Welsh Water Authority

HC Deb 03 March 1986 vol 93 cc6-8

6. Mr. Ray Powell

asked the Secretary of State for Wales what discussions he had with the chairman of the Welsh water authority prior to his statement to the House on privatisation; and on what date they took place.

Mr. Nicholas Edwards

I met the chairman of the Welsh water authority on 25 June 1985 to discuss the authority's response to the Government's consultation paper on privatisation. I also spoke to the chairman on the morning of 5 February to inform him that I would be making a statement on privatisation that afternoon.

Mr. Powell

On Friday 5 February, how far did the right hon. Gentleman screw the chairman's arm around his back to get him to agree to the idea that we should have privatisation of the water industry, because for months before—indeed, in all probability during the whole of 1985—John Elfed Jones had publicly declared, together with the board, that he was against any sort of privatisation? I should like an inquiry into what happened with the Secretary of State and what pressure he put on the chairman of the Welsh water authority to obtain his agreement.

Mr. Edwards

The thought of trying to twist someone's arm over the telephone is interesting. If anyone imagines that John Elfed Jones is the sort of man to have his arm twisted, he clearly does not know the man. He is well able to stick up for himself and to express his own views. He and the board will be considering the proposals put forward in detail and will be presenting their fully considered views to the Government in due course.

Mr. Gwilym Jones

Has my right hon. Friend been asked to convey any apology to the chief executive of the Welsh water authority for what must have been, at best, a sincere misunderstanding by the hon. Member for Cynon Valley (Mrs. Clwyd)?

Mr. Edwards

I have no desire to act as a postbox between the hon. Member for Cynon Valley (Mrs. Clwyd) and the chief executive of the Welsh water authority. I am sure that they are able to conduct their exchanges directly and on their own.

Dr. Marek

Is the Secretary of State aware of the quality of water that is being drunk by residents in the Wrexham area? Is he further aware—

Mr. Speaker

Order. There is another question on the Order Paper about that.

Dr. Marek

I was thinking that it might not be reached. It fits in with the present question.

Is the Secretary of State aware that there was a fire this morning, that some very toxic chemicals leaked into the soil, and that the Welsh water authority was able to say only that it probably will not reach the River Dee? What will the Secretary of State do, consequent upon privatisation, to ensure, if it happens, that any subsequent company will have sufficient capital to undertake a new water supply to the people of Wrexham?

Mr. Edwards

It is quite clear that none of the evils described by the hon. Gentleman could arise from privatisation. If the water authority is privatised, it will operate under a licence from the new Director General of Water Services, who will lay down strict conditions under which the service will operate. Undoubtedly one of the advantages of privatisation is that it will be easier for the authority to carry out its capital programme without the day-to-day and year-to-year interference from the Treasury and Ministers which is inherent in the present system.

Mr. Best

Is it not apparent to anybody who takes the trouble to read the White Paper that two things flow from the privatisation proposals: first, that the money would be raised from the private sector so that capital investment could be undertaken without the present great charges to many subscribers; secondly, that there would be much greater pricing protection and protection of the water consumer in the proposals than is presently enjoyed?

Mr. Edwards

I am sure that sewage will continue to flow as well. However, my hon. Friend is right.

Mr. Rowlands

Is it not a fact that the only way that privatisation of the Welsh water authority can be carried out is if the Government and the Secretary of State wipe off the vast majority of its debt? Instead of doing that for the benefit of future shareholders, why does the right hon. Gentleman not do it now for the benefit of the overwhelming majority of Welsh water consumers?

Mr. Edwards

We have made it clear that we shall be looking at the financial structure of the authority before privatisation. Surely the hon. Gentleman cannot object to any reconstruction of the debt position, because it is something for which Welsh Members have long pressed. In particular, it helps the authority to raise its capital more easily and carry out its programmes more satisfactorily, which is directly to the benefit of consumers.

Mr. Wigley

May I press the Secretary of State further on this point? If, in order to make privatisation viable, it is necessary to write off £450 million of historic debt, why does the right hon. Gentleman not do it now and give even more benefit to consumers?

Mr. Edwards

We shall look at the capital structure when we privatise and consider what is necessary for a sensible structure, but it is not the capital structure that controls the external financing limits—the borrowing—of the water authority. They are laid down by the Treasury, because of the need to control the totality of Government expenditure. That is the principal constraint on the capital programme at present — not the debt position of the water authority.

Sir Raymond Gower

Is it not a fact that prior to the big nationalisation programme of 20 or 30 years ago, many utilities in the private sector—gas, water, electricity and so on — had a splendid record of service to the community, and is it not likely that that will be reproduced in future?

Mr. Edwards

I think I am right in saying that one quarter of the water in England and Wales is presently supplied by private companies. Therefore, the idea that it is not possible to supply it efficiently and economically is disproved by existing facts.

Mr. Barry Jones

Does the right hon. Gentleman know that the director of the School of Water Sciences at Cranfield has predicted that when the details of privatisation are considered they will look impractical? Even at this late stage, will he strive to exempt Wales from the water privatisation proposals? Does he understand that the proposals have offended public opinion in Wales because they put profit before public service?

Mr. Edwards

No doubt we shall have many predictions. I predict that privatisation can go ahead and will result in an improvement in the service and the charging structure for the users of the Welsh water authority's services.