created the water authorities, as the hon. Member for Southwark and Bermondsey pointed out. Water authorities are public corporations answerable to the Government. Perhaps anyone who disputes that will tell me what they are if they are not public corporations answerable to the Government and therefore in the public sector.

Mr. Maxwell-Hyslop

In many cases the assets were provided by ratepayers in local government water boards, or in other cases river boards. I do not know what the Minister means by a public corporation. He has not said that its property is vested in the Minister, like the shares in BL, so who does he claim owns it? He thinks that he has answered his own question, but he has not.

Mr. Patten

Local government created many services which were later transferred to other public bodies, which then ran them and extended them. In 1973 Parliament decided that water and sewerage services should he transferred lock, stock and barrel to the water authorities. Debts were transferred as well as assets. My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) was in the House at the time and I was not, so I do not know whether he protested.

Mr. Maxwell-Hyslop

I can tell the Minister what Parliament did not do. This is a matter of public record, not of opinion. Parliament did not vest the water authorities in the Secretary of State or the Government. Does anyone in the House, including the Minister, challenge that?

Mr. Patten

I shall repeat what the situation is when I have dealt with the important point that in 1973, when the assets were transferred to the new public authorities, the debts were transferred at the same time. That fact must not be neglected. Before 1974, sewerage and sewage disposal was supported through the rate support grant system and other grants have been and still are paid to the water authorities, so the taxpayer has also played a part in funding the system.

The Water Act created the water authorities and my hon. Friend the Member for Tiverton agrees that they are public corporations answerable to the Government. They are therefore in the public sector and it is for Parliament to decide what to do with them. If that were not so, they would be very peculiar bodies indeed. If it is the will of Parliament, subject to parliamentary approval, the assets, debts and liabilities of the water authorities can be transferred to wholly-owned Crown companies, which will then empower the Secretary of State to sell them. The situation with regard to ownership is thus unutterably clear.

Mr. Spearing

On the question of ownership—

Mr. Patten

I was about to begin my peroration, but I was rude in not giving way to the hon. Gentleman earlier, so I give way to him now.

Mr. Spearing

I am grateful to the Minister. He has been patient. On the question of ownership and the Crown, is he not aware that the river Thames and other rivers are part of the water cycle and at one time were owned by the Crown, by the Commissioners of Lands and Forests and now, in the case of the Thames, by the Thames water authority? Are the Government saying that under their legislation the river Thames will be owned by Thames Water Services plc and that its environmental control will be in the hands of the majority shareholders, whether at home or abroad, and accountable only to them?

Mr. Patten

I appreciate the hon. Gentleman's interest in the Thames valley, which I share, because the Thames runs through my constituency. A privatised water authority, wherever it may be, would have a large number of environmental duties, many of which would be subject to the most stringent surveillance by my right hon. Friend the Secretary of State and by the director general.

Sir John Wells (Maidstone)

What my hon. Friend has said about the Thames applies likewise to the Medway. Inevitably, there are many navigations. Treatment of the leisure aspect in paragraphs 92 and 93 of the Green Paper was extremely slight, slender and inadequate. I appreciate that today my hon. Friend is dealing with the philosophy and not with the nuts and bolts, but the House is entitled to know where the navigations will be vested after privatisation. May we be assured that the Thames and the Medway will pass, say, to the British Waterways Board or something of that nature? We should be much happier if we could have that assurance today.

Mr. Patten

We are consulting widely with recreational and navigational interests as well as with fishing interests, which are also very important. On my hon. Friend's specific question, it is very important that we maintain and, if possible, improve the concept of integrated river board management. which means the total management of everything within the river basin. That necessarily includes the environment and, I believe, navigation and recreation on those waters, because those activities not only benefit those who enjoy them but may have deleterious environmental effects. That is why it is so important to maintain the concept of integrated river basin management. Indeed, these days in the Smoking Room hon. Members talk of little else.

I am grateful to the hon. Member for Southwark and Bermondsey and his hon. Friends for initiating this debate. I listened with great care to what he said, and I hope that they have listened with great care to what I have said. There is more than one side to the argument that it is impossible to provide a public good privately or that this is only a matter of ideology or profit. There is an area of considerable debate in the middle into which the Government wish to enter. During the next five months we shall certainly listen carefully to all representations put to us, as the hon. Gentleman put them this afternoon.

5 pm

Dr. John Cunningham (Copeland)

We, like the Minister, welcome the opportunity for this debate, and we shall support the motion.

The Minister deserves some sympathy. Certainly I sympathise with him for having a painful sore throat, but he has a painful task in every sense because he seeks to justify what to most people is a patently obvious political expedient, namely, what Lord Stockton described as the sale of the family silver to pay the bills. It is another public asset-stripping procedure which the Government are trying to dress up with philosophical justification.

The Minister talked about increased efficiency, customers' requirements and the position in other countries. I shall return to his arguments about customer's rights and efficiency, but first I shall deal with his point about France. The position in France is different from that which the Government propose for the United Kingdom. In France the water supply only is franchised, as the Minister well knows, and in no country is the complete cycle of water supply and sewerage management and control in private hands. We would be unique if the Government introduced that arrangement into the United Kingdom.

The Minister struck a note of light relief when he asked whether the public believed that water simply came from the atmosphere. At that moment, like water, his argument evaporated because the public are well aware that water is our foremost, most fundamental, natural resource. The public believe that it should he a publicly owned and controlled resource, and we in the Labour party agree with that.

The Labour party is wholly opposed to proposals to privatise Britain's water assets which are the nation's most fundamental resource and on which our existence depends. We believe that the water industry should be publicly owned and controlled and that it should be under democratic control and accountability at both regional and national levels. We further believe that the existing river basin management concept of organising the industry should be retained. In the event of any disposal of those assets, a Labour Government would return them to public ownership as a matter of priority.

Many peoplee inside and outside the House are asking what the point of the proposals is. As recent opinion polls show, even Tory voters no longer agree that tax reductions are in the best interests of the national well-being and should have the priority to which the Government so persistently cling. The Government have announced that the water industry is to be sold. The decision has nothing to do with the performance or efficiency of the industry, and everything to do with financing tax cuts to buy votes at the general election. Despite what the Minister said, the water authorities are not the Government's to sell, and I assure the Minister and his colleagues in the Government that they have not heard the last of this argument.

The Government intend to dispose of 10 regional water authorities in England and Wales at a knock-down price, turning them into privately owned companies. The authorities' assets have been valued at about £27 billion but, as many hon. Members have pointed out, even the most optimistic forecast is that the Government expect to raise only about £6 billion or £7 billion.

The proposed sale will have a disastrous impact on health and pollution control, prices and investment, and recreation and the environment. No one on the Government Benches, least of all the Minister, has sought to argue that privatisation can or will solve the manifest problems of urgently required infrastructure investment, particularly in our major conurbations, such as the northwest, where mains, sewers and other water authority assets are collapsing at an alarming rate and are in need of fundamental replacement and massive investment. Sewage disposal, water purity, flood prevention, drainage work, greater access to information and to amenities will all be jeopardised unnecessarily and put at risk by the proposed sale.

Throughout their seven years in office, the Government have ignored their statutory duty to promote a national policy for water, and now they are planning to abandon that duty altogether. The argument that to pass customers into the hands of private monopolies is in the consumers' interest is amazingly curious, especially coming from a Conservative Minister. It is the most astonishing volte face that any Conservative Minister could make. Whatever the Minister said about water companies, such as the Sunderland and South Shields or Newcastle and Gateshead water companies, they simply act as agencies for regional water authorities in the supply of water. However much he twists and turns, in reality, virtually all consumers — 99 per cent. of all households — will be connected to private monopoly suppliers, as the hon. Member for Southwark and Bermondsey (Mr. Hughes) said. There will be no competition, there is no competition and there is unlikely ever to be any competition, and Conservative Members know that full well.

Almost an identical state obtains with sewerage services, except that the percentage of households is slightly less, being about 94 per cent. Those are unique circumstances for any major industrial nation, which is another reason why the Minister's comparison is simply invalid. No other major industrial society has its water supply and sewerage system organised in that way, with such high percentages of households connected to private monopoly suppliers.

Furthermore, as the British Telecom experience has already demonstrated, charges to consumers are more likely to increase. In the interests of brevity, perhaps I should quote from the paper produced by the National Consumer Council, which addresses itself to these issues, especially to consumers' interests, and states: We must conclude that the proposals in the White Paper for privatising the water industry are contrary to the interests of consumers. We share that view. It is a view widely shared by groups who are not necessarily associated with the policies or the political views of Labour Members and include the Country Landowners Association, the National Farmers Union and many environmental and recreational groups.

Furthermore, perhaps most damning of all in terms of the Government's apparent consumer interest in the matter is that in a long list of what the Minister regarded as achievements of the Government he failed to mention that, as a result of Government policy, the press is excluded from the deliberation of water authorities and undertakings in Britain. The public interest simply cannot be served by those matters being dealt with in secret, out of public scrutiny and the public gaze.

Apparently, according to a recent parliamentary reply from the Secretary of State for the Environment, the House is to be treated accordingly. As during the passage of the legislation to abolish the metropolitan counties, the Government refuse to publish the responses to their proposals they have received from interested bodies and organisations.

In answer to my question on Thursday 12 June, the Secretary of State replied: My Department has received 280 letters from organisations and others, following publication of the White Paper. It is for the originators of those letters to publish their views, if they so wish."—[Official Report, 12 June 1986; Vol. 99, c. 311.] The Secretary of State refuses to make that information available to the House as it should be made available for debates such as this and especially for debates on legislation.

Even—I say "even", but perhaps I should say "also" —the Financial Times and The Economist have poured scorn on the proposals. On 4 June, the Financial Times concluded a leading article by saying: The Government needs to consider whether, given its other pressing priorities, the time and effort devoted to this ca use"— that is water privatization— will be justified. Earlier this year, The Economist, in an article headed "Water Goes Private", said of the Government's arguments, "They are not convincing." That was very much an understatement. It is a good question to ask—I notice that the Minister did not advance any answer or argument—who supports the Government's proposals to privatise the water authorities. No one in the Opposition and few, if any, of the organisations which have already published their views or their evidence support them.

Mr. Gow

Conservative Back-Bench Members support the Government's privatisation proposals. The hon. Gentleman was asking who supports the policy of privatisation. I invite him to await the results of the Division, which will take place in a couple of hours' time.

Dr. Cunningham

We have heard such words of bravado before, especially on policy matters emanating from the Department of the Environment. Under successive Secretaries of State, as time has gone on, the majorities have declined, the abstentions have increased and the votes in the Labour Lobby have come, I would say not thick and fast, but consistently against Government policy. We shall see what happens on this issue.

What of the arguments about the much-needed investment in the industry? I quote figures which neither I nor the Labour party have produced, but which come from the survey of the Government's record carried out by the Chartered Institute of Public Finance and Accountancy: Over the last 5 years capital investment by the water authorities, repriced on the basis of the Retail Price Index, has declined by 13 per cent.… If these figures represent an accurate picture works are not being replaced as fast as they are wearing out because allowance has also to be made for new works to serve new customers and raise evironmental and service standards. That is an indictment of the Government's record during the past five years. Against that background of a deteriorating water industry, of a shortfall in capital investment, in addition to that which we know historically exists and which is not the fault of this Administration alone, is it realistic to suppose that investors will want to take on those organisations? Even if they do, will they bring forward that desperately needed capital investment to safeguard water supply and sewerage systems, the health of the nation and the industrial and economic health and well-being of the community?

It is clear that investment cannot lead to a bigger market share. Investors can receive a return only through increased charges or reduced expenditure. Everyone knows that the latter needs to be substantially increased. Again, I refer to the private sector and quote Mr. Stanley Hill of Arthur Collins and Co., who summed up the Government's proposals thus: So the financial assessment, in essence, becomes a simple one. Whatever the Chancellor takes out of the industry on floatation of the companies and by subsequent annual taxation has to be made good by increased charges on consumers or a reduction in future capital investment, or both. Perhaps this axiomatic deduction was obvious from the start. The Government have produced no answer to those challenges.

On drinking water purity, about 10.8 million people in Britain receive drinking water on which the Government have had to issue waivers from the standard required by the EEC. Those figures were given in a parliamentary answer in response to my hon. Friend the Member for Rother Valley (Mr. Barron).

Mr. John Patten

Does the hon. Gentleman recognise that Britain was probably the first of all EEC countries to implement the Community drinking water directive, and that more than 90 per cent. of our water supplies already meet all of the 64 parameters of that directive? Does the hon. Gentleman recognise that that is a considerable achievement which compares well with any other European country and that we are working quickly and hard to ensure that the remaining 10 per cent. come up to the same standard?

Dr. Cunningham

Ten point eight million is approaching 20 per cent. of the population of Great Britain. That number of people receive drinking water below the required standards. Notwithstanding the Minister's comments, I assure him that those figures were provided by his Department in a parliamentary answer. If I cannot produce that answer now, I can produce it later.

Similarly, the position on pollution and sewage control is deteriorating. The Guardia,, said today that the Mersey basin project, widely supported and overwhelmingly necessary, is falling behind. The rate of pollution is outstripping the major investments which have taken place.

Mr. Allan Roberts

Will my hon. Friend comment on the fact that, only a few months ago, the Ministry of Agriculture, Fisheries and Food delayed the dredging licence to the Mersey Docks and Harbour Board, which could have meant the closure of the port of Liverpool because of the amount of mercury that was being dredged out of the estuary and dumped in Liverpool bay? The pollution of mercury and sewage in the river Mersey is such that no one in his right mind—no private capitalist —would want to buy what is an open sewer unless he could make much money out of consumers in the northwest of England by selling water.

Dr. Cunningham

I am grateful to my hon. Friend for his intervention. I wish that hon. Members would pay more attention to problems of that sort, and a little less attention to some of the problems which occur in my constituency from time to time. I am not referring to my hon. Friend the Member for Bootle (Mr. Roberts) in that regard.

The Minister of State referred to reported correspondence between himself and the chairman of the North-West water authority on these and other issues, and he said that the chairman's reply outlined the authority's plans for further capital investment. Perhaps I could tell the House exactly what the chairman said, because I have a copy of the Minister's letter of 5 June 1986 about the EEC bathing water directive as it relates to the position at Blackpool, and a copy of the reply from the chairman, Mr. Dennis Grove, dated 12 June.

Mr. John Patten

Since the hon. Gentleman is referring to that correspondence, it will help the House if I place copies of it in the Library. I am in favour of open government.

Dr. Cunningham

I am delighted to hear the Minister of State say that, even before I begin to quote the correspondence. However, if he is so keen for it to be in the Library, why did he not deposit it there previously?

The Minister said in his letter: If the case concerning Blackpool were to be decided against us"— he is referring to a threatened prosecution of Britain by the European Community because of the raw domestic sewage on our beaches and littoral— there would be no alternative but to set about urgently bringing Blackpool up to standard and to identify many more waters; we would then lose valuable flexibility. Of course, flexibility refers to privatisation, not public health. It continues: An action before the European Court during the privatisation discussions or flotations would have wide-ranging implications going well beyond Blackpool". He can say that again. The Minister continued: I need to know when a scheme could be started, when it could be completed, and what its cost and effects would be. The Minister said that the chairman replied outlining his plans. That was not entirely accurate. The chairman said: I fully appreciate the national sensitivity of this matter, and will be glad to do everthing possible to help you in handling it satisfactorily … We cannot give priority, for the foreseeable future, to securing higher bacteriological standards as envisaged in the EC directive on bathing waters … I acknowledge the special circumstances applying at Blackpool, as set out in your letter … we will make provision in our forward capital programme for further improvements of the coastal waters in the Blackpool area, with the aim of reaching EC standards so far as this is feasible… I must emphasise that we do not believe it is possible to achieve these higher standards at Blackpool, within our existing resources, without a significant impact on other programme areas such as the Mersey Basin Programme or coastal waters in other parts of the region. The Minister was ill-advised to deal with the matter as he did in the debate, because, as the chairman of the North-West water authority makes clear in that letter, there is, frankly, not a cat in hell's chance of the water authority reaching the required standards within the financial framework imposed upon it by the Government. It is a scandal that it is being urged to reallocate resources just to try to obscure this matter in the interests of privatisation. That is the burden of what is being proposed, and I can tell the Minister of State that it is absolutely disgraceful that the Government should be proceeding in that way.

There remains a fundamental conflict between the cost of environmental safeguards of the sort which I mentioned and the need to meet the financial requirements of prospective shareholders. What is more, many of the improvements in the existing systems of control, outlined in the Green Paper, could be more effectively introduced by retaining the water authorities in the public sector. Furthermore, the quality objectives and controls which the Government have undertaken to impose would require a large central inspectorate to ensure proper enforcement.

Another major concern of the environmental world is the influence of the privatised authorities on land use planning and infrastructure development. Major conflicts of interest could arise if certain sectors of industry held substantial interests in the authorities. These are all questions to which the Government have not produced answers, nor indeed have they attempted an answer.

Privatisation would be bad for those employed in the industry. The unions, representing the tens of thousands of workers in the industry, have heard the message loud and clear. Perhaps I should say that I am a Member sponsored by the General, Municipal, Boilermakers and Allied Trades Union. People believe that not only their jobs and their contracts, but their pension rights will be threatened, as happened with the National Bus Company, British Telecom and others.

It was exactly those issues of water purity, public health, coherent policies necessary for pollution control and sewage disposal, strategic investment and security of supply which originally caused water to become a public utility and monopoly. There remain overriding reasons for retaining water in public ownership and control.

The Government's timetable envisages a Bill being introduced in the House in the autumn of this year. That Bill will not reach the statute book, if it ever does, before the summer of 1987. Proposals for the sale of those important public assets will presumably be launched in the immediate run-up to a general election. I make it clear that a Labour Government returning at that election would stop those proposals in their tracks and take back any privatised resources.

5.27 pm

Mr. Ian Gow (Eastbourne)

This debate has taken place in the absence of the leader of the Liberal party and with only the intermittent presence of the leader of the SDP. We have just listened to the hon. Member for Copeland (Dr. Cunningham) promising that the Labour party, if returned to office, would take back into public ownership any water companies which had been transferred into what I call genuine public ownership. Mercifully, my hon. Friend the Minister of State and the Government will in no way be deterred from their sensible purpose by the hon. Gentleman's threat.

I shall make two observations about the hon. Gentleman's speech. He said — this is a widely held misunderstanding—that the 10 water authorities, nine in England and one in Wales, were being starved of capital investment. The hon. Gentleman knows that this year about £I billion of capital investment is being undertaken by the water authorities. Contrary to what he and— I almost said his hon. Friend — the hon. Member for Southwark and Bermondsey (Mr. Hughes) said, the investment in the water industry over the past seven years has been that which is required to keep our sewers in good condition. It is a great misunderstanding, common on Opposition Benches, to say that our sewers are in a serious state of disrepair. They are not. There are particular problems in the North-West water authority area, but the overall condition of our sewers is good.

Mr. Simon Hughes: The hon. Gentleman questioned the disrepair of sewers. A recent parliamentary answer shows that in the last year for which figures are available, in one region, Yorkshire, there were 1,350 significant sewer collapses, and figures for other regions were 280, 4,921, 260, 230 and 280. Surely the hon. Gentleman is not trying to pretend that in any of the 10 authorities there is not a major problem of sewer disrepair?

Mr. Gow

I am indeed disagreeing with the hon. Gentleman, because I am asserting the opposite. There are problems in some areas, but overall the condition of our sewers, many of which were built in the Victorian age, is satisfactory. I give way to the hon. Member for Copeland (Dr. Cunningham).

Dr. Cunningham

I am grateful to the right hon. Gentleman.

Mr. Gow

I am not a right hon. Member.

Dr. Cunningham

Just be patient. I am grateful to the hon. Member for giving way so early in his speech. As he challenged the point that I made, let me remind him, although I do not think that he needs reminding as not too long ago he held these responsibilities, of the existing problems. The average for each of the past three years is more than 4,000 significant sewer collapses. That figure does not include the minor collapses. If the hon. Gentleman does not regard that as a problem, I assure him that we do.

Mr. Gow

I commend to the hon. Gentleman the report of each of the nine English water authorities and the one Welsh water authority, where he will see that the chairmen of the boards of these companies set out, in some detail, the condition of the sewers for which they have responsibility. After studying those, as I am sure that the hon. Gentleman, if he has not done so already, will revise his opinion.

The hon. Gentleman referred to an observation by my noble Friend Lord Stockton and to his widely reported criticism that those who sit on the Treasury Bench are selling off the family silver. However, the great misunderstanding under which both my noble Friend and the hon. Member for Copeland labour is that whereas if one sells the family silver it is no longer around, if we sell the water authorities to the people, as I am delighted to say we shall, the assets remain. Therefore, the analogy about selling off the family silver is most inappropriate.

Mr. Spearing

Although it may not be selling off the family silver, because that money is still available to Her Majesty's Government for distribution to the rich people, they have created money that is not theirs out of thin air, where the moisture comes from and disappears to. This is a conjuring trick of doubtful morality.

Mr. Gow

I was disagreeing with my noble Friend Lord Stockton over the analogy about selling the family silver, because if one does that the silver is no longer there. If, as I hope, we sell the water authorities, all the millions of pounds worth of assets will still be there and will still be at the disposal and the service of the British people.

We have had a very interesting debate. I am sorry that the hon. Member for Bolsover (Mr. Skinner) is no longer here. The debate is interesting because we have seen once again that alliance between the Socialist party and the Liberal party that we saw in the Parliament between 1974 and 1979. Here we have the once-mighty Liberal party opposing a measure of privatisation and opposing the opportunities for employees of water authorities and customers to become owners. I give way to the hon. Member for Rochdale (Mr. Smith).

Mr. Cyril Smith

I was not asking the hon. Gentleman to give way, but I am grateful to him for doing so. I was merely going to make, I confess from a sedentary position, the following point. I understand the hon. Gentleman's deep concern about the Liberal party, because he is the hon. Member for Eastbourne, where, as I understand it, the Liberal party is in control of the council. We judge each privatisation measure on its merits, and we do not think that water authorities fall into the category of services that should be privatised.

Mr. Gow

I wish to give some comfort to the hon. Member for Rochdale. He will be pleased to know that those who are joining him in the Lobby tonight—we have heard from the hon. Member for Copeland that the Socialist party will be joining the Liberals—have their problems. The Labour party candidate at Eastbourne in the last general election, and that in 1979, lost his deposit. I confidently expect that the Socialist party candidate will again lose his deposit. The hon. Member is right to say that, for the time being, the Liberal party controls the borough council. However, I do not wish to be diverted by those who sit below the Gangway.

I have two reasons why I believe that the motion moved by the hon. Member for Southwark and Bermondsey is thoroughly misconceived. I have been in this place for only a short time, but I point out to my hon. Friend the Minister for Housing, Urban Affairs and Construction, to my hon. Friend the Under-Secretary of State for Wales and even to my hon. Friend the Lord Commissioner to the Treasury that nothing has occurred during my time in this place to lead me to believe that superior wisdom is given to Her Majesty's Ministers. I would have made the same observation when I had the privilege of being one of Her Majesty's Ministers.

I view with great enthusiasm the prospect of taking ownership and control of the water authorities away from the state. I hope that my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) will be able to catch your eye, Mr. Deputy Speaker, because he will be able to give an interesting seminar on the question of ownership. I shall base my remarks on the idea that water authorities in England are owned by my right hon. Friend the Secretary of State or by the Government, and that the Welsh water authority is owned by my right hon. Friend the Secretary of State for Wales or by the Government.

I am pleased about the prospect of privatisation of the water authorities, because we shall take a significant element of ownership and control away from the few—Her Majesty's Ministers — and transfer them to the many. I welcome that because, to take my constituency, our fresh water is supplied by the Eastbourne Waterworks Company which is privately owned. I am delighted that my hon. Friend the Member for Harrow, West (Sir J. Page) is in his place. He is a director of the Colne Valley Water Company, but that is not the only distinction that is enjoyed by my hon. Friend. He will correct me if I am wrong, but I think that he is a vice-president, no less, of the Water Companies Association. I shall give way to my hon. Friend if I am wrong.

Sir John Page (Harrow, West)

No. My hon. Friend is marvellous!

Mr. Gow

My point is that I have great confidence in my hon. Friend the Member for Harrow, West, who is a director of a private water company. The Eastbourne Waterworks Company, which supplies all my constituents with fresh water, is an excellent company and is very well run.

Another advantage will flow from the privatisation of the water authorities. At present, no hon. Member is able to serve as a director of a water authority. It would he an office of profit under the Crown. I have thought of some posts that might be available for the Liberal party after the next general election, or even for some of those who are returned to this House after the next election, or even for my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). He would be able to serve as a director of a privatised water authority. That is a byproduct of the advantage of privatisation.

The important element in the scheme that has been announced by my hon. Friend the Minister is that we shall spread ownership widely among customers and employees. The trouble is that the once mighty Liberal party, which used to he in favour of spreading ownership, has now been led astray by the Socialists who sit on that side of the House. That is very sad.

My hon. Friend the Minister knows very well that at present the chairmen and boards of water authorities have to go to him and to my right hon. Friend the Chief Secretary to the Treasury for permission to invest money.

Mr. Brian Sedgemore (Hackney, South and Shoreditch)

The hon. Gentleman voted for it.

Mr. Gow

What I am saying is that I am in respectful disagreement with the present system, whereby water authorities first have to come to my hon. Friend the Minister for Housing, Urban Affairs and Construction. They used to come to me.

Mr. O'Brien

Why do the Government not change the system?

Mr. Gow

We are changing it. The Opposition ask why the Government do not change it, but that is exactly what my hon. Friend the Minister has announced this afternoon.

Mr. O'Brien

That is stupid.

Mr. Gow

The hon. Gentleman ought not to rebuke me. On 7 February 1985 I announced a change of policy. I told the House of Commons on 7 February 1985—my hon. Friend the Minister will correct me if I have given the wrong date—

Mr. John Patten

My hon. Friend is absolutely correct.

Mr. Gow

I am obliged to my hon. Friend. I told the House that the Government would be considering the possibility of privatising the water authorities. One of the reasons for my announcement to the House of Commons, after 'consultations with my right hon. Friend the Chancellor of the Exchequer, was that my right hon. Friend the Chancellor, my successor and the Government believed that privatisation was right.

Mr. O'Brien

Will the hon. Gentleman give way?

Mr. Gow

I shall gladly give way to the hon. Gentleman, but he ought not to try to interrupt me from a sedentary position.

I want to take away from my hon. Friend the Minister for Housing, Urban Affairs and Construction, however excellent a Minister he may be, and from my right hon. Friend the Chief Secretary to the Treasury, however excellent he may be, the decision about how much money should be invested in the water industry. Those who, I believe, are best qualified to make judgments about the required level of investment are the directors of the water authorities.

Mr. John Patten

That is quite right.

Mr. Gow

I am delighted to have my hon. Friend's approval for my two philosophical points. The first is wider ownership, through customers and employees. The second, and important, aspect is that I want to give more freedom to those who are engaged in running the water authorities.

I very much welcome this debate. I deplore the way in which the Liberal party has been led astray by its Socialist comrades, and I want to assure the hon. Member for Copeland that the Government will not be deflected from their chosen and right path because of the threat of renationalisation that he made during his speech.

5.44 pm

Mr. William O'Brien (Normanton)

First, I intend to comment on the speech of the hon. Member for Eastbourne (Mr. Gow). He has been applying whitewash to the Minister's contribution. As my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) said, he ran out of whitewash at the end of his contribution.

When the hon. Member for Eastbourne had responsibility for the Department he could have allowed those who were responsible for running the water authorities to invest in them, if he had thought that that was correct. There is no reason for saying that the only way in which to attract investment in the water authorities in order that services may be provided by those authorities is to privatise them. That is sheer poppycock. If the hon. Member for Eastbourne had given the right to invest to water authorities when he was responsible for them, a better service could have been provided than that which will be provided under private ownership. The hon. Gentleman made the existing water undertakings faceless by means of the Water Act 1983, which provided that the discussions of water undertakings should be held in private. The hon. Gentleman has a great deal to answer for.

Much has been said in this debate about water supplies, and reference has been made to private water undertakings, but little has been said about the sewerage operations that are undertaken by water authorities. Since 1974, the responsibility for sewerage has been given to the district councils. This has been under an agency arrangement, in accordance with section 15 of the Water Act 1973. It provides that district councils should act as agents for sewerage management. The existing agreements were renewed in the provisions of the Water Act 1983. There has, therefore, been good sewerage management by local government since 1974.

Reference was made earlier to the fact that sewerage management and sewage disposal was a local authority responsibility before 1974. Therefore, local government maintained and provided a proper, efficient and safe sewerage system throughout the country. That was demanded by the numerous Public Health Acts. They were the basis for bringing local government into being and for the maintenance of our sewerage system. The management of sewerage has not changed. It is still with local authorities. I consider that this very important service to the community should always be controlled by Parliament through local authorities which should be accountable to the public. If not with a water authority, it should be with a local authority. It is against that background that I believe that the Labour party should, as my hon. Friend the Member for Copeland (Dr. Cunningham) said, bring the water undertakings back into public ownership under the control of the regional water authorities when it next takes office.

I, like many hon. Members and organisations outside, believe that sewerage and sewage treatment are the least likely local activities to lend themselves to privatisation. The point has clearly been made that there is little profit in sewerage systems and sewage disposal. Had there been any profit private undertakings would have been involved earlier, so there is no doubt that there is little profit in the privatisation of sewerage systems and sewage disposal. If those activities, were returned to local authorities, it would complement their other environmental functions such as waste disposal, highway drainage, conservation, recreation, land drainage and the quality of rivers and river discharges. Local authorities are much involved with the functions that we are considering this afternoon.

The new metropolitan districts which came into being a few weeks ago are large enough, and have the expertise, to carry out the functions of sewage disposal. If privatisation were allowed to take place in the same way as previous undertakings have been privatised, there would be a further loss of jobs and job opportunities in local government. People employed by the metropolitan district councils, both in administration and design work and in manual work, would be affected. That should be made clear by the Minister out of respect for those who are doing a useful job in that area.

Sewerage schemes are in the main drawn up by local authorities and presented to water authorities for their consideration and acceptance. The priority approved by the water authorities is looked at on a regional basis, and that is correct. I underline the fact that the original proposals come from the local councils, and the water authorities decide priorities on a regional basis. However, the initial input comes from the metropolitan district council, and that is important in helping the water authorities to decide where priorities lie.

The work carried out by local authorities on behalf of water authorities is substantial. The White Paper, "Privatisation of the Water Authorities in England and Wales", shows, on page 10, table 2, that out of a capital budget of £867 million for 1985–86, £267 million was spent by water authorities under the agency agreement with local authorities. Therefore, substantial work is undertaken by local authorities. It is widely accepted within the water authority areas that the authorised agencies give good value for money compared with the engineering consultation fee structures. Therefore, much needs to be looked at in relation to the functions of local authorities and agency arrangements with regional water authorities.

The Minister referred to people who have responded to the consultation documents that have been sent out. As my hon. Friend the Member for Copeland said, no responses to those consultation papers that have been submitted to the Department of the Environment have been submitted to the House for our consideration. However, I have a copy of a letter from the Bradford chamber of commerce that was sent to the Minister. That letter dated 28 April 1986—only a few weeks ago—makes it clear that the Bradford chamber of commerce has discussed the subject in its specialist committee and at a chamber council meeting. Therefore, the matter has been widely discussed by the Bradford chamber of commerce which comes under the area of the Yorkshire regional area authority. It says: The White Paper proposals were studied, especially the Government's suggested benefits of privatisation. Soundings were taken of large water users in the area with emphasis within the wool textile industry. Bradford needs a good supply of clean water for the textile industry and that is why I am quoting this letter. It goes on: The textile trade association have made their views known that they oppose the principle of privatisation. The Yorkshire Water Authority have discussed and given a very guarded welcome. That response comes from people who operate private businesses in west Yorkshire.

The Minister told my hon. Friend the Member for Copeland that he could not lip-read, but I hope that he can read the message that is coming from the Bradford chamber of commerce in particular, but also from many other organisations with no affiliation to the Labour party. The Bradford chamber of commerce gives a number of reasons for its opposition to the principle of privatisation. I hope that the Minister will make those views in particular, and the views of others who have responded to the consultation papers, available to hon. Members.

The Government have previously stated that, under privatisation, decisions would be taken for sound business reasons, and that is also implied in the document. However, the chairman of the North-West water authority, Mr. George Mann, said that sound business reasons led to filth being poured into the river Mersey for decades. Would a private company worry about that? The authority is spending millions of pounds trying to clean up the river. A great deal of money is also being spent on cleaning up the rivers Aire and Calder. I and my fellow Yorkshiremen fear that that investment programme will not continue after privatisation. We are also concerned about the river Don and other rivers in Yorkshire.

If the Government go ahead with privatisation, the Labour party pledges itself to take the industry back into public ownership and public accountability. There has been mention of the benefits that will accrue to workers in the industry, who will be allowed to purchase shares in addition to the shares that they will be given As I asked in an intervention earlier, will the workers have the right to vote on decisions affecting the operations and the boards of the new privatised companies? Those golden shares—

Mr. John Patten

All shareholders have the right to vote at annual general meetings and special general meetings of properly constituted public limited companies.

Mr. O'Brien

That is something that we have obtained—

Mr. Cyril Smith

The hon. Gentleman should ask the Minister what percentage of shares will be held by the workers in the industry, and how representative will their voting be.

Mr. O'Brien

When the Minister replies he will no doubt tell us the value of the shares to be given to the workers and also how much say the workers will have in the operation of the industry. After all, the Government have made great play about the shares that will he offered to workers.

A report in the Reading Evening Post on 21 February 1985 suggested that the chairman of the Thames water authority, Mr. Watts, and its directors had held top level secret meetings with City merchant bankers about the funding of the new company. If that is true, as the hon. Member for Rochdale (Mr. Smith) suggested, the real influence on the privatised undertakings will come not from the workers or customers who hold a few shares but from the merchant bankers.

The Minister admitted that there would be no restriction on foreign investment in the privatised regional water authorities. The Yorkshire authority could, therefore, be run by Americans, if they invested, who could then call the tune on the level of services for the area —

Mr. John Patten

The hon. Gentleman probably did not hear what I said, although he can read it in Hansard tomorrow. I was referring to the general welcome for foreign investment across the board. The Government will retain a golden share to ensure that the sort of problems mentioned by the hon. Gentleman could not happen.

Mr. O'Brien

The implication was that there would he no restriction on the amount of foreign money that could he invested in the privatised undertakings. However, I accept what the Minister said about the Government ensuring that a substantial amount of local money would be involved.

This is a short debate, so I shall not comment on the water aspect. As I have said, the sewerage system is important, although it has not been heavily involved in the discussions to date. I appeal to the Minister to consider what would happen to the sewerage system under privatisation. If it must be sold, it should be taken over by local authorities to ensure a satisfactory service.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. Perhaps I could help the House. It is interesting that five hon. Members have addressed the House, all of whom have referred to this being a short debate. The debate has now lasted for more than two hours and must end by 7 o'clock. I appeal for brevity. I am sorry for hon. Members who are waiting to be called.

6.7 pm

Sir John Page (Harrow, West)

I hope that the hon. Member for Normanton (Mr. O'Brien) will forgive me if I do not take up his argument, because I especially want to address my remarks to the water companies. My declaration of interest was most handsomely and fulsomely declared on my behalf by my hon. Friend the Member for Eastbourne (Mr. Gow). I am a director of a water company and the deputy president of the Water Companies Association.

I have a very long, very full and very well prepared speech, which regretfully I shall have to concertina rather more than I would wish. It was with pleasure that I noted the amount of knowledge and interest in water companies shown by hon. Members on both sides of the House. There are 29 water companies, of which 28 are members of the Water Companies Association. They supply water to 25 per cent. of the population, and the water goes to more than 200 constituencies, as I found to my cost as I am currently writing to the Members of Parliament for each of those constituencies. The water companies have been doing a good job in supplying wholesome water for more than 100 years.

Until the 1973 Act, there was no question of agency or franchise; they were independent companies, and the Act made little, if any, difference to their operation. Of course, capital financing does not constitute a burden on the public sector borrowing requirement. When the 1973 Act became law, there was some argument about whether the statutory water companies should remain. They were kept, and during and since the transition they have provided continuity and stability in the industry. When the water authorities are privatised, the statutory water companies —which the White Paper states will be retained-will provide valuable competition by comparison. As a result, 25 per cent. of water supplies w ill he free of any accusation of monopoly.

I shall mention two or three subjects briefly, as the Water Companies Association will be sending its response to the White Paper to my hon. Friend the Minister in a few weeks' time. Indeed, the water companies are grateful for the courtesy, interest and care shown by my hon. Friend the Minister, by my right hon. Friend the Secretary of State and by officials in their Department. At present, the companies pay water authorities for the water that they abstract. If plcs were created, they would have a monopoly, which might put the companies at a disadvantage. I hope that my right hon. Friend the Secretary of State will pay particular attention to that point when drawing up the Bill.

Mr. John Patten

My hon. Friend will be pleased to hear that we intend to ensure that no water services plc is in a monopolistic or exploitive relationship with a statutory water company. We intend to make certain that the Director General of Water Services can ensure that bulk transfers are properly and fairly priced.

Sir John Page

I am grateful to my hon. Friend for that generous and clear response, which is typical of his helpful and robust attitude towards this issue.

We must also consider the importance of securing our water resources in future. As it is almost certain that the planning time will he longer than the time covered by licences granted to those water services plcs., we feel that that should be retained in the hands of my right hon. Friend the Secretary of State. We also feel that to impose the same price formula for the whole industry would make things so bland as to be almost meaningless.

Moreover, the water companies have the greatest reservations about the removal of the control over the maximum dividend payable to shareholders. At present, my right hon. Friend the Secretary of State sets the limit for the maximum dividend, and it is laid down in law that the surplus must be returned to the consumer by a reduction in water charges in future years.

Mr. Maxwell-Hyslop

Hear, hear.

Sir John Page

I agree with my hon. Friend, but the water companies are not blindly hostile to the idea of becoming WS plcs. We believe that the statutory water company and its present modus operandi should be retained. We are happy with the controls on prices, and the control on dividends should also continue. There would then be some check on the price, service and efficiency offered by a new WS plc.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

Profit.

Sir John Page

I am deeply fond of the hon. Gentleman, but he cannot divert me from his sedentary position —[Interruption.]—and I shall not give way.

If the WS plcs provide a better service, with water of a higher quality and at a cheaper price than that provided by the statutory companies, the latter will deservedly disappear. But while the new companies prove themselves, the statutory companies should be allowed to retain their present arrangements. What is the snag? It can only be that two different sorts of undertaking would be providing water in England and Wales. That is the case now, and vive la difference. [Interruption.] As the great party of Europe is here, it may not be necessary for me to translate for the alliance.

When British Telecom was privatised, an enormous effort was made to ensure that there was competition, and Mercury was set up to that end.

Mr. Patrick Nicholls (Teignbridge)

Will my hon. Friend give way?

Sir John Page

If my hon. Friend does not interrupt me, he will probably have a better chance of speaking. I am now galloping round Becher's Brook for the second time and am nearly at the finishing post. I shall not fall.

The beneficent Lord has smiled on my hon. Friend the Minister and my right hon. Friend the Secretary of State, because, instead of having to provide extra competition, as happened in the case of BT, they have the perfect tool of competition at hand in the shape of the statutory water companies. If legislation were enacted and statutory water companies did not exist, my hon. Friend the Minister would have to go to the enormous trouble of creating them. The only disadvantage is that, by retaining them alongside the WS plcs, there will be less uniformity and harmonisation and bureaucratic neatness.

Fortunately, the Government do not worship at the altar of those household gods. In fact, I think that they would be rather iconoclastic about them. I am getting rather intellectual now, but when one speaks to a Minister from Oxford one has to get on. Thus, I leave it to the wisdom and farsightedness of my right hon. and hon. Friends, and feel sure that they will retain the statutory water companies in essentialy the same form as present, so that they can continue to provide a service and a comparison for the people of England and Wales, just as they have done in the past 100 years.

6.18 pm

Mr. Ian Wrigglesworth (Stockton, South)

I shall be as brief as possible at this late stage in the debate. I am pleased to speak after the hon. Member for Harrow, West (Sir J. Page), because even if he does not oppose the Government's intentions he is certainly anxious about them. Indeed, he expressed some of the anxieties that have already been expressed from these Benches.

I shall respond to the case—if one can describe it as that—that has been made for the privatisation of the water industry by the Minister, and rather more succinctly by his predecessor, the hon. Member for Eastbourne (Mr. Gow).

The hon. Gentleman said that the Government were right to privatise because they intended to spread ownership and to remove water authorities from Treasury control. However, he began by boasting about the £1 billion invested by the water authorities, despite Treasury control, which he regretted. He boasted and regretted at the same time.

Many of us believe, despite what the Minister said, that it is possible for public authorities to go to the market. It is reasonable to suggest that the success which the water authorities and other public sector authorities have achieved in providing a service is testimony to the effectiveness of the present system. We see no reason to change that system.

The hon. Member for Eastbourne talked about spreading ownership. If he regards turning a vast public monopoly into a private monopoly as providing the consumer with a better service and that that is decentralising and pushing away control, we profoundly disagree. We do not believe that such spread of ownership is advantageous. Indeed, many of the new owners will be the highest polluters of our rivers and waterways. That is another reason why this spread of ownership is not desirable.

If the hon. Gentleman wanted to extend ownership to employees in the industry, we would not disagree. There is a good case for giving employees in such enterprises a financial stake in their own business, but that is different from taking control out of public hands and putting it into private hands.

The Minister referred to a number of other arguments. In his justification of the privatisation of the water industry, I expected him to say that the present system was hopeless and was not providing the consumer with an adequate service, that it was damaging the environment, not providing anglers with the service that they require and not providing leisure facilities. Alternatively, I expected him to boast that under privatisation all anglers and all domestic and commercial users of water would receive a much better service, be provided with cleaner water and benefit from the privatisation which the Minister claims is the answer to the industry's unknown problems. He did not do that.

The Minister said that privatisation would provide the industry with the opportunity to obtain capital from the market, but it can already obtain that capital from the market. The Northumbrian water authority has obtained vast amounts from other parts of the world to build the Kidder dam. The trouble is that the Government's bookkeeping insists that such borrowing be included in the PSBR, and that conflicts with the doctrinal view of Ministers and Conservative party supporters that the PSBR is the sacred cow which must not be expanded. One of the arguments is that that would crowd out other money in the market. There was no crowding out problem when BT shares were launched on the market, nor is there in the prospects of launching British Gas shares. I cannot see that that argument applies. It is a bogus argument.

The Minister said that there would be tough regulation of the water industry. 'Why is there a need for tough regulation, if the present system is working satisfactorily? I thought that the Government were against establishing new quangos and public bodies. If the Minister wants the best regulation, he should have competition, but water is the most natural monopoly. If any industry is to be a candidate for privatisation, water is surely the last such industry because of its natural monopoly.

We have said that we support privatisation when clear competition is possible, when the consumer has a choice and when there is a guarantee of efficiency because of competition. This is the last industry for which competition should be introduced, and we are therefore opposed to the Government's privatisation measure. The Minister says that there will be tighter control over water quality. It is difficult to see what can be achieved under privatisation that cannot already be achieved under public control.

For all the reasons that I have explained, we reject the Government's privatisation proposal. If the Minister were able to come to the House and assure us that services would be improved, we might take a different view.

I fear that anglers will be charged fees that they cannot bear by private companies out to make a profit, that boating and other leisure facilities, will cost more under privatisation because companies have profits to make and are not there to serve the public interest, that there will not be a guarantee of a better supply, and that pollution control will not be improved because it is not in the interests of a private company to provide such facilities. That is why I believe that the Government have got it wrong, why the proposition will be opposed in the country and why we shall oppose it in the Division Lobby.

6.27 pm

Mr. Patrick Nicholls (Teignbridge)

In any programme for privatisation two essential ingredients are necessary. The first is competition, and the second is a reasonable prospect of a proper sum of money being made from the sale of assets.

However we feel about the principle of privatisation, in all the other Government privatisation schemes it has been possible to see competition resulting, or to create competition. That was true even for British Telecom, and it turned out to be so, whatever the misgivings. As the hon. Member for Stockton, South (Mr. Wrigglesworth) said, it is difficult to envisage any other sector of life in which there is less likely to be competition than in the supply of water. Unless we pretend that in future there will be alternative reservoir and supply systems for the same householders in the same area, there can be no competition in a real sense.

It is said that we shall gain efficiencies within a privatised system for the benefit of the consumer. So far, so good. But that cannot exist in a monopoly. If I create efficiencies in my business as a solicitor, I pass the benefits on to my clients not out of the goodness of my heart, but because, if I do not, my competitors will. In a sense, I have to share the benefits of my efficiency with my consumer. I cannot accept that the mere creation of efficiency will, of itself, help the consumer.

I cannot see how the competition argument for privatisation plays any part in the discussion about the privatisation of the water industry. I am not entirely convinced, subject to what my hon. Friend the Minister might say, that the competition point has been made.

Even on the question of raising money there is no certainty that this will he the sale of the century. Briefly, the argument is that if there are to be sufficient safeguards in terms of all the environmental considerations, and if we are to be able to guarantee the supply of water to consumers at a politically acceptable price, we must impose severe restrictions on the commercial companies which take over. If we impose sufficient restrictions for environmental safeguards and for the supply of water at a politically economic price, how attractive will the industry be on the open market'?

I am wondering about the possibility of creating a white elephant. I understand the arguments that are advanced in favour of the Thames water authority. On the other hand, I wonder how the extremely good chairman of the water authority in my area would feel if he were told that he had to supply water at a commercial rate to an isolated householder on Dartmoor? I think that that might worry him a great deal, and he might wonder in the end what he could do about it.

It seems that there are three possibilities. First, we could impose all the necessary restrictions to ensure that care is taken of all environmental, safeguards so that water is supplied at a politically acceptable price. Alternatively, the Government could find themselves with a white elephant that no one wants to buy.

There is a more sinister possibility, however. If a commercial entity could be found to take over the companies, with sufficient restrictions, what would happen if at some future date that entity were to say to the Government, "We tried it out, having taken on board a unit with all the restrictions that you imposed, and we are saying that, unless we push up the price in the areas where we know we can make a profit, we shall no longer be able to make a profit"?

The Government might have to agree to the relaxation of restrictions, with all the political consequences that would ensue, which I do not have time to elaborate. Alternatively — and to take an extreme example — the Government might be faced with the necessity to take back the concern, which would not have been the object in the first place.

The debate is taking place at an early stage in the Government's consideration of these matters, and I am encouraged by the fact that my hon. Friend the Minister has made it clear that he intends to listen to the debate rather than to lay down strict parameters. I should like to feel that in the end arguments which have been advanced extremely quickly will, nevertheless, be taken into the system and considered. It is because I have that degree of confidence in the Government that I shall not be troubled about voting for them, despite my reservations.

Given the problems that everyone would admit exist in the water industry, it is remarkable that there is nothing in the alliance motion to suggest that it has any positive solutions to offer. The motion merely tells us that on one issue the Liberal party and the SDP have managed to unite. They have been able to agree about the future of water. That might be a platform for a parish council election, but it is no platform for an election to government.

6.33 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North)

As a Welshman, I feel that it is especially appropriate that I should be called to speak in this debate, Mr. Deputy Speaker. Water has a special significance in Wales, apart from the fact that we have a great deal of rain. I understand, however, that the sun was shining in mid-Wales this afternoon.

Welsh water has long been a political issue, well before reorganisation, equalisation or privatisation were considered. The drowning of entire valleys following the construction of the Claerwen dam in Radnorshire, the Clywedog dam in Montgomeryshire and the Trywerin dam in Gwynedd and the scattering of communities to make way for dams to supply water to the cities of England aroused the strongest of emotions, and these events are still remembered and felt today.

I believe that the Government's plans to privatise the water authorities will provoke equally strong reactions in Wales and other parts of Britain. Water is a valuable natural asset, and to us on the Liberal and SDP Benches it seems utter folly to treat it as a market commodity and leave it to the mercy of the private sector, where the profit motive is, by definition, more important than the public good.

The reorganisation of the water industry by the Water Act 1973, which was introduced by a Tory Government. at least provided for some public accountability through the appointment of majority local authority nominations to the boards. Unfortunately, this public accountability has been eroded since 1983, and the Government, blinded as they are by their own ideology, are about to remove it altogether. They have given the water authorities impossible financial targets and have thus helped to force up water charges while limiting the authorities' scope for investment.

The present network of water authorities, imperfect though it is in some ways, at least provides valuable public services which no private company would feel able to afford, and in my view public health is among the most important of them. Who is to say that with privatisation there will not be some cutting of corners to please shareholders? Never mind the poor old customers who live in rural areas. Presumably there will have to be a new body —yet another quango—to ensure that certain standards are kept in maintaining the purity of our water and the efficiency of the sewerage system. When the Minister replies to the debate, it will be interesting to hear exactly what plans are being made.

There are many problems with pollution control because of the enforced low spending of the present authorities, and I greatly fear that with privatisation there will be a failure to keep the necessary high standards. We know that lower standards are already being tolerated. It is estimated that even now about 5 million people in Britain receive drinking water that fails to meet stringent EEC public health standards.

What responsibilities will the new water companies have for flood control and conservation? I am sure that many Conservative Members are members of the Country Landowners Association, there being many landowners on the Government Benches. I read with interest an article that appeared in the Western Mail today. It reads: Private-water chaos feared. Landowners fear Government plans to privatise the water industry could cause chaos in rural Wales. The Country Landowners Association want statutory functions, including pollution control, water-abstraction licensing and fisheries management kept in public hands. They fear that if the Government privatise these water authority functions, farmers and other landowners will be at the whim of profit-oriented companies. Charges for vital farming needs, such as taking stream water, could rise and landowners guilty of water pollution might face huge costs for damages instead of the present level of fines. Those are the views of Major George Lindsay, the chairman of the Country Landowners Association's Welsh water committee. There is widespread concern in rural areas, and this fear has been expressed by the NFU, about related charges levied in rural and urban areas. The logic of privatisation would seem to be that a company is run for the profit of its shareholders. It follows that where there is virtually a monopoly, minus any sort of state control, charges to the consumer will have to meet the aspirations of the shareholders.

As time is limited, I shall bring my remarks to a close. I say on behalf of my alliance friends that I hope that the Minister will take heed and abolish his plans to privatise the Welsh water authority and other authorities in England, which do a power of good. He should leave the Welsh water authority in the hands of those who are managing it so well. That can be said of the WWA and other authorities throughout the country.

6.39 pm

Mr. Robin Maxwell-Hyslop (Tiverton)

In the three and a half minutes that are available to me, I observe that I am not satisfied that the Government own the assets of which they wish to dispose. I believe that the Government are not satisfied either on that score. It seems that their intention is to nationalise the water industry before attempting to privatise it. That is what is widely believed.

Both the motion and the amendment include non sequiturs and spurious arguments. The alliance motion states that privatisation — will have serious consequences for capital investment". Surely that cannot be so. A monopoly for which there is no competition can borrow as much as it likes provided it can justify its costs. It can invest that capital, and pass on to the consumer the costs of so doing in increased charges. Among the problems it will not have are serious consequences for capital investment". The Government's amendment welcomes the Government's proposals for the privatisation of the water authorities, which will benefit customers". Why would it benefit customers? I can appreciate why economies will benefit shareholders, but not why they will benefit customers.

The normal way in which a business increases its profits is by persuading its customers to consume more of its products. However, we do not want people to consume more water; nor does the Prime Minister. My right hon. Friend has recommended metering to discourage people from consuming water, as it were free of charge. The Government's amendment welcomes the Government's proposals for the privatisation of the water authorities, which will … strengthen safeguards for the water environment". That can be done without privatising the authorities. That is why it is a spurious argument.

I cannot agree with the alliance motion because it contains an untrue proposition. If the motion had stopped at the end of the first sentence, the alliance would have found me with it in the Division Lobby tonight. I am opposed to the Government's amendment because it welcomes privatisation. I do not believe that privatisation is in the interests of consumers. There is too great a conflict between the interests of a water company and the interests of consumers in terms of water and sewerage. Moreover, the compulsory purchase of land for further reservoirs and the digging up of roads to put in new sewers and pipes should be co-ordinated with the other public authorities if the travelling public is not to be greatly disadvantaged.

6.42 pm

Mr. A. J. Beith (Berwick-upon-Tweed)

I am glad that the hon. Member for Tiverton (Mr. Maxwell-Hyslop) was able to contribute to the debate. His personal crusade on the issue of who owns the water authorities is an important factor in the discussion. The discussion on that point is by no means over, as the hon. Member for Copeland (Dr. Cunningham) said. We have now heard the Government's admission of their intention to nationalise water authorities before they can privatise them. The words that the Minister used earlier seemed to show that the Government must do so. I see no way that the Government can simply dispose of assets which are not vested in the Minister without what is in effect, however compressed, a two-stage process — one by which the Government acquire assets which are vested in water authorities and one by which they hand over those assets to newly constituted private water companies. How that will be done will occupy further discussion. I shall return to the implications in a moment.

We could have done with a longer debate so that many of the arguments could have been extended and developed. It would have been interesting to hear more from the hon. Member for Teignbridge (Mr. Nicholls) on the reservations that he shares with the alliance on many aspects of the proposals. He placed some emphasis on the impossibility of generating competition, which in other industries has been an argument for privatisation, in the water industry. I welcome what he said. I suspect that before the end of these discussions, he will be in the same Division Lobby as the alliance, even if he does not go all the way tonight.

My hon. Friends the Members for Stockton, South (Mr. Wrigglesworth) and Ceredigion and Pembroke, North (Mr. Howells) underlined, from our point of view, the many failings of the Government's proposals. The hon. Member for Copeland gave clear Labour support for our motion and referred to a wide variety of organisations, which do not normally support either the Labour party or the alliance, which have strong reservations about the proposals.

The hon. Member for Normanton (Mr. O'Brien) stressed, rightly, that the argument is not just about water supply. The key environmental functions of sewage disposal and the provision of drainage and sewerage systems are, in a sense, far greater problems in the water industry than the supply of water, which has been reduced to a relatively simple operation by the activities of various sections of the water industry over the years. The largest problems will arise in environmental protection.

The hon. Member for Harrow, West (Sir J. Page) spoke about the existing private water companies and his connection with them. I shall say more about that in the course of my comments on the Minister's remarks. Why did it fall to a wet to set out the Government's proposals on water policy? The Minister did so with a striking lack of conviction. Many alliance Members were genuinely convinced, by the end of his speech, that he was not convinced by the Government proposals he advanced. Perhaps we do him a disservice by saying so, but I think that everyone on this side of the House felt that he did not show any real conviction for the cause he sought to advance because of the obvious weaknesses of it. As he set up arguments one by one, they were knocked down.

The Minister argued that it was necessary to privatise the water industry to give it access to capital from the market and access to investment other than that provided by the Government from the public sector borrowing requirement. The Minister knows that that is nonsense. It needs only a mere stroke of an accountant's pen to decide whether a water authority's investment shall be reckoned for public sector borrowing purposes. He knows full well that there are institutions nominally in the public sector which have the freedom to go to the market for capital investment, and there are institutions which have not.

It was quite open to the Government to make the decision to give the authorities freedom to go to the market for their finance. The hon. Member for Eastbourne (Mr. Gow), who spoke strongly in favour of the Government's proposals, could have done so himself when he was Minister. He did not need to come to the House to announce the privatisation of the authorities. He could have given them the freedom to go to the markets for their capital.

Then the Minister chose, extraordinarily, to attack me and my right hon. and hon. Friends over the existing private water companies. In 1977–78, we were involved in preventing the then Labour Government from nationalising those companies, as they were intent on doing. I remember the meetings vividly. My hon. Friend the Member for Rochdale (Mr. Smith) will remember them well. My hon. Friend the Member for Isle of Wight (Mr. Ross) was closely involved. We were determined that the efficient operating water companies should not be nationalised.

The Minister sought to draw from that the conclusion that that was a model for the operation of the entire water industry. The private water companies, most of which have done a good job over many years, are quite unlike the monsters that the Government seek to create. Since the current legislation has been on the statute book, the statutory water companies have been effectively accountable to the water authorities for what they do. In a sense, they are the franchised concerns like those which the Minister sought to advance as the model when he cited France. We are not reluctant to do what is done abroad. France has adopted proportional representation in its electoral system. There is no need to look to the alliance Benches for any reluctance to follow the example of good things done in other countries.

As has been pointed out, private water companies have limited dividends. There is a dividend restraint on them which requires them to return to their consumers the benefit of the efficiency which they generate in their activities. That they do. I pay tribute to what a number of companies do. Furthermore, the companies only supply water. They do not have any of the other environmental or regulatory functions, such as fisheries management, amenities, and others specified in the motion. It is when one extends over such a wide area that one comes to an issue of public accountability.

The problem is not primarily one of ownership, although ownership is an aspect of it. It is primarily an issue of public accountability—how important public services are controlled and regulated. The Government, by singling out the issue of ownership and seeking to transfer ownership so massively, have thrown the baby out with the bath water. They have excluded the regulations of a monopoly activity, which closely concerns every aspect of the life of every citizen of this country, from effective public accountability.

It is interesting that no Minister representing Scottish interests is on the Government Front Bench. That is because the Government do not propose to take such a step in Scotland. It is interesting to speculate why. I suspect that one of the reasons is that the Government never managed to complete stage one of the process in Scotland. They never managed to get the local authorities out of democratic community control. They never managed to get the water and sewerage system out of local community control in Scotland, where it is still controlled by elected local authorities. The intermediate step has been taken in England with the creating of the halfway house of bodies with some public accountability but not democratic control. That is why we opposed their creation and have pledged constantly to introduce regional democratic control of the water system and of the functions now carried out by the regional water authorities. That already exists in Scotland. Therefore, the Government do not have that halfway status from which to move to privatisation.

I wonder why the Government are pressing ahead with this privatisation. There was a rather similar hint in what the hon. Member for Eastbourne said that the attractions of creating directorships of water authorities which Members of Parliament could take was part of the privatisation process. I hope that that was a jest and that it does not enter into the Government's motives. If the Government showed the same zeal in securing through their friends the appointment to water companies of people of their choice as they have done with the water authorities, every water company would be dominated by Conservatives. A great deal of political influence has been brought to bear in appointments to water authorities. There may be many ex-Conservative Members of Parliament seeking such posts after the next election.

The proposal is not about that. It is about feeding the meter of privatisation which the Government have set ticking away. They have made the national budget dependent on constant acts of privatisation, to such an extent that one wonders what they will do next. With a budget of £3 billion or £4 billion a year dependent on privatisation, what will be next? What industries are left?

Will the Government be turning next to the Church of England so as to privatise it and to distribute some shares?. Might they not privatise the official Opposition? That is a wonderful opportunity. It provides the scope to break the monopoly arrangements and to allow the free market in alternative Governments to operate, instead of sustaining arrangements by which large distorting public subsidies go to one of the parties.

The Government are on an endless treadmill, privatising industries to balance the books. That is what is happening with the water industry. In one sense, one can argue that the Government's plans are a shambles, because they cannot privatise the water industry at one go. Perhaps, by privatising two or three companies a year, they see the means of keeping up the flow of money to balance the books, using the sale of assets to finance current expenditure—the most basic accounting mistake one can possibly make. That is what is involved in privatisation of the water industry.

The consumer and the general citizen will suffer. It is wrong to suggest, as did the hon. Member for Tiverton (Mr. Maxwell-Hyslop), that the issue of capital investment is a non-sequitur. Capital investment is the crucial issue in the water industry's future. It will be a matter of consumers in the country asking why their village will not be connected to the main sewerage system, consumers in the city asking why their sewers are collapsing, and consumers in resorts asking why their resort is not being singled out for removal of coastal pollution. Those everyday questions of capital investment are the essence of public accountability in the water industry.

One cannot set up any type of Oftel or "Ofwater" institution that can reasonably engage in making the water industry accountable without getting it involved day to day in what are basically public decisions about where priorities lie. That body will have to be involved not only in capital investment decisions but in prying into many other issues of environmental management and leisure and amenity management. It must be involved in issues raised by, for example, the anglers as to how much money they will have to pay for the facilities for which the water authorities are responsible. The new privatised water companies will be involved in sea fisheries management. They will have the power to decide who can fish for salmon in the North sea off the English coast which, as some Conservative Members know, is a controversial issue. The hon. Member for Reading, West (Mr. Durant), who is the Government Whip in the Committee on the Salmon Bill, is well aware of the number of days spent discussing who should fish for salmon. In future, a commercial company will decide who has the right to put to sea, how effectively the rules are enforced, and the amount of conservation.

It will be the same for someone who wants to take a boat out on some canals, which are part of the water system. It will be the same for those involved in those river navigations which are controlled at present by the water authorities. Many aspects in which public accountability is involved will be handed over lock, stock and barrel to private companies, the primary interest of which must be the payment of dividends to their shareholders, and which will not be under the restraints of the existing private water companies.

The Government in the White Paper and in what they have said so far have given no reassurances to all those people involved in any of those activities, least of all the consumer of water and the ordinary user of the basic services, that their interests will be protected. In all the discussions on this subject the Government have simply failed to grasp the public mood. They have failed to recognise that environmental control and pollution control are major political issues about which many people care deeply. Because people care so deeply, these proposals will be a millstone around the Conservative party's neck between now and the next general election.

6.55 pm

Mr. John Patten

This has been an interesting and worthwhile debate. We shall, of course, take note of all the points that have been made. We intend to listen, as my hon. Friend the Member for Teignbridge (Mr. Nicholis) said in his excellent speech, to constructive questions and criticism. We note the views that were put forward by my hon. Friend the Member for Eastbourne (Mr. Gow) on the demands and needs of people for a wider spread of ownership and the much wider dissemination of ownership. My hon. Friend's emphasis on that theme was quite right.

I listened carefully for any mention by a Labour Member of the future position of the statutory water companies. The hon. Members for Berwick-upon-Tweed (Mr. Beith) and for Southwark and Bermondsey (Mr. Hughes) made clear the Liberal party's attitude to the statutory water companies. We do not know what the Labour party's attitude is. I ask the hon. Member for Copeland (Dr. Cunningham) to make known as soon as possible—not now, because of the shortage of time—the Labour party's attitude to the statutory water companies.

Dr. Cunningham

indicated assent.

Mr. Patten

It would be wrong for the hon. Gentleman not to make clear the Labour party's policy. I note that he has indicated assent, but I shall continue to ask him for more straightforward and spoken assent.

Hon. Members, including the hon. Member for Copeland and my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), were concerned about ownership. I was pleased to give way a number of times to my hon. Friend, just as I was pleased to give way, as Ministers should do, to as many other hon. Members as possible. I hope that the hon. Member for Stockton, South (Mr. Wrigglesworth) does not expect Ministers not to give way as often as they are asked to do so.

In answering my hon. Friend the Member for Tiverton on the issue of ownership, I shall use more or less the same words as I used earlier. The Water Act 1973 created the water authorities. Water authorities are public corporations which are answerable to the Government. That was not denied by any hon. Member when I offered hon. Members the opportunity to do so. The water authorities are clearly in the public sector. If they are in the public sector, it is for Parliament to decide what is to happen to them. Subject to parliamentary approval, any future Bill will transfer the water authorities' assets, rights and liabilities to wholly owned Crown companies— I hope that that answers the point made by the hon. Member for Berwick-upon-'Tweed; I have made it before—and will empower the Secretary of State to sell them at his or her pleasure at the correct time.

It was a little unfair of the hon. Member for Copeland to talk about lack of investment by the Government in the water industry, especially when he used the phoney figures produced by the Chartered Institute of Public Finance and Accountancy. The institute should know that the retail price index is not a suitable index for investment. Indices of capital expenditure prices move differently from the RPI. The institute should have chosen a more useful and valid index, because it would have produced the fact that, since 1980, investment in water by the Government has increased by 30 per cent. in real terms, which is a considerable achievement. We shall have no lectures from the Labour party or any other party about underinvestment in the water authorities. Care and consideration for the water authorities before privatisation will certainly be continued by us.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 183, Noes 253.

Division No. 229]	[7 pm
AYES
Abse, Leo	Eastham, Ken
Adams, Allen (Paisley N)	Edwards, Bob (W'h'mpt'n SE)
Alton, David	Evans, John (St. Helens N)
Archer, Rt Hon Peter	Fatchett, Derek
Ashdown, Paddy	Faulds, Andrew
Ashley, Rt Hon Jack	Field, Frank (Birkenhead)
Ashton, Joe	Fields, T. (L'pool Broad Gn)
Atkinson, N. (Tottenham)	Fisher, Mark
Bagier, Gordon A. T.	Flannery, Martin
Banks, T1ony (Newham NW)	Foot, Rt Hon Michael
Barnett, Guy	Forrester, John
Barron, Kevin	Foster, Derek
Beckett, Mrs Margaret	Fraser, J. (Norwood)
Beith, A. J.	Freeson, Rt Hon Reginald
Benn, Rt Hon Tony	Freud, Clement
Bennett, A. (Dent'n & Red'sh)	Garrett, W. E.
Bermingham, Gerald	George, Bruce
Bidwell, Sydney	Gilbert, Rt Hon Dr John
Blair, Anthony	Gould, Bryan
Boothroyd, Miss Betty	Gourlay, Harry
Boyes, Roland	Hancock, Michael
Bray, Dr Jeremy	Hardy, Peter
Brown, Gordon (D'f'mline E)	Harman, Ms Harriet
Brown, N. (N'c'tle-u-Tyne E)	Harrison, Rt Hon Walter
Brown, Ron (E'burgh, Leith)	Hattersley, Rt Hon Roy
Bruce, Malcolm	Heffer, Eric S.
Buchan, Norman	Hogg, N. (C'nauld & Kilsyth)
Callaghan, Jim (Heyw'd & M)	Home Robertson, John
Campbell, Ian	Howells, Geraint
Carlile, Alexander (Montg'y)	Hoyle, Douglas
Carter-Jones, Lewis	Hughes, Robert (Aberdeen N)
Clark, Dr David (S Shields)	Hughes, Roy (Newport East)
Clarke, Thomas	Hughes, Simon (Southwark)
Clay, Robert	Janner, Hon Greville
Clelland, David Gordon	Jenkins, Rt Hon Roy (Hillh'd)
Clwyd, Mrs Ann	John, Brynmor
Cocks, Rt Hon M. (Bristol S)	Johnston, Sir Russell
Cohen, Harry	Jones, Barry (Alyn & Deeside)
Conlan, Bernard	Kaufman, Rt Hon Gerald
Corbett, Robin	Kilroy-Silk, Robert
Cox, Thomas (Tooting)	Kinnock, Rt Hon Neil
Craigen, J. M.	Kirkwood, Archy
Crowther, Stan	Leadbitter, Ted
Cunliffe, Lawrence	Leighton, Ronald
Cunningham, Dr John	Lewis, Ron (Carlisle)
Davies, Rt Hon Denzil (L'lli)	Lewis, Terence (Worsley)
Davies, Ronald (Caerphilly)	Litherland, Robert
Davis, Terry (B'ham, H'ge H'I)	Lloyd, Tony (Stretford)
Deakins, Eric	Lofthouse, Geoffrey
Dewar, Donald	Loyden, Edward
Dormand, Jack	McCartney, Hugh
Douglas, Dick	McDonald, Dr Oonagh
Duffy, A. E. P.	McGuire, Michael
Eadie, Alex	McKelvey, William

MacKenzie, Rt Hon Gregor	Robinson, G. (Coventry NW)
Maclennan, Robert	Rowlands, Ted
McNamara, Kevin	Ryman, John
McTaggart, Robert	Sedgemore, Brian
McWilliam, John	Sheerman, Barry
Madden, Max	Sheldon, Rt Hon R.
Marek, Dr John	Shields, Mrs Elizabeth
Marshall, David (Shettleston)	Shore, Rt Hon Peter
Martin, Michael	Short, Ms Clare (Ladywood)
Mason, Rt Hon Roy	Silkin, Rt Hon J.
Maxton, John	Skinner, Dennis
Maynard, Miss Joan	Smith, C.(Isl'ton S & F'bury)
Meacher, Michael	Smith, Cyril (Rochdale)
Meadowcroft, Michael	Snape, Peter
Michie, William	Soley, Clive
Millan, Rt Hon Bruce	Spearing, Nigel
Miller, Dr M. S. (E Kilbride)	Stott, Roger
Morris, Rt Hon A. (W'shawe)	Strang, Gavin
Morris, Rt Hon J. (Aberavon)	Straw, Jack
Nellist, David	Thomas, Dafydd (Merioneth)
O'Brien, William	Thomas, Dr R. (Carmarthen)
O'Neill, Martin	Thompson, J (Wansbeck)
Orme, Rt Hon Stanley	Thorne, Stan (Preston)
Owen, Rt Hon Dr David	Torney, Tom
Park, George	Wainwright, R.
Parry, Robert	Wallace, James
Patchett, Terry	Wareing, Robert
Pavitt, Laurie	Weetch, Ken
Penhaligon, David	Welsh, Michael
Pike, Peter	White, James
Powell, Raymond (Ogmore)	Wigley, Dafydd
Prescott, John	Williams, Rt Hon A.
Radice, Giles	Winnick, David
Randall, Stuart	Woodall, Alec
Raynsford, Nick	Young, David (Bolton SE)
Rees, Rt Hon M. (Leeds S)
Richardson, Ms Jo	Tellers for the Ayes:
Roberts, Allan (Bootle)	Mr. Richard Livsey and
Roberts, Ernest (Hackney N)	Mr. Ian Wrigglesworth.
Robertson, George
NOES
Adley, Robert	Bulmer, Esmond
Aitken, Jonathan	Burt, Alistair
Alexander, Richard	Butcher, John
Alison, Rt Hon Michael	Butler, Rt Hon Sir Adam
Ancram, Michael	Carlisle, John (Luton N)
Arnold, Tom	Carlisle, Kenneth (Lincoln)
Ashby, David	Carlisle, Rt Hon M. (Wton S)
Atkins, Rt Hon Sir H.	Carttiss, Michael
Atkins, Robert (South Ribble)	Cash, William
Baker, Rt Hon K. (Mole Vall'y)	Chalker, Mrs Lynda
Baker, Nicholas (Dorset N)	Chapman, Sydney
Baldry, Tony	Chope, Christopher
Banks, Robert (Harrogate)	Churchill, W. S.
Batiste, Spencer	Clark, Dr Michael (Rochlord)
Beaumont-Dark, Anthony	Clark, Sir W. (Croydon S)
Bellingham, Henry	Clarke, Rt Hon K. (Rushcliffe)
Bendall, Vivian	Clegg, Sir Walter
Benyon, William	Cockeram, Eric
Biffen, Rt Hon John	Colvin, Michael
Biggs-Davison, Sir John	Conway, Derek
Blackburn, John	Coombs, Simon
Blaker, Rt Hon Sir Peter	Cope, John
Bonsor, Sir Nicholas	Corrie, John
Boscawen, Hon Robert	Couchman, James
Bottomley, Peter	Cranborne, Viscount
Bottomley, Mrs Virginia	Currie, Mrs Edwina
Bowden, A. (Brighton K'to'n)	Dickens, Geoffrey
Bowden, Gerald (Dulwich)	Dicks, Terry
Boyson, Dr Rhodes	Dorrell, Stephen
Braine, Rt Hon Sir Bernard	Douglas-Hamilton, Lord J.
Bright, Graham	Dover, Den
Brinton, Tim	du Cann, Rt Hon Sir Edward
Brown, M. (Brigg & Cl'thpes)	Dykes, Hugh
Bruinvels, Peter	Edwards, Rt Hon N. (P'broke)
Bryan, Sir Paul	Eggar, Tim
Buchanan-Smith, Rt Hon A.	Emery, Sir Peter
Buck, Sir Antony	Evennett, David
Budgen, Nick	Eyre, Sir Reginald

Fallon, Michael	Nelson, Anthony
Farr, Sir John	Neubert, Michael
Fenner, Mrs Peggy	Newton, Tony
Fletcher, Alexander	Nicholls, Patrick
Fookes, Miss Janet	Norris, Steven
Forman, Nigel	Onslow, Cranley
Forth, Eric	Oppenheim, Phillip
Fowler, Rt Hon Norman	Oppenheim, Rt Hon Mrs S.
Fox, Sir Marcus	Ottaway, Richard
Fraser, Peter (Angus East)	Page, Sir John (Harrow W)
Gardiner, George (Reigate)	Page, Richard (Herts SW)
Garel-Jones, Tristan	Patten, Christopher (Bath)
Gorst, John	Patten, J. (Oxf W & Abgdn)
Gow, Ian	Pattie, Geoffrey
Gower, Sir Raymond	Pawsey, James
Grant, Sir Anthony	Percival, Rt Hon Sir Ian
Greenway, Harry	Porter, Barry
Griffiths, Sir Eldon	Portillo, Michael
Ground, Patrick	Powell, William (Corby)
Hanley, Jeremy	Powley, John
Hawkins, Sir Paul (N'folk SW)	Prentice, Rt Hon Reg
Heddle, John	Price, Sir David
Higgins, Rt Hon Terence L.	Proctor, K. Harvey
Hill, James	Raffan, Keith
Hind, Kenneth	Raison, Rt Hon Timothy
Hogg, Hon Douglas (Gr'th'm)	Rathbone, Tim
Holland, Sir Philip (Gedling)	Rees, Rt Hon Peter (Dover)
Hordern, Sir Peter	Rhodes James, Robert
Howarth, Gerald (Cannock)	Ridley, Rt Hon Nicholas
Howell, Rt Hon D. (G'ldford)	Ridsdale, Sir Julian
Hunter, Andrew	Rippon, Rt Hon Geoffrey
Jackson, Robert	Roberts, Wyn (Conwy)
Jessel, Toby	Robinson, Mark (N'port W)
Joseph, Rt Hon Sir Keith	Rossi, Sir Hugh
Kershaw, Sir Anthony	Rost, Peter
Key, Robert	Rowe, Andrew
Knowles, Michael	Rumbold, Mrs Angela
Lang, Ian	Ryder, Richard
Latham, Michael	Sackville, Hon Thomas
Lawrence, Ivan	Sainsbury, Hon Timothy
Leigh, Edward (Gainsbor'gh)	Shelton, William (Streatham)
Lennox-Boyd, Hon Mark	Shepherd, Richard (Aldridge)
Lester, Jim	Shersby, Michael
Lewis, Sir Kenneth (Stamf'd)	Silvester, Fred
Lilley, Peter	Sims, Roger
Lloyd, Sir Ian (Havant)	Skeet, Sir Trevor
Lloyd, Peter (Fareham)	Smith, Sir Dudley (Warwick)
Lord, Michael	Smith, Tim (Beaconsfield)
Luce, Rt Hon Richard	Speed, Keith
Lyell, Nicholas	Speller, Tony
McCrindle, Robert	Spencer, Derek
McCurley, Mrs Anna	Spicer, Jim (Dorset W)
Macfarlane, Neil	Squire, Robin
MacGregor, Rt Hon John	Stanbrook, Ivor
Madel, David	Steen, Anthony
Major, John	Stern, Michael
Malins, Humfrey	Stevens, Lewis (Nuneaton)
Malone, Gerald	Stewart, Allan (Eastwood)
Maples, John	Stewart, Andrew (Sherwood)
Marland, Paul	Sumberg, David
Marlow, Antony	Taylor, John (Solihull)
Marshall, Michael (Arundel)	Taylor, Teddy (S'end E)
Mates, Michael	Temple-Morris, Peter
Maude, Hon Francis	Terlezki, Stefan
Mayhew, Sir Patrick	Thomas, Rt Hon Peter
Mellor, David	Thompson, Donald (Calder V)
Miller, Hal (B'grove)	Thompson, Patrick (N'ich N)
Mills, Iain (Meriden)	Thorne, Neil (llford S)
Mills, Sir Peter (West Devon)	Thornton, Malcolm
Miscampbell, Norman	Townend, John (Bridlington)
Mitchell, David (Hants NW)	Townsend, Cyril D. (B'heath)
Moate, Roger	Tracey, Richard
Montgomery, Sir Fergus	Trippier, David
Morris, M. (N'hampton S)	Twinn, Dr Ian
Morrison, Hon P. (Chester)	van Straubenzee, Sir W.
Moynihan, Hon C.	Vaughan, Sir Gerard
Mudd, David	Viggers, Peter
Murphy, Christopher	Waddington, David
Neale, Gerrard	Waldegrave, Hon William
Needham, Richard	Walker, Bill (Tside N)

Wall, Sir Patrick	Wilkinson, John
Waller, Gary	Winterton, Mrs Ann
Walters, Dennis	Winterton, Nicholas
Wardle, C. (Bexhill)	Wood, Timothy
Warren, Kenneth	Yeo, Tim
Watson, John	Young, Sir George (Acton)
Watts, John
Wells, Bowen (Hertford)	Tellers for the Noes:
Wells, Sir John (Maidstone)	Mr. Tony Duranl and
Whitney, Raymond	Mr. Archie Hamilton.
Wiggin, Jerry

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments):—

The House divided: Ayes 242, Noes 167.

Division No. 230]	[7.15 pm
AYES
Adley, Robert	Corrie, John
Aitken, Jonathan	Couchman, James
Alexander, Richard	Currie, Mrs Edwina
Alison, Rt Hon Michael	Dickens, Geoffrey
Ancram, Michael	Dicks, Terry
Arnold, Tom	Dorrell, Stephen
Ashby, David	Douglas-Hamilton, Lord J.
Atkins, Rt Hon Sir H.	Dover, Den
Atkins, Robert (South Ribble)	du Cann, Rt Hon Sir Edward
Baker, Rt Hon K. (Mole Vall'y)	Durant, Tony
Baker, Nicholas (Dorset N)	Dykes, Hugh
Baldry, Tony	Edwards, Rt Hon N. (P'broke)
Banks, Robert (Harrogate)	Eggar, Tim
Batiste, Spencer	Emery, Sir Peter
Beaumont-Dark, Anthony	Evennett, David
Bellingham, Henry	Eyre, Sir Reginald
Bendall, Vivian	Fallon, Michael
Benyon, William	Farr, Sir John
Biffen, Rt Hon John	Fenner, Mrs Peggy
Biggs-Davison, Sir John	Fletcher, Alexander
Blackburn, John	Fookes, Miss Janet
Blaker, Rt Hon Sir Peter	Forman, Nigel
Bonsor, Sir Nicholas	Fowler, Rt Hon Norman
Boscawen, Hon Robert	Fox, Sir Marcus
Bottomley, Peter	Fraser, Peter (Angus East)
Bottomley, Mrs Virginia	Gardiner, George (Reigate)
Bowden, A. (Brighton K'to'n)	Garel-Jones, Tristan
Boyson, Dr Rhodes	Gorst, John
Braine, Rt Hon Sir Bernard	Gow, Ian
Bright, Graham	Gower, Sir Raymond
Brinton, Tim	Grant, Sir Anthony
Brown, M. (Brigg & Cl'thpes)	Greenway, Harry
Bruinvels, Peter	Griffiths, Sir Eldon
Bryan, Sir Paul	Hamilton, Hon A. (Epsom)
Buchanan-Smith, Rt Hon A.	Hanley, Jeremy
Buck, Sir Antony	Hawkins, Sir Paul (N'folk SW)
Budgen, Nick	Heddle, John
Bulmer, Esmond	Higgins, Rt Hon Terence L.
Burt, Alistair	Hill, James
Butcher, John	Hind, Kenneth
Butler, Rt Hon Sir Adam	Hogg, Hon Douglas (Gr'th'm)
Carlisle, John (Luton N)	Holland, Sir Philip (Gedling)
Carlisle, Kenneth (Lincoln)	Howarth, Gerald (Cannock)
Carlisle, Rt Hon M. (W'ton S)	Howell, Rt Hon D. (G'ldford)
Carttiss, Michael	Howell, Ralph (Norfolk, N)
Cash, William	Hunter, Andrew
Chalker, Mrs Lynda	Jackson, Robert
Chapman, Sydney	Jessel, Toby
Chope, Christopher	Joseph, Rt Hon Sir Keith
Churchill, W. S.	Kershaw, Sir Anthony
Clark, Dr Michael (Rochford)	Key, Robert
Clark, Sir W. (Croydon S)	Knowles, Michael
Clegg, Sir Walter	Lang, Ian
Cockeram, Eric	Latham, Michael
Colvin, Michael	Lawrence, Ivan
Conway, Derek	Lee, John (Pendle)
Coombs, Simon	Leigh, Edward (Gainsbor'gh)
Cope, John	Lester, Jim

Lewis, Sir Kenneth (Stamf'd)	Roberts, Wyn (Conwy)
Lilley, Peter	Robinson, P. (Belfast E)
Lloyd, Sir Ian (Havant)	Rossi, Sir Hugh
Lloyd, Peter (Fareham)	Rost, Peter
Lord, Michael	Rowe, Andrew
Luce, Rt Hon Richard	Rumbold, Mrs Angela
Lyell, Nicholas	Ryder, Richard
McCrindle, Robert	Sackville, Hon Thomas
McCurley, Mrs Anna	Shelton, William (Streatham)
Macfarlane, Neil	Shepherd, Richard (Aldridge)
MacGregor, Rt Hon John	Shersby, Michael
Madel, David	Silvester, Fred
Major, John	Sims, Roger
Malins, Humfrey	Skeet, Sir Trevor
Malone, Gerald	Smith, Sir Dudley (Warwick)
Maples, John	Smith, Tim (Beaconsfield)
Marland, Paul	Speller, Tony
Marlow, Antony	Spencer, Derek
Marshall, Michael (Arundel)	Spicer, Jim (Dorset W)
Mates, Michael	Squire, Robin
Maude, Hon Francis	Stanbrook, Ivor
Mayhew, Sir Patrick	Steen, Anthony
Mills, Iain (Meriden)	Stern, Michael
Mills, Sir Peter (West Devon)	Stevens, Lewis (Nuneaton)
Miscampbell, Norman	Stewart, Allan (Eastwood)
Mitchell, David (Hants NW)	Stewart, Andrew (Sherwood)
Moate, Roger	Sumberg, David
Montgomery, Sir Fergus	Taylor, John (Solihull)
Morris, M. (N'hampton S)	Taylor, Teddy (S'end E)
Morrison, Hon P. (Chester)	Temple-Morris, Peter
Moynihan, Hon C.	Terlezki, Stefan
Mudd, David	Thomas, Rt Hon Peter
Murphy, Christopher	Thompson, Donald (Calder V)
Neale, Gerrard	Thompson, Patrick (N'ich N)
Needham, Richard	Thorne, Neil (Ilford S)
Nelson, Anthony	Thornton, Malcolm
Neubert, Michael	Townend, John (Bridlington)
Newton, Tony	Townsend, Cyril D. (B'heath)
Nicholls, Patrick	Tracey, Richard
Norris, Steven	Trippier, David
Onslow, Cranley	Twinn, Dr Ian
Oppenheim, Phillip	van Straubenzee, Sir W.
Oppenheim, Rt Hon Mrs S.	Vaughan, Sir Gerard
Ottaway, Richard	Viggers, Peter
Page, Sir John (Harrow W)	Waddington, David
Page, Richard (Herts SW)	Waldegrave, Hon William
Patten, Christopher (Bath)	Walker, Bill (T'side N)
Patten, J. (Oxf W & Abgdn)	Wall, Sir Patrick
Pattie, Geoffrey	Waller, Gary
Pawsey, James	Wardle, C. (Bexhill)
Percival, Rt Hon Sir Ian	Warren, Kenneth
Porter, Barry	Watson, John
Portillo, Michael	Watts, John
Powell, William (Corby)	Wells, Sir John (Maidstone)
Powley, John	Whitney, Raymond
Price, Sir David	Wilkinson, John
Proctor, K. Harvey	Winterton, Mrs Ann
Raffan, Keith	Winterton, Nicholas
Raison, Rt Hon Timothy	Wood, Timothy
Rathbone, Tim	Yeo, Tim
Rees, Rt Hon Peter (Dover)	Young, Sir George (Acton)
Rhodes James, Robert
Ridley, Rt Hon Nicholas	Tellers for the Ayes:
Ridsdale, Sir Julian	Mr. Tim Sainsbury and
Rippon, Rt Hon Geoffrey	Mr. Mark Lennox-Boyd.
NOES
Abse, Leo	Bidwell, Sydney
Adams, Allen (Paisley N)	Boyes, Roland
Alton, David	Bray, Dr Jeremy
Ashdown, Paddy	Brown, Gordon (D'f'mline E)
Ashley, Rt Hon Jack	Brown, N. (N'c'tle-u-Tyne E)
Atkinson, N. (Tottenham)	Brown, Ron (E'burgh, Leith)
Banks, Tony (Newham NW)	Bruce, Malcolm
Barnett, Guy	Buchan, Norman
Barron, Kevin	Callaghan, Jim (Heyw'd S M)
Beckett, Mrs Margaret	Carlile, Alexander (Montg'y)
Beith, A. J.	Carter-Jones, Lewis
Bennett, A. (Dent'n & Red'sh)	Clark, Dr David (S Shields)
Bermingham, Gerald	Clarke, Thomas

Clay, Robert	Harman, Ms Harriet
Clelland, David Gordon	Harrison, Rt Hon Walter
Clwyd, Mrs Ann	Heffer, Eric S.
Cocks, Rt Hon M. (Bristol S)	Hogg, N. (C'nauld & Kilsyth)
Cohen, Harry	Home Robertson, John
Conlan, Bernard	Howells, Geraint
Corbett, Robin	Hoyle, Douglas
Cox, Thomas (Tooting)	Hughes, Roy (Newport East)
Craigen, J. M.	Hughes, Simon (Southwark)
Crowther, Stan	Janner, Hon Greville
Cunliffe, Lawrence	Jenkins, Rt Hon Roy (Hillh'd)
Cunningham, Dr John	John, Brynmor
Davies, Rt Hon Denzil (L'lli)	Johnston, Sir Russell
Davies, Ronald (Caerphilly)	Jones, Barry (Alyn & Deeside)
Davis, Terry (B'ham, H'ge H'I)	Kaufman, Rt Hon Gerald
Deakins, Eric	Kinnock, Rt Hon Neil
Dewar, Donald	Kirkwood, Archy
Dormand, Jack	Leadbitter, Ted
Douglas, Dick	Leighton, Ronald
Duffy, A. E. P.	Lewis, Ron (Carlisle)
Eadie, Alex	Lewis, Terence (Worsley)
Eastham, Ken	Litherland, Robert
Edwards, Bob (W'h'mpt'n SE)	Livsey, Richard
Evans, John (St. Helens N)	Lloyd, Tony (Stretford)
Fatchett, Derek	Lofthouse, Geoffrey
Faulds, Andrew	Loyden, Edward
Field, Frank (Birkenhead)	McCartney, Hugh
Fields, T. (L'pool Broad Gn)	McGuire, Michael
Fisher, Mark	McKelvey, William
Flannery, Martin	MacKenzie, Rt Hon Gregor
Foot, Rt Hon Michael	Maclennan, Robert
Forrester, John	McNamara, Kevin
Foster, Derek	McTaggart, Robert
Fraser, J. (Norwood)	McWilliam, John
Freeson, Rt Hon Reginald	Madden, Max
Freud, Clement	Marek, Dr John
Garrett, W. E.	Marshall, David (Shettleston)
George, Bruce	Martin, Michael
Gilbert, Rt Hon Dr John	Mason, Rt Hon Roy
Golding, John	Maxton, John
Gourlay, Harry	Maxwell-Hyslop, Robin
Hancock, Michael	Maynard, Miss Joan
Hardy, Peter	Meacher, Michael

Meadowcroft, Michael	Silkin, Rt Hon J.
Michie, William	Skinner, Dennis
Millan, Rt Hon Bruce	Smith, C.(lsl'ton S & F'bury)
Miller, Dr M. S. (E Kilbride)	Smith, Cyril (Rochdale)
Morris, Rt Hon A. (W'shawe)	Snape, Peter
O'Brien, William	Soley, Clive
O'Neill, Martin	Spearing, Nigel
Orme, Rt Hon Stanley	Stott, Roger
Owen, Rt Hon Dr David	Strang, Gavin
Park, George	Straw, Jack
Parry, Robert	Thomas, Dafydd (Merioneth)
Patchett, Terry	Thomas, Dr R. (Carmarthen)
Penhaligon, David	Thompson, J. (Wansbeck)
Pike, Peter	Thorne, Stan (Preston)
Powell, Raymond (Ogmore)	Torney, Tom
Prescott, John	Wainwright, R.
Radice, Giles	Wallace, James
Randall, Stuart	Wareing, Robert
Raynsford, Nick	Weetch, Ken
Rees, Rt Hon M. (Leeds S)	Welsh, Michael
Richardson, Ms Jo	Wigley, Dafydd
Roberts, Allan (Bootle)	Williams, Rt Hon A.
Robertson, George	Winnick, David
Robinson, G. (Coventry NW)	Woodall, Alec
Rowlands, Ted	Young, David (Bolton SE)
Ryman, John
Sheerman, Barry	Tellers for the Noes:
Sheldon, Rt Hon R.	Mr. Ian Wrigglesworth and
Shore, Rt Hon Peter	Mrs. Elizabeth Shields.
Short, Ms Clare (Ladywood)

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the Government's proposals for the privatisation of the water authorities, which will benefit customers, strengthen safeguards for the water environment, encourage enterprise, improve the efficiency of industry, reduce the public sector and extend share-ownership.